Tue | Jan 26, 2021

UPDATE: Homeowner gets second chance to plead case in fight with VMBS

Published:Wednesday | January 15, 2020 | 12:00 AMMcPherse Thompson/Assistant Editor – Business
Inside a VMBS branch in Kingston.
Inside a VMBS branch in Kingston.

The Court of Appeal has set aside a judgment that favoured Victoria Mutual Building Society, VMBS, which sold a confiscated property in the upscale residential community of Long Mountain in Kingston at what the mortgagor said was a grossly undervalued price.

In January last year the Supreme Court, at the behest of VMBS, dismissed the homeowner Winston Charles’ claim for want of prosecution, but Court of Appeal Justice Patrick Brooks, in restoring the claim, ruled that a consideration of the merits of his case suggests that it has a real prospect of success.

According to the Court of Appeal judgment delivered in late December, Charles’ claim arose out of VMBS’ s disposal of his premises at Portlandia Close, Long Mountain, which was carried out under the powers of sale contained in a mortgage. Charles had mortgaged the premises to VMBS, but he fell into arrears and the building society threatened to sell.

The valuation of the premises was done by Wescar Development Limited, the other defendant to Charles’ claim.

VMBS’s attempts to sell by public auction were unsuccessful so it tried to sell by private treaty. During that time Charles had his then attorneys write to VMBS informing it of inaccuracies in the description of the premises in advertisements.

He informed VMBS that whereas it was advertising the premises for sale as a two-bedroom, one-bathroom house, the premises were, in fact, a five-bedroom, five-bathroom, freestanding house.

Charles pointed out that the premises as they had been described by VMBS and its valuator would fetch less than their true value.

VMBS transferred the title to the premises on or about September 5, 2011. Two months later, On November 3, the building society accounted to Charles for the sale proceeds and delivered the surplus of $4.33 million to him. Charles alleged that the sale price undervalued the property and in December 2011 he sued VMBS and Wescar to recover damages.

Both VMBS and Wescar filed defences to Charles’ claim. However, he failed to pursue the claim and VMBS applied to have it struck out. On January 9, 2018, Justice Andrea Pettigrew-Collins ordered the claim dismissed for want of prosecution.

In August 2018 Charles, who was by then representing himself, applied for the claim to be restored.

VMBS resisted the application, asserting that it made all permissible attempts to serve Charles, but he was not accessible for personal service.

When Charles’ application came for hearing before a judge of the Supreme Court on January 11, 2019 he had a lawyer, but the court refused the application and also refused him permission to appeal. He later renewed his application and the Court of Appeal granted it.

Justice Brooks, who wrote the decision of the Court of Appeal panel also comprising Justice Hilary Phillips and Justice Marva McDonald-Bishop, said Charles’ attorney Isat Buchanan pointed out that the persons to whom VMBS sold the premises resold them less than two years later for $41.5 million, significantly more than the $24.5 million purchase price that they paid.

According to the judgment, attorney Emile Leiba, who represented VMBS, said that Wescar had ascribed a market value of $32 million and a forced sale value of $25.6 million, while the valuation report that Charles had secured indicated that the premises would fetch in the region of $40 million and that a reserved price of $33 million should be set.

Justice Brooks said the absence of the Supreme Court judge’s reasons for her judgment has made the case a more difficult matter than it could have been. He said an analysis of the affidavit evidence, however, is conclusive that Charles was not actually served with the application to strike out his claim.

VMBS asserted that the Supreme Court judge properly exercised her discretion when she refused to restore Charles’ claim. First, VMBS asserted that it followed the provisions of the Civil Procedure Rules in attempting to give notice to Charles of the application to strike out his claim.

Second, VMBS says if Charles’ claim is restored it would cause VMBS irremediable prejudice. According to VMBS, Charles delayed prosecuting his claim for so long that in the meantime the witness, Howard West, the valuator and principal of Wescar who actually carried out the valuation, and who VMBS would have relied upon for its defence, has died.

The Court set aside the judgment of the Supreme Court handed down on January 9, 2018 and restored Charles’ claim.

Contacted, attorney Jonathan Morgan, who also represented VMBS, said he does not have the answer as to whether VMBS will be appealing the matter and declined further comment at this time.



CORRECTION: It was incorrectly stated in the original headline to this story that the Court of Appeal found that VMBS sold the mortgagor’s house undervalue. That matter is yet to be determined.