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THE REPUBLIC OF TRINIDAD AND TOBAGO
IN THE HIGH COURT OF JUSTICE
Claim No. CV 2011-03281
Between
THE AMERICAN STORES LIMITED
Claimant
And
SANDRA HOSEIN-SINGH
SHELDON SINGH
KYLE SINGH
SHANNA SINGH
CARLOS CALIX
Defendants
AND
NADIA HOSEIN
ROBIN HOSEIN
AMIR MAYBODI
YACOOB ALI
Defendants to the Counterclaim
BEFORE THE HONOURABLE MR. JUSTICE PETER A. RAJKUMAR
APPEARANCES
Ms. Annabelle Sooklal instructed by Mr. Jason Nathu for the Claimant and
Defendants to the Counterclaim
Mr. Justin Phelps instructed by Ms. Helen Alves for the Defendants
ORAL JUDGMENT AND REASONS FOR DECISION
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TABLE OF CONTENTS
PAGE
BACKGROUND 3
THE CLAIM
3
THE PARTIES 4
ISSUES 4
FINDINGS AND CONCLUSION
5
CHRONOLOGY 5
RENT 6
NATURE OF TENANCY
6
USE AND OCCUPATION
6
OPPRESSION 7
REINSTATEMENT OF THE 4TH DEFENDANT
7
REINSTATEMENT OF THE 2ND DEFENDANT
8
THE APPOINTMENT OF AN INDEPENDENT BOARD OF DIRECTORS
8
ACCOUNT
8
CONCLUSIONS 10
ORDERS
11
ANALYSIS AND REASONING
13
RENT 13
WHETHER THE INCREASED RENT DEMANDED FOR THE PREMISES WAS EVER AGREED
13
MEETING OF JUNE 17TH 13
ALLEGED SERVICE DEPARTMENT ARREARS
18
FURTHER ANALYSIS OF DOCUMENTARY EVIDENCE
21
LETTER DATED 3rd DECEMBER
22
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DRAFT MINUTES – WHETHER ACKNOWLEDGEMENT OR AGREEMENT TO PAY
24
17TH JUNE 2011 25
23RD JUNE 2011 26
18TH JULY 2013 27
22ND JULY
27
DISTRESS
29
LEVYING FOR RENT INCREASES BEYOND THAT RESERVED IN ORIGINAL DEMISE
30
WHETHER RIGHT TO DISTRAIN WAS SUSPENDED
30
REFUSAL OF TENDER
31
WHETHER PURPORTED DISTRESS EXCESSIVE
32
WHETHER THE CLAIMANT IS ENTITLED TO DAMAGES FOR ILLEGAL OR EXCESSIVE DISTRESS
AND IF SO IN WHAT AMOUNT
32
DAMAGES
33
THE COUNTER CLAIM
34
THE DISMISSAL OF SHELDON
35
THE DISMISSAL OF SHANNA
35
OPPRESSION 38
THE OPPRESSION REMEDY
42
LAW 42
INTERPRETATION OF SECTION 242
47
FAIRNESS – FACTORS AND CONSIDERATIONS IN DECIDING WHAT IS UNFAIR
48
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THE REASONABLE EXPECTATIONS STANDARD
48
TRANSFER of $4MILLION
55
ORDERS
58
RENT 58
OPPRESSION 58
ORAL JUDGEMENT
BACKGROUND
The claim
1. The Claimant, American Stores Limited (the company) claims for damages
suffered as a consequence of the Defendants’ alleged wrongful and/or illegal and /or
excessive distress at premises leased by the Claimant from the First Defendant situate at
Eastern Main Road, Mount Hope (the premises).
2. On August 23, 2011, a bailiff, the Fifth Defendant, acting on the instructions of
the Second, Third and Fourth Defendants as agents for the First Defendant under a Power
of Attorney, entered onto the premises of The Claimant and locked the main gates
excluding all the management and staff of the Claimant. A Notice served on the Claimant
by the Fifth Defendant purports to seek to recover arrears of rent of $2,056,000.00, fees
and costs.
3. This Court granted an injunction 4 days later which allowed the company to
continue in operation.
4. The defendants counterclaim for alleged arrears of rent. The Defendants also
counterclaimed that the business of the Claimant was being operated in a manner
oppressive to the First, Second and Fourth Defendants, and seek reliefs arising out of
alleged oppressive conduct by certain directors of the company in relation to
a. the termination of employment of Sheldon Singh,
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b the termination of employment of Shanna Singh,
c. the transfer of funds from the company to the estate of SS Hosein (the Estate), and
d. alleged exclusion of the first defendant and her family from the management of the
company.
(For ease of reference the first names of the numerous parties, most of whom share the
same last name, will be used).
5. They seek reinstatement of Sheldon and Shanna, the appointment of an
independent board of directors, and an account of the monies of the company (sic).
The Parties
6. The Claimant is a largely family owned company established by S. S. Hosein -
deceased (the founder) and his wife.
7. Nadia Hosein, Robin Hosein and Sandra Hosein-Singh (the first named
defendant), are their children. The second, third, and fourth defendants, Sheldon, Kyle
and Shanna are the children of Sandra.
8. Sandra suffered a stroke in 2010 and no longer participates in the activities of the
claimant company, save via a general Power of Attorney granted to her children, - the
Second Third and Fourth Defendants.
9. The fifth Defendant is a bailiff. The Claimants have discontinued their action
against him.
10. The defendants to the counterclaim are Nadia Hosein, Robin Hosein, Amir
Maybodi (the managing director of the claimant company), and Yacoob Ali, the chairman
of the board of the company.
ISSUES
11. The following issues arise:
a. What was the rent due and payable under the terms of the lease between the
Claimant and the First Defendant.
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b. Whether the rent was actually in arrears on August 23, 2011.
c. Whether the purported distress was illegal by reason of the fact that
i.the Defendants distrained against privileged goods; and/or
ii.the right to distrain had been suspended; and/or
iii. the Defendants were distraining for increased rent over and above that reserved
in the original demise; and/or
iv.a valid tender of the rent was made at the time of the levy and rejected by the
Defendants.
(As it turns out, it is not necessary to consider issue i. above).
d. Whether the purported distress was excessive.
e. Whether the Claimant is entitled to damages for illegal or excessive distress and if
so in what amount.
f. Whether the Claimant owes the First Defendant rent and/or sums for use and
occupation for the subject premises.
g. Whether the conduct of the Directors of the Claimant company constitutes
oppression so as to entitle the Defendants to relief pursuant to Section 242 of the
Companies Act, 1995.
FINDINGS AND CONCLUSION
12. Chronology
Up to December 2005 the rent was $20,000.00 for retail section and $7,000.00 for
the service department [Records of the Company]
In May 2006 rent increased to $32,000.00. The amount apportioned for the
service department remained at $7,000.00. The increase was retroactive to January 2006.
In September 2007 the total rent was increased to $44,000.00 retroactive to July
2007.
March 28th
2010 - Sandra Hosein incapacitated.
Letter dated November 15, 2010 – demand for increase in rent for retail section to
$220,000 per month with effect from March 2011.
In that letter also there was a claim that the service department was in arrears of
rent since October 2007.
Page 7 of 62
Letter dated December 3, 2010 - demands arrears of rent for service area from
October 2007 at a rate of $22,680.00 per month. [$884, 520.00]
August - Letter from Kyle - letter purports to be dated July 17 2011. (However it
refers to and acknowledges a letter on July 29th
.)
The claimant submits that that letter was issued on August 17th
2011. I accept this
has to be so as the date it bears is clearly erroneous. That letter demands that the rent in
arrears be paid within 14 days, that is on or before August 31st
2011.
Rent
Nature of tenancy
13. There is no evidence that this tenancy was a yearly tenancy. The rent was payable
monthly and was demanded monthly by reference to a period of one month. The evidence
suggests that the lease was oral and the tenancy was a monthly one. There is no evidence
that the tenancy, whether yearly or monthly, was ever terminated prior to the date of the
distress. There is no evidence that the demand for increased rent, whether for the retail
department or the service department, was ever agreed.
14. In the letter from Kyle (wrongly dated July 17th
2011 but actually August 2011)
he acknowledges that he was still awaiting a formal response to the demand for increase
in rent.
15. In fact the evidence is:-
i. that this increase was resisted,
ii. that this increase was to be the subject of further negotiation and discussion,
iii. that it was the subject of further negotiation and discussion, (resulting in the
Company occupying a smaller area, and now paying $50,000.00 per month), and
iv. that the rent demand was unaffordable, and therefore could not possibly have been
agreed as claimed.
Use and occupation
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16. The claim for use and occupation is not compatible with the existence of a
monthly lease. There is no evidence that the tenancy was ever terminated or that a valid
notice to quit had ever been served determining the tenancy. No such notice was served.
The tenancy was never terminated. In fact it still subsists, though for a reduced area. The
company gave notice of intention to vacate the portion occupied by the Service
department. This took effect after the distress.
17. There is no cogent evidence that the Company was holding over, after any
tenancy was terminated, so as to entitle the landlord to claim for use and occupation.
18. The evidence of the landlord is that the service department attracted an increased
rent which the Company had not been paying. There is no suggestion that the landlord
ever terminated any tenancy of any portion occupied by the service department.
19. With respect to the retail department, there is no evidence that, having failed to
pay the $220,800 per month being demanded for that department, that its tenancy had
been terminated, so as to permit a claim for use and occupation.
20. The argument that the tenancy had been brought to an end, and that the
occupation of the company in holding over entitled the landlord to claim for use and
occupation, is therefore simply not available.
Oppression
21. The Defendants have counterclaimed seeking relief under section 242 of the
Companies Act.
Reinstatement of the Fourth Defendant
22. Termination of the fourth defendant’s position as managing director of the
company was not unreasonable in circumstances where:-
a. she circulated an email to the Board demanding payment of sums in respect of vastly
increased alleged rents, and arrears, and
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b. then was seen to have participated actively in a distress with a view to having the
company, of which she was then a managing director, pay, under circumstances of
extreme pressure, the full amount demanded.
Obviously her actions, and conflict of interest, would have left any reasonable,
independent, Board with little choice but to terminate her employment as joint managing
director.
23. Her assertion that this was oppressive and her consequent claim for reinstatement
must be rejected. Her termination as managing director has not, in the circumstances,
been shown to be unjustified or oppressive. She remains a director with a voice on the
board.
Reinstatement of the Second Defendant,
24. He has not participated in this action. In any event no such relief can be granted
when in the face of serious allegations regarding his behaviour, even though after his
termination, he has chosen not to respond. A court will not in those circumstances be
justified in granting the relief claimed – his reinstatement.
The appointment of an independent Board of Directors
25. The Fourth defendant appears to have conceded that there are no issues with the
Board currently in place. This is not surprising as she was instrumental in having its
members appointed, including representatives of Islamic organizations, and her own
father. The current board reflects the shareholding in the Company. She herself remains
on the board representing her mother’s interest. The board has not been demonstrated to
lack independence. In fact its actions in refusing to succumb to the pressure of the
excessive demands for alleged rent and alleged arrears demonstrate its independence.
Even if there are family issues arising from the composition of the board, there are also
apparently independent non family members on the current board. There is no need
demonstrated for this court to interfere with the composition of the Board as currently
constituted.
