The Royal Bank of Trinidad and Tobago Ltd v Ghany Safety Supplies and Tool Company Ltd et Al
| Jurisdiction | Trinidad & Tobago |
| Judge | Kangaloo, J. |
| Judgment Date | 03 January 2001 |
| Neutral Citation | TT 2001 HC 6 |
| Docket Number | H.C.A. No. Cv. S-249 of 1985 |
| Court | High Court (Trinidad and Tobago) |
| Date | 03 January 2001 |
High Court
Kangaloo, J.
H.C.A. No. Cv. S-249 of 1985
Mr. S. Maharaj S.C. and Mr. R. Kawalsingh Instructed by Mr. S. Seenath for the plaintiff.
Mr. K. Harrikissoon for the defendants.
Real property - Conveyance — Whether fraudulent — Plaintiff sought declaration that three conveyances of property were made by defendant to defraud plaintiff as creditor of defendant — Whether defendant could show lack of intention to defraud — Section 78 of Conveyancing and Law of Property Ordinance, Cap. 27 — Whether properties conveyed for valuable consideration — Judgment for plaintiff.
By three deeds of conveyance registered respectively as 18991/83, 18992/83 and 25452/83, the first two of which were executed on the 18th August 1983 and the last of which was on the 14th November 1983, the first defendant conveyed to the second defendant several parcels of land. The first conveyance consisted of 3 parcels of land viz: 45,000 sq. ft. at Retrench, 12,000 sq. ft. at Alexander Road, Vistabella and 7,300 sq. ft. at Marabella.
The consideration was $100,000. The second conveyance consisted of a parcel of land consisting of 2 lots at Palmiste measuring approximately 15,505 and 8,694 superficial feet respectively. The consideration was $360,000. The third conveyance was of a property known as 28 Alexander Road, Vistabella. The consideration was $350,000.
The plaintiff claims a declaration that these three conveyances were made by the first defendant to delay, hinder and/or defraud the plaintiff as a creditor of the first defendant and are void to the extent of $2,126,256.43 together with interest thereon. This figure represents the total of two judgments obtained by the plaintiff against the first defendant on the 21st November 1984, but which judgments arose out of a default by the first defendant and by an associated company Western Oil Ltd. on two promissory notes, which default occurred respectively in October 1982 and July 1983.
The thrust of the first defendant's defence is that it was fully entitled to deal with and/or dispose of the properties mentioned above because the plaintiff held a mortgage over 6 1/2 acres of the first defendant's land at Palmiste, which were valued at $2.9 million. The mortgage it contends, was upstamped as late as April 1983 to secure a total of $2 million. The first defendant therefore contends that the aforementioned transfers of property by the first defendant were to all intents and purposes perfectly proper and were in no way an attempt to defraud the plaintiff or anyone else.
In support of its case that the conveyances were made by the first defendant to defraud the creditors of the first defendant, the plaintiff pleads as follows:
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“(i) Steve Ghany was at all material times a director of the first named company and the second named company.
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(ii) The said Steve Ghany at all material times acted on behalf of the first named company with respect to the October Promissory Note, Western's promissory note and execution of the aforesaid deeds of conveyance.
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(iii) The said Steve Ghany executed Western's Promissory Note as director of Western Oil Equipment Limited aforesaid and further executed the aforesaid deeds 18991 of 1983 and 18992 of 1983. He further executed deed No. 25452 of 1983 as a director on behalf of the first I named company.
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(iv) (iv) The said Steve Ghany threatened to transfer out the assets of the first named company if the bank ‘push too hard “for its money.
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(v) The directors and/or Secretary of the first named company and the second named company had knowledge of the aforesaid debts or would have become aware of the same if such enquiries and inspections had been made as ought reasonably to have been made by them.
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(vi) The value of the aforesaid assets exceeded the sum of $1.5 million at the material dates.
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(vii) The second named company was formed for the purpose of taking ownership of the aforesaid lands in order to deprive the plaintiff of its moneys aforesaid.
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(viii) There was no consideration for the aforesaid deeds of conveyance and/or the directors and/or shareholders of the second named company were related to the said Steve Ghany and conspired with the said Steve Ghany to deprive the plaintiff of its money aforesaid.”
The first defendant denies these particulars of fraud except for the first three.
This action is brought pursuant to section 78 of the Conveyancing and Law of Property Ordinance Chapter 27 Number 11 - which provides as follows:
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“78(1) Save as provided in this section, every conveyance of property, made…, with intent to defraud creditors, shall be voidable, at the instance of any person thereby prejudiced.
