Becker v Bank of Nova Scotia

• Jurisdiction: Cayman Islands
• Judge: (Summerfield, J. A.)
• Judgment Date: 13 March 1985
• Court: Court of Appeal (Cayman Islands)
• Date: 13 March 1985

Court of Appeal

(Summerfield, J. A.)

W. W. BECKER and M. L. BECKER

and

BANK OF NOVA SCOTIA and PARADISE MANOR LIMITED (in liquidation)

R. D. Alberga, Q.C. and A. J. Foster for the applicants;

C. C. Adams and G. Ritchie for the first respondent;

C. B. Cohen, Q. C. and T. Shea for the second respondent.

Case cited:

(1) Cropper v. SmithELR(1883), 24 Ch.D. 305.

Civil Procedure-appeals-stay of execution-granted if applicant shows ‘good cause,’ e.g. avoidance of increased financial burden arising from subject-matter of appeal and of possible further complex litigation, while no demonstrable prejudice to respondent

The applicants, having had judgment entered against them in the Grand Court in favour of the second respondent bank, applied to a single judge of the Court of Appeal to grant a stay of execution of that judgment pending appeal.

The respondent bank had obtained an order from the Grand Court authorising the sale by private treaty of land owned by the respondent development company, which was in liquidation. The land was charged to the bank as security for moneys advanced to the development company, repayment of which was also guaranteed by the applicants. The bank had contracted to sell the land on terms which stated that, should it not have obtained an order for sale, and all appeal rights expired by a given date, the agreement to sell would be null and void. The present application for a stay resulted from the applicants” appeal against the order for sale which would not be heard until some time after the completion date.

The applicants submitted that the proposed sale was at an undervalue and would thus increase the burden on themselves as guarantors. Though they would be able to claim damages from the respondent bank in the event of the sale being at an undervalue, this would involve further complex and expensive litigation and problems in quantifying the loss. They were supported in this submission by the liquidator, since any sale at an undervalue would fail to protect the unsecured creditors.

The respondent bank submitted that a stay of execution preventing the sale of the land would, in effect, be a reversal of the lower court”s decision and would prejudice the position of the bank under the proposed contract of sale, as failure to fulfil the necessary conditions before the agreed date would render the agreement null and void.

Held, granting the stay:

The judge had jurisdiction, concurrent with that of the trial court, to grant a stay provided ‘good cause’ was shown. The applicants had discharged the burden of establishing good cause since it was clear that the sale of the property at an undervalue would increase the burden on them, as guarantors, to meet the balance due under their guarantee, and

further litigation resulting from the completion of the sale on the existing terms or a successful appeal would be protracted, expensive and problematical. Moreover, the respondent bank had failed to establish that it would be prejudiced by the stay, since there was nothing in the proposed contract of sale which governed such a situation and no evidence as to the proposed purchaser”s intentions in the event of a stay being granted. In any event, the bank would profit since the sum owed would continue to earn interest for the duration of the stay...