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Ex-Bahamas Ceo Defeats $2m Asset Freeze Reimposition

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Bahamas-based chief executive, accused by his ex-employer of taking $2m in unauthorised payments and expenses, has successfully resisted the reimposition of an asset freeze.

The Court of Appeal, upholding an earlier verdict by Supreme Court Justice Ian Winder, found that Blue Planet Group had failed to make a “full, fair and frank disclosure” of all material facts relating to its bid to freeze all William Downie’s Bahamas-based assets.

Blue Planet, whose website describes it as a “multinational vertically-integrated water purification group”, with an office at Building No 6 at Caves Village in western New Providence, had obtained a Mareva injunction to prevent the sale of Mr Downie’s Albany home and freeze bank accounts belonging to himself and his wide at CIBC FirstCaribbean International Bank (Bahamas).

That injunction, obtained at a February 22, 2017, hearing before Justice Winder where only Blue Planet and its attorneys, Higgs & Johnson, were present, was successfully challenged by Mr Downie in the Supreme Court.

He argued that Blue Planet, whose Bahamian business he described as an International Business Company (IBC) serving as a “holding company” for the group, had failed to reveal he owned an 11 percent equity stake in the business that had been independently valued at $4.385m.

This sum, Mr Downie alleged, was worth double the sum Blue Planet was claiming from him, and the group had also failed to disclose to the Supreme Court that its Articles of Association enabled them to impose a lien or charge over his shares to “enforce” any debt he allegedly owed.

As a result, he argued that the Mareva injunction was irrelevant and unnecessary as Blue Planet had ample other remedies, especially the ability to block the sale of his shares. Justice Winder agreed and, based on Blue Planet’s non-disclosure, he discharged the asset freeze “in its entirety” on April 6, 2018.

Blue Planet’s appeal sought to reimpose the asset freeze against Mr Downie, who is counter-claiming for wrongful dismissal from his post as Blue Planet chief executive - a position he held from December 1, 2010, to July 18, 2016.

Appeal Justice Stella Crane-Scott, in a unanimous verdict, recorded that Blue Planet’s claim against its former chief executive was based on alleged “breaches of his contract and general breaches of his duties, including failing to meet target objectives, misrepresentation, unauthorised use of its funds, gross misconduct and insubordination, which had caused it loss and damage”.

The company sought the asset freeze after learning that Mr Downie had placed his Albany home up for sale and was seemingly making plans to leave The Bahamas. It sought an undertaking from him that he would not “dissipate” his Bahamas-based assets below a value of $2m - something he refused to do.

Julian Askin, Blue Planet’s chairman, alleged that “Mr Downie was looking to buy or rent a home in Pompano Beach, Florida. The Askin affidavit set out Blue Planet’s belief that if Mr Downie relocated to Florida, any judgment which the company may obtain against him in The Bahamas would be rendered nugatory as it would be unable to recover the amount from Mr Downie”.

Blue Planet claimed it had lost $1.147m and £64,830 as a result of Mr Downie’s allleged “unauthorised activities”, which purportedly included $142,000 in non-approved bonuses; the unauthorised hiring of his wife at Blue Planet’s Yellow Elder subsidiary; unapproved sums spent on furniture, a housing allowance, homeowners insurance and travel.

However, Mr Downie’s attorney, Metta McMillan-Hughes of Lennox Paton, argued before the Court of Appeal that “nothing could change the simple fact that Blue Planet had failed to fully disclose the existence and extent of Mr Downie’s shareholding, and the fact that Blue Planet had under its control $4.38m of Mr Downie’s shares which were obviously not at risk of dissipation”.

The Court of Appeal agreed, finding that had the existence of Mr Downie’s shareholding and Blue Planet’s ability to impose a lien on it been disclosed at the initial hearing, he would “seriously question the entire basis” on which the asset freeze was being sought.

“In our view, the existence in Blue Planet’s articles of association of a provision enabling Blue Planet to place a lien on Mr Downie’s shares was undoubtedly information which was both material and relevant to the exercise of the judge’s discretion whether he ought to grant the injunction at all, or even on the terms which he did,” Justice Crane-Scott found.

“It essentially, suggested that Blue Planet had it in its power to essentially take self-help measures to secure payment of any amounts which Mr Downie might later be found to owe to it following a full hearing of action and the substantive issues before the court.....

“Instead, notwithstanding its duty of full and fair disclosure, Blue Planet (with full knowledge of Mr Downie’s $4.385m shareholding) led the learned judge to believe that the Albany residence appeared to be Mr Downie’s ‘only asset’ in the jurisdiction.”

The Court of Appeal also agreed that it was impossible for Mr Downie to sell his shares prior to any trial, and said: “Having found that the non-disclosure was known to Blue Planet and could not have been perceived as irrelevant, and therefore was not innocent, the learned judge refused to exercise his discretion to continue the injunction or to make a new injunction on terms...

“We find no error of principle in how his discretion was exercised and, once again, we are not prepared to interfere.” However, it did set aside the Supreme Court’s costs order on the basis that Blue Planet had been denied a full hearing on the matter.

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