Andrew Flowers v Enterprise Insurance Company Plc (In Liquidation) (Gibraltar) (and No 2)

Why It Matters

The ruling limits liquidators’ ability to claim gross outflows without crediting returned capital, ensuring compensation aligns with actual loss and shaping future insolvency litigation involving group transactions.

Key Takeaways

• Court of Appeal netted loss after accounting £32.3m capital return.
• Liquidator’s claim reduced from £48.7m to £36.3m after rebates.
• Capital injections deemed causally linked, not independent collateral benefits.
• Over‑compensation risk if returns ignored, violating compensatory principle.
• Share‑subscription structure doesn’t alter economic reality of asset increase.

Summary

The hearing centered on the appeal of Enterprise Insurance Company’s liquidation, where litigant‑in‑person Andrew Flowers argued that the core issue was the true economic loss suffered by the insurer after a complex series of intra‑group transactions.

Flowers highlighted that the original liquidator claim of £48.7 million was effectively reduced to £36.3 million once £12.4 million in rebates and a £32.3 million capital injection from the parent EHL were accounted for. He stressed that the Court of Appeal correctly applied the compensatory principle, treating the capital return as a causal benefit rather than an independent, collateral windfall.

Key excerpts included, “the law does not ignore the return simply because the underlying conduct was wrongful,” and references to precedent cases Swinson and Titua. He illustrated the “triangular model” – funds moving from EIC to EIG to EHL and back – to demonstrate the single economic chain linking outflows and inflows, and dismissed the liquidator’s argument that share subscriptions altered the substance of the benefit.

The decision underscores that loss assessments in insolvency must reflect net economic reality, preventing over‑compensation and clarifying the treatment of intra‑group capital injections. It sets a clear precedent for future liquidators and boards when evaluating claims involving complex group structures.

Original Description

Andrew Flowers (Appellant) v Enterprise Insurance Company Plc (In Liquidation) (Respondent) (Gibraltar)

Case ID: JCPC/2025/0020

https://www.jcpc.uk/cases/jcpc-2025-0020.html

Andrew Flowers (Respondent) v Enterprise Insurance Company Plc (In Liquidation) (Appellant) No 2 (Gibraltar)

Case ID: JCPC/2025/0021

https://www.jcpc.uk/cases/jcpc-2025-0021.html

Hearing date: 29 April 2026

Session: Afternoon session [Session 2 of 2]

Issue:

JCPC/2025/0020

Did the Court of Appeal err in ruling that neither clause 11.4 nor the common law relating to public policy meant that the Icebreaker policies were void or unenforceable or otherwise provided EIC with a defence to the claims by policyholders?

JCPC/2025/0021

Did the Court of Appeal err in holding that certain payments from EHL to EIC should be credited against the liability of Mr Flowers to pay equitable compensation for dishonest breaches of fiduciary duty and/or damages for breaches of common law?

Facts:

These are linked appeals. Enterprise Insurance Company PLC (“EIC”), an insurance company registered in Gibraltar, is the Respondent in the first appeal and the Appellant in the second. In 2016, EIC went into liquidation on the grounds that it was insolvent. Mr Andrew Flowers is the Appellant in the first appeal and the Respondent in the second. Until 2014, he was the Chief Executive Officer of EIC. Mr Flowers was also a director of two other companies in the Enterprise group, Enterprise Holdings Limited (“EHL”), the holding company of EIC, and EIG Services Limited (“EIG”), another subsidiary of EHL also registered in Gibraltar. Both EHL and EIG are also in liquidation.

The liquidator asserted that EIC’s deficiency was around £200 million. Through its liquidator, EIC commenced proceedings in Gibraltar against 14 defendants, most of whom were directors of EIC in the relevant period. Claims against 13 defendants were settled, but the proceedings against Mr Flowers proceeded to trial. EIC alleged that Mr Flowers had committed multiple breaches of both his fiduciary duties and his non-fiduciary duty of care towards EIC.

Following trial, the Supreme Court of Gibraltar found substantially in favour of EIC and held Mr Flowers liable for multiple breaches of his duties to EIC. The court found (among other things) that Mr Flowers acted negligently because, when issuing hundreds of insurance policies in relation to a tax avoidance scheme referred to as “Icebreaker”, he failed to take proper professional advice as to the nature and extent of the risks associated with the scheme and the obligations imposed on EIC as a result. On appeal, the Court of Appeal of Gibraltar dismissed all but one of Mr Flowers’ grounds of appeal. The grounds dismissed by the Court of Appeal include Mr Flowers’ appeal on the Icebreaker issue. The Court of Appeal also held that certain payments made by EHL to EIC should be credited against the liability of Mr Flowers to pay equitable compensation and damages.

Both parties now appeal to His Majesty’s Privy Council. Mr Flowers appeals in relation to the Icebreaker issue. EIC appeals in relation to whether the payments it received from EHL should be credited against Mr Flowers’ liability.