Paragon Holdings Ltd and Erato v Turtle's Nest (Condominium) Company Ltd, Huffman and Fuhrman

• Jurisdiction: Caribbean States
• Court: Eastern Caribbean Supreme Court
• Judge: Ramdhani, J.
• Judgment Date: 03 July 2018
• Neutral Citation: AI 2018 HC 8
• Docket Number: CLAIM NO. AXAHCV 2018/0009
• Date: 03 July 2018

IN THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

AD 2018

Ramdhani, J. (Ag.)

CLAIM NO. AXAHCV 2018/0009

Between:

[1] Paragon Holdings Limited

[2] John Erato

Applicants/Claimants

and

[1] Turtle's Nest (Condominium) Co. Ltd.

[2] Bradford Huffman

[3] Wesley Fuhrman

Respondents/Defendants

Appearances:

Ms. Tara Carter for the Applicants/Claimants

Ms. Paulette Harrigan for the Respondents/Defendants

Injunctions - Interlocutory — Disclosure — Balance of convenience — Whether applicants failed in duty to provide frank and full disclosure of all relevant matters — Whether serious issues to be tried — Whether issues related to injunctions granted — Whether injunctions granted ought to be made interlocutory.

An interim ex parte injunction obtained by a party who has failed in his duty of candour may be discharged by a court to protect the administration of justice and to ensure that litigants give full and frank disclosure on such applications. The consequence imposed by the court will be informed by a number of factors including the significance of the non-disclosure in the application for the injunction.

To ground the grant of an interim or interlocutory injunction matters which are raised as serious issues must be shown to be sufficiently connected to the protection which is sought by the injunction. There were such serious issues in this case.

DECISION

Ramdhani, J.

1 (Ag.) Interim injunctive relief was granted to the applicants on an urgent ex parte application filed on 28 ^th February 2018. The orders granted were effectively to preserve the status quo of the first applicant's 10 years plus businesses which, as stated by the applicants, is the operation of the Turtle's Nest Beach Resort in Meads Bay, Anguilla, as well as separate private business. Before the return date of the application, the respondents also filed an application to discharge the injunction. Both these applications were heard together on 28 ^th March 2018 and the injunctions made on the original ex parte application are now made interlocutory for the reasons set out in this decision. The date for appealing this decision shall begin to run from the date the decision is issued.

Background leading up to the Applications for Injunctive Relief

2 These proceedings evolved from earlier proceedings, namely Claim No. AXAHCV 2013/0012 (‘the 2013 Claim”) which included a counterclaim, and which related to a dispute existing between these very parties and related inter alia to the management and the operation of the property and the 30 units of the same condominium project known as the Turtle's Nest Beach Resort located in Meads Bay, Anguilla. It also involved questions as to whether Paragon was entitled to occupy and maintain offices on certain parts of the common property.

3 The first applicant, Paragon, of whom the second applicant is a director, was the first registered proprietor of all of the units of the condominium project and sold a number of units under a generally standardized Sale and Purchase Agreement. The common features of each SPA obliged each buyer to enter into a Rental Pool Agreement along with a Maintenance Agreement and a ‘Home Beautification Agreement’. Paragon now owns 21 units and it appeared that Paragon itself had some agreement with a number of individual owners to manage and maintain their individual units and considered that it was also entitled to manage the Rental Pool. From its inception it appeared that Paragon had its base and its offices in several container buildings which had been placed on certain portions of the common property. That was the status quo when the 2013 Claim was filed and this was maintained throughout the proceedings by an injunction (the status quo order).

4 In that first claim and counterclaim, the court was moved to answer questions and make orders relating inter alia as to (a) the validity of certain resolutions of the directors of the Strata Corp made on the 23 ^rd February 2013; (b) the appointment of the second and third respondents as directors of the Turtle's Nest Condominium Company Ltd (the Strata Corp) in 2013; (c) who was responsible for the management of the Strata Corp's property, (d) the operation of the Rental Pool; (e) the maintenance of the Strata Corp's common property. The court was also asked to determine whether the offices formed part of the common property and if Paragon had a right to occupy the offices to manage, to maintain the common property, operate the rental pool and conduct their own business dealings. A number of injunctions and declarations were sought. Among these included an injunction to restrain these respondents from seeking to charge any rent as had been resolved. The respondents themselves sought injunctions to restrain Paragon from occupying the common property and maintaining the units on behalf of some unit owners.

