Anguilla Business Services v St. Kitts Scenic Railway et al
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EASTERN CARIBBEAN SUPREME COURT
FEDERATION OF ST. CHRISTOPHER AND NEVIS
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
Appearances:
Mr. Damien Kelsick and Mr. Garth Wilkin of Kelsick, Wilkin and
Ferdinand for the Applicant
Mr. Terence Byron and Ms. Talibah V.O Byron of Byron and Byron for
the Respondent

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2013: March 31st
November 27th

DECISION
[1]. THOMAS, J [AG]: Before the court is a notice of application for the appointment of
a receiver filed on July 5th 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:
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 22nd 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
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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.
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Affidavit Evidence
[3]. It is indicated by the applicant that certain affidavits 1will 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 9th
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 9th 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 11th, 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 9th 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”
1 These are: 1st affidavit of Thomas Rader filed June 3rd, 2011. 9th affidavit of Thomas Rader filed
on July 2nd, 2013. Supplemental affidavit to 9th Affidavit of Thomas Rader filed on July 5th, 2013.
[7th] affidavit of Albert Millington filed on July 9th, 2013.
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[8]. In his supplemental affidavit in support filed on July 17th, 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)2, 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 22nd August
2011 in the sum of US$3,195,050.00 plus costs of EC$2,617.00 and, as of 19th July
2013, the judgement debt, interest and costs total US$3,507,880.75.
2 [2009] QB450
3 [2011] UKPC
4 HCVAP 2007(035 CSCSC‐SLU)
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[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 22nd 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 23rd 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 15th 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 11th July 2013, and does so
5 It is to be noted that the submissions in support of the application to set aside the default
judgment entered on were filed on July 24th, 2013
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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.
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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 contemplates a power of the High Court to appoint a
receiver as at prescribe the context of an application for this purpose.
[22]. Learned counsel for the applicant says in his submissions that the applicant
obtained a judgment against the first defendant on August 22nd, 2011 in the sum
of US$3,195,050.00 plus costs of EC$2,617.00 and that July 19th 2013 the debts
stands at US$3,507,880.75 and it is wholly unsatisfied. Therefore for all purposes
in law there is a debt of US$3,507,880.75 owed by the judgment debtor/ receiver
to the applicant.
[23]. The objections to the appointment of a receiver relate to: the effect on the tourist
industry in St. Kitts, the effect on the company and the effect on the second and
third defendants.
Effect on the Tourist Industry
[24]. In a real sense this amounts to speculation as there is blue print as to the
outcome if a receiver is appointed given the nature of the assets identified by
learned counsel for the applicant without objection. These are in general terms:
real estate, railway cars, motor vehicles and a leasehold interest.
[25]. Given the foregoing the court agrees that such a consideration is irrelevant.
Effect of the Company
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[26]. Learned counsel for the applicant contends that this is not a relevant
consideration: in this regard reliance is placed on the following dictum of
Coleman J in Somco et al v Novoruznetsh Aluminium Plant et al6. This is
what the learned judge said:
“As to bringing the business of the judgment debtor to a standstill by
cutting off payment otherwise available to it, I am not persuaded that this
is a relevant consideration in the context of a remedy designed to effect
execution and not designed merely to conserve assets pending
determination of an unresolved claim. This is not the environment of a
Mareva injunction prior to trial, but execution of a pre-existing judgment.
Whereas the effect of an injunction on the defendant’s ability to conduct
his business in the ordinary course may be relevant where his liability is
yet to be determined, it cannot possibly be a relevant consideration where
his liability has already been determined. Impact on the judgment debtors
business is not a consideration material to the availability of legal process
of execution and there is no reason in principle why it should be
introduced as material to the availability of equitable execution.”
[27]. The court is persuaded by the foregoing especially the reasoning that the liability
has already been determined in this case since August 2011.
