First Caribbean International Bank (Barbados) Ltd v Exclusive Retreats Ltd

• Jurisdiction: Caribbean States
• Court: Eastern Caribbean Supreme Court
• Judge: Pariagsingh, M
• Judgment Date: 09 May 2022
• Judgment citation (vLex): [2022] ECSC J0509-1
• Year: 2022
• Docket Number: Claim No. SKBHCV2012/0371

THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

Civil Division

Claim No. SKBHCV2012/0371

Between

First Caribbean International Bank (Barbados) Limited

Original Applicant / Respondent

and

Exclusive Retreats Limited

Respondent

and

Social Security Board

Applicant

Appearances:

Leon Charles for the Applicant, Social Security Board; and

Garth L. Wilkin for the Original Applicant/ Respondent.

DECISION

Application to be added as a party and to set aside sale in statutory mortgage realization proceedings

Pariagsingh, M

1 — On January 26, 2021 the original applicant (“the bank”) applied to settle the scheme of division of the proceeds of sale after the respondent's property was sold under statutory mortgage realization proceedings. The respondent's property was sold for the sum of $540,000.00 USD and the purchase price has been paid into Court. Under the draft scheme of division submitted by the bank, if the proceeds of sale are applied to the mortgage debt first, there will be a deficit. Consequently, no other creditors, secured or otherwise will benefit from the proceeds of the sale.

2 By application filed on July 30, 2021 the applicant (The Social Security Board) applied for an order that it be added as a party to these proceedings. The crux of the applicant's application is that it has priority to seize and sell the respondent's property and also to apply the proceeds of sale to debts owed to it by the respondent. In the alternative, the applicant contends that the sale by the bank was unlawful, null and void and seeks an order that it be set aside.

3 The main issue to be determined in this application is; whether the applicant has priority to seize and sell the respondent's property? The other satellite issues will depend on the resolution of this issue. Though both parties filed affidavits, the issue to be resolved in the large is a legal issue.

ANALYSIS:

4 The applicant is a statutory body established pursuant to section 3 of the Social Security Act 1. The applicant contends that the respondent is indebted to it in the sum of $757,697.92 and this sum should be included in the scheme of division of the sale price as a debit in priority to the debt owed to the bank. The applicant alleges that this sum represents outstanding contributions due and owing under the Social Security Act, the Housing and Social Development Levy Act and the Protection of Employment Act for between the periods February 2005 to August 2011.

5 The applicant contends that the bank had notice in writing by letter dated June 19, 2014 of its claim of statutory priority to any property owned by the respondent which is seized by any creditor of the respondent. The applicant further contends that only after the property had been sold (on November 26, 2020), on December 03, 2020, did the bank respond and indicate that the property had been sold and that a response would be sent to the letter.

6 On April 01, 2021, after this application was filed, the bank wrote to the applicant's counsel and indicated that application to settle the scheme of division was filed and that the bank was contesting the position advanced by the applicant.

7 The applicant contends that the bank acted in bad faith by not responding to its letter of June 19, 2014 in a timely and direct manner, taking steps to settle the scheme of division of the sale price before addressing the applicant's position and by taking steps to settle the scheme of division without giving notice to the applicant.

8 In the alternative, the applicant contends that the sale by the bank was unlawful and null and void as the bank failed to comply with the provisions of sections 70 to 75 of the Income Tax Act 2. In the further alternative, the applicant seeks to be included in the scheme of division of the sale.

9 The respondent is a registered employer with the applicant and has been in operation since March 2005. Throughout its existence, the respondent has employed some seventy-six persons.

10 The applicant contends that as a registered employer, the respondent was under a statutory duty to pay contributions on behalf of its employees under the Social Security Act, the Protection of Employment Act and the Housing and Social Development Levy Act. It contends that the respondent did not honour its commitments under these Acts resulting in the respondent being a debtor to the applicant.

11 The applicant has also obtained several judgments in the Magistrate's Court, not the High Court, against the respondent for outstanding sums. The applicant contends that it has a statutory right to seize and sell the respondent's property pursuant to Sections 70 to 75 of the Income Tax Act.

12 Section 44 of the Social Security Act states that:

Recovery of Social Security contribution by sale of goods, etc.

44. (1) Subject to subsection (2) of this section, the provisions dealing with the recovery of income tax as provided in sections 70 to 75 in the Income Tax Act shall apply mutatis mutandis to the recovery of any contribution under this Act.

(2) Every reference to the word “collector” and the word “tax” in sections 70 to 75 of the Income Tax Act shall be read as a reference to the word “Director” and the word “contribution” respectively for purposes of this Act

13 Applying Section 44 to Sections 70 to 75 of the Income Tax Act in the manner prescribed it reads:

70. [Contribution] in arrear.

Where the whole [contribution] or an instalment is not paid on or before the prescribed date or dates then such [contribution] shall be deemed to be in arrear and it shall be lawful for the [Director], in his or her official name, to sue for and recover the [contribution] or such portion thereof as a civil debt in a court of competent jurisdiction or to issue a warrant under his or her hand directed to the Provost Marshal of the State setting out in the same or in a schedule thereto the several sums due on account of the [contribution] from the persons against whom the warrant is directed.

71. Penalty for non-payment of [contribution].

When any [contribution] becomes in arrear a fine in the sum of five per centum shall be added thereto and failing payment within one month of the date of notice of such fine, ten per centum per annum from the due date of payment to the actual date of payment shall be added thereto, and the provisions of this Act, relating to the collection and recovery of [contribution] shall apply to the collection and recovery of such sum.

72. Recovery by levy on goods.

Where [contribution] is in arrear the [Director] may, and the Provost Marshal, immediately on receipt of a warrant, shall proceed to levy upon the goods, chattels and lands of the persons against whom the warrant is directed and to sell in the manner provided in section 75 of this Act so much of the same as may be required to satisfy the several sums due on account of the [contribution] from the persons against whom the warrant is directed.

73. Priority of claim for [contribution].

• (1)...