```html IN THE GRAND COURT OF THE CAYMAN ISLAND BEFORE HON. JUSTICE MRS KIRSTY-ANN GUNN CAUSE NO. 371 OF 2009 BETWEEN BUTTERFIELD BANK (CAYMAN) LIMITED Plaintiff AND ANDREA ALESEA MARTINEZ-CALDERON 1st Defendant AND RAUL ESTEVAN MARTINEZ 2nd Defendant Appearances： Ms L DaCosta for the Plaintiff The 1st and 2nd Defendant in person Hearing date： 9th May 2018 Ex-tempore Judgment： 9th May 2018 Ex-tempore Judgment Distributed： 18th May 2018 HEADNOTE REGISTERED LAND LAW-CHARGES-CHARGEES POWER OF SALE-MARKET VALUE -RESERVE PRICE-INDEPENDENT VALUATIONS-CHARGE ACTING IN GOOD FAITH EX TEMPOR EX TEMPOR JUDGMENT of the s pril TEMPOR TEMPOR JU De ated 18 2018 and the Plaintiffs summons dated 25th April 2018.
The Defendants summons can be summarised as follows – (i) a declaration that the two most recent valuations obtained by bank are “unreliable”; and (ii) a declaration that the Offer to Purchase (“the OTP”) has expired and is now invalid; (iii) an order prohibiting the bank from acting on the current OTP or entering into another contract to sell the property; (iv) a declaration that the Notice to Vacate is null and void and be set aside.
The Plaintiff's summons seeks (i) An Order for vacant possession (ii) Leave to issue a writ of Possession (iii) Costs ### FACTUAL BACKGROUND
The 2nd Defendant is the registered owner of Block 32C Parcel 160, a residential dwelling in Lower Valley (“the Property”). He purchased the property some 22 years ago and has undertaken considerable work on the property. In 1997 the 2nd Defendant approached the Plaintiff Bank of Butterfield (“the Bank”) for a loan of $166,000 to complete renovation of the house and pay off a Cayman Islands Credit Union loan. The 1st Defendant was the co-signer of the loan, which was secured by a charge on the property. The loan was repaid in full in 2006. As at 1998 and the sum of CI$296,000. Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 2 of 24
In 2004 the 2 nd Defendant lost his employment and remained unemployed. The reasons for his unemployment are not relevant to these proceedings. During the course of the loan the 1 st Defendant reached retirement age and remains unemployed. Due to their unemployment, the Defendants fell into arrears.
Notices under Section 64 and 72 of the Registered Law Land (“The Law”) dated 21 st January 2009 were served personally on the 1 st Defendant on 13 th February 2009 and on the 2 nd Defendant on 30 th April 2009 (“the Notices”). At that time the Principle and Interest owing was CI$275,897.38 and the arrears were CI$57,621.78. Both notices complied with the requirements of the Law and expressly referred to the variation of section 72 as set out in the schedule, namely that the bank is permitted to sell the Property one month following service of the Notices if the sums demanded are not paid.
In 2009 the Bank obtained a valuation from DDL. It concluded that the value of the Property in 2009 was CI$787,000.
On 6 th August 2009 the Bank filed an Originating Summons seeking, (i) a declaration that the Defendants are in default of payment of the principle sum payable under the Charge; (ii) an Order that the Defendants deliver possession of the property to the Bank; (iii) that the Charge be enforced by private treaty; (iv) Settling of the terms and conditions of the sale by private treaty; (v) any further relief as the court thinks fit; and (vi) costs (vii) costs Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 3 of 24
On 13th April 2010 Henderson J made the following Orders and Directions - (i) The Charge be enforced by the sale of the Property by private treaty; (ii) The Defendants are permitted to remain in possession of the Property until there is an enforceable contract for sale of the Property or further order of the Court; (iii) The Defendants shall give the Bank and/or its agents reasonable access to the property in connection with the sale; (iv) The reserve price was set at CI$725,000; (v) The Defendants were to pay the Bank's costs; and (vi) The Order did not preclude the Defendants from perusing the sale of the Property themselves unless and until the Bank entered into a contract for sale;
It is evident from the foregoing that the Bank's application for an Order for Possession and leave to issue a Writ of Possession were not disposed of and therefore remained live applications, albeit the Court ordered that the Defendants were permitted to remain in possession of the Property until there was an "enforceable contract for sale."
