Legal Scoop | Why Jamaican directors should give a heck about Jennifer Messado’s personal assistant

One of several cases involving Jennifer Messado since her ignominious fall from the pinnacles of legal stardom is the case brought at the instance of Brilliant Investments, the judgment for which was recently handed down.

The Legal Scoop intends to look at this case from several angles in the weeks ahead. This week’s probe, however, turns on the case made out against Mrs Messado’s personal assistant, Mrs Jennifer Braham – a case which all directors in Jamaica should take note of.

BACKGROUND

The claimant, Brilliant Investments Limited (Brilliant), brought the case against Jennifer Messado, Mrs Braham and Mr Rory Chinn for fraudulent conversion, breach of trust, breach of contract, among others.

Brilliant had been incorporated in 2005, seemingly by Mrs Messado, on the instructions of Mr Paul Morrison. For some reason, the two had agreed that it would have been a good idea to appoint Mrs Braham as the company’s sole shareholder and director. It was understood by all the parties that Mrs Braham would be acting in her capacity as shareholder and director, purely as the nominee of Mr Morrison.

Mrs Braham’s sole qualification for this sensitive designation appeared to have been her close relationship to Mrs Messado. According to the judgment, Mrs Braham had worked for Mrs Messado firm’s for approximately 40 years, having been employed there since the age of 18. She had worked in various capacities with Jennifer Messado & Co; however, at the time of incorporation of Brilliant, Mrs Braham was Mrs Messado’s personal assistant.

Over the ensuing years, the properties, the subject of the lawsuit (two lots in Forest Hill and one in Grove Park Avenue) were acquired for Brilliant, with Mrs Braham, according to her evidence, signing whatever document that she was told to sign.

In or about 2013, seemingly having fallen on hard times, Mrs Messado, by her account, agreed with the third defendant, Mr Rory Chinn, to transfer the lots in question to him for a loan he had advanced to her. Mrs Messado further stated that she had attached conditions to the transfer which Mr Chinn did not comply with.

Mr Chinn’s version of how he came to advance monies to Mrs Messado for the lots does not coincide with her version, but the Legal Scoop will revisit that aspect of the case in a subsequent column.

For today’s column, however, what’s important is that the blank transfers which would have effected the shift of ownership of the properties in question, away from Brilliant to Mr Chinn, were signed by Mrs Braham as sole director, without the knowledge and consent of Mr Morrison.

MRS BRAHAM’S DEFENCE

By way of defence, Mrs Braham contended that Mrs Messado had the necessary authority, expressed or ostensibly so, to instruct her to sign the transfers in question. As such, she had not acted improperly in signing the transfers on Mrs Messado’s say-so only. Mrs Braham also argued that she possessed no special knowledge or experience which would have assisted her in relying on the instructions she received.

Furthermore, the established course of conduct between the parties created circumstances which would have allowed her to believe that Mrs Messado was authorised to provide her with instructions to exercise her powers on behalf of Brilliant and to cause her to believe that the instructions were given in accordance with the best interest of Brilliant.

THE COURT’S RESPONSE

In the judgment, Justice Laing rubbished Mrs Braham’s claim that her lack of experience and skill, and the usual practice of instructions to her flowing from Mrs Messado, her employer, justified her concluding that the instructions of Mrs Messado emanated from Mr Morrison. According to Justice Laing, this defence appeared to be the same as “giving effect, blindly and ignorantly, to others’ instructions”, which was criticised in the Central Bank of Equador case and which was found in that case not to amount to a good defence to the breach of duty claim.

NOMINEE DIRECTOR

While a claim had not been filed by Brilliant against Mrs Braham for breach of her fiduciary duty as a director, the court nevertheless, embarked on that query. Had Mrs Braham breached her fiduciary duties as a director to Brilliant? Having laid out the duties of a director as found under Section 74 of the Companies Act, including the duty to:

(a) act honestly and in good faith with a view to the best interest of the company; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Justice Laing then looked at authorities to conclude whether nominee directors (such as Mrs Braham) had a different standard of duty of care from regular directors and concluded they did not. According to Justice Laing, the cases

“demonstrate that nominee directors do not constitute a separate class of directors, accordingly, they owe the same duty of care to the company and are held to the same standard as other directors”.

