Tipperary T&C Management Ltd v Lofton Morley
| Jurisdiction | Turks and Caicos Islands |
| Judge | Mr Justice Anthony S. Gruchot |
| Judgment Date | 13 February 2024 |
| Docket Number | CL 173/23 |
| Court | Supreme Court (Turks and Caicos) |
The Hon. Mr Justice Anthony S. Gruchot
CL 173/23
IN THE SUPREME COURT
Mr Murray Snider of Griffiths & Partners for the Plaintiffs
Ms Chloe McMillan of F Chambers for the Defendant.
On 14 th December 2023, but dated 11 th December 2023, the Plaintiffs issued a specially endorsed writ of summons alleging various breaches of fiduciary duty, breach of trust, misrepresentation and dishonesty against the Defendant claiming the sum of at least US$262,991.55. The losses claimed by the Plaintiffs are said to arise from the Defendant's employment with the 1 st Plaintiff on 18 th July 2016 as a Resort Wedding Planner. This position included responsibilities to the 2 nd to 4 th Plaintiffs.
It is alleged that in 2018 the Defendant started a business called Island Dream Destination Planning (‘IDDP’) and wrongly directed funds due to be paid to the Plaintiffs, into that business and hence for his own use.
On 16 th September 2022 the Plaintiffs' attorneys sent a letter before action to the Defendant making various demands including a written confirmation that the Defendant accepted that he had acted dishonestly and in breach of his employment contract and other duties and demanding payment within two days, of the sums of US$50,544.39 in respect of commissions which it is alleged the Defendant was not entitled and US$172,586.26 with respect to deposit payments allegedly taken by the Defendant from customers who allegedly thought they were dealing with one or more of the Plaintiffs.
The letter of 16 th September 2022 included what was described as a draft of the writ of summons and statement of claim as an indication of intended proceedings if the Plaintiffs' demands were not met.
The Defendant's attorneys responded on 22 nd September 2022, referring to the draft writ of summons which they say they received that day and requested seven days to take instructions and respond. On 23 rd September 2022, the Plaintiffs' attorneys replied declining the period of time requested to respond “ because of the urgent nature of the claim and ongoing losses suffered by our clients.” (My emphasis)
The Defendant was served with the sealed writ of summons on 18 th January 2024, the urgency presumably obviated.
On 16 th January 2024 the Plaintiffs issued a summons seeking:
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1. An order restraining the Defendant from:
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a. directly or indirectly removing or transferring, or assisting in the removal or transferring, of any of the Defendant's assets from the TCI, or doing any act, the effect of which is to remove or transfer, or assist in the removal, of the Defendant's assets from the TCI, without leave of this Court;
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b. directly or indirectly removing or transferring any assets, including cash, shares, certificates or other valuables from any account to the credit of the Defendant, or held on the Defendant's behalf at any bank or financial institution, without leave of this court; and
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c. transferring, charging or otherwise disposing of or dealing with the land comprised in parcel 61103/19, Long Bay Hills.
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2. Inhibiting any dealing with the land comprised in parcel 61103/19, Long Bay Hills.
The summons incorrectly identifies the Defendant as Lofton Morely and concludes by stating “ AND TAKE FURTHER NOTICE THAT this application is made without notice to the above-named Defendant.” Given that the application is made by summons it is properly an inter-partes application. In the event, it transpires that the Defendant was served with the summons.
The summons is supported by the 1 st affidavit of Glen Peel, Group Internal Auditor of the Plaintiffs, sworn on 12 th January 2024 (‘the Affidavit’) which is accompanied by an exhibit (‘the Exhibit’). The Affidavit concludes:
“Based on the foregoing, I do verily believe that the plaintiffs have a prima facie case and a good cause of action against the Defendant, in fraud, breach of trust, and breach of the employment agreement with the plaintiffs.”
I note that, notwithstanding that both the Affidavit and Mr Snider's skeleton arguments are replete with allegations and assertions of fraud, no allegation of fraud is included in the writ of summons nor is any fraud specifically and distinctly pleaded in the statement of claim, as it must be 1.
Mr Peel did not attend the hearing of the application which would have assisted me in understanding the nature of the alleged wrongful actions which were not clearly described in the Affidavit, to which I refer further below.
