JOHN VELOX v HELENAIR CORPORATION LTD et al

.. --._-_.- ""-.' SAINT LUCIA uil/ IN THE HIGH COURT i OF JUSTICE (CIVIL) Suit No. 521 of 1993 Between : JOHN VELOX (Deceased) represented by CORNELIA VELOX ~nd LISA ANNE VELOX Administrct:rices Pl aintif fs and 1. HELENAIR CORPORATION LTD 2. JOAQUIN WILLIE 3 • ARTHUR NEPTUNE 4. MARIO REYES Defendants Mr . K. Monplaisir Q.C. and Miss C. Hinkson for Plaintiffs Mr. Mario Michel and Mr. Alvin St. Clair for Defendants • 1996. May 6, 7, and 20 October 30 JUDGMENT d'Auvergne J On the 19th of August, 19 93 the Plaintiffs filed a Wr i t of Summons i ndorsed with Statemenc of Claim asking for the following :

1.(1) A Declaration chac the forfeiture o f che 10 , 000 Shares numbering 18917 7 ~0 199176 in the Company bel onging to the Plaintiffs in accordance with Share Certif icate No . 0008 issued by the Company is void o r vo idable . A Declaration that che Deceased and o r his Escace i s the Sale Own~r o f 10,000 Shares numbering 189177 to 199176 in the Company in accordance with Share Certificate No. 0008 issued by the Company. That the Court do Order a Financial Account of ~ since the purported forfeiture of the aforesaid Damages against the Defendants joint and or s e That the Court Order payment to a iffs dividends declared. Further or other Relief. The Costs hereof. The Defendants entered an appearance and a ence on the 24th September, 1993. The st of the defence is that Ve was the holder of 10, 000 Shares the First Defendant, denies that the Shares were ful paid up and that he eiture the said Shares were wron3ful. .. matter came to t alan the 6th :="996. At the t Cornelia Velox and Pedro Toussaint evi on behalf of the Plaintiffs while only Joaquin Willie gave on If Defendants. Cornelia Velox said that she is the fe of as onn Velox exhibited their Marriage Certificate and the death Certificate John Velox. She further exhibited Letters istration estate of John Velox and identified a copy of a Certificate No. 0008 of Helen Air Corporation ':2d '."hie:" ___ Ii:::;:; "that John Velox is registered as the holder flO, 0 Shares of 1.00 each fully paid and numbered from 189177 to :="99176. She exhibited two (2) letters from Helen Air Corporation Ltd. The first, a letter dated 1st February, 1991 which in essence states that John Velox was the holder of 10,000 unpaid Shares _D Helen Air Corporation Ltd and t hat s he was r equired to pa y the sum of $10,000.00 to the Secretary o f t he Board on o r before the 1s t day of March 1991 failing which t he shares would become liabl e f or forfeiture and to this was attached a Resol ut ion of the Board of" Directors dated 29th January , 199 1 . The second, dated 20th March , 19 91[ was from Barrister Mario Miche l on behalf of the Defendants informing her that "in accordan c e with Article 37 o f the Articles o f Associa't ion of the Company the Shares hel d by your late husband in Helen Air Corporation Limited have b een forfeited by the Board of Directors for non -payment of the call made on your late h usband's Shares. " To this letter was attached a Resolution of the Board of Direc t ors of the said Helen Air which I have r eproduced in it s entirety. .. COMPANIES NAME OF COMPANY HELENAIR CORPORATION LI MITED NUMBER OF COMPANY No. 66 of 1987 .. RESOLUTION OF BOARD OF DIRECTORS WHEREAS: (1) The Board of Directors resolved at a meet i ng o f the Board held on t he 29th day of Janua ry 1991 t o call up all amounts due on t he s hares al l ott e d t o members of the Company. (2) Notice of the cal l and request fo r pa yment of the amounts due on the shares were serve d on a l l members of the company who held unpaid share s by 2.etter dated February 1st , 1991 . Only one member, to wic: ALVA LYNCH responded to the calIon the shares and paid in f ull all amounts outstanding on his shares. (4) The period of notice given for payment of the has expired. BE IT RESOLVED : (1) That the shares the company CAMILLE DUFOUR and JOHN VELOX are hereby forfeited. (2) That the Secretary of the lS hereby directed to serve notice on t persons concerned that the sh3res held respective names have been forfeit Dated this 19th day of March 