1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 IN THE GRAND COURT OF THE CAYMAN ISLANDS IN THE CIVIL DIVISION Cause No: G039S/2012 BETWEEN: DAVID MORRISON PLAINTIFF AND: SOLOMON HARRIS (A FIRM) DEFENDANT ,-,,-' , Appearances: Mr. Kenneth Farrow Q.c. iIlstqided by Mr. Stephen Symons of Bodden &':Bodden Before: Heard:
on behalf of the Plaintiff . > . . ., Mr. Thomas Lowe Q.C. instructed by Mr. David Herbert ofHarneys on behalf of the Defendant The Hon. Mr. Justice Charles Quin 13th and 14th June 2013 JUDGMENT On the 21" September 2012 the Plaintiff issued a Writ of Summons claiming damages for professional negligence arising out of the Plaintiff's instructions to the Defendant to act for him in relation to his proposed purchase of an undeveloped Lot ("Lot 12") and the subsequent construction of a detached residence thereon at West Bay Beach South, Block 12C, Parcel 394/3HIO (subsequently re-numbered as Parcel 451/3HIO) being another development forming part of the Ritz Carlton complex and known as The Deckhouses at the Ritz Carlton ("the Deckhouses") !Ritz Carlton Deckhouses # 12. Judgment. David Morrison v. Solomon Harris Cause 00395/2012. Coram QUin J. 30.8./3. Page 1 0/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
On the 12th October 2012 the Plaintiff filed his Statement of Claim, claiming that the Defendant had failed to exercise the necessary skill and care expected of it in relation to the acquisition of property in the Cayman Islands and further, that it had breached a similar duty of care in tort. The Plaintiff set out the following particulars of negligence on the part of the Defendant:
The Defendant failed to pay sufficient attention to the terms of the Reservation and failed to appreciate that the sums held in escrow by Cesar! and Maples and Calder were not intended to serve as, or as part of, the purchase price for the Lot but, as confirmed by the "Services Agreement", were to be transferred to, in the event, the Contractor;
The Defendant pennitted the Plaintiff to enter into an agreement, namely, the "Purchase Agreement", which was drafted on the incorrect assumption that Cesar held a sum ofUS$600,000.00 in escrow pending completion [of The Deckhouses #12] when it would be released to Cesar as the purchase price for the Lot; iii. The Defendant failed to appreciate, although the same was perfectly plain from a consideration of the Reservation' and the Services Agreement', that the purchase price of US$600,000.00 was to be paid by the Plaintiff on the I" June 2011; , Cesar Properties Ltd., the vendor of the proposed condominiwn at West Bay Beach South, being a development fanning part of the Ritz Carlton complex known as Secret Harbour. 2 A Reservation Agreement dated the 24th March 20 II and executed on or about March 20 II by the Plaintiff between Orion Developments Ltd. ("Orion"), Cesar, the Plaintiff and the Plaintiffs wife. 3 The Plaintiff, in his Amended Statement of Claim at paragraph 9, states that on the 25th March 20 II the Defendant obtained drafts of two agreements, one of which was an Agreement for Services ("Services Agreement") between Deckhouses Construction Company Ltd. ("the Contractor") and the Plaintiff. Judgment. David Morrison v. Solomon Harris Cause G0395/2012. Coram Quin J. 30.8.13. Page 2 0/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
iv. Although aware that the Plaintiff was contractually obliged to pay an aggregate sum of US$2 million on the I" June 20 II, the Defendant failed to advise the Plaintiff that, of that aggregate sum, US$600,000.00 should be paid to Cesar and not to the Contractor; v. The Defendant failed to obtain and provide to the Plaintiff any wire transfer instructions which would enable the Plaintiff to pay the purchase price to Cesar as opposed to the Contractor; vi. The Defendant failed to take any steps prior to the Plaintiff's payment of US$2 million, pleaded above, or at all, to ensure that the purchase price was paid to Cesar, which payment was a necessary pre-condition of obtaining the release of the Lot from the Charge; vii. The Defendant failed to communicate with the Chargee, prior to the said payment of US$ 2 million with a view to ascertaining the terms upon which it would release the Lot from the Charge; viii. The Defendant failed, prior to such payment, to take any steps to ensure that the Chargee's terms were met and, in particular, since those terms would inevitably require that the whole or some part of the purchase price was paid to the Chargee, failed to ensure that such payment was made in exchange for the release of the Lot from the Charge. The Plaintiff claims that he has suffered loss and damage, namely, the sum of US$ 3 million which he had paid out and obtained nothing in return, as well as further damages. Judgment. David Morrison v. Solomon Harris Cause 00395/2012. Coram Quin J. 30.8.13. Page 3 0/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
The Plaintiff's application for Summary Judgement filed on the 4th December 2012 is supported by his First Affidavit sworn on the 11th December 2012 and his Second Affidavit sworn on the 23'd May 2013. Tn opposition to the Plaintiff s application for Summary Judgement the Defendants rely on the First Affidavit of Jan Jamieson CMr. Jamieson"), sworn on the 15th May 2013, and on the Second Affidavit ofMr. Jamieson, sworn on the 11th June 2013. Leading counsel, Mr. Farrow Q.C. on behalf of the Plaintiff has said that his client is not pursing paragraph 23.7 in the Statement of Claim. On the 30th May 2013, the Plaintiff amended his Statement of Claim to include an additional breach at paragraph 23.(2a) which reads: i. The Defendant failed to ensure that Cesar retained US$600,OOO.00 out of the US$718,000.00 held in escrow, but arranged for the whole of such US$718,000.00 to be transferred to the Contractor. Judgment. David Morrison v. Solomon Harris Cause G0395/2012. Coram Quin J. 30.B.13. Page 4 of43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
II.
FACTS OF THE CASE In March 2010 the Plaintiff and his wife, who are Canadian citizens, instructed the Defendant in relation to their proposed purchase and construction of a condominium at West Bay Beach South, Block 12C, Parcel No. 394/3H9, being a development forming part of the Ritz Carlton complex and known as Secret Harbour. On the 16th April 20 I 0 the Plaintiff and his wife signed an agreement which dealt with the construction and sale of Secret Harbour. On the IStl, March 2011 Mr. Jamieson forwarded to the Plaintiff an email he had received trom Michael Ryan ("Mr. Ryan"), which stated that the Secret Harbour development was to be "temporarily put .... on hold'. As the Plaintiff states in his First Affidavit: "[Mr. Ryan 's] email went on to offer purchasers the return of their money or the possibility of investing in an alternative Ritz Carlton development." However, by this time, the Plaintiff had paid a total of US$718,000.00 in respect of the Secret Harbour purchase, of which US$179,SOO.00 was held by Cesar's then attorneys, Maples and Calder, and the balance of US$S38,SOO.00 was held on escrow by Cesar. The Plaintiff discussed the content of the email with Mr. Jamieson and, on the 21" March 2011, instructed Mr. Jamieson to send an email to Mr. Ryan/Cesar's attorneys, Maples and Calder - requesting the return of his money. Judgment. David Morrison v. Solomon Harris Cause G0395/2012. Coram QulnJ. 30,B.13, Page 5 0/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
On the 24tl' March 2011, the Plaintiff said he had a further discussion with a representative of The Residences at The Ritz Carlton, and, as a result of that discussion, the Plaintiff made an infonnal offer for an nndeveloped Lot - Lot 12 - which formed part of the Deckhouses Development in the Ritz Carlton complex. The Plaintiff said that on the 24'" March 201 I he spoke to Mr. Jamieson and provided him with brief details of the offer relating to the Deckhouses Development. The Plaintiff states that he cannot remember if the Deckhonses were expressly mentioned, but the conversation proceeded on the basis that the Defendant would be instructed to act, just as it had been in relation to the Secret Harbour purchase/project. The Plaintiff said that on the 25th March 2011 Mr. Jamieson was sent a copy of the Reservation Agreement. It was the Plaintiffs case that on the 28'" March 2011 the Plaintiff executed the Reservation Agreement however, in his Second Affidavit the Plaintiff accepts that he probably signed the Reservation Agreement by the time it was sent to Mr. Jamieson on the 25tl' March 20 11. The Plaintiff returned the executed Reservation Agreement to Cesar. By the Reservation Agreement, the Plaintiff confirmed his intention to purchase a Deckhouses Lot from Cesar, and, at the same time, enter into a separate contract with a company chosen by Orion/Cesar. As the Plaintiff stated in his First