Upload
phamtu
View
223
Download
0
Embed Size (px)
Citation preview
1
IN THE SUPREME COURT OF BELIZE, A. D. 2010
CLAIM NO. 878 of 2010
(BANKS HOLDINGS LIMITED Respondent/Claimant ( ( AND ( (BELIZE CITRUS GROWERS ASSOCIATION (INVESTMENT COMPANY LIMITED Applicant/1 st Defendant (CITRUS PRODUCTS OF BELIZE LIMITED 2 nd Defendant
Before: Justice Minnet Hafiz
Dr. Elson Kaseke for the Applicant/1 st Respondent Mr. Dereck Courtenay SC along with Vanessa Retreage for the Respondent/Claimant
D E C I S I O N
Introduction
1. In this Application which was heard on the 3 rd May, 2011, the Applicant,
Belize Citrus Growers Association Investment Company Limited, applied
to the court for an interim declaration until the trial of the Claim or further
order that the Resolutions made at an Extra General Meeting of Citrus
Products of Belize Limited on the 17 th December, 2010 are valid and
effective and that:
(a) the appointment of Henry Canton with Citrus Products of Belize
Limited was terminated with immediate effect as from the 17 th
December, 2010.
(b) A committee comprised of Denzil Jenkins, Roselia Zabaneh and a
Banks Holdings Limited nominee on the Citrus Products of Belize
2
Limited Board of Directors was created and became operative with
effect from the 17 th December, 2010, for the purposes of the tasks
specified in the Resolution.
(c) The firm Howarth Belize LLP stood appointed as the independent
auditors of the Citrus Products of Belize Limited to conduct a
feasibility study of each of the subsidiaries of the Citrus Products of
Belize Limited with effect from 17 th December, 2010 and required to
report to the membership of Citrus Products of Belize Limited within
two months.
Grounds of Application
2. The grounds of the application are that:
(a) Banks Holdings Limited (BHL), by notice of an urgent application,
applied in this Claim for an urgent interim injunction to restrain, inter
alia, the Citrus Growers Association Investment Company Limited
(ICL) from convening or holding an Extra Ordinary General Meeting
of Citrus Products of Belize Limited (CPBL) or from causing the ICL
from convening or holding such a meeting pursuant to a Requisition
Notice lodged with CPBL by ICL as shareholders of the CPBL
dated 2 nd December, 2010.
(b) The Application by BHL for the urgent interim injunction was refused
by the Court.
(c) Thereafter, on the 17 th December, 2010, an Extraordinary General
Meeting of Citrus Products of Belize Limited was held and the
Resolutions were duly passed.
(d) To ensure the good corporate governance of CPBL, the Applicant
seeks an interim declaration, until trial or further order, that the
Resolutions passed at the Extraordinary General Meeting of 17 th
December, 2010 are binding and effective.
3
The background
3. These proceedings began by Claim Form and Statement of Claim dated
13 th December, 2010, by BHL which claimed against ICL and CPBL
inter alia for:
(1) A Declaration that the Investment Agreement is valid and binding as
between the Claimant, 1 st Defendant and the 2 nd Defendant.
(2) A Declaration that the Claimant, by virtue of the Investment
Agreement, is entitled to participate in the management of the
Company pursuant to and in accordance with the terms of the
Investment Agreement.
(3) A Declaration that, pursuant to the terms of the Investment
Agreement, a 2/3 majority of the Board of Directors is required for the
removal and appointment of any executive of the Company, including
but not limited to the Chief Executive Officer;
(4) A Declaration that pursuant to the Investment Agreement , the powers
of the Board of Directors of the 2 nd Defendant can only be delegated
by a 2/3 majority vote of the Board of Directors.
(5) A Declaration that the material differences concerning the
management of the 2 nd Defendant which have arisen among the
Claimant, 1 st Defendant and the 2 nd Defendant must be settled
through arbitration as provided by Clause 30 of the Investment
Agreement.
(6) A Declaration that the Claimant has properly commenced the process
for settlement of material disputes in accordance with the Investment
Agreement and, that the 1 st and 2 nd Defendants are obliged to
comply with that process.
