Monteil and Stone Street Capital Ltd v Central Bank of Trinidad and Tobago and Colonial Life Insurance Company (trinidad) Ltd

• Jurisdiction: Trinidad & Tobago
• Judge: Bereaux, J.A.
• Judgment Date: 27 May 2016
• Neutral Citation: TT 2016 CA 26
• Docket Number: Civil Appeal No. P 19 of 2015; H.C.C. No. CV 2011-2140
• Date: 27 May 2016
• Court: Court of Appeal (Trinidad and Tobago)

Court of Appeal

Archie C.J.; Bereaux, J.A.; Narine, J.A.

Civil Appeal No. P 19 of 2015; H.C.C. No. CV 2011-2140

Monteil and Stone Street Capital Limited

and

Central Bank of Trinidad and Tobago and Colonial Life Insurance Company (trinidad) Limited

Appearances:

M. Daly SC, Mr. Mootoo for the appellants.

M. Hylton QC, I. Benjamin, J. Singh for the respondents.

Civil Practice and Procedure - Procedural Appeal of the judge's decision to refuse the appellants' application for further and better particulars on the basis that the application was premature — Whether Rule 8.6 of the CPR had been complied with — Whether the reamended statement of case had provided a statement of the facts sufficient to make clear the general nature of the claimants' case.

I have read in draft, the judgment of Bereaux J.A. I agree with it and have nothing to add.

I. Archie

Chief Justice

I have read in draft, the judgment of Bereaux J.A. I agree with it and have nothing to add.

R. Narine

Justice of Appeal

Bereaux, J.A.

THE APPLICATION

1 This is a procedural appeal against the decision of Robin Mohammed J made on 28 January 2015 by which he refused the appellants' application for further and better particulars on the basis that the application was premature. The appellants are the 2nd and 5th defendants in the substantive claim brought by the respondents, who are the claimants in the substantive claim. It is convenient for the better management of this judgment to refer to the appellants as Monteil or Stone Street respectively or collectively as the two defendants.

2 The two defendants sought orders pursuant to Civil Proceedings Rules 1998 (as amended) (the CPR) or under the Court's inherent jurisdiction that they be provided with further and better particulars in respect of some thirty-nine paragraphs set out in the amended statement of case and the Reply.

3 They make the usual assertions about the need for the particulars. Among them are that it will allow them to know and understand the case made against them, prevent them from being taken by surprise such that they can properly prepare their case and ultimately lead to the saving of time and costs.

THE BACKGROUND

4 The substantive claim out of which the application arose was brought by the claimants, the Central Bank of Trinidad and Tobago (the Bank) and Colonial Life Insurance Company (Trinidad) Limited (Clico) against six persons, human and corporate. The other defendants Lawrence Duprey, CL Financial Limited (CLF), Dalco Capital Management Limited and Gita Sakal did not join in the application. Where it is necessary to collectively refer to the Bank and Clico, I shall call them the claimants. I shall refer to the other defendants as Duprey, CLF, Dalco and Sakal or, collectively, as the other defendants. Where it is necessary to refer collectively to all the defendants, I shall call them the defendants.

5 The claim arose out of the assumption of control of Clico by the Bank on 13th February 2009, pursuant to its statutory powers under the Central Bank Act, Chap. 79:02 as amended by the Central Bank Amendment Act 2009. The claimants allege mismanagement of Clico, including the misapplication and misappropriation of income and assets of the company, its policy holders and creditors over a period of two decades; as well as the mismanagement of mutual funds, by the first defendant.

6 Clico was incorporated in Trinidad and Tobago in 1936. Its primary business is life insurance. It was the first locally owned life insurance company astutely managed by its founder Cyril Duprey. By the time of his retirement in 1987 due to ill health, it had expanded its business into other Caribbean islands. Duprey is his relative. Duprey was appointed managing director of Clico in 1987. He soon expanded Clico's business into financial services such as annuities and mutual funds as well the alcohol and petrochemical industries. The claimants allege that the offer of high rates of interest to policy holders in respect of annuities and mutual funds was a distinctive feature of Clico products.

7 In June 1988, Colonial Trust and Finance Company Limited was incorporated, later name changed to Clico Investment Bank Limited (CIB). In 1991, Colonial Life Financial Company Limited was incorporated. In March 1994, its name was changed to CLF. The claimants contend that Duprey controlled CLF and that effective 31st December 1992, Clico and CIB were “almost entirely owned by subsidiaries of CLF and were controlled by Mr. Duprey”, that “over the years” the CLF group (including Clico) grew to include an intricate web of companies, including the Dalco and Stone Street, which were controlled by Duprey and the 2nd defendant.

