Anguilla Business Services Ltd (on its own behalf as creditor and member of the first defendant and on behalf of the first defendant in its derivative capacity against the second and third defendants) Judgment Creditor/Applicant v ST. Kitts Scenic Railway Ltd Judgment Debtor/Respondent Steven G. Hites 2nd defendant Jeffrey D. Hamilton 3rd defendant [ECSC]

• Jurisdiction: Saint Kitts and Nevis
• Judge: Thomas, J
• Judgment Date: 27 November 2013
• Judgment citation (vLex): [2013] ECSC J1127-1
• Court: High Court (Saint Kitts and Nevis)
• Docket Number: SBKHCV2011/0144
• Date: 27 November 2013

[2013] ECSC J1127-1

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

SBKHCV2011/0144

Between:

Anguilla Business Services Ltd (On its own behalf as creditor and member of the first defendant and on behalf of the first defendant in its derivative capacity against the second and third defendants)

Judgment Creditor/Applicant

and

ST. Kitts Scenic Railway Limited

Judgment Debtor/Respondent

Steven G. Hites

2nd defendant

Jeffrey D. Hamilton

3rd defendant

DECISION

1 Thomas, J [AG]: Before the court is a notice of application for the appointment of a receiver filed on July 5^th 2013. In application the applicant/judgment creditor, Anguilla Business Services, the judgment creditor/applicant, the following orders are sought pursuant to Part 51 of CPR 2000:

Thomas, J

• 1) The accounting firm of Lanns Monish and Associate, whose senior partner is Marcella Lanns-Monish of Mattingley Heights, St. Kitts, certified Chartered Accountant, or some other fit and proper person or firm, be appointed receiver until further order, of the respondent with power to receive all profits, debts and accounts receivables now or hereafter to become due to the respondent or any account whatsoever;

• 2) This Honourable Court dispense with the requirements that the receiver give security; and

• 3) Costs incidental to this application be paid by the respondent.

2 The grounds of the application are:

• 1) The claimant relies upon this Honourable court's jurisdiction granted by section 26 of the Eastern Caribbean Supreme Court Act; Cap 3.11 to appoint a receiver it is just and convenient to do so.

• 2) By order of this Honourable court dated 22^nd August 2011, the respondent was ordered to pay the applicant US$3,195, 050.00 and costs of EC$2,617.00

• 3) The said order was served personally on Mr. Thomas Williams at the office of the said Judgment debtor

• 4) The respondent has failed to pay any monies to the applicant towards satisfaction of the said judgment

• 5) To date the judgment debt, costs and accrued interest remain wholly unsatisfied.

• 6) It is unlikely that the proceeds of the sale of the entirety of the assets of the respondent will be sufficient to satisfy the debt in full.

• 7) The assets of the company comprise of freehold, leasehold real estate, railway cars, cash balance and other types of assets. Different methods of execution will be available for each category of the respondent's property which would involve different officers realizing different assets. However because of the nature of the respondents business, the most beneficial method of the realization would involve a single person selling the assets of the respondent en block.

• 8) The accounting firm of Lanns-Monish and Associates has agreed to act as receiver of all profits, debts, and accounts receivable now or hereafter to become due to the respondents or any account whatsoever

• 9) The fees in relation to the appointment of the receiver are EC$275.00 (plus VAT in the sum of EC$46.75) which totals EC$321.75 per hour for senior partner Marcella Lanns-Monish; EC$180.00 (plus VAT in the sum of EC$30.60) which totals EC$210.60 per hour for associate. Dridnauth Gossai; EC$145.00 (plus VAT in the sum of EC24.65) which totals EC 169.65 per hour for associate Ayona Laws 10) Taking into consideration the circumstance of this matter, the requirement that the receiver give security be dispensed with.

• 11) In all the circumstances it is just and convenient for the receiver be appointed.

Affidavit Evidence

3 It is indicated by the applicant that certain affidavits1 will be relied on in this matter.

4 Essentially, in his first affidavit Thomas Rader deposes as to the circumstances in which he was owed money by the first defendant leading to his judgment. In his 9^th affidavit Rader deals with the said judgment still being unsatisfied, the balance sheet of the first defendant and also its assets. Finally, the supplemental affidavit to the 9^th affidavit the matter of the fees to be paid to a receiver and staff in the event of such an appointment.

5 The application is opposed by the respondent and two affidavits of Thomas Williams are filed in support. In the first affidavit filed on July 11^th, 2013 Thomas Williams, the affiant, deposes that the purpose of the affidavit is to support the application to set aside the default judgment and to oppose the appointment of a receiver.

