Legal Scoop | To defraud or not to defraud …The case of Brilliant Investments Limited against Jennifer Messado, Jennifer Braham and Rory Chinn [Part II]

The last time this column was printed, ‘Why Jamaican directors should give a heck about Jennifer Messado’s personal assistant’, we looked at the judgment of Justice Laing in Brilliant Investments Limited v Jennifer Messado, Jennifer Braham and Rory Chinn in so far as it related to findings against the second defendant, Jennifer Braham.

READ: Why Jamaican directors should give a heck 

This week’s column will look at the findings of his lordship in so far as it relates to the third defendant, Rory Chinn. It should be noted that judgment had been entered against the first defendant, Mrs Messado, a few months before. According to Justice Laing, it had been clear that the admissions in her defence and affidavits had been sufficient to support summary judgment being entered against her on the claim. This is why readers will find no lengthy analysis of the case against Mrs Messado in the written judgment. Judgment had already been entered against her a few months before the actual trial.

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. The kernel of Brilliant’s case against Mr Chinn was that he, in conjunction with Mrs Messado and Mrs Braham, had fraudulently orchestrated the transfer of properties owned by Brilliant to him, Mr Chinn, without knowledge of the de facto owner of Brilliant, one Mr Paul Morrison.

DID MR CHINN KNOW OF OR PARTICIPATE IN THE FRAUD BY MRS MESSADO?

The single most important query the Supreme Court had to resolve to determine the liability of Mr Chinn was whether he knew of and was party to the fraud Mrs Messado had perpetrated against Brilliant. If he were, then his title to the properties in question could be defeated. Had he not known or been party to the fraud, then his title to the properties was good and could not be defeated.

MRS MESSADO’S DEFENCE VS MR CHINN’S DEFENCE

To determine whether Mr Chinn participated in the fraud by Mrs Messado, the court, first, paid substantial attention to whether the monies given to Mrs Messado by Mr Chinn was by way of a loan, for which the properties owned by Brilliant were offered as security only (as alleged by Mrs Messado), or whether the monies given to Mrs Messado were as payment for the properties in question, with options to repurchase same, as contended by Mr Chinn.

To this end, the judgment pores in great detail through the evidence on both sides before concluding that Mr Chinn’s account was more credible than that of Mrs Messado and, therefore, to be preferred above hers.

Additionally, “in any event,” according to Justice Laing, “even if the transaction was a loan, that without more, would not amount to fraud unless Mr Chinn knew Mr Morrison was the beneficial owner of Brilliant and that Mrs Messado was not authorised to deal with the properties.”

DID MR CHINN KNOW THAT MRS MESSADO WAS NOT THE BENEFICIAL OWNER OF THE PROPERTIES?

Under this heading, it is sufficient to quote one aspect of Justice Laing’s dicta to summarise his conclusion:

I keenly observed the demeanour of Mr Chinn as he gave his evidence and I accept his evidence that Mrs Messado said that she was the beneficial owner of Brilliant and that he believed her when she said so. I also find that this governed his decisions and his conduct thereafter. I accept his evidence that he did not know of Mr Morrison’s involvement with Brilliant. I concluded that he was a shrewd businessman but that he was also cautious … the oral and documentary evidence, viewed in its totality, does not convince me, on a balance of probabilities, that he was a knowing participant in Mrs Messado’s fra ud or any other fraud, which would affect his registered interest pursuant to the Registration of Titles.

Justice Laing also accepted Mr Hylton’s submission that, on the evidence of Mrs Messado and Mr Morrison, the reason for using Ms Braham as nominee director and nominee shareholder was to keep Mr Morrison’s involvement secret, which would not have necessarily been consistent with disclosure to Mr Chinn. Justice Laing also accepted the second reason advanced by counsel, Michael Hylton, QC, under this heading, namely that disclosing Mr Morrison’s interest would have been contrary to the improper scheme which Mrs Messado intended to execute, which included the unauthorised use of Brilliant’s assets.

“The disclosure,” according to the judge, “of Mr Morrison’s interest to any person whom Mrs Messado wished to rope into her scheme would make the involvement of such person exponentially more difficult, as she did not in fact have authorisation to use the relevant properties and such a person would need to be a knowing and willing participant in the fraud.”

Having considered all the evidence before him, Justice Laing, therefore, concluded that the claims made against Mr Chinn had not been established.

CONCLUSION

There are many conclusions to be drawn from this case (as covered in today’s column and in ‘Why Jamaican directors should give a heck about Jennifer Messado’s personal assistant’ published on September 15, 2019), viz:

1. Directors have enormous responsibilities to act in the best interests of the company they direct.

2. Where a director is asked to sign away company property, especially, he should ensure, in signing, that he is acting in the best interests of the company he directs, he should not just trust that the person who gave him the document to sign has the best interests of the company at heart.

3. In general, a registered proprietor’s title to property will be good, even where same is sold to him fraudulently, provided he did not know of, or knowingly participate, in the fraud at the time of sale. The dispossessed owner must look to the fraudsters, and not the purchaser, for damages for loss of his property, bye-bye property.

Lead counsel in this aspect of the case were Georgia Gibson Henlin, QC, for Brilliant and Michael Hylton, QC, for Mr Chinn.

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