CONTROVERSIAL road construction company, Asphalt and Mining, which came into being under the Stephenson King administration during 2007–2011, is still causing waves in St. Lucia, notably in a judgment delivered last month in the Commercial Division of the High Court.
The court case in which the company is featured is the one where KCL Capital Markets Brokers Limited had filed a claim against the Attorney General of Saint Lucia, the party in whose name proceedings against the Crown must be instituted, to recover special damages in the sum of $1,338,570.28.
The claim alleges breach of contract occasioned by failure of the Government of Saint Lucia to remit to KCL certain receivables payable on the authority of two Notices of Direction to Pay, dated February 20, 2012 and March 6, 2013 issued pursuant to a Factoring Agreement and assignment of the receivables. The Attorney General asserted that the Crown is not liable for the sums claimed because an attachment order made on August 18, 2014 directed the Crown to pay the sum of $1,335,562.83 to a judgment creditor of the seller and assignor of the receivables.
KCL asked the court to determine certain preliminary issues which it believes will result in complete disposal of the claim. Justice Cadie St. Rose-Albertini said the facts of the case were not in dispute and that the fight between the parties concern differences on issues of laws relating to ownership of the factored receivables, the effect of the Order, if any, on the Government of St. Lucia’s obligations to KCL under the Notices and liability for the remaining payments due to KCL, under the Notices.
According to the judge, the central issue for the Court was to determine whether the Order impeded the contractual obligation of the Government of St. Lucia to KCL and in that regard the following questions must be answered: (1) Who is the lawful owner of the receivables payable under the Notices? (2) Did the Order vitiate (avoid, erase, reduce the effectiveness of something) the Notices? (3) Is the Crown liable for remitting to KCL the remaining payments arising from the Notices?
Background
The background of the case is where Asphalt & Mining comes in.
KCL is a securities company registered under the Companies Act of Trinidad and Tobago. It is licensed and regulated by the Trinidad and Tobago Securities and Exchange Commission and provides financial advisory, arrangement and underwriting services for securities offered for sale in that country. Its registered office is at No. 25 Western Main Road in Trinidad. The company previously operated as AIC Capital Market Brokers Limited.
On September 15, 2011, KCL executed a Factoring Agreement for the Purchase and Sale of Accounts Receivable, a Purchase Confirmation and Assignment Agreement with Asphalt & Mining (St. Lucia) Company Limited (AMSL), a company incorporated under the Companies Act of Saint Lucia. The arrangement was for the sale and purchase, with full recourse, of all the accounts receivable of AMSL, under a road construction and rehabilitation project in Saint Lucia, with absolute assignment to KCL, of all receivables payable under that project.
The effective date of the purchase was September 21, 2011. The genesis of the project lies in an agreement dated March 24, 2010 between the Ministry of Communications, Works, Transport and Public Utilities in Saint Lucia and AMSL for the AnseGer to Desruisseaux Road Rehabilitation.
According to court documents, the Crown’s evidence was contained in a single affidavit deposed by Ms. Jan Drysdale, Senior Crown Counsel in the Attorney General’s Chambers. In the main, she asserts that when the Order was made, the AG’s Chambers was unaware of the Notices which assigned all the receivables payable under the Project to KCL and that immediately upon receiving this information from the Ministry of Infrastructure, Port Services and Transport, the AG’s Chambers proceeded to file an application to discharge or vary the Order.
She deposed further that KCL was entitled to intervene in the proceedings to protect its rights as the factor of the receivables affected under the Order. Despite being made aware of the Order, KCL took no steps to intervene and was not represented at the hearing, albeit the AG Chambers had requested its attendance. Instead, KCL proceeded to write several letters to the Government of St. Lucia demanding payment of the receivables. The Crown’s application was struck out, the Order remained binding and Government of St. Lucia had no choice but to comply with it.
The Court was asked to take judicial notice of the petition which was subsequently filed and discontinued by KCL, coupled with its conduct in not facilitating a determination on the issues relating to the effect of the Order within the realm of the LCaribbean claim.
The Court was asked to find this claim tantamount to abuse of the court’s process on the basis that the proceedings were res judicata, meaning that a final judgment had been rendered on the merits of the action and that no other may hear an appeal.