6 In the first several paragraphs Thomas Williams dwells on the position of the second and third defendants and his understanding of the filing of a defence by the first defendant.

7 At paragraph 6 to 9 of his affidavit Thomas Williams sets out to answer the whole of Thomas Rader's 9^th affidavit. In so doing the affiant, being the General Manager of the first defendant, goes into the financial state of the first defendant and draws a certain inference as to the motive of Thomas Rader in seeking to have a receiver appointed. In this connection Thomas Williams at paragraph 8 of his said affidavit characterizes the reasons given by Thomas Rader for the appointment of a receiver as being "wrong or just plain false"

8 In his supplemental affidavit in support filed on July 17^th, 2013 Thomas Williams again deposes as to the difficulties faced by the second and third defendants and advice received and their belief regarding the filing defence

9 The affiant next makes an excursion into the process of disclosure and the meaning and attributes of 'loans,' equity and investment.

Submissions

10 In submissions on behalf of the applicant, learned counsel Mr. Damien Kelsick, outlines the evolution of jurisdiction of the court regarding the appointment of receivers and scope of that jurisdiction.

11 In terms of the scope of the jurisdiction learned counsel refers to the following authorities:Masri v Consolidated Contractors Limited (UK) [2009] QB 4502, Tasarruf Mevdirati Merduati Sigorta Fonu v Merril Lynch Bank and Trust Company (Cayman) Limited and others3, and Carosello Establishment et al v Caribbean Ventures International (In Liquidation)4

12 In the latter case, on appeal from the High Court of St. Lucia, the court examined section 16 of the Supreme Court Act and identified the only limit on the court in this regard.

13 The submissions go on to outline the factual matrix under which the application is being made which is that a judgment was granted against the first defendant on 22^nd August 2011 in the sum of US$3,195,050.00 plus costs of EC$2,617.00 and, as of 19^th July 2013, the judgement debt, interest and costs total US$3,507,880.75.

14 According to learned counsel: "as of the date hereof, the judgment remains wholly unsatisfied."

15 Learned counsel for the respondent, Mr.Terrence V. Byron filed submissions on behalf of the respondent relating to the setting aside of a default judgment dated 22^nd August 2011, and in opposition to the claimants' application for a receiver to be appointed over the first defendant assets.

16 In so far as the submissions5 relating to the setting aside of the default judgment these are academic as this court delivered a decision on 23^rd August 2013 which refused the application.

17 On the matter of the appointment of a receiver this is opposed by the respondent and in so doing the following propositions are posed:

• 1) In the claimant's written submissions dated 15^th July 2013, though they refer to the first defendant's application, no answer is made to the fundamental objections that the judgement is irregular, cannot stand and should be set aside.

• 2) The submissions also do not deal with the outstanding matters raised by the first defendant in relation to the claimants' failures to comply with undertakings to the court

• 3) Before the court can think in terms of exercising its jurisdiction (as provided by CPR Part 51) it must be satisfied of the legal basis upon which it might do so.

• 4) Even if there was such a legal basis, which there is not, the appointment must be just and convenient. To this extent that this is accepted in the claimant's written submissions these are correct.

• 5) The first defendant is…entitled to rely on the evidence of Thomas Williams' affidavit of 11^th July 2013, and does so

• 6) The submissions on the facts made by the claimant in paragraph 23 are plainly wrong. Mr. Williams describes the business as real and profitable. The distinction sought to be drawn between revenue and profit is unjustified.

• 7) It is further wrong to suppose that the affect on the company and the tourism industry is not relevant to the issue whether the appointment of a receiver is 'just and convenient'. It will be apparent to the court that the facts underlying the alleged debt are almost entirely disputed, and it is unrealistic to divorce these considerations from the question whether a receiver should be appointed.

• 8) It is further wrong to proceed as though these issues were solely joined as between the claimant and the first defendant. The second and third defendants are also parties to the proceedings and their interest will also be affected if a receiver is appointed.

• 9) The defendants are in real difficulty, given their situation…because their principal personnel, Mr. and Mrs. Hites and Mr. Hamilton are not present within the jurisdiction. This can be done if they are permitted to defend the claim on the merits.

18 Some of these propositions are not addressed by way of submission by learned counsel for the applicant and as such must be addressed by the court without such submissions.

Irregular Judgment

19 Any ruling of a court is valid and subsisting until set aside. This has not been done with respect to the default judgment obtained by the claimant.

Outstanding matters

20 The court takes the view that the 'outstanding matters' identified have no relevance to the matter now before the court

Reasoning and Conclusion

21 Part 51.2 of CPR 2000...