Why CDAL's 2% Monthly Interest Charges Are Legally Unenforceable

Summary

Caribbean Developments (Antigua) Ltd. (CDAL) has been adding 2% monthly interest charges (equivalent to 24% annually) to freeholders' accounts with outstanding balances. Our legal analysis reveals these charges are legally unenforceable because they:

Violate Land Transfer covenant principles requiring charges to directly benefit properties
Lack proper contractual foundation with no clear incorporation into original agreements
Constitute an excessive and unconscionable penalty under Antiguan law
Contradict established case law, including the Coleman ruling and 2008 Consent Order
May violate Antigua and Barbuda's consumer protection regulations

This article provides a comprehensive analysis of the legal issues with CDAL's interest policy and offers practical guidance for freeholders receiving these charges.

CDAL's Interest Charge Policy

CDAL has been imposing a 2% monthly interest charge on outstanding balances as evidenced by statements sent to freeholders. When questioned about the legal basis for these charges, CDAL, under the direction of Mr. Joseph Krohn (CFO of Sabana Holdings Ltd, CDAL's parent company), reportedly points to a small note at the bottom of their invoices stating:

Unpaid balance after the Due Date are assessed a 2% interest charge per month

This fine print appears to be Mr. Joseph Krohn and CDAL's sole justification for imposing substantial interest charges, without:

Prior notification to property owners
Amendment to the Land Transfer covenants
Proper incorporation into contractual agreements
Demonstration of legal authority under Antiguan law

Multiple Legal Problems with CDAL's Interest Charges

1. Unconscionable Rate Violates Penalty Doctrine

The 2% monthly interest rate (24% annually) is excessively punitive and appears designed to pressure freeholders rather than compensate CDAL for actual losses from payment delays. This violates established legal principles:

Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67: Establishes that any contractual provision imposing a detriment out of proportion to the innocent party's legitimate interest is unenforceable as a penalty

The rate far exceeds:

The Bank of Antigua's base lending rate
The statutory interest rate under the Judgments Act 1838 (which remains applicable in Antigua)
Standard commercial lending rates in Antigua, which typically range from 8-12% annually
Reasonable compensation for payment delays

2. Violation of Land Transfer Covenant Principles

The Land Transfer covenants that govern the relationship between CDAL and freeholders explicitly state that charges must be "levied for and expended upon services provided to and for the benefit of the above-mentioned parcel."

Interest charges:

Do not constitute a "service" that benefits the property
Are purely punitive and provide no benefit to the parcel
Function as revenue generation for CDAL, not service provision
Directly contradict covenant principles established in:
- Westerhall Point Residents Association v Batihk [2016] ECSCJ No. 79: Charges must directly benefit the property
- Waaler v Hounslow LBC [2017] EWCA Civ 45: Charges must be reasonably incurred and provide measurable benefit

3. Lack of Contractual Basis

Under both Antiguan and British contract law, a contractual term must be properly incorporated to be enforceable. CDAL's approach fails this standard:

A mere notation on invoices does not constitute valid contractual incorporation
Under Parker v South Eastern Railway Co (1877) 2 CPD 416, such terms must be reasonably brought to the attention of the other party at the time of contract formation
No evidence exists that these interest terms were disclosed during property purchase
No formal amendment to covenants has been executed following proper procedures

4. Contradiction of Prior Court Rulings

The Coleman Ruling (Claim No. ANUHCV2013/0029) and the 2008 Consent Order (Claim No. ANUHCV2004/0345) established clear principles that CDAL must follow:

Charges must be based on budgeted accounts and audited financial statements
New charges require proper documentation and implementation procedures
Interest charges were not contemplated in the original Land Transfer covenants

CDAL's unilateral imposition of interest charges appears to directly contradict these established legal precedents specific to Jolly Harbour.

5. Potential Unjust Enrichment

CDAL's interest charges potentially constitute unjust enrichment under the test established in Benedetti v Sawiris [2013] UKSC 50:

CDAL receives a benefit (excessive interest payments)
This benefit comes at freeholders' expense
Retention of this benefit is unjust because:
- The rate is commercially unreasonable
- It lacks legitimate justification
- It exceeds any actual loss or cost incurred by CDAL from late payments

6. Potential Consumer Protection Violations

These charges may violate:

The Antigua and Barbuda Consumer Protection and Safety Act
Common law principles protecting against unfair contract terms
The requirement of good faith in commercial dealings

Recommended Actions for Freeholders

1. Formal Written Response

Send a formal letter contesting the charge, requesting:

Documentation of the legal basis for the interest charge
Explanation of how the interest was calculated
Evidence that the charge complies with Land Transfer covenant requirements

2. Pay Under Protest

If paying the interest charge to avoid utility disconnection or other consequences:

Clearly mark payments as "paid under protest"
State in writing that this does not constitute acceptance of the charge's validity
Maintain all documentation for potential future claims

3. Collective Action

Consider joining with other freeholders to collectively challenge these practices:

Share information with neighbors also receiving interest charges
Document patterns of interest charges across multiple properties
Explore the possibility of a class action or group legal challenge

4. Legal Consultation

Consult with a qualified Antiguan attorney familiar with property law to:

Review your specific covenant terms
Assess options for challenging the interest charges
Determine if regulatory complaints are appropriate

5. Regulatory Complaint

Consider filing a formal complaint with Antigua's Financial Services Regulatory Commission regarding potentially unfair financial practices and excessive interest rates.

