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REPUBLIC OF TRINIDAD AND TOBAGO

IN THE HIGH COURT OF JUSTICE

CV NO. 2013-02044

IN THE MATTER OF THE PROPERTY COMPRISED

IN THE DEED OF MORTGAGE DATED 28TH

DAY OF

OCTOBER, 1998 AND REGISTERED ON THE 12TH

DAY

OF NOVEMBER,1998 AND MADE BETWEEN

ANSARI ALI NAGIR AND INDRANI ALI NAGIR

OF THE FIRST PART AND ANSARI ALI

NAGIR, INDRANI ALI NAGIR AND SHAHNIZAD NAGIR

OF THE SECOND PART AND GUARDIAN LIFE OF THE

CARIBBEAN LIMITED OF THE THIRD PART WHICH

WAS VARIED BY DEED OF VARIATION DATED

11TH

DAY OF JUNE 2002 AND REGISTERED ON

14TH

AUGUST, 2002 AND MADE BETWEEN

ANSARI ALI NAGIR AND INDRANI ALI NAGIR

OF THE FIRST PART, ANSARI ALI NAGIR

INDRANI ALI NAGIR AND SHAHNIZAD NAGIR

OF THE SECOND PART, ESMOND BACHAN

AND SHAHARAZAD NAGIR OF THE THIRD

PART AND GUARDIAN LIFE OF THE CARIBBEAN

LIMITED OF THE FOURTH PART

AND

IN THE MATTER OF THE CONVEYANCING AND

LAW OF PROPERTY ACT CHAP. 56:01

BETWEEN

GUARDIAN LIFE OF THE CARIBBEAN LIMITED

Claimant

AND

ANSARI ALI NAGIR

First Defendant

AND

INDRANI ALI NAGIR

Second Defendant

AND

SHAHNIZAD NAGIR

Third Defendant

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AND

ESMOND BACHAN

Fourth Defendant

AND

SHAHARAZAD NAGIR

Fifth Defendant

BEFORE THE HONOURABLE MADAM JUSTICE JONES

Appearances:

Mr. S. Young instructed by Ms. K. Peterson for the Claimant.

Mr. N. Ramnanan for the Defendants.

JUDGMENT

1. The Claimant, Guardian Life of the Caribbean Limited, is the holder of a mortgage on

premises owned by the First and Second Defendants (“the mortgaged premises”). The Third

Defendant, together with the First and Second Defendants are the original parties to the mortgage

deed dated 28th

October 1998. By way of a deed of variation dated 11th

June 2002 the Fourth and

Fifth Defendants became additional borrowers with respect to the mortgage loan. The Fourth

Defendant is now deceased.

2. By an action commenced on 10th

May 2013 pursuant to Part 69 of the Civil

Proceedings Rules 1998 as amended the Claimant seeks against the First and Second Defendant

an order for the possession of the mortgaged premises and against all the Defendants the

payment of the sum of $401,040.91 together with interest at a daily rate of $71.96 from 10th

October 2013 to date.

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3. The Claimant, by its statement of case, alleges that in breach of the conditions

contained in the mortgage deed the Defendants have failed to pay (a) the annual premiums for

the fire policy for the mortgaged premises; and (b) the instalments and interest due under

mortgage since 1st September 2011. The Claimant also alleges that there due to it outstanding

premiums on a life insurance policy in the name of the First Defendant and legal and other

miscellaneous fees incurred by it and chargeable to the Defendants pursuant to the mortgage

deed.

4. By way of defence the Defendants admit that they have failed to pay the annual

premiums for the fire policy on the mortgaged premises but contend that this is as a result of the

Claimant's refusal to reduce the instalments on the mortgage and the consequential financial

hardship inflicted on them.

5. With respect to the life insurance policy the Defendants aver that:

(i) contrary to an undertaking made to the First Defendant by the Claimant the

Claimant failed to change the policy from a flexi-term policy to a level

term level premium policy;

(ii) the policy is fraudulent in that: (a) there were errors in the statement of the

history of the life insurance policy relied on by the Claimant; (b) the policy

document relied on by the Claimant does not carry the first hard page with

the three authenticating company’s signatures as is customary; (c) the

document does not have two seals from the Board of Inland Revenue as

evidence of stamp duty paid; (d) the plan of assurance described as

renewable level term insurance plan for five years convertible to age 60

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during the life of the policy conflicts with clause 10 of the policy; (e) the

construction of the premium is a lie, and in particular the TDWP rider is

impossibly priced and is impractical and unrealistic; (f) the policy

premium of $314.57 contained in the policy document purported to be

issued in 1998 only came into being in December 2011; (g) the word

INSTALMENT on the policy is broken with the T placed on the next line;

(h) the Claimant has taken an inordinately lengthy period after the request

from his Attorneys to disclose a copy of the policy; (i) the staff premium

was not used in the calculation of the premium of $314.57; (j) there is an

unexplained discrepancy the difference in premium as stated in the agents

card and the photocopy of the policy furnished by the Claimant; and

(iii) in any event, on a proper calculation of the sum admitted by the Claimant

to be paid by them, the policy was paid up to August 2013 and therefore

not in arrears at the date of the filing of the claim.

