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Father of Health Minister loses court battle – Part II

Attorney-at-law Claudette Joseph – presented the case on behalf of the defendants

A high court judge in Grenada has thrown out a case brought by the father of Grenada’s Health Minister Nickolas Steele seeking damages amounting to nearly EC$2 million against the operators of Prickly Bay in the Lance Aux Epines area in the south of the island.

The owner of Steele’s Auto, Derick Steele took court action against Prickly Bay Waterside Limited in relation to a property transaction between the two sides that dates back to 2007.

Steele is known to have been annoyed with a building constructed by Prickly Bay which reportedly blocked out the view of his home in Lance Aux Epines.

The two sides settled the matter that went before the court and reached a compromise agreement in which Prickly Bay agreed to purchase Steele’s property and the sale was to be completed on May 18, 2009.

THE NEW TODAY understands that in accordance with clause 4 of the sale agreement, Prickly Bay agreed to pay interest in the sum of US $225,000.00 which was calculated on the balance of the purchase price in the sum of US $2,250,000.00.

The business tycoon later filed a court case seeking US$728,039.40 in interest as damages pursuant to the agreement and consent order made on 18th May 2007, with interest at a rate of 6% per annum, among other reliefs.

In response to the claim, Prickly Bay asserts that Mr. Steele is not entitled to interest on damages and in any event the claim is statute barred.

Justice Agnes Actie who heard the matter informed the parties that the main issue for determination in the case is whether Steele is entitled to payment of interest in the sum of US $728,039.40, together with interest at a rate of 6% per annum from the date of filing of the claim to present.

Steele was represented in the matter by attorney-at-law Gregory Delzin and the wife of the Minister of Health, Michelle Emmanuel-Steele while Prickly Bay retained the services of Amicus Attorneys Claudette Joseph and Ian Sandy.

As a public service, THE NEW TODAY reproduces the decision of the high court judge which went against the father of the island’s Health Minister:-

Issues
[25] The following issues are to be determined:

(1) Whether Mr. Steele is entitled to interest as damages as a result of the Prickly Bay’s breach of the agreement and consent order.

(2) Whether Mr. Steele is estopped from claiming additional interest as damages which could have been pursued in proceedings before Henry J and in the consent order entered before the Court of Appeal.

(3) Whether the claim for interest is statute barred.

Discussion and Analysis
Whether Mr. Steele is entitled to interest as a damages

[26] Mr. Delzin, Counsel for Mr. Steele, submits that under the contract which formed part of the consent order of 18th May 2007, it was agreed that Prickly Bay would pay to Mr. Steele, in addition to the agreed purchase price, a fixed amount of interest at the rate of 5% per annum for the period commencing 18th May 2007 to the completion date for the sale of the property being 18th May 2009. Counsel submits that the defendant defaulted in its obligation to complete the sale and to pay Mr. Steele the agreed purchase price and interest.

[27] Additionally, counsel submits that at common law where contracts for the repayment of money expressly provide for the payment of interest, a claimant is entitled to recover interest by way of damages for breach of an obligation to pay even though there was no express agreement for the payment of interest for any period after repayment should have been made. Counsel relies on the learning from the learned authors of McGregor on Damages and principles set out in Miliangos v George Frank Textiles (No.2) and other cases.

[28] Counsel submits that Mr. Steele is entitled to recover interest as damages against Prickly Bay on account of its breach of its obligations to pay on the date agreed as effectively Mr. Steele was deprived of the benefit of the monies.

[29] Contrastingly Ms. Joseph, counsel for Prickly Bay submits that it is an established principle of the common law that interest will not be payable on sums that are due under a specific written agreement (such as a consent order) unless the agreement on its face provides for the payment of interest or is implied from usage of trade. This principle was stated in Page v Newman and affirmed in London Chatham and Dover Rly Co v South Eastern Rly Co. Counsel submits that these principles remain the position at common law and relies on the learning from the House of Lords authority in President of India v La Pintada Cia Navegacion SA.