Account
Page 10 of 62
26. I find that the transfer of four million dollars ($4,000,000) from the accounts of
American Stores Limited by Robin and Nadia, the trustees of the estate, has not been
sufficiently substantiated. Accordingly the court cannot simply accept that there was a
previous decision of the board that sums, of which the sum of four million dollars
($4,000,000) was one installment, were to be paid to the estate in settlement of an alleged
debt by the Company.
27. The opportunity to satisfy the court by reference to documentation, either from
the accounts of the estate, or the accounts of American Stores itself, was not utilised.
That sum of four million ($4,000,000) needs to be repaid to the company, and the
current directors need to be given an opportunity to decide afresh whether that sum
is part of a debt and whether it needs to be repaid to the estate.
28. In addition that sum needs to be traced and recovered. Accordingly, Nadia and
Robin, as trustees of the estate, and also as defendants in this action, are to provide a
schedule within seven (7) days setting out:-
i. all persons who received distributions from the estate out of the four million
($4,000,000) allegedly paid to and received by the estate,
ii. the dates paid,
iii. how paid, and the amounts of such payments
iv. copies of any documentation evidencing such payment and receipt by the payees.
All persons who received a distribution from the estate out of the sum of four million
($4,000,000) allegedly paid to the estate out of the company’s assets are to repay the
sums received. Those persons should be all recorded in the schedule as ordered above.
All persons who are parties to this action will be ordered to repay to the company within
7 days all sums received by them from the estate out of the four million ($4,000,000) that
the estate allegedly received from the company funds.
29. If they have received the entirety of the four million ($4,000,000) and they all
return the sums received by them then the company would have received repayment of
the full amount.
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30. The current directors of the company should consider afresh whether they are
satisfied that the sum of four million ($4,000,000) constitutes part of a debt due and
owing by the company to the estate and whether the company should pay it, and if so
how or when.
31. If all of the four million ($4,000,000) received by the estate was not distributed to
beneficiaries, then the difference must be paid by the estate within 7 days. If it is not paid,
then Nadia and Robin are to repay that undistributed difference personally within 7 days,
subject to their right to recover any such payment from the Estate.
32. If repayment is not made by beneficiaries who are not party to the instant action,
of the sums received by them out of the four million ($4,000,000) in company funds
distributed to them by the estate, the Estate is to repay their share, subject to the right of
the Estate to recover any such sums from those non party beneficiaries.
33. So, in the case of persons who are not parties to this action who fail to repay (the
sums received by them out of the four million ($4,000,000) in company funds distributed
to them by the estate), the trustees are at liberty to recover from them any such sums
which remain unpaid.
34. It is only if the estate does not pay the difference, between four million
($4,000,000) and the sums paid out to beneficiaries of the estate that the issue of
personal repayment by Nadia and Robin would therefore arise.
35. It is not intended that the amounts paid by the estate, (as a distribution out of the
four million ($4,000,000) paid to it from the company’s funds) to those persons who are
parties to this action, be repaid personally by Nadia or Robin. Robin and Nadia would
not be responsible for personal repayment of any amount that is not refunded to the
Company by persons who are parties to this action, (as on the schedule referred to
above).
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36. It is only if the estate does not make up any difference between four million
($4,000,000) and the sum paid to beneficiaries of the estate, (that is the amount of the
four million ($4,000,000) that remains undistributed if any) that the issue arises of
personal liability by Robin or Nadia for repayment of such undistributed sum.
CONCLUSIONS
37.
1. The rent due and payable under the terms of the lease between the Claimant and the
First Defendant was, at the time of the distress, $44,000 per month for the entire premises
then occupied by the Claimant for both the service and the retail Departments.
2. The rent was actually in arrears on August 23, 2011 for 2 months, to the extent of
$88,000.00
3. The purported distress was excessive by reason of the fact, inter alia, that the
Defendants were distraining for increased rent over and above that reserved in the
original demise, and moreso, in respect of a claim for rent that was never agreed and
never constituted a term, express or implied, of the tenancy,
4. The Claimant is entitled to nominal damages as it has failed to prove adequately its
claim for special damages.
5. The Claimant owed the First Defendant no sums for rent and/or sums for use and
occupation for the subject premises at the time of the distress other than the sum of
$88,000.00 which it acknowledged owing.
6. The conduct of the Directors of the Claimant Company in relation to termination of
Shanna and Sheldon does not constitute oppression so as to entitle the Defendants to
relief pursuant to Section 242 of the Companies Act, 1995.
7. The defendants have sufficient representation on the independent Board which they
participated in establishing, and no basis has been established for the Court’s
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involvement in the affairs of the Company, save for the issue concerning the transfer of
$4 million from the Company’s accounts.
ORDERS
Rent
38. It is ordered that:-
i. Nominal damages in the sum of $20,000.00 are awarded against the defendants to be
paid by the defendants to the claimant in respect of excessive and unlawful distress.
ii. The defendants are to pay the costs of the counterclaim on the basis prescribed by the
civil proceedings rules for a claim in the amount of $ 1,968,000.00. ($2,056,000.00 minus
$88,000.00), the portion of alleged arrears of rent claimed without justification).
iii. The claimant is entitled to its costs of the application for the injunction to be assessed
by this court in default of agreement, and to be paid by the defendants to the claimant.
Oppression
39.
1. Nadia and Robin as defendants in this action, and who are also trustees of the estate of
SS Hosein (the Estate)), are to file a Schedule within 7 days setting out:-
i. all persons who received distributions from the Estate out of the four million
($4,000,000) allegedly paid to and received by the Estate, or entities under its
control,
ii. the dates paid,
iii. how paid, and the amounts of such payments
iv. copies of any documentation evidencing such payment and receipt by the payees.
2. All persons named on the Schedule who received any sums as a distribution from the
estate of SS Hosein, (out of the four million ($4,000,000) in funds received by that estate
from the Company), are to repay those sums within 14 days hereof.
3. All such sums, received by persons named on the Schedule, who received any such
payments out of the four million ($4,000,000) distribution, are to be paid by certified
Page 14 of 62
cheque made payable to the American Stores Limited deposited with the Registrar of the
Supreme Court.
4. Any difference between the total amount received by persons on that schedule and four
million ($4,000,000) (“the undistributed amount”), is to be repaid by the trustees of the
Estate, out of the assets of the Estate, to the company within 14 days hereof, by certified
cheque made payable to the American Stores Limited, deposited with the Registrar of the
Supreme Court.
5. In default of repayment of that undistributed sum within 14 days by the Estate, the
undistributed sum is to be repaid to the company personally by Robin and Nadia, by
certified cheque made payable to the American Stores Limited, deposited with the
Registrar of the Supreme Court, within 21 days hereof.
6. If repayment is not made by beneficiaries of the Estate named in the schedule, who are
not party to the instant action, (of the sums received by them out of the four million
($4,000,000) in company funds distributed to them by the estate), within 14 days hereof
it is ordered that that the Estate is to repay to the Company any sums that such persons
have received within 21 days, subject to the right of the trustees of the Estate to recover
from such beneficiary any such sum it has paid on his behalf .
7. All sums representing repayment of any payment received out of the sum of $4
million, paid into court by certified cheque made payable to the American Stores
Limited, are to be paid out, within 14 days after receipt, to the Company, upon the
company providing a receipt for such payment.
8. The issues of interest, if any, and costs of the counterclaim are reserved until the
Schedule has been filed, and there has been compliance with this order.
9. Liberty to apply.
REASONS FOR DECISION
Page 15 of 62
ANALYSIS AND REASONING
Rent
Whether the increased rent demanded for the premises was ever agreed
Meeting of June 17th
40. The notes from the Meeting of June 17th
do not indicate an agreement to the
specific amount of rent claimed, merely an authorisation that any rent outstanding be
paid. Hence the reason why it was indicated that a printed copy outstanding rent needed
to be examined, and paid. This cannot be construed as an agreement to pay whatever
sum was being claimed, whether or not it had been agreed or contracted, or even
examined.
41. It was submitted that the Minutes of June 23rd
purport to indicate agreement by
Robin Hosein that rent must be paid “the rent owed and the new current market value of
the property should be paid to Sandra Hosein Singh”.
42. These minutes are signed only by Shanna, daughter of Sandra, who is
representing her in the claim on her behalf for the increased rent. They were also
prepared by Shanna, and there is no resolution passed by the Board of the company
indicating that this was the position of the Board, or that a specific amount had been
agreed and authorized to be paid.
43. Further Robin himself testified that what he recalled as his position is that all rent
legitimately due should be paid. In those circumstances one is entitled to treat with
sceptism a self serving draft minute produced by the defendants in support of their claim
for vastly increased rent.
44. In any event it does not support the position that that rent was ever agreed by the
company or its board. Even if the minute reflected accurately the position of Robin, (and
he says that it did not fully reflect his views), it would make no difference. The recording,
in non finalized minutes of a board meeting, of what one director or the other allegedly
said does not reflect in this case what the company actually decided.
Page 16 of 62
45. This minute does not support any alleged agreement to pay a vastly increased
rent.
46. The minutes reflect discussion. On this issue they do not reflect a decision or
agreement to pay increased rent. In fact if such agreement had been arrived at there
would hardly have been the urgent need to force the issue by the purported distress.
47. That measure, instituted and instigated by persons who sat on the board of
directors of the company, smacked of desperation. It would have hardly been necessary if
the company had agreed to pay the increased rent. That action suggests a last ditch effort
to extract a payment that was otherwise not forthcoming.
48. By letter dated 17th
July 2011 Kyle Singh wrote to the Company’s Board of
Directors as follows:-
“Dear All,
Please be advised that after the initial letter dated November 15th
2010 and several
attempts to contact both Nadia Hosein and Robin Hosein, I Kyle Singh the duly
appointed attorney of Sandra Hosein-Singh is (sic ) still awaiting a formal response to
the increase in rent for the property situated at Eastern Main Road Mt. Hope. Please
keep in mind that neither a response to the letter referred to above nor any notice to
vacate the premises before the initial defined date of increase indicate an agreement to
the rental increase effective 1st March 2011.
In addition, I acknowledge receipt of the letter on July 29th
2011 which states that
American Stores will cease to occupy the building that houses the Warehouse (Used and
Service Department) by 31st August 2011.
I call upon The Board to make all outstanding payment within 14 days of date of this
letter.
Page 17 of 62
The Breakdown is as follows:
Mt Hope Arrears: August 2010 – February 2011 (7 months @ $44,000.00) =
$308,000.00
New Rent Arrears: March 2011 – August 2011(6 months @ $220,800.00) = $883,200.00
Total = $1,191,200.00 Minus $200,000.00 (repayment for Check #18571) = $991,200.00
One Payment was received on June 22nd
2011 for $284,000.00
A balance of $707,200.00 is still outstanding to date.
Please be guided accordingly.
Best Regards
Kyle Singh”
49. The claimant submits that Kyle’s letter, purportedly issued on July 17th
2011, was
actually issued on August 17th
2011. I accept this has to be so as the date it bears is
clearly erroneous. (It refers to a letter (clearly the one dated July 28th
) received on July
29th
). Also the date it purports to be issued, Wednesday 17th
July, was not a Wednesday,
but a Sunday. However August 17th
was a Wednesday). That letter demands that the rent
in arrears be paid within 14 days, that is, on or before August 31st.