8 The claimants allege that under Duprey, Clico's collective turnover, assets and liabilities grew rapidly. As Clico expanded so did debt due to it from CLF and CIB. They contend that soon after Duprey took over management of Clico, the company “started to develop regulatory compliance issues”. In order to remedy these issues and to grow the company into a conglomerate, Duprey set up CLF to become a parent or holding company. The total assets of Clico were transferred to CLF and CLF also took over various assets and liabilities of Clico.

9 Duprey also invested in other sectors such as the methanol industry, real estate developments in Florida, United States of America and the acquisition of various European drinks companies through subsidiaries within the Clico group.

10 The claimants contend that following the exercise of the Bank's powers, the President ordered a Commission of Enquiry into “the failure of CLF, Clico (Trinidad) Ltd., CIB …” in June 2011. The Commission brought to light evidence of the wrongful operation of Clico and the extent of wrongdoing in the Clico group of companies which, according to the Bank, would not otherwise have been discovered.

THE ISSUE AND SHORT ANSWER

11 The requests for further and better particulars are in respect of thirty nine paragraphs in the statement of case and the Reply. At the heart of the issue of the grant of particulars is whether Rule 8.6 of the CPR has been complied with, that is to say; whether the re-amended statement of case has provided a statement of the facts sufficient to make clear the general nature of the claimants' case.

12 The short answer to that question is yes it has. Robin Mohammed, J. was right to dismiss the application. The appeal must be dismissed.

A SAMPLE OF THE ALLEGATIONS

13 I find it necessary to refer to some of the allegations of which particulars are requested, if only to demonstrate the level of detail to which the claimants have resorted in setting out their case. It also gives a perspective to the allegations of wrongdoing in the context of the issues in this appeal while demonstrating that a balance had to be struck as to the amount of detail provided while ensuring that too much information did not render prolix the statement of case. Indeed the claimants have complained that the two defendants have been blowing hot and cold in their applications before the trial judge; on the one hand arguing that too much information had been put in the statement of case and the Reply with the result that the judge disallowed certain paragraphs of the proposed Reply, while they now complain that not enough particulars have been provided in the re-amended statement of case. Among the allegations made by the claimants against the defendants were that:

• (i) Duprey, Monteil and Sakal procured improper diversion and misappropriation of Clico's money (including policyholders' money) in order to fund CIB or CLF or other group entities, often in return for worthless or wholly inadequate purported consideration or security. They did so in circumstances where they knew or should have known that there was no or little prospect of return. They knew or ought to have known that CLF and CIB were each (a) highly dependent upon Clico not seeking repayment of principal and accumulated interest on existing indebtedness from them, as well as dependent upon Clico for further funding and (b) unable to pay its debts to Clico as they fell due.

• (ii) Duprey and Monteil procured that Clico fund other companies to make payments for their personal benefit.

• (iii) Duprey and Monteil procured Clico to fund unsuitable and high risk projects in the pursuit of Duprey's personal global ambitions contrary to the interests of Clico and its policyholders.

• (iv) Monteil procured payments to be made where there was no interest or return to Clico whatsoever and it was entirely in the interests of another.

• (v) Duprey and Monteil procured and permitted the sale of products such as EFPA's and the GAP product to be sold by Clico at rates of interest which far exceeded the market rate and also which far exceeded what any insurance company or other product provider could reasonably expect to generate from assets to meet its liabilities to policyholders and investors.

• (vi) Duprey and Monteil procured Clico to:

  • a. build up extremely high levels of debt owed by CLF and CIB in circumstances of continuing serious liquidity and solvency problems;

  • b. procure CIB to roll over debentures and other indebtedness to Clico (including interest thereon) upon maturity into other indebtedness without actually repaying same;

  • c. procure CLF to roll over debentures and other indebtedness to Clico (including interest thereon) upon maturity into other indebtedness without actually repaying same;

  • d. transfer assets or money in return for Certificates of Deposit from CIB in respect of non-performing fixed deposits (which totaled over TT4.238B as at 31.12.08) and/or CLF debentures (which totaled over TT$1.142B by 2008) and the CIB Bond (originally US$80M or approximately TT$500M) and other purported consideration;

  • e. keep reinvesting its fixed deposits in the same financial institution...