Richards J
```html IN THE GRAND COURT OF THE CAYMAN ISLANDS CIVIL DIVISION CAUSE NO：G0136 OF 2017 BETWEEN： DEX LTD PLAINTIFF AND： NOEL CHRISTIAN DEFENDANT Appearances： Mr. James Kennedy of KSG Attorneys for the Plaintiff Mr. Colm Flannigan of Nelson & Co，Attorneys at Law for the Defendant Before： The Hon. Justice Cheryll Richards Q.C. Heard： 20th September 2019 Draft Judgment： 28th October 2019 HEADNOTE Civil Division-Civil Law-Issue as to whether variation of contract or forbearance by Creditor. Application for indemnity costs to be awarded. JUDGMENT Judgment：G 0136/2017：Dex Ltd. v Noel Christian. Coram：Richards J. Q.C. Date：9th November 2019 ```
INTRODUCTION
The Plaintiff Company, Dex Limited, operates out of registered offices in George Town, Grand Cayman and is in the business of private lending. It offers loans to persons who are unable to obtain financing from larger banking institutions and thus charges a higher rate of interest than the banks.¹
Between September 2013 and the 29th April 2014, the Plaintiff, and the Defendant, Noel Christian, entered into a series of written loan agreements. By these agreements the Plaintiff agreed to lend to the Defendant various sums of money. The terms of payment included monthly interest as well as default interest, both at an interest rate of 23 percent on the sums loaned. The Defendant defaulted on the loans.
By Writ of Summons filed on the 21st August 2017, the Plaintiff claimed repayment from the Defendant of the sum of $23,000.00 together with legal fees of $5,146.60 and pre and post judgment interest from 1st September 2014 at the contractual rate of 23%. The total sum then outstanding at the date of the filing of the writ was $43,857.17.
On the 19th September 2017, the Defendant acknowledged service and indicated an intention to defend. On the 29th September 2017, he filed a Defence in which he admitted the principal amount of the debt but asserted that he had been advised orally by Mr. Rex Rankine, a Director of Dex Ltd. that he would not have to repay any amounts other than the principal loan. He also asserted that the interest rate of 23% amounted to a penalty and is not enforceable. --- ¹ Witness Statement of Rex Rankine dated 18th October 2017, paragraph 5 Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 2 of 21
By Summons filed on the 25th October 2017, the Plaintiff applied for Summary Judgment pursuant to GCR O.14 r.1 in respect of the principal sum claimed, on the basis of the Defendant's admission as to the principal debt.
By Consent Order made on the 26th January 2018, Summary Judgment was granted to the Plaintiff as to the principal sum of $23,000.00. The remainder of the claim was to proceed to trial. Both Parties filed witness statements and submissions which identified the single issue between them as being whether Mr. Rankine had made oral representations to the Defendant that he would not have to pay any interest on the sums borrowed. Mr. Rankine denied making such statements except for on one occasion on the 27th August 2014 when at a meeting with the Defendant he agreed, on behalf of the Plaintiff, to the refinancing of the Defendant's previously unpaid loans by way of a fresh consolidated loan with all past outstanding interest being waived. Following this meeting a formal agreement was prepared and signed by all parties.2
On the morning of trial, the Court was advised that the issue between the parties had narrowed even further and was no longer whether or not interest was in fact payable. The sole question between the parties which requires resolution is whether the interest had been reduced from 23% to 14%. The differing calculations between the parties is as follows: | The Plaintiff: | | | --- | --- | | Interest Rate Claimed | 23% | | Date of Loan | 1st September 2014 | | Date of trial | 20th September 2019 | | Number of days | 1845 | | interest | | | interest due | $14.49 | | Daily | | | Total | | 2 Witness Statement of Rex Rankine dated 18th October 2017, paragraphs 8 to 12. Judgment: G 0136/2017; Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 3 of 21
```html Interest Rate Claimed 14% Date of Loan 1st September 2014 Date of trial 20th September 2019 Number of days 1845 Daily interest $8.79 Total interest due $16，231.97 Both parties agreed that oral evidence was not required and that resolution of the issue as to whether the relevant Agreement had been varied was dependent on the construction of two letters sent by Mr. Rex Rankine on behalf of the Plaintiff to the Defendant on the 25th and 30th April 2015. THE AGREEMENT The relevant Loan Agreement is dated 27th August 2014 (the day of the meeting referenced above) and in so far as may be material provides as follows: Condition and Purpose: Clause 2.2 The Lender will (in consideration of the Borrower agreeing to repay the Loan on the terms of the Agreement) advance up to the amount of twenty three thousand dollars ($23，000.00) in full to the Borrower in respect of the Borrower's specified or agreed purpose of refinancing existing loans. Repayment of Indebtedness: Clause 3.1 The Borrower shall pay interest, effective 1 September 2014, monthly, starting with the first month's interest to be paid on 30 September 2014 at the rate of twenty three percent (23.0%) per annum. On 1 March 2015, or before at the Borrower's option, a new loan Agreement will be signed by the Borrower to refinance this loan over a period of 36 months, with equal monthly payments to cover principal and interest. Clause 3.2 Should the Lender waive the right to repayment on the Repayment Date under [3.1] above the r with all Inlhe, novable. and the Lend right to repayment den Loan togeth debtedness，nd by the Len holder. Default Interest Interest at the rate of twenty three per cent (23.0%) per annum shall accrue from the Repayment Date of the Loan (to the extent that the Loan has not been repaid pursuant to Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 4 of 21 ```