1991. This resolution was approved by the Board of Directors at a the said Board held on Tuesday the 19th day of March, 1991. . . . . .. . .. ~ . . . . . ~ . . . . . .. . fI CHAIRMAN OF THE BOARD SECRETARY OF THE BOARD This witness concluded her evidence in chief repeat requests in her prayer. She was not Cross Examined. Pedro Toussaint an employee in the Ministry of Civil Aviation told the Court that he is a Shareholder in the f t named Defendant and has been so from its inception and had been a member of the Board '. of Directors from 198"/ to 1989 and as s'...lch signed documents on behalf of the first named Defendant and tendered as exhibits firstly, a Resolution of Board of Directors dated 30th May 1988 and filed in the Registry on 31st May, 1988 which shows the names and allotment of Shares to the Shareholders. (The names of John Velox, Camille Dufour and Alva Lynch are noted) second document is an Annual Return filed in the Registrar's office on r, 1989 which also records the names ment above. last exhibit was a of en r tion Financial Stateme::J.ts 31st tewart Associates. He concluded s in chief was aware that the s f two rs of were ited. cross Examinat t s witness tt s f , Resolution Board of ors dated 3 th filed on the 31st May, 1988, Mr. es was a Company, but did not agree t Return 30th May, 1988 and filed on 31st ,198 ater t second Defendant Will part: f same transaction, though he t:hat t t same es were filed at the same t He further. admitted ad above menti Mr. cholas John was the Secretary to the first: iJefendant:. He the Court 1 11 I do agree t f t the e en se Mr. es Daher coming in to the was was a tory to the cancella on. transaction wi th Mr. Daher wen t to Mr. Nicholas John was no longer Secre to che documents prepared relative co that cransac on ,..;ere I am not saying that ter resolu on Share Cerci cates were Bsued to persons named resolution." He insisted that the allotment of Shares as shown ;n s irst exhibit was made before Mr. iJaher a s :::.n Company. Joaquin Willie, the present: Manager of the first: =:;efendant, a Pilot by profession, gave the a of Helen Air Corporation Limited. He 1/ se St. Airways a number the lots St. Airways Company got toge to start a tial investment was Member to t , as a t they would recei ve It was one per 0; 0,000.00 for fifty thousand was 1987. A number e teres t f t investors ~vere: Arthur Neptune 0, 00. o. Joaquin lie 9,176. O. Samuel Mason 01. Pedro Toussaint ,828. o Reyes and Michel ea con e got Shares in return t equivalent to the amount es paid by way of cash except in case of 0 and Dufour, they paid by a mixture on f Company. There were 0 people were issued en Air. After the forma on of was then tbe Managing tor had an i whi s Board, of issuing Shares to persons would 1 to associated to the Company and these were: Mr. ox Mr. Herald Wilson. After the di on with Board, Mr. Dufour produced Share cates for Mr. John Velox Mr. Herald Wilson. II witness told the Court that ::e Director allotted 10,000 each to John Velox, and to Hera d lson aced in the name his ) and 50, 0 s name of his wife Camille Dufour, but those Shares were not d for. 1/ He said that on or about the year 1988 Mr. Dufour discus Board of Directors of including Mr. Charles Daher as a Shareholder of the company who would invest money and transfer the ownership of an aircraft he owned to the Company would be given Shares in the Company. He told t t Mr. Daher became a Shareholder and brought 0 c s lawyer t Mr. Nicholas John as the Secrecary; ~ hat t latte.r prepared a number of documents viz. Resolucion of rectors, an Annual Return and an Agreemenc between the firs~ named Defe~dant and Mr. Charles Daher; chat all chose documents formed one transact~on and were al jated 3 th and registered in the Registra~'s ffice on the :sc '988 at 11.00 a.m. and bearing receipt n~mber 2157S8. He said that following that dace, Mr. Daher controll first named Defendant so the other named Def s fear they would loose their investments, sought 1 ce and informed Michel Dufour of their lack of confi his the first named Defendant's af rs, that soon after Mi Dufour left the State and took up duties France. He