The property was first listed on the CIREBA Multiple Listing System ("the MLS") on the 12th of October 2010 at the reserve price set by the Court.
On 29th July 2011 the Bank obtained a further order reducing the reserve price to CI$622,000 for 6 months and, to obtain an enforceable contract of sale or further Order of the Court". Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 4 of 24
In 2013 the Bank filed a summons seeking a declaration that the Property may be sold by public auction and reducing the sale price to CI$450,000.00. The application was opposed. The court made directions in preparation for a final hearing.
The Bank renewed its application for a reduction of the sale price in 2014. At this point the Defendants had not made any payments towards the loan for some two years. The Court's Minute of Order reveals that there were extensive discussions before the parties reached an agreement on a way forward. The Minute of Order records – a. Mr Moses advised that the bank confirmed that, based on the original mortgage sum of CI$296,000.00 the monthly payment was in fact CI$2,295.00. However, from this point going for the new mortgage sum, which would include the arrears, calculated on a new mortgage, over 15 years, at an interest rate of 5.25%, would result in a monthly payment of CI$3,837.04 not including CI$600 per month for insurance. Therefore, the new monthly payment, including the insurance, would be CI$4,400.00. b. Mrs Calderon immediate response was: "we will pay it. We have to make it." c. Mr Moses again expressed some concern about the defendants' ability to make these monthly payments in light of the many years of default, the defendants' earlier representations regarding their personal circumstances and health, and the fact that Mr Martinez's wife had only recommenced full-time employment in January 2014.... d. In inter-draft, Mrs Calderon spoke of varying other, which be, and the work ensure that the ro should be neveowards express hope of moments wadayments the exing on to ofat the poump-sum, te would n
```html 1 f. The court emphasised to the defendants that the focus must be on 2 making the monthly payments as the bank will not force the sale once 3 the monthly payments of CI$4,400.00 are being made in timely fashion 4 on a monthly basis. 5 6 g. Mr Moses told the court that the bank would only agree to these new 7 terms if the court orders that, should there be any default on payments, 8 the bank will be at liberty to exercise its power of sale under the charge 9 without any further recourse to the court, and that the reserve price be 10 set aside." 11 12 15. As a result of these discussions the Court ordered that the Defendants must 13 pay CI$4,400.00 on a monthly basis to the Bank in respect of this loan and 14 that, should the Defendants default on the monthly payment, the Bank is at 15 liberty to exercise its power of sale under the Charge, and list the property 16 for sale, and without further recourse to the court, at the best price the Bank 17 can, with its best efforts, obtain. 18 19 16. The Defendants made the required payments in February, March and April 20 2014, and thereafter they defaulted once more, making no further payments. 21 In August 2014 the Bank notified the Defendants that the property would be 22 re-listed for sale as a result of their breach of the court order. 23 24 17. In February 2016 the Property remained unsold. The Bank continued its 25 efforts to work with the Defendants and made a concession to accept 26 CI$1,600.00 per month towards the mortgage account on a temporary basis. 27 28 30 31 32 33 34 35 Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 6 of 24
The terms of this agreement were set out in a letter from HSM to the Defendants – "Our client is prepared to enter into one final payment arrangement in order to repay the outstanding debt of CI$525,950.13 consisting of principle of CI$305,351.01 interest of CI$219,199.12 and late payments of $1,400.00. As such we confirm that our client agrees not to enforce its right of sale over the property on condition that you:"
Pay $1,600.00 per calendar month towards the principal which currently stands at $305,351.01. The 1st payment shall be made on or before 28th February 2016 and by the end of each successive calendar month thereafter;
