-Guyana Court of Appeal had turned down application
The Caribbean Court of Justice (CCJ) recently granted special leave to LOP Investments to appeal a case which pertains to the validity of debentures relative to Roman Dutch law provisions after a request before the Guyana Court of Appeal (GCA) for leave to appeal to the CCJ had been turned down.
LOP Investments had argued that the appeal lay as of right under section 6(a) of the CCJ Act as the matter in dispute was of the value of more than $1,000,000 and the CCJ concurred with this. The court held that the Court of Appeal having found that the value of what was in dispute exceeded $1,000,000, ought to have granted the leave to appeal to which the applicant was entitled. The CCJ in its May 1st, 2009 judgment also adverted to the need for an authoritative statement by a final court on how debentures operate in a mixed system of Roman Dutch law, common law and statute law in Guyana.
In the application before the CCJ, LOP Investments was the appellant while the respondents were Demerara Bank Limited (DBL), Garrett Ward and Ramon Gaskin.
The case had its genesis in two debentures issued by LOP Investments in favour of DBL totalling $100M. LOP defaulted in repayment and DBL acting on the strength of the debentures appointed Ward, and when he withdrew, Gaskin to be the receiver of LOP’s assets which comprised in the main a rice mill.
In September 2005, LOP filed a writ challenging the validity of the appointment of the receivers and the lawfulness of the actions of Gaskin. DBL countersued on November 3rd, 2005 complaining of allegedly unlawful interference. By consent the two actions were consolidated and Justice Winston Moore ruled in favour of the respondents and ordered LOP to pay damages to Gaskin to the tune of $350,000 and costs to the respondents in the sum of $300,000.
LOP then moved to the Guyana Court of Appeal where then Justice of Appeal (J.A.) Charles Ramson, now Attorney General, delivering a decision on behalf of a panel, threw out the objections of LOP to the validity of the debentures and the appointment of the receivers.
LOP then applied to the Court of Appeal for leave to appeal to the CCJ on the grounds that an appeal lay as a right under Section 6(a) of the CCJ Act as the matter in dispute was more than $1M or pertained to property of equivalent value and secondly that the question involved was one which by virtue of its great general or public importance or otherwise ought to be tendered to the CCJ.
On behalf of the Court of Appeal panel comprising himself, J.A. B.S. Roy and J.A. Yonette Cummings-Edwards, J.A. Ramson refused leave to appeal to the CCJ on the ground that the appeal “did not raise a genuinely disputable issue of law or fact”. The CCJ disagreed with this. In its judgment on May 1st, the CCJ said that JA Ramson treated the objections of the applicant “as manifestly unsound but there was no reasoned refutation of them”.
The CCJ ruled that the decision was wrong for two reasons as the Guyana Court of Appeal having found that the case fell within the purview of section 6 (a) since the value of the property exceeded $1M was not entitled to deny leave to appeal on the ground that LOP’s case was so weak that it could not raise an issue of law or fact that was “genuinely disputable”. Secondly, the CCJ said that although the issue did not properly arise, the regional court said it did not share the view of the GCA that it was “overwhelmingly obvious” that the applicant’s case must be thrown out.
Referring to J.A. Ramson’s recourse to the concept of a “genuinely disputable” issue, the CCJ went on to explain why it believed that that argument had no relevance in the instant case. The GCA in support of its decision to refuse leave had listed a passage from a CCJ decision delivered by Mr Justice Nelson in Griffith v The Guyana Revenue Authority where the matter of a genuinely disputable issue arose. The CCJ however pointed out that paragraph cited by J.A. Ramson had to be taken in its full context and reciting it, the CCJ noted that Mr Justice Nelson had stated unequivocally that in an as-of-right case the Court of Appeal was not entitled to refuse leave because it viewed the appeal to be without merit. “But this is exactly what the Court of Appeal did in this case. We wish to reaffirm Mr Justice Nelson’s clear and simple statement and to emphasise that nothing contained in the rest of the passage quoted serves to derogate from it in any way”.
“With regard to the category of case with which we are concerned here, that is, that prescribed by section 6 (a) of the CCJ Act, we have no hesitation in holding that once the proceedings are civil in nature and the matter in dispute is of the value of the prescribed amount or the appeal involves a claim or a question respecting property or a right of equivalent value, leave to appeal must be granted. In this category of case there is no requirement that the applicant for leave to appeal must demonstrate a genuinely disputable issue of fact or law”, the court said in its judgment delivered by President of the court Mr Justice Michael de la Bastide.
The CCJ said it did not exclude the possibility that the GCA may in rare cases take action to prevent an abuse of the process of the court but for this to occur something more than a perceived lack of merit in the appeal would have to be in evidence.
The regional court therefore held that leave ought to have been granted under section 6 (a) and there was therefore no need to decide whether leave should have been granted under section 7 (a) but it said that the GCA might well have granted leave under this section considering the need for an authoritative statement on the mixed legal system as it related to the issue at hand.
Discretion
Delving further in to its reasons for granting special leave, the CCJ said that although the GCA wrongly refused leave to appeal the CCJ still had a discretion to grant or to refuse leave. The CCJ said it weighed in favour of granting leave in the provisional view that the applicant’s case is not as hopeless as the GCA thought and also “because there does not appear to have been to date any authoritative and reasoned exposition by any court in Guyana of the impact of the Civil Law of Guyana Act and the Companies Act on those provisions of a debenture which create, and provide for the enforcement of, a security interest”. It added that irrespective of the outcome of the appeal it would be beneficial to both the legal profession and the commercial sector here for definitive answers to be provided on some of the questions raised by the applicant.
LOP’s case revolves around the argument that Roman Dutch law provisions which govern the creation and enforcement of a conventional mortgage and are expressly preserved by Section 3(d) (ii) of the Civil Law of Guyana Act are inconsistent with the aspect of debentures which translate into a hypothecation (assigning as security under an arrangement) of the company’s property.
The applicant further argued that creation of a conventional mortgage according to the law of Guyana involves the passing of a transport before the Registrar of the Supreme Court, notice of which must be published in the Gazette wherein a right is given to other creditors of the proposed mortgagor or others interested in the property to lodge an opposition. Enforcement of such mortgage in the laws of Guyana involves the bringing of foreclosure proceedings by the mortgagee and the securing of an order for sale from the court.
The CCJ added that “It was argued that in so far as a debenture purports to create a charge over land, which may be enforced by an out-of-court receiver exercising a power of sale conferred on him by the debenture, it does not comply either in respect of its creation or its enforcement, with the requirements of Guyana law and therefore is void”. The applicant said this was notwithstanding section 234 of the Companies Act dealing with debentures which while it requires advance publication does not appear to give the right to anyone to oppose its registration.
The regional court added that it was argued on the applicant’s behalf that “Just as it was held to be impossible to evade the procedural requirements for creating and enforcing a legal mortgage by creating an equitable mortgage by a deposit of title deeds…so too it is argued that equity cannot be invoked in order to enable a debenture to be used to achieve the same result”.
The CCJ said that while it would not be appropriate to express an opinion as to the strength of the argument it was not prepared to deem the applicant’s case to be unarguable.
The CCJ granted the leave to appeal on the condition that the applicant provide security for the respondents’ costs in the sum of $1M by a deposit of cash within 14 days.
Attorney-at-law Sanjeev Datadin appeared for LOP Investments and Vidyanand Persaud and Parmanand Mohanlall for Demerara Bank and Ward.
