Prickly Bay Waterside Limited – British American Insurance Company Limited (Grenada)
Case ID: JCPC 2020/0001
Jurisdiction: Court of Appeal for Granada
The Judicial Committee of the Privy Council (the "Board") is asked to consider whether a sum of money and any accrued interest are held under a Quistclose trust (or any other form of trust) by BAICO.
Prickly Bay is a company involved in a development of a property in Grenada (the "Development"). Mr Steele owned two properties adjacent to the Development (the "Adjacent Properties"). Mr Steele alleged that the Development infringed certain of his rights in relation to the Adjacent Properties and issued proceedings against Prickly Bay in April 2006. The dispute was initially settled by way of a consent order of the High Court of Grenada in May 2007 (the "Consent Order"). Under the terms of the Consent Order, Prickly Bay agreed to purchase the Adjacent Properties from Mr Steele for approximately USD 5,000,000.
At Mr Steele’s request, Prickly Bay also agreed to purchase one of the Adjacent Properties immediately, and to allow Mr Steele to remain in the other property for a further two years, until 18 May 2009 (the "Payment Date") with the balance of the purchase price together with interest to be paid to Mr Steele on that date. Pursuant to this arrangement and at Mr Steele’s request, Prickly Bay provided Mr Steele with an irrevocable guarantee for the balance of the purchase price, some USD 2,475,000, from BAICO, an insurance company. The BAICO guarantee would be triggered in the event that Prickly Bay failed to pay on the Payment Date. In order to cause BAICO to issue the guarantee, Mrs. Lee (the wife of a director of Prickly Bay) agreed to deposit a sum of money with BAICO. An annuity arrangement was also agreed between Mrs. Lee and BAICO which took the form of the payment of a premium in the amount of the balance of the purchase price to BAICO. The annuity would pay interest on the premium monthly for the two-year term of the policy and repay the premium on maturity.
BAICO subsequently experienced financial difficulties was placed into judicial management. The judicial manager took the view that the sums paid and interest accrued (the "Monies") comprised part of BAICO’s general assets which could be distributed to its creditors. Mr Steele then recommenced proceedings against Prickly Bay to enforce the terms of the Consent Order. In April 2012, Henry J heard Mr Steele’s application for, amongst other things, injunctive relief and the appointment of a receiver over Prickly Bay’s assets, and Prickly Bay’s cross-application for, amongst other things, a declaration that the Monies were held on trust by BAICO. After the hearing but prior to handing down her judgment, Henry J granted Prickly Bay’s application to join BAICO as a second defendant in order to determine whether the Monies were held on trust by BAICO and she issued directions for the filing of further evidence in relation to that question. Henry J gave judgment on 26 August 2015 in favour of Mr Steele and BAICO. She rejected Prickly Bay’s case as to the existence of a Quistclose trust in respect of the Monies and granted injunctive and receivership relief in favour of Mr Steele.
The Eastern Caribbean Court of Appeal subsequently dismissed the Prickly Bay’s appeal on 31 October 2018, rejecting its case that the Monies were held on trust for Prickly Bay. Prickly Bay now appeals to Board.
Prickly Bay Waterside Limited
British American Insurance Company Limited
Lord Hodge, Lady Arden, Lord Leggatt, Lord Burrows, Lord Stephens
Hearing start date
16 March 2021
Hearing finish date
16 March 2021
|16 Mar 2021||Morning session|