Damian Kelsick v Kerstin Petty (in her capacity as Director General of the Financial Services Department)
| Jurisdiction | Saint Kitts and Nevis |
| Judge | Ventose, J. |
| Judgment Date | 12 November 2018 |
| Judgment citation (vLex) | [2018] ECSC J1112-1 |
| Court | High Court (Saint Kitts and Nevis) |
| Docket Number | CLAIM NO. SKBHCV2014/0119 |
| Date | 12 November 2018 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
CLAIM NO. SKBHCV2014/0119
Mr. Damian Kelsick in person
Ms. Simone Bullen Thompson, Solicitor General, for the Defendant
The Claimant is an attorney at law who was registered on 29 January 2014 as an authorized person under the Financial Services (Regulations) Order, CAP 21.05 (Seventh Schedule) (the “ Companies Order”) for the calendar year 2014. The Claimant failed to file annual audited accounts, certificate of compliance and other documents (together “ Annual Audited Accounts”) as required by Reg. 17(1) of the Companies Order. As a result, the acting Director of the Financial Services and Regulatory Commission (the “ Commission”) wrote him on 14 May 2014 directing him to submit the Annual Audited Accounts as soon as possible or be subject to criminal prosecution under Reg. 17(5). The Claimant sought relief via amended fixed date claim filed on 21 August 2014 seeking, among other things, a declaration that: (1) section 244 of the Companies Act CAP 21.03 of the Laws of the Federation of Saint Christopher and Nevis is unconstitutional because it offends the separation of powers doctrine; and (2) Regs. 17 and 28 do not apply to a person authorised to carry on corporate business. Similar declarations to declaration (1) were sought in relation to section 107 of the Trusts Act and section 55 of the Limited Partnerships Act.
The Companies Order was made by the Minister pursuant to sections 240 and 244 of the Companies Act and is found in the Seventh Schedule to the Companies Act. Sections 240 and 240 of the Companies Act are as follows:
240. Orders.
(1) The Minister may, by Order, make provision for the purpose of carrying this Act into effect and, in particular, but without prejudice to the generality of the foregoing, for prescribing any matter which may be prescribed by this Act.
(2) Except insofar as this Act otherwise provides, any power conferred thereby to make any Order may be exercised
(a) either in relation to all cases to which the power extends, or in relation to all those cases subject to specified exceptions, or in relation to any specified cases or classes of case; and
(b) so as to make in relation to the cases in relation to which it is exercised
(i) the full provision to which the power extends or any less provision (whether by way of exception or otherwise),
(ii) the same provision for all cases in relation to which the power is exercised or different provisions for different cases or classes of case, or different provisions as respects the same case or class of case for different purposes of this Act, or
(iii) any such provision either unconditionally or subject to any specified conditions.
(3) Without prejudice to any specific provision of this Act, any Order under this Act may contain such transitional, consequential, incidental or supplementary provisions as appear to the Minister to be necessary or expedient for the purposes of the Order.
244. Regulation of finance business.
(1) The Minister may, by Order, provide that companies, which intend to carry on or which are carrying on any business specified in the Order as being finance business, shall be subject to such regulations as the Minister may prescribe.
(2) An Order under this section may provide for the payment of annual and other fees and for the imposition of fines and daily default fines for breaches of the matters specified in the Order.
(3) Where a company is to be incorporated for the purpose of carrying on business that falls within the provisions of subsection (1) of this section, then the subscribers to the Memorandum and Articles of Association shall, before delivering the Memorandum and Articles of Association to the Registrar pursuant to subsection (1) of section 5 of this Act, obtain the authorisation that is required to carry on finance business.
