Wed | Aug 16, 2017

Musson loses again to Claude Clarke

Published:Thursday | October 6, 2016 | 10:00 AMJovan Johnson
Clarke

Local business conglomerate Musson (Jamaica) Limited has failed in another attempt to have a court accept its argument that businessman Claude Clarke "unjustly" enriched himself when it paid off a $12 million debt linked to companies he owned.

The Court of Appeal dismissed an appeal brought by Musson against a Supreme Court decision that rejected the enrichment claims.

Court documents show that in 1998, Clarke was the managing director and principal shareholder of Highgate Food Products Limited (Highgate) and Candyman Jamaica Limited (Candyman), which also had rights to distribute Highgate and Kraft products in Jamaica.

In June of 1998, by a deed of assignment, Candyman assigned its distribution rights to Musson.

The agreement also mandated that Candyman would be responsible for bad stock and uncollectible goods as at August 15, 1998.

On August 18, 1998, three days after the computation of the sum of $7.9 million for bad stock, Clarke issued the first in a series of promissory notes payable to Citibank for the sum of $9.9 million to be paid to the order of Musson.

Musson claimed that it stood as a guarantor for the loan, but Clarke countered, saying that the loan was for the benefit of Musson to reduce Highgate's indebtedness.

Musson advised Citibank to have Clarke settle the loan in 2004, but that proved futile and the company said it ended up paying.

In her judgement handed down on September 23, Justice Almarie Sinclair Haynes noted that "the facts of this case are, however, euphemistically atypical".

"The circumstances of this case deviated from the norm. Musson as guarantor received the proceeds of the loan and not the respondent (Clarke)," she stated.

 

FULL PROCEEDS RECEIVED

 

She noted that on the occasion when Musson signed up to guarantee the debt, none of the proceeds from a promissory note issued afterwards were paid to Clarke.

"It is not contested that in each case it was Musson that received the full proceeds of each note," Haynes reasoned.

"The incontrovertible evidence is that the respondent was not personally indebted to Musson. As already noted, Highgate/Candyman was indebted to Musson as a result of the arrangement of June 5, 1998. Musson, as guarantor, was the recipient of the loan proceeds from Citibank and not the respondent."

The judge accepted the 2011 finding of the lower court judge, Carol Lawrence Beswick, that Clarke signed the promissory notes "to assist the late (Desmond) Blades/Musson [and] to prevent financial embarrassment to Musson consequent on Musson's cash flow problems".

Blades, who is deceased, was executive chairman of Musson at the time.

Musson's lead attorney, Dr Lloyd Barnett, declined to speak on the judgement, but his clients have the option of appealing to the United Kingdom-based Privy Council, Jamaica's final court of appeal.

jovan.johnson@gleanerjm.com