BU is perplexed by the latest news in this mess, in which it is reported that the BIPA (Barbados Investors Policyholders Alliance) aka CLICO investors – represented by Mr Alair Shepherd QC – has refused to stay the action against the CLICO directors. It is noted that the FSC is represented in this matter by Mr Adrian King.
BU’s attention was initially grabbed (or as it transpires, misdirected and sidetracked) by the fact that Mr Shepherd and Mr King both practice out of Inn Chambers and BU asked for clarification that, although Mr Shepherd and Mr King both practice from the same chambers, they are NOT partners, but ARE, in fact, individual counsel who simply share facilities. As such, therefore, there is no impropriety, nor does BU even suggest such of the two counsel named.
That disclaimer and clarification having now been made, BU asks its family and legal eagles to weigh in as to whether BIPA has the standing to bring its action against the CLICO directors, or not. If not, as this whole CLICO mess is of massive importance to Bajans in general, on what basis BIPA has refused to stay its action? Is there any merit in pursing an action that will be stayed at the end of the day?
BU, which first disclaims that it this is in any way a legal opinion, sets out its impressions gained from archives and from a reading of the Barbados Companies Act Cap 308 as follows:
Some years ago, BU posted the decision of the Court of Appeal in Civil Appeal No. 17 of 2001 (written on behalf of the panel consisting of Waterman AJ, Belgrave AJ and delivered by the Honourable Errol Chase CHB JA, the chairman of the panel) and confirmed by the Privy Council (Hoffman LJ) in which Chase AJ started his judgement on behalf of an unanimous panel by giving a scholarly, yet easily understandable to the layman, and precedent-supported dissertation on the difference between the Barbados Companies Act Cap. 308 of the Laws of Barbados and the former Act, being the Companies Act 1910.
BU’s impression gained from this judgement was that prior to 1986, Barbados’ corporate laws had followed those of the United Kingdom. However, post 1986, all Barbados corporations had been required to be “continued” under the new Act (Cap. 308) which, in its turn, followed the Canada Corporations Act 1975.
The conclusion of Chase AJ is set out in paragraph 22 of his judgement, wherein he states:
“Further, section 95(3) of the [Companies] Act makes it unequivocally clear that the person to whom the directors of a company owe their duty is the company, not to the shareholders, not to the creditors, not to the general public, but to the company itself.”
For clarity, BU cites section 95 of the Companies Act Cap. 308.
“Duty of Directors and Officers
95. (1) Every director and officer of a company in exercising his powers and discharging his duties must
(a) act honestly and in good faith with a view to the best interests of the company; and
(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
(2) In determining what are the best interests of a company, a director must have regard to the interests of the company’s employees in general as well as to the interests of its shareholder.
(3) The duty imposed by subsection (2) on the directors of a company is owned by them to the company alone; and the duty is enforceable in the same way as any other fiduciary duty owned to a company by its directors.
(4) Every director and officer of a company must comply with this Act and the regulations, and with the articles and by-laws of the company, and any unanimous shareholder agreement relating to the company.
(5) Subject to subsection (2) of section 133, no provision in a contract, the articles of a company, its by-laws or any resolution, relieves a director or officer of the company from the duty to act in accordance with this Act or the regulations, or relieves him from liability for a breach of this Act or the regulation.”
Chase AJ goes on in paragraph 23 of his judgement, to cite the Canadian case of:
“Pelling v Pelling et al (1981), B.C.S.C. 130. D.L.R. (3) 761 at page 762, where Berger J. in dismissing a shareholder’s claim for breach of fiduciary duty, said:
“there is no fiduciary obligation between shareholders, and no general fiduciary obligation owed by a director to a shareholder. A director’s duty is to the company; he has no fiduciary obligation to the shareholders…..”
BU can find nowhere any subsequent case in which the decision of Chase AJ, as confirmed by the Privy Council, has been reversed or set aside by a court of competent and superior jurisdiction and therefore the Barbados courts are, it would seem to BU, bound by this ruling – and by the law as set out in the Companies Act Cap. 308.
Can BU’s legal eagles shed any further light or provide any opinions on this?
