First Caribbean International Bank (Barbados) Ltd v Belize Bank Ltd et Al
| Jurisdiction | Belize |
| Judge | Hafiz, J. |
| Judgment Date | 17 September 2008 |
| Court | Supreme Court (Belize) |
| Docket Number | 83 of 2006 |
| Date | 17 September 2008 |
Supreme Court
Hafiz, J.
83 of 2006
Mr. Michael Young SC for claimant.
Mr. Rodwell Williams SC for first defendant.
Mr. Fred Lumor SC for second and third defendants.
Mr. Eamon Courtenay SC for fourth defendant.
Real Property - Mortgage — Priority of charges — Whether security was a fixed or floating charge — Charging provisions examined — Finding that parties intended to create a fixed charge.
The claimant is a banking corporation duly incorporated under the Laws of Barbados West Indies with a branch duly registered in Belize carried on at #21 Albert Street, Belize City. On the 14th October 2002 they assumed all the assets rights liabilities and obligations of the Belize branch of Barclays Bank PLC in Belize.
The first defendant, The Belize Bank Limited (BBL) is a banking corporation operating in Belize. The second defendant, Development Finance Corporation (DFC) is a finance corporation operating in Belize. The third defendant, Social Security Board (SSB) is also a financial institution in Belize.
The fourth defendant, Stanley Ermeav is Receiver of charged assets of the fifth defendant, Belize Gold Bananas, the sixth defendant Tropical Produce Company Limited and the seventh defendant Toledo Fish Farming Company Limited. The eight defendant is Toledo Citrus Company Limited.
At the commencement of this claim there were second claimants and third claimants who removed themselves after hearing arguments from the first, second, third and fourth defendants that the claim cannot be brought in their personal capacities as Receivers and Liquidators. The third claimants were Court Appointed Liquidators of Caribbean Farming Limited. It is necessary to give the history of Caribbean Farming Limited (CFL) in order to get a better understanding of the claim before the Court. The claimant's submission is helpful in this respect. Caribbean Farming Limited is a company incorporated under the Laws of the Cayman Islands. However it is the holding company of several wholly owned subsidiary companies which own property in Belize, including the fourth, fifth, sixth, seventh and Eight defendants. This group of companies will be referred to as the Caribbean Farming Group (CFG).
The CFG has conducted the business of the growing, harvesting and sale of bananas, citrus and shrimp for many years and in that connection has acquired and managed farmlands in Belize. In the course of the said business the Caribbean Farming Group (CFG) has arranged financing for its operations and the subsidiaries of the CFG have created certain mortgages and charges as security for the financing provided from time to time. The financing has been provided variously by the first claimant, first Caribbean International Bank (Barbados) Limited, the first defendant the Belize Bank Limited, the second defendant the Development Finance Corporation and the third defendant Social Security Board (hereinafter called “the Lenders”). The various lenders separately took securities on properties through the different subsidiary companies and this led to complexity in the status of the securities and the respective positions of the lenders.
The CFG began experiencing financial problems and from March 2003 the first claimant made a formal written demand on the outstanding loans. Ultimately the first claimant petitioned the Cayman Court for liquidation of Caribbean Farming Limited and on the 8th of April 2005 Provisional Liquidators were appointed. (They are Marcus Wide and David Walker who removed themselves as second claimants).
On 1 July 2005 BBL appointed Stanley Ermeav, the fourth defendant, Receiver of the charged assets of TPCL, TFFC, Farm 1 Limited, Farm 11 Limited and D&F Limited. On 15 July 2005, DFC appointed Stanley Ermeav, Receiver of the charged assets of BGB. The third defendant, Social Security Board (SSB) on 18 July 2005 appointed Stanley Ermeav, Receiver of the charged assets of BGB. The fourth defendant, Stanley Ermeav is therefore the Receiver of the charged assets of fifth defendant, BGB, the sixth defendant, TPCL and the seventh defendant TFFC. On the 28th of July 2005 the first claimant appointed Marcus Wide and Brian Robinson as Receivers (who were removed as the third claimants) of the fifth defendant Belize Gold Bananas Limited. The Receivers appointed by the first claimant by letters dating between the end of July and September 2005, wrote the fourth defendant who is also a Receiver requesting information and accounting in respect of the assets of the companies of which he had taken possession. The first claimants were not satisfied with the response of the fourth defendant and thereafter filed this claim on the 17th of February 2006 to protect the assets which formed the securities for its loans to the CFG and in pursuance of realising proceeds from the said securities.
