The Attorney General of Trinidad and Tobago v CL Financial Ltd
| Jurisdiction | Trinidad & Tobago |
| Judge | C. Pemberton JA |
| Judgment Date | 01 December 2022 |
| Neutral Citation | TT 2022 CA 47 |
| Docket Number | CIVIL APPEAL NO P121 OF 2021 CLAIM NO CV2017-02536 |
| Court | Court of Appeal (Trinidad and Tobago) |
In the Matter of CL Financial Limited
and
In the Matter of the Companies Act, Chap 81:01
(In Compulsory Liquidation)
P. Moosai JA
C. Pemberton JA
CIVIL APPEAL NO P121 OF 2021 CLAIM NO CV2017-02536
IN THE COURT OF APPEAL
For the Appellant: Mrs D. Peake and Mr R Heffes-Doon instructed By Mr R Thomas
For the Respondent: Mr F Hosein leading Ms S Bridgemohansingh and Mr B Reid instructed by Ms K Richardson-Dumitriu
I have read the Judgment of Pemberton JA. I agree with it and I have nothing to add.
/s/MOOSAI JA
Delivered by C. Pemberton JA
The background to this application is important when assessing the merits of this appeal.
It is important to view this case within its special context as this will influence how the Liquidation Court is to approach its duties both generally and in distinguishing cases.
The CL Financial (CLF) Group at one time in our history, was the largest financial conglomerate, operating not only in Trinidad and Tobago but throughout the CARICOM region. According to the affidavit of David Holukoff, it was a privately owned operation and was not publicly traded, although some of the subsidiaries in the group were publicly traded on unidentified markets. 1 According to that affidavit, CLF, the parent company owned and/or controlled in excess of one hundred and forty (140) companies which operated in a wide variety of sectors, banking, insurance-life and general, energy, construction, retail and spirits. Sometime in 2009, the then Chairman of the Group wrote to the Governor of the Central Bank of Trinidad and Tobago telling of the woes and dire financial straits that the enterprise was facing. In other words, the conglomerate's future business
operations were more than gloomy. The GORTT determined that the picture and its effects could be catastrophic. The maladies striking the company posed a real danger and disruption to the financial system not only of Trinidad and Tobago, but also to CARICOM as a whole. The GORTT agreed to, as it were, bail out the conglomerate to the tune of TT$ 13, 196,459,663.35. 2The conundrum that CLF found itself necessitated the GORTT as creditor, to approach the Court for an order that CLF be wound up compulsorily and that a liquidator be appointed. By order of April 12 2018, of relevance to this appeal the court ordered inter alia that,
the remuneration of the Liquidators and their reasonable expenses or disbursements including legal costs or fees, may be drawn and paid on account of the total on a monthly basis from the assets of the Company including case and deposits on hand, on the basis of the reasonable time expended by the Liquidator and his staff or the staff of the professional services firm he is associated with…
CLF therefore found itself facing compulsory liquidation, necessitating that the joint liquidators, Grant Thornton (JLs) be appointed to call in and deal with what remained of CLF's assets and liabilities. That is, the JLs were tasked with selling off CFL's assets and converting them into cash to pay the company's secured and unsecured creditors in proportion to the company's confirmed indebtedness to each creditor. 3 At the time of JL's appointment there were twenty-eight (28) entities too be dealt with. The liquidation
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(i) the Joint Liquidator's (JL's) fees and expenses incurred in the sum of US$3,175,492.39 or (TT$21,571,119.80);
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(ii) Grant Thornton Trinidad and Tobago's charges incurred during the year 2019 – for the period 1 January to 31 December, in respect of payroll and tax services in the sum of TT$43,641.95;
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(iii) Grant Thornton Corporate Directors' fees and expenses incurred during the period 2 October 2018 to 31 December 2019 in the sum of US$312,738.33 or (TT$2,124,431.48);
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(iv) the JL's costs of the application be paid out of the assets of the Company as an expense of the liquidation;
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(v) Any further order as the court may deem just.
In response, the AGTT caused to be filed an affidavit in which it questioned the figures put forward and the bases upon which these figures lay. The JLs countered this by justifying the figures. The AGTT's resistance met with no success.
The Liquidation Judge through his Team Member, notified the parties by email of his decision on July 6 2021. We shall reproduce the email in full.