50. In fact the instant purported distress took place on August 23rd
- well before the
time limited. It is not in dispute by the claimant that there was then rent owing, but in the
sum of $88,000- 2 months’ rent as contended by the claimant.
51. In fact this letter by Kyle, replete with errors though it is, speaks volumes.
52. In letter from Kyle to bailiff Calix dated August 22nd
2011 he also sets out the
basis of this claim.
(Alleged increased Rent for the retail department)
Arrears of rent - August 2010 to Feb 2011 – $44,000 for 7 months (this is the old rate)
Page 18 of 62
$220,800 for 6 months - March 2011 to August 2011 - (Alleged new rent)
53. In fact he acknowledges receipt of a cheque for $284,000.00 (June 22nd
2011) and
gives credit for $200,000 - sums reimbursed to Sandra by insurance for medical
expenses, which were paid up front by American Stores, and which were to have been
reimbursed to American Stores.
54. That, in effect, is a payment/ settlement in respect of rent of $484,000.00, which
would represent 11 months’ rent at the rate of $44,000 per month.
55. If one does not accept that the rent for the main premises was ever increased to
$220,800.00, which I do not, then of the 13 months rent claimed from August 2010 to
August 2011, 11 month’s rent had been paid, leaving only 2 months outstanding. This is
the evidence of Nadia on behalf of the company.
56. I accept her evidence that only two months’ rent at $44,000 per month was in
arrears, as I specifically find that there was no separate rent, additional to the sum of
$44,000 which was being paid, for the service department. The rent of $44,000 by that
time included rent for the service department. There is simply no cogent evidence
otherwise.
57. The alleged increased rent – from $44,000 to $220,800.00 is rejected.
58. Shanna’s own evidence is:
i. that she was frantically seeking an “Emergency directors meeting” (Para 47
witness statement) on the day of the purported distress,
ii. that she had to call the chairman of the Board to complain that Nadia was not
issuing a cheque, and
iii. that she had to indicate to him that unless the Board met and a board decision was
made, the place would be “officially locked down”.
Page 19 of 62
59. This strongly suggests that she was aware that up to that point in time the
directors had never agreed to the claim for increased rent, and was aware that they were
not directing Nadia to issue any cheque based on that alleged increased amount, and at no
point had this increased rent actually been agreed.
60. The suggestion that it had been agreed, and that this was reflected in minutes of
the meetings of the company, and in admissions by the claimant is without substance. Dr.
Hosein made it clear that his position was that legitimate demands for rent should be
met, and that the company should vacate if it could not pay the rent legitimately due.
61. The alleged admission by Nadia in the minutes of the meeting of June 9th
2011 is
simply that rent was owing, not that the increased amount of rent being claimed was
owing. This was never in issue.
62. It is clear that there was never any agreement for the increased rental of
$220,800.00 per month. Further, this represents an increase of 400 per cent, and was
beyond the ability of the company to pay, as Shanna admits she later found out. Clearly
therefore the company could not have agreed to pay this increased rent.
Alleged Service department arrears
63. In letter from Kyle to bailiff Calix dated August 22nd
2011 he also sets out the
basis of the claim for Service department arrears - Oct 07 to Feb 2011 – 40 months at
$22,680.00.
64. This is not credible. Sandra, his mother, was in charge of paying the rent from the
company to herself as the landlord. It is therefore not credible that the arrears if any, for
the service department would be allowed to accumulate for 40 months without any
documentation or request in writing for payment.
65. There is no agreement to this figure for the service department, nor any indication
that this increased figure for the service department was even raised or demanded
contemporaneously with its alleged date of accrual, or at the inception of its accrual.
Page 20 of 62
66. If the $44,000 being paid for rent was supposed to not include the service
department then it is curious that no claim was ever made to this effect until after Sandra
became incapacitated in March 2010.
67. The landlord was under an obligation to produce its records in support of this
alleged claim for over 2 million dollars, when a substantial part of that claim was based
on its assertion that the rent for the service department and the rent for the retail
department were separate, and that the separate rent for the service department had been
allowed to remain unpaid.
68. It is also curious that there is no record from the landlord, the defendants, of
separate invoices for the service department, of invoices for this increased amount, of any
agreement to pay it on a deferred basis, or of any acknowledgement that the company
was even notified of this alleged increased rent for the service department.
69. This is particularly curious as it is clear from the company’s payment records that
the rent for the service department was invoiced for separately, up to the point when the
rent for the whole area occupied was increased to $44,000.00
70. After the rent for the whole premises was increased to $44,000.00 per month,
apart from a period of three months, the rent for the service department was not
separately invoiced.
71. While the records do reflect that there is a period of three months for which an
increased rent was invoiced for the service department in February 2008, this was never
repeated, and for the remainder of the period while Sandra remained in charge of making
rent payments on behalf of the Company to herself as the landlord of the premises, no
further invoice was presented for increased rent for the service department.
72. I find that this aberration is not sufficient to conclude that there was any
agreement on an increased rent for the service department. In fact the failure thereafter by
Sandra to either claim or continue to pay any increased rent for the service department
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suggests and is more compatible on a balance of probabilities, with the situation that the
rent was not actually increased as claimed , or that such an increase was not agreed by the
Company and therefore not persisted with.
73. The alleged arrears of rent for the service department dating from 2007 would
have accrued, if they were incurred at all, during the period when Sandra, the landlord,
was also managing director. Sandra was managing director up to 2010 when she became
incapacitated. She was responsible for ensuring that payment of rent by the company was
made to the landlord, herself.
74. If it had been agreed that the service department would attract a separate rent
from the total that was paid in rent, it defies credibility therefore that that she would have
allowed it to remain unpaid and to accrue over the years to the extent claimed.
75. The obvious inference is that this increased, separate but uninvoiced rent for the
service department:-
i. was never agreed,
ii. that it had not accrued, and
iii. that there was no sum due and owing as claimed as arrears for the service
department.
76. In fact not one resolution or minute of the company was produced to establish that
the increased rents claimed for the service department, (or the retail outlet), had ever been
agreed. The documentation produced to the court and relied upon simply establishes that
it had been agreed that any rent outstanding should be paid, and this meant any rent
legitimately being claimed.
77. The onus of proving its claim for rent was on the defendants / landlord .The
landlord would be expected to have its own records of invoices submitted for payment of
rent, or at the very least, sums received from the company as rent, to support its claim.
Page 22 of 62
78. The complete absence of tax returns, accounting records, invoices, receipts, or
even contemporaneous letters indicating that the rent for the service department remained
unpaid for years, demonstrate the lack of substance of this claim.
79. This claim for separate rent for the service department must therefore be rejected
and dismissed.
80. In those circumstances the purported distress,
i. was premature, (as Kyle’s letter , which I find was actually issued on August 17th
2011, one week before the purported distress, purported to give the company until
August 31st to pay,)
ii. was also clearly therefore for an amount of rent far in excess of the $88,000 then
actually owed. A cheque was tendered in the amount of over $1 million, half of the
amount claimed. This was rejected. In any event it far exceeded the amount of rent
that I find was actually then owing- $88,000.00.
Further analysis of Documentary evidence
Rent
What was the rent due and payable under the terms of the lease between the
Claimant and the First Defendant
Accounting records
81. The Claimant produced a print out of its electronic records of the rent payments.
No other records of the rent payments were produced. They support the Claimant’s
pleaded case.
82. The first mention of alleged arrears of rent for the Service Department is in the
demand letter issued by the Defendants to the Claimant dated November 15, 2010. This
letter purports to give notice to the Claimant of an increase in the rent for the premises to
$220,800 with effect from March 2011.
Letter dated the 15th
November 2010
“Dear Nadia,
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Re: Increase in Rent for Property located at Eastern Main Rd. Mt. Hope
We, the children of Sandra Hosein-Singh namely Sheldon, Kyle and Shanna act on behalf
of our mother.
Please be advised that there will be an increase in Rent for the property located at
Eastern Main Road. Mt. Hope effective March 1st 2011. American Stores Ltd currently
occupies the entire premises located at Eastern Main Rd. Mt. Hope covering 36,800
square feet in building which include: the Mt. Hope Branch,
Service Dep’t, Used Dep’t and a warehouse but has only been paying rent for the Branch
and the Service Dep’t
At present the rent for the Service Dep’t is in Arrears since October 2007.
The rental market value for the above mentioned property is $6.00 per sq./ft. As a result,
the new rent due is $220, 800.00
Rent is due on the 1st of each month; a grace period of 7 days will be given in which to
pay after which a 1% interest charge will be applied. Please be guided accordingly.
Best Regards.
Sheldon Singh
Kyle Singh
Shanna Singh”
83. By letter dated December 3, 2010 written by the Defendants’ Attorney to the
Claimant demand is made inter alia for rent for the Service Department at the rate of
$22,680 per month from October 2007. This letter conflicts with the Defendants pleaded
case, (at paragraph 17), that as at July 2011 the rent for the Service Department was in
the amount of $7,000.
Letter dated 3rd
December 2010
84. On the 3rd
December 2010, the Defendant’s Attorney at Law wrote demanding
arrears of rent as follows: -
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“Dear Madam
Re: Rental of property situate at Eastern Main Road, Mt. Hope.
I act for and on behalf of the duly appointed Attorneys of Sandra Hosein-Singh namely
Sheldon Singh, Kyle Singh and Shanna Singh.
The rental for the store is $44,000.00 per month and the rental for the service department
is (3.00 per sq. feet x560 sq. feet) $22,680.00 payable on the 1st of every month.
I am instructed that rent is outstanding for the service department from the month of
October 2007 to present in the sum of $884,520.00 (22,680.00 x 39 months). Further,
rent for the store is outstanding for the months of August 2010 to December 2010 in the
sum of $220,000.00 ($44,000.00 x 5 months).
I am to advise that the above outstanding sums be settled within 14 days from the date
hereof.
Please be guided accordingly
Yours faithfully
(S Ramkisson)
85. The Defendants contend that with effect from March 2011 the rent was increased
to $220,800 as a consequence of the demand made by the letter dated November 15,
2010. The letter, erroneously dated Wednesday July 17, 2011, written by the Third
Defendant to the Claimant, complains about not receiving a “formal response” to his rent
demand made by letter of November 15, 2010. This letter, delivered to the Claimant 6
days before the distress, confirms that the Claimant never agreed to pay the increased
rent. Also, this letter contains no reference to the alleged “arrears of rent for the Service
Department” which was previously demanded.
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86. The Defendants produced no documentary evidence of the payments made despite
the fact that they were made to the First Defendant.
87. The evidence of Nadia Hosein accords with the records in evidence. The evidence
for the defendants does not.
88. It was submitted that the records reveal that during her tenure as Managing
Director of the Claimant, the First Defendant paid to herself the rent due each month.
There is no month in which rent was not paid. There is no month in which the rent was
paid in parts or instalments. It was within the power and control of the First Defendant to
direct the payments to herself and she did so faithfully. I find that they do so reflect.
89. The contention of the Defendants that during the period October 2007 to March
2010 the First Defendant failed or omitted to pay herself rent for the Service Department
such that that rent fell into arrears is therefore:
(i) not consistent with the reality that Sandra was in a position to pay herself and that she
always did so promptly and
(ii) the documentary evidence
and is therefore not credible.
