Flowers v EIC (Gib Court of Appeal) (2024/GCA/005)

Mr Tom Poole KC and Mr Rowan Pennington-Benton for the Appellant, Andrew Flowers,

SIR PATRICK ELIAS, JA:
Introduction
Neutral Citation Number 2024/GCA/005

1. On 25 July 2016 the Respondent insurance company, Enterprise Insurance Company PLC (“EIC”), went into provisional liquidation and an order for its compulsory liquidation was made on 26 October 2016 on the grounds that it was insolvent. In December 2016 the liquidator, Mr White, asserted that EIC’s deficiency was around £200 million. That figure has been disputed, but on any view this was a very significant insurance failure.

2. EIC, acting by its liquidator, took proceedings against fourteen defendants. Eleven of them were, either for all or part of the period in issue, directors of EIC. Some were executive directors, and the rest were non-executive directors. A fourteenth defendant was Rhone Holdings Limited (“RHL”), which was for a period a 50% shareholder of Enterprise Holdings Limited (“EHL”), the holding company of EIC. EHL (in liquidation) and another of its subsidiaries, EIG Services Limited (“EIG”), also in liquidation, were the other two defendants, and proceedings were stayed against them.

3. EIC has settled the proceedings against all individual defendants, except Mr Flowers. He was the major figure behind the Enterprise group. He was a director of all three Enterprise companies and was Chief Executive of EIC until 2014. It was alleged that in various ways he was in breach both of his fiduciary duties towards EIC and of the duty of care he owed to that company.

4. After a very lengthy and complex trial – there were over a hundred bundles of double-sided documents, and the factual and expert evidence together took some 31 days – Restano J found substantially in favour of EIC. In an impressive judgment running to some 360 pages, the judge set out in considerable detail the relevant principles of law, the evidence given by the witnesses of fact and experts, and his findings on that evidence. The assessment of damages was left to a later hearing.
Neutral Citation Number 2024/GCA/005

5. The appellant challenges many of these findings. For the most part, the legal principles are not in any real doubt, although their application to the facts is very much in dispute. Furthermore, the appellant takes issue with some of the judge’s findings of fact.

6. The appellant also alleges that the judge conducted the case unfairly. It was an unusual hearing in that the appellant dispensed with his counsel five days into the trial, he says for financial reasons. Mr Flowers submits that thereafter it was unfair for him to have to conduct this complex case without proper legal representation. He also made other complaints about what he alleged were procedural failings by the judge, such as the way in which the judge dealt with the statements of witnesses who were not in the event called to give evidence. I deal with these procedural complaints at the end of this judgment.

7. Mr Flowers has been represented in the appeal by Mr Tom Poole KC and Mr Rowan Pennington-Benton. (The appellant’s written argument had been prepared by Mr Thomas Roe KC and Mr Pennington-Benton, but Mr Roe was unable to appear at the oral hearing.) EIC was represented by Mr Nigel Jones KC and Ms Sarah McCann, who had also represented it below. Counsel provided extensive written submissions, both before and after the hearing, and all four counsel have participated in the oral advocacy, each side distributing the burden of the submissions between their counsel. We are grateful to all counsel for their assistance.

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