Clico Investment Bank Ltd v Louis Andre Monteil

• Jurisdiction: Trinidad & Tobago
• Judge: Madame Justice Quinlan-Williams
• Judgment Date: 19 April 2021
• Neutral Citation: TT 2021 HC 75
• Docket Number: CLAIM NO: CV2010-01352
• Court: High Court (Trinidad and Tobago)

IN THE HIGH COURT OF JUSTICE

Before

the Honourable Madame Justice Quinlan-Williams

CLAIM NO: CV2010-01352

Between

Clico Investment Bank Limited

Claimant

and

Louis Andre Monteil

First Defendant

Richard Trotman

Second Defendant

Stone Street Capital Limited

Third Defendant

First Capital Limited

Fourth Defendant

Appearances:

Mr. Michael Green Q.C. leads Ms. Nadine Ratiram instructed by Ms. Keilah Granger for the Claimant

Mr. Jason K. Mootoo and Mr. Christopher Sieuchand instructed by Ms. Shivangelie Ramoutar for the First and Third Defendants

Mr. Mathew G.W. Gayle for the Second Defendant

1 This case involves a web of transactions and a cast of players – individual and corporate. In brief, in February 2007 the claimant company, Clico Investment Bank Limited (“CIB”), incorporated under the Companies Act of Trinidad and Tobago, was engaged in the business of banking and finance. The first defendant (“Monteil”) was a Director and Chairman of the claimant. The second defendant (“Trotman”) was the newly minted President, CEO and Director of the claimant. The first defendant, acting on behalf of the third defendant (“Stone Street”) had, before 14 February, orally made a loan application to the second defendant for the sum of $78 million to purchase 7 million Home Mortgage Bank (“HMB”) shares then owned by CLICO.

2 The second defendant communicated to the first defendant that the loan was approved and as a consequence and based on the oral loan application, on the 14 February 2007 the sum of $78 million was transferred by the claimant to CLICO on behalf of the third defendant. On 14 February 2007, the first defendant was the controlling Director and Chairman of the third defendant. On 14 February 2007, the first defendant was a Director and Chairman of Home Mortgage Bank. On 14 February 2007, the first defendant was the Finance Director of CLF Financial Ltd and on the 14 February CLICO – who owned the Home Mortgage Bank shares, was a subsidiary of CLF Financial Ltd.

3 The loan agreement was formalized by a series of documents executed on 20 December 2007.

4 Later, on 25 July 2008, the loan previously made to the third defendant was transferred by the claimant to a wholly owned subsidiary of the first defendant and the Home Mortgage Bank shares, the project and the reason for the loan in the first place, was released as security for the sum of $78 million. Also on the 25 July 2008, the first defendant was shareholder and Director of the fourth defendant. Contemporaneous with the event of novation, another company owned by Lawrence Duprey purchased the fourth defendant.

5 When the claim was filed and up to the date of this judgment, the claimant has not been paid the principal of the $78 million, any interest on the $78 million and do not hold the Home Mortgage Bank shares as security for the outstanding sum of $78 million and any interest on the $78 million.

6 The case is much more involved and complex than these brief introductory remarks and the judgment will go into all the relevant details.

7 Suffice it to say – that for reasons detailed in the written judgment – I have found the first and second defendants to lack credibility and in many respects to be untruthful witnesses. I make this statement because those findings were critical in the court's fact-finding exercise and in coming to the conclusion that the claimant has successfully met their burden in proving the case against the defendants.

Background

8 On 31 January 2009, the Central Bank pursuant to sections 44D and 44E of the Central Bank Act Chapter 79:02 published Legal Notice No. 20 of 2009 in the Gazette by which it assumed control over the claimant company CIB. Mr. Carl Hiralal was appointed Manager of CIB by Legal Notice No. 67 of 2009 published in the Gazette on 26 March 2009, with effect from 31 January 2009.

9 When the Central Bank assumed control of CIB, Ms. Wendy Ho Singh was appointed agent of the Manager, and a team comprising members from the Central Bank and from CIB was assigned to her.

10 The Honourable Justice Boodoosingh, by order dated 17 October 2011, placed CIB into compulsory liquidation and the Deposit Insurance Corporation (“DIC”), was appointed liquidator of CIB.

11 The Claim Form and Re-Amended Statement of Case were filed on 24 March 2011 by CIB when it was under control of the Manager. In these proceedings, CIB appears through the DIC its court appointed liquidator in accordance with the Order of the Honourable Justice Boodoosingh.

12 CIB along with Colonial Life Insurance Company (Trinidad) Ltd. (“CLICO”) and CLF Communications Ltd. (“CLFC”) are subsidiaries of the parent company CLF Financial Ltd. (“CLF”).