(7) An order that ICL and CPBL are restrained from engaging in any
conduct which would infringe the jurisdiction of any arbitrator or
arbitrators appointed by the parties or which would delay or frustrate
the arbitration process initiated by BHL in respect of material
4
differences which have arisen between the parties hereto, including but
not limited to:
1. Causing to occur or conducting any meeting of CPBL whose purpose is to pass a resolution or resolutions having the effect of altering the current management arrangements under which CPBL is governed until the conclusion of the trial of this matter.
2. Terminating the employment contract of Henry Canton with CPBL as Chief Executive Officer or at all until the trial of this matter.
3. Establishing any committee to manage any aspect of the affairs of CPBL, including the terms, remuneration and appointment of the Chief Executive Officer.
4. On the 13 th December, 2010, BHL also applied to the court in these
proceedings seeking an urgent interim injunction prohibiting both the ICL
and CPBL from holding an extraordinary general meeting or meetings
pursuant to a Requisition Notice dated 2 nd December, 2010 for the
purpose of passing the following resolutions.
a. That Henry Canton’s employment with CPBL be terminated;
b. That Henry Anderson be appointed as the interim Chief
Executive Officer of the 2 nd Respondent;
c. That a committee comprised of Denzil Jenkins, Rosella
Zabaneh and a nominee of the Applicant be constituted and
tasked with setting the terms and conditions of the
appointment of the interim Chief Executive Officer and
appointing a new Chief Executive Officer upon such terms and
subject to such conditions as to remuneration, tenure and
otherwise as the committee shall deem to be in the best
5
interest of CPBL or for the purpose of passing any resolution
having the like effect; and,
d. That the quorum for the committee will be two members and
the committee shall make decisions based on majority vote of
its members.
5. This Court heard the application for the urgent interim injunction on the 16 th
December, 2010 and refused the injunction sought for reasons stated in
that decision. The extraordinary general meeting of CPBL was thereafter
duly convened and held on the 17 th December, 2010 and certain
resolutions were passed.
The present application of ICL
6. The Applicant, ICL seeks an interim declaration that the Resolutions are
valid and effective so that CPBL can enforce those resolutions. This
application is supported by the affidavits of Denzil Jenkins and Eccleston
Irving both sworn on 29 th March, 2011.
7. Mr. Irving deposed that to ensure good governance of CPBL the applicant
is seeking an interim declaration that the Resolutions passed at the
Extraordinary General Meeting are valid and effective. See Mr. Irving’s
affidavit for evidence of serious cash flow problems.
8. Mr. Jenkins deposed that on 16 th February, 2011, Richard Cozier,
CEO/Managing Director of BHL wrote an email to the Secretary of the
Citrus Growers Association which was copied to him stating that as far
as they are “aware the CEO (Dr. Henry Canton) still functions fully in that
capacity, the CPBL Board has not cancelled his contract nor terminated
his services, and only they can do so”. See DJ 2 for a copy of the said
email.
6
9. At paragraph 8 of his affidavit he deposed that on February 11, 2011,
Directors Rosella Zebaneh, Antonio Zabaneh, Ivan Williams, Henry N.
Anderson and himself had written to Richard Cozier stating that at the
Extraordinary General Meeting of CPBL held on the 17th December,
2010, ‘the tenure of office of the CEO of CPBL was determined’. See DJ 3 for a copy of the letter to Richard Cozier dated 11th February, 2011,
which was copied to all CPBL Directors and transmitted by email and fax
to each of them.
10. Mr. Jenkins then further deposed that on Friday 18 th February, 2011, the
Directors of CPBL met at the Radisson Fort George Hotel in Belize City.
Further, that Dr Henry Canton was present at the meeting, and the
Directors appointed by Banks Holdings Ltd insisted that the Board of
Directors recognized him as the Chief Executive Officer of CPBL,
otherwise there would be no meeting. There was no agreement by the
Board members on that issue, so the Directors appointed by Banks
Holdings Ltd walked out of the meeting, thereby causing the meeting to be
aborted.
11. At paragraph 12 of his affidavit, Mr. Jenkins deposed that as a
consequence, the business reflected in the Agenda for the meeting could
not be done and, for all practical purposes, the Board of Directors of CPBL
is not functional, among other things over the issue of Dr Henry Canton,
and in the meantime CPBL is making huge losses as reflected in the
2008/2009 audited financial statements of CPBL which were approved by
the Board of Directors of CPBL, and in the audited financial statement of
CPBL for the financial period 2009/2010, which could not be approved by
the Board of Directors of CPBL at the meeting of 18 th February, 2011
because the Directors appointed by Banks Holdings Ltd. walked out of
that meeting.
