Clico International Life Insurance Ltd v Parris; Branlee Consulting Services Inc. and Estate of David Thompson

• Jurisdiction: Barbados
• Judge: Gibson, C.J.
• Judgment Date: 22 February 2016
• Neutral Citation: BB 2016 HC 7
• Docket Number: Claim No. 99/2015
• Court: High Court (Barbados)
• Date: 22 February 2016

High Court

Gibson, C.J.

Claim No. 99/2015

Clico International Life Insurance Limited

and

Parris; Branlee Consulting Services Inc. and Estate of David Thompson

Appearances:

Mr. Ramon Alleyne and Sheena-Ann Ince for the claimant

Mr. Hal Gollop QC and Mr. Michael Yearwood for the First Respondent

Mr. Vernon O. Smith QC, Mr. Steve Gollop and Teri Manning for the Second Respondent

Sir Maurice King QC, KA, and Mr. Edmund King QC for the Third defendant

( Mr. Barry L. V. Gale QC, Mrs. Leodean Worrell and Mrs. Laura Harvey Read, on a watching brief for The Bank of Nova Scotia)

Civil practice and procedure - Injunctions — Application by the first and second defendants seeking the discharge of a freezing order granted ex parte to the claimant — Deprecation of the practice of granting ex parte injunctions unless there is clear evidence for so doing — Caution to be applied when granting Mareva or Freezing injunctions — Whether on the facts before the judge in the ex parte application there was enough of a basis shown to justify the granting of a Mareva injunction — Whether after the inter partes hearing anything was revealed to justify the discharge of the injunction — Whether the evidence of dishonesty was such as to create a perceived palpable risk in the judge's mind that the assets would be dissipated prior to the plaintiff obtaining judgment — Whether there had been full and fair disclosure by the claimant to the court and defendants — Undertakings in damages — Whether the absence of provisions for the living and business expenses of the first and second defendants should lead to the discharge of the injunction — Whether the balance of justice should lead to the dismissing of the application and retaining the injunction in place — Application by the third defendant for summary judgment against the claimant on the whole of the claim against the third defendant or that the statement of case as it relates to the third defendant be struck out — Whether the third defendant was a legal personality or entity — No claim in the underlying action that the personal representative of the third defendant possessed any property belonging to the claimant or first defendant.

Company Law - Corporate groups — Whether a subsidiary could pay the debts of a parent company without the agreement of the subsidiary — Piercing the corporate veil — Judicial management — Whether a company under judicial management is under a disability making them unable to commence proceedings without being named as under judicial management.

Gibson, C.J.

INTRODUCTION

1 In this application, the first and second defendants, Leroy C. Parris (“LCP”) and Branlee Consulting Services Inc. (“BCS”), seek the discharge of a freezing order granted ex parte to the claimant, CLICO International Life Insurance Limited (“CIL”), on 29 January 2015 (Chandler J). CIL contends that the freezing order was properly granted because the asset frozen, an amount of $4,500,000.00 in a Fixed Deposit Account held at the Bank of Nova Scotia (“BONS”), was part of its corporate property which had been wrongfully under the control of LCP and BCS.

2 The basis of CIL's application for injunctive relief which resulted in the freezing order was its assertion that there was a risk of dissipation of the funds. LCP and BCS attack the freezing order as an improper application of either the principles governing the grant of Mareva injunctions or those governing the more widely known interlocutory injunctions under the authority of American Cyanimid v. Ethicon, per Lord Diplock, as reformulated and applied by our Court of Appeal in Toojays v. Westhaven Ltd, per Burgess JA.

3 Chandler J later recused himself from continued involvement in the matter and, in the interest of judicial economy I assigned the matter to myself under Supreme Court ( Civil Procedure) Rules 2008 (“CPR”), Rule 2.4(4).

4 This matter raises several issues of both procedural law in the (“CPR”) and interim injunctive relief, as well as substantive company law under the Companies Act, Cap 308 of the Laws of Barbados, particularly the rules governing the legal status of companies within a corporate group. Companion litigation has continued before Chandler J. Many of the facts are taken from the affidavits of the parties but also from two Reports of Forensic Audits conducted by the Forensic and Dispute Services team of Deloitte Canada. As will soon appear, Deloitte & Touche (or more accurately, Deloitte Consulting Ltd), a Canadian-based accounting firm with offices in Barbados, was appointed the Judicial Manager (“JM”) of the claimant CIL.

