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Court rules against local commercial bank – Part II

Justice Raulston Glasgow – has delivered some landmark judgements from the bench

Attorney-at-law Derrick Sylvester has won an important case for a New Hampshire, St. George resident against a major commercial bank on the island.

High court judge Justice Raulston Glasgow ruled for Sylvester’s client, Erron Williams who was taken to court by RBTT Bank Grenada Limited, formerly known as the Grenada Bank of Commerce Limited after he defaulted on mortgage payment.

The bank took possession of the property and allegedly sold it for less than the market price.

Justice Glasgow ordered the bank to pay Williams the sum of $105,260.00 in special damages, with Interest at the rate of 3% per annum from the date of service of the claim to the date of trial, as well as Interest at a rate of 6% per annum from the date of judgment to the date of payment.

The case was a claim for monies due and owing pursuant to a mortgage between the claimant, RBTT Bank Grenada Limited, formerly known as the Grenada Bank of Commerce Limited (the bank) and the defendant, Erron Williams.

On 11th May, 2011, Williams executed a mortgage in favour of the bank in the sum of $120,000.00 together with interest at the rate of 10.5% per annum.

Williams’ property is situated at Annandale in the parish of Saint George and was used as security for the mortgage.

Williams defaulted in his repayment obligations under the mortgage and the bank exercised its power of sale under the mortgage and sold the property on 12th May 2017 for the purchase price of $49,000.00.

The bank contends that notwithstanding the sale of the property, the proceeds of sale were insufficient to satisfy the debt and claimed that Mr. Williams still owed the sum of $87,210.31 to the bank.

By letter dated 23rd August 2017, the bank informed Mr. Williams that it was seeking payment of the balance of $87,210.31 failing which it would commence legal proceedings against him to recover the sum.

The bank told the court that Williams has failed, refused and/or neglected to make payment towards the outstanding debt and claimed in court for relief against Williams in the sum of $99,104.27 together with costs.

As a public service, THE NEW TODAY reproduces in full the counterclaim made by the New Hampshire resident against the bank and the arguments put forward by both sides.

The valuation reports

The Kenrick Gabriel & Associates Ltd valuation

[16] On 13th April 2011, a valuation report for the property was prepared by Kenrick Gabriel & Associates Ltd for Mr. Williams. In summary the report states that:

(1) It is signed by one Kenrick Gabriel, who is the principal engineer for the company.

(2) A site visit of the property was conducted on 12th April, 2011.

(3) The property contains 21,780 square feet.

(4) The property is best used for residential purposes.

(5) The topography of the property is gently sloping.

(6) The property has access to services and amenities, including electricity, water and telephone.

(7) The value per square foot of the property is $7.00.

(8) The total value of the property is EC $152,460.00.

(9) The forced sale value of the property is estimated at EC $137,214.00

The Terra Caribbean valuation
[17] On 28th June 2016, Terra Caribbean sent a report to the bank in respect of the property. The report reveals that the property was inspected on 17th June, 2016 which is the date of the valuation. The valuation report states:

(1) The property is vacant and measures 21, 780 square feet.

(2) The topography is gently sloping.

(3) The property has access to cable television, water and telephone services.

(4) There are overhead electric mains.

(5) The property offers a view of the surrounding hilltops and is occupied by trees, shrubs and some agricultural crops.

(6) The property is bound by vacant lots to the north and south. However, there are dwelling houses to the west and east of the property.

(7) The access road is partially paved and all utilities are available, including water, electricity and telephone.

(8) It should be noted that the plot plan was not available at the date of the valuation. One boundary marker was identified at the date of the valuation. The land area noted is per the deed of conveyance dated 28th July, 2000.

(9) The neighbourhood where the property is located lies within a subdivision of the Annandale Estate. The subdivision is predominately characterised by vacant and cultivated lots. There are some concrete and modest residential dwellings in the area. The neighbourhood features a waterfall (a tourist attraction) and a water plant. There are amenities such as school, church and small retail shops located in the neighbourhood.

(10) In relation to the market value, the report reveals that the property has a market value of $2.25 per square foot.

(11) The total value of the property is indicated at $49,000.00.

(12) Three comparable properties were used to estimate the market value of the property. Two lots within the Annandale neighbourhood and one in Vendomme, Saint George. The acreage of Annandale properties were 43,832.25 square feet and 48,188.25 square feet respectively Both Annandale lots were sold on 21st April 2016 for EC $65,000.00 and $70,000.00 and were valued at $1.48 per square foot and $1.45 per square foot respectively. The Vendomme lot was sold on 2nd April 2014 for EC $78,000.00 and measured 20,515 square feet.

