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JN Bank barred from disposing of Ocean Boulevard apartment

Published:Friday | August 16, 2019 | 12:13 AM

The Supreme Court has barred JN Bank from disposing of an apartment at Ocean Boulevard on the Kingston waterfront, pending the trial of a claim to determine whether the financial institution acted in bad faith when it sold the property.

Devon Morris and Cherrida Morris filed an application for an injunction on February 5, which was granted by Supreme Court Justice Kissock Laing, who handed down his decision at the end of July.

The apartment was secured by a registered mortgage in favour of joint financiers JN Bank and the National Housing Trust when the Morrises acquired it. The court judgment did not say when the acquisition occurred, but noted that they failed to meet payments on the mortgage, which fell into arrears.

JN Bank sold the property at auction, even though the Morrises had requested information from the bank to pay off the debt. It followed efforts by the couple to transfer the property to Cherida’s mother, Morlyn Mangaroo-McBean. In their case before the court, they argued that Mangaroo-McBean had legal and beneficial interests in the property.

They also asked for an order that JN Bank and its debt-collection agency Total Credit Services deliver to them the original duplicate certificate of title together with a stamped registerable discharge of the mortgage, and in the alternative, that they are entitled to damages for breach of contract, breach of statutory, equitable and fiduciary duties, and negligence.

The Morrises’ attorney, Patrick Foster, QC, submitted that there was evidence of bad faith on the part of JN. The Morrises alleged, for example, that in 2017 after their account fell into arrears, an employee of JN advised them to focus on servicing the NHT portion of the mortgage.

They contended that the JN employee also advised them that despite the notice that the bank was prepared to foreclose, the property was not in danger of being sold as long as they continued to service the loan in its original terms.

They also alleged that after that assurance, they were of the view that their property was not in any jeopardy of being sold and they would have received a fresh notice or communication if the status quo had changed. However, they maintained that they did not receive any additional notice in 2018, and that their next communication with the bank was by their then attorney Debbie-Ann Gordon, who on August 21, 2018, made a formal request to JN on their behalf to pay off the outstanding balance.

JN Bank’s attorney, Christopher Dunkley, was not reached for comment. But he has argued in court that there was no wrong-doing by the bank.

Foster, in laying out a sequence of events to the court, said the sale of the apartment was around August 31 of last year, and that it was sent to the Stamp Office on September 3. He also said that it was only on September 5, 2018, that the Morrises attorney received correspondence regarding the sale.

However, the bank’s defence to the lawsuit cites a letter dated months earlier, May 1, 2018, in which Total Credit Services informed the Morrises of an offer of $13.5 million that was accepted for the property.

“What is clear is that the chronology of events around this period is in dispute and may have a bearing on a court’s finding on the issue of bad faith,” Justice Laing said.

He noted that if the agreement for sale was not signed until August 31, 2018, as the Morrises asserted, then there is a serious issue to be tried as to whether JN acted in bad faith in disposing of the property when the Morrises’ attorney was making overtures on their behalf.

As a result, he granted an injunction restraining JN Bank from disposing of the property until the trial of the claim.

The restraint was granted on condition that the Morrises pay over $6.51 million to the court within 60 days of the order, based on an undertaking that they would compensate the defendants were they to lose their case.