Petrodel Investment Advisers (Nevis) Ltd v Regulator of the Nevis Financial Services
| Jurisdiction | Saint Kitts and Nevis |
| Judge | Thompson Jr J |
| Judgment Date | 10 February 2023 |
| Neutral Citation | KN 2023 HC 3 |
| Docket Number | CLAIM NO. NEVHCV2021/0099 |
| Court | High Court (Saint Kitts and Nevis) |
| Year | 2023 |
IN THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
NEVIS CIRCUIT
A.D. 2023
The Hon. Justice Patrick Thompson Jr. High Court Judge
CLAIM NO. NEVHCV2021/0099
Ms. Jackie Hunkins Taylor and Mr. Kris Liburd for the 1 st and 2 nd Claimant
Mr. Yuri Saunders and Ms. Andwena Lockhart for the 3 rd Claimant
Ms. Rhonda Nisbett-Brown, Ms. Shyra Wattley and Ms. Janicia Hodge for the 1 st, 2 nd and 3 rd Defendants
Dr. Henry Browne K.C. for the 4 th and 5 th named Defendants
Petrodel Investment Advisers (Nevis) Ltd (“Petrodel”) and Michael J Prest (“Prest”) are entitled to an order for certiorari quashing the decision of the Regulator of International Banking to issue the letter dated June 23 rd, 2021 which restricted Petrodel and Prest from intervening in the day to day operations of the Bank of Nevis International Limited (“BONI”).
Petrodel and Prest are also entitled to a declaration that the Regulator of International Banking had no authority to restrict the activities of Petrodel.
Petrodel and Prest are not entitled to any of the other reliefs sought in their claim form filed on December 23 rd, 2021.
BONI are entitled to orders for:
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(i) Certiorari quashing the decisions of the Regulator of International Banking and the Regulator of the Nevis Financial Service Department, collectively referred to as (“the Regulators”) to issue a Cease and Desist Order dated June 22, 2021, and fines of EC$10,000.00 and US$120,000.00 against BONI on June 25 th, 2021;
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(ii) Declarations that the Regulators had no authority to issue the Cease and Desist Orders and fines referred to above;
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(iii) Restitution to BONI of the fines of EC$10,000.00 and US$120,000.00 together with interest at the rate of 2 1/2% from the 29 th of March 2022 to the date of judgment; and
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(iv) Interest on the judgment pursuant to the statutory rate.
BONI's claim for misfeasance in public office and breach of statutory duty against the Regulators in their personal capacity is refused.
The Claimants are thus partially successful in their claim for judicial review against the Defendants for the following reasons.
At the outset, it is important to note that Petrodel and Prest initially filed their claims for judicial review on December 23 rd, 2021. BONI was added as a party to those claims by an order of Moise J dated March 16 th, 2022.
Justice Moise's decision to add BONI as a party put into stark focus the nature of the reliefs sought and against whom those reliefs could be ordered. The relevant facts are not in dispute and are as follows:
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(a) On June 22 nd, 2021 the Regulator of Nevis Financial Services Department (“the Financial Services Regulator”) issued a letter styled as an order to Cease and Desist. The letter set out a history of non-compliance by BONI and/or Prest and ordered that BONI cease and desist from holding out Prest as a being a director or the chief executive officer of BONI.
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(b) On June 23 rd, 2021 the Regulator of International Banking (“the Banking Regulator”) issued a letter dated June 23 rd, 2021 addressed to Prest and restricting the activities of the shareholder of BONI (Petrodel) and its ultimate beneficial owners from intervening in the day to day operations and related activities of BONI.
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(c) On June 25 th, 2021 the Banking Regulator issued a self-styled order for a global fine of US$120,000.00 against BONI and payable by no later than August 16 th, 2021.
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(d) On June 25 th, 2021, the Financial Services Regulator issued a self-styled order for a fine of EC$10,000.00 against BONI payable by July 2 nd, 2021.
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(e) BONI paid the fines by August 20 th, 2021.
It is immediately apparent that the cease and desist orders and fines were levied against BONI. BONI was clearly the proper party to seek to challenge the making of these orders and penalties against it.
