Court Of Appeal Blocks Sale of Land in Clico Judgment Enforcement Case

The Eastern Caribbean Court of Appeal has allowed an appeal by CLICO International Life Insurance Ltd and its administrator in a judgment that prevents creditors from selling land owned by a related company to satisfy judgment debts.

The Court of Appeal set aside a lower court’s order that would have permitted the sale of valuable land to pay judgment creditors. The Court ruled that the trial judge had incorrectly applied the principle of piercing the corporate veil between separate legal entities.

The Court of Appeal determined that CLICO International Life Insurance Ltd (CLICO Antigua) is not the beneficial owner of land registered to Colonial Life Insurance Company (Trinidad) Limited (CLICO TT), despite claims that the Antiguan company treated the property as its own asset.

The dispute began after three creditors – Eastern Caribbean Baptist Mission, Jerriann George, and Hensworth Jonas – obtained default judgments against CLICO International Life Insurance and its administrator in 2010. To enforce these judgments, the creditors sought to sell a parcel of land in the Sutherlands area valued at approximately $1.8 million in a 2011 appraisal.

However, the land is legally registered to CLICO TT, not CLICO Antigua. The creditors argued that the corporate veil should be pierced because CLICO Antigua was the beneficial owner of the property.
An initial application to sell the land was rejected by Justice Cottle in 2015, who found that the evidence did not demonstrate that CLICO Antigua was the true owner of the land or had any beneficial interest in it.

The creditors then conducted an oral examination of Patrick Toppin, a court-appointed judicial manager of CLICO Antigua. Toppin testified that while the land was included in CLICO Antigua’s books, it remained registered to CLICO TT.

He explained that when CLICO Antigua was established, the intention was that that company would take over the operations of Colonial Life in Barbados and [the] Eastern Caribbean, but the required regulatory approvals were not completed. Nevertheless, CIL managed the operation as though it was its own.

Based on this and other evidence, the trial judge ordered the land be sold by public auction to satisfy the judgments, finding that CLICO Antigua was the beneficial owner and that the circumstances warranted lifting the corporate veil.

The Court of Appeal rejected this analysis. The Court found that the trial judge misapplied the law regarding when a corporate veil can be pierced, citing the landmark UK Supreme Court case of Prest v Petrodel Resources Ltd.

According to the Court of Appeal, the corporate veil can only be pierced “when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control.” The Court found no evidence that CLICO TT had deliberately evaded legal obligations by using CLICO Antigua’s corporate structure.

The Court further ruled that the trial judge erred in finding beneficial ownership without properly applying “ordinary principles and presumption of equity especially those relating to gifts and resulting trusts.” The judgment noted that the trial judge did not explain the nature of any trust that would make CLICO Antigua the beneficial owner of the land.

Even if beneficial ownership had been established, the Court stated this alone would not be sufficient grounds to pierce the corporate veil without evidence of impropriety.

The Court ordered costs to be paid by the respondents to be assessed if not agreed within 21 days.