90. I find that the payments made by the Claimant from October 2007 to March 2010
at the direction of the First Defendant, to herself, represented the full amount of the rent
due to the First Defendant for the entire premises, and at March 2010 that rent stood at
$44,000 per month. The Defendants’ claim for arrears for the Service Department from
October 2007 is not supported by the evidence. It is without foundation and must be
rejected.
91. The Defendants’ own witness admitted in cross examination that the Claimant
had never agreed to pay the increased rent.
Rent - documentary evidence
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Draft minutes- whether acknowledgement or agreement to pay
9th
June 2011
92. A meeting of the Board of Directors of the company was held on the 9th
June
2011. Item 15 of those draft minutes is as follows:-
“15. Shanna Singh asked Nadia Hosein why she hadn’t paid rent for the property situate
at Mt. Hope since July 2010. She was unable to give a reasonable response. She admitted
that she was wrong and that American Stores does in fact owe rent to Sandra Hosein-
Singh”
93. This is not, as contended by the defendant, documentary proof of the Claimant’s
liability to the Defendants for arrears claimed by Ms. Ramkissoon in the sum of
$884,520.00. The proper context of that discussion recorded in the draft Minutes is that at
that time it is not in dispute that rent was owing for the premises. This was mostly paid
by cheque in the sum of $284,000 .00 dated June 22nd
2011. Sandra at that time had had
her substantial medical bills paid by the company and there needed to be a set off
between her and the company in respect of sums that she had received from her medical
insurance, but had not yet reimbursed to the company. The cheque dated June 22nd
2011
attempted to do this, and credit was given by the defendants for the medical insurance
reimbursement by letter dated August 17th
2011 from Kyle. That sum, after the set off,
effectively settled 11 months’ rent at $44,000.00 per month.
17th
June 2011
94. At a further meeting of the Board of Directors held on the 17th
June 2011, it was
noted:-
“The Board authorized the payout of outstanding rent due to Sandra Hosein-Singh for
the property situate at Mt. Hope. A printed copy of outstanding rent for the service
department due to Sandra Hosein-Singh needs to be examined and paid.”
95. It must be borne in mind that:
i. these are notes
ii. they are not verbatim notes but rather a recording of what the recorder
understood was discussed.
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iii. they are produced from the custody of Shanna,
iv. they were recorded by Shanna.
v. they are not resolutions of the company .
vi. neither are they approved and seconded final minutes
96. Furthermore, what is recorded is that the Board did not authorize payment of the
claim for arrears for the service department but rather required that the claim be
examined, and depending on the results of that examination, paid. If it were otherwise,
and the Board did not need to be satisfied as to the amount legitimately due, why would
the board have even required that the “printed copy” be examined? It could simply have
authorized payment, whatever the sum claimed.
97. The attempt to elevate draft notes Minutes of this type into binding
acknowledgements and decisions to pay by the Board of Directors of the Company is not
supported by the evidence.
98. It is not consistent with the actual actions of the Board of Directors in not
approving payment of the sums demanded, even in the face of a distress which
effectively shut down the headquarters of the company. If the Board had in fact already
agreed to pay these sums then obviously there would not have been the resistance to
paying as deposed to by Shanna, and a cheque for the full amount demanded would have
been authorized. .
23rd
June 2011
99. The draft minutes of a Special Directors Meeting held on the 23rd
June 2011 and
at which Mr. Robin Hosein, Ms. Nadia Hosein and Mr. Maybodi were present, allegedly
record that:
“Ms. Nadia Hosein raised the issue of Rent owed to Sandra Hosein-Singh for the store,
warehouse, service and used department located at Eastern Main Road, Mt. Hope.
Shanna Singh stated that a letter to increase the rent effective 1st March, 2011 was hand
delivered on 1st December 2010 to Ms. Nadia Hosein. She also added that on several
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occasions she has tried to contact Ms. Nadia Hosein about outstanding rent due to Ms.
Hosein Singh as well as the new rent that American Stores Limited was required to pay
as of 1st March 2011. Ms. Hosein avoided and also dropped the phone several times on
Ms. Singh. Robin stated that regardless of circumstances, the rent owed and the now
current market value of the property should be paid to Mrs. Sandra Hosein-Singh.”
100. Even if Robin did state this, a matter which he denied, such a statement on the
23rd
of June suggests that the issue had not been settled at previous meetings, and was
still a live one. I find in fact that his explanation under cross examination reflects his true
position, namely that all rent legitimately owed should be paid, and that if the company
could not afford the rent it should vacate the premises. The alleged statement by one
director, in draft Minute, which he does not fully accept under cross examination, is no
substitute for a resolution of the Board of Directors, or final confirmed minutes recording
an actual decision of the Board, rather than recordings of statements by individual
directors .
18th
July 2013
101. An email from Ms. Shanna Singh dated 18th
July 2013 was sent to the entire
Board of Directors, demanding the alleged outstanding rent at the rates set out in the
letter dated 15th
November 2010 in four parts.
Friday July 22nd
102. On Friday July 22nd
Ms. Hosein sent the following email to the Board of
Directors
“To the Board of Directors,
We would like to hold a meeting tomorrow at 4pm at Kapok Hotel to discuss some
pressing matters, namely, the rent rate at Mt. Hope warehousing facilities and alternate
premises. Also other matters.
Please indicate whether you can attend.
Thank You
Nadia Hosein
Page 29 of 62
Secretary”
103. The documentary evidence shows that the increased rent being demanded for the
retail premises, and the sudden, apparently retroactive, and in any event unsubstantiated,
claim for arrears of rent for the service department, had not been agreed. Those claims
were engaging the attention of the Board, but the Board, like this court, was never
provided with the basis, or with documentation to establish the legitimacy of this claim.
104. The Board was being asked in the case of the alleged arrears for the service
department, to write a cheque for almost one million dollars without any documentation
whatsoever to justify this demand. No responsible Board could have agreed to pay for
alleged arrears of rent for the service department in those circumstances.
With respect to the demand for increased rent for the retail premises, the demand was for
an increase in rent of approximately 400 per cent. Obviously more was required of a
Board considering such a claim.
105. In fact the evidence is that this alleged rent is no longer an issue between the
parties. The company gave up occupation of part of the premises, and has agreed to pay a
rent of $50,000.00 per month for the portion that it does occupy. It is therefore clear that
the company never agreed to pay $220,800 per month in rent as the defendants contend,
and that they were never in receipt of undertakings from the company that it would pay
this sum. The email correspondence demonstrates clearly that the defendants knew at all
times that the issue remained under discussion at the level of the Board
106. Ms. Hosein gave evidence at trial (at paragraph 32 of her witness statement filed
on the 1st March 2013) that “the Claimant at all material times made clear to the
Defendants that their outrageous demands for rent would not be acceded to.”
107. The exchange of legal letters, and in fact the very fact that the defendants had to
resort to the purported distress in a last ditch effort to extract a payment of the increased
rent demanded, both support her claim that the Claimant had made clear that it could not
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accede to the increased rent, and had not agreed that it was to form the basis of their
continued tenancy.
108. The company’s tenancy had not been terminated nor a new one substituted or
offered on the terms of the new rent. All that was being done was that increasingly
strident demands for a rent increased by approximately 400 per cent were being made,
together with a claim for “arrears of rent” for the service department amounting to over
$800,000.00, without a shred of supporting or substantiating material. In those
circumstances to contend that the evidence established agreement on the part of the
company to those demands is simply fanciful.
109. The evidence of Nadia Hosein is that although the Board discussed the issue of
the rent on a number of occasions there was never agreement to pay the increase
demanded. The Claimant admits that the rent for July and August 2011, in the sum of
$88,000.00 was in arrears on August 23, 2011.
110. The Defendants submitted that the weight of the documentary and oral evidence
established that the sum of $884,520.00 (arrears for the service department) was admitted
to be owed to the Defendants by the Claimant Company. I find that in fact the opposite is
the case.
111. No resolution passed by the Board agreeing to pay the increased rental demanded
in the letter of November 15, 2010 was produced.
112. The evidence is that:-
i. the board did not approve the payment of the sums being demanded.
ii. the company was in fact vacating part of the area it occupied, and did in fact vacate
the warehouse in December 2011. I note that even the Board’s alleged position was
not that it should vacate and pay the amounts demanded.
iii. that no where did the Board ever communicate to the defendants that it had agreed
to pay the increased sums demanded,
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iv. that the defendants were not informed by letter, legal or otherwise, or any written
communication, that their demands were being accepted,
v. that their claims were not in fact paid, and
vi. that the defendants, in the face of non acceptance of their demands for payment,
tried to force the issue by the purported distress.
DISTRESS
113. Whether the purported distress was illegal by reason of the fact that:-
i. the right to distrain had been suspended and/or
ii. the Defendants were distraining for increased rent over and above that
reserved in the original demise and/or
iii. whether the distress was irregular by reason of the fact that a valid tender of
the rent was made at the time of the levy and rejected by the Defendants.
Levying for rent increases beyond that reserved in the original demise.
114. It is not open to a landlord to levy for rent increases beyond that reserved in the
original demise. In Hill and Redman’s Law of Landlord and Tenant 14th
Ed at paragraph
244 it is stated
“Payments agreed upon during the currency of the tenancy by way of increased rent
...though expressly called rent, are not in fact rent, but sums in gross for which a distress
cannot be levied, for a rent can only be reserved at the time the demise is made.”
115. This suggests that even if the sums for increased rent had been agreed, and I
expressly find that they had not, a distress could not be levied for them.
Whether right to distrain suspended
116. Prior to the levy the Defendants issued a demand letter to the Claimant
erroneously dated Wednesday July 17, 2011. In fact July 17, 2011 was not a Wednesday
and in any event the contents of the letter made it clear that it could not have been written
in July. I accept the evidence of Nadia Hosein that she received the letter on August 17,
2011. This letter makes demand for payment of all arrears within 14 days, yet 6 days later
the Defendants purported to distrain.
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117. There are circumstances in which the right to distrain can be suspended. See Hill
and Redman on Landlord and Tenant 14th
edition paragraphs 289 page 410.
“The right to distrain may be lost, postponed, or suspended by an express or implied
agreement by the landlord not to distrain, or by conduct on the part of the landlord
inducing the owner of chattels to believe that he will not take them under a distress”:
118. By their letter of August 17, 2011, the Defendants induced the claimant to believe
that they had a grace period of 14 days to resolve the issue of the rent being claimed. The
effect of that letter was to suspend the possibility of, inter alia, distress for 14 days from
August 17, 2011 when the letter was written and served on the Claimant.
119. Distraining before the expiration of that period despite their letter, was
incompatible with that letter, and amounted to bad faith, especially in the context of the
testimony of Shanna that one goal of the distress was to remove Nadia from the
management of the company.
Refusal of Tender
120. Despite the fact that the Claimant had not agreed to the increased rent, on the day
of the levy Amir Maybodi made an offer to immediately pay half the sum claimed being
$1,028,000 which offer was rejected. I find that that sum far exceeded the amount of rent
which was in fact in arrears.
121. Having refused an offer of payment of a sum which far exceeded what was due
and owing the Defendants proceeded to lock the main gates of the premises and the
Claimant was not permitted to remove any items from the premises.
