National Stadium Project (Grenada) Corporation v NH International (Caribbean) Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Lord Carnwath |
| Judgment Date | 16 February 2015 |
| Neutral Citation | [2015] UKPC 6 |
| Date | 16 February 2015 |
| Docket Number | Appeal No 0103 of 2012 |
| Court | Privy Council |
[2015] UKPC 6
Lord Neuberger
Lord Mance
Lord Clarke
Lord Carnwath
Lord Toulson
Appeal No 0103 of 2012
Privy Council
From the Court of Appeal of the Republic of Trinidad and Tobago
Appellant
Simon Hughes QC
Stuart R Young (Instructed by Blake Morgan LLP)
Respondent
Alvin Fitzpatrick SC
Lesley-Ann Lucky-Samaroo
Shiv Sharma (Instructed by Ward Hadaway)
Heard on 21 and 22 January 2015
This is an appeal from a judgment of the Court of Appeal in Trinidad and Tobago (Archie CJ, Yorke Soo Hon and Stollmeyer JJA), dismissing the appellant's appeal without a hearing on the merits. The issue is whether the court was entitled to do so. If not, the matter will have to be remitted to that court for full hearing.
The dispute arose out of contractual arrangements made in connection with a project of the Government of Grenada for the construction of a national stadium and sporting complex. In January 1997 the government entered into a Memorandum of Understanding with Imbert Construction Services Limited ("ICSL") and CLICO Investment Bank Limited ("CIB"). ICSL would be engaged to implement and manage the project through a special purpose development company to be formed and owned by ICSL. The appellant company ("NS") was set up by ICSL for this purpose. By later agreements ICSL was replaced by ICS (Grenada) Limited ("ICS"). The arrangements were made under statutory authority: the Grenada National Stadium (Development and Finance) Act 1997 (Act No 8 of 1997).
Two agreements are particularly material to the present dispute, both concluded on 15 May 1997:
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i) By a facility agreement made between NS and CIB as "the trustee", CIB agreed to arrange a bond issue on behalf of NS, the proceeds of which were to be used to construct the sporting complex. CIB was to make advances to or on behalf of NS up to a maximum of US$23m, to be used solely for the purpose of the sporting complex. NS and CIB were to execute a trust deed, under which CIB was to hold the bonds (issued in the name of NS) for the benefit of the bondholders, as secured obligations of NS to the bondholders, for which CIB was to issue certificates to the bondholders in a prescribed form. Under the trust deed NS covenanted with CIB to pay interest on the bonds, and to repay the principal amount of the bonds, to or to the order of CIB as and when the same became due.
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ii) By a development agreement between the Minister of Finance, ICS, CIB and NS, ICS agreed to finance the project through CIB in the manner set out in the facility agreement; NS (as employer) was to enter into a contract with ICS (as developer) under which ICS was to carry out the development for US$23m; and CIB undertook to pay or cause to be paid through NS all monies due to ICS, consultants, suppliers, and other providers of goods and services. The government agreed to lease the sporting complex from NS for 15 years at a rent calculated on the basis of an amortised schedule for the repayment of US$23m with interest.
On the same day NS and ICS duly entered into a contract under which ICS agreed to carry out and complete the construction of the project and NS undertook to pay the sum of US$23m in accordance with its terms. The respondents ("NH") were not themselves parties to any of these agreements, but they entered into a construction agreement with ICS to carry out a major part of the development for an amount equivalent to about US$16m.
NH continued to be involved in the development until October 1999, when ICS gave them notice of intention to terminate the construction agreement. They responded by commencing an action in the High Court (the "1999 Action") against CIB, ICS and NS, claiming, inter alia, a declaration that there was a binding assignment in their favour of so much of the monies due from CIB under the Facility Agreement as would from time to time be due and owing to them under the construction agreement. On 5 November 1999 they sought and obtained from Tam J an ex parte injunction, restraining CIB from paying under the facility agreement monies which would reduce the balance below EC$7,430,724.70 (the "frozen fund") pending the trial of the action. NH also commenced arbitral proceedings against ICS which resulted in March 2002 in an award in their favour of EC$7,626,797.67 with interest.