Petrodel as a shareholder and Prest as CEO and/or director of BONI were clearly interested in these proceedings but insofar as relief was concerned, any reliefs would be directed to BONI. So that for example, an order for restitution could not be made to Petrodel or Prest since it was BONI who was liable to pay the fine and had paid the fine. Therefore, only BONI would be entitled to an order for restitution.
Similarly, the Cease and Desist orders though affecting Petrodel and Prest were clearly directed at BONI and in this Court's view it was BONI that was entitled to the quashing and declaratory reliefs that were sought.
This Court is satisfied that the letter of June 23 rd, 2021 from the Banking Regulator was addressed to Prest. In the course of his evidence the Banking Regulator testified that the letter though addressed to Prest had as its addressee Petrodel. The tenor of the letter was clearly directed at Prest and indicated that Petrodel ‘and its ultimate beneficial owners’ were instructed to do certain things. If as the Banking Regulator says the letter was for Petrodel and not Prest, there would be no need to refer to any other ultimate beneficial owners and Petrodel was the shareholder of BONI's shares.
This Court has no difficulty in finding that the letter of June 23 rd, 2021 was directed to both Prest and Petrodel and triggers Prest's claim for judicial review since the Regulator purported to take a decision in respect of both Prest and Petrodel. For reasons that this Court will come to shortly, the Regulators were not entitled to issue those orders.
This Court's findings confirm that save for the declaratory and quashing reliefs at paragraphs 1 and 2 of this judgment, Petrodel and Prest's claim for judicial review is refused. Prest and Petrodel had sought orders for general damages in the amount of US$100 million representing damage to their reputation, damage to the enterprise value of Petrodel's shareholding in BONI and losses in the investment portfolio. Petrodel and Prest also sought order for exemplary and vindicatory damages.
Putting to one side the fact that exemplary and vindicatory proceedings in claims for judicial review are rare, Prest and Petrodel, aside from baldly asserting their claim, offered no evidence in support of their position. No evidence to indicate what or whose investment portfolio or details of any evidence as to the loss of reputation or enterprise value was tendered before this Court.
The affidavits of Mr. Elusogbon (on behalf of Petrodel) and Mr. Prest in support of their claim for judicial review were almost identical in the way that they were bereft of any details of these losses. In this Court's view, while Prest and Petrodel were not required to quantify their losses, they were required to prove at the very least, loss and damage of the kind that they had pleaded. The paucity of this evidence was telling and it was not surprising that counsel for Prest and Petrodel did not tax this Court with any arguments in support of their client's right to these other reliefs.
Ultimately, the decision to grant relief in judicial review proceedings is discretionary in nature and this Court is not satisfied that Prest and Petrodel are entitled to the reliefs they have sought, save for those outlined above.
BONI's claim for relief was simple. BONI contended that the Regulators had no legal authority to issue the Cease and Desist Letters and levy the fines that they did in June 2021. Simply put their case was that this Court should declare that the Regulators had no authority to do as they did, quash their decisions and order restitution of the sums paid. As a corollary of their primary argument, BONI argued that the Regulators were liable to compensate them in damages for the tort of misfeasance in public office and/or breach of their statutory duty.
Counsel for the Defendants resisted these arguments and submitted that the Regulators were authorized to do as they had done and that BONI was not entitled to an order for damages for misfeasance in public office or breach of statutory duty.
Everyone is agreed that the Regulators authority is derived from the Financial Services Regulatory Commission Act (“the Act”). The long title to the Act is a well-known aid to statutory interpretation 1 and provides that the Act is “An Act to establish the financial services regulatory commission to regulate providers of financial services except for the financial services covered by the banking act and to provide for related or incidental matters”.
Parliament in its wisdom decided that the provision of financial services that were not covered under the Banking Act required regulation. Even without the benefit of the Hansard 2 of the passage of the Act it is clear that Parliament intended that a Commission be established for this purpose. Parliament has clearly entrusted the power to regulate the provision of financial services to the Commission.
The Act sets out the framework for how the Commission is to be operated and provides for among other things, it's functions (Section 4), the appointment of directors (Section 8), the Commission's powers (Section 11), staff (Section 13), meetings (Section 14), the power to impose sanctions such as cease and desist letters (Section 40).
The issue of whether the Commission delegated its undoubted statutory authority to the Regulators is at the heart of this dispute. The resolution of this issue warranted a discussion of the rule of construction captured by the Latin maxim delegatus non potest...
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