said, nI the responsibili ty for man;=Jqing the Company. II He told the Court that tht: first matter he dealt with "was the cancellation f the so led agreement with Mr. Daher (a copy f che cancellacion was exhibi ted) . He further said that the share standing in the first named reverted to what it was before Mr. Daher became a S der and a new Board was constituted. Unhappy differences between the newly constituted Board of Directors and Michel Dufour resigned, requesting sale for s Shares and that f his lie, whereupon the Board passed a Resolut for the 1 unpaid Shares and wrote informing Mr. Alva h, Mrs. Camille Dufour and Mrs. Cornelia Velox ot the ?~solution. He then spoke of the first letter (exhibited) delivered personally by him to Cornelia Velox, the second lecter a monch lacer posted to which he exhibited but to which she never replied. ~he Shares were forfeited and she was informed (lecter of 20th March, :991) Alva Lynch paid for his shares while Camille Dufour and Comella. Velox did not. The witness exhibited minutes of an extraordinary held on the 29th May, 1992. He asked the Court to note Page 2 I 21 which mentioned 70,()OO unpaid Shares the exact amount owned the three holders mentionerl. above viz Camille Dufour, Velox and Alva Lynch. Under Cross Examination this witness confirmed what he earlier and insisted that the three shareholders z John Camille Dufour and Alva Lynch held unpaid shares t that when Stewart and Associates compl the audited statement year ending 31st July, 1989, the Auditor, Mr. Stewart, that all shares were paid up Shares and that the latter clarified his assumed facts in his statement at the meeting held on 29th 1992 (exhibited). This witness also said and I quote, "Di vidends have d 989 and 1990. We paid Mrs. Camille Dufour dividends the dividends were declared before her Shares were forfeited 991.1/ .......... Mr. Velox received dividends but did not leet them. II He insisted that there was never an understanding between" them that those Shares would be paid up shares. Submissions of Counsel Learned Counsel for the Defendants in a well prepared document read out his submissions in defence of claims made. He said that it was trite law that a Company can issue id up Shares or unpaid Shares and in order for them to be ::::-egarded as paid Shares an amount of money must be paid for them, or expenses incurred on behalf of the Company, the only exception being bonus Shares which can certain situations be issued co Shareholders in lieu dividend, but the persons to whom are issued must be existing Shareholders. He argued that the document tendered in dence Mrs. Ve is not a Share Certificate since it lacks the seal cf the Counsel cited Article 83 of the Commercial Code of St. Lucia and Halsbury's Laws of England Third Editioil Vol. 6 Paragraph 517. He contendej that the alleged Share Certificate annot create kind of estoppel since Mrs. Velox would have to prove c John Velox believed the representacion contained _n the t his Shares were fully paid ~p even chougn ~new ne d not or them and that acted on chat bel f 0 ~:is r Halsbury's Laws of England Third Edition Paragraph 518 He further argued that Mrs. Velox is not a bona purchaser of f :he shares for value without notice she is owner through transmission. He strenuously argued that che reso ion t _D l Mr. Toussaint was one of chree documents and f~ ed Mr. Charles Daher's lawyer with a ew to facilitat c ect of his client which were all later cancelled and the stat~s quo was restored; John Velox, Alva ::"ynch and Camil::'e =u~cur all ho unpaid Shares. The Articles of Associatlon of che company were =omp~_ "Nlch and calls were made to the holders of 1 unpaid Shares of which only the Shares stallding in the name of Alva Lynch were paid r, the other shares became liable co forfeiture for non-payment and were eventually forfeited. He cited the English case of The Ooregum Gold Mining Company of India Ltd. House of Lords reported on March 14th (1892) Appeal Cases Page 125. which a Company no to issue Shares as it felt like. In that case the want money and the original shares ing at a seount, Directors in accordance wieh resolutions ssued Preference Shares of Ll pound each with 15s I credit as d, a liability of only 5s per contrace was lSt tra~saction was bona fide and for the benefit of the An action by an ordinary sharehol to test ehe val issue was filed. Both ehe Co~re of Appeal and the House of Id that the issue was noe thin the f the to issue shares as it felt 1 Learned Counsel concluded his arguments stat t Mrs. was not entitled to dividends despite given Mr. llie since Articles 36 of the Artie s of Assoc of Company (exhibited) reads. II a ture of 1 include all dividends t t ae d before the forfeiture no been declared. 