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Father of Health Minister loses court battle

Derick Steele - was trying to get more money

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:-

JUDGMENT
[1] ACTIE, J.: The central issues in this claim are whether the claimant is entitled to interest as damages and whether the claim is statute barred.

The Claimant’s case
[2] On 9th May 2016, the claimant, Derick Steele (Mr. Steele) filed a claim against the defendant, Prickly Bay Waterside Limited (Prickly Bay), a limited liability company, for payment of the sum of US $728,039.40 in interest as damages pursuant to an agreement and consent order made on 18th May 2007, 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 or interest as damages and in any event the claim is statute barred. In light of the foregoing, the main issue for determination is whether Mr. 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.

Background
[3] Mr. Steele and Prickly Bay were parties to a previous claim in GDAHCV2006/0162. On 18th May 2007, the parties entered into a compromise agreement which was reduced into writing and formalized by way of a consent order. The consent order annexed certain agreements, including a sale agreement which is the subject of this claim. Under this agreement, Prickly Bay agreed to purchase Mr. Steele’s property situate at L’Anse aux Epines, Saint George, Grenada and the sale was to be completed on 18th May 2009. 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.

[4] Further, clause 6 of the consent order provided that concurrent with the execution of the sale agreement, Prickly Bay was to provide an irrevocable bank guarantee for payment of the balance of the purchase price. The guarantee was negotiated with British American Insurance Company Limited (BAICO) and the parties entered the consent order.

[5] On 16th December 2011, Mr. Steele instituted enforcement proceedings against Prickly Bay for the appointment of a receiver and orders for sequestration of assets of its directors. Prickly Bay countered the application claiming that it had complied with the terms of the consent order by the payment of the balance of the purchase money to BAICO. On 26th August 2015, Henry J granted Mr. Steele’s application and ordered (1) an injunction to restrain Prickly Bay from dealing with the property until the appointment of a receiver by the court; (2) the appointment of David Holukoff as a receiver of the income and capital assets of the defendant to obtain payment of the balance of the purchase price, among other reliefs.

[6] Prickly Bay appealed the judgment of Henry J. However, the parties through their legal practitioners engaged in a series of email correspondence between 30th September 2015 and 9th October 2015 proposing settlement. On 4th November 2015, the parties entered into a second consent order before a single judge of the Court of Appeal, Thom JA. The second consent order included a clause which provided that Prickly Bay shall forthwith pay to Mr. Steel the sum of US $2,475,000.00 being the balance of the purchase price which was paid to Mr Steele on 6th November 2015.

[7] By letter dated 4th January 2016, Mr. Steele through his legal practitioner demanded payment of the sum of US $728,039.40 being interest as damages from Prickly Bay. By letter dated 18th January 2016, the legal practitioners for Prickly Bay rejected the claim that it was liable to pay interest as damages. Being dissatisfied with the above response from Prickly Bay, on 9th May 2016, the Claimant, Derick Steele (Mr. Steele) filed the extant claim against the Defendant, Prickly Bay Waterside Limited (Prickly Bay), for payment of the sum of US $728,039.40 in interest as damages pursuant to the agreement and consent order made on 18th May 2007 together with interest at a rate of 6% per annum, among other reliefs.

[8] Mr. Steele avers that he received payment of the sum of $2,475,000.00 pursuant to the second consent order six years after the due date for payment of the sum under the first consent order. Therefore, Mr. Steele contends that in light of Prickly Bay’s breach of the first consent order, he has been deprived of the benefit and use of that money, the benefit of interest which may have accrued and the difference in value of the count between 18th May 2009 and 6th November 2015. Accordingly, Mr. Steele contends that he is entitled to damages to compensate him for this loss.

Defendant’s case
[9] In response to the claim, Prickly Bay in its defence filed on 30th June 2016 asserts that Mr. Steele is not entitled to interest or interest as damages and in any event the claim is statute barred., Prickly Bay denies asserts that there is no contractual, legal or procedural entitlement to interest and states that:

(1) The parties settled and concluded the action by entering into a consent order in the Court of Appeal dated 4th November 2015 which provided that upon complying with the order “the injunction and receivership orders granted pursuant to paragraph 6 (1) (i) and (ii) of the said order of Henry J dated 26th August 2015 shall stand discharged and the Appellant (Prickly Bay) will have satisfied its obligations in relation to the first respondent (Mr. Steele) pursuant

(2) Therefore, having complied with the consent order before the Court of Appeal, Prickly Bay contends that having met all of its obligations thereunder they were led to believe that the issues between them were finally resolved and there would be no further or fresh action in relation to the consent order of 18th May 2007 and the order of Henry J dated 16th August 2015. In the premises, Mr. Steele is now estopped from re-litigating the matter to assert any entitlement for interest as damages as claimed or at all.to the said order of Henry J dated 26th August 2015”.