Affidavit, Orion/Cesar chose Deckhouses Construction Company Ltd. (a Contractor) for the subsequent construction of a dwelling house on Lot 12. Judgment. David Morrison v. Solonton Harris Cause G039512012. Coram Quin J 30.8.13. Page 60/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Cesar's then attorneys, Maples and Calder, held US$I79,500.00 (although it was incorrectly stated to be US$I74,550.00) and Cesar already held US$538,500.00, making the total US$718,000.00. These sums totalling US$718,000.00 were to be paid by the Plaintiff to Cesar and were described as a "non-refundable deposit". By the Reservation Agreement, signed by the Plaintiff and his wife, Lot 12 was reserved at the price ofUS$4,500,000.00, for fourteen (14) days from the receipt by Cesar of the original or faxed copy of the Reservation Agreement signed by the Plaintiff. That sum was payable in accordance with the terms of Schedule 1 to the Reservation Agreement. The Plaintiff agreed to instruct Cesar's attorneys, Maples and Calder, to transfer the funds held by them - US$I79,500.00 - to Cesar. The Plaintiff, in his First Affidavit stated: "On execution of the agreement to purchase Lot 12, the deposit should be paid to Deckhouses Construction Company." A Payment Schedule as set out in Schedule 1 to the Reservation Agreement was outlined as follows: i. US$282. 000 - Payment 1: Schedule 1 to the Reservation, provided that US$282,000.00, which, with the US$718,000.00 totalled US$I million, and was payable on the 1" May 2011 and expressed as being Payment One for the Agreement for Services. ii. US$600.000.00 - Payment 2: This was payable on the 1" June 2011 and was expressed to be Payment Two for the Deckhouse Lot Contract. Judgment. David Morrison v. Solomon Harris Cause G039512012, Coram Quin J. 30.8.13. Page 70/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
iii. US$1.400. 000. 00 - Payment 3: This was also payable on the 1" June 2011 and was expressed to be "Payment Three for the Agreement for Services" . IV. US$1.500. 000. 00 - Balance: This was payable on the I" June 2012 and was expressed to be the final balance due for Agreement for Services. On the 29'h March 2011 Mr. Jamieson emailed the Plaintiff, fonnaJJy accepting the Plaintiff's instructions to act on his behalf in relation to his purchase of Lot 12 and the construction of the condominium. On the 25tl' March 2011 the Plaintiff avers that Mr. Jamieson received drafts to two Agreements. One was a Strata Lot Purchase Agreement ("the Purchase Agreement") between Cesar and the Plaintiff. The other was an Agreement for Services ("Services Agreement") between Deckhouses Construction Company Ltd. ("Deckhouse Construction") and the Plaintiff. At this stage Maples and Calder no longer acted for Cesar. Cesar and Deckhouses Construction Company had appointed Mr. J. Samuel Jackson ("Mr. Jackson") as their attorney. On the 4'h April 20 II Mr. Jamieson obtained certified copies of the Land Register relating to Lot 12. Under the proprietorship section of the Land Register it was stated that there could be no transfer without the consent of the Chargee; Column Financial Inc. ("Colunm"). On the 4'h April 2011 Mr. Jamieson wrote to the Plaintiff stating that he had reviewed the Title to the land, the Agreement for Sale and Purchase and the associated docmnents "". which, after some negotiation are now in agreed form." Judgment. David Morrison v. Solomon Harris Cause G039512012. Coram Quin J. 30,8.13. Page 80f43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 21 22
In this letter Mr. Jamieson also stated that the Lot was subject to a mortgage, but that he (Mr. Jamieson) would ensure that this was removed from Lot 12 at the time it was transferred to the Plaintiff. The Purchase Agreement between Cesar and the Plaintiff was dated the 4th April 20 II and was executed by the Plaintiff on the 16th April 2011 - having been executed on the 5th April 2011 by Cesar. The Services Agreement between Deckhouses Construction and the Plaintiff is dated the 25th March 20 II and was executed by Deckhouse Construction on the 5th April 20 II and by the Plaintiff on the 16'" April 20 II. By Clause 2, the obligation of Deckhouses Construction was expressed to be subject to the fulfillment by the Plaintiff of all the conditions and obligations set forth in the Purchase Agreement and the Services Agreement. By Clause 3.3. by the Services Agreement the Plaintiff agreed to pay to Deckhouses Construction, the sum specified in the Payment Schedule - previously defined as " Schedule C" and outlined at paragraph 21 above. Schedule C sets out the following payment schedule: a. US$282,000 - Payment 1- (being $1,000,000.00 less $718,000 from the Secret Harbour Payments, the receipt of which the vendor, Cesar, hereby acknowledges) due on or before the r' May 2011; b. US$1,400,000.00-due on or before the 1" June 2011; c. US$1,500,000.00 - Balance, due on or before the 1" June 2011 (less any amount held back pursuant to Clause 3.4 of the Agreement). Judgment. David Morrison v. Solomon Harris Cause 00395/2012. Coram Quin J. 30.8.13. Page 9 0/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 22 23
The purchase price of the property, Lot 12, was US$600,000.00. The Plaintiff states in his affidavit that Cesar held that sum pursuant to a non-refundable Reservation, and that, upon the execution of the Purchase Agreement, Cesar would continue to hold the sum as a deposit, until completion, at which time it would be paid to Cesar. Cesar was holding the sum US$718,000.00 - being the money paid to them by the Plaintiff, and to their first attorneys, Maples & Calder. However, this statement is inconsistent with the Reservation Agreement, which, itself, provided that this sum was to go to Deckhouses Construction Company. The Plaintiff was not aware of this inconsistency and the Plaintiff also alleges that Mr. Jamieson, on behalf of the Defendant, did not draw this to his attention. The Plaintiff and Cesar agreed that the Plaintiff would simultaneously enter into the Services Agreement with Deckhouses Construction which was Cesar's designated contractor. Under Clause 2 the Plaintiff agreed to pay the price in the installments and within the time period stated in the Purchase Agreement. As the Plaintiff stated in his affidavit he agreed to pay, " ... the price in the installments and within the time periods stated in this Agreement. All payments and the Balance shall be paid by a wire transfer of funds to the following Butterfield Bank account, giving details of an account in the name of the Contractor, [Deckhouses Construction). " Clause 3.1 provides that completion should take place within 14 days of the satisfaction of all conditions in the Purchase Agreement, and in any event not later than 1" June 2011. Clanse 5.2 states that Cesar undertakes to discharge, on or before completion, any financial charge registered against the property. Judgment. David Morrison v. Solomon Harris Cause G039512012. Coram QuinJ. 30.B.13. Page 10 0[43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 21 22
On the 20tl• April 2011 Mr. Jamieson wrote to Cesar's previous attorneys, Maples and Calder, asking them to transfer the sum ofUS$718,000.00 which they held on account as part payment for the Secret Harbour purchase, in order to be put towards the Plaintiff s purchase of Lot 12. That sum was to be transferred to the account in the name of Deckhouses Construction. Cesar's attorneys, Maples and Calder confirmed that they held US$179,500.00 as the deposit sum and that the rest of the funds had been held directly by Cesar. Mr. Loutas of Maples and Calder stated that, pending instructions from Cesar he would make arrangements for the deposit sum to be transferred into the account set out in Mr. Jamieson's email. Furthermore, Mr. Loutas stated that he would request Cesar to transfer the funds to the [Butterfield] account towards the purchase of a Deckhouse by the Plaintiff. Also on the 20th April 2011 Mr. Ryan's PA, Ms. Frances Doud ("Ms. Doud"), wrote to Mr. Jamieson stating that the Secret Harbour escrow account shall transfer the funds into the Deckhouses Construction account. Also on the 20th April 2011 Mr. Jamieson wrote to Mr. Jackson - the attorney now acting for Cesar and Deckhouses Construction, to state that he was in receipt of the fully signed documents. Mr. Jamieson confirmed that Mr. Jackson, had more than the purchase price for the land and, as there were no outstanding issues, he looked forward to completion and to receiving a draft transfer for review in due course. On or about the 21 ,t April 2011 the Plaintiff paid US$282,000.00 to Deckhouses Construction, using the wire transfer instructions set out in the contract. Judgment. David Morrison v. Solomon Harris Cause 00395/2012. Coram Quin J. 30.8.13. Page 11 0/43 1
