National Stadium Project (Grenada) Corporation v NH International (Caribbean) Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Lord Briggs,Lord Sales,Lord Reed,Lord Lloyd-Jones,Lady Arden |
| Judgment Date | 19 October 2020 |
| Neutral Citation | [2020] UKPC 25 |
| Date | 19 October 2020 |
| Court | Privy Council |
| Docket Number | Privy Council Appeal No 0068 of 2019 |
[2020] UKPC 25
Michaelmas Term
From the Court of Appeal of the Republic of Trinidad and Tobago
Lord Reed
Lord Lloyd-Jones
Lord Briggs
Lady Arden
Lord Sales
Privy Council Appeal No 0068 of 2019
Appellant
James Ayliffe QC
Simon Atkinson
(Instructed by Ward Hadaway (Newcastle))
Respondent
Simon Hughes QC
(Instructed by Blake Morgan LLP (Oxford))
Heard on 17 and 18 June 2020
Lord Briggs AND( with whom Lord Reed and Lord Lloyd-Jones agree)
This appeal is concerned with the ownership of a fund of money held in a bank account pursuant to a freezing order made by the High Court (“the Fund”). The money frozen by the order of the High Court was originally part of moneys provided by Clico Investment Bank Ltd (“the Bank”) as a loan to the respondent, National Stadium Project (Grenada) Corporation (“NS”) under a Facility Agreement dated 15 May 1997 (“the Facility Agreement”) to provide financing for the construction of a national sports stadium for Grenada (“the Project”). The developer for the project was ICS (Grenada) Ltd (“ICS”), which took over that role from an associated company, Imbert Construction Services Ltd (“ICSL”). NS was established as a subsidiary of ICSL, and subsequently of ICS, to be a special purpose development company to implement the Project with funding arranged by the Bank. The principal building contractor for the Project was the appellant, NH International (Caribbean) Ltd (“NH”).
NH claims that it is the beneficial owner of the Fund. NS claims that it is. NH was successful at first instance after a trial before Rajkumar J in 2011. NS sought to appeal. Initially, its appeal was dismissed without a hearing. However, on an appeal to the Board against that disposal, the Board held that NS was entitled to a hearing. By a decision dated 28 November 2018, the Court of Appeal (Jamadar, Bereaux and Pemberton JJA) allowed NS's appeal and held that it is entitled to the Fund. Pursuant to leave granted by the Court of Appeal, NH appeals to the Board.
In January 1997, the Government of Grenada (“the Government”) entered into a Memorandum of Understanding with ICSL and the Bank (“the MOU”) by which it engaged ICSL to implement and manage the Project via a special purpose development company, which would hold the land on which the stadium was to be constructed and would borrow the moneys needed for carrying out the Project, with financing arranged by the Bank. NS was then incorporated as the special purpose development company. By a further Memorandum of Understanding in April 1997, it was agreed that ICS would step into the shoes of ICSL and assume all its rights and liabilities in respect of the Project. Mr Colm Imbert was a director of each of ICSL, ICS and NS. Following a tender process, ICS chose NH as the primary sub-contractor to carry out the building works for the Project.
A suite of detailed agreements was negotiated and put in place on 15 May 1997 to regulate the relevant relationships between the Government, ICS, NS and the Bank, comprising (i) an agreement between the Government, ICS, NS and the Bank, whereby ICS agreed to implement the Project and construct the stadium using finance arranged by the Bank under the Facility Agreement and provided via NS (“the Development Agreement”), (ii) the Facility Agreement, whereby the Bank agreed to arrange funding of the order of US$23m for the Project by lending funds to NS against notes issued by NS, which were placed with investors, and (iii) an agreement between NS and ICS, under which ICS agreed to act as developer to construct the stadium for US$23m (“the Main Construction Contract”). On 12 May 1997 the Grenadian parliament passed the Grenada National Stadium (Development and Financing) Act 1997, to which final drafts of these agreements were scheduled, to give them the force of law in Grenada once they were entered into. Nothing turns on this legislation, and Mr Ayliffe for NH did not suggest that it did. So far as rights under private law are concerned, the effect of the legislation turns upon (and confirms) the effect of the commercial agreements scheduled to it. The relevant terms of the Development Agreement and the Facility Agreement are examined in detail below.
