Derek Achong
Senior Reporter
The Court of Appeal has resolved a lawsuit over an unauthorised multi-million dollar payment facilitated by the former senior executive of an insurance company.
In a recent judgment, Chief Justice Ronnie Boodoosingh, and Appellate Judges Nolan Bereaux and Geoffrey Henderson weighed in on the case, which was brought by Gulf Insurance against its former chairman and executive director Gerrard Lee-Inniss and Firstline Securities Ltd.
The case centred around US$768,000 and $495,167 payments that were made to the Firstline by Gulf without the approval of the latter’s board.
The payments were made to clear a debt owed by Lee-Inniss and a company owned by him.
Lee-Inniss did not defend the case and a default judgment was entered against him.
Firstline denied any wrongdoing as it claimed that it was not aware that Lee-Inniss was not authorised to direct Gulf to make the payments.
Firstline appealed after a judge found it jointly liable to repay the money for allegedly dishonestly assisting Lee-Inniss in making the payments.
All three appellate judges agreed with their colleague that both Lee-Inniss and Firstline were liable as the latter should have had concerns over Gulf repaying a debt it had no connection to.
CJ Boodoosingh said: “These circumstances supported the inference that Firstline knew, or ought to have known, that the funds belonged to Gulf and were being applied in breach of fiduciary duty.”
“Without being supplied with authorisation from Gulf Insurance to the contrary (and there is no evidence of the existence of such authority), Firstline Securities knew that the funds it received from Gulf Insurance was traceable to a breach of fiduciary duty by Mr Inniss,” Justice Bereaux said.
However, Justice Bereaux and Henderson ruled that the judge was wrong to make findings against Firstline for dishonest assistance in the deal as it was not involved in the payment approval process.
CJ Boodoosingh ruled that the judge was entitled to make the finding.
“The dishonesty must be attributable to participation. But here, there was no participation sufficient to attract the doctrine. Instead, this case falls squarely within the realm of recipient liability,” Justice Bereaux said.
Firstline was represented by Ian Benjamin and Mervyn Campbell. Kerwyn Garcia and Karissa Singh represented Gulf.
