THE REPUBLIC OF TRINIDAD AND TOBAGO IN THE HIGH COURT OF JUSTICE CV 2012-03240 BETWEEN UNIT TRUST CORPORATION CLAIMANT AND RICHARD WOODRUFFE DEFENDANT BEFORE THE HONOURABLE MR JUSTICE RONNIE BOODOOSINGH MR RAVI NANGA FOR THE CLAIMANT MR ANIL MARAJ FOR THE DEFENDANT DATED: 2 JULY 2013 REASONS Page 1 of 5
1. The Defendant in his defence set out certain preliminary matters essentially advancing that the Claimant cannot enforce the agreement in question. 2. Written submissions were filed in support of the preliminary points and the claimant has replied to these and the defendant has been permitted to reply on the law. I have considered these submissions and these are my reasons. 3. The defendant s first submission is that the claimant loaned the money to the defendant ultra vires the powers of the Unit Trust Corporation Act, Chap 83:03 and therefore that the transaction is illegal and the court ought not to enforce it as being contrary to public policy. 4. From the outset I accept the learning on illegal contracts as set out in the Defendant s submissions. 5. The issue to be decided, however, is can this arrangement be considered to be contrary to the claimant s powers under the Act. 6. It is to be noted that the defendant has admitted at paragraph 2 of the Defence that he was a customer of the claimant in respect of merchant banking; the claimant loaned money to Page 2 of 5
him; that it was in the context of arranger and lender of a syndicated transferable loan agreement; that the claimant was the sole lender; and that the loan comprised 2 facilities. 7. The Act permits the claimant to conduct merchant banking. Merchant banking includes loan syndication. Loan syndication involves arranging the loan but it may also include lending the whole sum: See Modern Banking Law 3 rd Edition, pages 662-663. 8. I agree with the claimant s submission that what the UTC Act does is to prohibit the claimant from undertaking commercial banking business as opposed to merchant banking. 9. In construing the legislation, if merchant banking is permitted, and there are no restrictions on this, then the claimant was fully entitled to enter into the agreement it did, that is to say, to both arrange and lend the money in question. Further, I accept the submission of the claimant that the court must construe the legislation to further the legislator s aim of providing an effecti ve remedy for the mischief. There is no need in my view for the legislation to provide for the capacity to enforce any agreement made under its powers to do merchant banking including the provision of syndicated loans. The capacity to enforce the agreement by suing on the agreement would follow naturally from it. Page 3 of 5
10. The first preliminary submission is therefore overruled. 11. The second submission of the defendant is that the claimant had transferred or assigned this agreement to Portfolio Credit Management Limited (PCML) and, therefore, the claimant cannot now enforce the agreement. 12. The defendant relies on a letter by Eutrice Carrington, Executive Director of the claimant, in this regard. The letter provided for PCML to be the lender. 13. That letter, however, retained in the claimant the right to act as the Trustee/Arranger/Agent. 14. PCML then became the administrator, as it were, of the loan. 15. The preservation in the claimant of the position of Trustee/Arranger/Agent must have included the powers that would be incidental to those functions. Powers incidental would be the power to enforce the agreement in those capacities. What was transferred was the administration of all other terms and conditions of the facility. Page 4 of 5
16. The claimant having retained its role as arranger must necessarily have retained its capacity to enforce the agreement as arranger. There would have been no necessity to expressly retain that power. Enforcing must include the power to sue on the agreement. 17. The court has to look to the substance of the transaction as a whole. The claimant having loaned a substantial sum of money to the defendant under an agreement must have the capacity to enforce that agreement by bringing a claim. The second preliminary submission is therefore also overruled. 18. While these reasons have been brief given that this is a procedural appeal, for completeness, I should add that I agree with the written submissions of the claimant. 19. The issue of costs of this application was reserved as part of the costs of the claim. Ronnie Boodoosingh Judge Page 5 of 5