Hawkins v Abarbanel Ltd
| Jurisdiction | Cayman Islands |
| Judge | (Williams, J.) |
| Judgment Date | 07 May 2020 |
| Court | Grand Court (Cayman Islands) |
(Williams, J.)
Money — interest — compound interest — Moneylending Law 1938 (Jamaica), pursuant to which contract for loan illegal in so far as provides for payment of compound interest, not law of Cayman Islands
Held, ruling as follows:
The Moneylending Law 1938 was not a law of the Cayman Islands. It was necessary to consider the historical context. In 1863, the British Parliament passed the Act for the Government of the Cayman Islands, which recognized the local legislature in the Cayman Islands but reserved certain powers to Jamaica. Section 5 of the 1863 Act provided that the laws then in force in Jamaica were applied generally to the Cayman Islands. It did not provide that laws passed in Jamaica thereafter would automaticallyalso be so applied. In 1893, the Jamaican legislature passed the Cayman Islands Government Law which set out, in Schedule I, the laws passed by the Cayman legislature which were valid, in Schedule II, the laws of Jamaica which were deemed to be in force in the Cayman Islands by virtue of s.5 of the 1863 Act and, in Schedule III, acts and laws of Jamaica which were passed since the 1863 Act and which were deemed to be in force in the Cayman Islands. The Jamaican Moneylending Law was passed in 1938. In 1953, the Cayman Islands Government Law (consolidated) (Laws of Jamaica, 1953, cap. 425) was published. The Moneylending Law was not referred to in any of the schedules of laws or acts in force in the Cayman Islands. The Moneylending Law 1938 did not appear in the schedules to any version of the Cayman Islands Government Law. The Cayman Islands and Turks and Caicos Islands Act 1958 repealed the 1863 Act. Pursuant to s.56(2) of the Cayman Islands (Constitutional) Order in Council 1959, a law of Jamaica would not apply in the Cayman Islands unless it was applied in express terms or by proclamation of the Governor. The 1958 Act and 1959 Order were revoked in 1962 when Jamaica became independent. The Revised Edition (Laws of the Cayman Islands) Law 1960 required the Governor to appoint Commissioners to prepare a table of acts and laws of the Cayman Islands that were in force on December 31st, 1963. The revised edition was to be the sole and only proper edition of the laws of the Cayman Islands in force on that date. The Revised Edition contained a chronological table of the laws of Jamaica, setting out how each law which was applicable to the Cayman Islands was dealt with. The Moneylending Law 1938 was not included in the table or in the Revised Edition. The Law was not in the list of repealed laws. The court was satisfied that the Moneylending Law 1938 was not a law of the Cayman Islands (paras. 16–44).
(1)Al Sabah, In re, 2004–05 CILR 373, considered.
(2)Cook-Bodden v. Kirkconnell, 1994–95 CILR 27, considered.
(3)Deputy Registrar v. Day, 2020 (1) CILR 99, referred to.
(4)Merck KGaA v. Merck Sharp & Dohme Corp., [2014] EWHC 3920 (Ch), referred to.
Act for the Government of the Cayman Islands 1863 (27 Vict. Cap. XXXI), s.5: The relevant terms of this section are set out in paras. 18 and 25.
s.6: The relevant terms of this section are set out at para. 16.
Cayman Islands (Constitution) Order 1959 (S.I. 1959/863), s.56(2): The relevant terms of this subsection are set out at para. 33.
Moneylending Act 1938 (cap. 254), s.9:
“Subject as hereinafter provided, any contract made after the commencement of this Act for the loan of money shall be illegal in so far as it provides directly or indirectly for the payment of compoundinterest or for the rate or amount of interest being increased by reason of any default in the payment of sums due under the contract . . .”
Moneylending Amendment Law 1938, s.3: The relevant terms of this section are set out at para. 7.
Revised Edition (Laws of the Cayman Islands) Law 1960, s.10: The relevant terms of this section are set out at para. 37.
