REPUBLIC OF TRINIDAD AND TOBAGO - …webopac.ttlawcourts.org/LibraryJud/Judgments/coa/2015/bereaux/CvA... · 1991, Colonial Life ... controlled CLF and that effective 31st December

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REPUBLIC OF TRINIDAD AND TOBAGO

IN THE COURT OF APPEAL

Civil Appeal No. P 19 of 2015

H.C.C. No. CV2011-02140

Between

LOUIS ANDRE MONTEIL

STONE STREET CAPITAL LIMITED

Appellants

And

CENTRAL BANK OF TRINIDAD AND TOBAGO

COLONIAL LIFE INSURANCE COMPANY (TRINIDAD) LIMITED

Respondents

PANEL: I. ARCHIE, C.J.

N. BEREAUX, J.A.

R. NARINE, J.A.

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

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

respondents

DATE DELIVERED: 27 May 2016

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

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nothing to add.

R. Narine

Justice of Appeal

JUDGMENT

Delivered by 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

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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

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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

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[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.

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(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

instead of obtaining a return of its principal/capital and investing in

other financial institutions to reduce its exposure to the risk of any

one counterparty;

f. agree to the issue of further fixed deposits in substitution for interest

or other return on existing fixed deposits;

g. convert Investment Note Certificates (which were purportedly

secured) into fixed deposits (which were unsecured);

h. fail to seek to obtain or to obtain the return of its capital.

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(vii) Duprey and Monteil procured the manipulation of assets in the statutory

fund otherwise than in the interests of Clico and Clico policyholders

including with a view to concealment of the extent of the inter-company

indebtedness. Thus in relation to Clico’s 2001 statutory fund obligations

they procured:

a. CLF to borrow US$80M from International Bank of Miami (IBoM)

b. CLF to use the loan to pay down its intercompany debt with Clico

c. Clico to use the money received from CLF to purchase a bond from

CIB, which it then used as a purportedly qualifying asset for the

Statutory Fund

d. CIB to use the money received from Clico (effectively through CLF)

to make a fixed deposit at IBoM as security for the loan to CLF.

(viii) Monteil knowingly received payments and other assets subject to

constructive trusts in favour of Clico, its policyholders, mutual fund

investors and trustees, including deemed trustees.

(ix) Stone Street knowingly received payments and assets from Clico from

time to time which were misappropriated by Monteil and/or Duprey and

were received in breach of trust.

(x) Further Stone Street, by Monteil, dishonestly assisted in the following:

a. breaches of fiduciary duties owed to Clico by Duprey and Monteil

and other directors;

b. breaches of trust by Duprey and/or Monteil and other directors.

(xi) Monteil knowingly received from Clico (purportedly via CLF) the sum of

US$3.5M in consultancy fees arising from the 2004 acquisition of a

further 10% RBL shareholding by CIB to which he was not entitled, in

breach of the directors benefit prohibition and/or the pecuniary interest

prohibition and his fiduciary duties, in particular the no self-dealing duty.

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(xii) In breach of their statutory duties in s99 of the Companies Act 1995 and

their common law duties, Duprey and/or Monteil wrongfully caused or

procured Clico to enter into guarantees to unit-holders and arrangements

with CLF when this was contrary to Clico’s interests and when it exposed

Clico to substantial financial risk.

(xiii) Duprey, Monteil, CLF, Dalco and/or Stone Street received payments or

money from mutual fund accounts or out of moneys designated for the

mutual funds from Clico. They thereby knowingly received trust property

to which they were not entitled and are obliged to account for same.

[14] The two defendants have mounted a robust defence. They plead, inter

alia, that the claims are all statue barred by virtue of section 3(1) of the Limitation

of Certain Actions Act Chap 7:09 (see paragraph 6 of the amended defence).

[15] They also plead specific Limitation Acts in respect of certain breaches of

trusts by Monteil alleged by the claimants. In answer to paragraphs 186, 187 and

188 of the re-amended statement of case, the two defendants at paragraphs 179

and 180:

(a) deny, inter alia, that they are trustees of the monies or assets of Clico,

(b) say that any breaches of trusts are statute barred by section 6 of the

Trustee Ordinance Chap 8:03 and section 3(1) of the Limitation of Certain

Actions Act Chap 7:09.

