National Stadium Project (Grenada) Corporation v NH International (Caribbean) Ltd (Trinidad and Tobago)

In a commercial financing structure, restricting loan proceeds to project purposes does not, without clear language, create a trust of money credited to the project company’s bank account. The account relationship remains contractual, and the company retains legal and beneficial ownership unless the agreements clearly indicate otherwise. A payment covenant benefiting a broad class of project participants does not itself amount to an equitable assignment, particularly where it provides for payment through the project company and does not identify assignees or assigned rights. An assignment chain fails if the proposed intermediate assignee had no proprietary or contractual interest capable of assignment. Unpleaded alternative claims cannot ordinarily be introduced for the first time on a second appeal.

National Stadium Project (Grenada) Corporation established a project company to finance and construct a national stadium. NH International was engaged as the principal building contractor. Following a dispute and the termination of NH’s subcontract, NH obtained a freezing order over money remaining in the project company’s facility account. The resulting Fund was paid into a joint account pending trial.

Rajkumar J held that NH had a beneficial interest under a trust and/or equitable assignment, and ordered the Fund to be released to it. The Court of Appeal of the Republic of Trinidad and Tobago allowed the project company’s appeal, holding that no trust or effective assignment existed and that the project company was entitled to the Fund. The appeal concerned the trust, equitable assignment and entitlement issues, together with new arguments raised before the Board.

Lord Briggs and Lord Sales delivered the majority judgment, with whom Lord Reed and Lord Lloyd-Jones agreed. Lady Arden dissented.

1. Trust issue. The parties’ intention had to be determined objectively from the network of commercial agreements. In such a context, a trust conferring proprietary priority on one contractor required clear contractual indication. A trust would not readily be found where it undermined or contradicted contractual relationships that appeared to confer personal rights only.
2. The Facility Agreement created an ordinary banker–customer relationship in respect of advances credited to NS’s account. NS therefore had full legal and beneficial ownership of the relevant chose in action. The restriction that the Facility be used solely for the Project, together with the invoice, certification and oversight mechanisms, regulated NS’s contractual use of the money but did not create a trust or preferential proprietary rights for NH, ICS or other contractors. Clause 6.5 of the Development Agreement was consistent with that analysis: it contemplated payments through NS to a broad class of project participants and did not identify any preferential beneficiary. The Trust Deed demonstrated that the parties knew how to create express trust obligations when intended.
3. Equitable assignment. The proposed direct assignment by NS was a new, unpleaded case raised for the first time before the Board. It could not fairly be determined on a second appeal without appropriate findings and evidence. The proposed chain of assignments also failed. ICS had no beneficial interest or contractual right under the Facility Agreement capable of assignment. Clause 6.5 was a personal covenant by the Bank, not an assignment or agreement by NS, and the June 1997 correspondence amounted at most to a personal undertaking by ICS to implement direct payment. The formulation discussed in Palmer v Carey [1926] AC 703, deriving from Rodick v Gandell (1852) 1 De GM & G 763, did not assist NH.
4. The Statute of Frauds 1677 issue did not arise because no effective assignment had been established. A new estoppel argument, also unpleaded and unsupported by trial evidence, was unsuitable for determination on the appeal and permission to raise it was refused.
5. Entitlement and order. Neither NH nor ICS had a proprietary interest in the Facility money. The Fund represented money owned by NS, and the last paragraph of clause 9 of the Trust Deed supported that result. The Board dismissed NH’s appeal and confirmed the order requiring NH to repay the Fund, with interest, to NS.

Lady Arden’s dissent

Lady Arden considered that clause 3.1 of the Facility Agreement and clause 6.5 of the Development Agreement, read together, earmarked the advances for Project costs and created a beneficial interest in favour of ICS, which ICS assigned to NH. She relied on section 3 of the Grenada National Stadium (Development and Financing) Act 1997, which gave the agreements the force of law and made the relevant obligations irrevocable. She also considered that objective wording, rather than any prescribed form, governed the assignment and that payment through the assignor was not inconsistent with it.

• Privy Council: [2020] UKPC 25 dismissed NH’s appeal and confirmed the order requiring repayment of the Fund and interest to NS.
• Court of Appeal of the Republic of Trinidad and Tobago: on 28 November 2018, allowed NS’s appeal from the High Court, held that no trust or effective assignment existed, and declared NS entitled to the Fund.
• High Court: Rajkumar J, on 28 January 2011, held that the Fund belonged beneficially to NH under a trust and/or equitable assignment and ordered its release to NH.
• Earlier Board appeal: [2015] UKPC 6 reinstated NS’s appeal after its initial disposal without a merits hearing.