Globe Finance Inc. v Paul Norman Marshall

• Jurisdiction: Barbados
• Judge: Mr. Justice Barry Carrington
• Judgment Date: 29 April 2022
• Neutral Citation: BB 2022 HC 011
• Docket Number: NO. CV 1057 OF 2015
• Court: High Court (Barbados)

Between

Globe Finance Inc.

Claimant

and

Paul Norman Marshall

Defendant

Before:

The Honourable Mr. Justice Barry Carrington, Judge of the High Court.

NO. CV 1057 OF 2015

IN THE SUPREME COURT OF JUDICATURE

HIGH COURT

CIVIL DIVISION

Appearances:

Ms. Joia Reece of Denton's Delany, Attorneys-at-Law for the Claimant.

Mrs. Duana Peterson of Athena Chambers, Attorney-at-Law for the Defendant

1 The Claimant agreed to lend the Defendant the sum of Sixty-three thousand dollars ($63,000.00) to purchase a 2007 Mercedes Benz Sedan, 1800. The loan was secured by the execution of a Bill of Sale. — The Defendant defaulted in his payment of the agreed monthly instalments due to the Claimant and caused the said loan to fall into arrears. The vehicle was repossessed. It is alleged that the Defendant offered to pay $25,000.00 for the vehicle but the Claimant sold it for the much lower sum of $10,000.00. The Claimant seeks to recover the outstanding balance of the loan principal, accrued interest, wreckage and bailiff fees together with costs. The Defendant alleged that the Claimant had a duty to mitigate its losses and failed to do so and consequently, is not entitled to recover the full amount under the loan.

Background

2 Globe Finance Inc. (“the Claimant”) and Paul Marshall (“the Defendant”), pursuant to a Facility Letter dated the 23 ^rd day of August 2013, entered into an agreement by which the Claimant provided a loan in the sum of Sixty-three thousand dollars ($63,000.00) to the Defendant. The terms were that the Claimant was to pay the principal sum and interest thereon at the rate of 11% per annum by forty-eight (48) monthly instalments in the amount of $1,629.00 commencing on the 23 ^rd day of September 2013 and continuing thereafter on the 23 ^rd day of each succeeding month. A Bill of Sale dated the 10 ^th day of September 2013 was issued as security for the said loan on the motor vehicle described as a 2007 Mercedes Benz Sedan, 1800 Engine CC, registration no. MG 526.

3 In accordance with clause 6 of the Bill of Sale, provision was made for the Claimant, its servants or agents to seize the said vehicle on default in payment and after the expiration of five (5) clear days and sell the aforementioned vehicle by public auction or private contract. Significantly, the Defendant failed to repay the agreed monthly instalments to the Claimant with the last payment being made on November 4, 2014 in the sum of $1,700.00, thereby causing the loan account to fall into arrears in breach of the terms of the agreement.

4 Subsequently, the Claimant sent correspondence to the Defendant (December 11, 2013, January 8 & 23, 2014; March 12 & 27, 2014; April 11 & 24, 2014; May 9 & 26, 2014; June 10, 13 & 23, 2014; July 9 & 24, 2014; August 6, 2014, September 8, 2014, October 10, 2014 and November 10, 2014) indicating that the loan was in arrears and unless liquidated, the vehicle would be repossessed in an effort to recover the debt. There does not appear to be any responses to the correspondence. On the 22 ^nd day of March 2015, the Claimant repossessed the vehicle and drove it from the Defendant's premises to the Claimant's premises where it was stored.

5 The Claimant instituted proceedings seeking the following:

• i. payment of the sum of $52,439.84 which represented the outstanding balance of the loan principal inclusive of contractual interest, wreckage and bailiff fees;

• ii. interest on the judgment sum at the rate of 6% per annum pursuant to section 35 of the Supreme Court of Judicature Act, Cap. 117A in conjunction with Part 65A.2 of the Supreme Court ( Civil Procedure) Rules, 2008;

• iii. costs; and

• iv. such further and/or other relief

6 The Defendant alleged that he spoke to representatives of the Claimant regarding the sale of the said vehicle to satisfy the debt owed to the Claimant and to mitigate any loss/damage but was informed that the vehicle was in a state of disrepair. The Defendant however contended that the vehicle had been regularly maintained by its agents Simpson Motors and the only known issue of concern was the AC unit. It is further alleged that around November 2019, the vehicle remained unsold and stored at the Claimant's premises despite Clause 6 of the Bill of Sale which clearly identified the method of disposal. The Defendant claimed that he made oral offers to purchase the vehicle from the Claimant and visited its premises to inspect the said vehicle. By letter dated the 31 ^st day of January 2020, the Defendant made an offer to the Claimant to purchase the vehicle for the sum of Twenty-five thousand dollars ($25,000.00 BDS) but the Claimant refused to accept it. However, Counsel for the Claimant sent correspondence dated the 10 ^th day of November 2020 informing the Defendant that the vehicle was sold by the Claimant in or around November 2019 for the sum of $10,000.00.