122. Tender of the rent, with any proper costs, will deprive the landlord, according to
the stage at which it is made, either of the right to distrain or the right further to pursue
the remedy by distress, thus: - A tender to the landlord or his authorised agent by the
tenant or his agent of the rent without any costs (even though the landlord has incurred
costs) before seizure, extinguishes the right to distrain and makes the subsequent
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distress illegal. See Bennett v Bayes (1860) 5 H & N 391. A tender after distress taken,
but before it is impounded or removed, of the rent and costs of the distress makes the
subsequent removal or detainer unlawful. See paragraph 288 Hill and Redman 14th
Edition page 408
123. Shanna admitted in cross examination that there was never any agreement
between the Claimant and the Defendants for the payment of increased rent as demanded
in the letter of November 15, 2010.
124. Why it was considered necessary in those circumstances to retain a bailiff and
levy a purported distress on a company of which Shanna was a senior manager is
perplexing, apart from reflecting a significant conflict of interest.
125. The company was effectively shut down at that location. Its service department
and a retail outlet inter alia could not function, and its losses would have been significant
if an injunction had not been granted by this court 4 days later. The fact is that at the time
of the purported distress the increased rent demanded had not been agreed. In the context
of a family owned company with the defendants having an ownership stake and
representation at the board level and at the management level, the purported distress
could only have been contemplated as a last resort. The evidence is that it was an
unnecessary and self defeating step.
Whether the purported distress was excessive
126. The Claimant contends that the purported distress was also excessive.
To be prove excessive the value of the goods seized must be clearly disproportionate to
the rents owed taking into consideration the conditions in which a forced sale of the
effects would have to take place: Field v Mitchell (1806) 6 ESP 71) Halsburys 5th
ed. Vol
62 paragraph 408
127. I have found that the rent in arrears at the time of the levy was $88,000.
Obviously the seizure of four (4) delivery trucks, and stock including furniture and
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equipment must have exceeded the amount of the arrears. I accept the evidence that this
is so.
Whether the Claimant is entitled to damages for illegal or excessive distress and if so
in what amount
128. The Claimant’s submission on this aspect is “The Claimant’s pleaded case is that
the Fifth Defendant locked the main gates of the premises, thereby impounding all the
Claimant’s stock, equipment, vehicles and all other items stored on the premises. This
was admitted by the witness for the Defendants in her evidence in chief and in cross
examination. She indicated that she was present at the time the gates were locked, and
confirmed that she saw no items being removed from the premises prior to the Fifth
Defendant securing the premises.
129. The evidence of Nadia Hosein1 in support is that for a period of 4 days before the
Court intervened the Company had no access to the premises and to its stock valued
between $3-4 million which had been purchased for the upcoming busy sales period
between Divali and Christmas. The evidence is that the Claimant’s warehouse and
distribution functions were based at this location and so the stock for all branches as well
as the 4 delivery trucks were stored here. She gave evidence that she was forced to pay
wages of staff in the daily amount of $3,164.06 and $4,000 to hire alternative transport
as the Claimant’s vehicles were impounded. Her evidence is that the Claimant lost sales
revenue of approximately $100,000 per day during this period.
Damages
130. The evidence as to the damage actually sustained by the claimant is inadequate.
131. While I find that the distress was excessive, because the goods were returned,
even though only as a result of an approach to the court, damages recoverable would be
nominal only.
1 Witness Statement of Nadia Hosein at paragraph 39
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132. Where no sale of the goods distrained upon ever takes place the claimant is
entitled to nominal damages even if he has proved no actual damage. Chandler v
Doulton (1865) 3 H & C 553: Paragraph 371 Hill and Redman supra; Halsburys 5th
ed.
Vol 62 para 413
The claimant’s evidence does not meet the standard of proof required for special damages
– see for example Raghunath Singh v MTS H.C 2193 of 2007 where the principles, and
guidance from the Court of Appeal on this issue, are summarized. No accounts from the
company were produced in support for the claim for loss of sales. In relation to a
substantial claim in this regard the failure to produce documentary and accounting
information, which must exist, means that the claim has not been strictly proved, as it
must be.
133. In those circumstances nominal damages only can be awarded. Nominal
damages in the sum of $20,000.00 are awarded against the defendants to be paid by
the defendants to the claimants
134. The injunction was clearly properly sought by the claimant and the claimant is
entitled to its costs of the application for the injunction to be assessed by this court
in default of agreement, and to be paid by the defendants to the claimants.
THE COUNTERCLAIM
Whether the Defendants to the Counterclaim have exercised their powers as
Directors of the Claimant in a manner that is oppressive or unfairly prejudicial to,
or that unfairly disregards the interests of the Defendants.
135. The Defendants have counterclaimed seeking the following reliefs:
“i. Relief under section 242 of the Companies Act
ii. Reinstatement of the Fourth Defendant,
iii Reinstatement of the Second Defendant,
iv. The appointment of an independent Board of Directors to carry out the business
and affairs of the Company and
v. Account of the monies of the Company”
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136. The Defendants submit that the evidence established a case of oppression of the
Defendants by Nadia Hosein and Robin Hosein and the Board of the Claimant as
follows:-
1) The removal from their management positions without any good reason of the Second
Defendant and the Fourth Defendant.
2) Refusal to provide (i) accounts for the funds of the Company and (ii) other financial and
management information. There is no evidence of (ii). In fact the defendants are
adequately represented on an independent board by Shanna and her father, constituted
largely through the efforts of Shanna, and this was acknowledged by Shanna in cross
examination.
(3) Theft (being the taking without the authority of the Board of American Stores
Limited of $4,000,000.00 by Nadia Hosein with the complicity of Dr. Robin Hosein.
However, their evidence is that they acted under the authority of the previous Board
which included the first named defendant. This is dealt with hereunder.
The dismissal of Sheldon
137. In so far as it is alleged that the termination of employment of the second
defendant constitutes oppressive conduct the claimants claim that he was terminated with
cause as a result of his behaviour. While the defendants contend that the allegations
against him are vague and non specific it is clear that they are sufficiently specific to
require his response in these proceedings if he were to make out a claim of oppression in
this regard.
138. Allegations that he made threats to the life of to Nadia required rebuttal if he were
pursuing a claim of oppressive conduct.
139. Any exclusion from the management of the Company is alleged to be the result of
his own behaviour, which he has not taken the time to refute. He has not participated in
these proceedings and there is prima facie evidence that he was in fact terminated with
cause. In any event Shanna is a director on the board, as is her father, who is also the
father of the second defendant. If his dismissal had been without cause their presence and
Page 37 of 62
representation on the board is sufficient for them to have raised his reinstatement as an
issue if he were worthy of reinstatement. There is no evidence that this has been done.
The entire issue of his termination as a ground of a cause of action in oppression appears
to be an afterthought, which in any event is not substantiated on the evidence.
The dismissal of Shanna
140. In September 2011 Shanna Singh was removed from the management team by the
Claimant. It is alleged this constitutes an act of oppression, although Shanna seems to
have become disinclined to pursue this relief based on her testimony under cross
examination. She continues to be a Director of the Claimant.
141. Any exclusion of Shanna from the management team of American Stores was
clearly the result of her own conduct and role in participating in a levy against the
company of which she was supposed to be a part of the executive management team. She
still remains a director. In those circumstances it cannot be said that there was any
oppressive conduct in relation to her.
142. In fact the contrary is probably the case. Her own conduct, demonstrated the
clearest possible conflict of interest, and resulted, not surprisingly, in her exclusion from
the management. Taking action to close down the operations of the company in
pursuance of a demand for rent which, never having been agreed, was completely
illegitimate, putting the reputation of the company, and the security and peace of mind of
its employees and suppliers at risk, was highly irresponsible behaviour by a purported
manager of the company, and a conflict of interest.
143. While an exclusion from the management of such a family operated company
without a corporate purpose may amount to oppression the termination of both Sheldon
and Shanna was explicable and not unreasonable in the circumstances of their conduct.
No basis has been advanced to justify their reinstatement.
Whether Board Independent
Page 38 of 62
144. Until Sandra Hosein-Singh fell ill in March 2010), the Estate of S.S. Hosein was
managed by the Trustees of his Will, Nadia Hosein, Robin Hosein - and Sandra Hosein-
Singh.
145. Prior to March 2010 the Directors of the Claimant were the same - Nadia Hosein,
Robin Hosein and Sandra Hosein-Singh.
146. It is not disputed that the day to day operations of the Claimant Company were
then primarily run by Sandra Hosein-Singh. In March 2010 after Sandra fell ill she never
returned to work and Nadia took over the day to day operations until June 2011.
147. At the date of commencement of this action the Directors of the Claimant were:
Yacoob Ali (representing ASJA, Chairman of the Board of Directors of the
Claimant and the Fourth Defendant to the Counterclaim)
Nadia Hosein (the First Defendant to the Counterclaim)
Robin Hosein (the Second Defendant to the Counterclaim)
Amir Maybodi (the Third Defendant to the Counterclaim)
Abdur Rahman-Ali (representing Darul Uloom T&T)
Vickram Singh (husband of Sandra Hosein-Singh and father of the Second, Third
and Fourth Defendants)
Shanna Singh (daughter of Sandra Hosein-Singh and Vickram Singh, sister of the
Second and Third Defendants, the Fourth Defendant)
Farouk Kazim (representing the Islamic Academy of T&T).
148. At a Directors Meeting held on June 9, 2011 a decision was purportedly taken to
remove Nadia Hosein as Managing Director and replace her with a joint management
team comprising Amir Maybodi and her niece Shanna Singh.
149. Subsequently, it was agreed that the Claimant’s day to day operations would be
managed by a 3 person management team comprising Nadia Hosein, Amir Maybodi and
Shanna Singh.
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150. The independence of the Board is reflected inter alia in
i. the composition of the Board, which includes Shanna and her father Vickram Singh,
and representatives of religious organisations, (included on the Board as the result of the
actions of the defendants themselves), and
ii. the actions of the Board, in
a. altering the management structure, removing first Nadia as sole managing director, and
then Shanna, in the circumstances outlined above, and
b. their resistance to the payment of the unsubstantiated claim for rent and arrears.
151. No reason has been demonstrated, in the circumstances established on the
evidence, to require the involvement of the Court in the composition of the Board of the
Company.
Oppression
152. It is alleged by counterclaim that Nadia and Robin Hosein, as directors of the
company, have acted in a manner that was oppressive to the interests of the defendants in
transferring from the funds of American Stores, without the authority of the board of
directors, the sum of $4 million dollars.
153. Nadia and Robin admit that the sum of $4 million was paid out but aver that they
paid it to the estate of SS Hosein, or entities under its control, and thence to the
beneficiaries of the estate, which included the first defendant.
154. The issue is therefore whether in those circumstances a case of oppression has
been established.
