Lindsay (Delroy) v Attorney General of Jamaica

JurisdictionJamaica
Judge DOWNER, J.A. , HARRISON. J.A. , PANTON, J.A.
Judgment Date27 November 2000
Neutral CitationJM 2000 CA 44
Judgment citation (vLex)[2000] 11 JJC 2702
CourtCourt of Appeal (Jamaica)
Date27 November 2000
IN THE COURT OF APPEAL
BEFORE:
THE HON.MR. JUSTICE DOWNER, J.A THE HON. MR. JUSTICE HARRISON, J.A THE HON. MR. JUSTICE PANTON, J.A
BETWEEN:
DELROY LINDSAY
APPELLANT
AND
THE ATTORNEY-GENERAL OF JAMAICA
RESPONDENT
Dr. Ronald Manderson-Jones for the appellant
Dennis Morrison, Q.C., and Yolande Whitely for the respondent Instructed by the Director of State Proceedings

INJUNCTIONS - Mareva injunction - Order restraining appellant from moving assets out of jurisdiction - Application to discharge injunction - Whether danger of default if assets removed from jurisdiction

DOWNER, J.A.
1

Delroy Lindsay is a former banker who describes himself as a self- employed consultant. He is the second defendant in a suit instituted by the Attorney-General to recover over J$49.m. There are nine other defendants namely, Friends Group Ltd. (formerly Corporate Resorts Limited (In Receivership), Trevor Owen Patterson, Claudette Angella Maxwell, Raphael Gordon, Veritat Corporation, KPMG Peat Marwick (A firm), Corporate Merchant Bank Limited (Vested in the Minister of Finance and Planning pursuant to the Financial Institutions Act), Myers Fletcher & Gordon (A firm) and Corporate Group Limited.

2

This appeal by Lindsay seeks to set aside the inter- partes order of Reid J. dated 16 th December 1999, who refused to discharge the ex-parte Mareva Injunction granted by Theobalds J. dated 11 th August, 1999. This Order has restrained the appellant Lindsay from removing his assets out of the jurisdiction or dealing with his assets elsewhere. One of the complaints of Dr. Manderson-Jones of counsel is that his client was singled out by the respondent Attorney-General for a Mareva Injunction while the assets of the other nine defendants to the suit have not been so restricted.

3

It is pertinent to refer to the dominant role of Lindsay in the affairs of some of the other defendants. Here is how Audrey Deer-Williams put it in her affidavit in support of the summons in applying to Theobalds J. in the first instance for injunctive relief:

"4. That the Second Defendant was at all material times a Banker, the Chairman of the Board of Directors and the Chief Executive Officer of the First Defendant, as well as the Eighth and Tenth Defendants. The Second Defendant was also a shareholder of the First and Tenth Defendants and a member of the Prospectus Committee which supervised the public share issue of the First Defendant."

4

Then she explains the involvement of the Attorney-General thus:

"3. That I crave leave to refer to the Writ of Summons and Statement of Claim filed in this suit. The Plaintiff filed suit by virtue of the Crown Proceedings Act on behalf of the National Insurance Fund which was established pursuant to section 39 of the National Insurance Act."

5

Here it should be explained that Audrey Deer-Williams is a "public officer" and that the fund administered by her is controlled by the Minister of Finance.

6

As for her own role here is what she said:

  • "1. That my true place of abode and postal address is 7 Glebe Crescent, Dunrobin Acres, Kingston 10 in the parish of Saint Andrew and I am a Manager of the National Insurance Fund and I am duly authorized to make this affidavit on behalf of the Plaintiff herein.

  • 2. That the contents of this affidavit are derived from documents and information supplied to me by or on behalf of the Plaintiff and are true to the best of my knowledge, information and belief. That I make this affidavit in support of an application by the Plaintiff for a Mareva Injunction to be granted against the Second Defendant in terms of the draft Minute of Order filed herewith, or in such other terms as may be just and convenient."

7

It is regrettable that she failed to exhibit some of the documents supplied to her. The blame however is probably to be attributed to the Attorneys who prepared her affidavit.

8

As for the claim against Lindsay, Audrey Deer-Williams put it thus:

  • "5. That the claims against the Second Defendant are for fraudulent misrepresentation, negligence, breach of statutory duty and conspiracy to defraud. These arise out of the public share issue in the First Defendant, conducted in 1993, in which there was an offer to the public of 100 million shares at a price of $3.50 per share for a total of $350,000,000.00 payable in full on application in the First Defendant.

