EUSEZIE CLAIRMONT v SOUTHERN BUILDERS ENTERPRISES LTD et al

SAINT LUCIA IN THE HIGH COURT OF JUSTICE (CIVIL) A.D. 1996 Suit No.654 of 1992 Between: EUSEZIE CLAIRMONT Petitioner vs (1) SOUTHERN BUILDERS ENTERPRISES LTD (2) SERVILLUS JEFFREY Respondents Mr. D. Theodore for Petitioner Mr. H Deterville for Respondents 1996: 1 29 and 30; June 21; 19. JUDGMENT On December 23, 1992 the Petit r filed a petition that Southern Ent ses ted be wound up it is just and equitable to do so or in the ternat any order as to the Court shall seem just. Section 189 (6) of the Commercial Code states that a may be wound up by the Court if Court is of t on that it is just and equitable that the company d be wound up. At the end of his examination in chief the Petitioner stated: 11 I am asking the Court for an to wind up Responden t Company or any order the Court t. /I There were other interlocutory proceedings which necessitated a decision of the Court of Appeal and as a result the answer to the ion was filed approximate two years later, on November 18, 1994. answer was amended on June 21, 1994 without object from learned Counsel for the Petitioner. The ef of the answer was t application to wind up the company d not al that the second Respondent should pay to Petitioner f~ir vdlue of the latter's s. The Petitioner filed a y to answer on December 2,

1994.In that the PetitiJner answe 32 of the Respondents' answer that is act unreasonable in not pursuing his accepted offer to sIs s, ed that was acting unreasonably and said t t fil condition of s offer to t f the before the auditor's valuation, was a reasonable tion intended to ensure a r valuation of the's financ position and the payment of a fair price for hlS shares. The ~leadings s case were ext ens as was t evidence and addresses on a relat ly s e matter. judgment will be relative short. In their submissions both sides re rred to t well known case of EBRAHIMI v WESTBOURNE GALLERIES LTD

[1972]2 AER 492 espec ly as it relates to the ust and e. U In addition, learned Counsel Respondents refe to RE A COMPANY [1983J 2 AER 854 and Civil Appeal No.4 of 1990 CASTAWAYS HOTEL LIMITED v UNIVERSITY OF DOMINICA (SCHOOL OF MEDICINE AND HEALTH S~+~RCES) LTD decided on September 14,

1992.Learned Counsel for the Petitioner refe to a passage stated to come from the 14th Edition of Charlesworth and Morse on Company Law, pages 456 - 457. The passage states: "Wi th regard to a bona e offer other members under arti es for the petitioner's shares, that is, at a valua on an t valuer, the Court of Appeal Re Abbey sure L ,overrul the judge below and other earlier deci tha t this was not an automatic reason for s out the winding up pe tion. was no unreasonable the peti oner to accept the risk tha t a valuer's on might apply a discount hi.s minori shareholding, the a up to determine claims t the company was e to their worth being estimated by an accountant. I have had to se ties even my cis is not based on any specific sage. t Let me turn to a short story of the des red to Clairmont and Jeffrey were good fr icl:ds enter into a business rel&t so t decided to form a company for that purpose. The company was on May 30, 1989. Not happened after unti company on February 14, 1991 purchas a f and at Vieux-Fort measuring 18,821 square feet. On June 7, 1991 on the strength of its deed company executed a hypothec in favour of the National Commercial Bank for a loan of $350,000. The company int to construct a building. t must be stated that the company was formed on the basis that Clairmont would have 49 percent of the shares and Jeffrey would have 51 rcent. purchased the land with each contributing that percentage of the purchase price they executed a guarantee to the Bank t they would repay the loan in the said proportion of 49 percent by Cla and 51 percent by Jeffrey. The next event was the construction of the is presently the main asset of the company. None f shareholders is able to state def te t commenced and when it was completed. t h I have come to the conclusion that the ~uj' commenced before the company obtained t loan t Nat Commercial Bank and I put s as around to March 1991 And that it was concluded by 1992. come to that conclus having to the f Gardner Trim dated January 17, 1992 and to a statement tem 5 in minutes of the company for a meeting held on 18, 1992. There was a little spute as to whether or not the Pet t10ner was the building contractor. I do not think tn1s 1S mac al to t issue. Nevertheless I am not persuaded t In any event .L d that Clairmont was the contractor. company is not indebt to for any se ces even though I did not perce that he was press for any such payment. The next event was the starting up of the ss act ties which took the form of a market pet stat I find that the operations began on or about November 1, 1992. It is doubtful as to whether the Petitioner t t business operations because before November 1, 1 92 relations between the sharehol were severe stra Tbis was so much the case because the Petit r had sought to block the entrance to the mini market and f t Re had to seek injunctive relief which it got on November 27, 1992. On that day the Petitioner gave an undertaking that he would not any way block the entrance to the buil However it would appear that despite t s t Petit continued to make loan repayments up to 18,

