Clarien Bank Ltd v Ventures
| Jurisdiction | Bermuda |
| Judgment Date | 22 January 2021 |
| Docket Number | Civil Jurisdiction 2015 No 430 |
| Court | Supreme Court (Bermuda) |
[2021] Bda LR 6
In The Supreme Court of Bermuda
Civil Jurisdiction 2015 No 430
In the matter of a Mortgage dated 1 February 2010 between Gayle Ann Ventures (as Mortgagor) of the one part and First Bermuda Group Ltd (as Mortgagee) of the other part (such deeds now assigned to Clarien Bank Limited (formerly Capital G Bank Limited))
Mr B McCosker for the Plaintiff
Mr C Hill for the Defendant
The following cases were referred to in the judgment:
Williams and Glyn's Bank v Barnes [1981] Com LR 205
National Commercial Bank (Jamaica) Ltd v Hew [2003] UKPC 51
HSBC Bank Bermuda Limited v Wales [2018] Bda LR 116
Foley v Hill (1848) 2 HLC 28
Fahad Al Tamimi v Khodari [2009] EWCA Civ 1109
Westpac Banking Corporation v Diagne [2014] NSWSC 822
Bank of Scotland plc v Waugh [2014] EWHC 2117
Swift 1st Ltd v Colin and Ors [2011] EWHC 2410
E&C Well Drilling Ltd v Hayward [2011] Bda LR 1
Julius Samann Ltd v Just Add Bermuda and Ors [2019] Bda LR 100
BDC v Brown [1994] Bda LR 35
Birmingham Citizens Permanent Building Society v Caunt [1962] 1 Ch 883
Royal British Bank v Turquand (1856) 119 ER 886
Scope of duty of care owed by banker to customer — Whether duty to advise customer of prudence of a mortgage loan — Whether duty to investigate customer's ability to service a loan — Whether banker/customer relationship gives rise to fiduciary obligations — Predatory lending — Creation of equitable mortgage — Formal requirements for the execution of deeds by companies
JUDGMENT of Hargun CJ
1. These proceedings were commenced by way of Originating Summons filed on 26 October 2015. The claim against the Defendant (“the Defendant” or “Ms Ventures”) arises in circumstances where the Plaintiff's predecessor bank, First Bermuda Group Limited (“FBG”), granted Ms Ventures a loan in the principal sum of $842,000 over a 20 year term (the “2010 Loan”), secured by way of a mortgage (the “2010 Mortgage”) over the property located at 24 and 26 Blue Hole Hill (the “Property”). FBG assigned the 2010 Loan to Capital G Bank Limited (“Capital G”) on 30 September 2011, and on the same day also assigned the 2010 Mortgage to Capital G. On the 9th of April 2014 Capital G changed its name to Clarien Bank Limited (“the Plaintiff” or “Clarien”).
2. On 1 February 2016, Ms Ventures filed a Generally Endorsed Writ of Summons which makes allegations in relation to a separate loan in the sum of $1.5 million granted to her by Capital G on 10 August 2005 (the “2005 Loan”). The 2010 Loan refinanced some of the outstanding balance of the 2005 Loan, the remainder of which was retired by way of sale of a separate property, the effect being that the 2005 Loan was discharged, in full, on or about 1 February 2010. By her separate action, Ms Ventures seeks damages from Clarien for wrongful selling of a financial product, the restitution of sums paid by Ms Ventures as a consequence of the fees, charges, penalties and penalty interest, and a declaration that the 2005 Loan was illegal and/or unenforceable. Ms Ventures has also counterclaimed against Clarien, alleging that FBG owed Ms Ventures a duty of care in relation to the 2010 Loan and breach of that duty causing loss and damage to Ms Ventures.
3. The 2010 Loan remains in default, no payment having been made since January 2014, with a payoff figure as at 1 July 2020 of $1,338,493.59. Ms Ventures has, during the 6 years since ceasing payments, continued to enjoy the exclusive possession of the Property and the benefit of the rental income derived from the Property. Ms Ventures' position is that she owes Clarien no money whatsoever.
4. On 25 November 2016, Chief Justice Kawaley ordered the consolidation of the two proceedings, with the consolidated proceeding to continue as a writ action.
5. Clarien has elected not to pursue its claim to enforce its legal mortgage, and instead has advanced its case based upon the existence of an equitable mortgage it claims it holds over the Property, as well as seeking a money judgment against Ms Ventures.
6. The issues which were argued at the hearing and which required determination by the Court are as follows:
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i. Did FBG hold an equitable mortgage over the Property as a result of agreeing to make the 2010 Loan to Ms Ventures?
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ii. Have the 2010 Loan and the equitable mortgage over the Property been properly assigned to Clarien so that Clarien is in a position to enforce the 2010 Loan in its name and is entitled to take possession of the Property?
