Walker v Lundborg (The Bahamas)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Walker of Gestingthorpe |
| Judgment Date | 06 March 2008 |
| Neutral Citation | [2008] UKPC 17 |
| Docket Number | Appeal No 79 of 2006 |
| Court | Privy Council |
| Date | 06 March 2008 |
[2008] UKPC 17
Present at the hearing:-
Lord Hope of Craighead
Lord Rodger of Earlsferry
Lord Walker of Gestingthorpe
Lord Mance
Sir Christopher Rose
Privy Council
[Delivered by Lord Walker of Gestingthorpe]
Introduction
This appeal is concerned with a sale of real property under an order of the court. The property in question is a one-storey residence on a plot of land known as Lot 32, North Cat Cay. It is in a fairly poor state of repair and seems to have been vacant for long periods. But it is described as being in a sought-after location and as having some pleasant features. Differing views have been expressed as to its value, as will appear.
The unusual terms of the order and the unusual circumstances in which it was made have given rise to much controversy. It is necessary to set out the facts, so far as they can be established, in some detail. That is not an easy task because there were many conflicts of evidence, some not resolved at first instance and incapable of being resolved by the Board.
Part of the difficulty is that although the litigation has so far produced seven orders (interlocutory or final) made by Lyons J, it was only at the hearing leading up to the sixth order that the judge heard oral evidence (in the form of cross-examination of some, but by no means all, of the deponents). Another feature of the case has been concurrent bankruptcy litigation conducted in Florida, initially with little regard to the principles of international comity. Some affidavits sworn in the Florida litigation have been exhibited to affidavits made by other deponents in these proceedings, which is not a satisfactory way of adducing controversial evidence.
The seven orders made by Lyons J were:
(1) an order made on 3 September 2002 for the sale of the property, then owned by the appellants James F Walker and Carol Ann Walker, to the respondent Susan Lundborg;
(2) an order made on 7 July 2003 directing that the sale should be completed within 14 days;
(3) an order made on 21 July 2003 (not in the record, and possibly never drawn up) embodying an undertaking that Mrs Lundborg would not proceed pending an application for a stay of the order for sale made by Mr Walker's Florida trustee in bankruptcy;
(4) an order made on 23 March 2004 permitting an intervention by Mrs Lundborg and refusing the trustee's application for a stay;
(5) an order made on 26 July 2004 on the application of Mrs Walker granting a stay of the order for sale until the disputed issues could be resolved by cross-examination of the deponents;
(6) an order made on 7 December 2004, after oral evidence had been heard, setting aside the order for sale; and
(7) an order made on 28 February 2005 setting aside a money judgment which the plaintiff Eleanor C Cole had obtained against Mr Walker in the Supreme Court of the Bahamas on 3 December 1996, by way of enforcement of an earlier Florida judgment against him.
The appeal to the Board is from an order of the Court of Appeal (Ganpatsingh Ag P, Ibrahim and Longley JJA) made on 15 November 2005. This set aside the sixth and seventh of the above orders. The seven orders of Lyons J provide milestones along the weary path of the litigation, and the points at issue before him, and his findings of fact (incomplete though they are) provide the basis on which the issues raised on this appeal must be resolved.
The facts down to Mr Walker's bankruptcy
Mrs Cole, Mr and Mrs Walker and Mrs Lundborg are all United States citizens resident in Florida. Mr and Mrs Walker were, however, at one time resident in the Bahamas. In 1983 they purchased the property as joint tenants. They then immediately mortgaged it back to the previous owners, Mr and Mrs Krafft. That mortgage has now been paid off, although at one stage in the litigation that was in dispute.
In October 1990 Mrs Cole brought proceedings (1355 of 1990) in the Bahamas to enforce a judgment for about $300,000 which she had in November 1989 obtained against Mr Walker in Florida. Mr Walker entered an unconditional appearance and summary judgment was given against him in April 1991. But a month later he obtained an order setting aside the judgment on the ground that he was challenging the original Florida judgment. Five years went by but the Florida judgment was not set aside. On 3 December 1996 Mrs Cole again obtained summary judgment in her enforcement proceedings in the Bahamas.
Under section 63 of the Supreme Court Act the judgment operated as an equitable charge on Mr Walker's interest in the property, and was enforceable in the same way as an equitable charge. The charge did not affect Mrs Walker's interest, but it enabled Mrs Cole to apply to the court under Order 31 of the Supreme Court Rules for an order for the sale of the property as a whole. The making of the charging order effected a severance of the joint tenancy. Half of the net proceeds would go to Mrs Walker and the other half would be applied in or towards satisfaction of Mrs Cole's judgment debt.
