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JUDGMENT
THE APPLICATION
[1] This was an application for special leave to appeal to the Caribbean
Court of Justice from a judgment of the Court of Appeal of Guyana (Ramson,
Roy and Cummings-Edwards JJA) which dismissed the applicant's appeal from a
decision of Moore J. On the 24th November, 2008, after a hearing conducted
by means of a teleconference, we granted the applicant special leave to
appeal the Court of Appeal's decision on the condition that the applicant
provide security for the respondents' costs in the sum of GY$1,000,000 by a
deposit of cash, within 14 days. What follows is the written reasons for our
decision.
THE BACKGROUND
[2] At the centre of the factual background to this case are two debentures
issued by the applicant in favour of the respondent bank to secure advances
by the respondent bank to the applicant totaling GY$100 million. The
applicant defaulted in repayment of the moneys lent and the respondent bank
in exercise of the power in that belief conferred on it by the debentures,
appointed first the second respondent, and then when he withdrew, the third
respondent, to be receiver of the applicant's assets (which consisted mainly
of a rice mill). These proceedings were initiated by a writ filed by the
applicant on the 9th September, 2005, challenging the validity of the
appointment of the receivers and the lawfulness of the actions taken by the
third respondent in pursuance of his appointment. In that action the
applicant claimed declaratory and injunctive relief as well as damages. The
respondent bank countered by filing a writ of its own on the 3rd November,
2005, by which it complained of the allegedly unlawful interference by the
applicant in the conduct of the receivership and sought an injunction and
damages. These two actions were by consent consolidated.
[3] Moore J. gave judgment for the respondents and ordered the applicant to
pay damages to the third respondent in the sum of GY$350,000 and costs to
the respondents in the sum of GY$300,000. As already stated, the applicant's
appeal to the Court of Appeal was dismissed. In a judgment delivered by
Ramson J.A. the objections of the applicant to the validity of the
debentures and the appointment of the receivers were treated as manifestly
unsound but there was no reasoned refutation of them.
[4] The applicant then applied to the Court of Appeal for leave to appeal to
this Court on two grounds. The first was that an appeal lay as of right
under section 6(a) of the Caribbean Court of Justice Act ("the CCJ Act") as
the matter in dispute was of the value of more than GY$1,000,000 or the
appeal involved a claim or question respecting property of equivalent value.
Secondly, it was contended that the question involved in the appeal
was one that by reason of its great general or public importance or
otherwise, ought to be submitted to this Court pursuant to section 7(a) of
the CCJ Act.
THE JUDGMENT OF THE COURT OF APPEAL
[5] In a judgment delivered by Ramson J.A., the Court of Appeal (Ramson, Roy
and Cummings-Edwards JJA) refused leave to appeal on the ground that the
appeal did not raise a genuinely disputable issue of law or fact. We hold
that this decision was wrong for two reasons. Firstly, the Court of Appeal
having found that the case fell within the ambit of section 6(a) of the CCJ
Act since the value of the property in dispute was more than GY$1million,
the applicant was entitled to appeal to this Court as of right and the Court
of Appeal was not entitled to refuse leave to appeal on the ground that the
applicant's case was so weak that it could not be said to raise any issue of
law or fact that was "genuinely disputable". Secondly, although the issue
did not properly arise, we do not share the Court of Appeal's view that it
is "overwhelmingly obvious" that the applicant's case must be rejected.
[6] Mr. Justice Ramson took exception to the description of the Court of
Appeal's function in determining claims to appeal as of right under section
6 of CCJ Act as a 'gate-keeping' exercise. We do not consider that this
metaphor has a pejorative connotation or that its use diminishes the Court
of Appeal in any way. Sub-paragraphs (a) to (d) of section 6 provide access
to this Court for would-be appellants and the Court of Appeal has the
responsibility when dealing with applications for leave to appeal, of
ensuring that no one who does not properly qualify, takes advantage of these
means of access. It is not the only function which the Court of Appeal
performs in relation to such applications. The Court of Appeal also hears
and determines applications for leave to appeal as a poor person and fixes
the amount of security (if any) to be provided by the applicant and the form
in which, and the time within which, such security is to be provided: see in
this connection Rules 10.6(2), 10.7 and 10.17 of the Caribbean Court of
Justice (Appellate Jurisdiction) Rules as amended.