11 Learned Counsel for the Pla iff nlS insisting that Counsel muse seick to s and said Charles Daher's transaction with the f named Def was an arrangement outside of the issues in the case. He contended that there was a coneract tween the first De and John Velox and therefore obl tions arose between them. He cited Halsbury's Laws of England 4th Edition Page 199 Paragraph 362 and Article 917, 918 and 923 of the Civil Code of St. Lucia case of Joseph St. Rose vs Brice Lafitte St. Lucia Civil Appeal No. lB of 1990 and quoted from Louisanna Civil Code Articles 1644 - 1900 and in particular Article 1894 which states chat "an agreement is not the less valid, though the cause be not expressed." - He argued that from the nature and consideratlon of the case, consideration should be implied and gave t following reasons: That there was a resolution by the Board of Directors for issue shares fully paid-up; the issuing of share by a Certificate consequence ~f that resolution, the fil of the s accordance with the Company's Act r the return f the al shares and to the persons named in and statements which was submitted evidence. He said that there was no evidence that the Plaintiff, had not paid-up for the shares and that payment was not rece He urged the Court to note and apply Article 917 A (b) of the Civil Code which states that II consideration may be either onerous or gratuitous". He said that in this case it was gratuitous t the statement by the witness for the defence s Q as fortifying the argument. "Names on the ster f :he company looked good. II He also urged the Court to note that the same witness said that lfCamille Dufour sent a letter to the effect that the ven to John Velox Lynch and herself were free and did not have to pay. /I He quoted Articles 945 and 951 of the Civil Code. Learned Counsel's further contended that the Doctr' ne f Promissory Estoppel or Estoppel by Mutual Assurance appli and case of Castaways Hotel Ltd v University of Dominica (School of Medicine and Health Sciences) Ltd 1392 -13 WIR Page 18C (e) which reads as follows: "When the parties to a transaction proceed on the basis of an underlying assumption (either of facts or law) and whether due to misrepresentation or mistake, makes no difference), on which they have conducted the dealings between them, neither of them will be allowed to go back on tha.t assumption wheu; it: would be unfair or unjust to allow him to do so. If one of~ them does seek to go back on it, the Courts will give the other such remedy as the equity of the Court demands. II He further quoted the c ase o f Jennifer Remy vs Frederick Prospere St Lucia Civil Appeal No.2 of 1990 in support o f t hac a rgu~ent. He argued that the conduct o f the pa-rties was based on [he premise that the 20mpany would give 10,000 fully paid up shares to the Plaintiff John Velox, therefore the first Defendant is e stopped f rom denying that the shares were fully paid up or t hat they are liable to forfeiture. He then mentioned six reasons why the Plaintiffs insist that the shares were fully paid up and that they should succeed in their claims . .. l. That the agreement to issue shares was initiated by the Board of Directors through resolutions.

2.That by Article 6 o f the Articles of Associacion o f the Company the Directors were empowered to i ssue shares to who they wished. 3 . The resolution and the share Certificate were signed by the Chairman, Mr. Willie and by others who had authoricy to do so. 4 . The returns filed with the Registrar showed the shares as fully paid up shares.