Submissions on the Terra Caribbean valuation

Claimant’s submissions

[18] Counsel for the bank, Ms. Johnson explains that the bank relies on the Terra Caribbean (Terra) valuation. Ms. Johnson points out that Terra considered several properties which were sold in the immediate and surrounding areas within three years of the date of the appraisal.

[19] Further, Ms. Johnson observes that the first two comparative properties listed on page 4 of the report were both located in Annandale and were sold on 21st April 2016, which was a mere two months prior to the date of the report. The Vendomme property was sold in 2014, two years prior to the date of the report.

[20] Additionally, Ms. Johnson notes that the Annandale comparatives were sold for EC $1.48 and EC $1.45 per square foot respectively and did not have readily available utilities as was the case with the property. Ms. Johnson also notes from the report that the Vendomme property had better access and views than the property and sold for EC $3.80 per square foot. Ms. Johnson submits that the above variable required Terra to make adjustments in order to ascertain the value of the property at EC $2.25 per square foot.

Defendant’s submissions
[21] Mr. Sylvester states that the Terra Caribbean valuation was conducted some ten months and twenty-six days prior to the sale of the property. Therefore, Mr. Sylvester contends that this begs the question whether the valuation was done contemporaneously with the actual sale of the property. Notwithstanding the above, Mr. Sylvester notes the comments made by Terra Caribbean that “it should be noted that the plot plan was not available at the date of the valuation. One boundary marker was identified at the date of the valuation10”. With respect to those comments, Mr. Sylvester is of the view that it is wholly unsatisfactory that a valuation would be conducted on the property without the appraiser having a plan in hand. Mr. Sylvester submits that it is doubtful that the appraiser was in a position to identify what was valued.

[22] Mr. Sylvester highlights the fact that in the Terra Caribbean report, it summaries the features of the neighbourhood, including the partially paved road access, the modest condition of the dwelling houses in the area, views, attractions, amenities, and close proximity to the capital city of St. George’s. Mr. Sylvester opines that the neighbourhood where the property is located is certainly one of value. Therefore, Mr. Sylvester queries the basis on which it appears from the bank’s valuation that the property has decreased in value over the years. Counsel invites the court to draw a negative inference that the bank was negligent.

[23] Mr. Sylvester then emphasised the fact that the Kenrick Gabriel valuation conducted in 2011 shows that the property was valued at $152,460.00 which is more than double the original purchase price for the property at $60,000.00. However, 5 years later in June 2016 Terra Caribbean valued the property for $49,000.00 which, Mr. Sylvester concludes, amounts to a value that is about 32 % less than the property’s previous value. Mr. Sylvester does not dispute that the authorities suggest that a valuation is not an exact science or the fact that valuations can differ in value. However, he argues that that there is no justification for the marked depreciation in the value of the property. Mr. Sylvester relies on the analysis of Ventose J in The Bank of Nova Scotia v Lind Lou-Liburd et al to support his rationale that the onus lies on the bank to ensure that there was justification or rationale for the depreciation in the value of the property.

[24] Mr. Sylvester concludes that, having regard to all of the circumstances, including the absence of the survey plan, identifiable boundary marks and the lack of justification for the marked decrease in value, the bank has failed in its duty to obtain the true market value of the property.

Defendant’s submissions on advertisement
[25] With respect to the advertisement of the property, Mr. Sylvester submits that the bank as mortgagee owes a duty to the mortgagor to adequately advertise the property. Mr. Sylvester relies on Caribbean Banking Corporation v Alpheus Jacobs, where our Court of Appeal explained that the bank is under a duty to advertise the property for sale, properly describe it in the advertisements and ensure that the advertisements are sufficient in number. In respect of the duty to properly advertise the property, Mr. Sylvester commends the court to the findings made by the court in RBTT Grenada Bank Ltd v Elisha Baptiste, where the court found that the advertisements were inadequate since the periods between the advertisements and the proposed sale were brief.

[26] Mr. Sylvester points out that the bank has not presented evidence of the advertisements carried out by it or its agent Terra Caribbean in respect of the sale of the property. The affiant, Nikisha Alexander, who gave evidence about the advertisement, has not identified her relationship to the bank or whether she is an employee of the bank. Further, apart from her assertion on oath that the information is within her personal knowledge, there is no evidence as to what capacity the information on the advertisement came into her knowledge or whether the evidence of the advertisement is within her own knowledge. In any event, the statements made by Nikisha Alexander are not supported by evidence. There is no photograph of the advertisement which the bank alleged was placed on Terra Caribbean’s website or evidence of the actual period the property was advertised for sale.

[27] Mr. Sylvester points out that there is no evidence as to whether the property was sold as a consequence of the advertisements which were carried out by the bank. The bank has failed to produce evidence to substantiate its assertions that the property was properly advertised for sale. Therefore, Mr. Williams urges the court to find that the bank has failed in its duty to ensure that it took reasonable steps to obtain the true market value of the property.


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