Derek Achong
Senior reporter
derek.achong@guardian.co.tt
The Court of Appeal on Monday dismissed an appeal of a High Court judge's decision to invalidate the sale of CL Financial (CLF) and Clico's lucrative energy assets to Proman Holdings (Barbados) Ltd more than a decade after the transaction was completed.
Delivering the judgment, Court of Appeal judges Alice Yorke-Soo Hon, Gregory Smith, and Vasheist Kokaram dismissed the appeal brought by Proman over Justice Devindra Rampersad's handling of the contentious lawsuit in 2021.
The legal dispute between CLF, Clico, and Proman stemmed from a sale of shares in Clico Energy, which was undertaken by former CLF executive chairman and Clico director Lawrence Duprey three days after the Government bailed out the companies, in February 2009.
At the time of the deal, CLF controlled 34 per cent of Clico Energy, with an additional 17 per cent on trust for Clico. The 49 per cent balance of the shares in Clico Energy were owned by Proman, which has its headquarters in Switzerland.
After Proman acquired Clico Energy, it was renamed Process Energy (Trinidad) Ltd (PETL),
While the appeal panel stated that Justice Rampersad correctly ruled that the sale was not properly ratified and was grossly undervalued, it suggested that he should have also found that the deal was tainted by the fraudulent assistance of Proman's agents, as suggested by CLF and Clico's legal team led by Fyard Hosein, SC.
If Proman does not eventually succeed in a final appeal before the United Kingdom-based Privy Council, the outcome of the case would be significant for CLF and Clico, who would be entitled to over US$263 million (TT$1.78 billion).
The compensation represents 51 per cent of the approximately US$517 million in dividends that PETL paid since the deal was struck.
CLF and Clico, which will also receive the 51 per cent stake currently valued at US$140 million, would be required to reimburse Proman the US$46.5 million it paid for the shares in 2009.
In 2017, the Government, which owns 49 per cent of Clico, applied to have CLF wound up to repay its creditors, of which it (the Government) is the largest.
CLF's shareholding and profits from PETL, if upheld, are likely to be used by CLF's liquidators in that process.
During the hearing, the appeal panel granted an interim stay of its judgment under the condition that Proman places approximately US$70 million in escrow pending the outcome of the final appeal.
This was in addition to the US$83 million Proman was required to place in escrow when it was granted a stay of Justice Rampersad's decision pending the appeal before the Court of Appeal.
CLF and Clico were also permitted to select four directors for PETL's board, restoring the controlling interest in PETL they had before the deal.
In the appeal judgment, Justice Smith noted that since Proman did not challenge Justice Rampersad's finding that Duprey did not have ostensible authority to enter into the sale, it (the sale) should have been approved by the CLF and Clico shareholders for it to be ratified.
He also noted that the input of the Government was required for ratification as the Memorandum of Understanding (MoU) for the bailout precluded the disposition of CLF and Clico's assets.
"Alternatively, because of the activation of the creditor interest principle on the facts of this case, the sale agreement could only have been ratified by input from the Government, the major creditor at the time, and not by the directors or even shareholders of CLF/Clico," Justice Smith said.
Justice Smith also noted that based on the evidence in the case, Proman had to have been aware that the sale was grossly undervalued.
"It was not a case of mere carelessness but as the trial judge observed, a case where business-savvy persons set about to steal a march on Government to obtain the shares at a price they wanted and not at a fair price," Justice Smith said.
"They were willing to take the gamble that this could turn out to be a sale of trust property at a gross undervalue," he added.
Justice Smith noted that Justice Rampersad's ruling that Proman's complicity in the impropriety of the deal "did not cross the boundaries of fraud" was not consistent with his findings over Proman's knowledge of the issues with the legitimacy of the deal.
"These findings and statements of the Trial Judge indicate that Proman, on an objective standard, knew or at the very least was reckless to or turned a blind eye in respect of the fact that the purchase and sale of the CLF/Clico shares in PETL was not in the best interest of CLF/Clico at the time," he said.
"I am of the view that the findings of the trial judge, on an objective standard, are consistent only with dishonesty amounting to fraudulent assistance on the part of Proman," he added.
In June, Justice Rampersad delivered an outstanding aspect of his judgment in which he held Duprey, PETL and Proman jointly liable for the dividends .
The development in the case did not mean that all three defendants each have to pay the outstanding dividends or an equal portion of it but rather that CLF and Clico could seek to enforce the judgment against one or all of them.
In a press release, Proman stated that it was disappointed with the outcome of the appeal, especially the portion which dealt with its role in the transaction.
"We have a strong case on appeal, which we will pursue before the Privy Council and are confident in our prospects of success," it said.
"Proman has been committed to Trinidad and Tobago for over thirty-five years, and we are proud of our track record as the largest investor and employer in the Point Lisas Industrial Estate," it added.
CLF/Clico were also represented by Deborah Peake, SC, Kerwyn Garcia, SC, Sasha Bridgemohansingh, and Luanne Boyack.
Proman was represented by Simon Salzedo, KC, Christopher Hamel-Smith, SC, Jonathan Walker, and Catherine Ramnarine.