Pay the "Butterfield Heritage Home Insurance" renewal fee of CI$4,819.26 on or before the 24th February 2016 and keep the property adequately insured each successive year thereafter. We confirm that once the first payment is made in relation to paragraphs 1 – 3 [sic] above the property will be removed from the multiple listing system. However, should you default upon the terms of this arrangement the Bank reserves the right to continue to enforce its power of sale by re-listing the property without further reference to you. This agreement will be set for a review every 12 months with a view to having payments increased to reduce the outstanding interest." (emphasis mine)
Having accepted the new agreement, the Property was taken off the market. Unfortunately, the Defendants defaulted after two months and they were advised that the property would be relisted for sale. The property had been listed on the MLS front in 2009 until the interest. The list price was repeatedly reduced during this period. On 18th January 2018 the Bank accepted an offer for CI$285,000.00. This was the first offer the Bank had received in the 8 years the property had been marketed. Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 7 of 24
The Defendants were verbally notified of the OPT around 1st March 2018 when the 2nd Defendant approached the Bank about adding his fiancée to the loan in place of the 1st Defendant. The Bank rejected this and another proposal made by the 1st Defendant due to the poor credit history on the mortgage, the lack of evidence of the Defendants' commitment to rehabilitate the mortgage account and because the Bank had already accepted the OTP. The conditions of the purchase were met and/or waived on 16th March 2018. On 20th March 2018 the Defendants were served with a Notice to Vacate the Property by 20th April 2018. On 18th April 2018 the 1st and 2nd Defendant filed the ex-parte summons now being considered. That summons came before me for hearing the following day. Having heard the Defendants, I invited counsel for the Bank to attend to respond to the application. During the course of the proceedings the Defendants accepted that they were in default and that the Bank had a right to sell the property, however, they asserted that – (a) the Bank was not acting in good faith as they were intending to sell the property far below market value; and (b) The Bank had failed to meet the conditions set out in Practice Directions No. 5 of 2012 and No. 4 of 2014. The Defendants advised the Court that they would not voluntarily vacate the Property.
At the end of the hearing I granted the interim injunction and directed that the Defendants’ summons as well as the Bank’s summons for vacant possession and leave to issue a Writ of Possession be heard together. The Bank filed its summons on the 25th of April 2018 together with the affidavit of Adita Deonarine in support of the application. The Defendants have filed several affidavits and both parties have submitted new valuations. The closing date for the sale of the Property has now been extended to 4 PM on the 16th of May 2018 to allow these proceedings to conclude. The Defendants accept that they are indebted to the Bank in excess of CI$500,000.00, although they emphasised that they have paid significant amounts towards the loan over the years. I accepted the evidence of Adita Deonarine on behalf of the Bank that as at 24th April 2018 the payout balance on the loan was CI$593,008.18, consisting of | Item | Amount | | --- | --- | | Outstanding principal | CI$319,263.25 | | Penalty Interest on overdue principle | CI$30,030.13 | | Past-due interest | CI$241,639.80 | | Late Fee | CI$2,075.00 | Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 9 of 24
ADDITIONAL APPLICATIONS
In addition to the matters set out in their summons, the Defendants, through their affidavits, seek orders - (i) mandating the Bank to disclose details of the OTP; (ii) mandating the Bank to prove that the Defendants are still indebted to the Bank; (iii) mandating the Bank to disclose how the funds raised from the sale of the property will be applied to their loan; (iv) mandating the Bank to refinance the loan allowing the 2nd Defendant's partner to take the place of the 1st Defendant in the financing arrangements; and (v) a declaration that the requirement of "two independent valuations" in Practice Direction 4 of 2014 means each party obtains their own valuation and proceed on the mean value.