The Plaintiff stated in his affidavit that both Mr. Jamieson and Mr. Jackson, acting 2 on behalf of Cesar and Deckhouses Construction, proceeded to completion on the 3 mistaken assumption that Cesar would continue to hold the purchase price as the 4 sums which Cesar originally held were transferred to its designate construction 5 company, Deckhouses Construction Company. 6
On the 23'd April 2011 Mr. Jamieson wrote to Norman Klein ("Mr. Klein") of 7 Appleby, attorneys at law, stating that he understood that Mr. Ryan had signed 8 some transfers and, as the funds had now been paid over, could he send the 9 transfers over for registration. 10
Sometime between the 21't April 2011 and the 27th April 2011 Mr. Klein and/or 11 Cesar sent the transfer docnment for Lot 124 confirming that Cesar, in consideration 12 ofUS$600,000.00, was then transferring to the Plaintiff the said property. It has not 13 been verified, but it would appear that Mr. Ryan signed on behalf of Cesar and for 14 Reid Services Ltd.' 15
On the 27th April 2011 Mr. Jamieson sent the transfer of land to the Plaintiff, asking 16 him to sign where it said, "signed by the transferee." 17
The transfer of Lot 12 is dated the 3,·d May 2011, whereby Cesar, in consideration 18 of the payment by the Plaintiff of US$600,000.00 transferred to the Plaintiff the 19 said property. The Plaintiff points out in his affidavit that he put the Defendant in 20 funds in respect of stamp duty, land registration fees and the firm's professional 21 fees. 4 As defined in paragraph 1 of this Judgment 5 Reid Services Limited was the Secretary for Cesar. Judgment. David Morrison v. Solomon Harris Cause G0395/2012. Coram QUin J. 30.B.13. Page 12 0/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
6 Lot 12 On the 26th May 2011 the Plaintiff wrote to Mr. Ryan's PA, Ms Doud, confirming that he would be wiring the next payment. Ms. Doud replied to the Plaintiff on the same day and stated that she would look out for the funds and get a statement out to the Plaintiff when the funds were received. Ms. Doud confirmed that Mr. Ryan had been working with the team on determining a schedule for the completion of the Plaintiff's home. Ms. Doud confirmed that she would communicate further on this in the following week. Ms. Doud confirmed that the next payment would be for the Lot', and stated that she was sure that Mr. Jamieson would assist the Plaintiff in getting the transfer done. On the 31" May 2011 Ms. Doud wrote to the Plaintiff confirming receipt of the funds. The Plaintiff stated in his First Affidavit that he paid US$2 million by wire transfer in accordance with the wire transfer instructions set out in the purchase agreement. The Plaintiff did not make any distinction between US$600,000.00 and US$I,400,000.00 and alleges that neither did Mr. Jamieson ever advise that he should make a distinction between the two sums. The Plaintiff's evidence is that Cesar's recently appointed Receivers have confirmed that there is no evidence of any payment by Deckhouses Construction, the Contractor to Cesar of US$600,000.00 or any other amount subsequent to the 31 ,t May 2011. On the 7th June 2011 the transfer for Lot 12 from Cesar to the Plaintiff was submitted to the Land Registry for registration. The Plaintiff's evidence is that the documents were returned on the 8th June 2011 - with the Land Registry stating that a consent letter was required from the Chargee. Judgment. David Morrison v. Solomon Harris Cause G0395/2012. Coram QlIin J, 30.B.13. Page 13 0/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
On the 9th June 2011 Mr. Jamieson received the documents back from the Land Registry and wrote to Mr. Jackson - the attorney acting for Cesar and Deckhouses Construction Company, under the subject "Cesar Properties to Morrison". Mr. Jamieson asked Mr. Jackson whether he (Mr. Jamieson) could send over the transfers to Mr. Jackson to have the changes to the Parcel Number initialled and to deal with "items 2, 4, and 5." Mr. Jackson, acting on behalf of Cesar, wrote back on the 9"' June 2011 and copied his communication to Mr. Ryan and Ms. Doud, stating: "We will do what needs to be done to sort this out." Mr. Jackson stated that he could not understand why the Planning Department had put a restriction on the register and stated: "I don 't think they have a right to register a restriction anyhow (and I have told them that many times now)." On the consent letter from the Chargee Mr. Jackson asks: "Didn't we do a discharge of Charge for the Lot?" Mr. Jackson goes on to state: "In any event we will get it sorted for you. Please send the forms to me (or Frances [Doudj) at your earliest convenience." On the 10th June 2011 Mr. Jamieson writes to Mr. Jackson and thanks him for his assurances and states: "I will get the documents over to you now. Looking at the file, I don't think I ever received discharges which is an oversight on my part." On the 10th June 2011 Mr. Jackson replied to Mr. Jamieson stating: "I am pretty sure we requested the discharges from Appleby, but in any event we will get them. It might be best to send the documents to Frances [Doud}. ... " Judgment. David Morrison v. Solomon Harris Cause G0395/2012. Coram Quin J. 30.8.13. Page 14 of43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
On the IOlh June 2011 Mr. Jackson wrote to Mr. Jamieson, copied to Ms. Doud, stating: "It appears that the discharges were never issued by Appleby and we have now asked for them to be produced ASAP." Mr. Jamieson acknowledges receipt of this and thanks Mr. Jackson for his help. On the 8 1h June 20 II the Registrar of Lands wrote back with a "Documents Missing Record" and "Check List" and stated the following: i. Amend Parcel Number to state 394/3HlOIH12 not 394/5H1010 ii. Please state transferor or capacity in front of forms There is a stay to be registered and we will block the registration for 14 days There is also a restriction from 'Planning' which needs to be removed. v. Consent letter required from the Chargee. On the 1'1 July 2011 Mr. Jackson writes to Mr. Jamieson and copies his letter to Ms. Doud and Mr. Ryan stating: "We have been chasing Appleby, to no avail as yet, but will agitate vigorously again today to get the discharges from themforthwith." Also on the I" July 2011 Mr. Jackson writes to Mr. Jamieson and states: "We were under the impression that Appleby were obtaining the discharges from the time when the transfer forms were signed (1 believe that Norm [Mr. Klein] actually notarized those) until they came back recently to say that they needed a list of the closing costs." Mr. Jackson confirms to Mr. Jamieson that Fran (Ms. Doud) is on their case, but "it might help if you called Norm and asked him [Mr. Klein] to expedite it." Judgment. David Morrison v. Solomon Harris Cause 00395/2012. Coram Quin J. 30.8.13, Page 15 0/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 20 21 22 23
Also on the I" July 20 II Ms. Doud writes to Wendy Denman ("Ms. Demnan") at Appleby - copied to Mr. Ryan, Mr. Klein and Mr. Jackson regarding Deckhouse #12 said: "Can you please provide an update on this? .. The purchaser [i.e. the Plaintiff] is getting upset that we have not been able /0 provide the release as yet (Our first request was 10th June). ,. On tbe I't July 20 II Mr. Jamieson writes to Mr. Jackson confirming that Mr. Klein of Appleby has told him that everything is with your client's bank, Colunm, for processmg. On the I" July 2011 Mr. Jamieson writes to Mr. Jackson asking him to put pressure on Mr. Klein. Mr. Jamieson states that he hopes that we can still use the existing documentation before the need to prepare a new batch of transf~rs .. On the 1 ,t July 2011 Mr. Jackson tells Mr. Jamieson that the hold was caused because Column had recently been sold to another entity and adds: "It looks like it is moving now ... but if the both o/us keep Norm [Mr. Klein} under some pressure we should get it." Ms. Doud writes to Appleby copying Mr. Ryan and Mr. Jackson saying "Please provide an update the purchaser [PlaintifJJ is getting upset that we have not been able to provide the release as yet." Ms. Doud again points out the first request for the release was the 10th June 2011. On the 21" July 2011 Mr. Klein states that the security has been transferred to a new security agent so they cannot obtain the discharges until the transfer of Charge has been registered. Mr. Klein goes on to state that nobody seems to think that there would be an issue and that he was unaware that the Charge was being transferred. Judgment. David Morrison v. Solomon Harris Cause G0395/2012. Coram QUilt J. 30.8.13. Page 160/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 25