```markdown clause [3.1]) compounded monthly on the last day of each month and calculated both before and after demand or judgment on a daily basis and a year of [365] days. Clause 4.4 Notwithstanding any provision to the contrary, the Lender shall be entitled to defer or waive any or all payment of interest on the Loan by the Company pursuant to this Agreement." **Events of Default** Clause 10.1 The Lender shall be entitled at any time after the occurrence of an Event of Default by notice in writing to the Borrower to declare that the Indebtedness has become immediately due and payable whereupon the same shall become immediately due and payable and the Borrower shall immediately pay the same to the Lender. Clause 10.2 An event of Default occurs by: (1) On any default by the Borrower in paying when due any payment under this Agreement; **Modifications:** Clause 15.9 This Agreement may be amended or modified in whole or in part at any time by agreement in writing executed in the same manner and by the same persons as this agreement. ## The Letters
The first letter from Mr. Rankine on behalf of the Plaintiff to the Defendant is dated 25th April 2015 and states inter alia: "Dear Noel, We confirm that you called us yesterday as a result of the letter dated 9th April 2015 sent to you by our Attorneys... You have said that you are only working at... three nights per week. On 13 February we sent you an E-mail confirming our telephone conversation in which you offered to pay the full $23,000 owing to Dex Ltd. if we would waive the accrued interest. We said, in that E-Mail that we accept your offer provided the funds are paid by bank draft no later than 16 February 2015. We have here about the $23,000 that you said that you had available. We have here about the $23,000 that you said that you had available. We have here about the $23,000 that you said that you had available. We have here about the $23,000 that you said that you had available. We have here about the $23,000 that you said that you had available. 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```html 1 As set out in [Attorneys] letter to you of 9 April, the amount owing is $23,000.00 plus 2 interest of $3，188.49 to 9 April， plus daily interest of $14.49 since that date i.e. $217.35 to 3 today， plus our legal fees of $378.00 making a total of $26，783.84. 4 5 If you will agree to what we have set out above， with all other terms and conditions of 6 the original Loan Agreement dated 27 April 2014 to remain in force， we are willing to 7 recalculate the accrued interest at the rate of 14% per annum from 1 September 2014 to 8 30 April 2015， assuming that you would make your first payment on 31 May 2015. That 9 would then be $2，134.90. Adding the legal fees of $378.00， then the monthly payment to 10 repay $25，512.90 over 36 months would be $871.97. However we reserve the right to 11 proceed with legal action to recover the amount owing should you not make the agreed 12 monthly payments. 13 14 Please confirm your agreement by signing and returning to us a copy of this letter by 15 Wednesday 29 April 2015. This offer is null and void if you do not sign and return a copy 16 of this letter by that date." 17 18 11. There then followed a second letter from Mr. Rankine to the Defendant dated 30th April 2015. 19 20 That letter also required confirmation of the agreement of the Defendant， to be evidenced by 21 return of a copy letter with his signature. It was agreed at the hearing that the letter exhibited 22 in the trial bundle3 bore the signature of the Defendant. It states inter alia： 23 24 Dear Noel， 25 Further to our letter dated 25 April 2015， we wish to confirm our subsequent telephone 26 conversation of this morning. 27 28 You stated that you are agreeable to pay the amount owing， as set out in our letter of 25 29 April. However， after reviewing your financial position you would like to make changes to 30 the repayment. You would like to start monthly payments on 30 June 2015 with the amount 31 owing amortised over 48 months， rather than 36 months. You said that by way of lump sum 32 payments you will repay the amount owing within 36 months. 33 34 This will mean that interest of $273.47 for the month of May will have to be added to the 35 figure mentioned in our last letter. The total then is $25，786.37. Monthly payments 36 amortised over 48 months， will be $704.65." Page 156 of the trial bundle Judgment：G 0136/2017：Dex Ltd. v Noel Christian. Coram：Richards J. Q.C. Date：9th November 2019 Page 6 of 21 ```
Variation or Waiver
The Defendant submitted that Clause 4.4 of the Loan Agreement dated 27th August 2014 provides for the unilateral option of the Lender to waive or defer any or all payments of interest. Further that the letters should be construed as a unilateral waiver, varying the interest rate across the board to 14%. Mr. Rankine in that first letter sets out the contents of a conversation with the Defendant in which the Defendant offered to repay the amount in full, should there be a waiver of all the interest. The offer was accepted but the condition was not satisfied. The second letter refers to another telephone conversation which took place and the calculations therein reflect an interest rate of 14%. There were no conditions attached to that latter proposal other than that the Defendant should sign and return the letter, which he did. On the basis of this, says the Defendant, the appropriate interest rate to be paid is 14% because both parties agreed to that on the 30th April 2015 and the Lender was entitled to unilaterally vary the interest rate as he did.