(4) An existing company or external company which intends or wishes, as the case may be, to carry on finance business that falls within the provisions of subsection (1) of this section shall, before carrying on such finance business, obtain the authorisation that is required to carry on finance business. (Emphasis added)
The power to make orders generally is conferred upon the Minister by section 240. Section 244 specifically empowers the Minister to regulate finance business. However, the power is circumscribed because it specifically relates to “ companies” that “intend to carry on or which are carrying on any business specified in the Order as being finance business”. The Companies Act defines as “ company” as “a body corporate registered under this Act, or an existing company”. An “existing company” is defined as “a company registered under the Companies Act, Cap. 335 or the International Business Companies Act”, both of which were repealed by section 241 of the Companies Act. Therefore, the Minister under section 244 may by order regulate only finance business of a company registered under the Companies Act.
Regulation 4(1) of the Companies Order provides that:
Subject to the provisions of this Order, no person shall carry on or hold himself or herself out as carrying on any finance business in or from within St. Kitts unless that person is for the time being authorised under this Order. (emphasis added)
Regulation 4(2) of the Companies Order states that Reg. 4(1) shall not apply to the doing of anything by or on behalf of certain listed entities. Reg. 4(3) states that Reg. 4(1) shall not apply to any transaction prescribed by the Minister (which may be done by Order: Reg. 4(4)).
On the payment of a fee, a person may apply to the Minister under Reg. 5((1) for authorization under Reg. 4(1) to carry on or hold himself or herself out as carrying on any finance business in or from within St. Kitts. Any such authorization lasts for one calendar year (Reg. 4(2)) and Regs. 4(3) and 4(4) contain the particulars of the statement that any new application must contain. Any grant of authorization by the Minister may be subject to conditions (Reg. 6) and the Minister is given the power to refuse and to revoke authorizations (Reg. 7). A person who is granted authorization by the Minister receives an authorization certificate and that person's name must be published in the Gazette (Reg. 8) and that person must display that certificate at in a prominent place in public view at its place of business (Reg. 9(1)(a))
Regulation 2(1) of the Companies Order defines a “person” as:
“person” includes any
(a) individual;
(b) company;
(c) partnership; or
(d) trust;
The effect of this definition of a “person” is to provide for the types of entities who may apply to the Minister for authorization under Reg. 4(1) of the Companies Order to carry on finance business.
The essential question that arises for consideration is whether the Minister acted outside the powers conferred upon him or her by section 244 of the Companies Act when the Companies Order was made. In F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295 Lord Diplock (at p. 365) stated:
… in constitutional law a clear distinction can be drawn between an Act of Parliament and subordinate legislation, even though the latter is contained in an order made by statutory instrument approved by resolutions of both Houses of Parliament. Despite this indication that the majority of members of both houses of the contemporary Parliament regard the order as being for the common weal, I entertain no doubt that the courts have jurisdiction to declare it to be invalid if they are satisfied that in making it the Minister who did so acted outwith the legislative powers conferred on him by the previous Act of Parliament under which the order purported to be made; and this is so whether the order is ultra vires by reason of its contents (patent defects) or by reason of defects in the procedure followed prior to its being made (latent defects).
Similarly in R (Public Law Project) v Lord Chancellor (Office of the Children's Commissioner intervening) [2016] AC 1531, Lord Neuburger explained (at [23]) that:
Subordinate legislation will be held by a court to be invalid if it has an effect, or is made for a purpose, which is ultra vires, that is, outside the scope of the statutory power pursuant to which it was purportedly made. In declaring subordinate legislation to be invalid in such a case, the court is upholding the supremacy of Parliament over the Executive. That is because the court is preventing a member of the Executive from making an order which is outside the scope of the power which Parliament has given him or her by means of the statute concerned. Accordingly, when, as in this case, it is contended that actual or intended subordinate legislation is ultra vires, it is necessary for a court to determine the scope of the statutorily conferred power to make that legislation.
The Applicant submits that section 244 makes it clear that the Minister may by order regulate companies but the Minister has purported to regulate the Claimant who is an individual. The Respondents seem to concede the point albeit indirectly when they state that section 244 “clearly circumscribes the power of the Minister to only make orders in relation to companies carrying on finance business” (emphasis added). Counsel for the Applicant and the Solicitor General declined the invitation of the court on 26 October 2018 to file and serve submissions and authorities on whether the Minister acted outside of the powers...
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