  • 6. That the Prospectus relating to the said share issue stated that the subscription list would open on the 21 st day of May 1993 and close on the 7 th day of June 1993. The Prospectus further stated that each application must be accompanied by cash or cheque for the full amounts payable. The minimum subscription which had to be met at June 7, 1993, by the share issue was set at $200 million. The net proceeds of the share issue was earmarked principally for the repayment of high cost debt and to exercise the option to purchase Plantation Inn. This option had to be exercised by or before June 14, 1993 and was in fact exercised on June 11, 1993.

  • 7. That in reliance on the representations made in the Prospectus the Plaintiff made 35 applications for a total purchase of 14,285,700 shares at a cost of $49,999,950.00. That 14,285,700 shares at a cost of $49,999,950.00 were allotted to the Plaintiff. That the Plaintiff subsequently sold 300,000 shares for a total consideration of $519,930.63."

9

Then Audrey Deer-Williams explained how Lindsay breached Sec.47 of the Companies Act and why the plaintiff failed to recover its investment as there was a failure to institute proceedings within two years as required by the Act. Paragraph 12 sets out the means by which the respondent was defrauded thus:

"12. That the Plaintiff alleges that it did not obtain a refund of its monies and was prevented from making such claims due to the fact that the Second Defendant by himself or in conjunction with other Defendants in this suit, contrived and/or conspired to conceal the fact that the share issue had not been fully subscribed by the date of closing of the share issue."

10

According to Audrey Deer-Williams, the appellant, Lindsay compounded his wrongful conduct thus:

"13 That further, the Second Defendant caused or allowed to be published in the Daily Gleaner newspaper dated June 12, 1993, a Statement which indicated that the offer had been fully subscribed. That in addition in the Chairman's Report contained in the Annual Report of the First Defendant, for the year ending December 1993, the Second Defendant also made false representations that the offer had been fully subscribed. The Second Defendant also signed on behalf of all the Directors of the First Defendant to the Audited Financial Statements, accompanying the said Report, which accounts indicated the full subscription of the issue."

11

With respect to this paragraph it is strange that the auditors did not detect the alleged fraud concerning the "full subscription"

12

There is a Caymanian aspect for which Audrey Deer-Williams gave evidence. This evidence was acceptable for an ex-parte application, and might even have been acceptable at the inter partes hearing having regard to the urgency and its nature. It is arguable that if the following evidence is to be used at a trial some expert evidence will be required of Cayman law and there will be the need it seems of some- one from the Cayman Islands to give the factual evidence. It is difficult to know what weight Reid J. gave to this evidence as regrettably he gave no reasons for his decision in refusing to discharge the injunction. Here is the evidence:

"14. That however, by letters dated 7 th day of June 1993, the date on which the share offer closed, the Second Defendant, writing as the Chairman of Corporate Group Limited, wrote to one Michael DeLeon three separate letters relating to three companies, Tamron Limited, Kleinworth Limited and Kelner Limited. These letters referred to Mr. DeLeon's acquisition of all the shares of the said companies, which companies were each described as "... a company incorporated in the Cayman Islands for the purpose of applying for a block of shares in Corporate Resorts Limited ("CRL") pursuant to the public issue made by CRL". The letters also referred to Mr. DeLeon's intention to take up and pay for as much of the shares of the First Defendant as may be allotted to each company."

13

These letters ought to have been exhibited. In any event they ought to have alerted the auditors that something was unusual concerning the full subscription. Then the evidence continues.

  • "15. That the said Caymanian companies were not incorporated in the Cayman Islands until June 28, 1993, on instructions from the Third Defendant, another director of the First Defendant through the offices of the Ninth Defendant. This was 21 days after the share issue had closed. No shares in these companies were ever issued and no directors were ever appointed at the time of their incorporation or at any material time thereafter.

  • 16. On the 15 th day of June 1993, the Second Defendant wrote to the said Mr. DeLeon setting out the number of shares allocated to each of the three Caymanian companies as follows:

    Kleinworth Limited

    17,000,000

    shares

    Kelner Limited

    13,000,000

    shares

    Tamron Limited

    23,000,000

    shares

  • 17. That the fees for incorporation of these companies were paid to Messrs. Myers & Alberga, Attorneys in the Cayman Islands, under cover of letter dated September 30, 1993 signed by the Second Defendant on behalf of the Tenth Defendant."

14

Then comes the illegality which the Plaintiff claims:

"18. That the shares allotted to these Caymanian Companies were paid for by loans to these companies by the Eighth Defendant, of which the Second Defendant was Chairman of the Board of Directors and Chief Executive Officer. These loans were made in...

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