[7] The Court of Appeal adverted to the possibility that an application for
leave to appeal (even where there was an appeal as of right) might be
refused if the application constituted an abuse of the process of the court.
The Court of Appeal, however, correctly recognised that it was only in
exceptional cases that such a course would be justified and that the
apparent hopelessness of the proposed appeal would not provide such
justification. In any event the Court of Appeal did not seek to justify its
refusal of leave on the ground that the application for leave constituted an
abuse of process. We consider that it was right not to have done so.
"DISPUTABLE ISSUE"
[8] We turn now to explain why the concept of a genuinely disputable issue
had no relevance in the instant case and following that we will identify
what we conceive in any event to be a 'genuinely disputable' issue of law
raised by the applicant.
[9] It was common ground that this case fell within the ambit of section
6(a) of the CCJ Act and that the applicant was therefore entitled to appeal
as of right to this Court. This was accepted by the Court of Appeal and was
expressly conceded before us by counsel for the respondents. In those
circumstances we hold that the Court of Appeal was wrong to believe that it
had a residual discretion to refuse leave to appeal on the ground that in
its view the applicant's case did not raise a 'genuinely disputable issue'
of fact or law.
[10] The Court of Appeal in support of its decision to refuse leave cited a
passage from the judgment delivered by Mr. Justice Nelson in Griffith v The
Guyana Revenue Authority[FN1] in which the expression "genuinely disputable
issue" is to be found. It is important, however, to put this expression in
context by quoting the whole of the relevant paragraph in Mr. Justice
Nelson's judgment. It reads as follows:
"[19] Even where the local statute or the Constitution (as the case may be)
grants an appeal "as of right", leave must still be obtained from the local
court from which the appeal lies: see rule 10.2(a) of the CCJ Rules, which
have the force of law in Guyana. The local Court of Appeal must then form a
view as to whether "the proposed appeal raises a genuinely disputable issue
in the prescribed category of case": see per Lord Nicholls in Alleyne- Forte
v Attorney-General [1997] 4 LRC 338, 343; (1997) 52 WIR 480, 486E. However,
this is little more than a gate-keeping exercise since the appeal is as of
right. There is no discretion in the Court of Appeal to withhold leave in an
as-of-right case on the ground that the appeal lacks merit: see Lopes v
Chettiar [1968] AC 887 (PC). Similarly, where the appeal is as of right the
local Court of Appeal may not in its inherent jurisdiction impose terms and
conditions not contained in the legislative instrument granting the right of
appeal: see Crawford v Financial Institutions Services Limited (2003) 63 WIR
169." (emphasis added).
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[FN1] [2006] CCJ 2 (AJ)
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[11] It is to be noted that Mr. Justice Nelson stated quite unambiguously
that in an as of right case the Court of Appeal is not entitled to refuse
leave because it considers the appeal to be without merit. But this is
exactly what the Court of Appeal did in this case. We wish to reaffirm Mr.
Justice Nelson's clear and simple statement and to emphasise that nothing
contained in the rest of the passage quoted serves to derogate from it in
any way.
[12] Mr. Justice Nelson adopted a passage from the judgment of Lord Nicholls
in Alleyne- Forte which points to the need for the Court of Appeal to find
that the appeal raises a "genuinely disputable issue in the prescribed
category of case" before it grants leave to appeal, even in cases where the
appeal is claimed to lie as of right. In order properly to interpret and
apply this dictum it is important not to separate the expression "genuinely
disputable issue" from the words which immediately follow it i.e. "in the
prescribed category of case", and also to be conscious of the context in
which the whole phrase was used by Lord Nicholls and by Lord Diplock before
him.