Item (i) was satisfied in course of the preparations for today's hearing. As the Defendants concede that they owed the Bank over CI$500,000.00 in principle sum and interest and the evidence of Adita Deonarine item (ii) has been addressed. **Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009** Page 10 of 24
The Defendants also argue that the Bank's actions to obtain vacant possession violates their children's constitutional right to "parental care, basic nutrition, shelter where they can be protected from maltreatment, neglect, abuse or degradation; protection from exploitative labour practices, protected from performing work or provide services that are inappropriate for a child or young person under the age of eighteen, or be placed at risk of the child's well-being, education, physical or mental health or spiritual, moral or social development, all of which the [Defendants] claim the minor children could be exposed to if they are removed from their secure environment of their present home...together with the trauma of being uprooted from their familiar secure environment and placed in a less secure one..." The words are lifted from Article 17 of the Bill of Rights. I can deal with this last point swiftly: The Constitution lays down the fundamental rights of an individual enforceable against the Government, not private individuals. If the Defendants wish to challenge the constitutionality of the Law that gives rise to the power of sale then then they must do so in the appropriate manner. The Charge It is agreed that the parties entered into an agreement whereby a Charge would be made against the 2nd Defendant's property and that the Defendants were jointly responsible for the repayment of the loan. It is also agreed that the Defendants repeatedly failed to make repayments as required by the various agreements between Bank, frequently over periods, and er prolonged thed
```html 1 36. In 2003 the Defendants signed the most recent Charge and initialled every 2 page of the schedule. Section 12 provides- 3 4 Sections 72 and 75 of the above law shall be varied in their application 5 to this Charge and any instrument a variation executed pursuant to this 6 Charge so as to entitle the Chargee immediately upon default by the 7 Chargor in payment of the Principal Sum or of any interest payable 8 hereunder or in the performance or observance of any agreement 9 expressed or implied herein to serve on the Chargor notice in writing to 10 pay the moneys owing or due or to perform or observe the agreement as 11 the case may be and further so as to provide that if the Chargor does not 12 comply within one month of the date of service of such notice the 13 Chargee may thereupon either appoint a receiver of the income of the 14 charged property or sell the charge property by private treaty as well as 15 by public auction or by tender all to foreclose on the charged property." 16 (emphasis mine) 17 18 37. It is now trite law that there is no need to obtain the Court's leave to place 19 the property for sale by public auction where a power of sale arises under 20 the Law, and the requirements to giving notice have been complied with 21 (Bank of Butterfield v Jervis and Jackson 2011(1) CILR 54). Listing a 22 property through MLS is a public auction (Scotiabank & Trust (Cayman) 23 Limited v Cecilia Ebanks (as administratrix of estate of Allan Ebanks) 24 and Rudolph Gordon (as administrator of estate of Allan Ebanks GC 25 Cause No. 298 of 2010, Judgment delivered January 12th 2012). The 26 Court's intervention is only necessary if the charge is varied to require a sale 27 by private treaty which does not apply here. 28 29 Conseqng as the bplied with the 31 the Bank has not does not Co which tant nt to lis 30 38equenty, as l8ank has cment to give notice aby Section the require nt of the Lahe accept ts， the Bank he Court's cot th s 31 required 65 and imye 72 need these Defend 32 property for sale or before they can accept an offer to purchase. 33 Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 12 of 24 ```
The Bank's right to sell the Property without necessitating further Court intervention was reiterated to the Defendants by the Order made on 29th January 2014 (see paragraph 15 above). It was made abundantly clear that if the Defendants defaulted again the Bank was at liberty to sell the house at the best price that they could achieve. The Defendants have sought to go behind that Consent Order, arguing that the Bank 'set them up' to fail as it was evident that they would never be able to maintain the repayments given their financial circumstances. It is important to reiterate that the Defendants were cautioned by counsel for the Bank and the Court about the proposed course and nevertheless freely consented the proposal (see paragraph 14 above). The Defendants cannot abrogate responsibility for that decision, or the fact that they quickly defaulted again. The agreement reached between the Banks and the Defendants in 2016 (see paragraph 18 above) once again offered the Defendants an opportunity to avoid a forced sale. The terms very clearly state that in the event that the Defendants breached the terms of the agreement the Bank had the right to continue to enforce its power of sale by re-listing the property without further reference to the Defendants. Consequently, from the initial written notice right up to 2016, the Defendants have been on notice that the Bank had and maintained its right to sell the property, obviating any need for further RLL notices to be served. Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 13 of 24
Right of Redemption ## Section 70(1) of the Law Subject to this section, a Chargor, on payment of all money due and owing under the charge at the time of payment on fulfilment of any condition secured thereby and on payment of any costs or expenses properly incurred by the charge in exercising any power conferred on him by section 72, may redeem the charged land, lease or charge at any time before it has been sold under section 75, and any agreement or provision which purports to deprive the chargor of this right of redemption shall be void; and, for the purposes of this subsection land, a lease or charge shall be deemed to be sold when a bid has been accepted at the auction sale." ## Section 75(2) of the Law "where the chargor is in possession of the charged land or the land comprised in the charged lease, the chargee shall become entitled to recover possession of the land upon a bid being accepted." ## Consequences of These Two Sections The consequences of these two sections is that the Property is deemed sold upon the Bank accepting a bid/offer to purchase and the Bank is then entitled to recover possession (Scotiabank & Trust (Cayman) Ltd v Barnes (aka Christian) (Judgment delivered on 21st December 2016 and reported at 2016(2) CILR Note 7) ## Good Faith/Valuations The Debmit that price agreement between the Bank and the Purchaser is significantly under value and that Appraisers and Real Estate Marketers are artificially decreasing property valuations to enable banks to sell properties significantly under value and to secure their fees. The Defendants believe that this is what is occurring in this instance. Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 14 of 24
Practice Direction 5 of 2012 provides that "The sanction of the Court of a price obtained whether by public auction (by listing on the MLS or otherwise) or by private treaty, is more likely to be granted where the original asking price has been set by the chargee by reference to an independent valuation. In this way the Court will be able more likely to conclude that the chargee has acted in good faith in exercise of its rights under the charge."