[16] In response to the two defendants’ plea in their defence that the claims

were statute barred, the claimants contended in their Reply that:

(1) the defendants wrongdoing and fraud in the management of Clico’s

affairs as set out in the re-amended statement of case could not have been

discovered with reasonable diligence and without specially commissioned

forensic and accounting investigations and/or the Commission of Enquiry

into the affairs of Clico

(2) the defendants concealed the facts relevant to the rights of action and/or

withheld relevant information with the intention of concealing the facts in

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question

(3) at all material times the defendants knew they were in breach of duty,

and/or intended to commit the breaches of duty and concealment set out

in the re-amended statement of case and/or failed to disclose all of the

material facts relevant to those breaches to Clico’s board of directors

and/or shareholders and/or to the Central Bank (and its predecessor

regulator the Supervisor of Insurance) in circumstances such that the

claimants or either of them were unlikely to discover for some time that

the breaches of duties had been committed.

The judge’s decision

[17] Robin Mohammed J held that further and better particulars at this stage of

the proceedings were not necessary or proportionate and to order them now would

be premature, because, it would not be in keeping with the overriding objective of

dealing with the matter justly. He found that the disclosure process may well

provide the defendants with the information they seek and because no trial date

had been set, that a failure to provide the particulars now would not prevent the

defendants from knowing the details they would have to meet at trial. The judge

found that in any application for further and better particulars or for requests for

further information, the tests to be satisfied are necessity and proportionality.

Requiring the defendants to await the disclosure process and the filing and service

of witness statements were far more proportionate, likely to save costs and

prevent delay than to put the claimants through a rigorous process of providing

the quite extensive particulars sought.

[18] He also found that provision of the witness statements may well cause the

defendants to seek further information under Part 35 with a view to deciding

whether to pursue the preliminary question as a point in limine.

The defendants’ submissions

[19] The two defendants have challenged the judge’s findings on multiple

grounds. They contend that the judge was plainly wrong in finding that the

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claimants did not lack the necessary details of the ingredients of the claim. They

say that the most significant error of the judge was his failure to consider that the

true nature of the case before him was one which was built on allegations of

corporate fraud, dishonesty and “a variety of egregious equitable wrongs”. The

nature of such allegations required that there be great particularity in the

pleadings. His failure was indicated by his non consideration of the decision of

Three Rivers DC & Ors. v. Governor and Company of the Bank of England

(No. 3) (HLE) [2003] 2AC 1 and the dicta of Lord Hope and Lord Millett.

[20] The defendants made a number of additional submissions as to why the

judge was plainly wrong:

(i) On the limitation question they allege that by deferring it until after

discovery and after service of witness statements, the defendants have been

burdened with having to address allegations of wrongdoing in respect of

complex transactions requiring substantial time and resources, which may

ultimately turn out to be statute barred.

(ii) He wrongly limited the factors required for consideration to necessity and

proportionality on the basis of Lexi Holdings v. Pannone & Partners

[2010] EWHC 1416 Ch which turned on requests for information rather

than further and better particulars and by so limiting himself did not

properly consider factors such as the complexity of the issues, fairness,

equality of footing for each party the value of the claim, the allotment of the

Court’s resources and the relative financial position of the parties.

(iii) He failed to give sufficient weight to the true nature of the case before him

and the practical considerations to be taken into account. In this regard the

enormity of the transactions impugned had rendered this case

distinguishable from the vast majority of civil actions to which Lord Woolf

would have referred in Mc Philemy v. Times Newspapers Ltd. [1999] 3

ALL ER 775 at 779. This was because the massive number of documents

which are to be disclosed in this case are such that the appellants will not

immediately appreciate the case they will have to meet or will be time

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consuming. Secondly, trial dates are fixed before witness statements are

filed and witness statements are usually filed within a few months of trial.

The defendants will only likely discover the details of the claimants’ case

upon exchange of witness statements and while supplemental witness

statements may be filed in answer, they will only have a short time to do so

before trial. This is manifestly unfair especially when those details can be

readily disclosed now.

The Civil Proceedings Rules

[21] I shall first examine the re-amended statement of case and whether it

complies with Rule 8.6 of the CPR. Then I shall consider the specific

submissions Mr. Daly made on behalf of the two defendants. Because of its

importance, I shall then look specifically at the concealment issue and the

requests for particulars thereof.

[22] Rule 8.6 of the CPR provides that the claimant must include a short

statement of all relevant facts on which he relies in the claim form or statement of

case. Under Rule 29.4 the Court may order the service of witness statements as

evidence in the proceedings. The provision of witness statements prior to trial was

a radical change from the old Rules of the Supreme Court of Trinidad and

Tobago, 1975. It allows the parties to know well in advance of the trial the case of

the opposing party. Unlike the old rules there is also no express provision for the

ordering of particulars.

