Joan Marquis and Brands Inc. v The Attorney General

• Jurisdiction: St Lucia
• Judge: Thom JA
• Judgment Date: 21 September 2018
• Neutral Citation: LC 2018 CA 4
• Docket Number: SLUHCVAP2015/0006
• Court: Court of Appeal (Saint Lucia)
• Date: 21 September 2018

EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Before:

The Hon. Mde. Gertel Thom Justice of Appeal

The Hon. Mr. Humphrey Stollmeyer, QC Justice of Appeal [Ag.]

The Hon. Mr. Gerard Farara, QC Justice of Appeal [Ag.]

SLUHCVAP2015/0006

Between:

[1] Joan Marquis

[2] Brands Inc

Appellants

and

The Honourable Attorney General of Saint Lucia

Respondent

Appearances:

Mr. Dexter Theodore QC with him Ms. Shahida Charlemagne for the Appellants

Mrs. Brender Portland-Reynolds, Solicitor General, for the Respondent

Civil appeal — Compulsory acquisition of land — Land Acquisition Act — Compensation to be awarded — Lifting corporate veil — Whether court should award compensation to appellant for disturbance relating to loss of business — Causation — Whether acquisition caused loss of the business — Method of valuation — Whether cost method as opposed to investment approach more appropriate

The Government of St. Lucia compulsorily acquired a parcel of land situate at Vide Bouteille, Castries (the “property”) belonging to the first appellant, Ms. Joan Marquis (“Ms. Marquis”). The property was acquired for the purpose of widening the Castries/Gros Islet highway. On the property stood a two-storey building from which various businesses operated. Around 1987, Universal Brands, a business in which Ms. Marquis was the majority shareholder, commenced operations on the property and in 2000, the second appellant, Brands Inc commenced operations thereon. Ms. Marquis held 25% of the shareholding in Brands Inc while her daughter, Ms. Joanna Salton (“Ms. Salton”), held the remaining 75%.

Plans to widen the Castries/Gros Islet Highway were first commissioned in 1997; however, it was not until August 2005 that two notices of likely acquisition were published in the Saint Lucia Gazette (the “Gazette”). Between April and May 2006, four notices of acquisition were published in the Gazette thereby giving effect to the compulsory acquisition.

By letter dated 20 ^th November 2007, Ms. Marquis was offered compensation for the acquisition in the sum of $483,000.00 plus statutory interest of approximately $48,000.00. That offer was rejected, and by letter dated 5 ^th June 2008 a subsequent offer of $500,000.00 with interest of $65,000.00 was made. The appellants were still not satisfied with the offer and as a result, the Board of Assessment (“the Board”) was established to determine the compensation to be awarded.

The Board concluded by a majority that Ms. Marquis was entitled to: value of land and building of $610,470.00 together with interest at the rate of 6% per annum from 10 ^th April 2006 to the date of payment; compensation for disturbance: loan interest accrued on the sum of $425,000.00 from 11 ^th October 2002 to the date of payment; and legal costs to be assessed if not otherwise agreed. While the Board also found that Ms. Marquis would be entitled to 25% of the loss suffered by Brands Inc, if proven, it concluded that Ms. Marquis was not able to show a causal connection between the losses of Brands Inc and the acquisition of the property. No award was made to Brands Inc on the basis that Brands Inc was not a “person interested” within the meaning of the Land Acquisition Act to whom an award could be made separate and apart from Ms. Marquis.

The appellants, being dissatisfied with the decision of the Board, appealed on several grounds. The issues to be determined are: 1. Whether the appellants have established the right for the court to pierce the corporate veil and award compensation to Ms. Marquis for disturbance relating to loss of business of Brands Inc; 2. Whether there is a causal connection between the acquisition and the loss of the business of Brands Inc; and 3. Whether the Board erred in applying the cost method of valuation in awarding compensation for the land and building.

Held: dismissing the appeal and ordering that the appellants pay the costs of the appeal being 2/3 of the costs before the Board, that:

• 1. It is an elementary principle that the shareholders and the company are separate and distinct legal entities and that the court will lift the corporate veil in circumstances where the company is a mere facade concealing the true facts. Mere ownership and control of a company is not sufficient to lift the corporate veil. In the case at bar, the onus was on Ms. Marquis to show that the structure of Brands Inc was a mere facade. Evidence that Brands Inc conducted the same type of business as Universal Brands, from the same location and had the same client base and same directors, is not evidence that Brands Inc was a mere facade.

