PORT OF SPAIN, Trinidad, CMC – The Court of Appeal has overturned a multimillion-dollar award after indicating that the trial judge in the matter involving the former chairman of the CLICO Investment Bank, Andre Monteil, and others was “plainly wrong” in her assessment of the evidence.
High Court judge, Justice Avason Quinlan-Williams, had in March 2021 ordered Monteil and others to repay TT$78 million (One TT dollar = 0.16 cents), plus an estimated TT$20 million in interest and costs.
The case was among the most high-profile civil matters arising from the collapse of the Trinidad-based regional conglomerate, CL Financial, in 2009.
In their 108-page judgement, Justices James Aboud, Prakash Moosai and Gillian Lucky said that the trial judge was “plainly wrong” in her assessment of the evidence and in concluding that Monteil and former CIB chief executive, Richard Trotman, acted dishonestly or in breach of their fiduciary duties.
Justice Quinlan-Williams had accepted CIB’s case that the defendants had facilitated an unauthorised loan in February 2007 to Stone Street, a private investment company headed by Monteil, to finance the purchase of Clico’s 43.8 per cent stake in the Home Mortgage Bank (HMB).
She ruled then that the transactions were “ingeniously crafted for deceit” and found Monteil and Trotman to be dishonest and untruthful witnesses.
The Court of Appeal held that the bank’s board approved the TT$78 million facility granted by CIB in June 2007, and that Monteil properly recused himself from the decision-making process.
The Appeal Court also found that subsequent actions taken by CIB itself amounted to clear ratification of the loan and its later restructuring.
The case was based on a 2008 novation agreement, which transferred the loan obligation from Stone Street to First Capital Ltd (St Lucia) and substituted the original security with 337,269 ordinary shares in CL Financial.
At the time, a valuation by PricewaterhouseCoopers (PWC) placed the CL Financial shares at more than TT$444 million – far in excess of the outstanding loan. But when CL Financial collapsed in 2009, the shares became worthless.
CIB, later under the control of a Central Bank-appointed manager and then the Deposit Insurance Corporation (DIC) as liquidator, sued Monteil, Trotman and Stone Street, alleging the transactions were unauthorised and tainted by conflicts of interest.
The Court of Appeal said the bank’s own correspondence after the collapse told a different story, pointing to letters written in 2009 by CIB’s manager and again in 2015 by the DIC liquidator, both demanding repayment from First Capital Ltd (St Lucia).
“These letters amounted to ratifications of the original loan and the 2008 novation agreements,” the Appeal Court noted, adding that they were affirmative validations by statutory officers acting on behalf of CIB.
It also dismissed the High Court’s finding that the CL Financial shares were obviously “worthless” or “risky” in 2008, noting the unprecedented nature of the global financial crisis and the unexpected collapse of major US institutions such as Fannie Mae and Freddie Mac.
The Appeal Court also rejected the trial judge’s criticism of the PWC valuation, saying it was wrong to dismiss the report simply because it contained standard professional caveats.
It said that no evidence was led to show the valuation was incorrect at the time it was prepared. It described it as “peculiar” that while CIB had obtained a personal guarantee from CL Financial executive Lawrence Duprey when the loan was novated, the liquidator later discontinued proceedings against Duprey and instead “vigorously pursued” Monteil and Trotman.
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