[13] In Eric Frater v. R[FN2] Lord Diplock said:
"In their Lordships' view similar vigilance should be observed to see that
claims made by appellants to be entitled to appeal as of right under section
110 (1)(c) are not granted unless they do involve a genuinely disputable
question of interpretation [his emphasis] of the Constitution and not one
which has merely been contrived for the purpose of obtaining leave to appeal
to Her Majesty in Council as of right."
In Alleyne-Forte (supra) the relevant part of Lord Nicholls' judgment comes
at the end when having found that there had been no breach of the
appellant's fundamental rights, he turned to deal 'obiter' with a matter
raised by the respondent in its written case. This is how he introduced the
matter:
"Their Lordships mention one further point. Under section 109 (1)(c) of the
Constitution an appeal lies as of right to the Judicial Committee from final
decisions of the Court of Appeal 'in any civil, criminal or other
proceedings which involve a question as to the interpretation of this
Constitution'. In their written case the respondents submitted that there
was here no genuinely disputable question of interpretation of the
Constitution, as distinct from its application to a particular set of facts,
and that the appellant was not entitled to appeal as of right."
After quoting from the judgment of Lord Diplock in Frater a passage which
includes the one that has been quoted above, Lord Nicholls continued:
"Had this been an appeal under section 109 (1)(c) (the equivalent of section
110 (1)(c) in the Jamaica Constitution) there might have been force in this
submission ... . An appeal as of right, by definition means that the Court
of Appeal has no discretion to exercise. All that is required, but this is
required, is that the proposed appeal raises a genuinely disputable issue in
the prescribed category of case; here, a claim under section 14 to redress a
contravention of a provision for the protection of a fundamental right.
Contrary to the submission of Mr. Mendes, that principle is as much
applicable to an appeal under section 109 (1)(d) as it is to an appeal under
section 109 (1)(c). It is unnecessary however for their Lordships to express
any opinion on the application of that principle in this case; that is not
an issue which is before them" (emphasis added).
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[FN2] 1981] 1 WLR 1468 at 1470
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[14] It is striking that in speaking of the need to find a genuinely
disputable issue, Lord Diplock was dealing only, and Lord Nicholls initially,
with a claim to appeal as of right on the ground that the appeal involved a
question of 'interpretation' of the Constitution within the meaning of
provisions that correspond with section 6 (c) of the CCJ Act. Claims of this
kind are not infrequently made when what is involved is not truly a question
of interpretation, but a question of application of some constitutional
provision. Even in the relatively short life of this Court we have had
occasion to deal with such a claim: see The Queen v Mitchell Lewis[FN3]. The
question in that case was whether the accused was deprived of a fair trial
as a result of certain prejudicial statements made by counsel in the
presence of persons who subsequently became jurors in the case. It was held
by this Court that the question involved was not one of interpretation of
the constitutional provision which guarantees the right to a far trial, but
rather its application to the particular facts of the case. In delivering
the majority judgment in that case, I said:
"We would respectfully adopt the remarks of Lord Diplock [in Frater] and
Lord Keith [in Joseph v the State of Dominica][FN4] with regard to the need
for vigilance by the Court of Appeal when dealing with claims to appeal as
of right on the ground that the case involves a question of interpretation
of the Constitution".
