Panton v Minister of Finance
| Jurisdiction | Jamaica |
| Judge | Rattray, P.,HARRISON, J.A. |
| Judgment Date | 26 November 1998 |
| Neutral Citation | JM 1998 CA 54 |
| Docket Number | Civil Appeal No. 113 of 1996 |
| Court | Court of Appeal (Jamaica) |
| Date | 26 November 1998 |
Court of Appeal
Rattray, P.,
Downer, J.A.
Harrison, J.A.
Civil Appeal No. 113 of 1996
Frank Phipps, Q.C., Walter Scott & Miss Carolyn Reid instructed by L. G. S. Broderick & Company for Donald Panton.
Ian Ramsay, Q.C., Walter Scott, & Deborah Martin instructed by L.G.S. Broderick & Company for Janet Panton.
Lennox Campbell, Senior Assistant Attorney-General & Marcia Dunbar instructed by the Director of State Proceedings for the Attorney-General.
constitutional law - Fundamental rights and freedoms — Whether Minister's intervention in the management and control of some institutions constituted compulsory acquisition of the appellant's property and was therefore a breach of section 18 of the Constitution — Whether shares were compulsorily acquired by the Minister — Court found that no unconstitutional act was done — Appeal dismissed.
On the 20th November, 1996 the Constitutional Court (Panton, Langrin & Smith, JJ.) dismissed the appellants' application to that court for redress under section 25 of the Constitution of Jamaica and awarded costs to the respondents. It is an appeal against this determination of the Constitutional Court which is now before us.
The appellants-are the controlling shareholders of a group of companies of which the relevant ones are Blaise Trust Company and Merchant Bank Limited, Blaise Building Society, and Consolidated Holdings Ltd. For convenience they will hereinafter be referred to as the “Bank”, the “Building Society” and the “Holding Company”. These financial entities fall statutorily under the regulation of the Bank of Jamaica referred hereinafter as “BOJ”.
They likewise respectively fall under the requirements of the Financial Institutions Act, the Building Societies Act and the Bank of Jamaica (Industrial and Provident Societies) Act as well as the regulations made under these legislative enactments.
It was the complaint of the appellants that the Minister's intervention in the management and control of these institutions constituted a compulsory acquisitions of the appellants' property and therefore was in breach of section 18 of the Constitution of Jamaica which provides as follows:
“18.-(1) No property of any description shall be compulsorily taken possession of and no interest in or right over property of any description shall be compulsorily acquired except by or under the provisions of a law that -
a) prescribes the principles on which and the manner in which compensation therefor is to be determined and given; and
b) secures to any person claiming an interest in or right over such property a right of access to a court for the purpose of -
(i) establishing such interest or right (if any);
(ii) determining the amount of such compensation (if any) to which he is entitled; and
(iii) enforcing his right to a such compensation.”
The appellants maintain that none of the legislative enactment mentioned provide for the determination of compensation and a method of procedure required by section 18(1) of the Constitution of Jamaica. Neither do they secure a right of access to a court for the purposes stated in section 18(1) of the Constitution of Jamaica. Neither do they secure a right of access to court for the purpose stated in section 18(1) of the Constitution.
It will be necessary to give some background history in relation to the three companies which are the subject matter of litigation.
The Minister of Finance, the first respondent acting on the powers conferred upon him by the challenged legislation in respect of each entity assumed temporary management and control of each institution and placed temporary managers in each of these. His action was duly confirmed by the Supreme Court as required in law. These institutions operate under licence from the Government: the Bank under the Financial Institutions Act and the Building Society and the Holding Company being “specified financial institutions” under the Bank of Jamaica Act.
The impugned legislative enactments under which the Minister acted were as follows:
-
(a) The Financial Institutions Act of 1992.
-
(b) The Bank of Jamaica (Amendment) Act, 1995.
-
(c) The Building Societies (Amendment) Act, 1995.
-
(d) The Bank of Jamaica (Building Societies) Regulations, 1995.
-
(e) The Bank of Jamaica (Industrial & Provident Societies) Regulations, 1995.