[23] Consequently, as Lord Woolf MR noted in Mc Philemy v. Times

Newspapers Ltd. [1999] 3 ALL ER 775 at 792 J, “the need for extensive

pleadings including particulars should be reduced by the requirement that witness

statements are now exchanged”. Indeed, it is no doubt because of this that there

is no express provision in the CPR for the provision of particulars. But as Lord

Mance noted in Real Time Systems Ltd. v. Renraw Investments Ltd. & Ors.

[2014] UKPC 6, rule 26.1(1)(w) of the CPR enables the court, “of its own

initiative”, and for the purpose of managing the case and furthering the overriding

objective to “order the claimant to supply further details to the defendants”. Rule

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26.1(1)(w) is of course one of several general powers of management which the

Court in its discretion can exercise under the CPR. It empowers the court to:

“take any other step, give any other direction or make any other

order for the purpose of managing the case and furthering the

overriding objective.”

The judge chose not to order further particulars. The question is whether he was

plainly wrong to have done so.

[24] The purport of Rule 8.6 was examined by Lord Dyson in Bernard v.

Seebalack [2010] UKPC 15 in which the dictum of Lord Woolf in Mc Philemy

(supra) was approved by Lord Dyson at paragraph 15 of his judgment. In Mc

Philemy, Lord Woolf noted that “in the majority of proceedings, identification of

the documents upon which a party relies, together with copies of that party's

witness statements, will make the detail of the nature of the case the other side has

to meet obvious. This reduces the need for particulars in order to avoid being

taken by surprise”. Lord Woolf noted however that pleadings were still required

to mark out the parameters of the case which was being advanced by each party

particularly with regard to the identification of the issues and the extent of the

dispute between the parties. He added however that “what is important is that the

pleadings should make clear the general nature of the case of the pleader”.

[25] Having approved those comments (at paragraph 15 of his judgment) Lord

Dyson then added at paragraph 16:

“But a detailed witness statement or a list of documents cannot be

used as substitute for a short statement of all the facts relied on by

the claimant. The statement must be as short as the nature of the

claim reasonably allows”.

[26] Mr. Daly submitted that, consistent with the decision in Three Rivers DC,

the allegations of fraud and wrongdoing require great particularity. I agree. Mr.

Daly relied on Three Rivers DC to support his contention that allegations of

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fraud and dishonesty require particularization. His reliance on Three Rivers DC

was well founded. Three Rivers DC was a decision on the new Civil Procedure

Rules introduced in England in 1999. In that case although the decision of the

House of Lords was divided by a majority of three to two on the outcome of the

appeal, all of the law lords were at one that allegations of fraud and dishonesty

required particularization. The difference of opinion centred on whether the

particulars pleaded were consistent with fraud or negligence. The minority was of

the view that particulars were consistent with negligence and accordingly the

claim should have been struck out.

[27] As to the necessity to provide particulars of allegations of fraud and

dishonesty the dictum of Lord Hope of Craighead at paragraph 51 page 248 is

instructive. After approving Lord Woolf’s dictum in Mc Philemy (to which I

have referred at paragraphs 23 and 24) he said:

“On the other hand it is clear that as a general rule, the more

serious the allegation of misconduct, the greater is the need for

particulars to be given which explain the basis for the allegation.

This is especially so where the allegation that is being made is of

bad faith or dishonesty. The point is well established by authority

in the case of fraud.”

Later, at paragraph 53 he adverted to the argument of the Bank of England (which

was seeking to strike out the action for lack of particulars) in these terms:

“The Bank says that, as an allegation of misfeasance in public

office involves an allegation of dishonesty or bad faith on the part

of the public officer, particulars must be given of the facts which,

if proved, would justify the allegation. It is also said that it is not

enough to aver facts which are consistent either with dishonesty or

with negligence. Dishonesty or bad faith must be proved, so the

facts relied on must point distinctly to dishonesty. Reference was

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made to Davy v Garrett (1878) 7 Ch D 473, 489 where Thesiger LJ

said:

‘It may not be necessary in all cases to use the word 'fraud'—

indeed in one of the most ordinary cases it is not necessary. An

allegation that the defendant made to the plaintiff representations

on which he intended the plaintiff to act, which representations

were untrue, and known to the defendant to be untrue, is

sufficient. The word 'fraud' is not used, but two expressions are

used pointing at the state of mind of the defendant—that he

intended the representations to be acted upon, and that he knew

them to be untrue. It appears to me that a plaintiff is bound to

show distinctly that he means to allege fraud. In the present case

facts are alleged from which fraud might be inferred, but they are

consistent with innocence. They were innocent acts in themselves,

and it is not to be presumed that they were done with a fraudulent

intention.’ ”