5 The trial judge referred the matter to a referee and a Referee's Report dated the 18 ^th July 2017 was presented to the court for consideration. In that Report the Referee recommended that the learned Judge grant a number of declarations including declarations related to the control of the Strata Corp, and the validity of the appointment of the directors. The Referee also opined that whilst the Strata Corp was entitled to require Paragon to cease maintaining the common property, and to deliver any part of the common property that it occupied, he was not satisfied that the Strata Corp had so required that of Paragon. On 22 ^nd February 2018, the learned Judge ‘adopted’ several of the ‘findings’ of the Referee but did not make any orders, nor grant any injunctions or make any declarations. The learned judge instead dismissed the claim refusing to make any of the orders sought by the applicants as well as those sought on the counterclaim.

6 Adopting the Referee's conclusions, the learned judge held that the ‘resolutions made on the 23 ^rd February 2013 were done at a valid meeting of the directors, and the resolutions, save and except Part (ii) of the first and second resolution were valid decisions of the Strata Corp.

7 By adoption of those conclusions, the learned judge held that ‘responsibility for the management of the Turtle's Nest Beach Resort was vested in the directors of the Strata Corp. The learned judge stated that the current directors of the Strata Corp are the second and third respondents.

8 By the same process, the learned judge also found that Paragon ‘did not have any right or obligation to maintain or occupy the common property for the purpose of maintenance or operation of a rental pool and Paragon was doing so because of the status quo injunction issued by the court.’

9 That the court concluded ‘that there was no evidence of any agreement or permission between Strata Corp and Paragon permitting, requiring or authorizing Paragon to maintain the common property for the purpose of such maintenance or for the purpose of operating the rental pool.’

10 It was further concluded that the containers from which the first applicant operated the rental pool and a car rental were classified as buildings attached to the land and formed part of the common property, and that Paragon had no right to any part of the common property.

11 It was further concluded that the unit owners are competent to determine who manages any rental pool, but they are not competent on behalf of the Strata Corp to authorize Paragon to maintain the common property or occupy any part of the common property.

12 It was also found that there were oral agreements between Paragon and the unit owners for maintenance in accordance with the Sale and Purchase Agreement and for the operation of the rental pool. It was stated that the applicants were entitled to induce the unit owners to lawfully terminate these oral agreements.

13 The respondents pointed this Court to other conclusions of the Referee as findings which must have been adopted by Justice Mathurin. The first of these is at paragraph 67 and 68 of the Referee's Report where it was stated that:

• “67. The ability of Paragon to continue to maintain the common property, and thus charge the unit holders for its services, appears to be dependent upon the goodwill and/or acquiescence of the Strata Corp to undertake the maintenance. Whilst Paragon has benefitted from the interlocutory injunction which operates to allow it to continue to maintain the common property, it will have no right to do so once these proceedings have been concluded. Paragon does not, on the evidence before me have any right to a continuing injunction against Strata Corp allowing it to maintain the common property. I would expect and indeed hope that following the conclusion of these proceedings the directors of the Strata Corporation will ensure that the proper procedures are followed, that budgets are adopted, the common property is maintained (either by the Strata Corp or by its managing agent) and that all unit owners, including Paragon are charged for their respective share of the budget.’

• 68…the ability of Paragon to continue to manage the rental pool depends upon the continuation of the rental pool agreement. If the majority, or indeed all, of the unit owners do not wish Paragon to continue to manage the rental pool then it is likely that such an agreement will be terminated in accordance with its provisions. In addition, it is possible that … the Strata Corp will require Paragon to give up the container buildings from which it operates.

14 In dismissing both the 2013 Claim and Counterclaim, the court ordered that ‘no party having been substantially successful in the claim and counterclaim, each party is to bear their own costs’.

15 What next happened first came from the applicants in this claim from evidence presented on their application for the new interim ex-parte injunctions.

The Application for Injunctive Relief made on...