155. The shareholders of American stores are as follows:
SS Holdings Limited - 3641 shares
Estate of SS Hosein – 1 share
Sandra – 1
Vickram Singh - 40
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Ms. Pierre – 1 share
(Singh and Pierre do not have any interest in Holdings)
156. As the majority shareholder of American stores is SS Holdings Limited
(Holdings) it is necessary to examine the shareholding of Holdings. This is as
follows: Shareholders of SS Hosein Holding Limited, (the majority shareholder in
American Stores Limited), are:
Nadia Hosein – 305 ordinary shares
Sandra Hosein-Singh – 305 ordinary shares
Robin Hosein – 282 ordinary shares
Tana De Freitas – 94 ordinary shares , Amir Maybodi – 94 ordinary shares,
Anisse Maybodi – 94 ordinary shares, Gina Hosein – 141 ordinary shares, Jason Hosein,
141 ordinary shares ASJA – 282 ordinary shares Islamic Academy – 282 ordinary shares
Darul Uloom – 282 ordinary shares
157. The evidence is that the beneficiaries of the estate of SS Hosein are more or less
the same as that of Holdings, namely Sandra Hosein Singh, Ameer Maybodhi, Tana De
Freitas, Anisse Maybodhi, Robin Hosein, Nadia Hosein, Jason Hosein, Jenna Hosein and
the three Islamic bodies.
158. In answer to the court Nadia clarified this as follows:-
Q: And who are the share holders of SS Hosein Limited?
A: The Share holders are the same names that I called as the beneficiaries of the
estate in more or less the same proportion. Proportions are that eight bodies
meaning the five children and the three Islamic associations. That’s how the shares
were divided. So its 12 ½ per cent per body. So if there are three children of one of
the children, which is in the case of Ameer and Tanna Anees that would 12 ½
broken in three . And likewise with my other brother whose children are in Canada
.Theirs would have been in two. And now with these children- they are representing
their mother. Sandra Hosein Singh’s share. So the beneficiaries more or less the
same as Holdings which owned the majority shares of American Stores Limited as
well as other company’s (assets) which are basically properties.
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Q: The share holding in SS Holdings Limited is in the same proportions as the
beneficiaries’ share in the estate?
A: Yes almost, - except that Sandra and I had one share which became 23 shares in
the provision. So we each have an extra amount.
159. Clearly therefore these entities are interlinked, and the defendants as beneficiaries of the
trust, would have benefitted from any payment and distribution made to it from the
company, or entities under its control. This is actually admitted by Shanna. It is also the
evidence of Maybodi, that this transfer was not of great concern since the beneficiaries of
the estate and the shareholders of American Stores were the same. It was, in his view
tantamount to a transfer from “left pocket” to “right pocket,” and was therefore not a
“super problem”.
160. The evidence in context is also:-
i. that the estate has reported to the board,
ii. that there were minor differences between the proportions of the holdings of some of
the shareholders –in particular Sandra, and her entitlement as beneficiary of the Estate.
iii There is evidence that Vickram Singh, who held 40 out of the almost 4000 shares in
American stores, was not a beneficiary of the Estate, and
iv. The defendant’s evidence is that not all of the $4million was distributed to the
beneficiaries of the Estate.
161. It was alleged that the company owed the Estate a debt and it had been agreed that
the company would pay the Estate sums until the debt had been repaid.
However no documentation of the alleged debt was produced, nor any resolution of the
company recognizing the alleged debt, or agreeing to its repayment.
162. It is accepted that with regard to the specific payment of $4 million there was no
such resolution. On the evidence common to all parties there was no authorization for
that payment by the new Board.
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163. However Nadia says that it was a repayment to the Estate of SS Hosein and
affiliated companies based on a decision of the previous board, which then comprised
Sandra herself, Nadia, and Robin. There is absolutely no documentation to substantiate
this, either from the accounts and records of the estate or the affiliated companies, and
certainly not from the claimant company itself. This explanation cannot be accepted on
the state of the documentary evidence.
164. The entire context of the matter however is as follows:
a. the company’s meetings were few and far between;
b. the company had operated with 3 directors, Nadia, Robin, and Sandra, up to
March 2010, and up to March 2010 Sandra was effectively in charge of the day to day
operations of the Company;
c. important matters were not documented, for example the lease agreement between
Sandra and the company. (According to Nadia when she looked for the written lease and
did not find it “this was not surprising)”
165. The defendants claim that the actions of Nadia and Robin constitute theft and
should be referred to the Director of Public Prosecutions. This is a departure from their
pleadings, which alleges that the action of removing that sum from the company
constituted oppressive conduct.
166. Nadia and Robin aver that that sum was a repayment to the Estate of SS Hosein of
sums that the company owed to the estate. They contend that it was part payment, and
was consistent with a decision that had been taken by the board when it comprised
Sandra, Nadia and Robin. They claim that the beneficiaries of the estate benefitted from
this payment, and that would have included Sandra.
167. It is alleged that there is a difference between the shareholders of American Stores
and the beneficiaries of the Estate, as Vickram Singh owns 40 shares of American Stores
but is not a shareholder of Holdings. In any event he owns 40 shares out of almost 4000,
and is therefore a shareholder to the extent of less than 1 per cent of American Stores.
Further, he has not participated in this action.
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168. The counterclaim is by Sandra, Kyle, Sheldon, and Shanna, of whom only Shanna
gave evidence.
169. The allegation that the transfer occurred with the consent and participation of
Sandra pursuant to an earlier resolution / decision of the board, has not been refuted.
Neither has it been substantiated. It is clear that the business of the Estate, of Holdings,
and of American Stores itself is intertwined, and that the strict separation that would be
expected of separate legal and corporate entities has not always been maintained.
170. The evidence of Shanna, is that the board, constituted with the new directors, has
discussed the distribution by the trustees of the Estate to the beneficiaries at a directors’
meeting of American stores, that the Trustees of the Estate have reported to the Board of
the Company, and that Kyle has written to the Board of the Company (July 17th
2011) in
relation to distributions by the Estate. Further, Maybodi indicated in cross examination
that he considered that it was a transfer from one pocket to the next as the beneficiaries
and shareholders were the same persons.
171. In Shanna’s evidence, apart from the bald allegation that the sum of $4 million
was transferred by Robin and Nadia to the Estate, is notably silent on whether Sandra,
whom she represents, was the beneficiary of any part of that payment. This had to be
extracted under cross examination. In fact all parties to this transaction were suspiciously
vague as to precisely who received the proceeds of this payment.
THE OPPRESSION REMEDY
172. I consider that the law relating to the oppression remedy has been
comprehensively analysed by the High Court in a series of cases, extracts of which are set
out hereunder as relevant.
Law
173. The Oppression remedy is created by the Companies Act. This remedy is
based on Canadian legislation, namely the Canadian Business Corporations Act 1985,
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and the Ontario Business Corporations Act 1990. (Section. 242 of the Companies Act
35 of 1995 is in all material aspects identical to s. 241 CBC Act. Section. 248 of OBC
Act contains minor differences in wording but in substance is the same. )
174. Section 242 of the Companies Act, No. 35 of 1995
(1) A complainant may apply to the Court for an order under this section.
(2) If, upon an application under subsection (1), the Court is satisfied that in respect of a
company or any of its affiliates-
(a) any act or omission of the company or any of its affiliates effects a result;
(b) the business or affairs of the company or any of its affiliates are or have been carried
on or conducted in a manner; or
(c) the powers of the directors of the company or any of its affiliates are or have been
exercised in a manner;
that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of,
any shareholder or debenture holder, creditor, director or officer of the company, the
Court may make an order to rectify the matters complained of.
(3) In connection with an application under this section, the Court may make any interim
or final order it thinks fit, including
(a) an order restraining the conduct complained of;
(b) an order appointing a receiver or receiver-manager;
(c) an order to regulate a company’s affairs by amending its articles or Bye-laws, or
creating or amending a unanimous shareholder agreement;
(d) an order directing an issue or exchange of shares or debentures;
(e) an order appointing directors in place of, or in addition to, all or any of the directors
then in office;
(f) an order directing a company, subject to subsection (6), or any other person to
purchase shares or debentures of a holder thereof;
(g) an order directing a company, subject to subsection (6), or any other person, to pay
to a shareholder or debenture holder any part of the moneys paid by him for his shares
or debentures;
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(h) an order varying or setting aside a transaction or contract to which a company is a
party, and compensating the company or any other party to the transaction or contract;
(i) an order requiring a company, within a time specified by the Court, to produce to
the Court or an interested person financial statements in the form required by section 151
or an accounting in such other form as the Court may determine;
(j) an order compensating an aggrieved person;
(k) an order directing rectification of the registers or other records of a company under
section 245;
(l) an order winding up and dissolving the company;
(m) an order directing an investigation under Division 2 of Part V11 to be made; or
(n) an order requiring the trial of any issue.
175. In HCA No. CV s-852 of 1998 Sharma Persad Lalla v Trinidad Cement
Limited, TCL Holdings and Andy Bhajan, delivered 30th
November 1998, a decision
of the Honourable Justice Jamadar, the court considered the statutory origin, nature and
effect, of section 242 of the Companies Act. Three issues were identified.
1. Whether the complaints made by the plaintiff relating to his removal as an
employee/director of the first and second defendants disclosed any cause of action under
section 242 of the Companies Act.
2. Whether the relief claimed , namely an order to restore him to his executive
responsibilities with the first and second defendants, amounted to specific performance
of a contract of personal service and is relief which is neither available under section
242 of the Companies Act 1995, nor at common law.
176. Section 242
The learned Judge noted that
“Section 242 of the Companies Act is in virtually identical terms with section 241
(formerly section 234) of the Canadian Business Corporation Act, 1985 (CBCA) and
section 248 of the Ontario Business Corporation Act, 1990 (OBCA) – both scheduled
hereto – the so called ‘Oppression remedies”. Page No 5
177. The Court there found that:-
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i. Section 242 (2) creates a statutory cause of action which may be brought by anyone
who qualifies as a complainant. The plaintiff there qualified as a complainant as this
includes a director or an officer or former director or officer of a company or any of its
affiliates: page 6
ii. Section 242(2) sets out the grounds which constitute oppression. At page 7 the learned
judge states:
It is clear from section 242(2) that if the court is satisfied that there is or has been
conduct that is oppressive, or unfairly prejudicial to or that unfairly disregards the
plaintiff’s interest, then the court may make an order to rectify the matters complained of.
The statutory cause of action is Oppression. The remedy is rectification. Thus section
242(3) provides for some types of rectification orders that may be made. However, the
court may make “any interim or final order it thinks fit”. (All emphasis added)
And citing from the Canadian case of Naneff v Con-Crete Holdings 23 B.L.R (2d) 286
wherein Galligan JA in the Ontario Court of Appeal at page 296.20 stated
“The provisions of s. 248(3) (the Canadian equivalent of our S.242) give the court a very
broad discretion in the manner in which it can fashion a remedy. Broad as that
discretion is, however, it can only be exercised for a very specific purpose; that is, to
rectify the oppression”.(see page 8 of judgment)
…In seeking to address equity between private parties the provision does not seek to
punish but to apply a measure of corrective justice (citing with approval an article in
Canadian Business Journal)
…the discretionary powers in s. 248 (3) OBCA must be exercised within two important
limitations
1. They must only rectify oppressive conduct; and
2. They may protect only the person’s interest as a shareholder, director or officer as
such.
178. Thus given these limitations a Court once satisfied that there has been Oppression
can make whatever order it thinks fit once it is just and equitable having given due
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consideration to the real rights, expectations and obligations that exist between the
parties.
179. The learned judge also examined the scope of oppression noting that the three
categories of conduct which give rise to the Oppression remedy are introduced in the
statute by the words,
i. oppressive,
ii. unfairly prejudicial, and
iii. unfairly disregard.