Was it permissible for Mrs Braham to accept the instructions she received from Mrs Messado?

From all the evidence before him, Justice Laing accepted that Mrs Messado, as an attorney-at-law, would have had considerable influence over Mrs Braham. He noted that Mrs Messado admitted during cross examination that she had control over most of Mrs Braham’s actions in the office and certainly as it related to Brilliant.

According to Justice Laing, the relationship between Mrs Messado and Mrs Braham was clearly reflected in the evidence of Mrs Braham that in respect of the documents relating to the relevant properties and the transaction with Mr Chinn, she simply signed documents presented to her.

The judge was highly critical of this naïve approach. In the words of Justice Laing:

“It is implicit in a director’s duties that in making decisions, the director has to consider the nature of the transaction and nature of the decision which he or she is making ... Ms Braham’s evidence is that Mrs Messado just said ‘sign some documents’. It is clear from Ms Braham’s evidence that she made no attempt to understand what the transaction was about, on even the most basic level. I do appreciate that having regard to her skill sets, she may not have been able to understand the intricacies of the transaction but that is not an excuse not to make a reasonable enquiry.”

His Lordship, therefore, held that it had not been reasonable or permissible of Mrs Braham to accept the instructions of Mrs Messado without more. According to the judge, Mrs Braham, as the sole director, had been under a duty to consider the transaction and should not have wholly ceded this obligation to Mrs Messado

According to the judge:

“Ms Braham’s lack of ‘the information or resources necessary to carry out any serious analysis of the transactions’ deprived her of the ability to exercise her best judgment in the interests of the company. Accordingly, she became an easy pawn who was used by Mrs Messado in her scheme which resulted in Mr Chinn becoming the registered owner of the Relevant Properties, to the detriment of Brilliant ... I find that Ms Braham unwittingly became caught up in Mrs Messado’s scheme in which the Relevant Properties of Brilliant were misused. However, the authorities make it clear that her lack of intention is not a defence to a claim for breach of duty of care in circumstances such as these. Ms Braham is the author of her own misfortune. She willingly consented to become a nominee director and nominee shareholder of Brilliant and it is not an adequate response for her as a director to say ‘I did not know what I was doing, I was simply blindly following instructions of the company’s lawyer’. Accordingly, on the facts of this case, Ms Braham would be guilty of a breach of fiduciary duty to Brilliant; however, as previously indicated, this was [not] one of the heads of claim against her.”

As to whether Mrs Braham was liable for the claim of breach of trust, Justice Laing, having explored the authorities, noted that what is clear from an examination of the authorities is that although it is widely accepted that directors are not trustees in the strictest of sense, they can nevertheless be held liable for a breach of trust.

His Lordship further noted that it was a generally accepted principle that directors who dispose of the company’s property in breach of these fiduciary duties are usually treated as having committed a breach of trust.

He, therefore, concluded that Mrs Barrow, in addition to breaching her fiduciary duties as a director to Brilliant, was also guilty of breach of trust, even though he did not find that she had acted fraudulently.

CONCLUSION

Today’s conclusion is “res ipsa loquitur”, the facts speak for themselves. Lead counsel in the case included: Mrs Georgia Gibson-Henlin, QC, for Brilliant Investments Limited, Christina Excell for Mrs Messado, Ms Monique McLeod for Mrs Braham, and Mr Mike Hylton, QC, for the third defendant.

 

- Shena Stubbs-Gibson is an attorney-at-law and legal commentator. Send feedback to editorial@gleanerjm.com or shena.stubbs@gleanerjm.com. Twitter:@shenastubbs