Revised Edition (Laws of the Cayman Islands) Law 1960, as amended by the Revised Edition (Laws of the Cayman Islands) (Amendment) Law 1963, Preface: The relevant terms of the Preface are set out at para. 39.
The plaintiff challenged a loan arrangement with the defendant.
The defendant had loaned money to the plaintiff. Pursuant to the loan agreement, registered charges were placed over the plaintiff’s house and apartments. The plaintiff claimed that the charge against the apartments should be discharged.
The Moneylending Law 1938 of Jamaica provided, in s.9, that any contract for the loan of money would be illegal in so far as it provided (directly or indirectly) for the payment of compound interest. The plaintiff submitted that both the loan agreement and charges were illegal contracts because they provided for compound interest. The preliminary issue for the court was whether the Moneylending Law 1938 was in full force and effect in the Cayman Islands.
The plaintiff submitted that the Law was and remained in force in the Cayman Islands. The defendant submitted that the Law had never been a part of Cayman Islands law and could not be relied upon by the plaintiff. The parties agreed that the Law did not contain an express provision extending it to the Cayman Islands. The plaintiff submitted that this was equivocal and that, in the absence of a provision to exclude the Law’s applicability to the Cayman Islands, having regard to the legislative background, there was a presumption that the Law applied to the Cayman Islands as from the date of its enactment by the legislature of Jamaica. The defendant submitted that that argument was wrong as it was grounded on the erroneous basis that every law of Jamaica was a law of the Cayman Islands unless repealed.
M. Wingrave for the plaintiff;
C. Flanagan for the defendant.
1 WILLIAMS, J.:
Introduction
These proceedings concern a loan arrangement between the defendant, Abarbanel Ltd. and the plaintiff, Rogelio Antonio Hawkins. The plaintiff claims that the defendant is registered as a resident company and carries on a local business as a mortgage lender. The defendant takes issue with this claim but accepts that it is registered as a local company and loaned money to the plaintiff. Pursuant to the loan agreement, registered charges were placed over the plaintiff’s house and apartments. The plaintiff claims that the charge against the apartments should be discharged, contending that the defendant should be—
“barred from enforcing this charge because it was never properly authorised to carry on its commercial mortgage lending business in the Cayman Islands and thus the Defendant could not legally enter into, register and/or, enforce this charge.”
The plaintiff also claims that he should receive a refund of USD$40,504.731 as he contends that the defendant “was not entitled to earn any interest, because it should not be allowed to profit from its own illegality and/or wrong-doing.”
2 The originating summons was filed on September 18th, 2018. The acknowledgement of service of the originating summons was filed on October 3rd, 2018. On May 8th, 2019, Mangatal, J. directed that the action should continue as if begun by writ, pursuant to GCR O.28, r.8 and that a statement of claim should be filed by or on May 24th, 2019. The learned judge also gave comprehensive directions to trial. The lengthy statement ofclaim was filed on May 24th, 2019. The defence was filed, as directed, on June 7th, 2019. Although not provided for in Mangatal, J.’s directions, the amended statement of claim containing a great deal of amendments was filed on June 17th, 2019. As directed, on June 21st, 2019, a reply to the defence was filed. On July 8th, 2019, the defendant applied to strike out significant parts of the plaintiff’s statement of claim dated May 24th, 2019, as well as striking out the reply dated June 21st, 2019. On July 16th, 2019, a summons was filed by the plaintiff seeking leave to significantly amend its originating summons. The amended originating summons was filed on September 11th, 2019, leave having been given for that by Richards, J. when she approved a consent order on September 3rd, 2019. On September 17th, 2019, a re-amended statement of claim was filed pursuant to the order of September 3rd, 2019. On October 2nd, 2019, the amended defence was filed. On October 15th, 2019, the reply to the amended defence was filed.
3 I received oral submissions from the parties on December 9th, 2019. In addition, I have considered the written submissions filed by the...
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