There was then a further delay before Mrs Cole's attorneys, Callenders & Co of Nassau, took steps to enforce the equitable charge. They obtained a professional appraisal, dated 3 June 1997 and made by Sir Andrell Laville, valuing the property at $326,250. On 18 June 1999 they finally issued an originating summons (286 of 1999) seeking an order for sale. Those are the proceedings in which all but the last of the seven orders were made. The seventh order was made in the proceedings 1355 of 1990.
When the Court exercises its power to order a sale the usual course, provided for in Order 31, is to make an order in general terms, entrusting the conduct of the sale to a specified party, and giving general directions as to the manner of sale (by public auction or private treaty), the minimum price, and so on. That was the relief originally sought by the originating summons issued by Mrs Cole, with Mr and Mrs Walker as the original defendants, and Mrs Krafft Keims (then the sole mortgagee, since her husband had died) added as a third defendant in June 1999 since the legal estate was still vested in her.
Mr Sidney Collie, a Nassau attorney, entered an appearance for Mr and Mrs Walker on 18 August 1999. He had been instructed by Mr Walker through Mr Gary Rotella, a Florida attorney, and the three of them had a meeting at Mr Rotella's office at Fort Lauderdale on 14 August 1999. Mr Walker asked Mr Collie to act for himself and Mrs Walker. Mr Collie's evidence, which the judge accepted, was that he had never met Mrs Walker face to face, had never spoken to her on the telephone, and had never received any instructions from her. His only contact was with Mr Walker (and even that contact was limited and intermittent).
There was then a further period of inactivity. The rest of 1999, the whole of 2000 and most of 2001 went by without any progress. Mrs Cole's attorney, Mr Stephen Turnquest of Callenders, wrote to her on 31 July 2001 apologising for delay in obtaining certified copies of documents. In his letter he stated that he did not think that another appraisal of the property was necessary. Mrs Cole (who was by this stage an elderly lady in poor health) finally swore her first affidavit in support of the originating summons on 9 January 2002. It had three formal exhibits which did not include the 1997 appraisal of the property.
In early January 2002 (according to an affidavit sworn by Mrs Cole) she was approached by Mrs Lundborg, who expressed an interest in buying the property. Mrs Lundborg resided at West Palm Beach, Florida, but she owned another property at Cat Cay and was a member of the Cat Cay Club. On 27 January 2002 Mrs Lundborg sent Mrs Cole a document described as a letter of intent for the sale and purchase of the property for $400,000 (with some further sums for attorney's fees). Mrs Cole seems, initially, to have been grateful to Mrs Lundborg for her intervention.
In the summer of 2002 there was renewed contact between Mr Walker and Mr Collie. Mr Walker seems to have become aware of Mrs Lundborg's interest in the property and of the prospect of the originating summons eventually coming before the court. Mr Collie passed on to Mr Turnquest an offer from Mr Walker to settle for $40,000, said to be based on an appraisal of the property at $100,000 (in fact, Mr Walker later explained, a colleague had been trying to "low-ball" him). This offer seems to have been an obvious try-on but Mrs Lundborg has relied on it as evidence of Mr Walker's true view as to the value of the property. Apart from the "low-ball" offer there was a conflict of evidence between Mr Walker and Mr Collie about what instructions were given.
The originating summons was heard by Lyons J on 3 September 2002. The hearing was set for 2.30 pm. A lot seems to have happened that morning. Mr J Michael Saunders, an attorney with Callenders, swore an affidavit exhibiting the appraisal. He gave no explanation of why this document, then more than five years old, was put in evidence only on the day of the hearing. In his first affidavit he asked for a reserve price of $326,250 to be set.
Mr Saunders then swore a second affidavit, the text of which (in its entirety) was as follows:
"1. I am authorised by the Plaintiff to swear this Affidavit for the purpose of presenting to this Honourable Court on behalf of the Plaintiff a bona fide offer to purchase the property the subject of this Action, the Plaintiff being resident out of the Bahamas in the State of Florida, the USA. There is now produced and shown to be marked "JMS 1" a true copy of a written offer dated September 3, 2002 made by Susan Lundborg, US Citizen, to purchase the subject property for the sum of $400,000 with an agreement to defray the...
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