At paragraph 55, he then concluded as follows:

“…The principle to which those remarks were directed is a rule of

pleading. As the Earl of Halsbury LC said in Bullivant v Attorney

General for Victoria [1901] AC 196, 202, where it is intended that

there be an allegation that a fraud has been committed, you must

allege it and you must prove it. We are concerned at this stage with

what must be alleged. A party is not entitled to a finding of fraud if

the pleader does not allege fraud directly and the facts on which he

relies are equivocal. So too with dishonesty. If there is no specific

allegation of dishonesty, it is not open to the court to make a

finding to that effect if the facts pleaded are consistent with

conduct which is not dishonest such as negligence. As Millett LJ

said in Armitage v Nurse [1998] Ch 241, 256G, it is not necessary

to use the word "fraud" or "dishonesty" if the facts which make

the conduct fraudulent are pleaded. But this will not do if

language used is equivocal: Belmont Finance Corpn Ltd v

Williams Furniture Ltd [1979] Ch 250, 268 per Buckley LJ. In that

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case it was unclear from the pleadings whether dishonesty was

being alleged. As the facts referred to might have inferred

dishonesty but were consistent with innocence, it was not to be

presumed that the defendant had been dishonest. Of course, the

allegation of fraud, dishonesty or bad faith must be supported by

particulars. The other party is entitled to notice of the particulars

on which the allegation is based. If they are not capable of

supporting the allegation, the allegation itself may be struck out.”

See also Lord Hutton at paragraphs 122 to 125 and 129, Lord Hobhouse at

paragraph 161 C and Lord Millett at paragraphs 184, 185, 186 and 189.

[28] As I have stated earlier the decision in Three Rivers DC was a decision

under the new CPR in England. So it is clear that particulars of fraud and

dishonesty are still required to be pleaded under the new English CPR.

[29] It is the same for Trinidad and Tobago. While Lord Woolf stated that the

provision of documents and of a party’s witness statement reduces the need for

particulars, it does not eliminate it. Lord Dyson in Real Time Systems endorsed

that approach but emphasized the particulars be as short as the nature of the claim

reasonably allows. It follows that although allegations of fraud and dishonesty

require greater particularity, Part 8.6 still applies. It will still be sufficient if the

statement of case makes clear the nature of the fraud or dishonesty alleged to

allow the accused party to plead its defence. Particularity does not mean

verbosity. As Lord Hope stated in Three Rivers DC at paragraph 49 “a balance

must be struck between the need for fair notice to be given on the one hand and

excessive detail on the other”. In my judgment the claimants have struck an

appropriate balance in this case. The long and laborious pleading of particulars is

no longer necessary to convey to the defendants what his wrongdoing is alleged to

be. That detail will generally be found in the documents and in the witness

statements which the defendant will have at least forty two (42) days before trial.

(The judge can extend the period as the circumstances of the case require.) The

caveat remains however that the details in the statement of case though concise

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must make clear the nature of the case of the pleader. If it has not done so then as

Real Time Systems demonstrates, particulars can be ordered by the judge of his

or her own initiative or by application of the defendant.

The re-amended statement of case

[30] The question therefore is whether the re-amended statement of case has

provided a sufficient statement of the facts of each claim to make clear the nature

of the case against the defendants given that much of the allegations are about

fraud and wrongdoing.

[31] I consider that it has. At the heart of the claimants’ case is that the

defendants mismanaged Clico, misapplied and misappropriated its income and its

assets, and concealed their misdeeds from the Bank’s regulators. The extent of

this mismanagement and misappropriation was only discovered when the Bank

took over Clico’s operations and the Commission of Enquiry started hearing

evidence. The claimants have set out a detailed case with sufficient particulars of

the unfavourable transactions and the breaches of duty by the defendants which

caused the Bank’s intervention. The sample of the pleading to which I have

referred at paragraph 13 accuses Duprey and Monteil of dishonesty and of being

knowingly in breach of trust (among other things). It can hardly be described as

“equivocal”. It is the same for the entire pleading.

[32] The re-amended statement of case is a quite massive document in so far as

statements of case normally go, consisting of one hundred and sixty-seven pages.

It sets out multiple causes of action against the defendants alleging breaches of

duties of care to Clico and its policy holders. The claimants allege that the manner

of Clico’s operation was deficient and egregious. They contend that interests of

policyholders and investors were subordinated and that monies invested by them

were improperly disbursed. Clico became improperly exposed to liabilities. Its

insurance business was imprudently conducted and was not in accordance with

the Central Bank Act and regulatory requirements. It accuses Duprey, Monteil

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and Sakal of misappropriation of funds or facilitating it. Generally, there was no

proper governance of Clico (by extension CLF and CIB).