7
12. Mr. Jenkins further deposed that the CPBL Board of Directors is
dysfunctional and the company is suffering huge losses. As such, to
ensure the good corporate governance of CPBL, his position as a
Director is that the Resolutions passed at the Extraordinary General
Meeting of CPBL on the 17 th December, 2011 should be declared valid
and binding by the court, even on an interim basis.
Evidence for Respondent, BHL
13. Mr. Allan Fields, Chairman of the Board of Directors of the
Claimant/Respondent, BHL deposed that the initial resolution proposed
the termination of Henry Canton’s appointment as CEO and the
appointment of Henry Anderson as interim CEO of the Company. It
further proposed the appointment of a committee to determine the terms
and conditions of the engagement of the interim CEO of CPBL as well as
the terms and conditions of appointment of the new CEO of CPBL when
appointed. That this proposed resolution was unilaterally altered by the
Chairman in the course of the meeting so that it no longer proposed the
appointment of an interim CEO of CPBL and only the provisions relating to
the establishment of the appointments committee and the appointment of
the independent auditor remained for consideration by the meeting.
Further, that BHL never received notice of the proposed amendments, nor
did it agree to any such amendment to the Notice or to the resolutions
contained therein.
14. Mr. Fields at paragraphs 12 to 15 of his affidavit, deposed on the
financial position of CPBL. In answer to both the Jenkins Affidavit and
the Irving Affidavit as to losses of CPBL, Mr. Fields deposed that both
Affidavits failed to disclose a full and complete picture of the financial
experience of CPBL in the financial years of 2002 to 2010. That the
losses which CPBL suffered in the financial years 2008/9 and 2009/10
cannot fairly be attributed to the fact that Henry Canton has been and
8
remains the Chief Executive Officer of CPBL. Nor do the results in those
two years evidence a “negative trend”, having regard to the financial
results in the other years of that period. That there are several reasons
for the recorded losses, including but certainly not limited to:
i. significant capital investment by CPBL in its groves and
feed processing mill
ii. impact of reduction in world citrus prices
iii impact of a diminishing volume of fruit deliveries by the
farmers
15. Mr. Fields deposed at paragraphs 16 to 22 as to the Management of CPBL.
He deposed that both the Investment Agreement (as amended), as well
as the Articles of Association of CPBL provide expressly that the business
of the Company shall be managed by the Directors. See Exhibits “AF 4” and “AF 5” for copy of the Investment Agreement (as amended) and the
Memorandum and Articles of Association.
16. Mr. Fields deposed that the purported appointment of a committee to
appoint an interim CEO and a new CEO and determine the terms and
conditions of such appointment by a shareholders resolution is outside the
scope of the powers of the shareholders and as such, cannot be deemed
to be a valid resolution. Further, the alleged appointments committee
has not been validly constituted, if constituted at all, for the reason, among
others that BHL has not been invited to nominate and has not in fact
nominated any member thereto with the result that no such committee
exists and as such, cannot be declared to have “created and became
operative.”
17. Mr. Fields further deposed from paragraphs 23 to 26 as to the current
position of the CPBL. He deposed that since the December 17 th , 2010
meeting, the senior management of CPBL has been under constant attack
9
and threats from ICL. Specifically, ICL unilaterally has sought, without
resolutions of the Board of Directors of CPBL to do the following:
(i) delegate all functions of the CEO to the Chief
Financial Officer, Mr. Kent Herrera; (a copy of
the letter evidencing such attempted delegation
is produced and shown to me marked “AF6” and
is exhibited hereto);
(ii) relieve Henry Canton of his duties as CEO ( a
copy of the letter sent to Henry Canton
attempting to relieve him of his duties as CEO is
now produced and shown to me marked “AF7”
and is exhibited hereto);
(iii) restrict Henry Canton’s use of CPBL property
including the telephone and motor vehicle given
to him for his use as CEO;
(iv) advertised for the position of CEO using the logo
of CPBL; ( a copy of the advertisement as it
appeared on the television is now produced and
shown to me marked “AF8” and is exhibited
hereto); and,
(v) published several articles in the newspaper
notifying the public that Henry Canton is no
longer the CEO of CPBL (a copy of one such
article is now produced and shown to me marked
“AF9” and is exhibited hereto
.