Template Email for Contesting Interest Charges

Below is a template email that can be adapted to contest interest charges:

To: [email protected], [email protected], [email protected], [email protected], [email protected]
Subject: Formal Dispute of Interest Charge - [Reference Number]

Caribbean Developments (Antigua) Ltd. (CDAL)
c/o Cort & Cort
44 Church Street
St. John's, Antigua

Attn:
- Ms. Jamie Tarter – Director / Managing Director
- Ms. Melareen Jarvis-Christopher – Director
- Mr. Joseph Krohn – CFO of Sabana Holdings Ltd (CDAL's parent company)

Dear CDAL Management,

I am writing to formally contest the interest charge of [amount] dated [date] on my account.

This charge is disputed for the following reasons:

1. The Land Transfer covenant governing my property requires charges to be "levied for and expended upon services provided to and for the benefit of the above-mentioned parcel." Interest charges do not constitute a service benefiting my property.

2. The 2% monthly interest rate (24% annually) is unconscionable under Antiguan and British common law, violating the penalty doctrine established in Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67.

3. The Coleman Ruling (Claim No. ANUHCV2013/0029) established that new charges require proper documentation and implementation procedures, which have not been followed.

4. A notation on invoices does not constitute proper contractual incorporation under Parker v South Eastern Railway Co (1877) 2 CPD 416.

I request that you:

a) Provide the specific legal basis for imposing this interest charge
b) Explain how this charge complies with the Land Transfer covenant requirements
c) Remove this interest charge from my account

Until these requirements are met, I maintain that this interest charge is invalid and unenforceable.

I reserve all my legal rights in this matter.

Regards,

[Your Name]
[Your Property Details]

Template Email to Antigua's Financial Services Regulatory Commission

Below is a template email that freeholders can use to report CDAL's interest rate practices to Antigua's Financial Services Regulatory Commission:

To: [email protected]
Subject: Complaint Regarding Potentially Unlawful Interest Charges by Caribbean Developments Antigua Ltd.

Dear Sir/Madam,

I am writing to bring to your attention a potentially unlawful financial practice being implemented by Caribbean Developments (Antigua) Ltd. (CDAL), under the apparent direction of Mr. Joseph Krohn, CFO of Sabana Holdings Ltd (CDAL's parent company), which I believe may fall under your regulatory purview.

CDAL is currently imposing a 2% monthly interest charge (equivalent to 24% annually) on outstanding maintenance charge balances for property owners in Jolly Harbour. This practice raises several regulatory concerns:

1. The 24% annual interest rate appears to be usurious and significantly exceeds standard commercial lending rates in Antigua and Barbuda.

2. These interest charges are being imposed without proper contractual foundation, as they were not incorporated into the original Land Transfer covenants or property purchase agreements.

3. The interest rate appears to function as an excessive penalty rather than reasonable compensation for payment delays, potentially violating principles established in both Antiguan and British common law.

4. CDAL is imposing these charges despite previous legal rulings (Coleman v. CDAL, Claim No. ANUHCV2013/0029) that establish limitations on how new charges can be implemented.

5. The interest charges may violate the Antigua and Barbuda Consumer Protection and Safety Act provisions regarding unfair financial practices.

I respectfully request that your office investigate whether CDAL's interest rate practices comply with applicable financial regulations in Antigua and Barbuda. I believe this matter affects numerous property owners in Jolly Harbour and may constitute a pattern of potentially improper financial practices implemented by Mr. Joseph Krohn and CDAL management.

I can provide additional documentation as needed and am available to discuss this matter further at your convenience.

Thank you for your attention to this concern.

Regards,

[Your Name]
[Your Contact Information]
[Your Property Details in Jolly Harbour]

Conclusion

CDAL's practice of imposing 2% monthly interest charges appears to violate multiple legal principles and lacks proper contractual foundation. Freeholders have strong grounds to challenge these charges based on established case law, covenant requirements, and principles of fair dealing.

By understanding your rights and taking appropriate action, you can protect yourself from potentially unlawful interest charges while maintaining your position as a responsible property owner in Jolly Harbour.