I refer to the captioned matter which is before (the liquidation judge) for Decision on Notice of Application filed 28 th July 2020.
Below is a very brief summary of his Lordship's decision.
“The issues which have arisen in this case can be separated into 3 main categories:
(1) Whether the JLs have provided sufficient details for the fees charged in their remuneration report, and the affidavits of David Holukoff filed on 19 December 2020 and 10 February 2020 to justify the fees being claimed. Subsidiary to this is whether the amounts claimed are reasonable in the circumstances.
(2) Whether the JL's were justified in appointed the Corporate Company Directors to the subsidiaries of the Company.
(3) Whether the JL's should be compensated for the retention of GT staff to perform administrative functions.
The Court has answered all the questions in favour of the JL's. With respect to the details provided, the Court is of the view that the remuneration report goes into sufficient detail as to the work done by the JL's and their staff. A proper reading of the authorities does not suggest that a line by line time sheet is required, but rather sufficient information so that the court can ascertain the work done and by whom. The remuneration report in the court's view provides this information.
The Court further accepts that this is a fairly complex liquidation which requires careful continuous attention and work.
With respect to Directors, the Court accepts that it was prudent to appoint Directors to all relevant subsidiaries in the circumstances of the liquidation.
With respect to the administrative staff, it is to be noted that the order dated 21 04 2018 contemplated the use of administrative staff and prescribed an hourly rate. The Court is of the view that the work done and amounts claimed are acceptable in the circumstances.
In the circumstances, there will be an order in terms of the draft order annexed to the NoA fled on the 29 07 2020.
The Court notes that the issue of the remuneration of the JLs has caused some friction between themselves and the major creditor GORTT. It is also noted that the time will soon come again for the JLOs to file their request for remuneration in respect for 2020. It is hoped that the JLs made good on their offer to discuss a quarterly plan with GORTT, to prevent future applications for approval of remuneration taking up time and resources both of which would be better placed in bringing the liquidation to an amicable and satisfactory end”.
Please be advised that full written reasons will be provided if further action is taken, but this may take a while and the perfected order will be emailed to the parties at a later date via the Registrar.
Regards,
On the said date, the Registrar issued the order in which, the liquidation judge granted an order approving the following fees, expenses and charges said to be incurred by the JLs and their Corporate Directors on the winding up of CLF totaling TTD 23,739,193.23. The order in terms of the draft supplied to the liquidation judge reads as follows:
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1. That the fees and expenses of the Joint Liquidators of the Company in the sum of US$3,175,492.39 and Grand Thornton Trinidad and Tobago charges in respect of payroll and tax services in the sum of TT$43,641.95 incurred during the period from 1 January 2019 to 31 December 2019 be approved.
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2. That the fees and expenses of the Grant Thornton Corporate Directors in the sum of US$312,738.34 incurred during the period from 2 October 2018 to 31 December 2019 be approved.
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3. The Joint Liquidators' costs of this application be paid out of the assets of the Company as an expense of the liquidation.
The appellant, the Attorney General of Trinidad and Tobago (AGTT), filed this appeal challenging the liquidation judge's order on several grounds. These grounds may be summarised to wit the liquidation judge's decision was unsupportable in that the evidence presented was bereft of the requisite details as a matter of both fact and law, to support the fees, disbursements and expenses claimed for the year 2019. Moreover, the JLs failed to satisfy the duty to account placed on liquidators so as to comply with the propriety requirement inherent in such duty. The AGTT asks this court for an order setting aside the liquidation judge's order and that the JLs provide further particulars and information to justify the amount claimed and to provide documentary evidence to vouch the legal expenses.
In terms of a specific power that the court is being asked to exercise, the AGTT asked the court to order that,
The JLs … submit to the High Court (i) on a quarterly basis or half yearly basis a detailed plan setting out their programme of work for the relevant quarter or half year with an estimate of the remuneration fees and expenses to be incurred and by whom to be approved by the Court; and (ii) a detailed report within 3 months of the relevant quarter or half year showing what sums were expended and why for the consideration of the Court'.
The matter came up for hearing as a Procedural Appeal on February 7 2022. At the hearing, the Panel had the benefit of fulsome submissions from both Counsel...
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