180. He concluded that from these words fairness has been introduced by the statute as
the minimum underlying principle upon which the court can now review the acts and
conduct of companies. The classes of persons mentioned in section 242 (2), namely
shareholders, debenture holders, creditors, directors and officers, are all to be treated
fairly and justly. Failure to do so may amount to oppression.
181. He cited Westford v Watts (as cited in Fraser and Stewart, Company Law of
Canada at pages 720- 721) as follows - Page 10 - “They continue
In Westfair Foods Ltd v Watt, (1991) 4 W.W.R. 695(Alta C.A.), it was held that the test in
determining whether or not an action is oppressive is fact specific and courts should be
guided by the reasonable expectations of the parties. On an application, the Court must
consider the nature of the acts complained of and the method by which they were carried
out.
182. His Lordship also noted that directors have a duty to act with bona fides, and cited
s. 99 of the Companies Act. He adopted the dicta in Naneff at page 298.28 that, in
determining whether there has been oppression “the court must determine what the
reasonable expectations of that person were according to the arrangements which
existed between the principals”. The determination of reasonable expectations will also
have an important bearing upon the decision as to what is a just remedy in a particular
case. (Page 12)
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183. He concluded that it is essentially a question of fact whether or not there has been
Oppression. The courts must consider both the nature of the acts complained of and the
method by which they were carried out, in the context in which they arise. “Oppression
must necessarily be, in my mind context specific”.
184. In the instant case therefore the arrangements which existed among the principals
must be considered, in determining whether the conduct of transferring the sum of $4
million dollars from the account of American stores to the Estate of the deceased founder
would constitute oppression. It is relevant to an understanding of those arrangements to
note that
i. the company, the estate, and holdings are interlinked,
ii. that the beneficiaries of each are largely the same, and
iii. that the first defendant, represented by the other defendants, who complain of this
action being oppressive in relation to them, actually received a distribution from this
payment in an amount that she has failed to disclose.
It is in that context the claim of oppression must be viewed.
185. In HCA No. 3015 of 2000/CV 2006-00099 Demerara Holdings Limited,
Bertrand Doyle, Harold Russell and Gervais de Matas v Demerara Life Assurance
Company of Trinidad and Tobago Limited Mega Insurance Company Limited,
Wilbert Winchester, Peter Gillette and Cyril Gill a decision of the Honourable Justice
Moosai delivered 1st April 2011 the issue of Oppression was also considered. This case
involved proceedings to set aside a Merger Agreement on the grounds that it would be
oppressive or unfairly prejudicial to or unfairly disregard the interests of the policy
holders of Demerara Life within the meaning of s. 242.
INTERPRETATION OF THE SECTION
SECTION 242 AS REMEDIAL LEGISLATION SHOULD BE GIVEN A
LIBERAL AND PURPOSIVE INTERPRETATION
186. The learned judge relied on First Edmonton Limited v 315888 Alberta Limited
(1988) 40 BLR 28. He considered (page 20 paragraph 35) that Section 242, like its
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Canadian counterpart, should be given a liberal and purposive interpretation citing
from First Edmonton at page 45; 50-51 per Mc Donald J -.
“The introduction of a statutory remedy against oppression is a deliberate departure
from the policy of judicial non-intervention in corporate affairs. Section 234 “casts the
Court in the role of an active “arbiter of business policy’”. It is drawn in very broad
terms and as remedial legislation should be given a liberal interpretation in favour of the
complainant…..
The addition of “unfairly prejudicial” and “unfairly disregards” gives the Court a broad
basis on which to apply notions of equity and fairness to the conduct of the directors
and the majority … Clearly, the addition of “unfairly prejudicial” and “unfairly
disregards” puts the Court in a position to judge the fairness of the actions of
management ... In view of the broad discretion in s.234, each case will turn on its facts.
FAIRNESS – FACTORS AND COSIDERATIONS IN DECIDING WHAT IS
UNFAIR
187. The court referred to the First Edmonton case where Mc Donald J identified
factors relevant to determining unfair conduct, namely:-
1. The history and nature of the corporation,
2. The essential nature of the relationship between the corporation and the
creditor,
3. The type of rights affected, and
4. General commercial practice.
188. The test of unfair prejudice or unfair disregard should encompass the following
considerations:
1. The protection of the underlying expectations of a creditor in its
arrangement with the corporation,
2. The extent to which the acts complained of were unforeseeable or the
creditor could reasonably have protected itself from such acts, and
3. The detriment to the interests of the creditor.
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4. Other elements and considerations may be relevant, based upon the facts of
the particular case.
(This case of course involved a creditor, rather than a shareholder but the approach to
oppression, unfair prejudice, or unfair disregard of the rights of any of the parties,
including a shareholder, must be equally applicable).
THE REASONABLE EXPECTATIONS STANDARD
189. The learned judge in Demerara concluded that in determining whether oppression
exists the court would therefore have regard to among other matters, the reasonable
expectations standard of a shareholder in the position of the applicant. The learned
judge also relied on the Canadian case of Walker v Betts (2005) BCSC 128 at paras 87
to 88 which referred to the reasonable expectations standard, and, “… in determining a
shareholder’s reasonable expectations the court must apply a modified objective test. the
test requires objectively identifying) expectations that a shareholder in the applicant’s
position reasonably would expect to have .Identifying those reasonable expectations is
the starting point in determining if conduct was oppressive or unfairly prejudicial. (See
page 21- 22 paragraph 38).
190. A shareholder in the position of Sandra could reasonably expect that money
would not be paid out from the Company without a proper basis. Such a basis could
include settlement of a debt, with the approval of the directors. It is alleged that that was
in fact the basis, and that the approval of the directors of the old Board, which included
Sandra herself had been obtained, for the payment of that debt. The difficulty is that the
evidence of this debt, or of the approval of the directors of the old Board, is deficient.
Apart from the evidence of 2 of the directors of the old Board, Nadia and Robin, there is
no other evidence to support the basis for this payment. There is no written resolution of
the Board, or documentation, even for example, an account entry or note from the Estate,
or the Company.
191. INTERPRETATION OF SECTION 242 (3) (h) (paragraph 39 page 22 of the
judgment of the Honourable Justice Moosai)
39. Section 242 (3) (h) of the Companies Act authorises the Court to make any interim or
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final order, including an order varying or setting aside a transaction or contract to which a
company is a party, and compensating the company or any other party to the transaction
or contract. Its Canadian counterpart (section 241 (3) (h) of the CBCA) has been held to
be wide enough to permit a court to rescind a contract at the instance of a third party.
The court relied on Markus Koehnen’s Oppression and Related Remedies at page
374
“Section 241 (3) (h) of the CBCA allows the court to make an order varying or setting
aside a transaction or contract to which the corporation is a party. The court may also
compensate the corporation or any other party to the transaction. The remedy is
noteworthy because it changes the common law rules of rescission. At common law,
only a party to the contract could claim rescission. Under the oppression remedy, the
court has sufficient latitude to rescind a contract even at the instance of a third party.”
192. In the instant case therefore the court has latitude to even rescind a contract .It
would therefore certainly have sufficient latitude to reverse the payment, and allow the
new Board to reconsider whether the basis for this payment exists and applying their
minds afresh, decide anew whether this payment should be made to the estate in
settlement of a legitimate debt. In furtherance of this the monies already paid out need to
be returned to the company, as it has not yet been adequately demonstrated by evidence
that it was actually paid out in settlement of a legitimate debt.
193. The Court in Demerara found that the intention of the legislature was to balance
competing interests within the corporate structure including the rights of creditors,
minority shareholders and the public and that the jurisdiction though expansive should
be exercised with care. Stakeholders within the corporate structure must be protected but
at the same time courts ought not to usurp the function of the board of directors in
managing the company nor should it supplant the legitimate exercise of control by the
majority. The Canadian case of Bank of Montreal v Dome Petroleum Ltd (1987) 67
CBR 296 (Canada) at pp 305-306 was cited.
“I agree that the oppression remedy is designed to protect reasonable expectations.
However, one of the most reasonable of all expectations of those dealing with
corporations must be that the directors will manage the company in accordance with
their legal obligations. Some of these obligations are specifically prescribed by statute.
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Others are more generally derived from the common law. However, they essentially add
up to the same thing: namely, to act honestly and in good faith in the best interests of the
corporation and to exercise the diligence expected of a reasonable prudent person.”
194. The Court relied on another Canadian case of BCE IN and Bell Canada et al v
Canada Inc et al [2008] 3 SCR 560 paras 62, 64 and 67 for guidance on reasonable
expectations and the components of oppression. (All emphasis added throughout.)
62. As denoted by "reasonable", the concept of reasonable expectations is objective and
contextual. The actual expectation of a particular stakeholder is not conclusive. In the
context of whether it would be "just and equitable" to grant a remedy, the question is
whether the expectation is reasonable having regard to the facts of the specific case,
the relationships at issue, and the entire context, including the fact that there may be
conflicting claims and expectations.
64. Determining whether a particular expectation is reasonable is complicated by the
fact that the interests and expectations of different stakeholders may conflict. The
oppression remedy recognizes that a corporation is an entity that encompasses and
affects various individuals and groups, some of whose interests may conflict with others.
Directors or other corporate actors may make corporate decisions or seek to resolve
conflicts in a way that abusively or unfairly maximizes a particular group's interest at the
expense of other stakeholders. The corporation and shareholders are entitled to maximize
profit and share value, to be sure, but not by treating individual stakeholders unfairly.
Fair treatment — the central theme running through the oppression jurisprudence — is
most fundamentally what stakeholders are entitled to "reasonably expect".
72. Factors that emerge from the case law that are useful in determining whether a
reasonable expectation exists include: general commercial practice; the nature of the
corporation; the relationship between the parties; past practice; steps the claimant
could have taken to protect itself; representations and agreements; and the fair
resolution of conflicting interests between corporate stakeholders.
67. "Oppression" carries the sense of conduct that is coercive and abusive, and it
suggests bad faith. "Unfair prejudice" may admit of a less culpable state of mind, that
nevertheless has unfair consequences. Finally, "unfair disregard" of interests extends
the remedy to ignoring an interest as being of no importance, contrary to the
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stakeholders' reasonable expectations... the phrases describe, in adjectival terms, ways in
which corporate actors may fail to meet the reasonable expectations of stakeholders.
195. In the Demerara case itself:-
i. The result of the amalgamation was a tremendous benefit to one party, but was of
no benefit to the other party.
ii. The decision of the directors was made for the exclusive benefit of one party and
to the detriment of the financial worth of one of the merged companies and the
preference shareholders who had an interest in such worth.
196. This cannot be said to be the case here. In circumstances where Sandra has herself
admittedly received a distribution from the Estate out of the $4 million paid to it by the
Company, it is difficult to contend that the payment in relation to her has unfair
consequences.
i. The nature of the corporation, (American Stores) must be borne in mind - a family
owned company where the shareholders of the largest shareholder by far (Holdings) are
largely the same as the beneficiaries of the Estate.
ii. The relationship between the parties – they are all family members benefitting from
the Estate of the deceased founder, either through their shareholding in the Company,
Holdings, or as beneficiaries of the Estate, largely in the same proportions. (Vickram
Singh being the chief exception).
iii. past practice - it has not been disputed that a previous part payment of $1 million on
account of this debt had taken place, without apparent complaint .
iv. the allegation, unrebutted by Sandra, that she was a part of the decision making
process before her illness, to repay from the assets of the company, as its circumstances
permitted, alleged debts due to the Estate.