[33] Because of the size of the document, (167 pages) it has been arranged

alphabetically into sections with a table of contents and a definition section

explaining the use of abbreviated terms. The various duties of care allegedly

owed by the defendants to Clico and others are clearly set out in section E.

Specifically the claimants allege four general duties of care at common law which

are spelt out.

[34] The breaches of duty allegedly committed by the appellants are set out in

sections N and O. The allegations against the defendants are unambiguous. The

claimants complain generally of breaches in respect of all the defendants and

specific breaches of duties in relation to the seven arrangements or transactions.

Sections F, G, H, I and J set out the supporting facts. Section P sets out the

consequences of the various breaches of duty and particularises the loss.

[35] The factual background against which these breaches were committed are

set out in fair detail at sections F, G, H, I, J, K, L, M. Sections J, K and L are

particularly instructive. They respectively set out what was the actual position of

Clico, CLF and CIB, how egregiously operated they were and how adversely a

series of payments, transactions and arrangements affected Clico’s operations. In

this regard specific allegations are made with respect to seven matters:

(1) Payments made to Mr. Duprey, Mr. Monteil, Dalco and Stone Street.

(2) Transactions involving Republic Bank Limited.

(3) Transactions involving certain European drinks companies and a Jamaican

company acquired by various companies within the CLF group.

(4) Transactions with companies involved in the methanol industry in which

CLF group had ownership or control.

(5) Transactions in respect of four real estate developments in Florida.

(6) The sale of 7 million Home Mortgage Bank HMB shares between CIB and

the 2nd defendant among others.

(7) Mutual funds.

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Each section which addresses these seven matters sets out in some detail the

various facts and allegations made.

[36] The judge considered as a factor against the grant of particulars the filing

and service of a defence by the two defendants. This was the subject of criticism

by Mr. Daly. But I consider that the judge was right to do so. The fact that the

two defendants have all been able to plead a defence must reflect that they

understand the general thrust of the claimant’s case. They plead two limitation

defences.

[37] They also reserved their position in respect of several transactions

contending that they are unable to fully plead to the details of those transactions

until after discovery and at the appropriate time they will seek permission to re-

amend their defence, because:

(i) The claimants have failed to provide all of the documents referred to

in the statement of case;

(ii) Monteil since May 2005, has ceased to be an employee and director

of Clico, since March 2008 has ceased to be an employee and

director of CLF and since April 2008 resigned as a director of CIB.

The several transactions referred to by the claimants to support the

causes of action involve substantial documentation. Upon his

cessation of service, Monteil has only a few copies of documents

relating to Clico, CLF and CIB;

(iii) Owing to the passage of time, Monteil is unable to immediately

recall some of the details of certain of the transactions and requires

sight of the documentation to refresh his memory and to plead to the

claimants’ allegations.

[38] Having reserved their positions on the full thrust of their defences (I note

that the reservation is contingent upon the provision of discovery and not upon the

absence of particulars) the two defendants proceeded to plead their defence and

have made substantial responses to the allegations of the claimants.

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[39] Oddly enough, even though the two defendants have complained about an

absence of particulars in certain paragraphs e.g. 102, 104, 105 and 110, those

paragraphs are not the subject of requests for further and better particulars, neither

has the absence of particulars prevented them from responding to many of the

paragraphs of which particulars are sought, nor has it prevented them from

pleading to specific allegations made by the claimants. In short, the two

defendants appear to have a more than solid grasp of the case of the claimants.

[40] In my judgment such details as are not clear can be corrected during the

discovery process and the exchange of witness statements. If that is not sufficient

the two defendants can apply for information under Part 35 of the CPR. See in

this regard the dictum of Lord Mance in Real Time Systems paragraph 13:

“It is clear from the location of Part 35 and the wording of rule

35.3 that its focus is on information which one party is likely to

want at a relatively late stage of the proceedings, after the time for

serving witness statements, though not less than 42 days before

trial. Its subject matter is “information about any matter which is

in dispute in the proceedings”. While it is capable of being used to

elicit more about the matters pleaded, the normal expectation is

that, by the time of exchange of witness statements, the pleadings

would have been settled and the issues would be being explored in

greater depth at the evidential level”.

[41] In Mc Philemy Lord Woolf spoke of the vast majority of cases in which

the statement of case together with the witness statements and the relevant

documents would be sufficient to inform the defendants of what is being claimed.