18. Mr. Fields deposed that it is the position of BHL that ICL has no power to
act on behalf of CPBL for the above purposes even if the resolutions were
treated as being valid. That, ICL would not be in a position to act on
behalf of CPBL despite its status as majority shareholder. Further, that if
10
the interim declarations which are sought are granted, it would result in
the following:
(i) Henry Canton will be removed from his office as CEO without
the Board of Directors having resolved to remove him (as is
required by the Articles of Association and the Investment
Agreement);
(ii) The present CEO will be absent at a time when the Directors
are in deadlock and therefore unable effectively to give support
direction and supervision to those who must carry on the
business of the Company;
(iii) ICL may with impunity arrogate to the shareholders the
management functions of the Board of Directors;
(iv) The shareholders of the Company would, by relying on the
provisions of the Articles of Association and ignoring the
provisions of the Investment Agreement be able to pass
resolutions concerning management by simple majority without
obtaining the concurrence of BHL as required by the Investment
Agreement;
(v) BHL will thus have been denied the agreed protection from
absolute control of the Company by the majority shareholder
which was the basis upon which BHL agreed to make its
investment in CPBL.
19. Mr. Fields further deposed that the Investment Agreement was deliberately
drafted to provide the necessary protection for BHL and its Investment in the
Company against the absolute control by the majority shareholder and this
is the basis on which BHL made its investment in CPBL. That, if ICL is
allowed to persist in its course of action, the entire Investment Agreement
would serve no useful purpose.
11
The submissions
20. Dr. Kaseke for ICL submits that the application is urgent as things are
not well at CPBL as Dr Henry Canton, despite of having had his contract
duly terminated by CPBL in extraordinary general meeting effective 17 th
December, 2010, has refused and continues to refuse to demit office.
Further, that the position of the majority shareholder of CPBL, namely, ICL,
the Applicant, is that the employment of Dr. Henry Canton as CEO of CPBL
was effectively terminated by CPBL by the Resolution of CPBL in
extraordinary general meeting on 17 th December, 2010. Further, that the
Resolution is a decision of CPBL [and not of either BHL or BCGAICL], which
was duly passed in accordance with section 71 of the Companies Act,
Chapter 250, and which is binding on CPBL.
21. Dr. Kaseke referred to the evidence of both Mr. Irving and Mr. Jenkins to
show that CPBL has been losing millions of dollars in the past two
consecutive years under the managerial leadership of the former CEO of
CPBL, Dr Henry Canton.
22. Dr. Kaseke contends that the matters for which the interim declarations are sought therefore relate purely to the internal management of CPBL, and
as a general rule, Courts are very slow to interfere in the internal
management of the companies. Learned Counsel relied on Burland –v
Earle [1902] AC 83, at 93, per Lord Davey and Isle of Wright Railway Co.
–v Tahourdin [1883] 25 Ch.D. 320 (CA) where the court refused an
application by the Directors of a statutory company for an injunction to
restrain the holding of a general meeting with a purpose to appoint a
committee to reorganize the management of the company.
23. See further the case of Marshall’s Valve Gear Company Ltd –v Manning, Wardle & Co. Ltd [1909] 1 Ch. 267 where it is stated that the
majority shareholder has a right to enforce Resolutions of a company if the
12
majority shareholder knows that the Resolutions are not being enforced,
whether by the Directors of the company or by the company itself. At p. 273,
Neville J held that
I ought not interfere with the progress of the present action, because it is brought with the approval of the majority of the shareholders in the company, and, upon the decisions which I have referred to, they are the persons who are entitled to say aye or no, whether the litigation shall proceed.
24. Learned Counsel relying on the said authorities submits that it is therefore
lawful for the majority shareholder of CPBL, namely ICL, to ensure that
where CPBL makes decisions by Resolutions in general or extraordinary
meeting, CPBL carries those Resolutions into effect. Further, from the
evidence of Mr. Jenkins the Board of Directors of CPBL could not and
cannot transact business because of the Dr. Canton matter. Learned
Counsel submits that where the Board cannot function, company law
principles dictate that the company, in either general, extraordinary or
special meeting, will make the necessary decisions, because the
company belongs to the shareholders who are the investors in the
company. See Barron –v Potter [1914] 1 Ch. 895
25. Learned Counsel, Dr. Kaseke further submits that Article 122 of CPBL’s
Articles of Association specifically vests in CPBL in general meeting the
power to terminate the employment of the CEO or any other manager.