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[FN3] [2007] CCJ 3 (AJ)
[FN4] (1988) 36 WIR 216
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[15] What Lord Diplock in Frater said about the need for a genuinely
disputable question of interpretation as a precondition for granting leave
to appeal, was said with reference to cases in which it is claimed that
there is an appeal as of right because the case involves a question of
interpretation of the Constitution, and has to do with the correct
classification of the question raised, rather than with the merits of the
applicant's case. Lord Diplock's observations were adopted by Lord Keith in
Joseph (supra) and by Lord Nicholls in Alleyne-Forte (supra). Lord Nicholls
appears to have extended them to all the categories of case in which an
appeal lies as of right when he said: "All that is required, but this is
required, is that the proposed appeal raises a genuinely disputable issue in
the prescribed category of case...". (emphasis added). The particular
category of case with which Lord Nicholls was dealing in Alleyne-Forte and
to which he expressly held that the requirement did extend, was that in
which the jurisdiction of the High Court to grant redress for breach of
fundamental rights has been invoked. This corresponds with the category of
case covered by section 6 (d) of the CCJ Act. In Alleyne-Forte it was held
that there had been no contravention of constitutionally protected rights
but because the issue did not arise, the Privy Council expressly refrained
from ruling as to whether the appeal before them did raise a genuinely
disputable issue in that category of case. Presumably if the Privy Council
had had to rule, then if they adopted Lord Diplock's approach, they would
have concerned themselves with whether the case fell fairly within the
boundaries of the category of case to which it was being assigned rather
than with the appellant's chances of success.
[16] In any event, in this case we are not concerned with a claim to appeal
as of right in the category of case prescribed by section 6 (d) of the CCJ
Act. That sub-paragraph confers a right of appeal to this Court
"in any proceedings that are concerned with the exercise of the jurisdiction
conferred upon the High Court relating to redress for the contravention of
the provisions of the Constitution for the protection of fundamental
rights."
It is not necessary, therefore, for us to decide finally whether the
requirement of a "genuinely disputable question" applies (as Lord Nicholls
held that it did) to cases in which a right to appeal is claimed under
section 6 (d) or its equivalent. We do not accept that it can be used in any
category of case to deny leave to appeal to an applicant on the ground that
in the view of the Court of Appeal there is no merit in the proposed appeal.
It may be, however, that the test of 'a genuinely disputable issue in the
prescribed category of case' may be used to unmask an attempt to dress up
some other type of claim as a claim for contravention of fundamental human
rights.
[17] With regard to the category of case with which we are concerned here,
that is, that prescribed by section 6 (a) of the CCJ Act, we have no
hesitation in holding that once the proceedings are civil in nature and the
matter in dispute is of the value of the prescribed amount or the appeal
involves a claim or a question respecting property or a right of equivalent
value, leave to appeal must be granted. In this category of case there is no
requirement that the applicant for leave to appeal must demonstrate "a
genuinely disputable issue of fact or law".
[18] We do not exclude the possibility that the Court of Appeal may in rare
cases take action to prevent an abuse of the process of the Court by
striking out an application for leave to appeal, even in as of right cases.
But to justify such a step, something more than a perceived lack of merit in
the proposed appeal would have to be demonstrated. In addition to that there
would have to be an element of oppression, perversity or pure malice. In
this context I would regard as perverse a claim which warranted the
description 'frivolous and vexatious'. As already mentioned, however, the
Court of Appeal did not purport to refuse leave to appeal in exercise of its
jurisdiction to prevent an abuse of process.
ENTITLEMENT TO LEAVE
[19] For these reasons therefore we hold that the Court of Appeal having
found that the value of what was in dispute exceeded GY$ 1,000,000, ought to
have granted the leave to appeal to which the applicant was entitled.
[20] It is unnecessary to decide whether in the alternative the applicant
should have been granted leave to appeal under section 7 (a) of the CCJ Act
on the ground that the appeal raised a question which by reason of its great
general or public importance or otherwise ought to be submitted to the CCJ.
Having regard to the need for an authoritative statement by a final court of
how debentures fit into the mixed system of Roman Dutch law, common law and
statute law in Guyana (as explained more fully below), we are inclined to
think that the Court of Appeal might well have granted leave to appeal under
this section, if it had been necessary. In saying so we have in mind
particularly the widening of the Court of Appeal's discretion effected by
the inclusion of the words "or otherwise" in section 7 (a).
