FIRST STRIKE

by Ashford Peters

Ormiston Ken Boyea and Hudson Williams the former CEO and Financial Controller respectively of the East Caribbean Flour Mills are smiling easier these days.

This, after their former employers, the East Caribbean Flour Mills lost its proposed move to significantly amend its law suit against the businessmen by EC$25 million. {{more}}

Both businessmen had been fired from the company in 1997 and promptly sued for wrongful dismissal claiming damages amounting to EC$4.3 million.

In its defence, the company contended that it had just cause to dismiss Boyea for various breaches of his employment contract, and it counter-claimed against him for damages amounting to EC$30.6 million.

The Court of Appeal on September 16 upheld an appeal against the company’s proposal to amend its claim against Boyea and Williams from EC$30.6 million to EC$5 million.

Over a year ago, Master Brian Cottle had reserved a period of two weeks for the much anticipated trial which had been scheduled to start November 17 last year. On September 30, eight days after the date set for the filing and exchange of witness statements, the Flour Mills applied for leave to make amendments to its statements of defence and counter claim. That application was however opposed by Boyea’s lawyers.

Lawyers for the Flour Mills then submitted that the proposed amendments were seeking to amend the statements of defence “so as to clarify and/or narrow and/or reformulate the existing issues between the parties, that the amendments were relevant and central to the issues in the case and that they were of such a nature that they did not require any further witness statements.”

They further submitted that the proposed amendments “in no way prejudiced or disadvantaged” Boyea and Williams, but that they would “contribute to a just and fair determination of the matters in dispute.”

In response, lawyers for Boyea and Williams argued that the proposed amendments were alleging new issues and that several of them would fall after the limitation period. They further contended that their clients, as defendants to the company’s counter claim, would be “deprived of their entitlement to plead the statute of limitation.”

Earlier this year the court granted the company leave to amend most of the proposed pleadings. Boyea and Williams’ lawyers appealed the Judge’s decision, laying five grounds of appeal.

Following arguments before the Court of Appeal, Justice Suzie D’Auvergne said, that while it was true that the court had a general discretion to permit amendments “where it is just and appropriate,” and the overriding objective of the Civil Procedure Rules empowers the court with the responsibility of dealing with cases justly, which includes ensuring as far as is practicable, that the parties are on equal footing, she also bore in mind the general principles with regard to amendments – that amendments should be allowed as long as they do not affect the substance of the claim or the relief sought.

The Justice of Appeal also said she agreed with the lawyers that the overriding objective does not in or of itself empower the court to do anything or grant to it any discretion residual or otherwise, and that any discretion exercised by the court must be found not in the overriding objective but in the specific provision that is being implemented or interpreted.

After ECFM dismissed Boyea, the company alleged that he had used its funds to carry out certain investments and make certain advances not authorized by the Board of Directors. It also charged that the former chief executive had used its assets and business opportunities for his own personal benefit and for the benefit of others and that “as a result of his actions, conflicts of interest were created in the course of the relationship between the company and one of its subsidiaries, Caricom Rice Mills Limited and Montserrat Mills Limited.”

The latter was a rice milling operation established by Boyea and which, in addition to himself, had among its shareholders one of the two major shareholders of the company and another company owned by its senior managers. The company charged that Boyea had used the new entity, in such a manner as to breach their fiduciary duties to the company. It was also charged that he failed to maintain proper documentation “in relation to advances and investments of the company, forgave certain accounts receivables to benefit for himself and related parties and “received secret commissions and other payments from a trading agent of the company and […] persistently failed to carry out instructions of the company’s Board of Directors.”

Boyea, for his part, denied allegations of wrong doing and in his defence to the company’s counter-claim, contended that many, if not all, of the specific allegations were known to the Directors and debated extensively at meetings of the Board over a period of years. He further posited that decisions were taken by the Board in relation to each, “in such a manner that the company knew of these matters” and had, “as a matter of law, ratified any breaches that may have resulted from his actions.”

Boyea also argued that the company had notice of any alleged payments to him by agents through Managing Partner of its external auditors Coopers & Lybrand, and that such payments were not commissions nor were they secret payments unknown to the company’s Directors.

His lawyers also contended that he is entitled to compensation for benefits which had accrued prior to his dismissal. These include short payment of salary, bonuses and pensions entitlements. Additionally, they charge, he is the holder of 200,000 preference shares in the company and is also entitled to dividend on these, which has accrued over the years since the dispute has been pending. They contend that the sum total of these pre-dismissal benefits is in excess of EC$4 million.

Meanwhile, the trial date, which was fixed for October 2003, had to be abandoned because of the late application by Flour Mills to amend its pleading. No new date has been fixed however the outcome of which may well be influenced by the fact that the Flour Mills has failed to obtain the court’s approval to make the important amendment to its defence and counter-claim which it proposed.

East Caribbean Flour Mills is being represented by Sir Henry Forde QC, Barry Gale (Barbados)and Douglas Williams (St. Vincent). Boyea and Williams are being represented by Joseph Archibald QC, Sydney Bennett QC (Tortola) and Stanley ‘Stalky’ John (St. Vincent).