On the same date Mr. Jamieson writes to Mr. Klein asking him, "".have you had any joy in getting the discharges?" On the 29th July 2011 The Plaintiff writes in response to Ms. Doud's email of the 26th May 2011 which said that Mr. Ryan was working with the team in getting a schedule together for the completion of the Plaintiff's home. The Plaintiff stated that he has not received any kind of update or construction plan or engineering report, " ".and the place has sat half-built for some time." On the 5th August 2011 Ms. Doud, iu a letter copied to Mr. Ryan and the parties' attorneys states: "We are pleased to report, as you will see from [Mr. Ryan's} letter attached that we have been diligently moving forward in regard to your beautifol home." Mr. Ryan's letter is addressed to the Plaintiff and dated the 4th August 2011. Mr. Ryan assures the Plaintiff that a lot of effort is going into the completion of his Deckhouse home. On the 4th August 2011 Mr. Ryan writes to the Plaintiff and he deals specifically with the registration of title and states that the process here in Cayman: "".is straightforward but very slow, it requires that we put in the application to the senior lender to release and transfer the security to you, which in turn allows you to get the Lot registered at the Registry office. " Mr. Ryan goes on to state: "One additional wrinkle in this case was caused by the lending group transferring internally who directed the servicing agent necessary to authorise this, as a result the registration of the change among the lenders had to happen at the Registry before we could complete the transfer documentation for you. This has now occurred and we anticipate completing your transfer shortly. " Judgment. DaVid Morrison v. Solomon Harris Cause 00395/2012. Coram Quin J 30.B.13. Page 17 0/43 1 2 3 4 5 10 11 12 13 14 15 16 17 18 19 20 21 22 23
The Plaintiff did not make any distinction between Cesar and Deckhouses Construction assuming that they were both under the control of Mr. Ryan. Mr. Ryan, as the developer and principal for both Cesar and Deckhouses, reassures the Plaintiff and does not reveal that there are any insurmountable problems with the Charge. In relation to the contracting and procurement Mr. Ryan also writes to the Plaintiff stating:: "We have been working with various potential sub-contractors for the works, with our key focus being delivery of the highest quality along with meeting the projected completion date of June 2012." Again Mr. Ryan does not appear to have any reservations about the ability of the Cesar designated Contractor, Deckhouses Construction, to complete the construction. The Plaintiff responds on the Sd' August 2011 to Ms Doud, thanking her for the update, suggesting that continual updates would be the best course of action and stating that he will be in contact if he thinks there is a need to speak directly with Mr. Ryan. On the lSd, August 2011 Mr. Jamieson writes to Appleby asking about the amended charges. Mr. Klein confinns: "We are in contact with the new lender and have requested it "[the amended charges}" and that Appleby confirms they would "chase" the new lender. On the 22nd September 2011 Mr. Jamieson again writes to Appleby askifig '~Any luck with the discharges?" and saying that, if not, he is happy to eliase. them. himself. Judgment. David Morrison v. Solomon lIarris Cause 00395/2012. Coram QUin 1. 30.8.13. Page 18 of43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 20 21 22 23 24
Mr. Jamieson "chased" Appleby on the 14th September and the 22"d September
On the 23'd September 2011 Mr. Jamieson spoke with Mr. Ryan. Mr. Jamieson stated in his First Affidavit that Mr. Ryan asked Mr. Jamieson what he needed to complete the registration. Mr. Jamieson explained in his First Affidavit that he told Mr. Ryan that the primary issue was the lack of discharges and Mr. Ryan said he would chase these. There is no suggestion from Mr. Ryan that the necessary discharge would not be forthcoming. On the 5th October 2011 Mr. Jamieson wrote directly to Mr. Ryan regarding the sale to the Plaintiff. Mr. Jamieson reminded him that he [Mr. Ryan] "had asked me to tell you if the discharges for David Morrison's purchase were not forthcoming." Mr. Jamieson told Mr. Ryan that he had not received them. On or about the 27th October 2011 Mr. Jamieson met with Ms. Doud. Mr. Jamieson stated in his First Affidavit that Ms. Doud had received the discharges back, but could not lay her hands on them at that time. On the 27th October 2011 Mr. Jamieson wrote an email pointing out that in that meeting Ms. Doud had told him that she had received the discharges for the Plaintiff and he asked Ms. Doud to send them to him. Again on that date Ms. Doud wrote to Mr. Jamieson and said Mr. Ryan has to sign these [discharges] and she would follow up with him (Mr. Ryan) as soon as he was on the island next week. On the 16th November 2011 Mr. Jackson emailed Mr. Jamieson stating that he was awaiting agreement from the lender to release the parcel, so that Mr. Jamieson could have the discharges. Mr. Jackson, acting for both Cesar and Deckhouses Construction said in his email, "Mike [Mr. Ryan] said he spoke to them very Judgment. David Morrison v. Solomon Harris Cause G0395/20J2. Coram Quin J. 30.8.13. Page 19 0/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
recently and they had now agreed to sort it out. We expect to get this sorted for you in Ihe very near foture." On the 2nd December 2011 the Plaintiff received an out-of-office auto reply email response fi'om one of the developer's contacts stating that he was on a long term sabbatical and all enquiries should be directed to Stingray Construction Co. Ltd. The Plaintiff immediately sent an email to Ms. Doud, copied to Mr. Ryan and Mr. Jamieson stating, "What the hell is going on down there?" In response to this email Ms. Dond arranged a telephone call between the Plaintiff and Mr. Ryan to discuss the project generally. On the 5th December 2011 the Plaintiff and Mr. Ryan had a telephone call and Mr. Ryan subsequently emailed Mr. Jamieson stating: "Spoke with Mr. Morrison and updated him that we continued to have a delay with getting Ihe senior lender to finalise the transfer ... .! explained the background of Five Mile [the new lender} taking over from CS, and that they were a smaller oulfit who did not have the resources to focus on this like a CS would and they continued to swim in circles while they got their head around the situation of the security." Mr. Jamieson in his First Affidavit stated that at no point throughout the transaction did Mr. Ryan indicate that he had not forwarded the requisite funds to either lender [Column or CS] in order to pay off the charge over the property. Judgment. David Morrison v. Solomon Harris Cause G0395/2012. Coram Quin J. 30.B.13, Page 20 0/43 1 2 3 4 5 6 7 8 9 10 11 15 16 17 18 19 20 21 22 23
On the 5th December 2011 Ms. Doud wrote to Mr. Jamieson and copied Mr. Ryan saying that she had spoken to the Plaintiff and updated him regarding the delay in getting the senior lender to finalise the transfer. She confirmed that they were "ready to go with sub trades and procurement, but did not want to start until land transfer occurred and the property was in his name." On the 7th December 2011 Mr. Jamieson said the Plaintiff called him and said that he was due to speak to Mr. Ryan on the following Monday, but that he was minded to withdraw his funds. Mr. Jamieson wrote to the Plaintiff advising him of ways to protect his investment, which included: a. Seeking a personal guarantee from Mr. Ryan regarding the ultimate construction of the Deckhouses; b. Set some timescales for the works to commence and for the legal documents (inclnding the discharges) to be returned to Mr. Jamieson so that he could arrange for the transfer of land to take place; c. To seek the return of monies already paid by the Plaintiff. On the 12'h Decemher 2011 Mr. Jamieson spoke to the Plaintiff and the Plaintiff told him he wanted his money returned. On the 13th December 2011 Mr. Jamieson's evidence is that the Plaintiff had spoken to Mr. Ryan who assured him [the Plaintiff] that he was not being taken advantage of, and he would have the unit transferred to the Plaintiff straightaway, and that he, Mr. Ryan, would personally fund the remainder of the project until completion. The Plaintiff instructed Mr. Jamieson to wait until Mr. Ryan had got in touch with him with these further proposals. Judgment. David Morrison v. Solomon Harris Cause G039512012. Coram Quin J. 30.8.13. Page 210/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Mr. Jamieson sent reminders to the Plaintiff on the 3,d January 2012, 12'h January 2012, 4th February 2012, and each time the Plaintiff emailed to confirm that he had not heard anything from Mr. Ryan. The Plaintiff instructed Mr. Jamieson to "chase" Mr. Ryan. On the 4th February 2012 Mr. Jamieson wrote to Mr. Ryan requesting a formal response. Mr. Ryan responded by email stating, "1 wanted to let you know that I will be responding to you on the release and the go forward program within this week, 1 know that your client has been very patient and please rest assured I am doing everything in my power to make sure everything works out as he and 1 discussed. " Mr. Ryan failed to respond as promised, despite the follow-up correspondence from Mr. Jamieson. The Plaintiff then attempted to convene a conference with Mr. Ryan and Ms. Doud. After a further exchange of emails Mr. Jamieson again asked Mr. Ryan to follow up with the lenders for the discharges and Mr. Ryan responded by email, dated the 27th February 2012, that he was still working with the lender on this. On the 29th February 2012 Mr. Jamieson spoke to Mr. Ryan and he obtained the contact details of a Mr. Glasgow and a Mr. Latimer of Five Mile Capital. On the I" March 2012 US attorneys acting for Five Mile Capital asked Mr. Jamieson for proof of the fact that his client, the Plaintiff, had paid for Lot 12. Mr. Jamieson responded by passing on the Plaintiff's financial statements, showing the monies paid - including purchase of Lot 12. Judgment. David Morrison v. Solomon Harris Cause G039512012. Coram Quin J. 30.8.13. Page 220/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