SPECIAL LEAVE
[21] Although the Court of Appeal wrongly refused leave to appeal we
nevertheless had a discretion to grant or refuse special leave to appeal. As
stated by Mr. Justice Nelson in Griffith v Guyana Revenue Authority (supra)
at paragraph [23], "the Court [i.e. the CCJ] however always has the option
of refusing special leave, even in as of right cases, if it finds that the
appeal has no realistic chance of success". We did not however, exercise the
discretion we have to refuse special leave in this case, partly because in
our provisional view the applicant's case is not as hopeless as the Court of
Appeal thought, but also because there does not appear to have been to date
any authoritative and reasoned exposition by any court in Guyana of the
impact of the Civil Law of Guyana Act and the Companies Act on those
provisions of a debenture which create, and provide for the enforcement of,
a security interest. It seems to us that regardless of the outcome of the
appeal, it would be of benefit both to the legal profession and the
commercial sector in Guyana to have definitive answers to some of the
questions raised by the applicant in this case.
[22] The argument for the applicant is that the provisions in the debentures
which create a fixed charge over the fixed assets of the company and a
floating charge over its other property and provide for the realisation of
the security interest thus created by the appointment of a receiver and the
exercise by the receiver so appointed of a power of sale, amount in effect
to a hypothecation of the company's property. Therefore, it is argued, the
Roman Dutch law provisions which govern the creation and enforcement of a
conventional mortgage and hypothec and have been expressly preserved by
section 3 (d) (ii) of the Civil Law of Guyana Act, are inconsistent with
this aspect of the debentures and render them 'pro tanto' invalid. The
requirements in the law of Guyana for the creation of a conventional
mortgage or hypothec involve the passing of transport before the Registrar
of the Supreme Court. Notice of the proposed transport must be published in
the Gazette and there is a right given to other creditors of the proposed
mortgagor or other persons interested in the property, to oppose the
transaction. The enforcement of a mortgage or hypothec in the law of Guyana
involves the bringing of foreclosure proceedings by the mortgagee and the
obtaining from the court of an order for sale. It was argued that in so far
as a debenture purports to create a charge over land, which may be enforced
by an out of court receiver exercising a power of sale conferred on him by
the debenture, it does not comply either in respect of its creation or its
enforcement, with the requirements of Guyana law and therefore is void,
notwithstanding section 234 of the Companies Act 1991. This section provides
as follows:
"234. A debenture not secured by a separate mortgage or charge but which has
been duly registered after a notice of the intended registration has been
published in the Gazette and one local newspaper not less than seven days
previous to the registration, shall be valid and shall rank as a mortgage
notwithstanding that it has not been secured by any separate mortgage or
charge."
It is noteworthy that while the section requires advance publication of the
intended registration of a debenture, there appears to be no right given to
anyone to oppose its registration.
[23] It is submitted for the applicant that this section contains nothing
which exempts the debenture from compliance with the usual requirements for
the creation and enforcement of a conventional mortgage or hypothec. The
suggestion is that the validity conferred is limited to the contracted
aspects of the debenture.
Just as it was held to be impossible to evade the procedural requirements
for creating and enforcing a legal mortgage by creating an equitable
mortgage by a deposit of title deeds (see In re Samson; ex parte Official
Receiver[FN5]) so too it is argued that equity cannot be invoked in order to
enable a debenture to be used to achieve the same result.
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[FN5] [1922] LRBG 133
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It would not be appropriate for us at this stage to express any opinion as
to the strength or weakness of this argument. It is sufficient for us to say
that we are not prepared at this stage to deem the applicant's case to be
unarguable. In these circumstances, we found no justification for not
granting him special leave to appeal, given that he had wrongly been refused
leave to appeal by the Court of Appeal. Accordingly, we made the order
mentioned in paragraph [1] above. |
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