Practice Direction 4 of 2014 provides – "Practice Direction No.5 of 2012 directs that the objective of a public auction as contemplated by Section 75 can be achieved by way of listing on the Multiple Listing System by reference to a reserve sale price that reflects the fair market value of the property. This will usually be achieved by using two independent valuations (taking the median of the values where the valuers disagree). Where the reserve price is not met within a reasonable time, the discretion in the chargee to instruct its agent gradually to lower the reserve until the true market price is realized, must also be recognized." Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 15 of 24
The Defendants' argue that each party, that is the Chargor and Chargee must independently obtain one valuation each before a reserve price can be fixed: that this is the intention of Practice Direction No. 4 of 2014. This argument fails for several reasons – (a) If the intention of the Practice Direction was to place a burden on the Chargor to obtain a valuation I would expect the Practice Directions to expressly provide for this. (b) If the requirement was for each party to obtain one valuation, then the process could be frustrated by the Chargor simply not obtaining a valuation, as occurred in this instance 1 . This could not have been the intention. (c) Practice Direction No. 4 of 2014 provides that a reserve price reflecting the fair market value will usually be achieved by using two independent reports – it does not expressly mandate reports; and (d) Practice Direction No. 5 of 2012, does not mandate that valuations be obtained, rather that the Court is more likely to conclude that the chargee has acted in good faith if such a report is obtained. (e) The Courts have found that "[the] best evidence of market value is the reaction of the market" (see Scotiabank (Cayman Islands) Limited v Rankin 2004-05 CILR Note 26 and Bank of Butterfield v Thornton & Thornton Cause No. 307 of 2010, written decision given on 29 th March 2011) which I equate to mean the property's achievable price. The valuation is an estimate only. This is reflected in Practice Direction No. 4 of 2014- ``` 1 At the ex parte hearing the Defendants relied on reports prepared in 2008 and 2009 to establish that the property was valued in excess of CI$700,000. They advised that they could not afford to obtain an updated valuation. Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 16 of 24 ```
Given the foregoing, the position must be that valuations are guides as to the initial listing price, but that, ultimately, it is the market itself which determines a property's true value. In this regard, the history of the valuation and listing of the Property is very illuminating. I have been provided with several valuations, obtained between 2001 and 2018. I find that I can place no weight on any valuations that are more than 3 years old, as there are simply too many factors that could occur over such a long period which would affect the value of a property. Although there has been no direct expert evidence on the issue, I take judicial notice of the fact that the housing market in the Cayman Islands is not static, it fluctuates as a result of many factors. Some of those factors are mentioned in the valuations for this Property, such as demand and availability of properties of similar type at the relevant time, the condition of the property, location and amenities in the area. The best evidence of market value at any given time is the reaction of the market. In 2014 BCQS estimated the Property's market value to be CI$350,000, while Integra Realty Resources estimated the market value to be CI$425,000.00. The Property was therefore listed at CI$425,000.00. The list price was reduced to CI$400,000.00 in February 2015 due to lack of interest. The price was further reduced to CI$385,000.00 in April 2015 following a further period during which no showings were requested by potential purchasers. On both occasions the market interest report suggested that the lack of interest was due to the property being in an unfinished and dilapidated state and in location. In 2015 the Bank obtained an updated valuation based on an inspection of the property. The report concluded that the property was valued at CI$333,000.00. As a consequence of these reports in December 2015 the Bank instructed that the list price be reduced to CI$370,000.00. Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 17 of 24
After the Defendants defaulted on the last agreement in 2016, the Property was relisted in September of that year at CI$350,000.00. On the basis of further market interest reports, the list price was reduced to CI$340,000 in February 2017, CI$330,000 in August 2017, and CI$320,000 in November 2017. The reports identified a number of obstacles to selling the property, including the 2nd Defendant's presence at the property, the length of time the property had been on the market, that the property was not connected to city water, and poor upkeep.
