When persons approach the bank for a loan, some form of collateral must be provided. Often times, property is used. The collateral is required to ensure that if you default on payments, the bank has something in hand to recoup what was lost. When the court gets involved at this point, there are rules which govern how the property is to be sold. If the first round of auction turns out fruitless, the property must go through another auction to ensure transparency and accountability at all times.
But, a recent High Court case uncovered that marshals, who are empowered by the courts to oversee the auction, have not adhered to the foregoing rules. Violating it actually became a norm. Instead of going to another auction round, the marshals simply selected the next bidder on the list for the sale of the property.
It was after discovering this violation that High Court Judge, Justice Jo Ann Barlow recently ruled that an Execution Sale conducted by marshals of the High Court for a property at Lot 253 ‘BB’ Eccles, East Bank Demerara was unlawful and therefore set aside the sale of the property to the purchaser, Dionne Thomas-Fraser.
SPECIFICS OF THE CASE
The specifics of the case note that the owner of the property, Sharmilla Persaud, had borrowed money from the Guyana Bank for Trade and Industry Limited to fund her Sawmill business but defaulted on her repayments which
caused the Bank to sue her for the money owed.
On February 18, 2016, Justice Diana Insanally granted judgment to the Bank on two Mortgages in excess of $16M together with interest at 17% per annum.
Persaud had used her property at Lot 253 BB Eccles, East Bank Demerara as Security for the Mortgage. Despite the Court Order, the outstanding sum remained unpaid and the Bank instituted Levy proceedings on the
property and instructed the marshalls to sell the property at an Execution Sale to recover the money owed.
The property was first put up for sale on July 4, 2017, but the highest bidder, Dhanmattie Singh who had bid $25M did not pursue the sale. As a result, the property was re-advertised to be sold by public auction.
On September 12, 2017, the property was again put up for sale by the marshals of the High Court and members of the public bid to purchase the property. Eventually, Rohan Singh was declared the highest bidder at $40M but it was later discovered that he was the brother of the owner. Further, marshals later determined that he did not have a 25 percent deposit and therefore repudiated his winning bid.
The marshals then offered the property to Dionne Thomas-Fraser who had bid $21.5M and she agreed to purchase the property. She was allowed to pay the sum of $200,000.00 to secure the bid and later purchased a Manager’s
Cheque to satisfy the 25% statutory requirement. The marshals claimed that she was the next highest bidder.
However, when the Execution of Sale documents were examined, it revealed that there was an annotation which said, ‘sold to the lowest bidder at the instance of GBTI’ and there was a signature to the annotation.
Sharmila Persaud and Rohan Singh being dissatisfied with the actions of the marshals filed a Claim against them and the Registrar and Deputy Registrar of the Supreme Court to set aside the Sale and also asked for damages for breach of Statutory Duty. They also applied for Injunctions to prevent the sale of the property to Dionne Thomas-Fraser, but the Injunctions were refused by Justice Sandil Kissoon before whom the Application was made.
Guyana Standard understands that during the hearing of the Applications for Injunctions, Justice Kissoon made Orders joining the Bank as an added party to the Claim.
In her ruling, Justice Barlow found that the marshals were right to decide that Rohan Singh had rescinded his winning bid by not having money to secure the bid and therefore dismissed his Claim against the Defendants.
The Judge then considered whether the actions of the Marshals to sell the property to Dionne Thomas-Fraser were lawful. The Judge found that the Marshals had selected who to sell the property to after the winning bid failed rather than offering the property for Sale in another Auction. The Judge also found that their actions were in violation of the Rules of the High Court and established practice. She, however, did not award Damages to the Claimant as she found that the actions of the marshals were not deliberate or corrupt
as it appears that this practice had been used before and had now become the norm.
The Claimants, Sharmila Persaud and Rohan Singh were represented by Attorney-at-Law, Mr. Lyndon Amsterdam, whilst the Attorney General Chambers represented the marshals and the Registrar and Deputy Registrar.
Collis Baveghems represented Dionne Thomas-Fraser and Senior Counsel, Robin Stoby represented the Guyana Bank for Trade and Industry.