On or about the 19th March 2012, Receivers were appointed over the assets of Cesar following an event of default. On the 29th March 2012 Mr. Jamieson spoke with Mr. Ryan who confmned that he was trying to trace where the Plaintiff's payment had been sent. It transpired that the Receivers confmned that the secured lender would only release the funds upon being paid the sum ofUS$480,000.00. Judgment. David Morrison v. Solomon Harris Cause G039512012. Coram Quin J. 30.8.13. Page 230/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
PLAINTIFF'S POSITION As pleaded in his Amended Statement of Claim, the Plaintiff maintains that the US$600,000.00 was to be held by Cesar pursuant to a "non-refundable reservation agreement", which must be a reference to the reservation agreement, and maintains that the sum would continue to be held as a deposit until completion, at which time it would be paid to Cesar. Completion was to take place on the satisfaction of an the conditions in the agreement and, in any event, not later than the 1" June 2011. However, this is inconsistent with the Reservation Agreement which itself provides that the money held by Cesar US$71S,000.00, was to be transferred to Deckhouses Construction on the execution of the Services Agreement or the Purchase Agreement of the 16'h April 2011. The Reservation Agreement provided that the . purchase price was to come from monies paid by the Plaintiff Which Cesru'!Maples and Calder held, but was to be paid by the Plaintiff on 1" June 2011. The Recital to the Purchase Agreement is also inconsistent with the Services Agreement, which, in so far as the payment due on the 1"' May 2011 is concemed, replicates the provisions of the Reservation Agreement. Accordingly, the Reservation Agreement and the Services Agreement are consistent with each other, but the purchase Agreement is consistent with neither. Clause 2 of the Purchase Agreement provides that the Plaintiff shall pay the purchase price "in the installments and within the time period stated in this Agreement." Yet the Purchase Agreement contains no such statement, since it was predicated on the false assumption in the recital, namely, that Cesar held the whole of the purchase price as a deposit, and would continue to hold it until completion, when it would be released to Cesar. On this basis, no further payment would be Judgment. David Morrison v. Solomon Harris Cause G039512012. Coram Quin J. 30.8.13. Page 240[43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
required from the Plaintiff. Clause 2 also provided the wire transfer details for an account in the name of Deckhouses Construction Company, at Butterfield Bank. These were the only wire transfer details which have ever been provided to the Plaintiff or the Defendant. On or about the 20lh April 2011 the Plaintiff made the top up payment of $282,000.00. At that time, this money, together with the monies held by Cesar and Maples and Calder, were apparently transferred to Deckhouses Construction Company. On the 31'1 May 2011 the Plaintiff paid the additional US$2,000,000.00 to Deckhouses Construction, being the second and third payments referred to in Schedule 1 to the Reservation Agreement. So, at the end of the date for completion, Deckhouses Construction held all of the US$3 million paid and, despite the tenns of the Purchase Agreement, Cesar held nothing. Leading counsel for the Plaintiff, in his written submissions, points out that Mr. Jamieson's statement that there are "no outstanding issues" is only intelligible on the assumption that Cesar and Deckhouses Construction, both being under the ultimate control of Mr. Ryan at that time, could be treated as one and the same. As leading counsel, Mr. Farrow Q.C., submits, "in any event, according to the Reservation Agreement, which was consistent with the Services Agreement, the purchase price was not due to be paid, whomever it was paid to, until 1" June 2011." Judgment. David Morrison v. Solomon Harris Cause 00395/20/2. Coram Quin J 30.8.13. Page 25 0/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
The draft transfer and associated documents were submitted to the Land Registry. The Land Registry refused to register the transfer. One of the requisitions raised was a letter fi'om the Chargee consenting to the registration. The Plaintiff relies on the fact that Cesar did not ultimately receive the US$600,OOO.OO it was due from the monies held by Cesar and Maples and Calder, nor did Deckhouses Construction Company transfer US$600,OOO.OO from the US$2 million it received from the Plaintiff to cover the Plaintiffs purchase of Lot 12. As Mr. Farrow Q.C. puts it, the US$600,OOO.OO was performing two contradictory functions. First, US$600,OOO.OO was used as the purchase price, which Cesar aclmowledged it held and, second, as part of the first payment under the Services Agreement of which Decldl0uses Construction also acknowledged receipt. However, the evidence bears out that Cesar retained no part of the US$718,OOO.OO. Deckhouses Construction did not repay US$600,OOO.OO, and, as Mr. Farrow Q.C. points out in his skeleton argument, Deckhouses Construction Company had been overpaid by US$600,OOO.OO. Leading counsel on behalf of the Plaintitf submits that the fatal assumption made by the Defendant was, not just that Cesal' and Deckhouses Construction were under common control, but that they would remain under common control until completion had taken place. As Mr. Farrow Q.C. points out in his skeleton argument, "It is highly probable that, had the point been raised in, say, June 2011, the Contractor would have accounted to Cesar for the US$600, 000. 00 it had received, thus enabling the charge to be redeemed." Judgment. David Morrison v. Solomon Harris Cause G039512012. Coram Quin J. 30.8.13. Page 26 0[43 1
It is the Plaintiffs contention that it is difficult to see how Mr. Jamieson, acting on 2 3 4 5 behalf of the Plaintiff can, in the absence of specific and informed instructions, ever be justified in structuring the transaction in a way which involves the whole of the purchase price being paid, not to the vendor, but to an affiliate of the vendor, a fortiori, where there is a charge that needs to be discharged. 6
The Plaintiff relies on the Privy Council decision of Edward Wong Finance 7 Company Limited v. Johnson Stokes and Master [1984] A.C. 296 in which three 8 questions are posed: 9 '. Did the acts or omissions of the firm involve a foreseeable risk? 10 ii. If so, could that risk have been avoided? 11 lll. If so, was the firm negligent in failing to take avoiding action? 12
The Plaintiff maintains that the transfer of the whole of the US$718,000.00 initially 13 14 15 16 17 18 19 20 21 22 held by Cesar to Deckhouses Construction and/or the payment of the whole of the US$2 million to Deckhouses Construction created a risk that, whether, because of a change of control of either Cesar or Deckhouses Construction or other circumstances, Deckhouses Construction would be unwilling to account for the purchase price of US$600,000.00 to Cesar, thus enabling the charge to discharged. This risk was foreseeable. The Plaintiffs position is: a. Whenever in respect of a contract to purchase land, subject to an existing charge, the whole of the purchase price is paid, not to the vendor but to a third party, a reasonable attorney would foresee the possibility that the vendor might not be put in funds to enable it to discharge the Charge. Judgment. David Morrison v. Solomon Harris Cause 00395/2012. Coram Quin J. 30.B.13. Page 27 0/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