As set out in paragraph 5 above, the Plaintiffs considered that their claim was urgent, but they have not acted with any degree of urgency. Mr Peel's evidence is that the alleged wrongdoing was discovered in or around April 2022 and the Plaintiffs allegedly had proof of the wrongdoing from 22 nd June 2022 when Mr. Peel accessed the Defendant's e-mail, laptop and hard drive 2. Whilst Mr Snider is correct to say that delay is not a bar to the granting of a freezing injunction, the lack of any explanation for taking some 15 months to issue the writ and this application, following the letter before action, is in my view unsatisfactory, even more so in light of the refusal to give the Defendant's attorneys a 7-day extension to respond to the letter before action.
The requirements that the Plaintiff must show on an application for a freezing injunction 3 are 4:
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a. A cause of action justiciable in the Turks and Caicos Islands;
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b. A good arguable case;
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c. Assets of the Defendant within the jurisdiction 5; and
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d. A real risk of removal or disposal of the assets;
On an application for a freezing injunction there is a duty of full and frank disclosure on the Plaintiffs 6, such an order having a draconian effect.
It became apparent during the course of the hearing that on 5 th October 2023 the Plaintiffs had applied to the Registrar of Lands in a failed attempt to have a caution registered against parcel 61103/19, Long Bay Hills, Providenciales, the Defendant's property. That application was supported by a purported statutory declaration dated 26 th September 2023 7. It further became apparent that on 29 th November 2023 the Plaintiffs filed an appeal of the Registrar of Lands decision by commencing action no. CL 169/23 by way of a Notice of Appeal 8.
As noted above, the Affidavit was sworn on 12 th January 2024. None of the above information is contained in the Affidavit. I regard this as a breach of the duty to give the Court full and frank disclosure with respect to the application.
The above facts only came to my attention by happenstance and I do not accept Mr Snider's submission that there was no breach of the full and frank duty, as reference to the caution and appeal was made on his feet and in response to my enquiries. The place to disclose relevant facts whether in favour or against the plaintiff is in the supporting affidavit 9.
Paragraphs13.a and 13.b above can be considered together under the above
As noted above, the writ of summons was served on the Defendant on 18 th January 2024. An acknowledgement of service was filed on behalf of the Defendant on 31 st January 2024 indicating an intention to defend the whole of the claim. Accordingly, the date for filing the defence does not expire until 15 th February 2024. On the hearing of the summons, no defence had yet been filed nor did I have the benefit of any responsive affidavit. I declined the offer of one being filed subsequently.
With respect to whether the Plaintiffs have shown that they have a good arguable case on the substantive claim over which the court has jurisdiction, there are certain difficulties. It is clear that the causes of action are ones over which this Court would have jurisdiction.
Mr Peel makes the following allegations 10:
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a. Mr Morley induced customers to pay deposits directly to IDDP under the mistaken belief that IDDP would be providing wedding services;
b. Mr. Morley induced suppliers of goods and services to the Resorts to make payments to (sic) directly IDDP, under the mistaken belief that IDDP was the provider of wedding services;
c. Mr. Morley manufactured fraudulent invoices from IDDP for payment of services that were delivered by the Resorts; and
d. Mr. Morley retained for himself or for the benefit of IDDP deposits paid by customers which were directed to the Resorts and had manufactured invoices at marked-up prices retaining profits and commissions to which he was otherwise not entitled to.”
No documents were contained in the Exhibit supporting these specific allegations.
There is no explanation as to why the Plaintiffs did not discover that they were providing services for which they were not receiving payment, the ‘red flag’ that commenced the investigation being that the Defendant from time to time allegedly sent email requests to the Assistant Reservations Manager for Island Dream Destination to be added as a travel agent 11 which Mr Peel describes as “ unusual”. Further, and despite Mr Snider's best efforts to explain, I still do not understand how the allegation that suppliers to the Plaintiffs have made payments to IDDP or the Defendant in respect of goods and services they have supplied 12There is also an issue as to the legal identity of IDDP. The document in support of the creation of IDDP is not a company search as stated by Mr Peel but is entitled ‘Business Name Search Results’.
Mr Peel's evidence is 13:
“In or around 7th February 2018 Mr. Morley incorporated a TCI company named Island Dreams Destination Planning (“IDDP”). Mr....
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