With respect to the Bank an inspection report commissioned by the Bank of Jamaica revealed sixteen breaches of the Financial Institutions Act. It stated that the Bank faced serious operational and financial problems. The Bank's overall condition was assessed as being poor. Unsecured credit facilities were granted above the limits permitted by law to shareholders and directors including the appellants. Capital adequacy was deemed to be poor. The Bank's portfolio was almost totally illiquid. The practices in relation to the management of the licensee's funds were unsafe, unsound and imprudent. Depositors were at great risk and the Bank was facing the danger of insolvency.
The temporary managers placed in the institutions by the Minister reported that the Building Society and the Holding Company were insolvent and the Bank “was solvent only because deposits from these two institutions were transferred to it.”
In relation to the Building Society and the Holding Company, reports of the Chartered Accountants found that the transactions and affairs of all three institutions were so intermingled that a detailed and accurate separation of them would have been time consuming and in many respects impossible.
This was the situation which led to the Minister assuming temporary management of the Bank on the 18th December, 1994 and of the Building Society and the Holding Company on the 10th April, 1995. On the 2nd June 1995 the Supreme Court conferred the vesting in the Minister of full exclusive powers of management of the Building Society and the Holding Company. The Supreme Court had already so done in respect of the Bank on the 15th February, 1995.
Schemes of Arrangement between the institutions and the creditors/depositors were proposed by the Minister in respect of all the entities. These were agreed to by the creditors/depositors and sanctioned by the Supreme Court. Under the Schemes of Arrangement the creditors/depositors of each institution were able to receive 90 cents in the dollar of sums owing to them and the preferred creditors would be paid in full. The Schemes committed the Government of Jamaica to lend to the institutions, if necessary, enormous sums not exceeding One Thousand and Seventy-Eight Million Dollars.
There has been no rebuttal of the Minister's allegations that the three entities “occupied the same physical office space and facilities”. All the institutions had the same employees. Furthermore, the operations of the three institutions were closely intertwined. The deposits, liabilities and assets of the three institutions were co-mingled with deposits being transferred and re-transferred between these institutions.
It was this state of affairs which impelled the Minister in respect of each institution to obtain the orders from the Supreme Court vesting in him full and exclusive powers of management in all three institutions and later to enter into the schemes of arrangement sanctioned by the court. No complaint comes from the creditors. They have been salvaged by the actions of the Minister.
The declarations sought by the appellants are to the effect that all these pieces of Legislation are unconstitutional and in breach of section 18 of the Constitution of Jamaica and the constitutional rights of the appellants in that they permit the compulsory taking possession of the property of the appellants and the compulsory enquiring of an interest in or right over property of the appellants without prescribing - (The principles on which and the manner in which compensation therefor is to be determined and given:” (section 18(1)(a) of the Constitution).
The gravamen of the submissions on behalf of the appellants is to the effect that the shares in the companies had been compulsorily taken possession of by the Minister, and their interest in, or right over these shares compulsorily acquired under legislation which does not provide for compensation.
This appeal despite the voluminous nature of the record and the detail of legal arguments rests upon narrow questions of law. The judgment of the Privy Council in Century National Bank Ltd and Others v. Omar Davies and Others Privy Council Appeal No. 52/97 delivered on the 16th of March, 1998 after the commencement of the hearing of this appeal and which upheld the decision of this Court of Appeal in Jamaica (Forte, Gordon, JJ.A. & Harrison, J.A. (Ag.) as he then was) has put beyond challenge the Minister's legal right to act as he did in putting in temporary management in these financial entities and entering into Schemes of Arrangement in respect of them. The one point therefore outstanding is, whether the provisions of section 18 of the Constitution of Jamaica require that the Acts and Regulations under which the Minister acted must include compensatory provisions, the legislation as is claimed by the appellants being confiscatory of the property of the appellants.
The appellants' case rests upon whether the appellants as shareholders in these financial entities have been deprived of their property, to wit their shares in the companies by virtue of the Minister's action.
In this regard the areas which have been canvassed by counsel before us and indeed in the Full Court are as follows:
-
1) Do shares in a company fall under the rubric of “property of any description?”
-
2) If the answer is in the affirmative did the Minister in exercising his authority under the impugned legislation compulsorily take...
To continue reading
Request your trial