Asset freeze order in trust case partially lifted

Caymanian Compass staff reports

A well-connected Cayman Islands
businessman has found himself at the centre of a complex and potentially
expensive legal battle in Jamaica, according to court records obtained by the
Caymanian Compass.   

A claim filed in August in the
Supreme Court of Judicature of Jamaica by First Financial Caribbean Trust
Company Ltd seeks to recover US$13,911,092.15 as well as damages from defendants
Delroy Howell, Kenarthur Mitchell and four financial companies which court
records state Mr. Howell had a controlling interest in.

Three of those companies are
registered in the Cayman Islands, which is Mr. Howell’s primary place of
residence, according to court records.

In addition to the nearly $14
million, the claim also seeks unspecified damages for alleged breach of fiduciary
duty, alleged breach of contract and alleged fraud. Mr. Mitchell was a director
of First Financial Caribbean Trust Company Ltd until he resigned in February,
court records show. Mr. Howell served as chairman and chief executive officer
of that company until his removal on 12 April, 2010, according to the claim, which
was filed on 19 August with the Jamaican court.

Attempts by the Compass to reach
Mr. Howell this week regarding the claim have proved fruitless. Mr. Mitchell
also could not be reached for comment.

On 19 August, the Jamaica Supreme
Court of Judicature also ordered that the defendants in the claim should have
their assets frozen – which means they cannot transfer, withdraw, dispose of,
charge or diminish any assets up to the value of US$13,911,092.15 – other than
to pay for daily living expenses and the like.

A hearing is set before the court
today (Friday) to determine whether that freeze order should be extended until
the case goes to trial.

“In this case, the order is
enforceable in relation to Mr. Howell anywhere,” said Queen’s Counsel Michael
Hylton, who is representing First Financial Caribbean Trust Company Ltd in the
claim.

Friday afternoon the judgment of a Justice Brooks of the Supreme Court of Judicature in Jamaica was released to the Caymanian Compass. 

Justice Brooks ruled that the freezing order first issued 19 August and extended since then should be lifted against Mr. Howell and Mr. Mitchell as well as two of the four companies listed as defendants in the claim – First Financial International Group Ltd. and First Financial Caribbean (Holdings) Ltd. 

The freeze order was maintained against two of the companies listed in the claim, First Financial Caribbean (Jamaica) Ltd. and First Financial Caribbean Ltd. but that freeze order only applies to US $1.7 million worth of “admitted debt”.

“The claimant has identified a cause of action against the defendants,” the judgment’s conclusion read. “The need for the recovery of the trust monies, together with prima facie evidence of a failure to account to the claimant’s auditors, when called upon, forms the basis of these findings.” 

However, Justice Brooks ruled that there was no need to continue to further freeze the personal assets of either Mr. Howell or Mr. Mitchell.

“I find it would be inappropriate to continue or extend the freezing order against any of the other corporate defendants, nor, indeed, Messrs. Howell or Mitchell,” the 15 October judgment continued. 

The claim

According to the 19 August claim by
First Financial Caribbean Trust Company Ltd, a firm named Leadenhall Bank and
Trust Company Ltd entered into an agreement that appointed First Financial
successor trustee and administrator of a trust fund. That agreement was reached
in 2002, according to court records.

As part of that deal, First
Financial received from Leadenhall a sum of US $14,876,092.15 to be
administered as part of the trust business.

“In breach of their fiduciary
duties to the claimant (First Financial Caribbean Trust Company Ltd.), in
breach of contract and fraudulently, Howell and Mitchell transferred the trust
funds to themselves and others including First Financial Jamaica, First
Financial Group, First Financial Caribbean and First Financial Holdings,” the
19 August court claim read.

The court records state that, at
all material times, those four companies identified in the previous paragraph
acted under the control, management and direction of Mr. Howell.

“Further…the defendants (referring
to the companies) were merely devices and vehicles through which Howell carried
out the activities described in this statement of the case,” the 19 August
claim read.

According to the claim, Messrs.
Howell and Mitchell used the trust funds to buy a property in Kingston,
Jamaica, known as 6 Dumfries Road “without accounting to the claimant for their
use and occupation thereof”.

Similarly, the claim states that
the two men also used trust company funds to buy a luxury apartment property
known as Bay Tower 304 in Nassau, Bahamas. Again, the claim states that no account
was made to First Financial regarding the use and occupation of this property.

Since May, First Financial has
taken control of and sold the Bahamas apartment property and has received US
$645,000 from that sale. First Financial was also able to recover a further sum
of US$320,000 from a company in the Turks and Caicos Islands, a company that is
a subsidiary of another firm that Mr. Howell owned.

Those payments reduced the amount
sought from the defendants in the claim to US$13,911,092.15, according to court
records.

The claim states with regard to the
trust fund transfers that Messrs. Howell and Mitchell failed or refused to
deliver investment statements, account books, financial statements or other
records belonging to First Financial Caribbean Trust Company Ltd which related
to the investment of the trust funds. 
The claim also accuses both men of transferring some of the trust fund
monies to accounts they held.

“The defendants and each of them
have received trust funds in circumstances where they were not entitled to the
said funds or any part thereof,” the 19 August claim states. “In the premises,
the claimant (First Financial) has suffered loss by being deprived of the said
funds. Each defendant has been unjustly enriched by the receipt of the said
funds.”

QuikCash

Earlier this year, the Caymanian
Compass reported that a Jamaican company, Jamaica National group through its
subsidiaries JN Money Services Ltd and the National Building Society of Cayman,
had taken over First Financial Caribbean Ltd and First Financial Caribbean
(Jamaica) Ltd, which operated QuikCash and SunMoney money transfer
companies. 

Both First Financial Caribbean Ltd
and First Financial Caribbean (Jamaica) Ltd were named as defendants in the 19
August claim made by First Financial Caribbean Trust Company Ltd.

That article about the QuikCash
sale appeared in the Compass on 11 August, about a week before the Jamaican
court made the asset freezing order against Messrs. Howell and Mitchell. The
sale was reported to have been finalised in July.

However, according to Mr. Hylton,
the agreement surrounding the sale of QuikCash and its parent companies had to
be altered.

“It is our understanding that (the initial)
sale was cancelled and a new sale was entered into on August 20th,” Mr. Hylton
said. “The new sale was not a sale of the company. It was a sale of the assets
of one of the businesses. It is my understanding the sale was pending.”

The Compass contacted both Mr.
Howell and JN Money Services regarding the QuikCash agreement last month. Mr.
Howell indicated at the time that the sale had gone through. JN Money Services
never provided a response, though it did return phone calls.

Separate case

According to newspaper reports this
week in the Turks and Caicos Islands, Mr. Howell made a separate claim
regarding the ownership of First Financial Caribbean Trust Company Ltd.

The published report indicates that
an individual Mr. Howell hired, Judith Wilchcombe, improperly acquired a number
of shares in First Financial Caribbean Trust Company Ltd.

First Financial Caribbean Trust
Company Ltd was incorporated in the Turks and Caicos in 2001.

The Turks and Caicos Sun reported
that the action by Mr. Howell was called before the country’s chief magistrate
on 7 October and sought clarification of the company’s register. The matter was
adjourned until 27 October, according to the newspaper.

The 19 August claim in the Jamaican
court was signed by First Financial Caribbean Trust Company Ltd Director Judith
Wilchcombe. 

Turks and Caicos Sun
Publisher Hayden Boyce contributed to this story.

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