6. With respect to the sums claimed to be due under the mortgage by way of the monthly

instalments of principal and interest the Defendants allege that the Claimant has breached a

material and fundamental condition of the loan agreement relating to the interest to be charged

on the principal sum. In this regard the Defendants allege that prior to entering into the contract

the Claimant advised that the interest rate of the contract would vary according to the current

customer rate and that in reliance on that representation they entered into the loan agreement.

The Defendants allege that in December 2004 the current customer rate was reduced but that,

contrary to the said representation, the Claimant refused to adjust the interest rate applicable to

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the agreement. The Defendants further aver that if the interest rate had been reduced the

Defendants’ mortgage instalments would have been paid up to and until April 2014.

7. In the circumstances the Defendants counterclaim seeking a declaration that the

Claimant has breached the loan agreement and the mortgage agreement; a declaration that the

insurance policy is fraudulent and the following orders:

(i) the loan agreement, deed of mortgage and life insurance policy be

rescinded for breach of condition, misrepresentation and fraud and

breach of fiduciary duty and that consequent to this the Defendants make

“counter restitution” to the Claimant in the sum of $320,000.00 together

with interest at a rate to be fixed by the court and that the sums already

paid by the Defendants be set off against such sum with interest to be

calculated on a reducing balance basis;

(ii) the Claimant compensate the First Defendant for loss of coverage under

the life policy representing the face value of the policy;

(iii) a jointly selected accountant be appointed to conduct an assessment of

the compensation due to the First Defendant for the loss of coverage

under the life policy and the “counter restitution” claimed;

(iv) the payment to the Defendants of any surplus found due to them; and alternatively

(v) an order of specific performance of clause 4 of the loan agreement.

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The issues

8. With respect to the claim the issues for my determination are:

1. Are the Defendants in breach of any of the conditions of the mortgage loan?

2. If so, do those breaches or any one of them entitle the Claimant to call in

the loan and exercise any of its remedies under the mortgage?

3. If so, what are the sums now due to the Claimant?

The burden of proof on these issues is on the Claimant.

9. With respect to the counterclaim the issues for my determination are:

(i) With respect to the insurance policy: (a) was there an undertaking given

by the Claimant to convert the flexi-term policy to a level term policy?

and (b) is the life insurance policy issued by the Claimant on the life of

the First Defendant fraudulent?

(ii) If the answer to either of these questions is yes, what is the effect of

same on the mortgage?

(iii) Were the Defendants entitled to the benefit of a decrease of 1% in the

interest rate from January 2005 and, if so, is rescission now open to the

Defendants?

The burden of proof with respect to these issues is on the Defendants.

The Undisputed Facts

10. Most of the basic facts relevant to the claim and counterclaim are not in dispute. The

mortgage deed and by extension the deed of variation (collectively called “the mortgage

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documents”) contain the usual provisions. In particular the mortgage documents require the

Defendants to repay the principal sum borrowed from the Claimant by the last day of October

1998 and provide, with respect to any of that sum unpaid by that date, that the Defendants repay

that sum together with interest thereon by equal monthly payments on the last day of each and

every month.

11. With respect to the payment of interest the mortgage documents provide: (a) for the

payment of interest at the original rate or any variation to that rate made by the Claimant in

accordance with clause 2 of the second part of the second schedule of the mortgage deed; (b) that

the monthly payments shall include the interest payable; and (c) that each instalment of interest

on the principal money for the time being secured, including capitalised interest, shall from

seven days after the date it ought to be paid be added to the principal sum secured and shall

thereafter bear interest and be secured and payable accordingly.

12. By the mortgage documents the Defendants covenant that during the continuance of

the security they will observe and perform the stipulations and provisions contained in the first

part of the second schedule and agree and declare that the stipulations and provisions contained

in the second part of the second schedule shall apply.

13. Insofar as it is relevant to these proceedings the second schedule provides that:

with respect to the payments of the monies due:

(i) should the Defendants (a) pay to the Claimant all interest due on the

principal sum, when due and owing on each of the monthly days fixed

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for payment of interest, and (b) not breach any covenant, agreement or

provision contained in the mortgage documents other than the covenant

for the repayment of the principal sum and (c) pay the principal sum

with interest at the original rate or any variation by the instalments of

principal and interest combined on the last day of each month in the

manner provided by the in the third schedule the Claimant shall accept

the payment of the principal sum and interest and will not require the

payment of such sum in any other manner1.

