The Caribbean Court of Justice (CCJ) has granted judgment in favour of the Canadian Imperial Bank of Commerce (CIBC) against Gypsy International Ltd and Royston Beepat to the tune of Bds$109,968 plus interest of Bds$214,091 and with interest of 12.75% on the former sum from June 11th 2012 until payment.
The total minus the interest to be paid would be around US$162,029 or roughly $34m.
In a ruling on November 12th 2015 in a case which stretched back to 1988, the CCJ also dismissed the cross-appeal of Gypsy and Beepat seeking Bds$300m for loss of profits and inadequate realization of assets following CIBC’s appointment of a receiver in accordance with a debenture.
The summary of the judgment said that the main issue in the appeal was whether the appointment of a receiver by CIBC, pursuant to a demand debenture, over the assets of Gypsy International (Gypsy) was properly made. The appointment was occasioned by a fire at Gypsy’s business premises at Six Roads, St Phillips on March 25th 1984 which ruined its machinery, equipment and stock. The summary said that subsequent to the fire and the arrest of its managing director, Beepat, charged with arson (though the charge was subsequently dropped), Gypsy’s insurance coverage was cancelled. The summary said that this left CIBC’s interests unprotected from April 7th 1984. Therefore CIBC, in accordance with clause 10(h) of the debenture, proceeded to appoint Grenville Phillips as Receiver on April 10th 1984, without making any demand for payment of the principal money due.
The CCJ summary said that Phillips took possession of the premises at Six Roads and proceeded with Gypsy’s co-operation to sell its stock, equipment and assets to meet the debt owed to CIBC. The receivership ended a little over four years later on May 30th 1988, without Gypsy’s debt to CIBC being fully repaid. On June 22nd 1988 CIBC then made a written demand on Beepat as guarantor of Gypsy’s debt for the payment of the outstanding monies which amounted to Bds$109,969.18 plus interest in the amount of Bds$214,091.60. With no payment forthcoming CIBC launched legal action against Gypsy and Beepat (the Respondents) on August 16th 1988. The Respondents on November 10th 1988 filed a defence and counterclaim, which the summary said was subsequently amended in November 2002. The counterclaim was for loss of profits and damages for trespass and conversion.
The Barbadian trial judge, Chandler J upheld the appointment of the Receiver and ruled that according to the terms of the debenture there was no requirement that CIBC make a written demand prior to exercising its power to appoint a receiver under clause 10(h).
According to the summary, the Barbados Court of Appeal (Sir Marston Gibson CJ and Burgess and Goodridge JJAs) then reversed this decision, ruling that a written demand is a legal requirement under the laws of Barbados which cannot be negated by a contractual agreement. The Court of Appeal further ordered that CIBC pay damages to Gypsy for the Receiver’s “inadequate realization of Gypsy’s assets and for loss of profits.”
CIBC and the Respondents then both filed appeals with the CCJ challenging the decision of the Court of Appeal. CIBC, the summary said, contended that the Court of Appeal erred in finding that the Receiver was not validly appointed, that CIBC was liable for the actions of the receiver and in awarding damages to Gypsy for the inadequate realization of assets and for loss of profits amounting to Bds$6,110,705.27. Gypsy for its part contended that the amount of damages and interest awarded by the Court of Appeal for loss of profits and inadequate realization of assets was low and should be in the region of Bds$300 million.
In its ruling, the CCJ held that the Receiver was validly appointed. It rejected the Respondent’s contention that the triggering events contained in clause 10 had to be construed in conjunction with clause 1, under which Gypsy covenanted to pay on demand all money due under the debenture.
The summary said that the Court reasoned that the Respondents would have been estopped from raising any challenge to the appointment of the Receiver. It noted that the Respondents raised no objection to the grounds for appointment of a Receiver and fully co-operated with Phillips during the period of the receivership, thereby giving rise to an estoppel convention.
“It would be unconscionable to allow the Respondents to take advantage of the mistaken shared assumption with CIBC which it encouraged namely that the Receiver was validly appointed and to seek damages amounting to almost (Bds)$300 million”, the court ruled.
The CCJ further said that even if CIBC’s purported appointment of the Receiver as Gypsy’s agent under clause 11 of the debenture was not valid, CIBC could not be held liable for damages stemming from the receivership. “The Court emphasised that the Receiver was not the agent of CIBC which had given him no authority to bind CIBC but was an independent operator responsible for his own conduct. Furthermore the trial judge found that the Receiver had acted honestly in discharge of his duties and had sold Gypsy’s goods for the best prices obtainable on the market”, the summary said.
The CCJ then dismissed the Respondents’ appeal in relation to the claim for damages for loss of profits and inadequate realization of assets. It pointed out that the trial judge found that the various assets sold by the Receiver were sold in good faith and at the best prices possible on the market. The CCJ ruling also noted that the trial judge also accepted the evidence of the Receiver that the damage caused by the fire was substantial.
The CCJ ruling then rapped the decision by the Barbados Court of Appeal.
“Although these findings were accepted by the Court of Appeal, it went on to award damages on the basis that the damage caused by the fire was minor and on the principle that in assessing damages every reasonable presumption may be made against the wrongdoer, relying on Wilson v Northampton and Banbury Junction Railway Co.5 The Court (CCJ) held that in so doing the (Barbados appeal) court fell into error. It reminded lower courts that appellate judges are not entitled to accept primary findings of fact from the court below and then draw inferences that are clearly opposed to those findings of fact. Furthermore the reliance on Wilson was misplaced given that the principle therein stated only operates where a person commits a wrong designed to make the exact ascertainment of damages impossible or extremely difficult and embarrassing. In the circumstances of this appeal it was the fire, not any actions of CIBC, which created challenges regarding the assessment of damages”, the CCJ said.
The Court therefore allowed CIBC’s appeal and dismissed the cross-appeal. The decision of the Barbados Court of Appeal was set aside and the order of the trial judge restored. Judgment was entered for the Appellant against the Second Respondent, Beepat for the claimed sum of Bds$109, 969.18 and interest of Bds$214,091.60. Pursuant to the consent order of the trial judge dated June 11th 2012, the CCJ said that the Second Respondent must pay interest at 12.75% on the sum of Bds$109,969.18 from June 11th 2012 until payment.
Roger C Forde, QC and Sherica Mohammed-Cumberbatch appeared for the Appellant, CIBC.
Sir Fenton Ramsahoye, SC, Alrick Scott, Roopnarine Satram, Chandrapratesh Satram and Mahendra Satram appeared for the Respondents Royston Beepat and Gypsy International Ltd.