  Woolfson v Strathclyde Regional Council 1978 SC(HL) 90, La Generale de Carrieres et des Mines v FG Hemisphere Associates LLC [2012] UKPC 27, Ord v Bellhaven Pubs Ltd & Ors v Prest and others [1998] 2 BCLC 447, Adam v Cape Industries [1991] 1 All ER 929 applied.

• 2. The onus is on the person claiming compensation to show on a balance of probabilities that the loss suffered was as a result of the acquisition and/or news of the acquisition. Before the Board was evidence that Universal Brands ceased operations in 1999 and it was unable to pay its debts. Brands Inc ceased operation in 2000–2001. There was no documentary evidence that Ms. Marquis or Brands Inc were denied financing prior to Brands Inc ceasing operation because of the acquisition. Therefore, it was open to the Board to find that neither the impending acquisition nor the acquisition caused or materially contributed to the demise of Brands Inc and there is no basis to interfere with that finding.

  Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 1 All ER 846, Aberdeen City District Council v Sim and another [1982] 2 EGLR 22 applied.

• 3. The Land Acquisition Act provides for fair compensation to be paid to the land owner for losses suffered by the land owner. Where he/she is conducting business on the property, the most appropriate method of valuation is the income/investment approach which anticipates a proper analysis of the business as a going concern. The value of the land is determined on the basis of the amount of rent that an occupier would pay for the right to occupy and the level of return an investor would require on their capital. In the case at bar, it is not disputed that the property was used as a business premises. Ms. Marquis, however, was not conducting any business on the property during the shadow period or at the time of acquisition. Critically, there were no records of any rental history of the premises. In the circumstances, the income/investment approach would be inappropriate.

  Mon Tressor Desert Limited v Ministry of Housing [2008] UKPC 31 applied; Mark Pennington and another v Burnley Borough Council [2004] EWLands ACQ/102/2002 (14 March 2003) distinguished.

• 4. The finding of the Board that the trading figures were unreliable was a finding of fact. It is well settled that an appellate court would not interfere with the finding of facts of a lower court unless it was plainly wrong. In this case, it was open to the Board to conclude that the trading figures and financial forecasts of a company which was not a party to the proceedings and which had defaulted on its loans and ceased operation since 1999, and another company which was in operation for less than a year and which also could not service its debts was an unreliable basis to apply the income/investment approach. Accordingly, the the Board's decision is unimpeachable.

Thom JA

1 This is an appeal against an award of compensation made by a Board of Assessment (“the Board”) for the compulsory acquisition of real property belonging to the first appellant, Ms. Joan Marquis (“Ms. Marquis”), pursuant to the Land Acquisition Act. 1 The property was acquired by the Government of Saint Lucia for the public purpose of widening the Castries/Gros Islet Highway.

2 The background to this appeal is that Ms. Marquis was the registered owner of a parcel of land situate at Vide Bouteille, Castries and registered in the Registry of Lands as parcel 0850 B 3 (the “Property”). The property measured 6,204 square feet and on which stood a two-storey building measuring some 2,160 square feet of floor space. The property is located adjacent to the Castries/Gros Islet Highway with road frontage in a commercially zoned area surrounded by sales depots, offices and warehouses. Around 1987, Universal Brands, a business in which Ms. Marquis was the majority shareholder, commenced operations on the property. Subsequently, a company which also carried on business on the property, Brands Inc was incorporated on 22 ^nd March 2000 with 100 issued shares, 25 of which were issued to Ms. Marquis and the remaining 75 were issued to her daughter, Ms. Joanna Salton (“Ms. Salton”).

3 Around 1997, the Government of Saint Lucia commissioned plans to widen the Castries/Gros Islet Highway to ease traffic congestion. Based on the plans prepared for the widening of the road in 2001 and revised in 2006, the property was identified as one which needed to be acquired to facilitate the widening of the road. As early as 11 ^th October 2002, the Permanent Secretary in the Ministry of

Physical Development, in response to a query from CIBC (Caribbean) Ltd, 2 advised CIBC, in writing, of the intended acquisition of the Property. However, it was not until August 2005 that two notices of likely acquisition were published in the Saint Lucia Gazette (the “Gazette”) and on 10th April, 17 ^th April, 1 ^st May and 8 ^th May 2006 four notices of acquisition were published in the Gazette thereby giving effect to the compulsory acquisition

4 By letter dated 20 ^th November 2007, the authorised officer made an overture of settlement to Ms. Marquis for the acquisition of the property in the sum of $483,000.00 plus statutory interest of 6% per annum, calculated from 29 ^th March 2006 of approximately $48,000.00. A subsequent offer was made by...