In support of his submissions, Counsel for the Defendant referred the Court to Chitty on Contracts 33rd Ed., paragraph 22-039. It is stated therein that at common law a contract may validly give to one contracting party the power to unilaterally vary the obligation of the parties to the contract. The power may be limited in cases where the variation sought to be made is for a dishonest or improper purpose, (Nash and Staunton v. Paragon Finance Plc4). This is not the position in the instant matter.
The Plaintiff in response argued that the letters did not amount to a variation of the Loan Agreement and that the Defendant had no more reason to agree to the terms of the agreement. It was agreed that the terms of the agreement were clear and that the Defendant had no more reason to agree to the terms of the agreement. 4 [2001] EWCA Civ 1466 Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 7 of 21
```html 1 the original Loan Agreement remained in effect. One party was saying by the letters that it 2 would forbear its legal rights if and only if payment were made. 3 4 15. It was further submitted that there was no consideration flowing in order for the variation to be 5 effective and that the context also has to be considered. This included that the Defendant had 6 been orally refusing to pay his debt unless adjustments were made. 7 8 9 16. Counsel for the Plaintiff placed reliance on paragraph 22-035 of Chitty on Contracts 33rd Ed. 10 which provides as follows: 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 17. As I understood the argument, it was that the letters themselves did not purport to be a waiver 32 or defers payments ause 4.4. The 15.9. 33 issue there 35 constitut of the Agree ed by Cla 34 ral of intere pursuant to fore is what form reque Cl her they 3 te a variation ement in uir Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 8 of 21 ```
```html 1 18. The contents of the letters are relatively clear. If all the other elements are satisfied, they could 2 amount to a variation. (See Woodhouse AC Israel Cocoa Ltd. SA v. Nigerian Produce 3 Marketing Co.) 4 5 19. The element of consideration which is raised by the Plaintiff is not without ambiguity. The 6 case of Foakes v. Beer 7 sets out the base principle that there is an absence of consideration 8 where a creditor alters the agreed terms of payment and that such alteration will not prevent 9 the creditor from seeking to enforce the whole of the debt. The case held that: 10 “An agreement between judgment debtor and creditor, that in consideration of the debtor 11 paying down part of the judgment debt and costs, and on condition of his paying to the 12 creditor or his nominee the residue by instalments, the creditor will not take any 13 proceedings on the judgment, is nudum pactum, being without consideration, and does not 14 prevent the creditor after payment of the whole debt and costs from proceeding to enforce 15 payment of the interest upon the judgment.” 16 20. In the more recent case of MWB Business Exchange Centres Ltd. v. Rock Advertising Ltd 17 the United Kingdom Supreme Court adverted to the decision in Foakes v. Beer. 18 The Court 19 referred to cases decided thereafter which concluded that consideration could be found in the 20 ‘practical expectation of benefit’ and expressed the view that the case of Foakes v. Beer may 21 need re-examination at a later time before an enlarged panel of the Court. Having determined 22 the issue in MWB Business Exchange Centres Ltd. v. Rock Advertising Ltd on the basis of 23 the legal effectiveness of a clause prohibiting oral modification, Lord Sumption stated: 24 “[18] That makes it unnecessary to deal with consideration. It is also，I think， 25 undesirable to do so. The issue is a difficult one. The only consideration which 26 MWB can be said to have been given for accepting a less advantageous schedule 27 was (i) at the payments，such (i) the reason that the mode p were soms tradct term jao hands wt a 28 lner was 29 less likely h e，u of the a，avancant onhilvalue，bus a 5[1972] A.C. 741 61884 9 AC 605 7[2018] 4 All ER 21 Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 9 of 21 ```
```html 1 contractual entitlement. In Williams v Roffey Bros & Nicholls (Contractors) Ltd 2 [1990] 1 All ER 512，[1991] 1 QB 1，the Court of Appeal held that an expectation 3 of commercial advantage was good consideration. The problem about this was 4 that practical expectation of benefit was the very thing which the House of Lords 5 held not to be adequate consideration in Foakes v Beer (1884) 9 App Cas 605， 6 [1881-85] All ER Rep 106：see in particular (1884) 9 App Cas 605 at 622，[1881- 7 85] All ER Rep 106 at 115 per Lord Blackburn. There are arguable points of 8 distinction，although the arguments are somewhat forced. A differently constituted 9 Court of Appeal made these points in Re Selectmove Ltd [1995] 2 All ER 531， 10 [1995] 1 WLR 474，and declined to follow Williams v Roffey. The reality is that 11 any decision on this point is likely to involve a re-examination of the decision in 12 Foakes v Beer. It is probably ripe for re-examination. But if it is to be overruled 13 or its effect substantially modified，it should be before an enlarged panel of the 14 court and in a case where the decision would be more than obiter dictum." 