KCL’s evidence was contained in two affidavits deposed by Mr. Shannon Chitolie as Attorney appointed under a Deed of Deposit of Power of Attorney duly registered at the Office of Deeds and Mortgages. In summary, he outlined the chronology of events leading up to this application and tendered the exhibits relied on by KCL.
KCL’s contention was that in complying with the Order, the Government of St. Lucia caused the accounts receivables which belonged to it to be redirected to the payment of the judgment debt owed by AMSL to LCaribbean and that it was erroneous for the Government of St. Lucia to interpret the Order as intercepting the contractual obligation to KCL, as enshrined in the Notices.
Chitolie deposed that representatives of KCL travelled to Saint Lucia for the hearing of that application. However, due to a miscommunication, the incorrect date was conveyed by the AG Chambers and the Crown’s application was disposed of ahead of their arrival. KCL accepts that it was entitled by law to apply to be joined as a party in the LCaribbean claim and took steps to this end by filing a petition pursuant to Article 318 of the CCP.
That effort was stalled by prolonged delay in obtaining a hearing date from Court Registry, which led to a decision by KCL to discontinue the petition. The demand letters written to the Government of St. Lucia served to bolster the assertion that government was in breach of the Notices by failing to remit the balance of the receivables due under the Project.
Appearing this year before Justice St. Rose-Albertini were Leslie Prospere and Vilan Edwards for KCL and Rene Williams, Senior Crown Counsel, for the Attorney General.
Williams, among other things, contended that the Order operated in rem (a technical term used to designate proceedings or actions instituted against the thing) in respect of the receivables payable under the Project. Further, that the Notices were frustrated by a supervening illegality, thereby discharging the Government of St. Lucia from making further payments to KCL and that when the Order was made there was no evidence that a valid assignment existed in accordance with Article 1 479 of the Civil Code.
He submitted that in the circumstances the Order had the effect of vitiating the Notices but only to the extent of the sums specified therein, thus preventing AMSL from receiving the sums directed to be paid to LCaribbean. He agreed that the Government of St. Lucia remained contractually bound to pay KCL any sums left over after payment to LCaribbean.
Prospere contended, among other things, that the receivables payable under the Project had been previously assigned to KCL with the knowledge of the Government of St. Lucia and the Notices were merely a fortification of KCL’s ownership of the receivables which previously belonged to AMSL, which is so because ownership of these receivables changed by virtue of the Factoring Agreement which was fortified and reinforced by the Purchase Confirmation and Assignment Agreement, followed by the Notices to the government.
According to Prospere, there was, from September 2011, an outright purchase of the receivables and the Government of St. Lucia was put on notice of the assignment. As a result, the receivables could not be considered a debt due to AMSL capable of attachment under Section 22 of the Crown Proceedings Act or CPR 59.7(4). He further stated that Williams’ arguments on this point would have been justified only if the receivables in the hands of the government were still the direct assets and property of AMSL, but when the Order was made the receivables had long been factored and assigned to KCL, who became the rightful owner.
Prospere noted that government’s attempt to interpret the Order in a manner which vitiates the Notices was flawed because the language of the Order was clear and unambiguous and only restrains government from remitting sums to be paid to AMSL and directs that same be paid instead to LCaribbean. He also stated that the Order does not in any way (expressed or otherwise) mention or interfere with the contractual rights existing between the Government of St. Lucia and KCL and could not have affected the Notices, as it did not speak to these rights at all.
Prospere contended that having established from these principles that the receivables were incapable of being classified as a debt due to AMSL, if government erroneously made the payment to LCaribbean in compliance with the Order, it would be faced with the inherent risk of having to pay the amount twice, because a third party cannot pay a debt to the wrong party without incurring the concomitant risk of having to pay it again to the rightful party.
Justice St. Rose-Albertini concluded that the Order of the Court dated August 18, 2014 did not vitiate the Notices of Direction to Pay dated February 20, 2012 and March 6, 2013. Further, that the defendant/respondent (Attorney General) continues to remain contractually liable to remit to the claimant/applicant (KCL) the remaining payments due under the Notices.
“Judgment is given for the claimant/applicant in the sum of $1,335,892.78 together with interest on the said sum at the rate of 6% per annum from 5th November, 2015 until payment in full. The claimant/applicant is awarded the costs of this application in the sum of $7,000,” Justice St. Rose-Albertini concluded.
