De Bourg and Capbank score victory in court

Controversial businessman turned banker, Finton De Bourg is smarting from a court victory involving Capital Bank International, which was sent into Receivership under a former Keith Mitchell-led New National Party (NNP) administration.

A three-member panel of Appeal Court judges in the OECS circuit ruled in favour of an application made by De Bourg and Capbank to challenge the appointment by then Minister of Finance Dr. Keith Mitchell in the 2003-08 period of David Holukoff as receiver for the bank.

Holukoff is the husband of local attorney-at-law, Leslie-ann Seon, a former President of the Senate under a previous NNP regime and one of the persons recently appointed as an agent to facilitate the sale of Grenadian passports.

When De Bourg first brought his legal action against government, his chosen attorney was his brother-in-law, Cajeton Hood who is now serving as the island’s Attorney-General in the new Mitchell-led government.

According to a government insider, one of the early decisions taken by PM Mitchell after the 2013 general elections was to distance Hood from matters involving government and Capbank and for the files to be handed over to a prominent criminal lawyer in Trinidad & Tobago.

The source said that the Trinidadian attorney is doing the work through a female barrister-at-law with offices in the city.

De Bourg is also said to be trying to move the local high court to hear a matter that was filed a few years ago by Hood for the Minister of Finance who is PM Mitchell to be sent to prison for disobeying a court order for the bank to be returned to him.

As a public service, THE NEW TODAY reproduces an edited version of the decision of Chief Justice Dame Janice  Pereira,  as well as Davidson Baptiste and Paul Webster on the Capbank issue:

Civil appeal – Section 43 of the Banking Act – Appointment of receiver – Whether revocation of receiver’s appointment is sole or exclusive remedy available to financial institution – Claim for declaratory relief and damages The Minister of Finance, pursuant to the powers conferred by section 43 of the Banking Act (“the Act”), appointed a receiver over the appellant.

The appellant challenged the appointment by filing a claim, which was later amended, seeking various declarations, damages and other relief.

An application to revoke the appointment of the receiver was also filed. The learned trial judge on hearing the application concluded that the appointment of the receiver was invalid and revoked the appointment.

The appellant subsequently applied for permission, under rule 12.3(1) of the Civil Procedure Rules 2000 (“CPR”), to enter default judgment on the amended claim for failure by the respondents to file a defence and also on the basis that the court had previously ruled that the appointment of the receiver was invalid.

The learned trial judge refused permission to enter judgment by default holding that section 45 of the Act provides both the right and the remedy and therefore the appellant cannot go outside of the remedy provided.

The appellant appealed alleging that all the requirements for entry of default judgment were satisfied; and that the learned trial judge erred in failing to consider whether section 45 of the Act provides an exclusive remedy in circumstances where the Minister acts in excess of jurisdiction, as conferred by the Act, to appoint a receiver.
Held: allowing the appeal; setting aside the order and remitting the matter to the court below and ordering the respondents to pay the appellant’s costs on appeal to be assessed unless agreed within twenty one days, that:

1.      There is no provision in CPR 12.3(1) which requires a claimant to first obtain the court’s permission before judgment in default can be entered against the Crown.

2. Section 45 of the Act speaks to a specified period within which a financial institution may institute proceedings in the High Court to have a receiver’s appointment revoked.  It did not create any fetter on the court’s power as to the nature and type of relief which may be granted after such a claim has been instituted.  In that regard, section 45 does not preclude the appellant from claiming damages as it has claimed in its amended claim.

JUDGMENT PEREIRA, CJ:

This appeal is yet another, flowing from the appointment of a receiver on 15th February 2008, over the appellant (“the Bank”) by the second respondent.

The essential issue raised in this appeal is whether the revocation of a receiver’s appointment is the sole or exclusive remedy available to a financial institution where a receiver has been appointed under section 43 of the Banking Act (“the Act”)1 of Grenada.

Procedural Matters

In August 2012, the parties filed consent pursuant to rule 62.6 of the Civil Procedure Rules 2000 (“CPR”) for the appeal to be heard and determined as a summary appeal.




Following directions and orders given by a single judge of the Court on 23rd January 2013, a certificate pursuant to CPR 62.6(1)(a) was filed on 25th January 2013 and the appeal came up for further directions before the Court on 28th January 2013.