Statutory and Equitable discretion (common law) to award interest as damages
The text Chitty on Contracts under the rubric “The Award of interest at common law” provides:

“In 1985, the House of Lords in President of India v La Pintada Cia Navegacion SA refused to depart from its previous decision in 1893 in London, Chatham and Dover Railway Co. v South Eastern Railway Co9 which laid down that the common law does not permit the award of interest by way of general damages for delay in payment of a debt beyond the date when it was contractually due. It has, however, always been open to the parties to make express provision in their contract for the payment of interest, which the court enforce (except in situations covered by specific statutory provision). The courts were sometimes prepared to infer an agreement to pay interest where the inference could be based on the course of dealing between the parties or on a relevant trade usage.”

[31] Ms. Joseph submits that the relevant statutory provision would be Section 27 of the West Indies Associated States Supreme Court (Grenada) Act (Supreme Court Act). Further, counsel submits that Mr. Steele has not met any of the 4 elements set out in the La Pintada case. Firstly, the position at common law does not apply in the instant case because the first consent order was specific on the question of interest. It did not specifically provide for the payment of additional interest to meet the common law threshold. The second is that this is not an admiralty claim, so the second element set out in La Pintada will not apply. The third element will also not apply as this is not a claim in equity but one in law of recovery of interest as damages on the unpaid balance of a sum owed. Fourthly, Section 27 of the Supreme Court Act as it stood when the first consent order was entered on 18th May 2007 will operate to prevent Mr. Steele from claiming interest as damages as pleaded, because there was no specific provision for such additional interest in the first consent order.

[32] In La Pintada, Lord Brandon espoused the following principles with respect to a claim for interest as damages in the court’s equitable and statutory jurisdictions:

Thirdly, the area of equity. The Chancery courts, again differing from the common law courts, had regularly awarded simple interest as ancillary relief in respect of equitable remedies, such as specific performance, rescission and the taking of an account. Chancery courts had further regularly awarded interest, including not only simple interest but also compound interest, when they thought that justice so demanded, that is to say in cases where money had been obtained and retained by fraud, or where it had been withheld or misapplied by a trustee or anyone else in a fiduciary position.

Fourthly, the area of statutory law. The relevant statutory provision in force in 1981, when Tehno-Impex [1981] Q.B. 648 was decided, was section 3(1) of the Law Reform (Miscellaneous Provisions) Act 1934. That subsection provided:

“ (1) In any proceedings tried in any court of record for the recovery of any debt or damages, the court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment: Provided that nothing in this section — (a ) shall authorise the giving of interest upon interest; or (b) shall apply in relation to any debt upon which interest is payable as of right whether by virtue of any agreement or otherwise; or (c ) shall affect the damages recoverable for the dishonour of a bill of exchange.” (Bold emphasis mine).

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[33] The relevant statutory power to award interest on debts and damages is provided under section 27 of the Supreme Court Act.

  1. Power of courts to award interest on debts and damages

In any proceedings for the recovery of any debt or damages, in the High Court or the Court of Appeal, the Court may, if it thinks fit, order that there shall be included in the sum for which judgement is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgement, but nothing in this section— (a) shall authorise the giving of interest upon interest; or (b) shall apply in relation to any debt upon which interest is payable as of right whether by virtue of any agreement or otherwise; or (c) shall affect the damages recoverable for the dishonour of a bill of exchange. (Bold emphasis mine)

[34] There has been a slight shift in the principles where the court may allow damages for non-payment of debts subject to the proof of the loss, remoteness of damages rules, obligations to mitigate damages and any other relevant rules relating to the recovery of the alleged losses12. The court may allow interest where it can be inferred from course of dealing between the parties or where the claimant had actually incurred interest charges, or it may be reasonably inferred in contemplation of the delay. Therefore, the court will examine the circumstances of the case to determine whether it should exercise its discretion.

[35] Mr. Steele at paragraph 8 of his witness statement averred that “in my application I claimed that further interest was to be paid on the balance of the purchase price at the rate of 6% per annum from May 18th, 2009”. However, the court notes that neither the consent order dated 18th May 2007, nor the judgment of Henry J dated 26th August 2015 contained any order for further interest as a relief. A fair reading of the written judgment of Henry J13, where the learned judge reproduced Mr. Steele’s prayers for relief, reveals that Mr. Steele’s application did not contain a prayer for interest as damages or interest at all. Additionally, even if the application did contain a prayer for interest, it is noted that Mr. Steele did not appeal the learned Judge’s refusal to award interest.

