Trew v HSBC Bank Bermuda Ltd and Dwyer

• Jurisdiction: Bermuda
• Judgment Date: 28 July 2021
• Docket Number: Civil Jurisdiction 2019 No 379
• Court: Supreme Court (Bermuda)

[2021] Bda LR 68

In The Supreme Court of Bermuda

Civil Jurisdiction 2019 No 379

Between:

Denise Priscilla Trew

Plaintiff

and

HSBC Bank Bermuda Limited

and

Dennis William Dwyer (as Executor of the Estate of Robert Allen Trew)

Defendants

Mr M Scott for the Plaintiff

Mr J Hindess for the 1^st Defendant/Applicant

The following cases were referred to in the judgment:

Maybury v Lowe [2016] Bda LR 95

Downsview Nominees Ltd v First City Corpn Ltd [1993] 3 All ER 626

China and South Sea Bank Ltd v Tan [1989] 3 All ER 839

Lawrance v Lord Norreys (1890) 15 App Cas 210

Tucker v Hamilton Properties Ltd [2017] Bda LR 136

Broadsino Finance Co Ltd v Brilliance China Automotive Holdings Ltd [2005] Bda LR 12

Kingate Global Fund Ltd v Kingate Management Ltd [2016] Bda LR 4

E (a minor) v Dorset CC [1994] 4 All ER 640

Parker Tweedale v Dunbar Bank plc (No 1) [1991] Ch 12

Michael v Miller [2004] EWCA Civ 282

Application to strike out — Mortgage — Enforcement — Property sold — Duty owed by mortgagee — Failure to provide accounting — Reasonable cause of action — Eligible creditor

RULING of Mussenden J

Introduction

1. This matter came before me by the Summons of the First Defendant HSBC Bank Bermuda Limited (the “Bank”) dated 7 January 2021 to strike out the Plaintiff's claim against the Bank pursuant to the Rules of the Supreme Court (“RSC”) Order 18/19 and/or under the inherent jurisdiction of the Supreme Court on the grounds that:

• (a) Neither the indorsement of the Specially Indorsed Writ of Summons nor the Statement of Claim dated 18 September 2019 (the “Writ” and the “Statement of Claim”) disclose a reasonable cause of action against the First Defendant; further or in the alternative;

• (b) That the said Writ and Statement of Claim as against the First Defendant are scandalous, frivolous or vexatious; further or in the alternative;

• (c) That the said Writ and Statement of Claim as against the First Defendant are an abuse of the process of the Court.

2. The application is supported by the First Affidavit of Adenike D. Carmichael, of HSBC Bank Bermuda Limited sworn on 19 April 2016 (“Carmichael 1”) with its Exhibit “ADC-1” and the First and Second Affidavits of Lavonne Brown sworn respectively 23 December 2020 (“Brown 1”) with its Exhibit “LB-1” and 25 February 2021 (“Brown 2”) with its Exhibit “LB-2”.

3. The Plaintiff Denise Trew (“Mrs Trew”) opposes the application. She relies on her Affidavit in Reply sworn 5 February 2021 (“Trew 1”) with its Exhibits “DPT-1”.

Background

4. The evidence of Carmichael 1 states that on 12 January 1996, Mrs Trew's husband, Robert Allen Trew (“Mr Trew”), borrowed the principal sum of $325,000 from the Bank. The loan was secured by a Promissory Note dated 12 January 1996 as well as an equitable mortgage over the property known as 6 York Street in St. George's Parish (the “Equitable Mortgage” and the “Property” respectively).

5. Mr Trew died on 20 June 1999.

6. The Last Will and Testament of Mr Trew executed on the 23 June 1998 (the “Will”): (i) appointed Dennis William Dwyer, Terry Eugene Lister and Ronald Leslie Brown as executors of Mr Trew's estate and (ii) directed that the Property pass to his wife Mrs Trew, as life tenant and upon her demise her interest was to be passed to several of Mr Trew's children in various percentages of interest.

7. Soon after Mr Trew passed away, payments under the loan facility with the Bank became delinquent. The attorneys for the Bank, Marshall Diel and Myers Limited (“MDM”) wrote to Mrs Trew by letter dated 5 November 2012 notifying her as such and requesting that she arrange a meeting to resolve the situation.

8. Mrs Trew sought to retain the property and requested that the Bank not enforce the Equitable Mortgage and allow her to pay it. Throughout the period 2012 to 2016, the Bank continuously tried to work with Mrs Trew to allow her to retain possession of the property.

9. However, the facility remained delinquent and so on 20 April 2016, the Bank filed an Originating Summons to enforce the Equitable Mortgage with Carmichael 1 filed in support, that matter being matter No. 150 of 2016 (“matter No. 150 of 2016”).

10. The Bank served the Originating Summons and supporting affidavit in matter No. 150 of 2016 on the Plaintiff on 10 May 2016 and on the Second Defendant, Mr Dennis Dwyer as executor of the estate of Mr Trew on 2 May 2016.

