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UPDATE: Royal Bank gets green light to challenge Ocean Chimo ruling

Published:Wednesday | August 10, 2016 | 12:00 AMMcPherse Thompson

RBC Royal Bank and parent Royal Bank of Canada lost round one in their efforts to have a lawsuit filed six years ago by Ocean Chimo Limited thrown out of court, but has been given another chance to argue their case.

The appeal filed by the banks aims to overturn a Supreme Court decision handed down two years ago that denied their application to throw out a lawsuit by Ocean Chimo Limited that alleged RBC Royal Bank breached a loan agreement with the hotel company.

Ocean Chimo initially filed the lawsuit in 2010. The next year, the banks placed the company, which operated the former Wyndham Kingston, in receivership. RBC Royal Bank later sued director Delroy Howell for more than US$30 million as guarantor of loans to Ocean Chimo. That case is ongoing.

In response to the 2010 lawsuit filed by Ocean Chimo, which preceded the receivership, the banks argued before Supreme Court Justice Carol Edwards that Ocean Chimo's claim should be stayed until the company provided proof it either had the consent of the receiver to continue the litigation, or that its directors provide indemnity for the costs of the claim were Ocean Chimo to lose its case. They also urged the court to strike out the lawsuit if Ocean Chimo failed to provide such proof. It is usual for the court to order the losing party in a lawsuit to pay the victor's legal fees.

But Justice Edwards ruled in July 2014 that there was no credible evidence that Ocean Chimo could not pay its cost and in the absence of said evidence from the banks, Ocean Chimo’s claim could proceed. She also granted the banks permission to appeal her ruling.

RBC Royal Bank Jamaica, RBC Royal Bank Trinidad & Tobago, Royal Bank of Canada, Samuel Billard, Raymond Chang and Greg Smith subsequently appealed Edwards’ ruling. However, Ocean Chimo Limited sought to block the appeal on the basis that the papers had not been properly served on the company.

In July 2016, the Court of Appeal ruled that the banks had demonstrated every intention to comply with the rules and, as such, denied Ocean Chimo's request. The appeal court also acknowledged in its ruling that the banks' attorneys made an error by only serving Ocean Chimo the first page of the written submissions along with the notice of appeal. But the justices found that the banks had acted swiftly to rectify the error the following day after Ocean Chimo's attorneys brought it to their attention.

"They filed the required documents within time and attempted to serve them timeously," said the judgment written by Justice Patrick Brooks.  The appellate court ruled that Ocean Chimo had been properly served with the notice of appeal, but also awarded costs to Ocean Chimo.

The hotel company was given 14 days to file its response to the banks' appeal of Justice Edwards' ruling.

Ocean Chimo's attorney, Roderick Gordon, told Gleaner Business on Tuesday that the response has been filed.

The substantive case is yet to be heard.

CORRECTION: This article has been updated throughout to clarify the date and correct details of the lawsuit and differentiate it from other legal action in which the parties are involved.