The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A funeral home principal has won a partial victory in her legal appeal over a case where Bank of The Bahamas extended a combined $74,000 in auto loans despite knowing one vehicle was stolen.

The Court of Appeal, in a unanimous verdict, ruled on Tuesday that Denalee Penn-Mackey, Evergreen Mortuary’s principal, will not get extra time to challenge the initial Supreme Court verdict in favour of the BISX-listed institution because she has “no prospects of success” and the delay is “inexcusable”.

However, Ms Penn-Mackey was more successful in persuading the Court of Appeal to reinstate her claim against Kevin Saunders, who sold her both Cadillac Escalades for use in the funeral home business. Finding that her breach of contract claim is “unassailable”, the three-judge panel remitted that aspect of the case back to the Supreme Court for fresh determination.

Appeal justice Milton Evans, in a written verdict, said the Evergreen chief had applied for “an extension of time” in which to appeal then-justice Charles’ original Supreme Court ruling on April 13, 2023. The extra time was sought because, while the original appeal notice was filed within the time stipulated by the Court of Appeal’s rules, it was submitted to the wrong court.

“According to the affidavit in support of the present application, a Notice of Appeal was filed on behalf of the applicant but it was inadvertently filed in the Supreme Court. This is verified by the copy of the notice which is exhibited to that affidavit,” appeal justice Evans wrote.

“It should also be noted that the applicant’s attorneys apparently did not realise that they had filed the notice in the wrong court until February 2023. The applicant provides no reasonable explanation as to why it took over a year to realise that the notice was filed in the wrong court.”

Appeal justice Evans noted that one year and eight months had elapsed between the Supreme Court’s August 20, 2021, verdict and the April 13, 2023, extension of time request. A key factor in determining whether to grant the latter, he added, was whether Ms Penn-Mackey’s appeal presented “an arguable case” and has any chance of succeeding.

Detailing the background to the dispute, the Court of Appeal noted: “The applicant was a customer of the second respondent [Bank of The Bahamas]. In January 2010, she observed the first respondent [Mr Saunders] driving a 2007 Cadillac Escalade. She offered to purchase the vehicle from him and obtained a loan from the bank to do so.

“The bank for its own internal purposes obtained a ‘Carfax’ report on the vehicle which stated that the vehicle had been reported stolen. Notwithstanding the contents of the report, the loan was approved for the sum of $34,000 (the 1 percent loan).

“The applicant accordingly purchased the vehicle with the funds received from the bank under the 1 percent loan, which was secured by a chattel mortgage and promissory note. It was also a term of the chattel mortgage that the applicant as mortgagor ‘warrants that the property is free and clear of all lien and encumbrances’”.

Bank of The Bahamas extended that loan just three days after the Carfax reported the 2007 Cadillac Escalade was stolen in Florida on July 9, 2009. “In June 2010, the applicant once more approached [Mr Saunders] and purchased a 2008 Cadillac Escalade from him with the assistance of a loan from the bank,” the Court of Appeal noted.

“The loans were consolidated, and the applicant also gave the bank a chattel mortgage over the second vehicle. The bank also obtained a ‘Carfax’ report on the second vehicle which showed that the vehicle had a lien over it. Notwithstanding the contents of the report the loan was approved for the sum of $40,000.

“In September 2011, both vehicles were seized by the Customs Department for non-payment of Customs duties...... The applicant averred that the Customs department seized the two vehicles on the basis that there was no evidence that the vehicles had cleared Customs in The Bahamas. As a result, the applicant lost the vehicles but was left with the loan,” the judgment added.

“The applicant alleged that [Bank of The Bahamas] was negligent in failing to advise her of the defects in the title which they should have discovered by a proper investigation. She further alleged that the bank had results from Carfax reports which showed that one vehicle had been reported stolen and the other had a lien over it.

“These, she asserts, were never shared with her. Thus she asserted that the bank owed her a duty which they breached resulting in damages.” Bank of The Bahamas, in its defence, “denied liability and claimed for the sums outstanding under the loans. They claimed that they had not advised Mrs Penn-Mackey as to the marketability of Mr Saunders’ title”.

The bank claimed a total $64,370, with some $60,743 of that representing the principal due on the consolidated auto loan as well as interest, late fees and penalties. While Ms Penn-Mackey’s claim against Mr Saunders was “not very clear”, it appeared she was suing him for breach of contract due to his failure to deliver good and marketable title to both autos.

Then-justice Charles found in Bank of The Bahamas’ favour on the basis that Ms Penn-Mackey should have conducted her own investigation to determine whether there was good and marketable title to both vehicles having pledged that they were “free and clear of all liens and encumbrances” as part of the loan terms.

As a result, the Evergreen Mortuary principal has been ordered to pay Bank of The Bahamas some $64,370 in principal on the outstanding auto loans. And, with Justice Charles imposing interest at 14 percent per annum (just over $9,000) for a nine-year plus period between March 2012 and August 2021, Mrs Penn-Mackey was to pay more in interest - over $81,000 - than principal that is due

The funeral home chief only had use of the vehicles for 18 months, and she claimed their loss resulted in a collective $45,740 in loss and damages. Appeal justice Evans, though, found the Supreme Court was mistaken in finding that Ms Penn-Mackey had abandoned her claim against Mr Saunders, who did not participate in the trial.

Calling for her claim against the seller “to be retried as soon as possible”, he added that this was “unassailable”. However, the Evergreen Mortuary principal was less successful in her battle with Bank of The Bahamas, as appeal justice Evans rejected the suggestion that the BISX-listed institution had assumed responsibility for confirming title to both vehicles was good.

“In my view there is no merit in the assertion that it was an implied term of the agreement between the parties that the bank had a duty to investigate the marketable title of the vehicles and to advise the applicant on the same. There was nothing in the nature of the transaction nor any document produced which supported such an assertion,” appeal justice Evans wrote.

“It is well known that a bank has a responsibility to protect its own interests. When they deal with a client, they determine whether they want to advance the loan or not and they investigate title for their own purposes.

“The person who is purchasing has an independent responsibility to ensure that what they are purchasing is free and clear and safe to purchase. The loan officer was saying nothing more than that before we commit to a loan we have to confirm title.”

Ms Penn-Mackey was the author of her own misfortune, the Court of Appeal ruled, as she should have conducted her own title investigation prior to obtaining the loans and signing the Bill of Sale with Mr Saunders. “It is that failure which resulted in her loss. In the absence of a duty owed by the bank to the applicant there could be no breach,” the Court of Appeal ruled.

“The final point raised by the applicant was that the bank, having received the Carfax information, were obligated to share the same with her. It is clear, however, that whatever the goodwill such a step would have produced that would not have assisted the applicant.

“As noted earlier, the applicant having already committed herself to the transaction by virtue of the bill of sale, her obligation to finance the vehicles already existed.” As a result, the Court of Appeal declined to grant the Evergreen Mortuary chief an extension to proceed with the Bank of The Bahamas’ appeal.”

Yvette McCartney-Meredith represented Ms Penn-Mackey, while FNM Senator, Michela Barnett-Ellis, acted for Bank of The Bahamas.