15 16 21. In the case of Vanbergen v. St Edmunds Properties Ltd，the plaintiff debtor had agreed 17 with the solicitors for the defendants that he would pay the amount of the debt into a certain bank 18 by a certain time and that he would not be subject to a bankruptcy notice if he did so. The 19 plaintiff paid the funds but because the solicitors were unaware that he had done so at the agreed 20 time，he was served with a notice. He brought an action for damages for breach of the 21 agreement. At the hearing，the defendants argued that the agreement was not enforceable in 22 law on the basis of the established principle that a promise to pay a sum which the debtor is 23 already bound in law to pay does not afford consideration to support a contract. 24 25 22. Lord Hanworth M. R. identified the essential question as being whether there was any sort of 26 advantage or independent benefit，actual or contingent of such a kind as might be good and 27 valuable consideration to the creditors. The learned Judge stated the summary principle as 28 being that： 29 “A not bind him 30 an debt of larger stiple agreement being an：redert that support to 31 be or even any meh an agrenuaefit to throm in lieu 32 of a smaller of But if the 33 certained dimidion，l'embility of e can smaller of 34 additional weight will turn the scale afa render the constaerdanthsufficient to support the 35 8[1993] 2 KB 223 Judgment：G 0136/2017：Dex Ltd. v Noel Christian. Coram：Richards J. Q.C. Date：9th November 2019 Page 10 of 21 ```
Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 ## 1. That is dealing with the case where there is to be a smaller sum in lieu of an ascertained sum by agreement, but where there is an agreement to pay the sum due the same principle applies. Lord Selborne, in Foakes v. Beer [15], the latest case which investigated this principle of the law, deals with it in this way. In that case there was an agreement between judgment debtor and creditor, that in consideration of the debtor paying down part of the judgment debt and costs, and on condition of his paying to the creditor or his nominee the residue by instalments the creditor would not take any proceedings on the judgment. The question was whether that was a valid agreement or a nudum pactum, and it was held that it was merely a nudum pactum, being made without consideration. There Lord Selborne, in concluding his speech upon the point under consideration, said [16]: “What is called ‘any benefit, or even any legal possibility of benefit,’ in Mr. Smith’s notes to Cumber v. Wane [17], is not (as I conceive) that sort of benefit which a creditor may derive from getting payment of part of the money due to him from a debtor who might otherwise keep him at arm’s length, or possibly become insolvent, but is some independent benefit, actual or contingent, of a kind which might in law be a good and valuable consideration for any other sort of agreement not under seal.” We have, therefore, to consider whether the agreement that was made here on July 6 was an agreement to do anything else than simply to pay on Friday, July 8, into the hand of the creditors the sum which was already ascertained and in respect of which there was not only the legal liability, but a duty enforceable by any mode of execution against the debtor.” ## 23. The learned Judge concluded that the creditor obtained no advantage in that case which could be deemed a consideration such that it could be said that a new contract had been made. ## 24. In Williams v. Roffey Bros. & Nicholls (Contractors) Ltd. [9], the defendants had subcontracted the plaintiff to carry out carpentry work on a block of flats at a price of GBP 20,000.00. In the course of the work, the plaintiff got into financial difficulty and sought an uplift in the sum. An oral agreement was reached that he would receive an additional sum of GBP 10,300. The defendants later declined to pay the additional sum agreed. The issue was whether the oral agreement constituted an enforceable contract, and as to whether there was any consideration attached to the agreement. The Court of Appeal upheld the trial judge’s decision that there was no consideration for the contract. ## 9[1991] 1 Q.B. 1 Page 11 of 21
```html 1 some resulting commercial advantage to the defendants who were seeking to have the carpentry 2 work completed on time. 3 4 25. Glidewell L.J. reviewed a number of cases and concluded that: 5 “The present state of the law on this subject can be expressed in the following proposition: 6 (i) if A has entered into a contract with B to do work for, or to supply goods or services to, 7 B in return for payment by B; and (ii) at some stage before A has completely performed his 8 obligations under the contract B has reason to doubt whether A will, or will be able to, 9 complete his side of the bargain; and (iii) B thereupon promises A an additional payment 10 in return for A’s promise to perform his contractual obligations on time; and (iv) as a 11 result of giving his promise, B obtains in practice a benefit, or obviates a disbenefit; and 12 (v) B’s promise is not given as a result of economic duress or fraud on the part of A; then 13 (vi) the benefit to B is capable of being consideration for B’s promise, so that the promise 14 will be legally binding.” 