Mr. Hylton submitted that that represented the general rule and while there will be

exceptions, this case, unlike Real Time Systems, was not. I agree.

[42] The decision in Real Time Systems was very much an exception. That

was a case in which the defendant sought to have the substantive claim struck out

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for lack of particulars. The claimants on the other hand sought summary

judgment, seeking repayment of sums, purportedly advanced by way of loan,

totaling just over one million five hundred thousand dollars ($1,500,000.00). In

neither the pre-action protocol letter, the claim form nor statement of case were

details provided of particulars of the loan (for instance, whether it was oral or

written). No details were provided by the claimant in the supporting affidavit in

its application for summary judgment. It was plain that an order for particulars

was necessary. There are no similar exceptional circumstances here. The

claimants have provided sufficient particulars in the re-amended statement of case

to allow the defendants to know the nature of the case made against them.

[43] The claimants have set out in quite fair detail what the allegations against

the defendants are. A table of contents is provided to allow the defendants (and

indeed anyone who reads it) to follow the allegations with some alacrity. It is

difficult to see what more can be stated without falling into prolixity. Rule 8.6

requires concision. The intention of the rule is efficiency of expression.

Sufficient detail is to be provided. Excessive verbage is to be eschewed. The

particulars provided are sufficiently clear and detailed to enable the defendants to

prepare a defence and the defendants have done so.

[44] I turn then to the specific submissions of the two defendants in respect of

their challenge to the judge’s findings. I have already summarized the

submissions it is not necessary to repeat them.

(i) The Limitation point

[45] Mr. Daly relied on the decision in Civil Appeal No. 171 of 2012,

Kenneth Julien & Ors. v. Evolving Tecknologies v. Enterprise Development

Company Ltd. to the effect that the limitation defence should as far as possible

be permitted to be pursued as it may liberate a defendant from the oppression of

defending a stale claim.

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[46] I do not agree with Mr. Daly that the deferral has left the defendants

unfairly burdened with the continued preparation of a complex case. The fact that

the particulars may have been deferred until after discovery does not prejudice the

two defendants. The trial date has not been set. The information which may be

revealed at discovery will still permit them to prepare and pursue their defence of

limitation as a point in limine, if necessary.

[47] It is a question of case management by the judge. No trial date need be set

until all the issues are sorted and ready for argument.

(ii) Three Rivers DC

[48] Mr. Daly is quite right that the claimants alleged fraud and serious

wrongdoing. The re-amended statement of case is quite clear. He is also right that

the Three Rivers DC principle applies i.e. that when such allegations are made

that greater particularity is required. The difficulty the two defendants face in this

case is that the pleadings are sufficient to satisfy Rule 8.6 and the Three Rivers

DC principle.

(iii) Necessity and proportionality

[49] Mr. Daly is also right that the judge’s application of the test of necessity

and proportionality to a request for further and better particulars was

inappropriate. But it did not infect the judge’s conclusion. The decision in Lexi

Holdings which the judge followed and applied, is a decision on the English

equivalent of Part 35 of the CPR. The test of necessity and proportionality applied

by Briggs J. in Lexi Holdings is an application of paragraph 1.2 of the Practice

Direction to Part 18 of the English rules. Paragraph 1.2 states that “a Request

should be concise and strictly confined to matters which are reasonably necessary

and proportionate to enable the first party to prepare his case or to understand

the case he has to meet”. There is no similar provision in Part 35 of the CPR.

That is a significant difference. See Jamadar JA in Real Time Systems v.

Renraw Investments, Civil Appeal No. 238 of 2011 paragraph 26.

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[50] An order for particulars under the CPR derives from Rule 26.1(1)(w)

which directs the court to “give any direction or make any other order for the

purpose of managing the case and furthering the overriding objective”. A

direction for the giving of particulars per Rule 26.1(1)(w) turns on whether the

statement of case complied with Rule 8.6 by providing details sufficient to allow

the defendant to know the case he has to meet and file his defence. The question

is as Lord Woolf stated in Mc Philemy; that is to say, whether the pleadings

“have made clear the general nature of the case of the pleader”. In Real Time

Systems the statement of case did not comply with Rule 8.6. I cannot say the

same here. The judge however found, correctly, that the statement of case made

clear the general nature of the claimants’ case. While he found the application to

be premature, I consider that it has no merit whatever. At best the defendants

may seek information under Part 35 after witness statements are served.

[51] In his oral submissions Mr. Daly criticized what he described as the

“broad brush” approach of the judge in considering the requests for particulars.