Issues

7 The issues which arise for determination before the Court are as follows:

• i. whether the Defendant violated the terms of the loan agreement by failing to satisfy the agreed monthly instalments as owed to the Claimant;

• ii. whether the Claimant had a duty to mitigate its losses and if the duty existed, if it failed to do so; and

• iii. whether the Claimant is entitled to recover the remaining principal together with accrued interest and costs following the seizure and sale of the vehicle.

Evidence

8 The evidence was in the form of witness statements which were formally admitted and augmented by evidence on oath. Mrs. Mona Griffith, Collection's Officer and Mr. Michael Nurse, a Mechanic gave evidence for the Claimant, while the Defendant gave evidence on his behalf. Mrs. Griffith said that a valuation in the amount of $20,000.00 was received in August 2018 and the vehicle was sold for $10,000.00 on December 10, 2019. Under cross examination, Mrs. Griffith said that the vehicle was sold about 4 years after the repossession and that they could have sold it for a higher price but below the valuation. She said that any such sale from the offers received was not in keeping with their established procedures. The witness confirmed receiving an offer of $25,000.00 from the Defendant but refused to accept it since there was an outstanding balance of over $50,000.00 on the loan to purchase the vehicle. Mrs. Griffith said that the vehicle fetched such a low price because of issues such as the upholstery the a/c unit and the engine, plus the depreciation which occurred in the ensuing years. Mr. Nurse said that he inspected the vehicle in 2015 and it was in good condition and could pass a road worthy test. He indicated that the brakes needed attention, the upholstery also need some work and there was an oil leak that needed to be fixed. He said that it needed some maintenance but not a significant amount. He also indicated that the vehicle could deteriorate if it was parked for four (4) years.

9 The Defendant, under cross examination admitted defaulting on the loan agreement and indicated that he understood that the Claimant could sell the vehicle which was used as security for the loan, and apply the proceeds to liquidate the debt or reduce the balance. He said that the vehicle's a/c was not working and there was a minor issue with the upholstery. He said that within the first twelve (12) to fourteen (14) months of the repossession, he unsuccessfully tried to find a buyer. He said that the vehicle was a 2007 model that he bought in 2013. He admitted that it could have deteriorated by 2019 when it was 12 years old.

Written Submissions of Counsel for the Claimant

10 Counsel for the Claimant, Ms. Joia Reece, submitted that by executing both the facility letter and the bill of sale, the Defendant expressly agreed to repay the loan sum to the Claimant by way of forty-eight (48) monthly instalments of $1,629.00 thereby establishing a contractual arrangement or agreement with the Claimant. Counsel then contended that the Defendant's failure to pay any one instalment, was a breach of the terms of the facility letter and the bill of sale entitling it to seize the vehicle. The case of Re Wood, ex p. Woolfe [1894] 1 QB 605 was cited as having established that in default of the payment of one instalment, the grantor is entitled to seize possession of the chattels for the total debt.

11 It is Counsel's submission that the obligations of the Defendant to pay the principal, interests and costs survive the Claimant's seizure under the loan agreement. She argued that the existence of security does not mean that the Claimant is bound to look only to the security for repayment of the debt. Counsel contended that the Defendant's personal obligation remains unaffected by the security and the Claimant may realize the security and, if it proves insufficient, sue for the debt which remains due. In support of this position, the Court was directed to para. 23 of the decision in Sagicor Finance Inc. (formerly the Mutual Finance Inc.) v Glenis Remi & Anor. [2016] ECSC J1214-2 (“ Sagicor Finance Inc.), where it was held

“…the Claimant in such instances has the right to pursue the Defendants for any shortfall in the debt after the seizure and sale of the vehicles.”

12 As it relates to the issue of mitigation [of losses], Counsel referred to the decision in Grenada Development Bank v Dexter Chance [2020] ECSC J1005-2 (“ Grenada Development Bank”) at para. 7 where the Court held that

“whether the mortgagee exercised due diligence in fulfilling its duty is a question of feet looking at all the circumstances. It is the effort rather than the result to which the Court looks. The burden rests on the mortgagor to establish that the mortgagee failed to discharge its duty”.

13 Reference was made to the Claimant's evidence which set out the steps taken to advertise the vehicle through its website, the period of time that the vehicle was advertised and the efforts to attract a buyer including...