DOWNERLavern Clarke, Staff Reporter
PRICEWATERHOUSECOOPERS AND its senior partner Richard Downer have lost the first round in the legal battle now being fought between the international accounting and auditing firm and Chambers Henry and Partners.
PricewaterhouseCoopers' lawyers failed in two days of appearances in the Supreme Court this week to have the more than $29 million fraud case thrown out against defendants Pricewaterhouse-Coopers and Downer.
Justice Lloyd Hibbert on Thursday ruled that Douglas Chambers had the authority to bring the suit against them, despite arguments from their attorneys that the writ of summons and statement of claim filed last October be struck out by the court on the basis that Chambers had no power to sue.
"Their claim was dismissed," Benito Palomino confirmed via telephone yesterday. Chambers was represented in court by Palomino and Alexander Williams of the law firm Williams, Palomino, Gordon-Palomino, and Pamela Benka-Coker, Q.C.
Douglas Chambers, a senior partner in CHP Chartered Accountants, is contending that Downer and his firm mishandled two receiverships causing the companies, Thermo-Plastics Jamaica Limited and Plas-Pak Limited to incur new but avoidable debt, and that Downer overbilled on receivership fees.
Chambers brought suit on behalf of Thermo-Plastics and Plas-Pak against PricewaterhouseCoopers and two partners four months after he succeeded Downer as receiver. John Lee is named in one of three writs for breach of fiduciary duty, and is seeking to recover more than $116 million.
PricewaterhouseCoopers has made no attempt so far to speak to the merits of the case against it.
Instead, Derick Jones of the firm Myers Fletcher and Gordon, lead attorney for the defence, argued before Justice Hibbert on Wednesday that Douglas Chambers, who replaced Downer as receiver of the companies last June, had needed the "leave of the court" or the court's permission to bring the suit, and that Chambers had no authority under the debenture to sue. Jones and Malaica Wong appeared for the defendants.
Justice Hibbert ruled, however, that the powers in the debenture were wide enough. He also disagreed with the argument by the defence that the section of the Companies Act that requires liquidators to seek the court's permission to sue, was also applicable to receivers.
Chambers was appointed to replace Downer by Financial Adjustment Company (FINSAC) agent, Dennis Joslin, who last year was contracted to collect on the outstanding bad debts assumed by the state-owned financial readjustment agency.
Chambers has authority over Thermo-Plastics and Plas-Pak under separate debentures.
An order for liquidation of the companies had been made, but that was prior to Chambers taking over the receivership, Palomino said, adding that the plaintiffs were surprised that the defence would have sought to bar the suit on that basis.
"They themselves (Downer and PricewaterhouseCoopers) had already been continuing with actions to recover the assets of the company," the attorney said. "The winding up did not stop their work as receivers."
Jones said last night that now that the judge has ruled that Chambers was an appropriate plaintiff, the next move was "to deal with the substantive allegations."
PricewaterhouseCoopers and its partners, who managed the receiverships for approximately four years between 1998 and 2002, now have until Monday, February 17, to file a defence against the October writs.
"The defence will speak for itself when it is filed," said Jones last night. "We reject the allegations of fraud or improper behaviour and the defence will set that out."
Palomino says their next move, after the defence is filed, is to seek a case management review, hopefully within eight weeks and that they would also seek to have the trial set and completed within the year.
Both lawyers agree that it is within their interests to get the matter to trial as quickly as possible, given the nature of the allegations, and that the new rules of the court which encourage speedier disposal of cases would facilitate their objective.
"The process of having the matter resolved as quickly as possible is something in which I think both sides will be enthusiastically involved," said Jones.
