Maybury v Lowe and ors

• Jurisdiction: Bermuda
• Judgment Date: 29 September 2016
• Date: 29 September 2016
• Docket Number: Civil Jurisdiction 2016 No 210
• Court: Supreme Court (Bermuda)

[2016] Bda LR 95

In The Supreme Court of Bermuda

Civil Jurisdiction 2016 No 210

Between:

Keerome Maybury

Plaintiff

and

Keetha Lowe

Kent Lowe

The Estate of Rahima Muhammad

Clarien Bank Limited

Alex Smith

Defendants

Mr C Hill for the Plaintiff

Mr K Taylor for the Fourth Defendant

1st – 3rd and 5th Defendants not represented and took no active part in the hearing

The following cases were referred to in the judgment:

American Cyanamid v Ethicon Ltd [1975] AC 396

Duke v Robson [1973] 1 WLR 267

Silven Properties Ltd v Royal Bank of Scotland [2004] 1 WLR 997

National Commercial Bank of Jamaica v Olint Corp [2009] 1 WLR 1405

Application for interlocutory injunction prohibiting conveyance of property — Lapse of credit facility agreement — Mortgage arrears — Whether serious issue to be tried

RULING of Hellman J

Introduction

1. The hearing concerns a property known as “Cedar Knolls”, 3 Port Royal Gardens, Southampton (“the Property”). The Plaintiff, Mr Keerome Maybury (“Mr Maybury”), seeks an interlocutory injunction prohibiting the Fourth Defendant, Clarien Bank Limited (“the Bank”) from conveying the Property to the Fifth Defendant, Mr Alex Smith (“Mr Smith”).

2. Mr Smith was joined to these proceedings at the direction of the Court because he has entered into a contract to purchase the Property. But he has not played an active role in the application and looks to the Bank to protect his interests. Irrespective of the outcome of the application, he is therefore at no risk as to costs. Neither are the First through Third Defendants, who also took no active part in the application.

Background

3. By a sale and purchase agreement which is undated, but which Mr Maybury says was made on 27th November 2014 (“the SPA”), Mr Maybury agreed to buy the Property and the First and Second Defendants and the late Mrs Rahima Muhammad (“Mrs Muhammad”) agreed to sell it to him. The purchase price was $847,149.09. For ease of reference I will refer to Mrs Muhammad as the Third Defendant, even though the Third Defendant is in fact her Estate.

4. The buyer and the sellers are related. The First and Second Defendants, Ms Keetha Lowe (“Ms Lowe”) and Mr Kent Lowe (“Mr Lowe”), are the children of Mrs Muhammad. Mr Maybury is Ms Lowe's son. Mr Lowe is his uncle and Mrs Muhammad was his grandmother.

5. The sellers bought the Property in 2000 with the aid of a mortgage loan from the Bank. It was a term of the mortgage that the mortgagors – ie the sellers – could not sell the Property without the Bank's written permission.

6. The mortgage fell into arrears. Mr Maybury and the mortgagors entered into negotiations with the Bank to try and resolve the situation. All parties sought a global solution which would address the mortgage arrears in relation not only to the Property but also in relation to another property, “Aerial View”, which was Mrs Muhammad's home. The solution that they came up with was that Mr Maybury would buy the Property from the mortgagors and that the purchase monies would be used to redeem the existing mortgage. Mr Maybury would borrow the purchase monies from the Bank, with the loan secured by a fresh mortgage over the Property. The amount of the mortgage loan was to be $920,000. The loan monies would also be used to complete renovations on the Property, pay the arrears of the mortgage on “Aerial View”, and cover the Bank's fee.

7. Pursuant to this arrangement, Mr Maybury entered into a Credit Facility Agreement with the Bank dated 13th December 2013 (“the CFA”). Its terms included amongst others: (i) that the funds must be drawn down by not later than 30th June 2014 and that any un-drawn funds would lapse; and (ii) that prior to the disbursement of funds the Bank required, in a form and substance satisfactory to it, a signed copy of the sale and purchase agreement. It is common ground that as of 13th December 2013, and indeed prior to 30th June 2014, no sale and purchase agreement had been drawn up.

8. Confusingly, the CFA stated that Mr Maybury's acceptance had to be received on or before 20th December 2014. Mr Maybury says that this date was correct and that the draw-down date of “30th June 2014” should read “30th June 2015”, whereas the Bank says that “30th June 2014” was correct, and that “20th December 2014” should read “20th December 2015”. Viewing the document in its commercial context, I am satisfied that Mr Maybury's position on this point is not seriously arguable and that the Bank's position is correct.

9. Mrs Muhammad refused to sign the sale and purchase agreement prior to 30th June 2014. As no signed copy of the agreement was supplied to the Bank, and no draw-down of the funds took place, on or before that date, the Bank's offer of funding under the CFA lapsed.

10. Mr Maybury submits that, irrespective of when the CFA lapsed, it comprised or alternatively was evidence of an offer made to him by the Bank to consent to the sale of the Property by the mortgagors to him for the amount necessary to redeem the mortgage on the Property. This offer was intended by the Bank to be capable of acceptance so as to give rise to a contract between Mr Maybury and the Bank. It was not limited by time. It did not depend upon the particular terms of the contract which Mr Maybury and the mortgagors might enter into. Neither did it depend upon Mr Maybury having available as at the date of that contract the funds to complete the...