Effect on the second and third defendants
[28]. This appears to the court to relate principally to the inability of the second and
third defendants’ inability to file a defence. This can be of no moment as this
matter has run its full course in the High Court, the Court of Appeal and then
again in the High Court. These actions speak for themselves and the conclusion
is patent and pellucid.
[29]. On the other side of the equation the court draws the reasonable inference that
the second and third defendants being shareholders and directors of the
respondent have not shown a semblance of an intention to settle the debt.
6 [1998] QB 406
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[30]. The court must now write penultimate chapter as to whether the conditions for the
appointment of a receiver are satisfied in this instance. In this regard Part 51.3 of
CPR 2000 contains the following”
“51.3 In deciding whether to appoint a receiver to recover a judgment debt the
court must have regard to the –
a. The amount likely to be obtained by the receiver;
b. The amount of the judgment debt
c. Probable cost of appointing and remunerating the receiver.”
[31]. The court must now “have regard” to prescribed conditions seriatim.
Amount likely to be obtained
[32]. By definition, this requires evidence of an accountant who has examined the
books of the first defendant and other matters which is not before the court. In its
stead, the court can have some regard to part of the evidence of the General
Manager, Thomas Williams, of the first defendant as deposed in his affidavit filed
on July 11th, 2013. This is what the deposed at paragraph 6:
“6 The allegations made by Mr. Rader that the first defendant is in a poor
financial state are not true. The respondent’s business is a real and
profitable business. Its activities a highly seasonal, and while they go into
a slow period each summer, revenues pick up again each fall in October,
with the cash flow becoming positive (depending on year) but no later than
mid-January. 2013-2014 will be the biggest year to date with 20,000 more
passengers riding the train than rode in 2012-2013. This equates to US$ 1
million more in tickets revenues in 2013-2014 than there were in 2012-
2013. Even if the judgment is valid, there would be no need to appoint a
receiver to sell up the assets. This would be a disaster not only for the
defendants but for the tourist industry of St. Kitts.”
Amount of the judgment debt
[33]. The amount of the judgment is disputed but it rests on a judgment of the court. It
is in the amount of US$3,195,050.00 plus costs of EC$2,617.00 and it has not
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been set aside by this court, the Court of Appeal or any other court with jurisdiction
over St. Kitts and Nevis.
Probable cost of appointing a receiver
[34]. These conditions appear to contemplate on figure for a definite period. This is not
before the court. What is before the court is the fee payable to receiver and two
associates7 which are EC$321.75, [EC$ 210.60] and EC$ 169.65 per hour,
respectively.
[35]. The lacunae pointed out above are clarified by Justice Edwards Barrister in
Dalemont Limited v 1. Alexander Gennadervich Senatorov. 2. Riggels
Enterprise Limited8. The learned judge was interpreting Part 51.3 of CPR 2000.
This is his reasoning:
“14 Before I can do that, however, the Rules oblige me to have regard to
the amount likely to be obtained by the receivers; the amount of the
judgment debt; and the possible cost of appointing a rumerating the
receivers. In my judgment, these requirements are not to be taken literally.
They do not require the court to work out in cents and dollars what will be
the likely recovery or expenses of the receivership. They are directing the
attention of the court to the need for it to be satisfied that the proposed
appointment will be proportionate in all the circumstances. I am entirely
satisfied that it will be. The unpaid amount of the debt easily outweighs the
likely loss of the receivership and it seems to me that the prospects of
recovery by the proposed route are sufficient to justify the probable
expenses.”
[36]. This court is persuaded by Justice Barrister’s dictum and would add that Rule 51.3
speaks merely requires that the court “must have regard to …” By implication this
would be a prelude to the ultimate question, being, whether the appointment sought
is just and convenient.
7 See supplemental affidavit to 9th affidavit of Thomas G Redar, at para. 3
8 Claim No. BVIHC (Comm) 149/2011
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Is it just and convenient?