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78(2)
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78(3) This section does not extend to any Estate or interest in property conveyed for valuable consideration and in good faith or upon good consideration and in good faith to any person not having at the time of the conveyance, notice of the intention to defraud.”
The success of the plaintiff's claim therefore depends on its being able to prove:
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(a) that the plaintiff was a creditor of the first defendant at the time of the conveyances;
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(b) that the first defendant conveyed the properties described with the intention to defraud its creditors;
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(c) that as a result of the conveyances the plaintiff suffered prejudice; and
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(d) that the properties were not conveyed in good faith or that there was no valuable or good consideration for them.
These are all issues of fact which must be determined by the evidence led at the trial.
In respect of issue (a), there is no dispute that at the time of the conveyances, the first defendant was heavily indebted to the plaintiff. The plaintiffs main witness, Mr. Afzal Khan who was the manager of the plaintiffs branch at Cross Crossing, San Fernando from the 1st September 1981 to the 6th August 1985 gave the history of the financial relationship between the first defendant, Western Oil Ltd. and Ghany Holdings Limited and the plaintiff. These three companies were operated by Mr. Steve Ghany who was the eldest child of Solomon Ghany who died on the 19th July 1975, leaving a wife, three sons and two daughters. At the date of his father's death Steve Ghany would have been around 17 years old.
Afzal Khan's evidence is that in December 1979 Western Oil Ltd. became a customer of the plaintiff with an overdraft facility as well as a letter of credit facility totalling $600,000. The security the bank held for this indebtedness was a fixed deposit in the name of Western Oil Ltd. in the sum of $90,000, a guarantee from the first defendant in the sum of $500,000 and a mortgage over the first defendant's property comprising 6 1/2 acres at Palmiste. In March 1980 the plaintiff increased the letters of credit and overdraft facility of Western Oil Ltd. as well as it guaranteed $60,000 for Western Oil Ltd. to a third party. For these additional borrowings, the bank upstamped the mortgage of the Palmiste lands to cover $500,000, as well as it took another guarantee from the first defendant for $780,000. On the 24th November 1981, Western Oil Ltd. was indebted to the plaintiff to the tune of $1.6 million, being an instalment loan of $1.1 million, an overdraft facility of $350,000 and a Letter of Credit facility of $150,000. This indebtedness was restructured in March 1982. The overdraft of $350,000 and the Letter of Credit of $150,000 were converted into an instalment loan of $551,200. Western Oil Ltd. thus had at this time two instalment loans, the first for $1.1 million and now this recent one for $551,200. By September 1982 both loans were in arrears, so that another refinancing took place. This took the form of a promissory note by Western Oil Ltd. for repayment to the first defendant on the 20th September 1982 of the sum of $2,082,488 by monthly instalments of $47,341 until the whole of the said sum was repaid. This promissory note was indorsed by the first defendant to the plaintiff, but Western Oil Ltd. defaulted, having made only the first payment of $47,341 on the 31st October 1982. Upon this default both Western Oil Ltd. as well as the first defendant became liable under the Western Oil Ltd. promissory note. Prior to the conveyances in August 1983 the first defendant was liable to the plaintiff for just over $2 million on the Western Oil Ltd. promissory note, thereby making the plaintiff bank a creditor entitled to judgment on the promissory note although no such steps were taken by the plaintiff until the 1st October 1984 when it sued both the first defendant and Western Oil Ltd. for $1,527,337.84 and obtained judgment for that sum together with interest at the rate of 13% per annum from the 1st November 1984 together with costs of $139.25. This judgment was entered in default of appearance and stands to date as there is no evidence that any steps were taken to have it set aside. The plaintiffs witness, Afzal Khan referred to Document 60 of the agreed bundle of documents to show how the judgment figure was arrived at.
Prior to the conveyances in August 1983, there was also in existence a promissory note from the first defendant to the plaintiff issued on the 12th October 1981 by which the first defendant promised to pay to the plaintiff the sum of $784,020 by monthly instalments of $13,067 until the entire sum was paid. The first defendant defaulted on the payment in or around July 1982, thereby making a total balance of $692,551 then due and payable. However other payments were subsequently tendered and accepted so that as at August 1983, the time of the conveyances a sum of $639,414 was due and payable from the first defendant to the plaintiff. This information is obtained from Document 59 of the agreed bundle of documents. The plaintiff instituted proceedings...
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