197. HCA Cv 427 of 2004 Bodhan Ramkissoon, Meena Ramkissoon, Deokie
Ramkissoon v Bridglal Ramkissoon, Alphan Mohammed and Supermix Feeds
Trinidad Limited (delivered on the 28th
February 2005) the Honourable Justice
Stollmeyer stated, (in the context of an action for relief from Oppression albeit obiter):-
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I accept that "… when dealing with a close corporation, [howsoever that may be
defined] the Court may consider the relationship between the shareholders and not
simply legal rights as such", as was done in Re: Ferguson and Imax Systems Corp. 43
O.R. (2d) 128. That, however, was a case which can easily be distinguished on the facts,
and in the present instance it must be recalled that the complaint is in relation to
Supermix, not Aripo.
The facts of that case are not material. The acceptance of that proposition is.
198. On that state of the evidence one cannot conclude that the elements of oppression
have been established as:-
a. the parties allegedly oppressed are largely the same parties who actually benefitted
from the receipt of that sum by the estate and payment to them, (which has not been
refuted).
b. the parties counterclaiming include Sandra and her representatives, when Sandra is in
fact alleged to have been a party who participated in the decision in pursuance of which
this payment, inter alia, was made.
c. The alleged detriment in relation to Vickram Singh in relation to his shareholding of 40
shares out of almost 4000 was not pleaded and is simply an afterthought. He is not even a
party, and any alleged injury to his interest as shareholder is speculative, and unsupported
by any evidence, far less evidence on his behalf.
d. the counterclaimants are on the current board, yet that board has made no claim for
repayment from the trustees of the estate.
e. the counterclaimants themselves accept that there are no governance issues outstanding
now that Nadia is no longer managing the company, and they have achieved a change in
the management, under Maybodi.
199. As far as credibility is concerned the evidence of the claimants is to be generally
preferred for the following reasons:-
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i. They were forthright in their testimony that that they were responsible for the
transfer of the sum of $4 million and made no attempt to evade responsibility for
this.
ii. Their evidence in relation to the matter of the rent is consistent with such
documentary evidence as exists.
iii. The transfer of the sum of $ 4 million did not become an issue until the claim was
filed. It did not figure in any minutes of directors meetings.
iv. Maybodi, who is now the managing director of the company, described the transfer
as from one pocket to the next, in explaining his lack of concern about it.
v. The defendants only disclosed under cross examination that Sandra had benefitted
from a distribution from the estate out of the sum of $ 4 million.
vi. The transfer took place in the midst of a struggle for control of the company with
the potential for a new Board being misled on the issue of outstanding rent
payments and alleged arrears. Robin and Nadia would have been concerned that
those demands might have been satisfied by a new Board which had not yet
oriented itself.
In fact that newly appointed Board was then bombarded by demands to not only
pay rent increased by over 400 %, but arrears for the service department of over
$800,000.00 without a shred of documentation. While this by itself does not excuse
the transfer, it is an important part of the context, and explains the preference of the
remnants of the old Board, Robin and Nadia, to settle debts owed to the Estate
rather than alleged debts to the defendants, based on demands and not much else.
As it turns out this court has found those demands to have been without foundation
or substance.
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vii. In its proper context, the actions of Nadia and Robin appear far less oppressive than
the action of the defendants , which had as their goal the shutting down of the
company’s operations at its nerve centre if their demands for,
(a) Excessively increased rent, (which the company could not afford), and
(b) Alleged arrears of rent for the service department, (which had never been
documented, claimed, agreed to, or made known to the company’s board, either old
or new, but allowed to allegedly accumulate over years to in excess of $800,000).
This is not credible.
It could even be argued that it was the actions of the defendants that were the most
oppressive actions that the Company was subjected to in this case.
viii. The absence of documentation for this transfer cannot be ignored. It is because of
that lack that the sum of $4 million needs to be returned to the company by the
Estate, for the current independent directors to consider afresh whether they are
satisfied that the alleged debt to the Estate exists, and if it does, how it should be
repaid.
200. While on the current state of the evidence it cannot be concluded that the
company was being, or is being managed in an oppressive manner, the evidence
surrounding that payment of 4 million dollars remains unsatisfactory. This is especially
so as it was admitted by Nadia that there were records of the estate, and of the company,
which would have corroborated that there was a debt owing to the estate, and that there
would be accounts showing to whom of the beneficiaries payments had been made.
201. Robin and Nadia in making that payment acted also as the trustees of the estate,
which was therefore represented in these proceedings in relation to that payment. It must
be accounted for, to the satisfaction of the current directors, and to the court.
Transfer of $4 million -Conclusion
202. Accordingly I find that the alleged basis for the transfer of four million dollars
($4,000,000), (the alleged debt to the Estate) from the accounts of American Stores by
Robin and Nadia, the trustees of the estate, has not been sufficiently substantiated.
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Accordingly the court cannot simply accept that there was a previous decision of the
board that sums, of which the sum of four million dollars ($4,000,000) was one
installment, were to be paid to the Estate in settlement of an alleged debt by the
Company.
203. The opportunity to satisfy the court by reference to documentation, either from
the accounts of the Estate, or the accounts of American stores itself was not utilised. That
sum of four million ($4,000,000) needs to be repaid to the company, and the current
directors need to be given an opportunity to decide afresh whether that sum is part of a
debt ,and whether it needs to be repaid to the Estate.
204. In addition, that sum needs to be traced and recovered. Accordingly, Nadia and
Robin as trustees of the Estate, and also as defendants in this action, are to provide a
schedule within seven (7) days setting out:-
i. all persons who received distributions from the Estate out of the four million
($4,000,000) allegedly paid to and received by the Estate,
ii. the dates paid,
iii. how paid, and the amounts of such payments
iv. copies of any documentation evidencing such payment and receipt by the payees.
205. All persons who received a distribution from the Estate out of the sum of four
million ($4,000,000) allegedly paid to the Estate out of the company’s assets are to repay
the sums received. Those persons should be all recorded in the schedule as ordered
above.
206. All persons who are parties to this action will be ordered to repay to the company
within 7 days all sums received by them from the Estate out of the four million
($4,000,000) that the Estate allegedly received from the company funds.
207. If they have received the entirety of the four million ($4,000,000) and they all
return the sums received by them then the company would have received repayment of
the full amount.
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208. The current directors of the company should consider afresh whether they are
satisfied that the sum of four million ($4,000,000) constitutes part of a debt due and
owing by the company to the Estate and whether the company should pay it, and if so
how or when. The result should be recorded in the minutes of a meeting to be held by the
company.
209. If all of the four million ($4,000,000) received by the Estate was not distributed
then the difference must be paid by the Estate within 7 days. If it is not paid then Nadia
and Robin are to repay that undistributed difference personally within 7 days, subject to
their right to recover any such payment from the Estate.
210. If repayment is not made by beneficiaries who are not party to the instant action,
of the sums received by them out of the four million ($4,000,000) in company funds
distributed to them by the estate, the Estate is to repay their share, subject to the right of
the Estate to recover any such sums from those non party beneficiaries.
211. So, in the case of persons who are not parties to this action who fail to repay (the
sums received by them out of the four million ($4,000,000) in company funds distributed
to them by the estate), the trustees are at liberty to recover from them any such sums
which remain unpaid.
212. It is only if the estate does not pay the difference, between four million
($4,000,000) and the sums paid out to beneficiaries of the estate that the issue of
personal repayment by Nadia and Robin would therefore arise.
213. It is not intended that the amounts paid by the estate, (as a distribution out of the
four million ($4,000,000) paid to it from the company’s funds) to those persons who are
parties to this action, be repaid personally by Nadia or Robin. Robin and Nadia would
not be responsible for personal repayment of any amount that is not refunded to the
Company by persons who are parties to this action, (as on the schedule referred to
above).
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214. It is only if the estate does not make up any difference between four million
($4,000,000) and the sum paid to beneficiaries of the estate, (that is the amount of the
four million ($4,000,000) that remains undistributed if any) that the issue arises of
personal liability by Robin or Nadia for repayment of such undistributed sum.
ORDERS
Rent
215. It is ordered that:-
i. Nominal damages in the sum of $20,000.00 are awarded against the defendants to be
paid by the defendants to the claimants in respect of illegal, excessive and unlawful
distress.
ii. The defendants are to pay the costs of the counterclaim on the basis prescribed by the
civil proceedings rules for a claim in the amount of $ 1,968,000.00 ($2,056,000.00 minus
$88,000.00), the alleged arrears of rent claimed.
iii. The claimant is entitled to its costs of the application for the injunction to be assessed
by this court in default of agreement, and to be paid by the defendants to the claimants.
Oppression
216. a. Nadia and Robin as defendants in this action, and who are also trustees of the
estate of SS Hosein (the Estate), are to file a Schedule within 7 days setting out:-
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i. all persons who received distributions from the Estate out of the four million
($4,000,000) allegedly paid to and received by the Estate,
ii. the dates paid,
iii. how paid, and the amounts of such payments
iv. copies of any documentation evidencing such payment and receipt by the payees.
b. All persons named on the Schedule who received any sums as a distribution from the
estate of SS Hosein, out of the four million ($4,000,000) in funds received by that estate
from the Company, are to repay those sums within 14 days hereof.
c. All such sums, received by persons named on the Schedule, who received any such
payments out of the four million ($4,000,000) distribution, are to be paid by certified
cheque made payable to the American Stores Limited deposited with the Registrar of the
Supreme Court.
d. Any difference between the total amount received by persons on that schedule and four
million ($4,000,000) (the undistributed amount), is to be repaid by the trustees of the
Estate, out of the assets of the Estate, to the company within 14 days hereof, by certified
cheque made payable to the American Stores Limited, deposited with the Registrar of the
Supreme Court.
e. In default of repayment of that undistributed sum within 14 days by the Estate, that
undistributed sum is to be repaid to the company personally by Robin and Nadia, by
certified cheque made payable to the American Stores Limited, deposited with the
Registrar of the Supreme Court, within 21 days hereof.
f. If repayment is not made by beneficiaries of the Estate named in the schedule, who are
not party to the instant action, (of the sums received by them out of the four million
($4,000,000) in company funds distributed to them by the estate), within 14 days hereof
it is ordered that that the Estate is to repay to the Company any sums that such persons
have received within 21 days, subject to the right of the trustees of the Estate to recover
from such beneficiary any such sum it has paid on their behalf .
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g. All sums representing repayment of any payment received out of the sum of $4
million, paid into court by certified cheque made payable to the American Stores
Limited, are to be paid out within 14 days after receipt to the Company, upon the
Company providing a receipt for such payment.
h. The issues of interest, if any, and costs of the counterclaim are reserved until the
Schedule has been filed, and there has been compliance with this order.
i. Liberty to apply
Dated this 12th day of December, 2013
…………………………………………
PETER A. RAJKUMAR
Judge
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The Court records its appreciation to counsel for all parties and their teams for their invaluable assistance
provided to the Court. The Court would also like to record its appreciation to Judicial Research Assistant
Ms. E. Ali for her contribution to this judgement.
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