BU goes further, in so far as BIPA (as a party to the action is concerned) in asking its legal eagles for clarification as to whether as an association, it has any standing at all to bring such an action against the directors of CLICO in the name of the association. After all, the association is itself not a shareholder in CLICO, nor, so far as we can see, is this a class action of shareholders. It seems to BU that BIPA is acting as an agent in this, but so far as BU is aware, an agent has no right to bring such an action, only the shareholders themselves can do that in their own names. IF BU is correct (and we are very open to dissent, discussion and advice on that) then this action is fatally flawed from the get-go and doomed to be stayed.
On its Facebook site BIPA sets out its mission statement as:
“BIPA is a non-profit organisation which was formed out of the coming together of policyholders of the bankrupt insurance companies, CLICO and BAICO who are seeking to get their money back using the legal system to achieve this goal.” [BU’s emphasis]
While BU applauds and encourages the BIPA intentions and is certainly 100% behind holding CLICO and BAICO to account, it sincerely questions the grounds of this latest and asks if in this case “using the legal system” is prudent…….or a possible mis-use and whether the stay BIPA has refused to agree to may not inevitably be granted by the courts, based “unequivocally” (the word used by Chase AJ) on both statute and precedent?
It is noted solely as a by-the-way that the losing counsel in Appeal No. 17 of 2001 were Mr Alair Shepherd QC acting in association with Mr Adrian King.
We are, frankly, confused on this one and we hope that BU’s legal eagles will assist us to understand what is going on, for clearly Mr Shepherd QC knows something that is completely obscured from the scope of BU’s layman knowledge. We would like to know what it is. For to quote BIPA’s Facebook statement:
“The ongoing CLICO and BAICO situation is without doubt the most disgraceful financial debacle Barbados has ever witnessed. For nearly four years now it has devastated the lives …of 35,000 Barbadians, most of whom can least afford it, particularly the elderly.”
BU ENDORSES THIS STATEMENT WITHOUT RESERVATION OF ANY KIND.
In a country of approximately 285,000 souls, something that has “devastated the lives …of 35,000 Barbadians, most of whom can least afford it, particularly the elderly,” requires more journalistic investigation than the mere bald statement that BIPA has refused to agree a stay of the action against the CLICO directors. It requires an investigation on the chances of success of such an action and whether good money is not being thrown after bad.
And it is no good claiming that the matter is sub judice and that BU should not comment or question, as in any other free society with a functional press, such an action would be discussed in all media by legal experts, as to law and chances of success. In addition, elected members of the executive would be weighing in heavily with their views and statements of outrage and AGGRESSIVE suggestions of ways forward. Imagine that 12+% of the population of the United Kingdom (8.4 million souls) were affected by a situation like CLICO……imagine the press and investigative journalism feeding frenzy. There would be parliamentary inquiries, judge-led inquiries, police inquiries and a major international scandal and every UK MP would be fighting for air time to make their views known.
Well, according to BIPA, 12+% of Barbados’ population are victims of CLICO and, so far as we can see, not much is being done – and frankly a change of government in February 21 is highly unlikely to change this, given the deafening silence and the political games that has one party trying to blame another for a situation for which BOTH are clearly responsible. BU is fully on side with BIPA in any law-based action that can bring with it the chance of success and restitution for the CLICO investors.
Where BU and BIPA would part company is if the money of BIPA members, already egregiously harmed by CLICO, is being used by counsel to bring meritless litigation with little or nil chance of success – for which the losing party will have to pay the costs. For that would be to exacerbate the harm and loss and hardship already suffered by CLICO investors. All for nothing, except dollars in the pockets of the legal profession and the further clogging up of an already fully clogged and moribund court system under the administration of a chief justice who hasn’t a clue what is going on or, even if he had a clue – which he clearly does not, how to fix it.
And it is no good to say that this action is brought as a means of getting the matter before the CCJ, if, once it is before the CCJ, it fails. The CCJ is bound to apply the laws of Barbados, being the Barbados Companies Act Cap 308, not the 1910 Act. In the circumstances, and as a pure layman, BU does not see on what basis the precedent decision of Chase AJ can be overturned. It seems crystal clear and unshakeable and a matter of statute.
BU, having little or no legal training, does not pretend to know the answers. It merely presents its impressions and poses obvious questions and now affords the family and legal eagles the chance to weigh in, in the spirit of a true, functional and democratic press. We are, after all, the Fifth Estate and, in Barbados at any rate, charged with the responsibility of making up for the deplorable lack of duty of what calls itself the Barbados Fourth Estate. Also, frankly, the family as a whole is far brighter and better educated and much more on the ball than those posing as reporters in the Fourth Estate.