See Shaw And Sons (Salford) –v Shaw [1935] 2 KB 113 (CA) where
Greer LJ held that where by the Articles of Association certain powers are
vested in the company in general meeting, the company in general
meeting, and no one else, is the entity which at law is authorized to
exercise those powers.
26. Learned Counsel submits that in the case at bar, CPBL exercised the
powers vested in it by Article 122 of its Articles of Association, and the
13
decision arising therefrom should be given validity at law. That if those
Resolutions are not given validity at law, it would mean that when the
Court declined to grant the injunction restraining the holding of the
extraordinary general meeting, on the 14 th December, 2010 the Court was
acting in vain, because the Resolutions to be made thereat would in any
event have no force or validity. Further, it would lead to the incongruous
result that the Court effectively allowed CPBL to expend both time and
money in holding an extraordinary general meeting when nothing would
come out of the Resolutions made thereat.
27. On the applicable law of interim declaration, Learned Counsel submits
that the CPR 2005 provides at R17 (1) (b) that the Court may grant
interim remedies including “an interim declaration”. Dr. Kaseke pointed
out however, that there is no decided case which could be found by
attorneys for the Applicant where the applicable principles for the grant of
interim declarations have been authoritatively and clearly stated by the
courts. That courts have granted interim declarations on a case by case
basis, based on the interests of justice, without enunciating clearly
identifiable principles of law which apply in every case: see The NHS
Trust –v Ms T [2004] EWHC 1279.
28. Dr. Kaseke went on to submit that there are however, some principles
from judgments dealing with declaratory relief which Learned Counsel
submits is applicable to the case at bar. He referred to Financial Services Authority v John Edward Bourke (Trading As J.E. Rourke & Co) [2001] EWHC 704 (ch) where Mr. Justice Neuberger stated, in
respect of declarations, that
It seems to me that, when considering whether to grant a declaration or not, the Court should take into account justice to the Claimant, justice to the Defendant, whether the declaration would serve a useful purpose and whether there
14
are any other special reasons why or why not the court should grant the declaration. (at p. 5)
At page 4 the Learned Justice stated:
…the power to make declarations appears to be unfettered. As between the parties in this section, it seems to me that the Court can grant a declaration as to their rights, as to the existence of facts, or as to principle of law, where those rights, facts, or principles have been established to the Court’s satisfaction. The Court should not, however, grant any declarations merely because the rights, facts or principles have been established and one party asks for a declaration. The court has to consider whether, in all the circumstances, it is appropriate to make such an order.
29. Learned Counsel, Dr. Kaseke further submits that in the interest of BHL,
ICL and CPBL the issue that Dr Henry Canton’s employment was
determined effective 17 th December, 2010 should be resolved at an early
stage, even on an interim basis, because (i) Dr Canton is still making
managerial, financial and policy decisions for CPBL when CPBL’s
Resolution of 17 th December, 2010 effectively determined his employment
contract forthwith, (ii) CPBL has been posting huge financial losses for the
past two consecutive financial years under the leadership of Dr Canton,
and serious legal consequences will arise if this trend continues, given
that he is currently making managerial, financial and policy decisions for
CPBL, (iii) the CPBL Board of Directors is paralysed because of divisions
caused by the issue of whether Dr Canton is or is not CEO of CPBL.
30. Learned Counsel further submits that the special reasons applicable to this
case is that there is no dispute under the Investment Agreement between
BHL and ICL [on the one hand] and CPBL [on the other hand] relating the
Resolution terminating the employment of Dr Henry Canton in particular,
or of the Committee duly established to appoint his successor in office by
15
everyone. Further, all that is requested of the Court is to pronounce on
the validity of the Resolutions themselves to enable their enforcement.
31. Further, Learned Counsel submits that leaving Dr Canton operating as
CEO of CPBL when CPBL terminated his employment contract effective
17 th December, 2010 would be foisting a CEO on CPBL when by its own
very decision CPBL decided that it did not want Dr Canton as its CEO. In
addition, the managerial, financial and policy decisions which are being
made by Dr Canton on behalf of CPBL are very special reasons, why the
interim declaration should be granted. As such, it is appropriate to
make the interim declaration sought. Further, that in injunction law, the
comparable principle is that of balance of convenience and in the case at
bar, the balance of convenience favors the granting of the interim
declaration sought.
