Mon | Apr 6, 2020

Judge's retirement nullifies $29b lawsuit - Richard Lake case against NCB to be tried again

Published:Friday | October 12, 2018 | 12:00 AM
Businessman Richard Lake.

The Court of Appeal has ordered a new trial in a lawsuit filed 13 years ago by businessman Richard Lake that was initially decided in favour of National Commercial Bank Jamaica Limited, NCB.

The written judgment in the case was delivered after the deliberating judge who heard the trial had retired from the bench.

The trial judge had issued no verdict in the case. Subsequent to his retirement, another Supreme Court justice, Roy Anderson, reviewed the proceedings, and in September 2013, decided the case in favour of NCB.

However, the Court of Appeal ruled that while Anderson had acted "in good faith", the judgment he delivered would have to be nullified, in an appeal of Anderson's ruling by Lake and his companies. The decision turned on a similar case cited in the appeal, Paul Chen-Young v Eagle Merchant Bank Jamaica Limited, where a new trial was ordered under similar circumstances.

Court of Appeal Justice Patrick Brooks ordered on September 27 of this year that the lawsuit against NCB be referred to the registrar of the Supreme Court for a new trial date to be set.

Lake initially sued NCB in 2005 for $29 billion in relation to a hotel development taken over by the bank more than two decades ago for unpaid debts and placed in receivership.

The property, known as Rio Blanco Village Hotel in receivership, was subsequently sold to Lake in May 1993 by the receiver-manager hired by the bank, Karl Aird, but the businessman later contended that the receiver failed to fulfil the conditions of the agreement. The deal for the 27-acre development was worth about $64 million, according to press reports.

Through three of his companies, Lake sued NCB as well as Rio Blanco Development Company and the receiver for breach of contract and resulting losses, citing failure to deliver duplicate titles for four lots acquired at White River, St Mary.

The suit was filed through associated companies Caricom Investments, Caricom Hotels and Caricom Properties, all controlled by Lake and had shareholders and directors in common.

The Supreme Court judgment quotes the value of the lawsuit at over $29 billion, but with mounting interest charges the figure had risen above $31 billion.

Aird was appointed receiver-manager by NCB in October 1992 under a debenture over the assets of Rio Blanco and as mortgagee of properties registered in the name of the development company, according to the judgment.

In May 1993, Aird, in his capacity as receiver-manager, executed two agreements with Caricom Investments, one for sale of land involving 53 titles, and the second for chattels and property.

A condition of the sale of the land was that the vendor, Rio Blanco, would apply for the relevant certificates of title immediately after registration of the ownership.

The claimants contended that the titles for four lots were not delivered, and that this, in turn, served as an encumbrance to the other 49 certificates of title. As a result, the contract was not concluded, they contended.

Lake's companies filed their appeal against the Supreme Court judgment earlier this year. Appellate Justice Brooks noted in the September 27 ruling that although several grounds of appeal were cited, it was only necessary to address the ground that it was a "nullity", having been written by a judge who did not have the authority to deliver the judgment.

The Caricom companies relied on the judgment in the Chen-Young case decided earlier this year to make their case for a new hearing.

In Chen-Young v Eagle, the Court of Appeal similarly declared the judgment in that case a 'nullity', because the three judges who heard the appeal had all retired from the bench by the time their reasons and judgment were delivered.

Justice Brooks noted that although NCB had filed a counter-notice of appeal, it did not pursue it in the light of its acceptance of the force of the decision in Chen-Young v Eagle.