Royal Bank gets approval to challenge Ocean Chimo’s f inancial standing

RBC ROYAL Bank and parent Royal Bank of Canada lost round one in their efforts to have a countersuit filed by Ocean Chimo Limited thrown out of court, but has been given a second chance to argue their case.

Ocean Chimo Limited had sought to block the banks’ appeal on the basis that the papers had not been properly served on the company.

However, Court of Appeal Justice Patrick Brooks ruled in mid-July that he found no evidence that the banks had intentionally breached the rules and, as such, denied Ocean Chimo’s request.

The appeal filed by the banks aims to overturn a two-year-old judgment in the Supreme Court that denied their application to throw out a lawsuit by Ocean Chimo that alleged RBC Royal Bank breached the loan agreement.

The parties have been at odds since 2011 when the hotel run by the company, the former Wyndham Kingston, was taken over by the banks and placed in receivership. The banks also sued Ocean Chimo to recover debt. Ocean Chimo challenged the debt and countersued the banks, saying they had breached the loan agreement.

PETITION

The banks responded with a petition to throw out the countersuit. They argued before Supreme Court Justice Carol Edwards that the hotel company had not shown it had the capacity to pay legal costs were it to lose the case. It is usual for the court to order the losing party in a lawsuit to pay the victor’s legal fees.

The banks asked the Supreme Court to stay Ocean Chimo’s claim until the company provided proof it either had the consent of the receiver to pursue the claim, or that its directors had provided security for the costs of the claim. They also urged the court to strike out the lawsuit if Ocean Chimo failed to provide proof.

But Justice Edwards ruled in July 2014 that the lawsuit should proceed. She also allowed the banks to appeal her ruling. The appellants in the case included RBC Royal Bank Jamaica, RBC Royal Bank Trinidad & Tobago, Royal Bank of Canada, Samuel Billard, Raymond Chang and Greg Smith.

The substantive case is yet to be heard.

The Court of Appeal acknowledged in its ruling in July 2016 that the banks’ attorneys made an error by only serving Ocean Chimo the first page of the written submissions along with the notice of appeal. But Justice Brooks also found that the banks had acted swiftly to rectify the error the following day after Ocean Chimo’s attorneys brought it to their attention.

“They filed the required documents within time and attempted to serve them timeously,” Justice Brooks said. He then ruled that Ocean Chimo had been properly served with the notice of appeal, but also awarded costs to Ocean Chimo.

Justice Brooks then gave the hotel company 14 days to file its response to the banks’ appeal of Justice Edwards’ ruling.

Ocean Chimo’s attorney Roderick Gordon, told Gleaner Business on Tuesday that the response has been filed.