Daphne Richardson Applicant-Respondent-Pefitioner v Hope Investment Construction & Engineering Ltd Respondent v First Caribbean International Bank Applicant [ECSC]

• Jurisdiction: Antigua and Barbuda
• Judge: Harris, J.
• Judgment Date: 31 May 2010
• Judgment citation (vLex): [2010] ECSC J0531-2
• Docket Number: Claim No. Anuhcv 2008/0271
• Court: High Court (Antigua)
• Date: 31 May 2010

[2010] ECSC J0531-2

THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

Claim No. Anuhcv 2008/0271

In the Matter of the Companies Act 1995

In the Matter of a Petition For the Liquidation of Hope Investment Construction &

In the Matter of an Application for the Appointment of the Official Reciever as Liquidator of Hope Investment Construction & Engineering Ltd

Between:

Daphne Richardson

Applicant-Respondent-Pefitioner

and

Hope Investment Construction & Engineering Ltd

Respondent

and

First Caribbean International Bank

Applicant

Priority of Charges — Judgments Act — Statutory Charge on the whole of the proprietary interest of the premises — Registered Land Act — Overriding Interests.

DECISION

Harris, J.

1 The Claimant (also referred to as: Petitioner; Judgment Creditor and Daphne Richardson) obtained a Judgment against the Defendant Company(Also referred to as the Judgment Debtor and Hope Investment Construction & Engineering Ltd.) on the 29^th July 2009 and is seeking to enforce that judgment1.

2 The Claimant, on the 17^th December 2009 filed a Petition for winding up of the Defendant Company pursuant to S.337(c) of the Companies Act 1995 on the grounds that the Company was unable to pay its debts2.

3 The Defendant Company is indebted to the First Caribbean International Bank("FCIB") AND the Bank holds a registered charge on the subject property3.

4 The Defendant Company has ceased trading as a going concern.

5 The effect and indeed the apparent intent of the Petitioner and the Petition were to bring the subject property into "hotchpots" as it were.

6 The secured creditor, The First Caribbean International Bank(Barbados Ltd)("FCIB") seemed to have gotten wind of the unfolding process and has now sought to intervene in the matter in order to protect its interest in the security4 over the interests of the Petitioner in a winding-up of the Defendant/Judgment Debtor Company. The Defendant Company is the registered owner of the subject property and is also the Judgment Debtor (Hope Investment Construction & Engineering Ltd) of the Petitioner/Judgment creditor, Daphne Richardson.5 The FCIB has filed an application pursuant to S. 382 of the Companies Act 1995 and the inherent jurisdiction of the Court, seeking permission to enforce its security under a legal charge registered on the 16^th February 2005, over the subject Freehold property.

7 On the application of counsel for the Defendant, leave was granted on the 26^th of February 2010 to the parties, to file written submissions in the matter and the hearing was adjourned to a later date. The FCIB and the Claimant/petitioner filed their written submissions. The Defendant/Judgment Debtor Company did not file any submissions in this matter. Both applications were heard together.

8 Relying substantially on the authority ofCleaver et al v Delta American Reinsurance Co.6 the intervener, First Caribbean International Bank ("FCIB"), contends that;

• (i) A secured creditor pre-dating the liquidation is entitled to realize his security and apply the proceeds to his use. He is not required to bring into general account, the proceeds of his security.7

• (ii) Neither the Insolvent Company nor the Liquidator has title to the Security;8

• (iii) The asset constituting the security never formed part of the Liquidation estate;9

• (iv) It is only of the secured creditor elect to give up his security and prove for the full amount that the secured asset becomes part of the liquidation estate;10

• (v) The Mortgagors interest is Limited to an equity of redemption.11

9 Further, Counsel for First Caribbean International Bank (FCIB)contends that where a liquidation ensues, the secured creditors rights under the security are not prejudiced and the liquidator cannot restrain the secured Creditors sale, save by either;

• a. Paying the amount due or

• b. Paying the amount Claimed in Court.12

10 Counsel for the (FCIB) submits further, that a Mortgagee is entitled to enforce his security notwithstanding the liquidation of the Mortgagor and that leave will normally be granted a secured Creditor seeking to enforce his security.