13 The First Defendant Louis Andre Monteil (“Monteil”) has demonstrated a wealth of experience in the accounting and banking sectors. He is a Chartered Accountant and a Fellow of the Association of Certified Accountants. Monteil is and was at all material times the controlling shareholder, Director and Chairman of the third defendant, Stone Street. Additionally, throughout the course of his professional career he has held various executive positions including:

• i. Executive Director, finance of CLF from the 22 July 1992 to the 31 March 2008;

• ii. Chairman and Director of CIB from the 27 March 2003 to 22 April 2008;

• iii. Director of the Home Mortgage Bank from the 25 April 2000 to the 7 November 2008;

• iv. Director of First Capital Limited incorporated in St. Kitts (“FCL St. Kitts”) from the 15 March 2007; and

• v. Shareholder and Director of First Capital Limited incorporated in St. Lucia (“FCL St. Lucia”) from the 4 July 2008 to the 25 July 2008.

14 In 2000, the second defendant Richard Trotman (“Trotman”), joined CLF and was appointed Group Corporate Finance Executive until March 2005. Trotman subsequently joined CIB and initially held the position of Chief Operating Officer and Executive Vice President until January 2007. On 1 February 2007, Trotman was appointed President and Chief Executive Officer of CIB which position he held up until his resignation in January 2009. During that period, he was also a Director of CIB.

15 The instant proceedings revolve around a loan of $78 million from CIB to Stone Street, advanced on the 14 February 2007 and the subsequent transfer and substitution of the responsibilities for that loan from Stone Street to First Capital Limited. The claimant claims that both transactions were unauthorized and in circumstances where Trotman and Monteil committed serious breaches of their legal obligations and duties to CIB. As a result, the claimant contends that the 2007 loan and the 2008 transfer are void or voidable and ought therefore to be set aside.

16 In addition or in the alternative, the claimant claims restitution of the $78 million from Stone Street or that Stone Street holds the $78 million or its traceable proceeds on constructive trust for CIB. The claimant further seeks damages or equitable compensation against all the defendants for either their breaches of duty or dishonestly in assisting in the commission of such breaches.

17 Finally, if the court finds that the original loan is valid and enforceable, the claimant claims against Stone Street under the loan agreement dated 20 December 2007 for the $78 million plus interest.

The Issues

18 The issues for the court's determination are:

• • In relation to the findings of fact:

  • A. What were CIB's established lending procedure;

  • B. Whether a valuation and a signed stock purchase agreement existed in February 2007;

  • C. Whether Trotman conducted his own due diligence on Stone Street and HMB before the loan was made;

  • D. Whether there was Board approval of the loan;

  • E. The events of 14 February 2007;

  • F. Whether there was adequate security for the loan at the time of disbursement;

  • G. The events up to December 2007;

  • H. When was the instructions for the 2007 loan documentation given;

  • I. Whether the PwC valuation could have been used for the novation of the loan;

  • J. Whether the Board approved the transfer of the loan to FCL St. Kitts and the CLF shares as the substituted security for the loan;

  • K. Whether the CLF shares were transferred from FCL St. Kitts to FCL St. Lucia; and

  • L. Whether Monteil was obligated to disclose the transfer of FCL St. Lucia to Dalco.

• • In relation to the legal findings are whether:

  • M. Monteil and Trotman were in breach of their contractual, fiduciary and statutory duties consequent to the grant and disbursement of the loan;

  • N. CIB is estopped from contending that the grant and disbursement of the loan was not approved by CIB's Board;

  • O. Monteil and Trotman were in breach of their contractual, fiduciary and statutory duties consequent to the novation of the loan;

  • P. The 2007 loan agreements are rendered void or voidable;

  • Q. The allegations of the “secret deal” with Duprey were sufficiently pleaded;

  • R. Monteil and Trotman were in breach of their contractual, fiduciary and statutory duties in relation to the novation of the loan to FCL St. Lucia;

  • S. Monteil and Stone Street dishonestly assisted Trotman's breaches of duty;

  • T. The 2008 agreements in relation to the novation of the loan have been ratified; and

  • U. The novated loan documents ought to be rendered void.

The Evidence

19 Ms. Wendy Ho Sing the Executive Chairman of CLICO, and Ms. Yvette Peters the Project Manager of CIB and an agent of DIC, the court appointed liquidator of the claimant, gave evidence on behalf of the claimant. Both witnesses have no personal knowledge of either the circumstances and transactions concerning the loan granted in 2007 nor its transfer in 2008. However, by virtue of their responsibilities in managing the affairs of the claimant, their investigative functions and attempts to recover debts due and owing to the claimant, they have access to the documents and records of the claimant generally and for the...