3.Petitioner exhibited cheques to effect thirteen payments between February 1992 and May 1993 amount to approximately $38,217.56. :::>n '_he totality of the evidence I not find t s business a profitable one. t seem to be e to make the repayments. Since May 1993 Se Je frey been meeting the 1 repayments and as at 1 27, 1996 loan balance was $292,046.22. I do not think the been able to pay dends or salaries to the Iders or directors. I now turn to determine what was the cause the the relationship between two close friends. The Petitioner examination-in- ef puts it this way: "After comple on of the to go wrong. Jeffrey and I began not to one ano from that time. There was no t t break. After the building was eted did not speak to me any more." s expla why it was necessary to get to a valuation January of 1992. I find that from that time the Petitioner withdrew If from the activities of the company and Jeffrey rema control up to present time. He purport made cis all by himself in my view contrary to Article 14 of t Articles of Association which would seem to require a quorum of two persons to transact business. He purported to have meetings of t company without adequate notice to Clairmont who for the most part remained away. I have come to the conclusion that rs were responsible for the breakdown of the commerc If there was any animosi as re to in the petition it was on h s s. one to anot r. Surely, things cannot cor~lnue t s way and some must be done with the company and the issues are wheth~r t is ust and equitable to wind it up or whet r t re s some ot remedy which is available to Petit Article 192 (5) of t Commercial is as lows: 11(5) Where the peti on is presen by of the company as contribu es on the t t is just and equitable t company d be wound up, Court, if it is of on, ) tha t the pe oners are en tl relief either up the or some o means; and that of 0 it would be just and table that the company should be wound up; shall make a up order, unless it ~s so of opinion both that some 0 remedy is a to peti oners and tha t they are ac seeking to have company wound up tead of that other II The Petitioner himself may have thought that some was available when he asked Gardner Tr to value the property. In addition to this on June 15, 1992 t s solicitor, Mrs Veronica Barnard, he gave notice to t second Respondent of the offer to sell s in the company and he set a price of $223,086.96. On July 2, 1992 a came from Det lIe on behalf Jef accepting s offer not at t ce stated but at a fair value of t s as approved auditors. The letter gave names f auditors practising in Sa Lucia advised the Petit r to choose one of the On July 28, 1992 Mrs wrote to Mr Det. lIe. letter stat that t Petit would prefer Messrs. and T.yb:tand, which was one four firms refe to above, to do valuat the etter states what is a bone of contention to be ref to ater liMy client however, wishes to be of the date which such tment 1 be and also to be ven oppor to t to d tment. If Respondent appeared not to have the f refe to by learned Counsel Petitioner as unfulfill condit ,but to deal with Coopers and LVbrand on the 1 cated The next bit of correspondence was a letter from an new firm of Det lIe and Associates ed 1 , 1994 to Mrs Bernard indicating that the va of the Petit r's shares was valued by at $122,5 0.0 There was an attachment to this letter of a communication Coopers and Lybrand to Jeffrey dat 16, 1994 t a value on the company of $254.00 or $12.50 a e fect from December 31, 1992. I understand the Petitioner to be resiling from seier position essenti because of the filled condit referred to earlier. It was in t s context that Counsel the Respondents referred to the Castaways' case ment earlier. It seems clear that if the Respondents had the Petitioner of date on ch and was appointed and if he was an ty to books of the company before t appointment, t t of i es:'oppel the Castaways case might more easily One may ask whether the Petit's wi s were so mat that the doct of eptoppel miqht still not e to apply. I am not going 0 t it is not neces my decision. I I the fit to the Petitioner. The Petitioner has asked me in s pI and s chief to order a winding up of or ot remedy as Court t fit. I find as a fact that the business is the sole source d not living of the Re Petit deuy that upon cross-examination. On t it is accepted by all that Petit is a successful company in Vieux-Fort known as pI Enterprises Ltd so so that he is called If II Fort. The second Respondent been paying the loan $5,230. 0 per month to date and as I have said the arrears at f April this year was approximate $292 f 000. The income from the property at the moment is ess monthly loan payments. I must have regard to the bona fides the Petitioner. He admitted under cross examination that it was when t process was going on to value the shares that filed the petition to wind up the company and he intimated that unless he gets a value that suits his investment he will not accept it. It is my view that all the circumstances the Petit is acting unreasonably in seeking to the wound up. I think another appropriate remedy s to another valuation of company shares and shares f Petitioner. I therefore refuse ~o the order to wind up t I thought of asking one of rema tors letter ed 2, 1994 to unde the va ion a quite recent winding up matter both Counse to appointment Jeffrey Stewart of Stewart Associates to the liquidator. So as to depart from past I am o ask this person to effect a valuat f t f S shares in the company and make a to me wits weeks. The costs of report shall the first Respondent in the first tance. Unless Counsel will t ther draft an iate letter to Jeffrey Stewart then I shall the Cl of Court to dO so and sign it on behalf of the Court. This matter is adjourned to Chambers on r 2, 1996 report.

A.N.J. MATTHEW

PUISNE JUDGE

Suit No. 654 of 1992 Matthew, J Delivered: 19/07/96