11 I accept as the applicable Law in relation to liquidation, that which is submitted by Counsel for the FCIB above.

12 The First Caribbean International Bank (FCIB) contends that it has a priority over the security (the subject property) and entitled to pursue its right of sale of the Security. It contends that the petitioner ought not to be allowed in the winding up process to affect the Security interests of the (FCIB) or its right of sale (equity of redemption) as a Mortgagee.

13 Prior to the date of the adjourned hearing of the Intervener/FCIB's application, the Petitioner/Judgment creditor, Daphne Richardson, filed an application seeking an order of the Court that the registered property of the Judgment Debtor Company be sold so as to satisfy the Judgment of the Court which was entered in favor of the Petitioner, Daphne Richardson on the 7^th July 2009. Daphne Richardson's application was to sell the property as provided under the Judgments Act Cap 227; an Act, which if complied with, rendered the said Judgment a Charge on all of the property of the Judgment Debtor Company. At the adjourned hearing of the FCIB's application, Counsel for the Petitioner (Daphne Richardson) accepted,13 that in a winding-up the subject property did not fall into "hotchpots" and thus, in a winding up, would be subject to the priority of the registered charge14.

THE JUDGMENT ACT

14 The effect of the Petitioners compliance with the said S.3 of the Judgment Act is to render the Judgment effective as a Charge upon all lands of the Judgment Debtor and more specifically, to operate as a Charge on the (FCIB) Security interest—the subject property—to the extent of the Defendant/Judgment Debtors interest in the property.

15 Counsel for the Petitioner/Judgment Creditor submits that this Judgment Act creates a special class of Charge that supersedes the prior registered Charge of the FCIB. Counsel contends that whereas the (FCIB) Charge is merely a right limited to the parameters of the "equity in redemption", the Claimants statutory Charge goes to the whole of the proprietary interest in the subject property and is in effect, a part of the property'15. This Interest extends to every interest that one can hold in property and therefore the Chargee/ FCIB takes subject to the Petitioners Interest16.

16 Counsel for the Petitioner submits that S.3 of the Judgments Act of Antigua and Barbuda renders the Claimant an equitable Mortgagee. He contends further, that in any event, as a Judgment creditor, the Petitioner has an"overriding interest" in the property pursuant to s. 28(e) of the Registered Land Act Cap 374.

17 Counsel has cited several authorities17 in support of his contentions including setting out S.I3 of the English Judgments Act of 1838.

18 Counsel for the First Caribbean International Bank (Barbados ltd) (FCIB) referred to the Companies Act18, the Bankruptcy Act, Cap 41 and the Registered Land Act Cap 374 ("RLA")19 and the various provisions therein that support the priority of the FCIB Registered Charge. There is no dispute the FCIB Charge is first in time.

COURT'S FINDINGS

19 At the onset, let me say that the Claimants understanding of an 'overriding interest' under S.28 of the Registered Land Act (R.L.A) is at variance with that of the Court. The 'overriding interest', does not in my view, merely by being an overriding interest, override the priority of the prior registered charge interest of FCIB, but merely overrides the requirements for the specified interest to be registered —the S.3 Judgment in this case. Thereafter, the Registered Land Act and the Law provides for the process of determining the priority of interest.

20 There can be no dispute that a Judgment in compliance with S.3 of the Judgments Act is an overriding interest under the R.L.A.

21 So, we now have two Charges recognized by the R.L.A., both of which are created by statute; which one has priority? Counsel for the FCIB contended that the FCIB Charge ranked above that of the Petitioner/Judgment Creditor. Counsel referred to several sections of the RLA and case authorities in support of the priority of the FCIB duly Registered Charge under the RLA.20

22 The Petitioner submits that her later-in-time" Statutory Charge" goes to the very essence of the proprietary interest in the land. I do not know this fact, if correct, helps the Claimant. The undisputed existing owner of all the interests in the land —is the Defendant Company —by virtue of that plethora of interests that he, as do all registered title owners have, in the land [and he can confer no greater interest to any one). However, this interest is without dispute subject to the First Caribbean International Bank's (FCIB's) Charge21. So how then, can the Petitioner, at best standing in the shoes of the Defendant, not also be subject to the Chargee's interest?

23 The very S.13 of the English 1838 Judgment Act referred to and relied upon by the Petitioner, upon proper construction, refers to the Judgment creditor's interest crystallizingfrom the time of registering the Judgment.

24 Turner LJ in theex parte Boyle (1853) 43 ER 202 case22...