Belize International Services Ltd v The Attorney General
| Jurisdiction | Belize |
| Judge | Sir Manuel Sosa PA,Hafiz-Bertram JA,Campbell JA |
| Judgment Date | 15 March 2019 |
| Neutral Citation | BZ 2019 CA 11 |
| Court | Court of Appeal (Belize) |
| Docket Number | CIVIL APPEAL NO 36 OF 2016 |
| Date | 15 March 2019 |
THE COURT OF APPEAL OF BELIZE AD 2018
The Hon Mr Justice Sir Manuel Sosa
The Hon Madam Minnet Hafiz-Bertram
The Hon Mr Justice Lennox Campbell
CIVIL APPEAL NO 36 OF 2016
E Courtenay SC along with P Banner for the appellant.
Denys A. Barrow SC along with J Ysaguirre for the respondent.
Contract - Illegality — Ministerial authority — Appeal — Whether termination of agreement by government unlawful — Whether agreement was unconstitutional and contrary to public policy — Whether decision of trial judge ought to be affirmed
This appeal must, in my opinion, be dismissed. I concur in the reasons for judgment given, and the orders proposed, in the judgment of Campbell JA, which I have read in draft.
SIR MANUEL SOSA P
I had the pleasure of reading the judgment of my learned brother, Campbell JA, in draft, and concur in the reasons for judgment given, and the orders proposed therein.”
HAFIZ-BERTRAM JA
By this proceeding the appellant seeks to challenge the orders and judgment of Madam Justice Arana, delivered on the 28 th October 2016. The learned judge, by her judgment declared that the Extension Agreement dated 24 th March, 2005 was unconstitutional illegal and invalid and dismissed the appellant's claim to recover the sum of US$45 million dollars for breach of contract. The learned judge ordered costs to the defendant to be paid by the Claimant.
The appellant, is a company duly registered on the 10 th April 1991 under the laws of the British Virgin Islands, with its registered office situate at Craigie, P.O Box 71, Road Town, Tortola and is jointly and equally owned by the Panamanian Law firm of Morgan & Morgan and WIHL, a British Virgin Island company.
The respondent is the legal representative of the Government of Belize.
In 1980‘s the Government of Belize decided to enter the services industry. The legislative framework for this industry was enacted with the passage of The Registration of Merchant Ships Act 1989 to establish IMMARBE, as an open shipping Registry. That Act was repealed and replaced by the Merchant Ships (Registration) Act which came into force on the 23 rd October 2010, and, secondly, The International Business Companies Act 1990 to establish IBCR, for the registration of international business companies under IBCA. The Hon. Mr Said Musa, was Prime Minister from 1998 to 2008, when following national elections, a new government was installed with Hon. Mr Dean Barrow as Prime Minister.
The IBCR, was managed between 1990 and 1993, pursuant to an Agreement between the Government and Belize Holding PLC, for, the private entity, to establish and develop the IBCR. In respect of IMMARBE, operations started, based on the Agreement of 19 th April 1991. In the stead of both these Agreements, the parties entered into the 1993 Management Services Agreement, dated 11 th June 1993. (1993 Agreement), which was renewed for a further 10-year period. (hereinafter referred to as Renewal Agreement)
On the 9 th June 2003, Mr Gandhi, legal counsel, in the Ministry of Finance wrote to BISL, on behalf of the Government of Belize, expressing concerns about fundamental change of circumstance, in the parties contractual relationship.
BISL rejected the factors enumerated in the Government's letter, and denied that they were, affecting the validity of the 1993 Agreement. The parties engaged in two meetings, involving BISL's representative, the finance minister, and Mr Gandhi. There was a further meeting, with the Government being represented by Prime Minister, Hon. Mr Said Musa, and Mr Gandhi. Subsequently, Prime Minister Musa, wrote that the Government was considering the extension of the relationship.
On the 24 th March 2005 an Agreement (Extension Agreement), amending the 1993 Agreement was signed. On the 16 th May 2005, BISL paid US$1.5 million to the Government, for an additional period of seven years, from 2013 to 2020. On the 26 th January 2009, Mr Gandhi wrote BISL, stating that the 1993 Agreement had expired on the 10 th June 2003, and inquired whether there was a new agreement. A new government was installed in 2008. On the 11 th February, 2009, BISL confirmed the extension of the 1993 Agreement to the 11 th June 2020.