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iii. Are Ms Ventures' claims in respect of the 2005 Loan time barred under the Limitation Act 1984?
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iv. If not:
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(a) Were there any implied terms governing the 2005 Loan and, if so, what were those terms?
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(b) Did Capital G owe any duties to Ms Ventures in connection with the 2005 Loan and, if so, what was the content of those duties?
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(c) Is Ms Ventures estopped from making claims in respect of the 2005 Loan by virtue of the equitable doctrine of laches?
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(d) Has Ms Ventures waived her rights to challenge the calculation of the amounts owing under the 2005 Loan by reason of the payment of all amounts owing under the loan?
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v. Did FBG owe a duty of care to Ms Ventures in respect of the 2010 Loan and, if so, what was the content of that duty of care? If such duty exists, was it breached by FBG and, if so, what damages flowed from that breach?
7. These proceedings were commenced by Originating Summons dated 26 October 2015 and filed by Clarien seeking an order that Ms Ventures pays to Clarien the sum due under the 2010 Loan and an order that the 2010 Mortgage may be enforced by sale. Clarien also sought an order for delivery by Ms Ventures to Clarien of possession of the Property.
8. On 1 February 2016 Ms Ventures filed a Generally Endorsed Writ of Summons, making claims against Clarien in respect of the 2005 Loan.
9. At the first directions hearing on 24 March 2016, Kawaley CJ ordered that Ms Ventures file her responding evidence by 21 April 2016, Clarien to file its evidence in reply by 19 May 2016, and the matter be set down for review on 2 June 2016. The Court encouraged the parties to attempt to agree further directions for the exchange of expert evidence.
10. On 13 May 2016 Clarien filed a summons seeking to strike out Ms Ventures' Defence in circumstances where Ms Ventures was more than 3 weeks in default of the deadline for filing her evidence as ordered by Kawaley CJ on 24 March 2016.
11. On 25 November 2016, at the second directions hearing, Kawaley CJ ordered the consolidation of the two proceedings, with the consolidated proceedings to proceed as a writ action with the two affidavits of Patrice James and the Originating Summons standing as the Statement of Claim and Writ of Summons respectively. Orders were also made requiring parties to, inter alia, exchange lists of documents within 14 days from the close of pleadings. The question of the need and scope of any expert opinion evidence was reserved.
12. On 23 December 2016, Ms Ventures filed her Defence and Counterclaim.
13. On 21 March 2017, Clarien filed its Reply and Defence to Counterclaim.
14. On 1 June 2017, at the third directions hearing, parties were ordered to exchange lists of documents within 28 days and to exchange dates for trial within 14 days.
15. On 3 October 2017 Clarien filed its List of Documents.
16. On 9 November 2017 the matter came before Hellman J for further directions in circumstances where Ms Ventures was in default of the previous directions orders, having refused to provide trial dates or exchange her List of Documents. Hellman J made a peremptory order, requiring Ms Ventures to serve her List of Documents on or before 23 November 2017, failing which her Defence and Counterclaim would be struck out. Hellman J awarded to costs of the hearing to Clarien.
17. On 22 August 2018, there was a further directions hearing in relation to this matter which lasted for 2 hours. Mr Hill, on behalf of Ms Ventures, had sought in correspondence that Clarien agree that Ms Ventures be allowed to produce expert evidence in relation to whether Clarien and FBG had breached their respective duties of care to Ms Ventures and that Clarien provide electronic discovery. In response, Clarien had issued a summons seeking an order that there be no expert evidence and no electronic discovery and the matter be set down for trial. At the conclusion of that hearing I refused to make an order that Ms Ventures be debarred from adducing expert evidence, but allowed Clarien to consider whether it wished to strike out the counterclaims by Ms Ventures in respect of which expert evidence was sought by Mr Hill. But for the issue of expert evidence and electronic discovery, I would have set this matter down for trial in August 2018. At this hearing there was no suggestion by Mr Hill that Ms Ventures did not have the financial means to obtain expert evidence.
18. On 19 December 2019, counsel for Clarien wrote to counsel for Ms Ventures, offering to consent to Ms Ventures being permitted to adduce expert evidence, and to voluntarily producing electronic documents, in exchange for Ms Ventures agreeing dates for trial in 2020. As no response was received, there was a further directions hearing on the 13 February 2020. Mr Hill, for Ms Ventures, stated that he needed 28 days (after electronic discovery) to prepare an expert's report and thereafter the matter could be set down for trial. At that hearing I ordered, by consent, that Ms Ventures be given leave to adduce expert evidence on the subject of “practice in Bermuda as to what a competent mortgage lender and banker would do in relation to the ability of one being able to service the loan and what a competent banker would do in terms of collection on the default of the borrower.” At the suggestion of Mr Hill I also ordered that there be an exchange of witness statements...
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