15 16 26. Russell LJ noted that the plaintiff had not undertaken any additional work to that required by 17 his contract but expressed the view that the terms had been altered by a variation which was 18 supported by a pragmatic approach to the relationship between the parties. The learned Judge 19 stated: 20 “A gratuitous promise, pure and simple, remains unenforceable unless given under seal. 21 But where, as in this case, a party undertakes to make a payment because by so doing it 22 will gain an advantage arising out of the continuing relationship with the promisee the new 23 bargain will not fail for want of consideration.” 24 25 27. Purchas LJ stated that the modern approach to the question of consideration would be: 26 “... that where there were benefits derived by each party to a contract of variation even 27 though one party did not suffer a detriment this would not be fatal to the establishing of 28 sufficient consideration to support the agreement. If both parties benefit from an agreement 29 it is not necessary that each also suffers a detriment”. 30 31 Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 12 of 21 ```
```html 1 28. In the case of Re Selectmove Ltd 10 the English Court of Appeal expressed the view that the decision in Williams v. Roffey Bros. & Nicholls (Contractors) Ltd as to practical benefits amounting to consideration was to be confined to matters involving the supply of goods and services and did not apply to a situation involving a debtor. The Court held that: 5 6 7 8 9 10 11 12 13 14 15 “It was settled law that a promise to pay a sum which a debtor was already bound by law to pay was not good consideration. The principle that a promise to perform an existing obligation could amount to good consideration provided that there were practical benefits to the promisee was confined to cases where the obligation involved was a supply of goods or services. It would be impossible, consistently with the doctrine of precedent, for that principle to be extended to an obligation to make a payment. Accordingly, even if there had been an agreement between the company and the Revenue, it was unenforceable for want of consideration (see p 538 g to j and p 539 f g, post); Foakes v Beer [1881-5] All ER Rep 106 followed; Williams v Roffey Bros & Nicholls (Contractors) Ltd [1990] 1 All ER 512 distinguished.” 16 29. In the Grand Court in the case of In the matter of Jukebox L.P. 11 the Court distinguished the case of Williams v Roffey Bros & Nicholls (Contractors) Ltd. The circumstances in that case involved an alleged oral agreement whereby a commercial lender was said to have suspended its rights to repayment of a loan. The Learned Chief Justice referred to such an oral agreement as making no commercial sense and being devoid of consideration, it being inexplicable that the lender whose very existence depended on the proper conduct of commercial lending activity could have entered into same. 24 30. Against the background of these cases, I accept the submissions of the Plaintiff that there was no consideration attached to the letters sent by the Plaintiff to the Defendant. The Plaintiff’s argument is in effect that the purported change in interest rates was a change made without 10 [1995] 2 ALL ER 531 11 [2009] CILR Note 32, Cause 292 of 2009, judgment of 8th October 2009 Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 13 of 21 ```
```html 1 consideration which could not serve to irrevocably alter the rights of the Plaintiff under the 2 Agreement.12 It was therefore no more than forbearance. 3 31. The absence of consideration may well be of limited assistance in resolving the issue between 4 the parties. The Agreement expressly provides that the Plaintiff had unilateral power to waive 5 interest rates. In so far as the Agreement uses the word “waiver” rather than “variation” of 6 interest rates, the distinction in the resulting effect may be a narrow but important one. The 7 initial outcome in either case would have been a change in interest rates from 23% to 14%. On 8 the strength of the letters, the Defendant would have been entitled to make monthly repayments 9 going forward at the rate of 14% percent interest. The important question is what the position 10 is if it is no more than a waiver as distinct from a formal variation. 11 12 32. According to Chitty on Contracts, 33rd Ed. para. 22-044, a waiver is distinguishable from a 13 variation by the absence of consideration and may be analogous to an estoppel which in order 14 to be effective must not only be clear and unequivocal but the other party must either have 15 acted upon it or altered his position in reliance on it. 16 17 18 33. In WJ Alan & Co. Ltd El Nasr Export & Import Co13. Lord Denning M.R. stated: 19 “The principle of waiver is simply this: If one party, by his conduct, leads another to believe 20 that the strict rights arising under the contract will not be insisted upon, intending that the 21 other should act on that belief, and he does act on it, then the first party will not afterwards 22 be allowed to insist on the strict legal rights when it would be inequitable for him to do so: 23 see Plasticmoda Societa per Azioni v. Davidsons (Manchester) Ltd. [1952] 1 Lloyd's Rep. 24 527，539. There may be no consideration moving from him who benefits by the waiver. 