On the 6 th May 2013, Mr Waight, the Financial Secretary, noted that BISL had exercised its option, for an additional period of ten years, from the 11 th June 2003 and expiring 10 th June 2013, and that the government had no record of any further extension. BISL responded by sending a copy of the Extension Agreement purporting to extend the 1993 Agreement to 2020 by way of an amendment effected on the 24 th March 2005.
On the 4 th June 2013, the Financial Secretary, wrote to BISL, acknowledging receipt of the Extension Agreement. The letter indicated that, insofar as the document purports to extend the Agreement beyond 2013, it was ‘wholly invalid’, as it was patently contrary to applicable laws. It was indicated, that the Renewal Agreement would expire on the 10 th June 2013, and the government would assume control of the Registries, with effect from 11 th June 2013.
On the 8 th June 2013, an Order was gazetted by the Registrar of Merchant Shipping. It appointed a public official to assume control of the Head Office of IMMARBE subject to the control of Mr Gandhi. The Order revoked any previous appointment to that post. There was a press release informing the public of the Government's assumption of control of the Registries.
BISL commenced an action with the filing of the Claim Form and Statement of Claim, both dated 26 th March, 2015, seeking the following reliefs:
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(1) A Declaration that on the 11 th June 2013 the Government breached the Agreement;
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(2) Damages, including exemplary and/or aggravated damages, for the Defendants breach of the Agreement;
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(3) Interest pursuant to sections 166 and 167 of the Supreme Court of Judicature
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(4) Such further and other reliefs as may be just; and
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(5) Costs.
The trial before Arana J, commenced on the 9 th December 2015, and lasted over 3 days, with hearings on the 10 th December, 2015 and 16 th February 2016, judgment was delivered on the 28 th October 2016, with the claimants case being dismissed, and the claimant ordered to pay the defendants prescribed costs, to be taxed or agreed.
On the 12 th December 2016, consequent on the dismissal of the claim BISL filed a Notice of Appeal, seeking to set aside, inter alia, an Order setting aside the Order of the Supreme Court dated 22 nd day of November 2016 in Claim No 698 of 2013.
Mr Denys Barrow, SC, for the Respondent, at the start of the trial, advised the Court that, the manner in which the Government's case would be conducted, the allegation of mismanagement would be entirely irrelevant. Mr Barrow, SC, indicated that the Court was not being asked to make any determination as to whether the Registries were ‘impeccably run’.
The parties had joined issue on the manner in which the appellant had managed the Registries. The Claimant in its Statement of Claim, at paragraph 9, asserted; that the claimant had faithfully managed the Registries and shared the revenue with the Government, in strict compliance with the terms of the Agreement
For its part, the Government in its Defence, dated 13 th April 2015, alleged, at paragraph 11:
‘The Defendant, denies paragraph 9, of the Statement of Claim, and says that the Claimant BISL operated the Registries strictly along commercial lines, without regard to regulatory aspects and damaged Belize's reputation with the EU, FATF and CFATF and other international bodies, thereby adversely affecting Belize's economy’.
Mr Barrow, SC, indicated that the Government was prepared to amend paragraph 11, to read, “That the Defendant does not admit paragraph 9, of the Statement of Claim”. According to Mr Barrow there would be no pleading on the government's case, of bad management or of breach. Mr Courtenay informed the court he would not make any submission on the point, if the Court is satisfied there need be no resolution on the issue.
The learned trial judge identified the issues, as follows
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(i) Did the Government breach the Agreement with BISL? Was the Agreement validly extended by the letter dated 24 th March 2005, signed by the Prime Minister and Attorney General addressed to BISL?
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(ii) If there was a breach, has the Government breach of the Agreement resulted in loss and damage to BISL?
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(iii) If the answer to b, is yes, then what is the amount of loss and damage suffered by BISL as a result of the breach by the Government together with interest and costs.
The learned trial judge laid out the claimant's case, as outlined by Mr Courtenay, that the parties acting pursuant to the 1993 Agreement and for the consideration of US 1.5 million dollars, amended and extended the duration of the Agreement, to 2020. The terms of the Agreement provided for the Government to share the revenue derived from the management's operations with BISL as follows:
(a) 40% of the income in any given year is to be used to cover the operational expenses of IMMARBE and IBCR for that year. Thereafter, the balance of income is to be shared, 60% for the Government, and 40% for BISL.
The Claimant submitted that the Agreement had been extended until 2020 for consideration. That the Government evinced an intention to repudiate the Extension Agreement after 11 th June, 2013, by appointing a Deputy Registrar, to control both Registries and by its letters, issuance of statutory instruments No. 58 and 59 of 2013 and by its conduct. That the measure of damages, from the...
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