(ii) Such payments may be accelerated by the repayment on any of the

days appointed for the repayment of instalments of principal and

interest, in addition to the instalment of principal and interest due for

payment, all or any number of the unpaid instalments of principal

money specified in the third schedule or any substitute therefore

provided that (a) unless the Defendants have given to the Claimant six

months previous notice in writing the Defendants shall pay at the same

time six months interest and (b) that any such partial repayment by

anticipation of instalments shall not interfere with the payment in the

regular course of the instalments of the principal money and interest

subsequently falling due but shall only have the effect of accelerating

the ultimate payment of the principal money remaining owing under the

security2;

with respect to the variation of the interest rate:

1 Clause 3 of the second part of the second schedule.

2 Clause 5 of the second part of the second schedule

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(iii) the Claimant may from time to time vary the original rate of interest

payable by the Defendants by increasing or decreasing same by way

of a notice to the Defendants to that effect but that the rate of interest

shall not be increased so as to exceed the rate of interest at the date

of the notice upon new loans on a security of the same type or

comparable to the premises3;

with respect to the fire insurance:

(iv) the Defendants are required to keep the buildings insured to the full

insurable value against loss or damage caused by fire and duly and

punctually pay all premiums and other monies necessary for

effecting and keeping up such insurance. And that upon default the

Claimant is at liberty to pay such premiums and the costs and

expenses of same deemed to be properly incurred by the Claimant4.

14. The schedule further provides that all costs and charges and expenses properly

incurred and all monies properly paid by the Claimant shall together with interest at the

applicable rate be charged on the property secured and shall be repaid by the Defendants on

demand5.

15. The First Defendant was up to the year 1999 an employee of the Claimant. On 13th

May 1998 the First and Second Defendants applied to the Claimant for a mortgage loan. The

Claimant required that additional conditions be met and accordingly the Third Defendant joined

3 Clause 2 of the second part of the second schedule

4 Clause 2 of the first part of the second schedule

5 Clause 9 of the second part of the second schedule.

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in the application. Pursuant to the revised application the Claimant offered to lend these

Defendants the sum of $320,000.00 utilising the mortgaged premises as security for the loan.

The offer was contained in a document dated 27th

July 1998 (“the offer”).

16. The offer identified certain preliminary requirements and in this regard , among other

things, the first three Defendants were required to effect an insurance policy with the Claimant as

collateral for the mortgage together with an existing flexi- term policy on the life of the First

Defendant. Further the offer advised that it contained in general language the more important

terms and conditions from the Claimant's usual form of mortgage deed and invited these

Defendants to inspect at the Claimant's premises such form of deed if they so desired.

17. With respect to the rate of interest payable the offer differs from the relevant clause in

the mortgage deed in that it states that the rate of interest may from time to time be varied

upwards or downwards on three months’ notice in writing being given by the Claimant “so as to

conform with the rate charged by the company from time to time on similar security.” The offer

was accepted on the 31st July 1998.

18. The Defendants failed to pay the principal sum with interest on the last day of

October 1998. Accordingly the provisions requiring the Defendants to repay the principal sum

and interest by monthly instalments became applicable. Throughout the currency of the mortgage

the Defendants’ payments of the monthly mortgage instalments were irregular and stopped

completely in January 2012. The history of the payments made by the Defendants is reflected in

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a schedule of payments tendered into evidence by the Claimant.6 During the period December

1998 to August 2003 the interest rate applicable to the loan was reduced by the Claimant on

three occasions. On each occasion the Defendants were either in arrears of their mortgage

instalments or there was due to the Claimant sums representing outstanding insurance premiums,

money paid by it for fire insurance premiums and legal fees or all of the above.

19. By letter dated 8th

December 2004 the Defendants were advised of a 1% reduction in

the applicable interest rate effective from January 2005. On this occasion, however, the Claimant

refused to apply the reduced interest rate to the mortgage loan unless the loan was paid to 1st

December 2004. In accordance with this advice on the 29th

December 2004 the Defendants

liquidated all the arrears on their mortgage instalments. Despite this, by a letter of the same date,

the Defendants were advised that they would only be entitled to the benefit of the decrease in

interest if all arrears were cleared by 31st December 2004. The letter identified the sum of

$31,057.79 due to the Claimant from the Defendants with respect to outstanding premiums on

life insurance policies and fire policies and legal fees. Included in that sum of $31,057.79 was a

claim for outstanding insurance premiums on the First Defendant's life in the sum of $200.83 per

month. These sums were not paid by the Defendants and in accordance with the letter the interest

rate applied by the Claimant to the loan remained at 10% per annum rather than the 9%

applicable to other mortgage loans.

20. By a letter dated the 21st February 2005 from the Claimant the Defendants were

referred to conversation between the First Defendant and the writer, an investment assistant with

the Claimant, concerning the status of the Defendants’ account. The letter notes that the First

6 Exhibit LR6 to the witness statement of Leon Ramdeen.

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Defendant was expecting an increase in salary by March 2005 and “would arrange to remit

additional monies apart from the usual mortgage instalments each month to clear the arrears on

the account.” The letter indicated that the account was now paid up to January 2005 with the sum

of $199.57 in suspense to their credit but that there were still outstanding: premiums on their

assigned policies, legal fees and fire insurance premiums.