FACTUAL AND PROCEDURAL BACKGROUND

5 CIL was a very successful insurance company for many years and operated throughout the Caribbean. It was a subsidiary of CLICO Holdings (Barbados) Ltd (“CHBL”) and part of the wider CLICO group of which the ultimate parent company was CL Financial Ltd (“CLFL”), a Trinidad-based insurance conglomerate. From about January 2009, several of the companies in the group began to endure significant financial stress and, on 14 April 2011, the High Court, upon the application of CIL, appointed Deloitte Consulting Ltd (“DCL”), acting through Messrs Oliver Jordan and Patrick Toppin (“PT”), to act as JM of CIL. Mr. Jordan has since resigned from DCL, leaving PT as the sole JM. The Court's Order was based on sections 56 through 70 of the Insurance Act, Cap 310 of the Laws of Barbados. On 29 April 2011, the Court issued a Directions Order which set out the JM's authority and directed that an interim report be submitted within 30 days of the date of the Order. Submitted into evidence during the hearing were two Forensic Reports, one as of 5 December 2011 and the other as of 21 June 2013.

6 The first defendant (LCP) had been CIL's President and Chief Executive Officer for many years immediately preceding his retirement after some 34 years in the insurance field. As President, he had responsibility for the company's operations in Barbados and the Eastern Caribbean. There is no gainsaying that the financial success enjoyed by CIL was due in no mean measure to LCP's business acumen in the insurance field. He is also presently a director, along with his wife Faye Wharton-Parris (“FWP”), of the second defendant, Branlee Consulting Services Inc (“BCS”).

7 The third defendant is the Estate of David Thompson QC, late Prime Minister of Barbados and former principal of the law firm of David Thompson & Associates [DT&A], which had acted on behalf of both CIL and LCP on numerous occasions prior to the group running into financial difficulty. Central to CIL's claim was an invoice for legal fees for services purportedly performed for CIL, and the transfer to LCP, as a gratuity, of the legal fees once received by the law firm.

8 By letter dated 5 December 2002, Mr. Lawrence A. Duprey (“LAD”), the chairman of the board of directors of CLFL, the overall parent company of the Clico group of companies, wrote to LCP as follows:

December 5, 2002

Mr. Leroy Parris

President

CLICO Holdings (Barbados) Limited

Whitepark Road

Bridgetown

BARBADOS

Dear Mr. Parris,

You have made a verbal application to me to arrange some sort of lump sum reward for the work you have done in growing the asset base of CLICO Holdings (Barbados) Limited and transforming CLICO International Life Insurance Company Limited and CLICO International General Insurance Company Limited into profitable companies.

I have considered your application and I will make the following financial arrangement for you. The commitment of CLFL is conveyed in this letter and I have expressed my prerogative as Chairman to do so. CLICO Holdings (Barbados) Limited will pay you five million United States Dollars (US$5,000,000) IN A TAX EFFECTIVE FORM under the following conditions:

• 1. Lawrence A. Duprey ceases to be Group Chairman.

• 2. Leroy Parris ceases to be Chief Executive officer of CLICO Holdings (Barbados) Limited.

• 3. We both are still active and hold our offices on December 31, 2010. Then this payment will be made to you in lump sum by January 31, 2011.

Terms and conditions of this agreement are between Leroy Parris, CEO, CLICO Holdings (Barbados) Limited and Lawrence A. Duprey, Chairman, CL Financial Limited and CLICO Holdings (Barbados) Limited.

Signed

Lawrence A. Duprey Chairman

CL Financial Limited.

(Emphasis added.)

9 The December 2002 agreement was put into more formal language by an agreement dated 15 May 2005 and made between CHBL, as “‘the employer’ which expression shall include where the context so admits its subsidiaries Clico International Life Insurance Limited, Clico International General Insurance Limited, Clico Mortgage and Finance Corporation, Todds Estates Limited, Clico Property Development Limited, Clermont Development Inc., Clico Financial Holdings Inc., Rodney Bay Limited, Clico Property Development (St. Lucia Limited), CL Financial Limited, and Professional Financial Services, Inc., whose registered office is at Dayrells Heights in the parish of St. Michael, hereinafter called ‘the employee’ which expression shall include where the context so admits its principal employee Leroy C. Parris and its agents assigned to perform tasks under the terms of this agreement.” The agreement was for a term of 10 years commencing on 15 May 2005.

10 Under the rubric “Remuneration and other benefits,” CHBL, as employer, agreed to pay to Professional Financial Services Inc., (“PFSI”), a company of which LCP was a director, “a basic annual salary of Three Hundred and Sixty Thousand dollars ($360,000.00) (or such increased basic rate as the parties may from time to time agree).” Clause 14 of the May 2005 agreement provided as follows:

The employer will pay to Professional Financial Services Inc. and/or Leroy Parris a gratuity of US$5,000,000.00 on the 15th of May 2008 in such manner as may be agreed between the parties on terms as set out but amended herein...