Red Rock Resources - Re: RRR Stream Log - ST. JOHN'S PROPERTIES (V.N) LTD....

ST. JOHN'S PROPERTIES (V.N) LTD. v. VILLA NOVA LTD. (IN RECEIVERSHIP) AND ROYAL BANK OF CANADA [HIGH COURT - CIVIL SUIT NO. 153 OF 1994 ((Williams, C.J.) January 28, February 22, 1994] (1994) 30 Barb.L.R. 64 Injunction - Application for discharge of injunction - Principles governing grant - Whetherthere is a serious issue to be tried - Whether damages could be an adequate remedy - Whether anundertaking as to damages would be of value. Facts: On January 28, 1994 the plaintiff obtained an interlocutory injunction restraining thedefendants until further order from offering for sale and/or selling and/or disposing of and/ordealing with certain items of property, namely, furniture, cutlery and paintings. On or aboutJanuary 10, 1994 a receiver for the plaintiff was appointed pursuant to a debenture datedDecember 12, 1988 made between the plaintiff and the second defendant and others. Thedebenture predated the agreement on which the plaintiff relied for its title. On an application for anorder to discharge the injunction - [64] Held: (i) That a matter of law fell to be determined, namely, whether or not the agreement wasprohibited, and this raised a serious issue to be tried; (ii) if the items were sold and it was later found that the plaintiff was right in his contention,damages would not be an adequate remedy; (iii) there being no directors of the plaintiff and with the shareholding being uncertain, anundertaking as to damages by the plaintiff would be of doubtful value. Taking all thecircumstances into account, the best course would be to make an order for an early trial. Theinterest of the defendants would be further protected by counsel's undertaking on behalf of theplaintiff not to dispose of the items pending trial. Miss E. Kentish in association with Mr. B.L.V. Gale for the plaintiff. Mr. David Simmons, Q.C. in association with Mr. Ernest Jackman for the defendants. WILLIAMS, C.J.: On January 28, 1994 the plaintiff St. John Properties (V.N.) Limited took outa writ against the defendants, Villa Nova Limited (in Receivership) and the Royal Bank of Canadaclaiming the following relief: 1. A declaration that the plaintiff is the beneficial owner of the furniture, cutlery andpaintings described in the Second Schedule of an agreement dated May 29, 1992 madebetween the plaintiff and Villa Nova Ltd. In this agreement Villa Nova Ltd. agreed to selland the plaintiff to buy the scheduled items; 2. An injunction to restrain Villa Nova Ltd. and the Royal Bank of Canada from offering forsale and/or selling and/or disposing of and/or dealing with the scheduled items in anymanner whatsoever. On the same date the plaintiff, on an ex parte summons supported by the affidavit of Mr. Turney,a partner of R.G. Mandeville & Co., and heard on a certificate of urgency, obtained aninterlocutory injunction restraining the defendants until further order from offering for sale and/orselling and/or disposing of and/or dealing with the items. It appeared that on or about January 10,1994 Mr. Patrick Toppin of Toppin, Ward and Co. had been appointed receiver of Villa NovaLtd. pursuant to a debenture dated December 12, 1988 made between Villa Nova Ltd of the firstpart, Northern Sands Ltd. of the second part, Andrew Ronald Macmillan Bell and MargaretStephanie Bell of the third part, and the Royal Bank of Canada of the fourth part. It also appearedthat the scheduled items had been advertised for sale in an advertisement contained in theBarbados Advocate of January 23, 1994. By summons filed on February 9 and heard on February 16 on a certificate of urgency thedefendants are seeking an order to discharge the injunction granted to the plaintiff. The summonsis supported by the affidavit of the receiver.[65] Counsel for the defendants refers to two errors in the order that was served on the defendants:first, an incorrect date and second, an omission to state that the defendants could apply to setaside the order. These errors caused no prejudice and need not be mentioned further. I turn tothree matters discussed in argument. The debenture, which was executed on December 12, 1988, predated the agreement on which theplaintiff relies for its title to the scheduled items and counsel for the defendants points to clauses 3and 9 (n) which are in the following terms - "3. The Company (Villa Nova Ltd.) hereby charges with the payment and discharge of allmoney and liabilities hereby agreed to be paid or intended to be hereby secured ... so thatthe charge hereby created shall be a continuing security on .... Fourthly, the undertaking and all other property and assets of the company both present andfuture. The charge hereby created ... as regards the premises Fourthly described shall be a floatingcharge but so that the Company shall not without the consent in writing of the Bank createany mortgage debenture or charge upon and so that no lien shall in any case or in anymanner arise on or affect any part of the premises Fourthly described ranking either inpriority to or pari passu with the charge hereby created. 9. During the continuance of this security - (n) the company and Northern Sands shall not without the written consent of the Bank firsthad and obtained sell, lease, transfer, part with the possession of or otherwise dispose oftheir said respective properties or any of their properties or assets which shall be requiredfor the efficient carrying on of their business." Mr. Toppin, in paragraph 12 of his affidavit, deposes that the agreement was made without theBank's consent and characterized it as a device by the plaintiff, the first defendant and Mr. andMrs. Bell to remove assets from the first defendant and devalue the Bank's security. He continues: "13. I verily believe that the ... sale ... is a sham and not a genuine transaction between theparties and the parties of the ... sale had actual or constructive notice of the existence of thedebenture/mortgage ... and the fact that the items described in the Second Schedule wereand are charged by the ... debenture/mortgage. 14. I verily believe that the purpose and intent of the said agreement is to put [66] the assetsof the plaintiff company beyond the reach of the second defendant as a creditor of theplaintiff and, to that extent, is a disposition or purported disposition to defeat creditors. 15. I am advised by my attorneys-at-law and verily believe that when the plaintiff files itsStatement of Claim in this action, defendants will counterclaim for an order to declare theagreement void and of no effect." Counsel for the plaintiff submits that a matter of law has to be decided, namely, whether or not theagreement was one that was prohibited without the Bank's written consent and it is not disputedthat this raises a serious issue that has to be tried. The second matter discussed is the nature of the items, Mr. Turney having deposed in his affidavitthat antiques which are irreplaceable are included among the items being advertised for sale. Thequestion that follows is whether damages would be an adequate remedy if the items are sole and itis later found that the plaintiff was right in his contention that the agreement was outside the termsof the debenture. They clearly would not, so that I must proceed on the basis that damages wouldnot be an adequate remedy for the plaintiff. This brings me to the third point: the question as to the plaintiff's undertaking. The point is madethat according to the records in the Corporate Registry, there are no directors of the plaintiff, and,according to the receiver's affidavit, the shareholding is uncertain. Therefore, an undertaking bythe plaintiff would be of doubtful value. On the other hand, counsel for the plaintiff points out thatin the order the undertaking as to damages is given by the plaintiff's counsel, R.G. Mandeville &Co., not by the plaintiff and the plaintiff through its counsel is also prepared to give anundertaking not to dispose of the items pending trial. The receiver has raised a difficulty which is being encountered by the defendants. Enquiries arebeing made by prospective purchasers in respect of the real and personal property together. If amore ready sale or a better total price can be obtained by selling both house and contents togetherthis opportunity should begiven. My view is that taking all the circumstances into account, including the comparatively simple issuethat requires the decision of the court, the best course is to make an order for an early trial. Theinterests of the defendants will be further protected by counsel's undertaking on behalf of theplaintiff not to dispose of any of the items pending the hearing. An early trial is ordered. Costs inthe cause. [67]