(3) Notwithstanding the above, Prickly Bay further asserts that:

(a) Mr. Steele is not entitled to interest or interest as damages under the consent order dated 18th May 2007, because interest under that agreement was expressed to be in a specific sum which Prickly Bay has already paid;

(b) Mr. Steele is not entitled to interest in law and it relies on section 27 of the West Indies Associated States Supreme Court (Grenada)1 for its full meaning and effect;

(c) The issue of interest was not canvassed before Henry J dated 26th August 2015 neither did Mr. Steele’s application include a prayer for interest and accordingly the learned Judge’s order did not include any order for payment of interest.

Claimant’s evidence
[10] Mr. Steele in his witness statement avers that he commenced the action in Claim No. GDAHCV2006/0162 to stop Prickly Bay from construction of a block of buildings at the Prickly Bay Marina which were immediately in front of his home in L’Anse aux Epines in the parish of Saint George. Mr. Steele applied for an injunction to restrain Prickly Bay from building in excess of the agreed heights. However, his claim for an injunction was refused by the High Court. Thereafter, Mr. Steele avers that he appealed, but that appeal was unsuccessful. Mr. Steele, then appealed to the Privy Council and was successful on that appeal. Subsequently after, he was offered a settlement by Prickly Bay and after some negotiations, the parties reached a settlement which was entered into a consent order.

[11] Under the consent order, it was agreed that Prickly Bay would purchase his property situate at L’anse aux Epines for the purchase price of US $2,500,000.00. Mr. Steele avers that he was paid a deposit in the sum of US $250,000.00. The balance of the purchase price in the sum of US $2,250,000.00 together with interest calculated on the balance at the rate of 5% per annum was to be paid to him by completion date of 18th May 2009. The amount of interest due on the completion date would be US $250,000.00. However, Prickly Bay breached the consent order, since it failed to pay the balance of the purchase price by the agreed completion date.

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[12] On 16th December 2011, Mr. Steele states that he initiated enforcement proceedings against Prickly Bay to enforce the terms agreed upon. In the application, Mr. Steele avers that he claimed for interest at a rate of 6 % per annum from 18th May 2009. The application was heard on 11th and 12th April 2012 before Henry J. However, before Henry J delivered her decision, Prickly Bay filed an application to join British American Insurance Company Limited as a party to the first claim. On 26th August 2015, Henry J delivered her judgment and ordered an injunction against Prickly Bay, the appointment of a receiver, the payment of the balance of the purchase price by Prickly Bay, among other things. Mr. Steele avers that the legal practitioners for Prickly Bay sent email correspondence to his legal practitioners making an offer to pay the amount ordered by Henry J. The parties engaged in further correspondence between 7th and 9th October 2015.

[13] Thereafter, Mr. Steele says that a consent order was entered on 4th November 2015, before the Court of Appeal in Grenada Civil Appeal No. 2015/0026 wherein Prickly Bay agreed to pay the balance of the purchase price and there was a mutual understanding that he would have the right to pursue a claim for interest separately. Mr. Steele avers that having regard to the assurance given by Prickly Bay in their correspondence that he was at liberty to pursue his claim for interest in a separate action, he decided to rely on this representation and pursue a compromise without prejudice to his claim for interest.

[14] On 6th November 2015, Prickly Bay paid the balance of the purchase price some six years, five months and twenty days after the due date agreed in the first consent order. As a result of the delay of six years in payment of the balance of the purchase price, Mr. Steele says that he suffered loss and has been deprived of the benefit and use of the that money and the benefit of the interest which may have accrued in his favour had he invested same. Mr. Steele avers that he received rental income from the property (pool apartment and main house) between 21st June 2014 and 31st August 2016 in the sum of $180,628.46.

[15] On 4th January 2016, Mr. Steele through his legal practitioners wrote to Prickly Bay’s legal practitioners claiming the payment of the outstanding interest owed in the sum of US $728,039.40. However, by letter dated 18th January 2016, the legal practitioners for Prickly Bay responded and rejected this claim for interest. In the premises, Mr. Steele claims interest as damages in respect of the Prickly Bay’s breach of the first consent order to compensate him for the loss he suffered as a consequence.

Defendant’s evidence
[16] Mr. Richard Lee, a director of Prickly Bay, gave evidence in support of the company. On 18th May 2007, Mr. Steele and Prickly Bay settled a suit GDAHCV2006/0162 on terms contained in a consent order with several annexures thereto (the first consent order). The first consent order included an agreement for sale which provided that Prickly Bay agreed to purchase Mr. Steele’s property at L’anse aux Epines. At the time of execution of Agreement B, Prickly Bay was in a position to pay to Mr. Steele the full purchase price for the property. However, Mr. Steele was not in a position to give vacant possession of the property and insisted on a delayed completion date of two years and a licence to occupy for a further twelve months after the completion date.

[17] Clause 4 of Agreement B provided that Prickly Bay was to pay Mr. Steele interest in the specified sum of $US $225,000.00. The interest was calculated at 5% for the specific period of 24 months on the agreed purchase price which was US $2,250,000.00. Clause 4 of the Agreement B was the entire agreement between the parties for the payment of interest to Mr. Steele. There was never an intention expressed or implied that any additional sum would in future be paid by Prickly Bay.