b. The risk could easily have been avoided by the Defendant ensuring that Cesar retained control of the purchase price ofUS$600,000.00, and only allowing the balance of US$400,000.00 to be transferred to Deckhouses Construction Company. c. Alternatively, when the Plaintiff was paying US$2 million, the Defendant should have ensured that the Plaintiff only paid US$I,400,000.00 to Deckhouses Construction Company, and retained the US$600,000.00 to be paid to Cesar. Consequently, Mr. Farrow Q.C. submits that since the risk was foreseeable and easily avoided it must follow that the Defendant was negligent in failing to foresee that risk and take avoiding action. Judgment. David Morrison v. Solomon Harris Cause G039512012. Coram Quin J. 30.8.13, Page 280/43 1 THE DEFENDANT'S POSITION 2
Leading counsel, Mr. Lowe Q.C., on behalf of the Defendant submits that there are 3 4 significant factual disputes between the parties and there are a number of issues or questions in dispute, which ought to be tried at the trial of these proceedings. 5
The Defendant submits that it could never be the case that the Defendant has no 6 defence to the Plaintiff's claim and further, the Defendant's statement of claim 7 could not be detennined without a full trial of the action. 8
The Defence contends through the evidence adduced by Mr. Jamieson that the 9 10 11 Plaintiff had already agreed to substantial payments to Cesar and Deckhouses Constmction without any security for these payments and before title to Lot 12 was transferred to the Plaintiff. 12
Leading counsel Mr. Lowe Q.C. relies upon the fact that it was a condition of sale 13 14 15 that the vendor, Cesar, would discharge, on or before the completion date, any financial charge registered against the property. The vendor failed to discharge its duty and is thereby in breach of its contract with the Plaintiff. 16
The Defendant submits that the charge and the release of it are entirely matters for 17 18 19 20 21 the vendor. The terms of the charge are matters within the vendor and his attorneys' knowledge, and not within the knowledge of the Plaintiff or the Plaintiffs attorneys. As such, the vendor was contractually obliged to secure the release of the Charge over Lot 12 before transferring title to the Plaintiff. Judgment. David Morrison v. Solomon Harris Cause 0039512012. Coram Quin J 30.B.13. Page 290/43 1 2 3 4 5 6 7 8 13 14 15 16 17 18 19 20 21 22 23
-, { . The Defendant relies upon the fact that when the Plaintiff was in negotiations with Orion, Cesar and Mr. Ryan for the purchase of Condominium 145 Harbour Loft, Secret Harbour, Mr. Jamieson, acting on behalf of the Plaintiff, provided a formal report on title to the Plaintiff in which he stated: "Please note that the seller is entitled to use your deposit in the construction of the condominiums once the first milestone payment has been made. This means that, in effect, the seller will have used up your deposit before you have received title to the condominiums. The risk with this is, if the seller were to fall into liquidation, you could have a problem retrieving your deposit as your specific deposit monies may have been spent and so you would need to claim against the other liquid funds which the seller may have along with all the sellers' other creditors." Mr. Ryan then told the Plaintiff that as a result of some reorganization, he had temporarily put Secret Harbour on hold whilst they reviewed the construction and fmance programme to ensure it is sustainable. In addition, in the same email Mr. Ryan assured the Plaintiff, "We appreciate your support and are happy to do whatever you feel comfortable with, your funds are still in escrow." The Defendant relies upon Mr. Jamieson's evidence in which he states that his advice is siguificant as it applied equally to the Plaintiff s subsequent purchase of Deckhouse Lot 12, which is the subject of this claim. The vendor, Cesar's construction contracts with its designated contractor, Deckhouses Construction, envisages that a purchaser would take the risk that the construction company would not complete the work, or, indeed carry out any work. Judgment. DaVid Morrison v. Solomon Harris Cause 00395/2012. Coram QUin J 30.8.13. Page 30 0/43 1
It is the Defendant's position that the Plaintiff was pulling out of any further 2 3 4 5 6 7 8 dealings with Mr. Ryan and was going to seek a return of his monies when he, the Plaintiff, informed Mr. Jamieson, that he had made an offer to pay the asking price for one of the units of Deckhouses. Evidence from Mr. Jamieson reveals that the Plaintiff told Mr. Jamieson that he had already agreed to transfer his funds held by Cesar for the Secret Harbour purchase to the new purchase for Lot 12, together with payment of a further US$2 million on the 1 ,t June 2011, with the balance to be paid on the 1 ,t June 2012. 9
One material dispute of fact is that in the Plaintiff's First Affidavit he stated that he 10 11 12 13 14 15 signed the reservation agreement on the 28th March 2011 and sent it to Cesar. Mr. Jamieson's evidence states that, on the 25th March 2011, Mr. Ryan's PA, Ms. Doud, circulated an executed Reservation Agreement signed by the Plaintiff, the Plaintiff's wife, Cesar and Orion. The Defendant maintained that it is highly significant that the Plaintiff had executed the Reservation Agreement without any reference to the Defendant. 16
The Defendant relies upon the terms of the Reservation Agreement entered into 17 18 23 24 25 between the Plaintiff and Cesar, and in particular upon the statement "in consideration Cesar acknowledges that it is holding US$538, 000. 00 in escrow from the purchaser." The purchaser was to instruct Maples and Calder to transfer US$174,550.00 to the vendor, and the US$718,000.00 was to constitute the non- refundable deposit (the "Deposit") having been paid by the purchaser. In addition, Mr. Ryan's P A, Ms. Doud, stated in an email, "As promised, attached is a copy of the executed Reservation Agreement from which you will see SH fonds in escrow are non-refondable and these will be transferred to the DH purchase." So the Defendant contends that the monies the Plaintiff paid for the Secret Harbour Judgment. David Morrison v. Solomon Harris Calise 00395/2012. Coram Quin J. 30.B.13. Page 310/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 22 23 24
Condominium were now paid to Cesar as a non-refundable deposit for the purchase of Lot 12 by the Plaintiff. Aside from not taking any active role in the Deckhouses Lot 12 transaction, and not having seen the Reservation Agreement before it was executed by the Plaintiff, it is the Defendant's position that the monies always remained with Cesar, initially in escrow, for the aborted Secret Harbour purchase and then as a deposit for the purchase of Lot 12. Mr. Jamieson makes the point in his First Affidavit that the Plaintiff had executed the Reservation Agreement and had already agreed to make substantial payments to Deckhouses Construction without any security and before the title could be passed. Mr. Lowe Q.C. submits that the Plaintiff is a sophisticated man in business and it was no part of the duty of the Defendant to prevent the Plaintiff from assuming commercial risks. To put it another way, the Defendant contends that it is no part of the duty of Mr. Jamieson to re-write the elements of a commercial bargain entered into between the Plaintiff and Mr. Ryan. The Defendant relies upon the fact that on the I" April 20 II Cesar's new attorney, Mr. Jackson, who also acted for Deckhouses Construction, suggested that the Plaintiff's deposit of US$71S,000.00 should be split between the two contracts, with $600.000.00 being used to fund the purchase of the bare land (i.e. Lot 12), pursuant to the Purchase Agreement, and the balance being applied to the fIrst payment uuder the Services Agreement with Deckhouses Construction: Mr. Jamieson agreed for the funds to be split because, in his view, it would mean that the Plaintiff's purchase of the bare land would be completed before the fIrst payment was due under the Services Agreement, it would provide the Plaintiff with Judgment. David Morrison v. Solomon Harris Cause G0395/2012. Coram Quin J. 30.8.13. Page 32 0/43 1 2 3 4 5 6 7 some security by way of title to the land, and it would limit the stamp duty payable by the Plaintiff. Accordingly, the Defendant contends that it is as a result of the vendor's attorneys' proposal of the payment for the purchase price, that US$600,000.00 which was held by the vendor Cesar, was apportioned to the Strata Lot Purchase Agreement. The Defendant further contends that this was acknowledged as having discharged the Plaintiff s obligation under the Purchase Agreement. 8
The Defendant takes issue with the Plaintiffs statement of claim, in which the 9 Plaintiff claims that funds for the purchase of the Lot did not reach Cesar. The 10 11 Defendant maintains that Cesar was paid, but Cesar did not use the funds it received to secure a release over the Charge over Lot 12. 12