25 There may be no detriment to him by acting on it. There may be nothing in writing. 26 Nevertheless...the one who waives his strict rights cannot afterwards insist on them. His 27 strict any rate sug as the wa 28 able his strict lever.lasts. He 29 behcise making itunr the futu ret he will tist'955] 1 Wut 30 Toolufacturing Care conduct heric Co. Ltd.L.tice in th ulf, or otherw fot plain bythagsten Ele. [aisonable at upon then 12 Paragraph 4-083 of Chitty on Contracts 33rd Ed. 13 [1972] 2 Q.B. 189 Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 14 of 21 ```
```html 1 there are cases where no withdrawal is possible. It may be too late to withdraw：or it 2 cannot be done without injustice to the other party. In that event he is bound by his waiver. 3 He will not be allowed to revert to his strict legal rights. He can only enforce them subject 4 to the waiver he has made." 5 6 36. I accept the submission of the Plaintiff that the legal position is that the Defendant cannot place 7 reliance on the waiver (if waiver it was) when he did not act upon it. In this case the Defendant 8 made no payments following on from the 30th April 2015 correspondence. It follows that the 9 Plaintiff would have been entitled to enforce the debt in terms of the Agreement at the interest 10 rate of 23%. 11 12 37. If I am wrong as to the conclusion on consideration, either as to there being a need for same 13 the absence of same, in that it can be said that there was some consideration however nebulous, 14 for example good commercial relations or the anticipated practical benefit of more timely 15 repayment of the debt, and thus wrong as to whether the letters amounted to a waiver as distinct 16 from a variation，for the reasons set out below，in my view this will have limited impact on the 17 ultimate conclusion. 18 19 NATURE OF THE VARIATION OR WAIVER 20 21 38. A second argument made by the Plaintiff was that even if there were a variation，the variation 22 would be to Clause 3，which refers to monthly interest payments and not to clause 4 of the 23 Agreement which refers to default interest. 24 25 Counsel of the Plaintiff 26 39.1 on behalf of the Defendant submitted that the default interest payments were to commence on 30th June 2015. No payments were made and thus the default Judgment: G 0136/2017：Dex Ltd. v Noel Christian. Coram：Richards J. Q.C. Date：9th November 2019 Page 15 of 21 ```
```html 1 clause in the contract became effective. It was submitted that this is an entirely separate clause 2 in the event of default and constitutes a separate legal obligation. There had been no variation 3 of default interest, as this could not be said to have been contemplated by the letters. In the 4 event of default on the loan, the default term of the contract would be triggered. To the extent 5 that the Defendant can benefit from a variation, it is only for a one month period to June 2015. 6 Thereafter he fell into default at an interest rate of 23% as all other conditions of the Agreement 7 remained in force. 8 9 40. The Defendant in reply submitted that the level of interest in both circumstances was the same 10 and that at the point in time of the letters, the Defendant was already in default so that the 11 default provision had been triggered by then. Counsel submitted that at the point of the first 12 letter, it should be construed as relating to both sets of interest. Further that the Plaintiff must 13 have been talking about default interest because the Defendant had in fact defaulted. Thus there 14 was non-payment so that the letter of 25th April 2015 must be referring to default interest. 15 16 41. I find it difficult to accept the submissions of the Defendant on this aspect. In my view the letter 17 of 25th April 2015 can only be a reference to the monthly interest. It is plain from the wording 18 of it, that at the urging of the borrower the parties were electing to renegotiate. In effect this 19 was an attempt to re-set the position by reducing the monthly interest rate and determining new 20 monthly payments going forward. Significantly, the letter clearly states that “all other terms 21 and conditions of the original loan agreement dated 27th August 2014 remain in force”. 22 23 1 conclude that the Defendant has not satisfied me on balance that this letter of 25th April 2015 24 has any default interest to do with interest payments. 25 26 Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 16 of 21 ```
Satisfaction of Conditions
The Plaintiff's further argument was that in any event the Defendant failed to make any payments at all and that when he so failed the Agreement reverted back to its original terms. The Defendant did not meet the condition for variation to be triggered as he had made no payments as agreed. The two letters can only be read to mean that the Plaintiff intended to take legal action upon the original terms if the Defendant did not comply with the newly agreed terms.