21. The letter further indicated that with respect to the rate reduction, due to the fact that

only the mortgage loan was regularised as of 31st December 2004 and not all the other sums

outstanding on the account, the Defendants would only be eligible to the reduction in interest

three months after all the arrears on the loan were updated in full.

22. Thereafter the Defendants continued making irregular payments on the mortgage on

the basis of an interest rate of 10 % per annum until January 2012 when the Defendants stopped

making payments. By a letter dated 12th

March 2012 the Claimants, by their Attorneys, advised

the First and Second Defendants of the existence of arrears on the mortgage instalments and

demanded the payment of the sum of $45,230.04 by the 23rd

March 2012. This sum comprised

instalments of mortgage payments in the sum of $20,002.22; fire insurance premiums due

$9,225.37; legal fees due $11,291.90 cents and premiums due on the First Defendant's life

insurance policy in the sum of $4,718.55 cents.

23. On the 23rd

March 2012 the Defendants, by their Attorney, requested of the

Claimant’s Attorneys a copy of the relevant documents which documents included a copy of the

insurance policy on the life of the First Defendant. By a letter dated 5th

March 2013, a document

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purporting to be a copy of the policy was submitted by the Claimant’s Attorneys to the

Defendants’ Attorneys. The life insurance policy submitted to the Defendants prior to the trial

was not an accurate copy of the original neither were the premiums provided by the policy

correct.

24. With respect to the fire insurance as at 4th

November 2013 the Defendants owed the

sum of $12,063.62 with respect to these premiums. The Defendants do not deny that only the

sum of $36,751.89 has been paid with respect to the insurance policy on the life of the First

Defendant.

The Evidence

25. Evidence on behalf of the Claimant was given by Leon Ramdeen (“Ramdeen”), the

Vice President of Operations and Technology with Guardian Asset Management Ltd, and

Jacqueline Eadie-Williams (“Eadie-Williams”) the Manager of the Customer Service

Department of the Claimant. On behalf of the Defendants evidence was given by the First

Defendant and two expert witnesses, Alan Ramoutar (“Ramoutar”) and Lloyd Ince (“Ince”).

Ramoutar gave evidence with respect to the monies due under the mortgage applying a 9%

interest rate effective from January 2005. Ince gave evidence with respect to the calculation of

the monthly premiums on the life insurance policy and the discrepancies observed by him in the

copy of the policy documents presented to the Defendants by the Claimant’s Attorneys. The

original of the insurance policy was tendered into evidence at the trial. The production of the

original insurance policy at trial rendered Ince’s evidence of no assistance.

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26. With respect to the evidence of the other Defendants in his witness statement the First

Defendant advises that the Second, Third and Fifth Defendants have informed him that they have

read his witness statement and agree with its contents insofar as it is within their personal

knowledge and have informed him that they wish to rely on the evidence contained therein in

support of their joint defence. I understand this to mean that these defendants agree to be bound

by the First Defendant’s evidence.

27. I shall deal with the disputes of fact when dealing with the individual issues. I

propose to deal with the issues raised by the Defendants first.

Was there an undertaking by the Claimant to convert the existing flexi- term policy to a

level term level premium policy?

28. It is clear that there was an agreement by the parties, as evidenced by the letter of

offer, that in addition to the provision of the premises as security for the loan the Defendants

would effect a suitable assurance policy with the Claimant together with the existing flexi-term

policy on the life of the First Defendant as collateral for the mortgage. The Defendants’

complaints deal with this existing flexi- term policy on the life of the First Defendant.

29. Evidence in this regard was given by the First Defendant. In a nutshell the evidence of

the First Defendant on this issue is based on his evidence as to conversations with persons

employed by the Claimant and conclusions drawn by him based on documents tendered into

evidence by him. With respect to the alleged conversations the First Defendant fails to identify

the persons by name or even by the scope of their employment with the Claimant. This is despite

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the fact that the First Defendant was employed by the Claimant during this period. Unfortunately

for the First Defendant the documents relied on him to support the conclusions drawn by him do

not assist.

30. For example the First Defendant’s evidence is that his application for a flexi-term

policy was made on 11th

December 1997. According to him two weeks after this he orally

requested the Claimant to change the policy to a level term level premium policy. On 8th

January

1998 he received an advice providing the number of the policy and stating among other things

that the policy in force was a flexi-term policy. He says that he called the Claimant’s head office

and reminded them of his request to change the policy to a level term level premium policy.

Thereafter he received an advice dated 9th

January 1998 which, according to him, showed that

the policy had been converted to a level term level premium policy, giving him a new policy

number and advising that his new premium was $200.83.

31. The copy of the advice relied on by the First Defendant however does not support this

conclusion. This document merely advises that there was an error with respect to the policy

number and the premium charged and gives the correct policy number and premium. The

applicable premium was in fact lower than the premium stated in the earlier advice.

32. The contents of these documents correspond with the Claimant’s evidence as to the

relevant flexi-term policy on the First Defendant's life used as additional security for the

mortgage loan by the Defendants. Indeed, all the documents relied on by the First Defendant in

this regard are consistent with there being in force a flexi-term policy.