It is the Defendant's position that the Reservation Agreement was subsequently 13 14 15 16 17 18 superseded by the Purchase Agreement. The Defendant maintains that this was reflected by Ms. Doud's email sent on the 4'h April 2011, and also by the Amended Schedule C which shows the correct price for the Services Agreement of US$3.9 million, to reflect the fact that, of the total price ofUS$4.5 million, US$600,000.00 was being paid in respect of the purchase of Lot 12, pursuant to the Strata Lot Purchase Agreement. 19
Accordingly, the Defendant's position is that the allocation of US$600,000.00 for 24 the purchase of Lot 12 would mean that, as of the 1 ,I May 2011 (the date of the first installment due of US$1 million under the Services Agreement) Deckhouses Construction would have been underpaid as it would only receive US$400,000.00. This was the US$118,000.00 deposit balance left over, once the initial deposit of US$718,000.00 was partially used to allocate US$600,000.00 as the payment price Judgment. David Morrison v. Solomon Harris Cause 00395/2012. Coram Quin J. 30.8.13. Page 330/43 1 2 3 4 5 6 for the land; plus the amount ofUS$282,000.00, being the first additional payment made by the Plaintiff. Mr. Jamieson maintains that he clarified this new breakdown by infonning the Plaintiff that he would be paying US$2million, made up of $1.4 million, the second installment due on the I" June 2011, and a sum of US$600,000.00 being the extent of the underpayment of the initial payment to Deckhouses Construction Company of US$I million. 7
On the IOu, April 2011 the Plaintiff confirmed that he was happy with the tenus of 8 9 10 Mr. Jamieson's report on title and was ready to execute the Strata Lot Purchase Agreement with Cesar and the Agreement for Services witll Deckhouses Construction Company. 11
The Defendant accepts that tile payment schedule at Appendix C of the Services 12 17 18 Agreement is inaccurate, in that, it indicates that the whole of the sum held by Cesar from the Secret Harbour payment of US$718,000.00 was payable under the Services Agreement. The Defence maintains that the appOitionrnent was not subseqnently questioned by the vendor, Cesar, and that the inaccurate details in Schedule C of the Services Agreement did not become material. It is the Defendant's position that tile vendor, Cesar, sent transfers to ilie Defendant on the footing that the purchase price had been credited to the Plaintiff. 19
The Defence submits that the normal procedure is that, prior to completion, the 20 21 22 23 24 purchaser's attorneys will have ensured that the purchase contract contains provision for the vendor to ensure that any security is discharged as a condition of completion, and iliat all charges in respect of that security are removed frorn'the Land Register. Judgment. David Morrison v. Solonton Harris Cause G039512012. Coram QuinJ. 30.B.13. Page 34 0/43 1
The Strata Lot Purchase Agreement specifically stated that completion shall take 2 3 place "within fourteen (14) days of the satisfaction of all conditions in this agreement." 4
Clause 5.2 provides that, "The vendor undertakes to discharge on or before the 5 6 completion date any financial Charge registered against the property as of the date of this agreement. " 7
The Defendant maintains that as a consequence of the Purchase Agreement as to the 8 use of the US$600,OOO.OO of the funds already held by Cesar as purchase money for 9 10 11 12 13 14 15 16 17 18 19 24 the land, Cesar was already holding the purchase monies and the Plaintiff had consequently ah'eady fulfilled his side of the bargain prior to formal completion. The Defence submits that the Plaintiff complains that the Defendant did not ensure that the purchase price was paid to Cesar. The Defence submits that this is incorrect and that the purchase price had been paid to Cesar prior to completion and that Cesar had received all that it was entitled to receive under the Strata Lot Purchase Agreement. It is the Defendant's case that, since the vendor, Cesar, had already been paid the equivalent of the purchase price, it was for Cesar to procure the release of the Charge. The Plaintiff had already parted with his money when he entered into the Reservation Agreement, and thus, the Defence maintains that the Defendant was not in a position to exercise any greater control over what Cesar did with the purchase funds. The Defendant never had the funds in its possession, nor did the Defendant ever have any control of the funds. It is the Defendant's position that the vendor, Cesar, is in breach of its contractual obligations to the Plaintiff, and it is for the Plaintiff to pursue the usual remedies for breach of contract. Judgment. David Morrison v. Solomon Harris Cause 0039512012. Coram Quin J. 30.8.13. Page 35 0/43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Mr. Lowe Q.C. submits that there are too many unanswered questions such as:
What happened to the money? n. Was Cesar paid? The Plaintiff having paid his money, why did neither Cesar nor Deckhouses Construction, nor Mr. Ryan pay the Chargee? What did Mr. Morrison discnss with Mr. Ryan? and these are issnes of fact which cannot be resolved in sunnnary judgment proceedings. The Defendant snbmits that Mr. Jamieson and the Plaintiff had been assured on nnmerous occasions by the vendor Cesar, by Mr. Ryan, by Mr. Ryan's PA, Ms. Doud, and by the attorney, Mr. Jackson - acting for Cesar, Mr. Ryan and Deckbouses - that the discharge of charge would be forwarded to the Defendant. As can be seen from the long and tortured history of this matter, the vendor kept promising to obtain the release, and such release never carne. The Plaintiff entered into the Agreement to purchase Lot 12 after his own discussions with Cesar and Mr. Ryan. The Plaintiff signed the Agreement before the Defendant saw it, and, the Defendant does not know what took place between the Plaintiff and Mr. Ryan or the Plaintiff and Cesar. The Defendant submits that the vendor, Cesar, and its nominated Contractor, Deckbouses Construction, were under the common control of Mr. Ryan, with the common attorney, Mr. Jackson. The Defendant posed the question: There must have been a running account of some kind between Cesar and Deckbouses Judgment. David Morrison v. Solomon Harris Cause G039512012. Coram QUin J. 30.B.13. Page 36 0/43 1 Construction. The question must be asked: Why was the US$600,000 which the 2 Plaintiff paid for Lot 12 not used to pay the Chargee? Leading counsel on behalf of 3 the Defendant submits that is the reason why the Plaintiff is not alleging that the 4 Defendant should have prevented the Plaintiff from entering into the Purchase 5 Agreement. 6
On the 21" April 2011 Cesar acknowledged that it had received US$609,OQo,00in' 7 8 9 10 11 12 accordance with the terms of the Strata Lot Purchase Agreement. ;The bef~nce ", contends that, in addition to Cesar's obligation to hold the purchase piicy II) esc~ow,. " the Plaintiff had the benefit of the undeltaking by Cesar in the Strata Lot Purch#e Agreement to give clean and clear title and specifically to discharge any registered financial Chru'ge on the property. Accordingly, Cesar has the obligation of a constructive trustee to obtain the discharge of the mortgage over Lot 12, 13
The Defence concludes by submitting that in all the circumstances it cannot be said 14 that the Defendant has no defence. 15 16 17 18 19 20 21 Judgment. David Morrison v. Solomon Harris Cause G0395/2012. Coram Qufn J. 30.8.13. Page 37 0/43 1 2 3 4 5 6 12 13 14 15 16 17 18 19 20 21 22 23 24 25
ANALYSIS AND CONCLUSION GCR O.14A reads: "(1) The Court may upon the application of a party or of its own motion determine any question of law or construction of any document arising in any cause or matter at any stage of the proceedings where it appears to the Court that- (a) such question is suitable for determination without a foll trial of the action; and (b) such determination will finally determine (subject only to any possible appeal) the entire cause or matter, or claim or issue therein. (2) Upon such determination the Court may dismiss the cause or matter or make such order or judgment as it thinks just." I am grateful to both leading counsel for their careful written submissions. It is common ground between both leading counsel that the approach to Summary Judgment is set out in the English Court of Appeal case of Swain v. Hillman and Another [2001] 1 All E.R. 91 which has been followed by the Grand Court in Rankine v. Scott, Martin and Ebanks [2008] C1LR Note 9. The approach can be summaTised as follows:
hI an appropriate case the Court will grant summary judgment to a Plaintiff; ii. The issue on such an application is whether the Defendant has no real, as opposed to fanciful, prospect of success; iii. The Court has to test that by reference to what would happen if the matter were allowed to go forward to a trial; Judgment. David Morrison v. Solomon Harris Cause G0395/2012. Coram Quin J. 30.8.13. Page 38 0/43 1 IV. The Court should generally not grant summary judgment when there 2 are disputed issues of fact or where there should be a trial for some 3 other reason; 4 v. Where there is a dispute of fact the Court should only grant summary 5 judgment where it can see with confidence that the issue would be 6 determined in favour of the applicant. 7