Submissions by BHL in response to application
32. Learned Senior Counsel, Mr. Courtenay submits that the principal reliefs
sought in the Claimant’s Claim Form are declarations pertaining to the
validity and enforceability of the terms of the Investment Agreement dated
the 31 st May 2006 to which the Claimant and Defendants are parties.
Further, Learned Counsel submits that in the current Application made by
way of interim relief and before a trial or determination of any of the issues
raised by the substantive claim, it seeks to circumvent the binding
provisions of the Investment Agreement governing the relationship of all
three parties. That the application seeks to have the Court declare that
Resolutions passed at the extraordinary general meeting on the 17 th
December 2010 (i) are “valid and effective” and (ii) that certain events
have in fact occurred as the result of the passing of those Resolutions.
16
33. Mr. Courtenay submits that the opposition to the current application is the
fact that the three parties have freely entered into a contract governing the
manner in which they shall conduct themselves and the business of
CPBL, including the matters upon which declarations are sought, and to
grant such declarations would be to sanction breaches of that contract.
Further, the present application seeks to ignore any contractual
imperative imposed by the Investment Agreement and to invoke the
assistance of the Memorandum and Articles and the Companies Act in
doing so. Further, it would be unusual if by the device of interim
declaratory orders the Claimant was to be deprived of the opportunity of
pursuing its contractual right to insist that the management of CPBL shall
be conducted in the manner as the parties have contractually agreed that
it should. Learned Counsel on the enforceability of such shareholder
agreements, relied on Eton Consultants Holdings Ltd. and James Spencer Greene vs. Dorot Properties and Holdings Ltd. et al
(unreported) BVI HCV2007/0209; Russell vs. Northern Bank Development Corp. Ltd. et al (1992) 3 All ER 161.
34. Learned Senior Counsel, Mr. Courtenay further submits that the terms of
the Resolutions passed at the Extraordinary General Meeting held on the
17 th December 2010 are significantly different from the resolutions of
which notice was given to the shareholders. That question arises as to the
propriety of the passage of such Resolutions in their final form of which no
prior notice was given to persons invited to attend the meeting. The
Notice informed of the intention to nominate and appoint Mr. Henry
Anderson as interim CEO upon terms to be determined by a proposed
Appointments Committee. That what was put to those who attended the
meeting was that the Committee should make the nomination and
determine the terms of appointment.
17
35. Learned Senior Counsel, Mr. Courtenay submits that in relation to the
third declaration sought, the Court is asked to declare that Howarth Belize,
LLP “stood appointed as the independent auditors….with effect from 17 th
December, 2010” and were required to report to the membership of CPBL
within two (2) months, i.e., by a date in February, 2011. Learned Counsel
argued that as a practical matter, in the absence of any evidence at all as
to what has transpired in this, it would be inappropriate for such a
declaration to be made as to a state of affairs which may or may not in fact
exist.
36. Further, Learned Counsel submits that with regard to the second
declaration sought, to the effect that an appointments committee was
“created and became operative with effect from 17 th December, 2010”,
the establishment of such a committee is ultra vires the provisions of the
Articles which provide for the delegation of any of the powers of the
directors by the establishment of subcommittees of the Directors to be
appointed by the Board of Directors. That there is no provision in the
Articles for appointment of such subcommittees by the shareholders.
37. As for the first declaration sought, Learned Counsel submits that the
language is in terms that it shall be declared prospectively, which is that
Dr. Henry Canton’s appointment with CPBL “shall be terminated with
immediate effect”. That the Resolution passed does not purport to
arrogate to the shareholders the power and responsibility of the Directors
conferred by the Articles to actually terminate the appointment. Further,
that the engagement and termination of employees is a function of the
Board of Directors and the resolution in its terms did not purport to
exercise that function. Learned Counsel further argued that Article 122
does not empower the Shareholders to remove a CEO.
18
38. In further submissions, Mr. Courtenay submitted that in keeping with the
usual practice, CPBL’s Articles of Association provide for the decision
making function to be exercised by the Directors, except in those cases
where the Companies Act or the Articles of Association require particular
decisions to be made by the shareholders. Also, that the Investment
Agreement assigns total responsibility for the management of the
business of the Company to the Directors, in so far as the Companies Act
does not make other provision.