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33. I do not accept the evidence of the First Defendant that there was an undertaking by the

Claimant to convert the policy on his life from a flexi- term policy to a level term level premium

policy. The only actual evidence of any undertaking given by the Claimant is the First

Defendant’s statement that he was given an undertaking by the Claimant that the flexible term

policy would be amended to an “LTLO” since the policy was now reactivated. The First

Defendant gives no particulars or details of who gave this undertaking on behalf of the Claimant.

Neither does he even provide the date of the conversation or even a description of the

circumstances in which this conversation took place. I do not accept this evidence.

34. In any event it is clear that with respect to the mortgage loan the offer accepted by the

Defendants specifically referred to the existing flexi-term policy on the First Defendant's life as a

suitable assurance policy as collateral for the mortgage. The Defendants accepted this offer. On

the documents presented therefore I am satisfied that on the 31st July 1998 the First Defendant

knew that the policy was a flexi-term policy and agreed for this flexi-term policy to be used as

further collateral for the loan.

35. In the circumstances I do not accept the First Defendant's evidence of an undertaking

by the Claimant to convert the existing flexi-term policy on his life to a level term level premium

policy and I reject the Defendants’ claim in this regard. Further I am satisfied that the agreement

made between the parties mandated the Defendants to maintain such that insurance on the life of

the First Defendant during the currency of the loan.

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Is the insurance policy fraudulent?

36. It cannot be disputed that fraud is difficult to prove. To succeed the Defendants will

have to show more than mere error or even negligence on the part of the Claimant. The

submissions of the Defendants in this regard are not the easiest to understand. They are wide and

far-ranging. The challenge is to understand the submissions in the context of the plea in the

defence and counterclaim. The Defendants’ case as pleaded is that the policy is not a policy at all

since it is a forgery. In this context as I understand their submissions it is that fraud on the part of

the Claimant must be imputed as a result of the Claimant presenting a document purporting to be

the original policy which contained errors and was clearly not the original policy.

37. It is clear that in this regard the plea relates to two documents. The first is the

document sent to the Defendants’ Attorneys by the Claimant’s Attorneys in March 2012 and the

second is a document annexed to an affidavit deposed to by an employee of the Claimant and

filed in these proceedings prior to this action being set down for trial. Both of these documents

were described as being the relevant policy.

38. It is not in dispute that there are discrepancies in both of these documents. While it

cannot be disputed that these discrepancies may be relevant with respect to the credibility of the

Claimant's witnesses and may at some time in the future have some relevance to the question of

costs it also cannot be disputed that the original insurance policy was tendered into evidence by

consent. The Defendants only real complaint with respect to this document is that it was

presented to them only minutes before the commencement of the trial.

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39. In this regard therefore insofar as the Defendants plead that the insurance policy is

fraudulent because the policy document relied on by the Claimant does not carry the first hard

page with the three authenticating company’s signatures as is customary and the document does

not have two seals from the Board of Inland Revenue as evidence of stamp duty paid these

allegations are not supported by the evidence.

40. The fact that the description of the policy as a renewable level term insurance plan for

five years convertible to age 60 during the life of the policy conflicts with clause 10 of the policy

is a matter for the interpretation of the policy and does not, in my opinion, admit a conclusion of

fraud or forgery. In any event on a reading of the relevant clauses and the policy as a whole I am

not satisfied that such a description is in fact in conflict with clause 10 of the policy.

41. In support of its plea that the policy is fraudulent the Defendants rely on the fact that

(a) the construction of the premium is a lie and, in particular, the TDWP rider is impossibly

priced and is impractical and unrealistic; (b) the policy premium of $314.57 contained in the

policy document purported to be issued in 1998 only came into being in December 2011; and (c)

the word INSTALMENT on the policy is broken with the T placed on the next line. With respect

to (b) and (c) there is no evidence of this on the original policy tendered into evidence. With

respect to (a) the Defendants have led no evidence in this regard.

42. The Defendants further rely on the fact of errors in the statement of the history of the

insurance policy relied on by the Claimant; the fact that the Claimant has taken an inordinately

lengthy period after the request to its Attorneys to disclose a copy of the policy and what they

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say is an unexplained discrepancy the difference in premium as stated in the agent’s card and the

photocopy of the policy furnished by the Claimant. With respect to these facts I am satisfied that

even if true these facts, individually or collectively, do not allow for a conclusion of fraud to be

drawn with respect to the policy.

43. In any event with respect to the insurance premiums due on the insurance policy

effected on the life of the First Defendant the Claimant, through Eadie-Williams, admits errors in

the premiums applied by it to the policy. In this regard the Claimant states that while the

insurance policy was renewed for an additional five years in May 2003 and while the premium

ought to have been recalculated to $221.66 in fact no increase in premium was charged and the

First Defendant continued to be charged the original premium of $200.83. This is consistent with

the letter of the 29th

December 2004. In addition the Claimant states that the premium of $200.83

was calculated on the basis of a rate applicable only to the Claimant’s staff despite the fact that

the First Defendant had ceased being employed by the company since the year 1999.