The learned editors of the Supreme Court Practice 1999 have referred to Lord.: 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Bingham's dicta, when he was Master of the Rolls in (E (a Minor) v.' Dorset County Council [1995] 2 A.C. 633 [1994] 4 All. E.R. 640) at O.l4N2/5 on page 200: "Sir Thomas Bingham MR considering the inter-relation of striking out and o.14A expressed unease at " ... deciding questions of legal principle without knowing the full facts". However, he continued "but applications of this kind are fought on ground of a Plaintiff's choosing, since he may be generally assumed to plead his best case .... [ij] the legal viability of a cause of action is unclear (perhaps because the law is in a transition), or in any way sensitive to the facts, an order to strike out should not be made. But if, after argument, the Court can be properly persuaded that no matter what (within the reasonable bounds of the pleading) the actualfacts [are} the claim is bound tofailfor want of a cause of action, J can see no reason why the parties should be required to prolong the proceedings before that decision is reached." 23
Having read the Plaintiffs two affidavits and the two affidavits of Mr. Jamieson, I 24 find that there are questions which are not suitable for determination without a full 25 trial of the action. As Lord Bingham stated in E (a Minor) v. Dorset County 26 Council, I have considerable unease in endeavouring to decide questions of legal 27 principle without lmowing the full facts, aud, in this case, there is a dispute on a few 28 important material facts, and a significant dispute on their interpretation. 29 Judgment. David Morrison v. Solomon Harris Cause 00395/2012. Coram Quin J 30.B.13. Page 39 0/43 1 2 3 4 14 15 16 17 18 19 20 21 22 23 24 25 26 27
I refer to the Second Edition of Civil Litigation in the Cayman Islands by Deborah Barker Roye, at paragraph 12.9 on page 213. Ms. Roye refers to the case before the fanner Chief Justice Harre CJ., Brown v. Green Thumb Nursery [1994-5] CILR Note 7 and states: "The Court took some time to deal with the appropriate use of, and test for, summary disposal on a point of law under D.14A. Harre CJ stated that the fact that matters of law are of complexity and importance did not render procedure under 14A inappropriate. The Court's discretion under D.14A may be exercised even when summary determination requires extensive argument. Harre CJ held the test to be applied in deciding whether one should utilise D.14A was "whether all necessary and material facts had been duly proved or admitted so that the Court was not required to hear evidence or make its own findings of fact." The Plaintiff submits that the Defendant failed to pay sufficient attention to the terms of the Reservation Agreement and failed to appreciate that the sums held in escrow by Cesar and Maples and Calder were not intended to serve as, or as part of, the purchase price for the Lot, but, as confmned by the Services Agreement, were to be transferred to, in the event, Deckhouses Construction. The Defendant claims that it was not instructed to advise on the tenns of the Reservation Agreement and also that it was never in a position to change or amend the tenns of the Reservation Agreement entered into by the Plaintiff and Orien and Cesar - after discussions between the Plaintiff and Mr. Ryan. The Plaintiff claims that the Defendant permitted the Plaintiff to enter into the Purchase Agreement on the incorrect assumption that Cesar held the sum of US$600,000.00 in escrow pending completion, when it would be released to Cesar as the purcbase price for Lot 12. From the evidence in the affidavits of the Plaintiff Judgment. David Morrison v. Solomon Harris Cause G0395/2012. Coram Quin J. 30.8.13. Page 40 0/43 1 2 and Mr. Jamieson there is controversy and a dispute between the parties on this particular issue. 3
The Plaintiff filed an amended Statement of Claim dated the 30th May 2013 in 4 which he added the claim that the Defendant had failed to ensure that Cesar retained 5 6 US$600,000.00 out of the US$718,000.00 held in escrow, but arranged for the whole of such US$718,000.00 to be transfelTed to the Contractor. 7
The Defendant maintains that, according to the Reservation Agreement, the funds 8 the Plaintiff had paid were to be kept in escrow until the Purchase Agreement had 9 10 been executed by the parties, and then the deposit would be released from escrow to Deckhouses Construction Company. 11
FurthelTUore, the Defendant contends that there was a further agreement entered 12 13 14 15 16 into between Mr. Jamieson and Mr. Jackson - the latter acting on behalf of Cesar and Deckhouses Construction Company - whereby they agreed that US$600,000.00 of the sum of US$718,000.00 would be held by Cesar in escrow pending completion of the purchase of the Lot, and the balance would be taken as part payment under the Services Agreement. 17
The Plaintiff claims that the Defendant failed to appreciate that the purchase price 18 of US$600,000.00 was to be paid by the Plaintiff on the I" June 2001. The 19 Defendant submits that on the affidavit evidence the Plaintiff had paid this purchase 20 price to the vendor Cesar. 21 22 Judgment. David Morrison v. Solomon Harris Calise 00395/2012. Coram Quin J 30.B.13. Page 410/43 1
The Plaintiff claims that the Defendant failed to advise him that the aggregate sum 2 3 4 5 of US$600,OOO.OO, should be paid to Cesar and not to Deckhouses Construction Company. On Mr. Jamieson's evidence in his affidavit, the Defendant maintains that US$600,OOO.OO was paid to Cesar, and then it became a matter for Cesar to specifY the account where this money would be held. 6
From my review of all the affidavits and exhibits relating to the aforementioned 7 8 9 10 11 12 disputed facts, I camlOt find that the Defendant has no real defence to the Plaintiffs Statement of Claim. Moreover, I find that the Defendant has more than a fanciful prospect of success and, accordingly, it is not an appropriate case for summary judgment. To adopt Harre CJ's words in Brown v. Green Thumb Nursery [1994-5] CILR Note 7, all the necessary and material facts have not been proved, which would allow for summary determination under GCR O. 14A. 13
The Plaintiff has paid over the initial sums that were agreed between him and Mr. 14 15 16 17 Ryan, pursuant to the Reservation Agreement, and without any security. If Cesar had honoured its obligation to the Plaintiff, under their agreement, Cesar would have paid the mortgagee, who then would have provided the release which would have allowed the Plaintiff to obtain the title to Lot 12. 18
The Court has considerable sympathy for the Plaintiff who, having paid significant 19 20 21 22 23 sums to Cesar and Deckhouses Construction, has nothing to show for these payments but delay, expense and unfulfilled promises from Mr. Ryan, his PA, and, Mr. Jackson, acting on the instructions of one or more of his clients - Cesar, Deckhouses Construction, andlor Mr. Ryan. Judgment. David Morrison v. Solomon Harris Cause 00395/2012. Coram Quin J 30.B.13. Page 42 of43 1
From the evidence from both parties it is unclear where the US$600,000.00 paid by 2 the Plaintiff to Cesar ended up. There is a lack of evidence, and before tbis Court 3 can make any final findings of fact, it would require full and frank discovery from 4 Cesar and Deckhouses Construction. 5
It also seems to be common ground between the parties that both Cesar and its 6 designated contractor, Deckhouses Construction, were controlled by Mr. Ryan. 7 Again, before this Court can make any findings of fact in this regard, evidence by 8 way of oral discovery or interrogatories or written statements or affidavits would 9 need to be received from Mr. Ryan, Mr. Ryan's PA, Ms. Doud, and Mr. Jackson, 10 who acted on behalf of Cesar, Deckhouses Construction and Mr. Ryan. 11
It is still open for the Plaintiff to succeed in proving his claim against the 12 Defendant, but, it would be impossible for this Court in an application under GCR 13 O.14A to make any final detennination on either the question of where liability lies 14 in relation to the Plaintiff s loss, or on quantum. 15
Accordingly, and for the aforesaid reasons, I reject the Plaintiffs application for 16 summary judgment. 17
Should counsel wish to address me on costs, I will hear them at a time convenient 18 to all parties. 19 Date this the 30th day of August 2013 20 21 22 23 Honourable Mr. Justice Charles Quin 24 Jndge of the Grand Court Judgment. DaVid Morrison v. Solomon Harris Cause G0395/20f2. Coram QUin J. 30.B.13, Page 43 0/43