After the filing of the claim the claimants learnt that (i) in January 2006 a number of properties of the subsidiary companies of the CFG had been sold to companies named serially Gold Bananas 1, 2, 3, 6, 11 and Banana Farms 9 & 10 and Traders Home Limited and (ii) The first defendant had been granted Mortgage Debentures on the assets of certain of the above companies which had purchased the properties in January 2006.
Following upon the discovery of the Conveyances and the Mortgage Debenture the claimants amended their Statement of claim. The Statement of claim was further amended after the second claimants and third claimants were removed as parties. This significantly reduced the dispute between the parties. The final Amendment to the claim is labeled “third Amended Statement of Claim”.
The claimant at paragraph 8 of their claim states that they have caused searches to be conducted in relation to the securities created by affiliates of the CFG and annexed to the claim was a listing of the charges and Mortgages and assignments. They said that the Caribbean Farming Group has defaulted on their payment obligations of the Lenders and as at the 5th of February 2006 was indebted to the claimant in the amount of BZ$13,101,283.70 with interest continuing to accrue at a current rate of 15 per annum. At paragraph 12 the claimant state that the floating portion of the charges held by the claimant has crystallised.
They claim that by letter of the 11th of April 2006 addressed to the Banana Growers Association, Banana Farm 9 & 10 Limited reported that they had purchased all assets of the fifth defendant from Stanley Ermeav, acting as receiver of the fifth defendant. That through searches at the Land Titles Unit they learnt that certain Conveyances have been recorded in respect of sales of lands from the first defendant Belize Bank and the fourth defendant, Stanley Ermeav to Banana Farms 9 & 10 Ltd. The Conveyances relate to a 200 acre parcel and 77 acre parcel of land. See paragraph 15 of third Amended Statement of Case.
The claimant states at paragraph 19 that the purchaser of the properties conveyed by the Conveyances above are deemed in law to have notice of the legal interests of the claimant contained in any mortgage instruments recorded in any public registers including those in the Land Titles Unit and the Companies Registry and are subject to any prior legal interests owned by the claimant relating to the properties subject to the Conveyances or any of them. The purchaser is a company formed and registered under the Companies Act of Belize in or around October 2005. The claimant state that they have also learnt through their attorneys of a Mortgage Debenture recorded in favour of the first defendant in respect of the properties and assets of Farm 9 & 10. The Mortgage Debenture is:
Mortgage Debenture of 30th January 2006 — Mortgagor: Banana Farm 9 & 10 Ltd. — Mortgagee: Belize Bank Ltd. — The properties directly mortgaged are Farms 9 & 10625 acres, 200 acres and 77 acres.
The claimant say that the first defendant as holder of the Mortgage Debentures listed above is deemed in law to have notice of the legal interests of the claimant contained in any mortgage instruments recorded in any public registers including those in the Land Titles Unit and the Companies Registry and the Mortgage Debenture is subject to any prior legal interests relating to the properties subject to the Conveyances or any of them. See paragraph 19.
The claimant states that by virtue of Mortgage Debenture dated 8th February 1990 recorded in the Land Titles Unit Deeds Book Volume 4 of 1990 Folios 803 to 834 the claimant holds a first charge on properties and assets of the fifth defendant, Belize Gold Bananas in priority to all other charges and interests including those held by any of the defendants. See paragraph 21.
The claimant states that that in the event that the Principal and interest secured by the Mortgage of 2nd April 1986 created by the sixth defendant Tropical Produce Company Limited has been paid, it holds a first mortgage on the 3225 acre parcel of land charged by the sixth defendant under the Mortgage dated the 30th of January 1987 recorded in Deeds Book Volume 1 of 1987 folios 943–998.
The claimant say that in any event the Mortgage of 30th January 1987 ranks prior to any other charge by any other mortgagee insofar as such other charge secures a debt of debts above and beyond any balance due of the original debt to Clarence McCleary and Anita McCleary under the Mortgage of 2nd April 1986.
And the relief claimed by them which is reproduced in it entirety is:
1. “A Declaration that the claimant first Caribbean International Bank (Barbados) Limited by virtue of Mortgage Debenture dated 8th February 1990 recorded in the Land Titles Unit Deeds Book Volume 4 of 1990 Folios 803 to 834 holds a first charge on properties and assets...
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