39. On the interim declaration sought, Learned Senior Counsel, Mr. Courtenay
submits that while there is provision in the Rules for granting interim
declaratory relief, it will not be granted in run of the mill cases where
alternative interim relief is available. See Zamir and Woolf – The Declaratory Judgment at pgs 9398 and Bank of Scotland vs. A Ltd. (2001) 1 WLR 751 at p. 768).
40. Further Learned Senior Counsel argues that in exceptional cases where
the Court will consider granting interim declaratory relief, the tests to be
applied would be similar to those applied in granting injunctions with
specific emphasis however on determining where the balance of
convenience lies. (See Zamir and Woolf (supra) at page 95).
41. Mr. Courtenay contends that the central issue is where the balance of
convenience lies. He referred to the Affidavit of Eccleston Irving and
argues that the termination and replacement of a CEO and the
commissioning of a feasibility study of subsidiaries are all matters which
could be and are properly dealt with by the Board of Directors. Further,
there is no evidence that any resolution to this effect has been placed
before the directors and been considered or refused by the Board. That
the majority shareholder has elected to avoid having these matters
brought to the Board where the voting agreement requires that the
19
minority shareholder shall concur in the decision. Further, Learned Senior
Counsel contends that the Court should not interfere by making
declarations having the effect of sanctioning the circumvention of the
protective clauses of the Investment Agreement and so interfering with the
internal management of CPBL. Learned Counsel relied on Burland vs. Earle (1902) A C S 3 at p 93 Lord Davey said, “It is an elementary
principle of the law relating to joint stock companies that the Court will not
interfere with the internal management of companies acting within their
powers, and in fact has no jurisdiction to do so.”
Determination
42. The two shareholders of CPBL are BHL and ICL. ICL is the majority
shareholder and BHL is the minority shareholder. It is the company CPBL
that passed the resolution which is the subject of this application. Though
the present application at bar was served on CPBL, they chose not to oppose
or support same. Submissions were made only by ICL, the Applicant
seeking the interim declarations.
43. Three resolutions were passed by the Company as shown below. The main
contention is the one passed to terminate the appointment of Dr. Henry
Canton, CEO of the Company. The affidavit of Mr. Irving at “Exhibit 1”
shows the resolutions which were passed by the shareholders. It states:
‘RESOLVED THAT:
In pursuance of Article 122 of the Articles of Association of the
company and otherwise in pursuance of the powers of the
company in general meeting, the employment of Henry Canton
with the company shall be terminated with immediate effect.
20
“RESOLVED THAT:
1. A committee comprised of the following persons:
Denzel Jenkins
Rosella Zabaneh
BHL nominee on the CPBL Board shall hereby be
constituted and tasked forthwith with:
(1) Setting the terms and conditions of the
appointment of the new CEO.
(2) Appointing a new CEO upon such terms and
subject to conditions as to remuneration,
tenure and otherwise as the committee shall
deem in the best interest of the company.
2. The quorum for the committee will be two members and the
committee shall make decisions based on majority vote of its
members.
“RESOLVED THAT:
The firm of Horwarth Belize LLP shall be appointed as independent
auditors to conduct a feasibility study of each of the Company’s
subsidiaries and to report back to the membership within two
months.
44. The court is of the view, having carefully considered the evidence in this
application and the submissions on both sides, that the balance of
convenience lies in refusing the interim declarations sought. The court is
not convinced by the evidence that Dr. Canton is the reason why CPBL is
experiencing financial difficulties. Further, there has been a delay of
21
over four months before an application to determine the validity of the
resolutions, has been made. All this while Dr. Canton continues to be
the CEO of CPBL. Under such circumstances, the court does not find it
appropriate to determine the validity of the resolutions at this interim
stage in order to ensure good corporate governance of CPBL. See
Financial Services Authority v John Edward Bourke (Trading As J.E. Rourke & Co) [2001] EWHC 704 Instead, the court intends to fast
track the substantive action so that all the issues could be fully ventilated.
Accordingly, the following order is made:
45. Order
The Interim Declarations sought by the Applicant, Belize Citrus Growers
Association Investment Company Limited is refused.
An early trial date is to be fixed for the substantive action.
Cost in the cause.
....................................... Minnet Hafiz Supreme Court Judge
Dated this 26 th day of May, 2011.