The MOU, the Development Agreement, the Facility Agreement and the Main Construction Contract contemplated that NS would operate as the special purpose development company for the Project, in that it was established as a company with no other business than to implement the Project, it would be the recipient of the moneys for the Project provided under the Facility Agreement and it would pay out from those moneys sums due to contractors. In this way, the role of NS provided a degree of security for contractors working on the Project, since the funding stream and its operations were entirely dedicated to the Project. Contractors did not have to take the credit risk associated with an operating company carrying on general business activities across a number of projects (which might go wrong and give rise to liabilities) and mixing up its moneys in a general fund available to meet all and any liabilities it might incur.
The site for the Project was vested in NS. Once constructed, the stadium was to be leased to the Government. The site was mortgaged to the Bank as security for the funds advanced to NS under the Facility Agreement. Under the terms of the Development Agreement, if the Government paid off the sums due from NS under the Facility Agreement, the site (with the stadium) would be vested in the Government.
NH, an experienced construction company, was chosen by ICS to be the principal sub-contractor to construct the stadium. ICS would pay NH some US$16m for this, to be funded from the moneys provided under the Facility Agreement. On 6 June 1997, ICS and NH entered into an agreement to this effect (“the Construction Sub-Contract”).
Before the Construction Sub-Contract was signed, there was an exchange of letters. On 4 June 1997, NH wrote to ICS to raise various issues, including the following:
“1. Financing Agreement
We require confirmation that the Financing Agreements have been fully satisfied and are in place. …
2. Assignment of loan proceeds
We require confirmation of the Agreement that the moneys due to us under the contract would be assigned and paid directly to us from [the Bank].”
ICS wrote to NH on 5 June 1997 to accept NH's tender for the Construction Sub-Contract. In that letter, ICS included at para 17 its response to NH's point about assignment of loan proceeds, as follows:
“All moneys due to [NH] under the [Construction Sub-Contract] shall be assigned and paid directly to [NH].”
At trial, the judge found as a fact that in negotiations leading up to the signing of the Construction Sub-Contract, conducted orally and by this correspondence, “ICS agreed to assign, and did assign, to NH so much of the moneys payable to it under the Facility Agreement as would from time to time be due to NH under the [Construction Sub-Contract]” (para 138). The judge also found that Mr Imbert arranged for the Bank to put aside some US$16m out of the sums advanced to NS under the Facility Agreement, for the purpose of allowing the Bank to make payments to NH in respect of moneys due to NH under the Construction Sub-Contract (para 135).
The contractual arrangements ran smoothly for a period. The Bank lent money to NS pursuant to the Facility Agreement and in return NS issued bonds to the Bank (as Trustee in relation to the bonds) acknowledging NS's indebtedness, which bonds the Bank allocated to the investors. As construction proceeded, sums became due to ICS from NS under the Main Construction Contract and became due to NH from ICS under the Construction Sub-Contract. NS authorised the Bank to pay NH directly the sums due to it from ICS, setting that against the sums due from NS to ICS.
In October 1999 ICS and NH fell into dispute. ICS purported to terminate the Construction Sub-Contract and obtained an injunction in Grenada to exclude NH from the Project site. ICS and NS proceeded to complete the Project without NH, using funds obtained by NS from outside the Facility Agreement arrangement. NS used these funds to discharge its obligations to ICS under the Main Construction Contract and to pay other contractors who worked on the Project.
NH denied that ICS had any right to terminate the Construction Sub-Contract. As at the date of the purported termination, NH claimed that sums amounting to ECD 7,430,724.70 (equivalent to about US$2.6m) were owed to it for construction services it had performed under the Construction Sub-Contract.
On 5 November 1999, NH obtained an ex parte interlocutory injunction from Tam J in the High Court against the Bank, and directed also to ICS and NS, as a freezing order to restrain the Bank from paying ICS or NS under the Facility Agreement moneys which would reduce the balance of those held by NS in its account with the Bank below the amount NH claimed was owed to it at the date of the purported termination. In this way, the Bank's compliance with the injunction constituted the Fund which is in issue in these proceedings. At about the same time, NH issued a claim in the High Court against the Bank, ICS and NS to claim the Fund. Later, in 2004, the injunction was varied to require the Bank to pay the Fund into an account with the United Trust Corporation of Trinidad and Tobago (“UTC”), to be held in the joint names of the lawyers for the parties pending trial or further order.
In February 2000 NH commenced arbitration proceedings against ICS, claiming damages for wrongful repudiation of the Construction Sub-Contract and payment of sums due under that...
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...approach to the identification of the parties' intentions was confirmed by the Privy Council in National Stadium Project (Grenada) Corporation v NH International (Caribbean) Ltd [2020] UKPC 25, at 93 As Ms Stanley made clear, the Bank relies, in the alternative, on both of the ways of maki......