Nevis Island Administration Claimant v West Indies Power (Nevis) Ltd Defendant [ECSC]
| Jurisdiction | Saint Kitts and Nevis |
| Judge | Actie M [Ag.],Agnes Actie,Master |
| Judgment Date | 16 January 2013 |
| Neutral Citation | [2013] ECSC J0116-5 |
| Judgment citation (vLex) | [2013] ECSC J0116-1 |
| Court | High Court (Saint Kitts and Nevis) |
| Docket Number | NEVHCV 2012/0078 |
| Date | 16 January 2013 |
EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
Ms. Agnes Actie
Master [Ag.]
NEVHCV 2012/0078
Mr. Anthony Gonsalves with him, Mr. Arud Gossai of counsel for the Claimant
Mr. Terrance Byron with him, Mr. Fitzrory Eddy of counsel for the Defendant
By Claim Form with Statement of Claim filed on 30th May 2012 the claimant claims an order by the Court for a declaration that the defendant is unable to pay its debts as they fall due and that consequently the claimant is entitled to terminate the Geothermal Resources Contract made between the parties dated 28th April 2009.
By Notice of Application with affidavit in support filed on 15th June 2012, the claimant applied for summary judgment in respect of the claim filed on 30th May 2012.
The defendant filed a defence on 26 th June 2012 and on 28 th June 2012 filed an application for summary judgment or alternatively that the statement of claim filed by the claimant be struck out.
The defendant by notice of application filed on 13 th July 2012 applied for a stay of the proceedings on the ground that the dispute between the parties should first be referred to arbitration.
At the hearing the defendant withdrew the applications for summary judgment, striking out and stay of execution.
On 28 th April 2009 the claimant and the defendant entered into a Geothermal Resources Contract pursuant to the Geothermal Resources Ordinance 2008. The contract granted the defendant certain concessions in relation to geothermal energy reconnaissance exploration, drilling and production in Nevis. Article 4 of the contract provides for dispute settlement and clause 4.8.5 provides for the cure period and events permitting termination. Clause 4.8.5(a) provides for termination for cause and (b) provides for termination for bankruptcy. The claimant seeks a declaration by the Court that the defendant is unable to pay its debts as they mature pursuant to clause 4.8.5(b) of the contract and as result the Claimant is entitled to immediately terminate the contract if, inter alia, the defendant is unable to pay its debts as they mature. Clause 4.8.5(b) reads as follows:
" 4.8.5
(b) Termination for bankruptcy:
The Government may at its option, immediately terminate this Contract if a receiver is appointed for the holder of these authorizations or its property; the holder of these authorizations becomes insolvent or unable to pay its debts as they mature, or makes an assignment for the benefit of its creditors; the holder of these authorizations seeks relief or if proceedings are commenced against the holder of these authorizations or on its behalf under any bankruptcy, insolvency or debtor's relief law, and such proceedings have not been vacated or set aside within (60) days from the date of commencement thereof; or if the holder of these authorizations is liquidated or dissolved."
The claimant submits that by letter dated 8 th May 2012 addressed to the defendant's Board of Directors, the claimant brought to the defendant's attention clause 4.8.5(b) of the contract. The said letter also notified the defendant that the claimant had been informed that the defendant is experiencing financial difficulty and is unable to pay its debts as they become due to a number of creditors namely:
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(1)Renova Capital Caribbean LLC in the sum of US$944,593.00 plus interest due at 31 st December 2011 under the terms of a Note. A sum which was demanded by letter dated 8 th January 2012. Renova Capital Caribbean LLC has in fact filed an action for the debts against the Defendant in the United States District Court for the Southern District of New York. A copy of the USA claim is annexed to the statement of claim.
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(2)Processes Unlimited in the sum of US$40,069.00 as stated in an email dated 4th May 2012.
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(3)CCC Group Limited in the sum of US$2,204,949.00 as evidenced by summary of invoices provided on 12 th June 2012 by Jim Wickens, Divisions Manager.
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(4)Geothermal Resource Group Inc. in the total sum due at US $122,600.30 with an amount of $110,505.41 past due over 90 days as shown on invoice.
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(5)Geothermal Development Associates in the sum of US $6,000.00 as evidenced by statement dated 4 th June 2012.