[18] Notwithstanding that Mr. Steele was not able to complete the sale, Mr. Steele objected to Prickly Bay holding on to the balance of the purchase price and the interest until he was able to give vacant possession. Mr. Steele insisted that the money be held by a third party in trust for him until the completion date. Therefore, Mr. Steele demanded that he be provided with an irrevocable guarantee and that the benefit of the guarantee would be immediately assigned to him. The guarantee was provided by BAICO on 18th May 2007 and BAICO insisted on an assignment to Mr. Steele executed on 22nd August 2007.

[19] On 13th May 2009, Wilkinson, Wilkinson & Wilkinson, the legal practitioners for Prickly Bay, requested details of completion for 18th May 2009 as Prickly Bay had complied in full with the consent order by procuring that Mr. Steele held a guarantee from BAICO. However, that request was refused and by the completion date BAICO was already experiencing financial difficulty. Although BAICO fully acknowledged its obligation to Mr. Steele, it failed to pay him the balance of the purchase price that Prickly Bay had paid into them at the Mr. Steele’s insistence.

[20] On 16th December 2011, Mr. Steele commenced enforcement proceedings against Prickly Bay. The application sought no relief or contained no prayer for the payment of interest. On 25th August 2015, Henry J granted Mr. Steele’s application. However, Henry J’s order at paragraph 61 of her judgment does not award interest. Prickly Bay appealed Henry J’s judgment. While the appeal was pending, the parties engaged in discussions with a view to complying with the terms of Henry J’s order, thereby finally settling the appeal and all related matters with Mr. Steele. Mr. Lee avers that during those discussions Mr. Steele for the first time claimed further interest under the consent order which took him by surprise as there was never any understanding between the parties that interest beyond what was agreed in the said order would be paid. Additionally, Mr. Lee avers that Mr. Steele did not claim interest in his application nor did Henry J make an order for interest.

[21] By email dated 9th October 2015, Mr. Lee avers that Mr. Steele was informed that, although Prickly Bay was prepared to fully comply with the terms of Henry J’s order, it would not pay any additional interest because Mr. Steele was not entitled to none. Mr. Steele did not reply to Prickly Bay’s said email of 9th October 2015. The parties then proceeded to full and final settlement of the dispute between them. There was no agreement or understanding between the parties that the settlement was without prejudice to any right Mr. Steele felt he had to separately file an action for further interest. The consent order was entered in the Court of Appeal on 4th November 2015. Under this second consent order, the parties agreed, among other things, that the injunction and receivership orders made by Henry J stood discharged and that Prickly Bay would have satisfied its obligations to Henry J’s order.

[22] Additionally, Prickly Bay maintains that Mr. Steele suffered no loss whatsoever. He retained ownership and possession of the property for more than five years after his licence to occupy expired, that is from 17th May 2010 to 12th November 2015. During that period Mr. Steele was free to use the premise to his advantage. Mr. Lee states that Mr. Steele appears to be seeking interest for the period of his personal occupation and that of him family after the licence expired. Mr. Lee avers that when Prickly Bay took possession of the premises on 12th November 2015, there was a tenant renting the property at US $5,300.00 per month. The tenancy was carried over to Prickly Bay and the premises have been continuously let since then. Mr. Lee avers that had Mr. Steele let the property at a similar rent between 17th May 2010 and 2015 when he transferred it to Prickly Bay, he would have realised net income in excess of US $300,000.00.

[23] In the premises, Prickly Bay maintains that it is not liable to pay Mr. Steele any further interest, be it interest as damages or otherwise. Prickly Bay paid the said interest and the balance of the purchase price on 18th May 2007 into BAICO and on 6th November 2015 under the second consent order.

Expert Report
[24] On 7th April 2017, Mr. Henry A. Joseph, a chartered accountant by profession, filed his expert report. Mr. Joseph is of the opinion that, having regard to the facts surrounding the non-payment of interest due to Mr. Steele by Prickly Bay and considering the time value of money, Mr. Steele should be compensated for his loss to the extent of US $665,879.00. Mr. Joseph summarised his conclusions as follows:

(1) Prickly Bay was obligated to pay Mr. Steel the remainder of the purchase for the property being US $2,250,000.00 together with interest of US $225,000.00 totalling US $2,475,000.00. This amount was settled in full on 8th November 2015 being seventy-seven months after the contracted completion date.

(2) Generally, the value of a dollar at any date would be lower than what it was worth in the past. This diminution in value is principally the result of inflationary trends.

(3) The spending power of the funds received on 8th November 2015 would be less than what it would have been had Prickly Bay settled on the due date of 18th May 2009.

(4) Additionally, due to the late receipt of the funds Mr. Steele has lost the opportunity to invest the funds that were due to him 18th May 2009. There are many ways that these funds could have been invested. A safe form of investment would be with a deposit at a financial institution or tin the purchase of Government securities.

(5) The interest rate at financial institutions varied between one percent (1%) and three percent (3%) per annum. On the other hand, the interest on Government securities varied from four and a half percent (4.5%) to six percent (6%) per annum.

(TO BE CONTINUED)