Tewani company triumphs in suit over forex loan
The Court of Appeal has reaffirmed that a company which sought to renege on a foreign exchange loan on the basis that the lender was not an authorised dealer still has to make good on the US$747,909 debt.
Alexander House Limited, whose principal is Christopher Moore, argued that the loan it took from Reliance Group of Companies, which is owned by Gordon Tewani, was granted in the course of the latter company's dealing in foreign exchange in contravention of the Bank of Jamaica Act and was therefore unenforceable.
However, Supreme Court Justice David Batts rejected that argument and his decision was affirmed on appeal in a ruling handed down in early July.
The appellate court was essentially asked to determine the circumstances under which a mortgagor can get an injunction to restrain a mortgagee from exercising its powers of sale over property.
According to the background outlined in the judgement written by Justice Marva McDonald-Bishop for the three-member panel, the loan in question was granted four years ago, around July 2014, when Reliance Group loaned US$600,000 to Alexander House Limited.
The loan was secured by a mortgage on property 1 Waterloo Road, an empty lot opposite Devon House, St Andrew and guaranteed by Christopher Moore.
Alexander House fell into arrears and in June 2016, Reliance Group attempted sell the Waterloo property to satisfy the debt. The issue ended up in court, where Alexander House argued that since Reliance was not an authorised dealer, the mortgage was illegal.
Reliance Group countered that it was not in the business of lending foreign currency and only did so in emergency situations or as a specific transaction to particular individuals.
The Supreme Court ruled that the alleged breach of the BOJ Act should be resolved separately through a trial.
At the appellate level, the court accepted the submissions of Patrick Foster QC, who argued on behalf of Reliance Group that a breach of the relevant section of the BOJ Act does not by itself render a mortgage transaction illegal or unenforceable.
The panel also agreed that the issue should be resolved through trial. However, the Financial Gleaner has not been able to ascertain whether Moore plans to pursue the issue as neither Abe Dabdoub nor Karen Dabdoub-Harris, who represented Alexander House, were reached for comment.