The Defendant submitted in response that the second letter did not make the new interest rate subject to any condition and does not refer to reverting to the original terms as did the first. While this is correct, the second letter referred to one change, to wit pushing back the start date as proposed in the first letter, to June 2015 at the request of the Defendant and amortizing over 48 months rather than 36 months. Importantly it refers to the first letter and sets out what the sole requested change would mean.
I accept the submission of the Plaintiff on this point that the second letter of 30th April 2015 can only be read in light of the first letter of 25th April 2015. It follows that both were subject to the caveat that all other terms and conditions as per the original Agreement remained in force. Further the clear import of the letters is that if the Defendant failed to meet the condition of commencement of repayments, the Agreement reverted back to its original terms and back into the hands of the Plaintiff's Attorneys for proceeding with legal action. Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 17 of 21
```html 1 promise, the creditor is obliged to maintain the adjustment made. This claim is not reflective 2 of the position set out in the letters. 3 4 CONCLUSION 5 47. I conclude there was no consideration such as to make the letters enforceable as a variation of 6 the contract. This may not be as significant a factor as the Agreement specifically provided 7 for the waiver of interest rates at the unilateral option of the Plaintiff. The determinative factor in 8 my view is that, on the plain reading of the letters, any possible variation (or waiver) was 9 specifically as to monthly payments going forward. Thus the letters can only be construed as 10 referring to Clause 3 of the Agreement and of note is that they (read together) contained an 11 express statement that all other terms and conditions remained in force. The default interest 12 term which therefore remained unchanged was triggered for a second time when in June 2015, 13 the Defendant failed to pay the new monthly sum as agreed. 14 15 48. In any event in so far as the letters can be construed as amounting to a unilateral waiver of the 16 interest rates on the part of the Plaintiff, (which did not require consideration), the Defendant 17 failed to act upon the waiver in any way and most importantly he did not meet the condition of 18 payment which was set out therein. 19 20 49. The Defendant elected to raise no additional issues in response to the claim and elected not to 21 give evidence in proof of his case. There is no other evidence before the Court on this aspect. 22 As invi ties, the cas on the basis t the case is determined on the basis of the content of the two letters 23 24 above. Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 18 of 21 ```
```html 1 50. I accept both the primary and secondary arguments put forward by the Plaintiff and conclude that the Defendant is liable to pay default interest on the Loan at 23% as agreed to in Clause 4 of the original Loan Agreement and that he owes the sum of $26,739.86 as at the date of this hearing. 5 COSTS 6 51. At the hearing, the Plaintiff indicated that contractual costs at the point of issue of the proceedings would not be pursued. However an application was made for costs on an indemnity basis for costs subsequently incurred. It was submitted that the Defendant had pursued the matter only to abandon his position as to an oral variation of the Agreement on the very day of trial. 11 12 52. In response, Counsel on behalf of the Defendant submitted that the Plaintiff had also abandoned part of its claim in respect of the matter and that the focus of the Defendant had been on the entirety of the claim as pleaded by the Plaintiff. While the Defendant has to accept that he agreed to pay some interest, there had been no reference to the letters on the Plaintiff's case. 17 53. In the cited case of Al Sadik v. Investcorp Bank BSC and Five Others, Jones J. considered the Court's powers to make indemnity costs pursuant to GCR O.62 r.4(11) and 11(2). He noted that while the application of both rules depends upon establishing that a party has behaved improperly, unreasonably or negligently in some way, he thought that the aim of these rules is to deal with substantive misconduct either by a party or procedural misconduct