[37]. The phrase just and convenient is one of great antiquity in the context of the
appointment of receivers and other circumstances9; and whereas it has been
interpreted as meaning necessary in the circumstances10 the modern approach is
to consider the question having regard to all the circumstances.
[38]. Therefore, having regard to the matters which Rule 51.3 says the court must
have regard to plus the following: the fact of that the debt of US$3,195,050.00
plus costs of EC$2,617.00 stands unsatisfied since August 2011, the position of
the 1st defendant as deposed by its General Manager; including the cash
projections; cash flow for the new season of 2013-2014; the attitude of the 2nd
and 3rd defendants in the entirety of the matter.
[39]. In relation to the last matter mentioned the court finds that the following extract
from the 9th affidavit of Thomas Rader also merits consideration:
“22 Therefore, I have instructed my attorney-at-law to seek to that a
receiver be appointed by the Honourable court because I firmly believe
that:
a. The respondent and the 2nd and 3rd defendants have
demonstrated a continued lack of trustworthiness, contempt of
the injunction, breach of their duties as directors of the
respondent, and have continued to operate the respondent
without concern for the judgment of this Honourable court dated
22nd August, 2011;
b. The respondent and the 2nd and 3rd defendants have and continue
to authorize capital expenditure which is unnecessary, excessive,
unprofitable, unbudgeted, and uneconomical and will therefore
cause the respondent to become insolvent;
c. Unless a receiver is appointed by this Honourable court the
applicant will be unable to collect the judgment debt; costs and
interest lawfully due to the applicant.”
9 For example the winding up of companies
10 See for example: P.L.S Palnieppe Chetty v P.L.P.C [1917] 32 MLS 30 per Srinivess Aiyanagar J of
the Madras, High Court; John v John [1989] 2CL 573 per Lindley Mr.; Dalemont Limited v
Alexander Gennadievich Senatrov and Riggels Enterprise Ltd, supra per Bannister J.
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[40]. In all the circumstances the court, pursuant to Part 51 of CPR 2000, hereby
authorizes the appointment of a receiver as prayed.
The Receiver
[41]. There is no objection to Marcella Lanns-Monish of the accounting firm of Lanns
Monish and Associates being appointed as a receiver, and as such the said
Marcella Lanns-Monish is hereby so appointed receiver of all the assets of
whatever nature of the respondent, St. Kitts Scenic Railway Limited until further
order of the court.
[42]. There is also no objection to the fees stated in the supplementary affidavit to 9th
affidavit of Thomas Rader and these are approved as follows:
Receiver, EC $321.75 per hour and associates EC $210.60 and EC $169.65 per
hour, respectively. All the fees are inclusive of value added tax.
Dispensing with security
[43]. Rule 51.4 (1) says that the general rule is that a person may not be appointed
receiver until that person has given security. However sub-rule 51.4 (2) gives the
court the power to dispense with security. It is in this connection that the
applicants are seeking to move the court.
[44]. It is therefore the determination that in all circumstances, especially since there
is no objection by the respondent the requirement of security in this instance is
dispensed with.
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Costs
The respondent must pay the costs of this application which shall be assessed if
not agreed within 30 days after the date of this judgment
ORDER
IT IS HEREBY ORDERED as follows:
(1) The application by Anguilla Business Services Ltd, judgment
creditor/applicant for the appointment of a receiver is hereby granted as
the court considers it just and convenient to so appoint having regard to
all the circumstances.
(2) Marcella Lanns-Monish shall be the receiver of all the assets of whatever
nature of the respondent, St. Kitts Scenic Railway Limited.
(3) The approved fees payable to the receiver shall be at the rate of
EC$321.75 per hour and the rate for the two associates shall be
EC$210.60 and EC$169.65 per hour, respectively.
(4) The requirement for security by the receiver is dispensed with pursuant to
Rule 51.4 (2) of CPR 2000
(5) Costs to be assessed if not agreed within 30 days after this decision
(6) The draft order attached to the application is approved as amended.
Errol L. Thomas
High Court Judge [A.g]