44. According to the Claimant’s witness this benefit to the First Defendant continued until

July 2008 when by letter dated the 9th

June 2008 the monthly premium was increased to $273.33.

Thereafter another error on the part of the Claimant resulted in the First Defendant being charged

a monthly premium of $314.57 from September 2011. As a result of this latter error, by way of

correction, the Claimant has now applied a monthly premium of $273.37 to the policy from

September 2011. I accept the Claimant’s evidence in this regard. The fact of the errors were not

challenged by the Defendants. What is suggested by the Defendants by their defence and

counterclaim is that in making these errors the Claimant was acting fraudulently. While in this

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regard the Claimant may be guilty of carelessness and unprofessionalism I am satisfied that there

is no fraud on the part of the Claimant with respect to these irregularities.

45. On the evidence before me therefore I am satisfied that the insurance policy on the life

of the First Defendant is not a fraudulent policy nor is it a forgery. I find that the insurance policy

on the life of the First Defendant is a valid insurance policy and that the errors made by the

Claimant with respect to the premiums due to it under the policy were errors made with no

fraudulent intent. Further these errors have been corrected with no loss to the First Defendant.

Indeed given the errors made by the Claimant the First Defendant has had the benefit of no

increase in premium for the second five years of the policy and, in accordance with the evidence

of Eadie-Williams, the Claimant has reversed the monthly premium of $314.57 charged on the

insurance policy from September 2011.

Were the Defendants entitled to the benefit of a decrease of 1% in the interest rate from

January 2005 and, if so, is rescission now open to the Defendants?

(a) Are the Defendants entitled to the decrease?

46. It is clear that the mortgage loan provides for a variation in the applicable interest rate

at the discretion of the Claimant. With respect to the interest rate the mortgage documents and

the offer provide for the manner in which Claimant's discretion is to be exercised. The

Defendants rely on the clause in the offer which provides for a variation by the Claimant in the

interest rate from time to time “so as to conform with the rate charged by the company from time

to time on similar security.” The Claimant, on the other hand, relies on the clause in the

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mortgage documents which merely provides that the rate of interest shall not be increased so as

to exceed the rate of interest on that date upon new loans on security of the same type or

comparable to the premises.

47. I am satisfied that with respect to the issues for my determination the question of

which clause is applicable to the exercise of the Claimant's discretion is immaterial. Given the

reference to the mortgage documents in the offer, however, I am satisfied that if there is a

difference between the documents it is the mortgage documents that will apply. In any event

insofar as either document purports to allow the Claimant to vary the interest rate applicable and

gives the Claimant the discretion to do so this discretion applies to the quantum of the increase or

decrease. On the facts the Claimant determined that the rate of interest applicable to its securities

from January 2005 was to be reduced from 10 % to 9% - a 1% reduction in interest rate. The

Claimant's exercise of its discretion to determine the quantum of the decrease has not been

challenged in these proceedings. What has been challenged is the Claimant's determination that

such a decrease was not available to the Defendants.

48. In this regard the Defendants’ case is simple. During the currency of the mortgage the

Claimant reduced the interest rate applicable to its mortgage loans by 1% per annum on four

occasions. In accordance with the terms of the mortgage documents by December 2004 the

Defendants had obtained the benefit of three of these decreases despite the fact that on each

occasion there was money due to the Claimant under the mortgage. Unlike the other occasions

however in December 2004 the Claimant required the Defendants to liquidate all monies due to

it before being entitled to the decrease.

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49. The Claimant submits that it is entitled to determine the manner in which it exercises

its discretion to allow a mortgagor the benefit of a decrease in the applicable rate of interest and

that the only fetter to its discretion with respect to the variation of the mortgage rate is to the

quantum of interest to be charged.

50. To my mind the answer to this dichotomy is to be found in the manner in which the

Claimant’s discretion under the mortgage had been exercised in the past. While the interpretation

adopted by the Claimant may be open to the Claimant it is clear that, on the evidence before me,

in the past the relevant clauses have been interpreted by the Claimant to entitle the Defendants to

a variation in the interest rate whether or not there was money due to it by the Defendants under

the mortgage or by way of insurance premiums. Indeed was the variation an increase in the

interest rate, in exercising the very same discretion given it under the mortgage, it is hardly likely

that the Claimant would have required the Defendants to satisfy all its liabilities to it before

applying the increase.

51. On the evidence before me I am satisfied that any discretion vested by the mortgage to

permit the Claimant to vary the interest rate had in the past been implemented so as to entitle the

Defendants the benefit of any decrease whether or not there were sums due to the Claimant under

the mortgage. The Defendants submit that it is an unreasonable exercise of that discretion to now

demand that they liquidate all sums due to the Claimant before being entitled to the benefit of

such decrease. I accept the Defendants’ submissions in this regard. The Claimant in my opinion

cannot now unilaterally seek to impose a new condition before allowing the Defendants the

benefit of the increase.

