Scotiabank Trinidad and Tobago Ltd v Seltex Ltd et Al

• Jurisdiction: Trinidad & Tobago
• Judge: Bereaux, J.
• Judgment Date: 28 October 2005
• Neutral Citation: TT 2005 HC 147
• Docket Number: 2265 of 2004
• Court: High Court (Trinidad and Tobago)
• Date: 28 October 2005

High Court

Bereaux, J.

2265 of 2004

Scotiabank Trinidad and Tobago Limited

and

Seltex Limited et al

Appearances:

M. Morgan for plaintiff.

W. Seenath for defendants.

Civil practice and procedure - Striking out of defence and counterclaim — Defence ambiguously pleaded and embarrassing — Order that both defence and counterclaim be struck out.

Bereaux, J.

1 (1) By its summons of 10th November, 2004, the plaintiff applies to have struck out, the defendant's defence and counterclaim, on the grounds that they disclose no reasonable defence and that the cause of action is frivolous and vexatious and otherwise an abuse of the process of the court. The application is made under the court's inherent jurisdiction as well as Order 18, rule 19.

The plaintiff also seeks judgment in the sum of four million, six hundred and eighty-six thousand, eight hundred and fourteen dollars and eighty-four cents ($4,686,814.84) against the first defendant and as against the second, third and fourth defendants the sum of four million, nine hundred and sixteen thousand, and forty-seven dollars and twenty-seven cents ($4,916,047.27) both with interest at the rate of 12% per annum from 25th August, 2004.

2 (2) The plaintiff claims against the defendants the sum of four million, nine hundred and sixteen thousand and forty-seven dollars and twenty-seven cents ($4,916,047.27), together with interest at twelve percent from 25th August, 2004 until payment. The debt is alleged against the defendants as follows:

• (i) As to the first defendant, being monies due and owing on thirty-seven demand promissory notes made by the first defendant in the plaintiff's favour.

• (ii) As to the second defendant being monies secured by three guarantees in writing to secure the first defendant's indebtedness. The guarantees are dated 17th July, 1997, 9th October, 1997 and 10th February, 1998.

• (iii) As to the third and fourth defendants, being monies secured by three guarantees in writing respectively dated 17th July, 1997, 9th October, 1997 and 10th February, 1998 in respect of the first defendant's indebtedness.

3 (3) The first defendant's indebtedness arises under two credit facilities granted to the first defendant. The first, #950051 was made on 14th July, 1997 when the plaintiff accepted the defendant's offer of credit facilities in the amount of two million, five hundred thousand dollars ($2,500,000.00) by a letter of credit or revolving loan. These credit facilities were increased to four million dollars ($4,000,000.00) on 5th February, 1998. The first defendant used the credit facilities issuing thirty-six promissory notes during the months of January 1998 to June 1998 (inclusive), and October to December, 1998 and the months of January to July 1999.

4 (4) The second facility, #950128, was effected on 10th November, 1998 by which the plaintiff granted credit facilities to the first defendant in the sum of two hundred and fifteen thousand dollars. The plaintiff issued a promissory note of even date and agreed to repay that sum together with interest at a rate of two and a half percent (2- ¹/₂%) per annum over the plaintiff's current lending base.

4 (5) These facts are set out in the plaintiff's statement of claim at paragraph one to five and paragraph nine. Paragraph six gives full particulars of the thirty-six promissory notes issued by the first defendant. Paragraph nine pleads the additional agreement for two hundred and fifteen thousand dollars and the single promissory note.

The three written guarantees made by the second defendant are pleaded at paragraph 13 of the statement of claim. Those made by the third and fourth defendants are pleaded at paragraph 15.

6 (6) At paragraph. 7, the plaintiff contends that the first defendant defaulted in the payment of instalments on the revolving loan and the sum of four million, six hundred and eighty-six thousand, eight hundred and fourteen dollars and eighty-four cents ($4,686,814.84) remained due and owing as at 4th August, 2004 (particulars as to principal and interest are provided). This in spite of a demand for payment made by letter of 4th August, 2004 by the plaintiff's attorneys at law (paragraph. 8 of the statement of claim).

7 (7) The plaintiff also contends that the sum of two hundred and eleven thousand, three hundred and eighteen dollars and forty-three cents ($211,318.43) remained due and owing on the second loan as at 4th August, 2004. The sum remains unpaid despite a demand for payment made by its attorneys at law, by letter of 4th August, 2004.

