Junkanoo Estate Ltd and Others v UBS Bahamas Ltd (in Voluntary Liquidation) (Bahamas)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Sumption |
| Judgment Date | 03 April 2017 |
| Neutral Citation | [2017] UKPC 8 |
| Court | Privy Council |
| Docket Number | Appeal No 0052 of 2016 |
| Date | 03 April 2017 |
[2017] UKPC 8
Privy Council
From the Court of Appeal of the Commonwealth of the Bahamas
Lord Mance
Lord Kerr
Lord Sumption
Lord Reed
Lord Hughes
Appeal No 0052 of 2016
Appellants
Joel Bennathan QC
Phillip Lundy
(Instructed by Junkanoo Estate Ltd and Yuri Starostenko)
Respondent
Marco Turnquest
Chizelle Cargill
(Instructed by Lennox Paton)
Third Appellant
Irina Tsareva Starostenko
Phillip Lundy
(pro se)
This is an application for special leave to appeal to the Judicial Committee. Unusually, the application was listed for an oral hearing, and a formal judgment is being given in open court. This is because it arises out of procedural difficulties which have arisen in an ongoing action, and for reasons which will become clear it is important that the basis of the Board's decision should be understood both by the parties and by the courts who may have to deal with further applications.
The application arises out of a mortgagee's action for possession of a residential property at Lyford Cay in the western district of New Providence in the Commonwealth of the Bahamas belonging to the First Defendant, Junkanoo Estates Ltd. The mortgage was granted by Junkanoo to secure its indebtedness under an agreement with UBS (Bahamas) Ltd contained in a Commitment Letter dated 23 August 2011. The Second and Third Defendants, Mr and Mrs Starostenko, control Junkanoo and guaranteed Junkanoo's indebtedness. They also occupy the property, together with their family. Under the Commitment Letter, UBS provided a credit facility of $1.4m to the company on terms that at least half of the facility would be available for investment in securities through trading facilities to be made available by UBS. On 28 February 2014, UBS declared the loan in default and demanded repayment of the whole outstanding balance. The alleged defaults were the failure of Junkanoo to maintain the minimum sum under management or to pay periodical interest as it accrued. On 10 March 2014, UBS declared its intention to seek orders for the sale, possession or foreclosure of the property.
The defendants say that they have a defence. This is that the alleged defaults were due to UBS's own breaches of their obligations in relation to the management of the invested funds, in particular in failing to provide an electronic trading platform for the investment of the funds under management and failing to carry out certain trades. It is also said that there is a cross-claim for damages flowing from the same breaches. It is unnecessary to examine these points in greater detail. As a result of the procedural mishaps described below, they have never been examined by the courts below. The Board think it right to approach the present application on the assumption that they are arguable, without deciding whether or not they are.
The action was begun in the Supreme Court on 3 October 2014, and a month later, on 5 November, UBS applied for summary judgment. The application came before Evans J on 23 March 2015. It is apparent from the transcript of the hearing, which has been put before the Board, that no real attempt was made to present the defendants' case at this hearing. Counsel for the defendants had by mistake put the hearing into his diary for 25 March, as a result of which Mr and Mrs Starostenko were not present and Counsel was not properly prepared. An affidavit had been sworn on behalf of the defendants which, when read with the voluminous correspondence exhibited, could be said to support the defence to which the Board has referred. However, it was still in the process of being filed and was not before the court. Counsel for the defendants observed that "to that extent" the application for summary judgment was opposed. But he added that Counsel for the Bank had drawn his attention to certain authorities to which, he said, he had no answer. This appears to have been a reference to authorities such as National Westminster Bank Plc v Skelton [1993] 1 All ER 242 [1993] 1 All ER 242, 246 (per Slade LJ) to the effect that a counterclaim was not normally a sufficient basis for resisting a mortgagee's summary application for possession. It appears not to have been appreciated that the defence which the defendants wished to raise was not just that the debt was abated by the cross-claim, which might in some circumstances have amounted to an equitable set-off, but that the event of default which was said to have made the debt payable was brought about by UBS's breaches of duty....
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