The Bank instructed JEC and Bould Consulting once more in December 2017. They concluded that the Property was valued at CI$322,000.00 and CI$300,000.00 respectively. The Defendants take particular objection to these two reports as they were done without an inspection of the house ("drive-by" only).
As I have already outlined, the Defendants assert that the low valuations of more recent reports are as a result of large-scale collusion between the appraisers, realtors, and banks to sell foreclosed properties below their true value, to secure their own fees while leaving owners significantly out of pocket. The Defendants have the burden of proving on the balance of probabilities that the Bank acted in breach of its duty of care, including the assertion that it was sold under value. Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 18 of 24
In preparation of today's hearing the Defendants instructed IRR to complete a report. The 1st Defendant adduced this report in evidence. The report appears to be very thorough. IRR concluded that the Property's market value is CI$290,000.00. Unusually, the Defendants invite me to find the IRR's report unreliable and inadmissible. They complain that IRR's approach to the Realtor for the sale price was inappropriate, tainting the appraiser's opinion. They assert that the appraiser's conclusion that the market value is the same as the list price is evidence of collusion. I have read the report and I can find no basis for believing that the appraiser artificially decreased the value or that there was any flaw in their methodology. I noted that the appraiser made an upward adjustment to the square-foot value, which acts in the Defendants' favour. I am satisfied that IRR's report is accurate and reliable.
JEC and Bould updated their report last month and they further decreased their assessments. Given the history of the ever decreasing list price being unable to attract purchasers for so many years and the condition of the property as evidenced in the various reports, I am not surprised at their conclusions. Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 19 of 24
JEC, Bould Consulting and IRR are certified and Court approved firms. They are bound by a Code of Ethics. I could not find any flaws in their methodology. Having reviewed the reports I can find no basis for suspecting, let alone finding, that the IRR, JEC, Bould Consulting or any of the other companies who have valued the Property in the past are part of a conspiracy to assist the Bank in selling this property. The Defendants have not presented any credible evidence to even suggest that there is collusion or bad faith, only general hearsay and speculation. For the same reasons I reject the Defendants’ suggestion that I direct the Lands and Survey Department to conduct yet another valuation. I accept the 2017 and 2018 reports are reliable estimates of the Property’s market value. There is no need for me to calculate the median value between any of the reports as the purchase price is within a reasonable margin of the recent reports.
Common sense dictates that a scheme to sell this Property under value would be counterproductive to the Bank as the present purchase price is considerably less than even the remaining principal balance. A successful sale of the Property at a higher price years ago would have been more beneficial for the Bank and the Defendants, as the Bank may have recouped more if not all of the outstanding sums and avoided years of legal and penalty fees and efforts trying to resolve the matter.
