Clico Investment Bank claim against Clico thrown out

Justice Kevin Ramcharan -

The High Court has dismissed an application by CLICO Investment Bank Ltd to overturn a decision rejecting its claim for more than US$43 million against CL Financial Ltd, finding the claim was statute-barred and unsupported by sufficient evidence.

In a ruling delivered by Justice Kevin Ramcharan, the court upheld the decision of the joint liquidators of CL Financial to reject CIB's s claim for US$33,067,718.95 in principal and US$10,282,990.84 in interest, concluding that the contractual claim was time-barred and that alternative arguments based on fiduciary duty, constructive trust and unjust enrichment were not made out.

CIB, a wholly owned subsidiary within the CLF group, sought to vary the liquidators’ decision rejecting its proof of debt, which was based on eight commercial papers issued between November 2006 and December 2008. The Deposit Insurance Corporation, appointed liquidator of CIB in October 2011, supported the application.

The respondents, joint liquidators of CL Financial Limited Hugh Dickson and David Holukoff, maintained that the claim was statute-barred, unsupported by original documentation and lacked proof that CL Financial Limited ever received the alleged funds.

Justice Ramcharan found that the loan schedules relied upon by CIB could not be treated as balance sheets capable of reviving a limitation period, noting they were unsigned, of unclear purpose and did not unequivocally acknowledge a debt as still due. He held that the contractual claim had expired long before CLF entered liquidation.

The court also rejected arguments that CLF acted as a shadow or de facto director of CIB, or that it was a constructive trustee of the funds. The judge said the evidence, including statements by former financial director Michael Carballo, did not establish that CL Financial exercised the level of control necessary to impose fiduciary obligations or trust liability.

“In the circumstances, the court is not satisfied that the Company was a shadow/de facto

director of CIB, and therefore not a fiduciary or constructive trustee.

On unjust enrichment, the court agreed with the liquidators that the dispute was fundamentally contractual and could not be reframed to avoid limitation periods.

“With respect to the question of unjust enrichment, it appears that CIB is trying to claim that because the loan was unpaid, there was unjust enrichment by the company.

“The court agrees with the company that this is really a contractual issue, and not a question of unjust enrichment.

“To take CIB’s submission to the logical conclusion, the limitation period for a

debt could always be defeated by claiming unjust enrichment. This is not the basis of the

relief. In the circumstances, that ground also fails.

“In light of the above, CIB’s notice of motion to reverse, vary or modify the decision of the

Liquidators must be dismissed, as the court is satisfied that the proof of debt was rightly

rejected.”

Justice Ramcharan dismissed the application in its entirety and ordered that each party bear its own costs, noting that both entities are in compulsory liquidation.