by a party or his attocaus their aste money on the 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360 361 362 363 364 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 380 381 382 383 384 385 386 387 388 389 390 391 392 393 394 395 396 397 398 399 400 401 402 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 421 422 423 424 425 426 427 428 429 430 431 432 433 434 435 436 437 438 439 440 441 442 443 444 445 446 447 448 449 450 451 452 453 454 455 456 457 458 459 460 461 462 463 464 465 466 467 468 469 470 471 472 473 474 475 476 477 478 479 480 481 482 483 484 485 486 487 488 489 490 491 492 493 494 495 496 497 498 499 500 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 528 529 530 531 532 533 534 535 536 537 538 539 540 541 542 543 544 545 546 547 548 549 550 551 552 553 554 555 556 557 558 559 560 561 562 563 564 565 566 567 568 569 570 571 572 573 574 575 576 577 578 579 580 581 582 583 584 585 586 587 588 589 590 591 592 593 594 595 596 597 598 599 600 601 602 603 604 605 606 607 608 609 610 611 612 613 614 615 616 617 618 619 620 621 622 623 624 625 626 627 628 629 630 631 632 633 634 635 636 637 638 639 640 641 642 643 644 645 646 647 648 649 650 651 652 653 654 655 656 657 658 659 660 661 662 663 664 665 666 667 668 669 670 671 672 673 674 675 676 677 678 679 680 681 682 683 684 685 686 687 688 689 690 691 692 693 694 695 696 697 698 699 700 701 702 703 704 705 706 707 708 709 710 711 712 713 714 715 716 717 718 719 720 721 722 723 724 725 726 727 728 729 730 731 732 733 734 735 736 737 738 739 740 741 742 743 744 745 746 747 748 749 750 751 752 753 754 755 756 757 758 759 760 761 762 763 764 765 766 767 768 769 770 771 772 773 774 775 776 777 778 <
The learned Judge referred to the decision of Kellock J. in *Nike Real Estate Ltd. v. De Bruyne*¹⁴ as a case with circumstances illustrative of substantive misconduct. In that case an order for indemnity costs was made against the defendant where a key witness had lied to the Court and the Court found that its process had been abused because the witnesses had colluded together in advance of the trial and put forward a deliberately dishonest case. In relation to procedural misconduct, Jones J. said: "In my judgment, a proceeding, or some identifiable part of it, can only be said to have been conducted “improperly” within the meaning of r.4 (11) if the court is satisfied, in all the circumstances of the case, that a party has invoked the court's jurisdiction illegitimately or abused the process in a way which attracts moral condemnation. A party who asserts a cause of action when he knows that he has no legitimate basis for doing so is acting improperly. Pursuing an action for some ulterior motive is an abuse of the process which may be categorized as improper." The learned Judge noted further that unreasonable conduct falling short of impropriety can lead to an indemnity costs order under r.4.11 if it can be characterized as substantive misconduct. In the case of *Bennett v. Attorney General*, Henderson J. discussed the difference between maintaining a defence which is merely weak and unlikely to succeed and maintaining one which is manifestly hopeless. The learned Judge stated that advancing a case which is merely weak or unlikely to succeed, may not be unreasonable in the typical case. Weak cases would succeed from time to time and a litigant may prefer to have a judicial determination on a matter rather than accept the advice of his attorneys. He then stated: "such a fclai the unsuy wto a judgne ?nce. The of 'nity basis nable to brincc. It is ope te such a uision an ins." "There es which are that way to with thegal train: ho anyone" ¹⁴ [2002] CILR 233 Judgment: G 0136/2017: Dex Ltd. v Noel Christian. Coram: Richards J. Q.C. Date: 9th November 2019 Page 20 of 21
```html 1 58. In this case I do not think that the conduct of the Defendant rises to the level which should 2 attract indemnity costs. While it is unfortunate that the change in position on the facts was only 3 put forward at the last minute after there had been much preparatory work on the case, 4 ultimately he pursued a legal argument which did not succeed but was at least arguable. 5 6 59. The Defendant should pay the costs of the Plaintiff on the standard basis to be taxed if not 7 agreed. 8 9 10 Dated this the 9th day of November 2019 11 12 Honourable Justice Cherryl Richards Q.C. 13 Judge of the Grand Court