I reject the Defendants’ assertion that this Property is valued in the region of CI$500,000 to CI$800,000.00 as they assert. They have not adduced any evidence to corroborate this. The rebuild cost is one method of determining the market value but not the only definitive method. In this instance, the market value is only definitive, and the Defendants’ assertion is inconsistent with the evidence. Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 20 of 24
The 2 nd Defendant submitted that if the Property has to be sold then he should be paid for his "sweat equity". He proposes that he should receive a portion of the proceeds to reflect his labour and investment in the property over the years, irrespective of the loan balance: as the owner he should not come away "empty-handed". However, the concept of "sweat equity" has no foundation in law. On the evidence before me I am satisfied beyond doubt that the Bank has made every effort to assist the Defendants in retaining the house. They have acted in good faith and the purchase price agreed is aligned with its true market value. ### The Offer to Purchase With respect to the Defendant's argument that the OTP has expired, it is important to recognise that the contract for sale is between the Bank and the purchaser; the Defendants are not a party to that transaction. That agreement gives rise to rights and liabilities between the contracting parties. Whether the Defendants are provided a copy of the OTP or not is immaterial. On the evidence adduced by the Bank I am satisfied that the Bank has accepted an offer to purchase following public auction, which is now unconditional. The Defendants no longer have a right of redemption; The Bank has the right of possession (see paragraphs 43-45 above). **Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009** Page 21 of 24
Other complaints
The Defendants assert that the Bank should be estopped from selling the Property as it would leave them out of pocket as the sale price is considerably more than the balance of the loan. Whether the debt is more or less than the purchase price is immaterial to whether the Bank has a power of sale.
The Defendants have referred to community concerns that the number of foreclosures are increasing. They seek the Court’s intervention to prevent what they consider to be unfair practices by banks against Caymanians who fall on difficult times. Without commenting upon the validity of their concerns, this is not the appropriate forum. Any policy decisions or legislation providing consumer protection or changes to the regulation of the banking industry or the Law are matters for Government and the Legislature.
For the avoidance of doubt, even if the Bank had not yet accepted an offer, the Court could not have mandated the Bank to refinance the loan. This is a commercial transaction in which the bank has acted in good faith and in accordance with the Law and the Charge.
Even in February/March of this year, when the Defendants made their last attempt at refinancing the loan, it was too late as the Bank had already accepted the offer to purchase as they were entitled to do. **Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009** Page 22 of 24
```html 1 68. I have no reason to doubt that the initial causes of this family’s financial 2 difficulties were beyond their control and unfortunate, but they do not 3 provide a reason in law to prevent the Bank from exercising its lawful power 4 of sale over the Property. The Defendants entered into these various 5 agreements freely. It is unfortunate that the Defendants did not accept years 6 ago that they would not be able to maintain the repayments in the long-term. 7 This has led to them incurring considerable additional costs, substantially 8 increasing their debt with the Bank. Although they were may not have been 9 the creators of their initial plight (nor were the Bank), they compounded the 10 situation by failing to accept the inevitable. 11 12 69. It is my judgment that there is no basis in law on which the Court can prevent 13 the sale of the Property from completing; the Bank is entitled to an order for 14 possession and to issue of Writ of Possession. Upon the sale concluding, the 15 Bank will issue the Defendants with an updated statement at which time they 16 will be advised of the remaining balance on the loan. It is a matter between 17 the Bank and the Defendants as to how, and how much, of the remaining debt 18 will be enforced. Given that the Defendants have been aware of the sale of 19 the Property since February of this year, they were served with a notice 20 requesting vacant possession in March and the completion date has already 21 been postponed as a result of the Defendants’ attempt to prevent the sale, I 22 order that the Defendants and any other occupants vacate the Property 23 within 7 days. The Bank may issue of Writ of Possession on or after 7 days 24 from today. 25 26 70. I make no order for costs as counsel for the Bank confirms that the costs of 27 these proceedings are governed by the terms of. 28 29 30 12/17 Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 23 of 24
As a final observation, I note that by virtue of section 72(3) of the Law, in the event that there has been an irregular or improperly exercise of the Bank's power of sale, the Bank has breached its obligation to act in good faith or the property has been sold under value, the Defendants' only remedy is damages against the Bank. This provision was not drawn to my attention during the application for the interim injunction. Had this been drawn to my attention I would not have granted the interim injunction. ORDER
The Defendants' summons filed on 18th April 2018 is dismissed.
The interim injunction made on 19th April 2018 is discharged.
The Plaintiff's application for an Order for possession is granted. The Defendants shall deliver up vacant possession of the Property to the Plaintiff within 7 days of this order.
The Plaintiff is granted leave to issue a Writ of Possession on or after 7 days of this Order.
No Order as to costs. Dated the 9th day of May 2018 [Signature] [Seal] Justice Kinunn Acting Judge of the Grand Court Ex-tempore Judgment | 20180509 | Coram: Gunn J (Acting) | G371 of 2009 Page 24 of 24