[36] A fair reading of the agreement annexed to the first consent order does not suggest that there was an understanding in the parties’ dealings that interest would accrue in the event that the balance of the purchase price remained unpaid after the completion date. This was admitted by Mr. Steele at paragraph 4 of his witness statement that “a deposit of US$250,000 was paid to me and the balance of the purchase price of US$2,250,000 together with interest calculated on the balance at the rate of 5% per annum was to be paid to me by the completion date of May 18th, 2009. The amount of interest due on the completion date would be US$225,000.”

[37] The court is of the view that the agreement which was crystallised into a consent order dated 18th May 2007 did not contemplate that further interest of 5% per annum would accrue on the balance of the purchase price of US $2,250,000.00 in the event that the balance remain unpaid after the completion date. There was no such term for further interest in the first consent order. Additionally, the post-judgment interest provision under Section 27A of the Supreme Court Act was not enacted when the first consent order was entered and did not have retroactive effect on previous judgments of the court. Therefore, post-judgment interest did not run-on balance of the purchase price and as such it is not applicable in the circumstances.

[38] The court notes that Mr. Steele asserts that as a consequence of the default in payment, he has been deprived of the use and benefit of his money and the benefit of any accrued interest on those monies owed to him. Further, the court notes Mr. Steele’s evidence that he rented the property and collected over EC $180,628.46 as rental income between 21st June 2014 and 31st August 2016.

[39] Contrastingly, Prickly Bay states that when it took over the property on 12th November 2015, there was a tenant renting the property at US $5,300.00 per month.

Prickly Bay argues that had Mr. Steele let the property at a similar rate from 17th May 2010 to 2015, he would have realised net income in excess of US $300,000.00. However, the court notes that apart from Mr. Steele’s and Prickly Bay’s factual assertions of the rental income of the property, no documentary evidence, including rental agreements, rental property appraisals or financial documents were tendered before the court for consideration. Damages to be recovered must be pleaded, proved and would be subject to same to well established principles of remoteness and right to mitigate loses. Therefore, the court is constrained and is not in a position to assess the rental income of the property but can only surmise that the property ought to have been able to generate substantial rental income having regard to the purchase price of USD $2,500,000.00

[40] Further, it is the evidence, and the court accepts that Mr. Steele requested an irrevocable guarantee from Prickly Bay for the payment of the balance of the purchase price together with agreed interest. This guarantee to Mr. Steele was negotiated between BAICO and Prickly Bay. Prickly Bay asserts and the court accepts that before the balance of the purchase price became due on the completion date, it demanded BAICO to pay the sum of monies as guaranteed. However, BAICO failed or neglected to pay the sums as guaranteed.

[41] This action by BAICO, in the court’s view, left Prickly Bay in a precarious position, having paid the balance of the purchase price into BAICO to guarantee its obligation to pay Mr. Steele on the completion date. This default was not contemplated by the parties. The court notes that even Mr. Steele at paragraph 6 of his witness statement avers that: “given these guarantee arrangements, which the Defendant complied with, it was not anticipated that there would be a default in payment of the balance of the purchase price”. Therefore, notwithstanding Prickly Bay’s breach of the consent order and agreement by reason of its failure to pay the balance of the purchase price together with interest as agreed, the court is not of the view that Prickly Bay acted in bad faith in light of its position with BAICO failing to pay the agreed monies as guaranteed.

[42] Taking the above facts and evidence in the round, the court is not satisfied that the circumstances surrounding the delay in the payment of the balance of the monies under the agreement/first consent order were of such nature that would require the court to remedy the “injustice” to provide Mr. Steele with interest as damages. As indicated earlier damages must be pleaded and proved and would be subject to the rule of remoteness and mitigation. Accordingly, the court is not of the view that the circumstances of this case demand an exercise of its discretion under the common law or statutory discretion under Section 27 of the Supreme Court Act to award interest as damages. In the circumstances, Mr. Steele’s claims for interest are refused.

[43] Notwithstanding the above conclusion the court will address the other issues raised for completeness.

(TO BE CONTINUED)

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