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Supreme Court rules on $3.4m loan case

Magistrates Court (photo by Glenn Tucker)

A Bermudian businessman has lost a bid to have a $3.4 million judgment against him thrown out.

Ralph DeSilva had been ordered to pay the sum to Lorenzo Caletti, but he argued in Supreme Court that the judgment was based on an illegal promissory note and that he was unaware it meant he could lose his home.

Puisne Judge Stephen Hellman, in a written judgment, ruled that a denial of the claim would not be proportionate.

The judge wrote: “The illegality relates not to the terms of the promissory note, none of which are illegal on their face, but the manner in which it was sought to enforce them.

“Even if the term requiring Mr DeSilva to execute a valid legal mortgage over his properties was illegal, which it was not, it was severable from the obligation to repay the loan monies.”

Mr DeSilva borrowed $3 million from Mr Caletti in 2006 to buy a house and signed a promissory note.

He made monthly interest payments until early 2012, when he hit financial problems.

The court heard he sold a motorboat and a separate property and paid the cash to Mr Caletti.

Mr DeSilva signed a consent judgment in 2013, which said he owed Mr Caletti $3,372,396.

Mr Caletti died the following year and left his wife, Lydia, in charge of his estate.

She filed a writ last year to call in the debt. Mr DeSilva was contacted by a bailiff in January to arrange access to his home for valuation. He said it was only then that he realised he could lose the house.

Mr DeSilva’s lawyer Michael Scott argued the promissory note he signed was not legal because it meant that, in default, he could lose his two properties to Mr Caletti.

He also argued Mr Caletti was a Canadian national and anti-fronting legislation passed in 2007 would prevent him from taking the property without the approval of Government.

The court accepted an application by Mr Caletti’s widow to cut the sum owed by Mr DeSilva.

Ben Adamson, representing Mrs Caletti, explained Mr Caletti received a payment of more than $1 million from the sale of one of Mr DeSilva’s properties.

Mr Justice Hellman reduced the amount owed under the consent judgment to $2,352,127.

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