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52. In the circumstances I find that the Defendants ought to have had the benefit of the 1%

decrease in interest rate applicable from January 2005. The effect of this is that the monthly

instalments payable by the Defendants would have been reduced effective 1st February 2005.

(b) Is rescission now open to the Defendants?

53. The Defendants submit that they are entitled to be relieved from any further

performance under the mortgage as a result of the Claimant’s failure to apply to the mortgage

debt the 1% reduction in interest rate. It is trite law that a party to a contract may be entitled to

treat its liability under the contract as discharged as a result of the other parties’ breach. In these

circumstances the innocent party may be entitled to rescind the contract. There are however

certain limitations on this entitlement, as for example, a lapse of time or an affirmation of the

contract by the innocent party.

54. Where an innocent party, being entitled to choose whether to treat the contract as

continuing or to accept the repudiation and treat itself as discharged from the liabilities under the

contract, elects to treat the contract as continuing that party in certain circumstances is said to

have affirmed the contract. An innocent party will not however be said to have elected to affirm

the contract unless that party has knowledge of the facts giving rise to the breach and has

knowledge of the legal right to choose between the alternatives open to him. 7

55. On the facts before me the Defendants, albeit irregularly, continued to make monthly

payments in accordance with an instalment based on an interest rate of 10% until January 2012.

7 Chitty on Contracts, Volume 1, thirty-first edition, paragraph 24-003, at page 1696.

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Indeed on the evidence before me the issue of the Defendants’ entitlement to rescind the

mortgage agreement was only raised after the institution of this action. In this regard therefore it

is clear that time is against the Defendants.

56. The evidence of the First Defendant is that notwithstanding his disagreement with the

Claimant's decision not to reduce the interest rate he brought the loan account up-to-date. Except

for a passing reference in the letter dated the 21st February 2005 there is no confirmation by way

of correspondence of any disagreement by the First Defendant however.

57. According to the First Defendant he called and spoke with the team leader who

documented the conversation by a letter dated the 29th

December 2004. The letter of 29th

December, while referring to a telephone conversation of that date, makes no reference to the

contents of the conversation except insofar as it states that the First Defendant promised to

submit a further $10,000 by 10th

January 2005. The letter therefore does provide the support

suggested by the First Defendant.

58. Thereafter he says he continued to protest and make further representation and by

the February letter he was informed of the Claimant's final position. Again the letter of the 21st

February does not support the First Defendant’s evidence. On the contrary the letter shows that

the Defendants were attempting to comply with the Claimant’s requirements. While the letter

refers to a telephone conversation in January 2005 the letter suggests that the main topic of the

conversation was the manner in which the arrears and other sums due would be paid. With

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respect to the reduction on the interest rate the letter merely prefaces the Claimant’s restatement

of its position with the words: “with regard to your question on the rate reduction”.

59. I do not accept the First Defendant's general statement that he continued to protest and

make further representation. Insofar as he particularises his protest by reference to two instances

of same the contemporaneous documents relied on by him do not support this evidence. Indeed,

prior to the letter of the 23rd

March 2012, all the correspondence from the Defendants suggests

that the Defendants were at all material times attempting to comply with the preconditions

imposed by the Claimant.

60. In any event the evidence presented by the First Defendant, and agreed with and

relied on by the other Defendants, points to a deliberate decision on his part to continue with the

contract.

61. According to the First Defendant he contemplated taking action to have the loan

agreement formally rescinded in a court of law and the mortgage set aside. He says, however,

that on that date the money paid under that mortgage was inadequate to return to the original

position as at the date of the agreement and to pay the interest up to December 2004 as a result

he chose to continue to deposit the instalment amount. In addition he says his religion teaches

him that irrespective of any breach principal debts must be paid as a result he continued to make

the payments.

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62. I am satisfied that the effect of this evidence is that with knowledge both of the facts

and his legal rights the First Defendant elected to treat the contract as continuing. I am satisfied

therefore that the First Defendant affirmed or waived his right to treat the contract as repudiated.

In these circumstances, in my opinion, rescission is no longer an option open to the Defendants.

63. In the circumstances I am satisfied that on the counterclaim the Defendants are

entitled to a declaration that, in accordance with the mortgage documents and the practice of the

parties, the Defendants were entitled to a 1% reduction in the interest rate payable under the

mortgage effective from January 2005. Accordingly the interest rate applicable from the

instalments due from 1st February 2005 was 9% per annum. I find that this however does not

now entitle the Defendants to rescind the contract.

Are the Defendants in breach of any of the conditions of the mortgage loan and, if so, do

those breaches or any one of them entitle the Claimant to call in the loan and exercise any

of its remedies under the mortgage?

64. By a letter dated 12th

March 2012 the Defendants were advised that there was due to

the Claimant the sum of $20,002.22 representing arrears in the mortgage instalments due as well

as the sum of $9,225.37 representing fire insurance premiums and the sum of $11,291.90,

representing legal fees. No payments have been made with respect to the mortgage instalments

since January 2012. Neither have the Defendants made any payments towards the fire insurance

premiums nor any money which may be due with respect to legal fees since the demand made on

the 12th

March 2012.

