White v Conyers, Dill & Pearman 1993 Civil Appeal No. 31

• Jurisdiction: Bermuda
• Court: Court of Appeal (Bermuda)
• Judgment Date: 12 May 1994
• Docket Number: Civil Appeal No. 31 of 1993
• Date: 12 May 1994

In the Court of Appeal for Bermuda

da Costa P. (Atg)

Astwood, J.A.

Kempster, J.A.

Civil Appeal No. 31 of 1993

Arthur White

Appellant

and

Conyers, Dill & Pearman (sued as a firm of attorneys practicing law in Bermuda)

Respondents

Mr. McMillan for the appellants

Mr. Riihiluoma for the respondents

Lee v ThompsonUNK (1989) 40 EG 13

Tai Hing v Liu Chong Hing BankELR [1986] AC 80

Foster v Outred & Co.UNK [1982] 2 All ER 753

Moore v FerrierUNK [1988] 1 All ER 400

Bell v Peter BrowneELR [1990] 2 QB 495

Intercontinental Resources Ltd v Dill 1981 Civil Appeal No. 14

Limitation Act 1984

Barristers Code of Professional Conduct

Loan agreement — Enforceable security — Negligence of law firm — Liability in tort — Strike out statement of claim — Failure to state a cause of action — Solicitors negligence — Cause of action in tort or contract — Limitation of actions

Reasons for Judaement

da Costa P. (Atg)

On the 18th March 1994 we dismissed the appeal with costs and intimated that we would give our reasons in due course. We now do so.

On the 25th day of September 1993 Ground J. struck out the writ and the Statement of Claim herein as vexatious and an abuse of the process, and dismissed the action with costs to the defendants. The basis for the learned judge's decision was that the Amended Statement of Claim failed to state a cause of-action which was not clearly statuted barred under the Limitation Act 1984. He further held that any cause of action would have been completely overtaken and expunged by the novation of the original note in July 1989 with which the defendants were not involved.

The appellant has appealed from the learned judge's decision. The Statement of Claim alleges that in or about 1980 Mr. White, the plaintiff (the ‘appellant’) retained the services of Mr. Maddocks a partner of the defendant firm, Conyers, Dill & Pearman (C.D.&P). In 1981 Mr. White wished to make a loan of US$200,000 to York Hannover (Bermuda) Ltd. (‘YHB’) who were about to embark on a time sharing development project in St.Georges. According to Mr. White the loan was to be secured by certain leasehold properties in St. Georges and by a pledge of shares in YHB: and so in 1981 Mr. White entered into an oral agreement with Mr. Kirsten von Wersebe, an executive officer of YHB. Accordingly he informed Mr. Maddocks of the terms of his oral agreement with Mr. von Wersebe and provided Mr. Maddocks with a copy of the Loan Agreement which he had obtained directly from YHB. Mr. White further stated that he retained Mr. Maddocks to review the Loan Agreement to ensure that it adequately represented the terms of the oral agreement which he had reached with Mr. von Wersebe. Mr. Maddocks made certain changes to the execution clauses of the Loan Agreement and it is alleged that he subsequently informed Mr. White that the loan agreement was in order. The Loan Agreement with Mr. Maddocks' amendment was executed by all parties on the 12th July 1981. It is to be noted that Mr. White did not personally enter into the Loan Agreement The lender under the Loan Agreement is a Netherlands Antilles' Corporation called Anjili Realty (N.V.) (‘Anjili’). That company in fact acted as trustee and/or agent for Mr. White as the lender under the agreement. In the event, nothing turns on the personality of the lender.

The gravamen of Mr. White's complaint is that a loan that was to be protected by adequate security turned out to be an unsecured loan. The Loan Agreement clearly does not make any provision to secure leasehold property in st. Georges in favor of Anjili the lender. Again the Loan Agreement does not pledge or secure any YHB shares or any other shares in favor of Anjili. Although clause 4.02 of the Loan Agreement, entitled ‘Enforcement of Security’ makes an anomalous reference to ‘the shares placed hereunder’ there is no further language in the Loan Agreement identifying the shares pledged or the terms of the pledge. In fact the only ‘security’ provided to Anjili under the Loan Agreement was a promissory note given by YHB to Anjili in the amount of US$200,000 which contained a provision for interest of the same terms as the Loan Agreement

Clause 1.02 of the Loan Agreement stated that the term of the loan was to be for a period of six years i.e. from 12th July 1981 until 12th July 1987. Clause 1.04 provided for annual interest at the rate of 15% per annum payable by YHB to Anjili.

It is plain on the evidence that after the execution of the Loan Agreement in July 1981 CD&P's involvement in the YHB loan transaction came to an end.

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