5.The Balance Sheet produced by Stewart and Associates for year ending 31st July, 1989 i ncluded the Shares o f the Plaintiff John Velox as being fully paid-up and;

6.Finally, dividends were paid to Mrs. Dufour whose shares according to the evidence of the second Defendant were similar to that of the Plaintiff and which were also forfeited. CONCLUSION: One of the requirements of a valid Share Certi ficate i s t hat i L must be dated and (in the absence of Statutory Authority f o r lssue under Signature of appropriate officials ) be issued under Seal . Article 83 of the Commercial Code of St. Lucia. Halsbury's Laws of England 4th Edition Volume 7 paragraph 383. The share Certificate identified by Mrs. Velox does not carry any Seal and therefore cannot be considered as a valid Share Certificate. The Plaintiffs' case is that the shares are fully paid up and wer~ t herefore not liable to forfeiture. • I t is trite law that he who asserts must prove. No evidence has been led to indicate that the shares have been pa id for, rather evidence led by the defence i ndicates the contrary. Calls were made on the shares of John Velox, Camil le Dufour and Alva Lynch . Mrs. Velox admits that she received the first l etter but denies having received the second. It i s also t rite l aw that by the proper posting of that cal l the person to whom it was posted i s deemed to have received it . Based on the above, I find as a fact that Mrs. Velox was fully aware that the Company considered her husband's Shares as unpaid Shares and despite her knowledge of this did nothing about it, nor has she produced any evidence to show that the shares have been paid for. The evidence o f Mr . Toussaint does not support her in that regard. I find that the cal l s made on Mrs. Velox were not satisfied and therefore the forfeiture of the shares was duly and properly effected in accordance with the articles of Association of the first Defendant. ~ Learned Counsel for the Plaintif:(S.has a rgued tha t the Company should be estopped from disputing that John Velox is t he r eglstered owner of 10,000 ful~y paid-up shares in that Company. As I see i t, Mrs. Velox c ~n only r elie on the Share Certificate (which the document identified in Court i s not ; if she could show that John Velox believed the representation ,ontained In the document that his Shares were fully paid - even though he knew that he did not pay for them and that he acted on tha t be lief to his detriment. This has not been established by the Plaintiffs. Halsbury's Laws of England 4th Edition Paragraph 389. There is no dispute that Mrs. Velox i s not a bona fide purchaser o f the Shares for value without no t ice but that she c ame by the alleged shares through transmission (devolution by death ) and as such cannot rely on estoppel in her own right. Learned Counsel for the Plaintiffs referred to Article 6 of the Articles of Association which states that "The Directors, may, subject to Article 45 hereof allot, grant options over, or otherwise deal with or dispose of the shares of the Company to such persons and generally on such terms and conditions as the' Directors think proper. II ~ '£\L v Roper W"WiIIli! The case of OoRegum GOld~Mining Company of India ) Ji rec t ors of a ~ IS~ (1892) at Page 125 clearl y shows that : he Company cannot act with the shares'"'';: a CGiT,par:'./ ::"3 ::-:'2Y :ee l like. While it is true that under Cross Examination ehe witness for the defence said that despite the fact that Camille ~ufour's shares were forfeitured she received dividends for the year 1989 and 1990. I t is to be noted that "payment of Dividends on Shares does not estop the Company from denying the title o f che payee to tILe shares." Halsbury Laws of England 4th Edition Volume 7 Paragraph 389. Moreover Article 36 of the "Articles of Association of the First Defendant (exhibited ) provides /I •••••••• a forfeiture o f shares shall i nclude all dividends i n respect u f t he Shares no c accually paid before the forfeiture notwithstanding t hac chey shal l have been decla.red." For reasons stated above t his case is dismissed and T order the Pl aintiffs to pay to the Defendants costs co be agr eed o r o c herwise taxed. ~ . c\~~ ........ ~ ..... SUZIE d'AUVERGNE PUISNE JUDGE • ; 1\

Suit No. 521 of 1993 D’Auvergne, J Delivered: 30/10/96