The Bank of Nova Scotia v Joyce Erin Rabess et Al

• Jurisdiction: Dominica
• Court: Court of Appeal (Dominica)
• Judge: Ellis JA
• Judgment Date: 22 July 2024
• Judgment citation (vLex): [2024] ECSC J0722-1
• Docket Number: DOMHCVAP2016/0010

Between:

The Bank of Nova Scotia

Appellant

and

[1] Joyce Erin Rabess

[2] Anison Rabess

Respondents

Before:

The Hon. Mde. Vicki Ann Ellis Justice of Appeal

The Hon. Mr. Gerard St. C Farara Justice of Appeal [Ag.]

The Hon. Mr. Eddy Ventose Justice of Appeal [Ag.]

DOMHCVAP2016/0010

THE EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Civil appeal — Default judgment — Service of default judgment — The doctrine of stare decisis — Whether the learned master erred by finding that she was bound to follow the decision of Mitchell JA [Ag.] in Anison Rabess et al v National Bank of Dominica — Title by Registration Act — Exercise of mortgagee's rights under the TRA — Section 66 of the TRA — Conversion of equitable mortgage to legal mortgage — Appellant's failure to serve default judgment prior to taking steps under the TRA for conversion of the equitable mortgage to legal mortgage — Whether service of a default judgment is a condition precedent to mortgagee taking steps under section 66 of the TRA — Enforcement of judgments under the CPR — Whether proceedings under the TRA are enforcement proceedings governed by the CPR — Whether the master erred by ruling that the Bank's failure to serve the default judgment rendered all steps taken by the Bank pursuant to the TRA null and void and of no effect

On 31 ^st August 2001, the respondents obtained a loan facility from the Bank of Nova Scotia (“the Bank” or “the appellant”) and in accordance with section 62 of the Title by Registration Act (the “ TRA”), an equitable mortgage was granted to the Bank over the respondents' interest in property registered in the Land Titles Register Book. As per section 65 of the TRA, a caveat was presented by the Bank to prevent any dealings with the mortgaged property and this caveat was noted on the certificate of title for the property.

The respondents defaulted on their loan obligations and the Bank commenced a claim against them on 26 ^th August 2002 to recover the sum of $346,012.42 which the Bank claimed was due and owing on the loan. The respondents failed to file an acknowledgement of service and on 22 ^nd October 2002, the Bank filed a request for entry of judgment in default of acknowledgement of service. The Bank requested that judgment be entered for the sum of $354,341.66. On the same date, 22 ^nd October 2002, the Bank filed a draft judgment in default. Judgment in default was subsequently granted to the Bank and the default judgment, was filed on 29 ^th September 2003, although dated 24 ^th September 2002.

After the entry of judgment in default, the judgment was presented to the Registrar of Titles on 16 ^th July 2004 and a legal mortgage dating back to the date of the caveat was noted on the certificate of title and the caveat was removed, in accordance with section 66 of the TRA. On 3 ^rd December 2015, the respondents filed an application to set aside the default judgment entered on 24 ^th September 2002 and they also sought an order that all enforcement proceedings predicated on the purported default judgment be set aside and declared null and void.

On 7 ^th December 2015 the Bank filed an ex-parte application for an order that the default judgment be corrected to 24 ^th September 2003 rather than 24 ^th September 2002. The Bank — contended that by accidental slip, the incorrect year was inserted in the default judgment. This ex-parte application was granted by Thomas J, who ordered that the date of the default judgment be corrected to 24 ^th September 2003 under Part 42.10 of the Civil Procedure Rules 2000 (the “CPR” or “CPR 2000”).

On 15 ^th October 2015, the Bank served the default judgment on counsel for the respondents and on the same date, filed an application pursuant to CPR Part 26.9 for the court to deem service of the default judgment on counsel for the respondents as proper service, and to have all matters put right without invalidating any steps taken in the proceedings after judgment.

The respondents' filed an amended application on 31 ^st December 2015 seeking an order that: (i) the default judgment entered on 24 ^th September 2003 be set aside; (ii) the amended judgment obtained by order of Thomas J be set aside; (iii) all enforcement proceedings predicated on the purported default judgment be set aside and declared null and void; and (iv) the Bank pay to the respondents all sums obtained or realised in enforcing the purported default judgment from 2003 to date together with interest at the prevailing banker's rate.