On that date, the Court gave directions for the filing and service of submissions by the parties. The respondents’ submissions which were directed to be filed on 12th February 2013 were not filed until 21st February 2013.

The respondents have sought an extension of time to deem the written submissions filed on 21st February 2013 to be properly filed.  We are satisfied from the affidavit of service of the application for an extension of time that the same was served on the solicitors for the appellant on 25th February 2013.

That application has not been opposed by the appellant and we conclude that the late filing has caused them no prejudice. Based on the information contained in the affidavit, filed in support of the application for extension of time, the Court is satisfied as to the reasons given for the delay.
Further, the Court considers that the written submissions of the respondents addressing the question raised by this appeal which raises a question of law, would assist the Court in a determination of the question.

Accordingly, the Court deems the written submissions filed on behalf of the respondents to have been properly filed.  The appellant had been granted liberty to file written submissions in reply.  No reply submissions have to date been filed, and we infer from this that the appellant did not consider it necessary to file and serve a reply.
In the interim, the appellant took steps to sort out its legal representation in relation to the various pending legal proceedings and, on 28th April 2014, a copy of notice of change of solicitor was filed with the court.

No further submissions have been filed following the change of legal practitioners and the Court accordingly concludes that the question may now be determined by the Court without the need for further submissions.
The background

A background summary giving rise to this issue is set out so as to place it within context:

(1) Pursuant to the powers conferred by section 43 of the Act, the Minister of Finance, on 15th February 2008 appointed a receiver over the Bank.

(2) The Bank challenged the appointment of the receiver by filing a claim in the High Court on 25th February 2008 in which it sought various declarations, damages and other relief.

(3) The Bank also filed on the same date of filing the claim, an application seeking the revocation of the appointment of the receiver, the delivery up by the receiver of the Bank’s books, records, keys and other documents, the surrender to the court (subject to confidentiality safeguards) of all documents made or prepared by the receiver following his entry upon the Bank’s premises on 15th February 2008.

(4) The Bank filed an amended claim on 5th March 2008, seeking various declarations, damages for breach of statutory/and or common law duties, as well as damages for unlawful interference with the business of the Bank.

The Bank’s amended claim is not stated to be pursuant to section 45 of the Act. Indeed the Bank had already accomplished the removal of the receiver by way of their application of 25th February 2008.

(5) The trial judge on hearing the application, in her decision delivered on 7th May 2008, concluded that the appointment of the receiver was invalid and revoked the appointment. The learned judge also ordered the receiver to deliver up possession of the business and premises together with, among other things, all books, papers records, and keys by noon the following day; and that the receiver file a report of all action taken by him during the period of the receivership.

(6) An appeal was filed and subsequently abandoned.  Nothing turns on this. The respondents failed to file any defence to the claim.

(7) On 12th November 2008, the Bank applied for permission (it said pursuant to CPR 12.3(1))2 to enter default judgment on the amended claim for failure by the respondents to file a defence and also on the basis that the court had previously ruled (on the application) that the appointment of the receiver was invalid.  Indeed the Bank had already accomplished the removal of the receiver.

(8) The respondents opposed the application, arguing in essence that the only remedy available to the Bank pursuant to section 45 of the Act (i.e. revocation of the receiver) had already been granted; that the Bank suffered no actionable wrong – the acts of the receiver being valid notwithstanding the defects in his appointment; and that damages are not available to the Bank.

It was not sought to be argued that the preconditions set out in CPR 12.5 for entry of default judgment in the normal course had not been satisfied. The difference here is that the respondents (defendants) were officials of the Crown, namely the Minister of Finance and the Attorney General.

2 CPR 12.3 (1) A claimant who wishes to obtain a default judgment on any claim which is a claim against a (a) minor or patient … or (b) State as defined in any relevant enactment relating to state immunity; must obtain the court’s permission.

(9) On 23rd September 2010, the learned judge, in essence relying on the Privy Council decision in Century National Merchant Bank Limited and Others v Omar Davies and Others (Jamaica),3 which she considered to be analogous, held at paragraph 11 that the Act (section 45) “provides both the right and the remedy and therefore the aggrieved party cannot go outside of the remedy provided”.

She therefore refused the permission sought by the Bank to enter judgment by default.

(10) It is this ruling which the Bank challenges on appeal.

(To be continued next week)

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