11. Mr Dwyer responded that since Mr Trew's death, Mrs Trew had had control and possession of the Property and that, as far as he was concerned, Mr Trew's estate had no remaining assets whatsoever as all assets had been distributed pursuant to the terms of the Will.

12. In response to the Originating Summons, Mrs Trew again asked the Bank not to proceed with repossession of the Property and the Bank, once again, gave Mrs Trew more opportunities to remedy the situation and retain possession of the Property. At this time and at least as early as 1 November 2016, Mrs Trew was represented by Michael Scott of Browne Scott.

13. A hearing was held on 7 December 2017 with Mr Scott as counsel for Mrs Trew in attendance where the Court ordered that the Equitable Mortgage was foreclosed and the Bank was entitled to enforce the Equitable Mortgage by sale (the “December 2017 Order”).

14. The Court granted a Writ of Possession on 17 January 2018 and the Writ was executed by the Provost Marshall General on 15 May 2018.

15. According to the evidence of Brown 2, at the time that the Bank took possession of the Property in May 2018, it was in a severely dilapidated condition. As such, the Bank obtained a structural survey report from Mason and Associates Ltd on 24 May 2018.

16. The structural survey report quoted a cost of $885,000 for necessary remedial work and upgrades to the property. It also stated, inter alia, that:

“The subject property is well below market condition with significant structural, electrical and plumbing concerns noted. Walkway supporting steel beams are severely corroded impacting the structural integrity of these two elements and should now be considered to be unsafe to access. Plumbing and electrical infrastructure is substandard and should all be replaced to code compliant safe, modern standards. Significant termite activity noted in the wood windows and door frames and upper level stud partition walls. Wood windows and some doors were noted to show significant rot and deterioration and should be replaced with new to match. West and north boundary stone wall/rock facings shows some undermining and localized erosion and should be strengthened.”

17. The Bank then obtained three valuations on the Property from three different appraisers in 2018 prior to placing it on the market. The appraisers noted as follows:

• (a) The 27 June 2018 valuation by The Property Group stated that “neither building is up to code and that will require the wiring and plumbing”, quoted estimated renovations costs at $500,000 and set a market value of $550,000.

• (b) The 29 June 2018 valuation by MainPoint Real Estate (“MainPoint”) found that “this property requires extensive renovation costs to make its operable [which renovations] are further hindered by the Grade 2 listing set on the property” and set a market value of $540,000; and

• (c) The 5 September 2018 valuation by Rego Sothebys found that the “property needs a substantial amount of refurbishment [and] as an investment property, the capital expenditure required to repair the property may not be economically feasible in the short term” and set a value of $660,000

18. In addition, all of the valuations recommended that a structural survey be undertaken due to its poor condition.

19. A series of marketing efforts and negotiations took place leading to the sale of the Property on 7 November 2018 when the Bank accepted the offer that produced the highest net sale value. Also, the Bank forgave over $80,000 in debt interest to the estate of Mr Trew.

20. In the Second Affidavit of Lavonne Brown for the Bank, the evidence sets out the details of the marketing, negotiations and sale of the Property some of which includes as follows:

• i. A real estate agent Alkon Realty inquired on behalf of an interested client Ms. B eventually making an offer on 6 and 7 August 2018 of $595,000 for the Property.

• ii. The Bank engaged MainPoint to handle offers for the Property.

• iii. On 7 August 2018, MainPoint received two formal offers for consideration:

  • (a) Coldwell Banker on behalf of their client, Mr D, made an offer in the amount of $650,000;

  • (b) Alkon Realty, on behalf of their client Ms. B, made an offer in the amount of $696,000; and

  • (c) MainPoint was then instructed to request best offers from their clients.

• iv. On 7 August, Coldwell Banker's client increased their offer to $710,000, however, Alkon Realty's client did not modify their offer. The Bank accepted the offer of $710,000, but on 30 August 2018, the client reduced his offer to $550,000, based on details in the appraisal that revealed significant depreciated building cost. The offer was declined and the Property placed back on the market.

• v. On 1 October 2018, MainPoint presented a cash offer of $500,000 from Mr S for consideration. The Bank counter offered at $600,000 to which Mr S countered at $525,000, which he increased to $560,000 gross on 3 October 2018 and which was accepted by the Bank.

• vi. On 17 October 2018, prior to entering a sales and purchase agreement with Mr S, the Bank received another cash offer for $550,000 ‘net net’ from Mr G. The Bank then asked both potential purchasers for their best and final offers. On the same day, Mr S advised that he did not wish to proceed with the purchase.

• vii. On 23 October 2018, the Bank proceeded with the offer form Mr G, recognizing that due to the ‘net net’ offer from Mr G, the offer would result in higher sale proceeds than the offer by Mr S.

• viii. On 31 October 2018 Mr S made a new offer of $575,000 gross...