In support of the claim the claimant relies on letter dated 8 th May 2009 requesting information on the outstanding debts and its ability to pay these debts and the fact that there has been no response from the defendant to the said letter. The claimant also relies on invoices and information from the other creditors named in the claim. The claimant avers as a result of the foregoing the Defendant is unable to pay its debts as they fall due or mature. In the circumstances the claimant seeks a declaration that the defendant is unable to pay its debts as they fall due. The claimant avers that it has a legitimate interest in obtaining the requested declaration as the inability of the defendant to pay its debts directly affects the defendant ability to perform under the contract and consequentially the Claimant is entitled to immediately terminate the contract.
The claimant, subsequent to the defendant filing an acknowledgement of Service, filed a notice of application under CPR 15.2(b) for summary judgment on the ground that the defendant is clearly unable to pay its debts as they fall due or mature and has no real prospect of successfully defending the claim.
The defendant filed a defence on 26th June 2012 in which it denies that it is unable to pay its debts as they mature. The defence avers that the defendant does not deny that it is indebted to some creditors but asserts that such indebtedness arose out of mutual agreements between the defendant and creditors engaged in the normal course of business. The defence further avers that the defendant is not indebted to the claimant in any manner, shape or form and states that the Claimant is a stranger to any past or existing contractual arrangements between the creditors and the defendant.
The defence further states that the reference made to the Renova lawsuit is without merit as the suit has not been served on the defendant. It is to be noted that during the hearing the claimant conceded this point and said that it would only rely on the other debts referred to in the statement of claim.
In summary, the defence avers that the claimant has not articulated any breach of contract between itself and the defendant but relies on non-existing facts between the defendant and other entities, of which the claimant is a stranger. The defence avers that the entire claim should be struck out or such paragraphs which do not demonstrate a cause of action but an abuse of the process of the court.
The claimant contends that the filing of the defence presents no difficulty, either procedurally or substantively to the claimant's application. On the contrary the claimant states that the very defence is devoid of substance, defective and that it has the effect of supporting the claimant's application for summary judgment.
It is not disputed that the Court has the inherent jurisdiction to grant a declaration. The claimant in support of the application for the declaration claims that the Court has wide latitude to grant a declaration. Section 24 of the Eastern Caribbean Supreme Court (Saint Christopher and Nevis) Act Cap 3.11 provides that:
"No action or proceeding shall be open to objection on the ground that merely declaratory judgment, decree or order is sought thereby and the Court may make binding declarations of right whether any consequential relief is or could be claimed or not."
The claimant states that the provision does not confer the jurisdiction, but regulates the Court's ability to grant a Declaration and relies on the authority of Re S (hospital patient: court's jurisdiction) [1995] 3 All ER 290 at page 296 letter d where Sir Thomas Bingham MR stated —"The jurisdiction of the court to grant declaratory relief is not conferred, but is regulated by Order 15 r16… has the inherent jurisdiction to grant the Order sought". The applicant in its submissions states that in seeking a declaratory relief it is not necessary for the plaintiff to establish a cause of action. It is only necessary to show that the plaintiff's own legal position will in some way be resolved by granting the declaration. Re S at page 296 letters h to i. This principle was applied in the Barbados case of Archbald v Camacho 1960 3 WIR 40 where Hyatali J stated "But this conclusion does not determine the matter; for the court has power to make a declaration at the instance of a plaintiff even though he could claim no relief against the defendant". Pickford LJ in Guaranty Trust Co of New York v Hannay & Co [1915] 2 KB 537 at 562, cited in Re S at page 296 letter h. The party needs to show that he has a "sufficient interest" in the matter to which his application relates.
The Court agrees with the claimant's assertions that the Court has jurisdiction to grant the declaration.
The claimant states that determination of inability to pay debts is a matter of fact and relies on the case of Taylor v Australia and New Zealand Banking Group Ltd. [1988] 6 ACLC 808 where MacGarvie J stated at page 811 that the question of whether a company was able to pay its debts as they fell due was a question of fact to be decided as a matter of commercial reality in light of all the circumstances.
The claimant in the statement of claim relies on the debts due and owing to a number of creditors. The claimant conceded that the Renova Capital claim filed in the USA has not been served on the defendant but states...
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