He submitted that the judge ought to have considered and discussed individually

the merits of each request rather than to have spoken in general terms.

[52] I do not consider that, in this case, the judge can be faulted. Certainly

where possible, a judge should engage and analyze each request giving his

assessment of the merits of the request in relation to the pleadings. But a failure

to do so is not fatal if the judgment properly conveys the reasons why the requests

should succeed or fail. In most cases, a seriatim engagement of the individual

requests would be required but it is not an absolute necessity in every case.

[53] The judge took the view that none of the requests should be granted. He

could only have done so after having considered each of the requests for

particulars. The requests were numerous, a total of thirty nine requests with two to

four paragraphs requesting that the facts and circumstances of the allegations be

set out. He concluded that discovery and the provision of witness statements may

well provide the answers sought to all the requests. That was a sufficient

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explanation to convey to the two defendants his reasons for refusing the requests.

It was not then necessary for him to engage and analyze each request. That would

have been a less than efficient use of judicial time.

True nature of the case/practical consideration

[54] In his written submissions Mr. Daly argued that the obtaining of

information after service of witness statements gives the two defendants little time

to prepare for trial and that this sets them apart from the vast majority of cases. I

agree that this is not the ordinary case but it is a question of case management.

The judge in his discretion can set a longer window for the trial to allow the

defendants sufficient time to digest the contents of the witness statements and

other documents supplied to them or he may set no trial date at all until after he is

satisfied, through various case management conferences, that sufficient trial

preparation has been done.

[55] Mr. Daly also submitted that the judge by limiting the factors required for

consideration to necessity and proportionality, failed to consider such factors as

the complexity of the issues, fairness, placing the parties on an equal footing, the

value of the claim and the efficient use of the court’s resources. These are all

considerations of the overriding objective, as set out in Rule 1.1(2) of the CPR,

allowing for the just disposal of cases. While the judge did not especially mention

these factors he clearly had the overriding objective in his mind in coming to his

decision. It is not always necessary to spell out these considerations.

The concealment issue – the requests for particulars

[56] I turn specifically to the requests for particulars in the Reply. The

particulars sought are in respect of paragraph 2(a), 2(c) and 2(e) of the Reply. In

my judgment the defendants are not entitled to any particulars in respect of the

allegation of concealment raised in the Reply.

Paragraph 2(a)

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[57] In regard to paragraph 2(a) the claimants say that the “wrongdoing and

fraud in the management of Clico’s affairs.. would not have been discovered with

reasonable diligence and without specially commissioned forensic and accounting

investigations and the Commission of Enquiry into Clico’s affairs”. The two

defendants seek further and better particulars of “the specially commissioned

forensic and accounting investigations and the Commission of Inquiry, the period

during which they were conducted, by whom they were conducted, whether the

findings were conveyed orally or in writing and if in writing”, that the claimants

“identify the relevant document or documents containing such findings”.

[58] There are sufficient particulars set out in the re-amended statement of case

to allow the defendants to prepare their case. Mr. Hylton is right that enough has

been pleaded in the re-amended statement of case and that what the two

defendants now seek is evidence. Paragraph 1(3) of the re-amended statement of

case states clearly that one of the bases upon which the claims arose is the Bank’s

assumption of control of the affairs of Clico. Paragraph 40 then provides that

those powers were exercised on 13th February 2009 and that it led to

investigations into Clico, CIB and CLF, Duprey, Monteil and Sakal, inter alia,

and “consequent discovery of the extent of wrongdoing alleged herein which

would not otherwise have been discovered”.

[59] Paragraph 1C of the re-amended statement of case states that the

Commission of Enquiry is ongoing, that the first evidence hearing took place in

June 2011 and that “amongst other things, it brought to light evidence of the

wrongful operation of Clico …” and “significant evidence continues to emerge

therefrom”.

[60] From the re-amended statement of case therefore one can conclude that, at

latest, the relevant period of discovery of the wrongdoing and the issue of

discoverability of the wrongdoing could encompass the period 13th February 2009

to the period of filing of these proceedings.

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[61] The defendants ask that the claimants “state the specially commissioned

forensic and accounting investigations, the period during which they were

conducted, whether the findings were oral or written and if written to identify the

relevant documents in which they are ...” That is evidence which can come

through the discovery process and from the witness statements. The essential facts

upon which the claimants rely to refute the limitation point are set out in the

statement of case.