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65. With respect to the mortgage instalments the Defendants submit that the effect of the

reduction of the interest payable on the mortgage loan to 9% is that their mortgage instalments

have been paid up to April 2014. In support of this submission they rely on the evidence of their

expert witness Ramoutar. Ramoutar’s evidence is that given the applicable amortization schedule

the Defendants were required to make 80 monthly payments of principal and interest to liquidate

their debt. The effect of the interest rate being reduced to 9% per annum means that the new

monthly instalment would be $2,648.58 from 1st February 2005. According to Ramoutar

applying that monthly instalment and taking into consideration the monies already paid by the

Defendants the loan is in fact paid up to April 2014. In other words, his evidence is that by way

of accelerated payments the Defendants have discharged their responsibility to make the relevant

monthly instalments up to and until April 2014.

66. This is a very simplistic view of the requirements under the mortgage with respect to

the payment of principal and interest. Under cross-examination Ramoutar admits that in coming

to his conclusions he did not have sight of the mortgage documents. This, to my mind, is

particularly relevant with respect to his evidence of accelerated payments since the mortgage

documents make specific provision as to the payment of interest in this regard. In addition, from

his evidence as to the method used to calculate the Defendants’ outstanding liabilities with

respect to the monthly instalments, no consideration is taken of the fact that the payments made

by the Defendants after January 2005 were irregular and not always paid when due. In this

regard the expert fails to take into account the effect of this on the interest payable on the

outstanding principal sum by the Defendants. In these circumstances I do not accept the

conclusion arrived at by this witness.

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67. On the other hand there is the evidence of the Claimant’s witness Ramdeen that he

conducted an exercise on the status of the loan if the interest was reduced by 1% to 9% per

annum effective from the instalment due on the 1st February 2005. On his calculations he

concludes that if the rate reduction was applied the loan would be paid to the 1st April, 2012 with

the sum of $576.04 in suspense. I accept his evidence. The only cross-examination on the

document prepared and tendered by the witness was to the fact that in preparing the document

the witness did not apply the surplus of monies paid by the Defendants to the principal,

presumably either the sum of $208.88 identified by Ramoutar or the sum of $576.04 identified

by Ramdeen

68. I am satisfied therefore that at the date of the institution of this claim, May 2013,

despite the fact that the interest rate payable by them on the principal ought to have been reduced

by 1% per annum effective from the date of the instalment due on the 1st February 2005, the

Defendants were in breach of the provisions in the mortgage documents which provide for the

manner in which they were required to liquidate the outstanding sums of principal and interest

under the mortgage.

69. On the evidence before me it is not in dispute that the Defendants were in breach of

that term of the mortgage which required them to duly and punctually pay all premiums

necessary for effecting and keeping the premises insured against the risk of fire. In addition it is

not in dispute that there was, at the date of the institution of this action, sums due to the Claimant

representing fire insurance premiums paid on the mortgaged premises and legal fees properly

incurred with respect to the loan. Neither is it in dispute that a demand for the payment of these

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sums was made by letter dated the 12th

March 2012. I am satisfied therefore that prior to the

institution of this action the Defendants were in breach of that provision of the mortgage which

required them to pay on demand all costs charges and expenses properly incurred by the

Claimant.

70. At the commencement of this action therefore the Defendants were in breach of three

of the terms and conditions of the mortgage loan either one of which would have entitled the

Claimant to call in the loan. In these circumstances the Claimant is entitled to exercise the

remedies open to it under the mortgage. These remedies include an order for the possession of

the mortgaged premises and the payments of all sums due to it under the mortgage documents.

What are the sums now due to the Claimant by the Defendants?

71. In this regard I accept the evidence of Ramdeen that there is due to the Claimant as

of 6th

January 2014 the sum of $452,980.14 together with a daily interest rate of $61.90. This

sum includes the sum of $124,622.84 representing legal fees as of the 6th

January 2014. There

was no cross-examination by the Defendants with respect to this sum claimed. Indeed in their

oral replies the Defendants, by their Attorney, accept that there has been no challenge to the sum

claimed with respect to either the fire insurance premiums or legal fees. The sum claimed for

legal fees will have some relevance however to the costs awarded in this action.

72. In the circumstances I find that there is now due to the Claimant by the Defendants the

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sum of $452,980.14 together with a daily interest rate of $61.90 effective from the 7th

January

2014.

73. Accordingly my order on the claim and counterclaim is as follows:

1. I declare that the Defendants are entitled to a 1% reduction in the interest

rate payable under the mortgage effective from January 2005;

2. As against the First and Second Defendants the Claimant is entitled to the

possession of the mortgaged premises; and

3. There is due to the Claimant from the Defendants the sum of $452,980.14

together with interest at a daily rate of $61.90 from the 7th

January 2014.

Dated this 27th

day of March, 2014.

Judith Jones

Judge

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