Applying Part 11.16(1) of the CPR 2000, the learned master set aside Thomas J's order and reheard the Bank's application to correct the date of the default judgment. The master found that there was indeed an accidental slip since the Bank's application for entry of judgment in default was filed in October 2002 and default judgment could not have been granted before the request had been made. Consequently, under the slip rule (rule 42.10 of the CPR 2000), the Bank's application was granted, and the date of the default judgment changed to 2003. The master also found that there was no basis for setting aside the default judgment since, contrary to the respondents' argument, judgment had not been entered for an excessive amount.

The respondents also sought to set aside all enforcement proceedings predicated on the default judgment on the basis that the default judgment had not been personally served on them. It was submitted that even with the corrected date of September 2003, the default judgment was only served on the respondents on 15 ^th October 2015. The respondents relied strongly on the appellate judgment in Anison Rabess et al v National Bank of Dominica (“Rabess”).

The Bank countered that the application for an order for the sale of the land was brought under the TRA and did not constitute enforcement of the judgment since: (i) CPR Part 45 sets out the various methods for enforcing a judgment; (ii) money judgments may be enforced, inter alia, by an order for seizure and sale of goods under CPR Part 46; (iii) CPR Part 46 defines writ of execution as including an order for sale of land; and (iv) proceedings under Part V of the TRA are not referred to in the TRA or the CPR as a method of enforcement.

The Bank further submitted that the master would not be bound by the decision in Rabess because the statements by Mitchell JA [Ag.] were obiter and would not be binding. The master ultimately found that the facts of Rabess were almost identical to the facts before her. She was unable to agree with the Bank's argument that Mitchell JA's [Ag.] statements were obiter and she determined that she was bound to follow Mitchell JA's [Ag.] appellate decision. Having found that service of the default judgment was only deemed to have been effected on the respondents on 15 ^th October 2015, the learned master consequently ordered that all proceedings taken consequent to the entering of the default judgment on 24 ^th September 2003, were null and void and of no effect. Having found that the respondents had succeeded only on some portions of their application, the master made no order as to costs.

Being dissatisfied with the learned master's ruling, the Bank appealed. The Bank initially lodged 9 grounds of appeal however, during the oral hearing, counsel for the Bank, indicated that they would not be proceeding with grounds 3 and 4 of their notice of appeal, effectively conceding that Mitchell JA's [Ag.] statements in Rabess at paragraphs 7 and 12 were not obiter dicta and formed part of the ratio decidendi in that case.

Three main issues therefore arose for determination by the Court from the seven remaining grounds of appeal: (i) Whether the learned master erred by finding that she was bound to follow the decision of Mitchell JA [Ag.] in Rabess; (ii) Whether the master erred by ruling that the Bank's failure to serve the default judgment rendered all steps taken by the Bank pursuant to the TRA null and void and of no effect; and (iii) Whether the master erred by failing to determine the appellant's application under CPR Part 26.9 to put matters right notwithstanding their failure to serve the default judgment in 2003 and only serving same in 2015.

Held: allowing the appeal, setting aside the decision made by the learned master on 29 ^th June 2016 which rendered all proceedings taken by the Bank consequent to the entering of the default judgment on 24 ^th September 2003 null and void and of no effect, and ordering that the respondents pay the appellant's costs on the appeal, such costs to be assessed by a judge of the high court, if not agreed, within 21 days of the date of this judgment, that:

• 1. A judgment under section 66 of the TRA is a judgment (obtained pursuant to CPR Part 12) which on a strict reading of CPR Part 42.6 ought to have been served on the respondents. However, it does not follow that under the provisions of the CPR or indeed the TRA, that the respondents would be entitled to have the consequential proceedings set aside as of right, ex debito justitiae, or indeed that, if there is such a discretion it can be exercised in only one way. The court must look at the individual facts of each case. In this appeal, the proceedings which would have led to the default judgment were properly served on the respondents. The default judgment serves as a judgment under section 66 of the TRA fixing the amount owed by the respondents. It is not a money judgment and the proceedings under the TRA are not enforcement proceedings. It simply serves as the authority to the Registrar of Titles to act to convert the bank's equitable mortgage to a legal one. Once that legal mortgage was noted on the certificate of title, the procedures prescribed under the TRA to realise the Bank's security are not dependent on any judgment. The proceedings under the TRA are an entirely fresh set of proceedings under a completely disparate statutory regime which had been properly served on the...