The plaintiff also alleges that the second, third and fourth defendants have also failed to pay that outstanding sum despite demands made by its attorney at law by letters of 4th August. (See paragraph. 14 – second defendant and paragraph 16 – third and fourth defendants). The plaintiff also seeks its costs.

THE DEFENCE

8 (8) On 4th October, 2004 the defendants filed a defence to the plaintiff's statement of claim. The contents of that defence led to the plaintiff's summons of 10th November, 2004. By summons of 8th December, 2004, the defendants applied to amend their defence. That summons was fixed for hearing on 5th January, 2005 but was adjourned without a date as being wrongly listed. That summons was never formally argued before me but I have considered the application in the course of arriving at my decision. I have also considered the draft amended defence. The proposed amendments add nothing to the defence.

9 (9) The defendants do not specifically address the plaintiffs allegations as to the issue of promissory notes in paragraph 6 of the statement of claim. There is no outright denial that the promissory notes were issued. Rather, the defendants deny any default or that the sum of four million, six hundred and eighty-six thousand, eight hundred and fourteen dollars and eighty-four cents ($4,686,814.84) is outstanding. They say in paragraph 7 of the defence that:

“Assuming but not admitting that it owes the principal sum of $2,604,886.66 it is not liable to pay the interest thereon on account of the delay of the plaintiff in pursuing High Court Action No. 2701 of 2000, a fire claim brought by the plaintiff as assignee of an insurance policy in which the first and second defendants herein were also joined as plaintiffs.”

10 (10) The defendants then allege that:

• (a) The plaintiff has failed to pursue the claim in a timely manner to the prejudice of the rights of the defendants “thereby causing a phenomenal rise in the interest rate after a period of approximately five years and then pursuing a demand for the same.”

• (b) They gave “security by the assignment of their interest in a parcel of land described in deed # 17875 of 1993, which parcel of land is valued at one million dollars ($1,000,000.00) “.

• (c) Because of its delay, the plaintiff has caused the unnecessary rise in the interest rate which it ought to bear because it is unconscionable and wrong both in law and equity for it to insist on payment.

• (d) Alternatively, the insurance companies which issued the policy ought to be held responsible for the payment of the alleged sum and it is against these companies that the plaintiff should have brought this action.

• (e) Further, the second, third and fourth defendants contend that the entitlement of the plaintiff to the proceeds of the claim in HCA 2701 of 2000 as assignee has relieved the guarantors of liability. This action is ill-conceived and improper and ought to be stayed pending the determination of the fire claim brought in HCA 2701 of 2000 or in the alternative consolidated with it.

11 (11) Specifically, the third and fourth defendants contend that as guarantors they are secondarily liable after the plaintiff pursues its principal claim against the insurance companies and has also exhausted all other securities held by it as collateral for the alleged debt. They also contend that they are “relieved of the guarantees” by the failure/neglect of the plaintiff to pursue HCA #2701 of 2000 in a timely manner.

12 (12) The third and fourth defendants also contend that the plaintiff was negligent in pursuing the fire claim by not applying to have “the critical issue” determined and by not making an application for early trial which early hearing would have minimised the guarantors’ risk. It is not clear to me what that “critical issue” is. Additionally all the guarantors are “relieved from the guarantees” because of the plaintiff's conduct which has caused the recourse of the defendants by way of indemnity to be lost to their prejudice.

13 (13) The second, third and fourth defendants also contend:

• (i) that the sums claimed and payable under the policy of insurance were adequate to meet the principal debt.

• (ii) the plaintiff is estopped from pursuing its claim against them for the entire sum of even the principal sum and their obligations thereunder have now ceased or they are or ought to be discharged from liability.

14 (14) The first defendant also pleads that the action is statute-barred having been brought outside the statutory period of four years, which is the period prescribed by the Limitation of Actions Ordinance No. 36 of 1997. The second, third and fourth defendants also contend that by virtue of the debt being statute-barred their liability as guarantors ceased to exist and they are entitled to an absolute release.

15 (15) As to the sum of two hundred and fifteen thousand dollars ($215,000,00) the defendants admit credit facilities having been made available to them. (It is unclear whether they admit credit facilities up to the sum of two hundred and fifteen thousand dollars ($215,000.00) or simply the fact of credit facilities) but do not admit the sum claimed. They also admit receipt of the demand letter of 4th August, 2004. They deny owing the plaintiff the sum of four million eight hundred and ninety-eight thousand,...