Appeal Court throws out property developer’s claim over CL Financial lands

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THE Court of Appeal has upheld a judge’s decision on a legal challenge brought by a property developer in its legal battle over the purchase of 16 acres of land from a subsidiary of CL Financial.

In a written decision on Friday, Justices of Appeal Peter Rajkumar and Vasheist Kokaram dismissed the procedural appeal of Select Properties Ltd (SPL) which challenged a decision of Justice Kevin Ramcharan to order that the land, located at South Park, Tarouba, as well as other properties owned by CLF’s subsidiary Home Construction Limited (HCL) be publicly advertised.

HCL’s subsidiary, Trincity Commercial Centre Ltd (TCCL), had agreed to sell the land to SPL for $60 million. The company agreed to pay a 10 per cent deposit, which was to be refunded if the deal fell through.

Last year June, Hugh Dickson and Marcus Wide, of international accounting firm Grant Thornton, who were appointed by Ramcharan when he approved the liquidation in 2017, applied to approve the sale. The application was refused by Ramcharan, who instead ordered the liquidators to advertise the property for sale to the highest bidder.

At the appeal, Select Properties’ lead counsel Anand Ramlogan, SC, argued that the judge was wrong when he ordered that the land be advertised.

However, Rajkumar said Ramcharan was correct in law to take into account the higher offers.

“There was no basis in law for disregarding them or pretending that those offers did not exist,” he ruled, adding that it was contrary to the evidence to contend that the liquidator had made or approved a decision to sell the property to SPL.

“The proposed sale was expressly conditional upon approval by the court on an application for directions,” he said. He said based on the liquidators’ evidence, the only conclusion that could be drawn from it was that they decided to approach the court for directions, not that a decision had already been made, or approved, to sell to SPL.

“Even if the liquidator had made a decision, (which he had not), given that the court was not bound to approve a decision of the liquidator, was not a rubber stamp, and possessed power to review an improvident transaction, it was entitled to consider whether the process of the sale was designed to secure the highest value realisable value and assess whether this had been accomplished.

“It was entitled to decline to approve a sale arrived at as a result of a process which was not designed to achieve this, and to order instead a process which was,” he held.

Select Properties had argued that it received an offer for the purchase of the lands in Tarouba and, TCCL, after receiving the approval of the liquidators to proceed with the sale of the specific lands. Ramlogan argued the judge did not have the power to disregard the sale agreement and overturn the contract of sale.

Ramlogan said when the liquidators came to the court for approval, it was not for a sanction, but for approval to go ahead with the sale.

He said since the Companies Act gave the liquidators the power to sell by private treaty, then he was basically a rubber stamp for the transaction.

Senior Counsel Deborah Peake, who represented the Attorney General for the Government as the largest CLF creditor at the appeal, had reminded the judges that CLF was in compulsory liquidation and the debt owed was still massive, even after all this time.

“Any rational judicial officer would be concerned with the debt owed.” She said the liquidators applied to the court for directions on the sale of CLF’s land bank, which included the Tarouba lands, and Select Properties agreed that the sale would be subject to the court’s agreement.

She said the judge refused to approve the sale to SPL and, on the urging of creditors, made an order for the properties to be advertised.

Peake said the judge was correct to take into account the higher bids received after the property was advertised. “Are they saying the judge should disregard the later high bids received pursuant to a court order? It must be that he was entitled to look at the change in circumstances. The principal function of the court in liquidation matters is to achieve the high possible price in a court-approved process,” she said in her submission to convince the judge to dismiss SPL’s appeal.

Also arguing that SPL’s appeal must fail was attorney Bronock Reid who represents CLF. Select Properties was ordered to pay two-thirds of the costs assessed by the High Court to CLF and the AG.

At the end of the hearing, Rajkumar and Kokararam reserved their decision and told the parties they will be notified in writing.

Also appearing for SPL were Renuka Rambhajan and Jared Jagroo while Ravi Heffes-Doon also represented the AG.

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