Following termination of the construction agreement ICS became responsible for completing the project. NS had to advance funds to enable it to do so. As a result, ICS became indebted to NS in the sum of approximately EC$13.5m, for which sum (with interest) NS has obtained judgment against ICS. (There appears to be a surprising discrepancy in the evidence as to whether this sum included, or was in addition to, the amount of the frozen fund. Happily, in the Board's view it is not necessary to resolve it at this stage.)
The project was eventually completed on 7 June 2000. In August 2002 all monies advanced by lenders secured by bonds under the facility agreement were fully repaid, with funds provided by the government. In April 2005, following an order of the court, the frozen fund, converted into US dollars (US$2,682,719.24) was deposited by CIB into an interest-bearing account in the joint names of the attorneys on the record for the parties in the 1999 action.
In May 2006 NH commenced the 2006 action against CIB and NS claiming inter alia, declarations that the frozen fund was held by CIB on trust for the sole purpose of applying the same in payment of suppliers and other providers of goods and services for the project, which trust NH as such a supplier were entitled to enforce for their own benefit. NS resisted the claim, and counterclaimed for a declaration that the fund belonged to them.
The consolidated actions were heard by Rajkumar J, who on 28 January 2011 held in favour of NH. He granted a declaration that the frozen fund was held by CIB on trust for the NH and ordered payment of that sum with interest, which he later assessed. That money has been paid into the joint account by CIB. Neither ICS nor CIB, though nominal parties to the proceedings, had taken any active part before the judge, and neither has appealed. In later correspondence CIB has made clear that it asserts no separate interest in the monies held in the joint account. (We were told by Mr Fitzpatrick SC that in January 2009 CIB was brought under control of the Central Bank of Trinidad and Tobago in the exercise of the Central Bank's emergency powers, and that since October 2011 CIB has been in liquidation).
By notice of appeal dated 11 March 2011 NS appealed to the Court of Appeal, seeking orders that the orders of Rajkumar J be reversed and that judgment be entered for NS on their counterclaim. On 24 June 2011 NH applied to the court for an order that the appeal be dismissed without a hearing on the merits, on the grounds that NS had not themselves demonstrated any entitlement to the frozen fund, nor appealed against the judge's findings against them on that issue. On 25 June 2012 the Court of Appeal upheld the application and dismissed the appeal. NS appeals to the Privy Council with leave granted by the Board on 25 August 2013.
In order to understand the issues in the appeal, it is necessary to look in more detail at the relevant parts of NH's pleaded case and NS's response. NH's case in summary (see para 28 of the claim) was that the advances received from investors under the facility agreement, of which the frozen fund (referred to as the "EC fund") formed part, were held in trust by CIB; that the primary purpose of the trust was to finance the project by payment to ICS and other suppliers; that it had been agreed that money due to NH under the construction agreement should be paid directly to them from those advances; that the investors as lenders had been fully repaid; and accordingly the frozen fund was held on trust for NH.
In NS's defence, the main substantive allegation came in para 16, which, having referred to the termination of NH's construction agreement by ICS and ICS's failure to fulfil its own duties, continued:
"… this Defendant being under a continuing duty and obligation under the Project Agreements, Memorandum of Understanding and Supplemental Memorandum of Understanding pleaded herein, was forced to complete the Project at considerable cost and expense to itself and as a consequence whereof ICS became indebted to this Defendant in the sum of EC$13,449,469.00, which sum remains due, owing and payable by ICS to this Defendant."
In response to para 28 of the claim, the defence (para 29) asserted that the frozen fund was "part of such monies received by (CIB) from the investors/bondholders"; but denied that the primary purpose of the trust was to finance the project by payments to ICS and others; rather it was "for the benefit and protection of the investors/bondholders". Further the trust was –
"… until the happening of one or the other of 2 events, namely, completion of the Project or until the Bondholders (investors) had been repaid, whichever occurs first in time. This defendant avers that the Project was completed in or around June 7, 2000 and the Bondholders were fully repaid as at August 8, 2002."
It was accordingly denied that the NH was entitled to any of the relief claimed.
The counterclaim repeated the allegations in the defence. It asserted that the freezing injunction had been obtained by NH "wrongfully and without any entitlement", that NS in consequence had been "forced to obtain alternative funding at considerable expense" for the completion of the project; leading to the judgment debt for ICS; and that –
"In the premises, this defendant has been unlawfully and/ or...
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