Paragraph 2(c)

[62] It is the same for paragraph 2(c). In regard to paragraph 2(c) the two

defendants seek information as to the facts and matters which show concealment,

withholding of information, when the concealment was discovered and the facts

by which the claimants could not have discovered them. In my judgment the

requests relate to evidence and documents which can be provided at discovery and

by witness statements. Paragraph 2(c) states, inter alia, that the defendants

“concealed the facts relevant to the rights of action and withheld relevant

information with the intention of concealing the facts in question”, that plea in the

Reply relates to the pleading in paragraphs 6, 33A, 179(c) and 180(b) of the

amended defence.

[63] Paragraph 6 of the amended defence pleaded that all the causes of action

are barred by virtue of section 3(1) of the Limitation of Certain Actions Act.

Section 33A, responds to paragraph 40 of the re-amended statement of case and

states that the two defendants were unaware of the investigations of the Bank.

They deny any wrongdoing by Monteil. Additionally, the two defendants assert

that the conduct of Monteil concerning Clico was at all material times, well

known to Clico and CLF. Further details of such knowledge are provided by the

two defendants at paragraph 12 and 13 of the amended defence. Paragraph 179(c)

pleads a limitation defence under the Trustee Ordinance Chap 8:03 (section 6) and

paragraph 180(b) pleads a limitation defence under the Limitation of Certain

Actions Act Chap 7:09 (section 3).

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[64] The limitation defences are pleaded in answer to the claimants’

allegations, in paragraphs 186, 187 and 188 of the re-amended statement of case,

of breach of trust by Monteil in respect of moneys diverted out of Clico, or

misappropriated by Monteil, or knowingly received by or for Monteil’s benefit.

[65] The claimants’ contentions as to breach of trust are fully set out at

paragraph 183 of the re-amended statement of case under the rubric “N2:

Monteil” and deal specifically with Monteil’s breaches of his duties as a director

of Clico under the Companies Act Chap 81:01 and under the common law. At

paragraph 183(10), 183(11) and 183(12), the claimants contend that Monteil:

(i) failed to make full and proper disclosure to Clico’s members in general

meeting or its board of directors (other than himself and Duprey) of matters

affecting Clico including its assets and liabilities as necessary and

appropriate – paragraph 183(10)

(ii) failed to obtain the consent of Clico’s members in general meeting or its

board of directors (other than himself) to payments or transactions as

appropriate paragraph 183(11)

(iii) failed to report the true position of Clico to the Supervisor of Insurance or to

the Bank; to wit “that it was insolvent on a statutory fund basis and was

periodically insolvent on an economic basis”

[66] These contentions all involve elements of concealment and all of them are

covered by paragraphs 1(3), 1C and 40 of the re-amended statement of case which

allege that these were wrong doings which were discovered only after the

assumption of control by the Bank on 13th February 2009 and the commencement

of the hearings of the Commission of Enquiry in June 2011. Facts and matters

which show concealment, withholding of information and when the concealment

was discovered go to proof and will be a question of evidence.

Paragraph 2(e)

[67] My conclusion is the same in respect of paragraph 2(e). Paragraph 2(e)

states:

Page 27 of 28

“at all material times these defendants knew they were in breach of

duty, and/or intended to commit the breaches of duty and concealment

set out in the re-amended statement of case and/or failed to disclose

all of the material facts relevant to those breaches to Clico’s board of

directors and/or shareholders and/or to the Central Bank (and its

predecessor regulator the Supervisor of Insurance) in circumstances

such that the claimants or either of them were unlikely to discover for

some time that the breaches of duty had been committed”.

The two defendants seek:

(i) particulars of the facts, documents or overt acts upon which the

claimants intend to rely in support of the allegation that they or either

of them knew that they were in breach of duty,

(ii) material facts relevant to the breaches of duty which they or either of

them failed to disclose,

(iii) the particulars of the circumstances which made it unlikely that the

claimants or either of them would have discovered the alleged

breaches of duty that had been committed.

[68] But, in my judgment paragraphs 1(3), 1C and section 40 as well as in

paragraphs 183(10), 183(11) and 183(12) of the re-amended statement of case set

out the relevant facts for the purposes of Rule 8.6 of the CPR. These are sufficient

to disclose the nature of the case to the two defendants.

[69] Mr. Daly indicated that he was no longer pursuing the question of inherent

jurisdiction so we have not addressed it.

[70] In closing, we wish to apologize for the delay in delivering this judgment.

We deeply regret it. The reason for the delay has already been intimated to the

attorneys-at-law.

[71] In the result the appeal is dismissed. We will hear the parties on costs.

Page 28 of 28

Nolan P.G. Bereaux

Justice of Appeal