Justice Kevin Ramcharan. – Judiciary of TT
A HIGH COURT judge has declared that local conglomerate CL Financial held over 42 million in shares in CL World Brands Ltd (CLWB) for its insurance subsidiary, Colonial Life Insurance Company Ltd (Clico).
Justice Kevin Ramcharan also held that the trust deeds held by CLF were sufficient to establish the existence of a trust.
The judge was asked by the joint liquidators of CLF to determine whether it held shares in CLWB on trust for Clico.
CL World Brands is a holding company comprising the drinks and beverages arm of CLF and includes the shareholding of two international brands, Burns Stewart Distillers (BSD) – a Scottish distillery – and Belvedere SA (BVD).
In October 2022, the company’s board approved Angostura Ltd’s acquisition of the majority shareholding in BSD.
To facilitate the purchase, Angostura issued a $354 million bond which was eventually guaranteed by Clico.
Before that, Angostura already held 14,360,274 shares in BSD, and made an offer to buy the balance of 46,372,466 BSD shares, which was accepted.
On January 9, 2003, CLWB was incorporated, and three months later, Angostura agreed to transfer shares in BSD to the company for £34,779,350. It was also agreed that the company would transfer the shares to CLWB. This was completed on October 23, 2003.
Angostura then transferred its shares, which were then transferred to CLWB.
The acquisition of shares of BVD took place in two tranches: 165,900 shares in BVD at the price of €63 per share or €10,451,700 (TT$70,333,075.45) and 185,000 shares at the price of €63 per share or €11,655,000 (TT$86,698,374.99).
In June 2003, a further 185,000 shares were bought and transferred into the name of CLWB.
In his ruling, Ramcharan said the application had vast documentary evidence.
“The court has considered the evidence surrounding the purchase of the shares in BSD and BVD and their subsequent transfer to CLWB in exchange for CLWB shares very carefully.”
In their application, the joint liquidators argued that CLF and its subsidiaries were “very badly managed.”
Ramcharan said he was not at liberty to make definitive judgments on the running of the company before 2009.
“However, what the court can assert is that based on the information and evidence in this matter, it appears that there was some level of uncertainty among the officers of the company and its subsidiaries.”
He said it was accepted by both sides that CLF’s executive chairman Lawrence Duprey was the controlling mind of the company and its subsidiaries until its takeover by the Government.
“It would, therefore, not be surprising if he took decisions with respect to the company and its subsidiaries without informing the board or other directors.
“Of course, this is no way to run a business, but from all accounts, this is the manner in which the company and to a large extent the subsidiaries were run.”
Ramcharan said he was not satisfied that the evidence the joint liquidators provided established that the deeds of trust relating to the transactions were “shams.”
“It does not rise to the level of disturbing the express intention of the deeds.”
In their application, the joint liquidators argued that Clico did not execute the deed of trust. However, he said Clico was a named party to it, and it was not the law that both parties had to execute a deed. He said this can be done by the vendor alone.
“The court also takes into consideration that both parties made several public assertions that the shares were held on trust for Clico and that Clico in fact did provide the funds to purchase the shares in BSD and BVD.
“These factors go towards the trust deeds being genuine and against their being a sham.”
Although he said it appeared Duprey treated the group companies as his “personal property such as a car or house, rather than commercial enterprises which affected hundreds of thousands of people across the region and the world,” he said he could not agree that to find that the trust deeds were valid would allow Duprey to “get away with it.”
“Merely because there is evidence that there was poor governance in the group at some times, doesn’t mean that every action by the group is tainted with subterfuge or ulterior motive.
“A suspicion may be raised, but there still must be cogent compelling evidence to set aside what is in black and white before the court.”
He said there was little doubt that Clico provided the funding for the purchase of the BSD and BVD shares.
“It would therefore, seem unfair to set aside the trust deeds on the basis that Mr Duprey and the company have been guilty of shenanigans, as it would mean that the company would benefit from the shares and Clico which stood the risk and paid the fees would get nothing.”
“The trust deeds themselves were sufficient to establish the existence of a trust whether in existence prior to or created by the deeds.
“In the circumstances, the court will declare that the company in liquidation (CLF) holds 42,830,350 shares in CLWB on trust for Clico.”
Since the matter was complex because of the volume of documents and the sum of money involved, the judge ordered the parties – the joint liquidators of CLF and Clico – to bear their own costs.