republic of trinidad and tobago in the high court of justice...

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REPUBLIC OF TRINIDAD AND TOBAGO

IN THE HIGH COURT OF JUSTICE

CV: 2011-04466

BETWEEN

IN THE MATTER OF THE COMPANIES ACT, 1995 (AS AMENDED) (CHAP

81:01) AND IN PARTICULAR SECTIONS 242 AND 498 THEREOF

AND

IN THE MATTER OF FORTY FOUR LIMITED AND CLUB PRINCESS

LIMITED

AND

IN THE MATTER OF THE SUPREME COURT OF JUDICATURE ACT

CHAP. 4:01

BETWEEN

DALLAS CORP.

THOMAS BAKER

Claimants

AND

ALNANDO CORPORATION

SUDI OZKAN

ZAFER HAKAN UNAL

CHRISTLYN MOORE

FORTY FOUR LIMITED

CLUB PRINCESS LIMITED

Defendants

Before the Hon. Madam Justice Eleanor J. Donaldson-Honeywell

Appearances:

Mr. Seenath Jairam SC, Mr. Anil Maraj and Ms. Rhea Libert for the Claimants

Ms. Deborah Peake SC, Mr. Kerwyn Garcia and Ms. Sasha Franklin for the Defendants

Delivered on May 24, 2017

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Judgement

I. Introduction

[1] The parties to this claim alleging oppression are largely non-nationals of Trinidad and

Tobago. Thomas Baker, [“the Second Claimant”] is a United States of America [“US”].

citizen who sought by investment in a St. Christopher and Nevis [“St. Kitts”] registered

company – Dallas Corp [“the First Claimant”] owned by a fellow US citizen Charles Frost

(now deceased) to share in the management of and profits from two companies [“the Fifth

and Sixth Defendants”] operating in the casino industry in Trinidad and Tobago. There was

a falling out with the Turkish nationals [including the Second and Third Defendants]

connected with the St. Marten based company Alnando Corporation [“the first Defendant”]

which together with Dallas Corp. jointly owned the fifth and sixth Defendant companies.

Essentially, the intervention of Thomas Baker after Charles Frost died in 2011 brought a

new dynamic to the business relations concerning the fifth and sixth Defendant companies.

Thomas Baker and Dallas Corp complain that they have been shut out of the business since

2011.

[2] The matter has been before the Court since then with no resolution due partly to the fact

that there was a four year stay pending the results of parallel litigation in St. Kitts and

Florida, USA. Additionally, there have been numerous pre-trial matters raised by the

parties. The Trial commenced on 9 May, 2016. Oral hearing of the evidence ended in May

last year followed by a Site Visit in 29 July, 2016. Permission was granted to the parties to

file written closing submissions and that time was extended thereafter. Finally, in April this

year submissions were closed. Having considered the evidence and submissions my

conclusion is that the claim for relief for oppression is justified and there will be judgment

for the Claimants.

[3] The Claim is brought pursuant to S. 242(1) of the Companies Act, Chap. 81:01 [“the

Act”]. By fixed date claim filed on 16 November, 2011, the Claimants claimed against the

Defendants the following reliefs:

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i. A declaration that the Claimants are proper applicants and thus complainants within

the meaning of the Act and in particular section 239 thereof;

ii. A declaration that the Defendants and each of them whether jointly and/or

separately are guilty of oppression as defined in and/or specified in section 242(2)

(a), (b) and (c) of the Act in relation to each of the Claimants and the Claimants are

entitled to apply for an order in accordance with the said section;

iii. A declaration that the First Claimant is beneficially entitled to a 50% shareholding

in the Fifth and Sixth Defendants;

iv. An order directing the Fourth Defendant and in lieu of same the Registrar of

Companies to issue such shares in the Fifth and Sixth Defendants as to achieve a

50% shareholding in each company in the name of the First Claimant;

v. An order that the Second Claimant be appointed to the respective Board of

Directors of the Fifth and Sixth Defendants;

vi. An order requiring an investigation of the Fifth and Sixth Defendants and/or each

of them pursuant to the provisions of 242(3)(m) and/or section 498 of Part VII

Division 2 of the Act;

vii. An order requiring the Fifth and Sixth Defendants and or each of them to produce

an account of all monies earned and expended by the Company for the period 1

June 2011 to 14 November, 2011 and/or for such other period as to the Court as

shall seem just and/or in such forms as the Court may determine;

viii. An order requiring the First, Second and Third Defendants or any of the them, to

forthwith pay to the Fifth and Sixth Defendants and/or each of them such sum/s

together with interest thereon at such rate and for such period as the Court may

determine are due and owing by any and/or all of them;

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ix. Repayment of all sums unlawfully and/or improperly removed from the Fifth and

Sixth Defendants either by or with the complicity of the First, Second, Third and

Fourth Defendants, their servants and/or agents and/or any of them and acting

together with any other person or persons unknown or howsoever otherwise;

x. An order appointing a receiver-manager of the Fifth and Sixth Defendants;

xi. An inquiry into damages and/or compensation including aggravated and/or

exemplary damages;

xii. Damages, including aggravated and/or exemplary damages and/or compensation

against the First, Second, Third and Fourth Defendants;

xiii. Any and/or all of the orders or relief specified in section 242(3) of the Act as to the

Court as shall seem just, whether interim or final;

xiv. All necessary and consequential directions;

xv. Such further and/or other relief as this Honourable Court deems fit;

xvi. Interest thereon at such rate and for such period as shall seem just pursuant to the

equitable jurisdiction of this Honourable Court and/or pursuant to section 25 of the

Supreme Court of Judicature Act, Chap.4:01; and

xvii. Costs.

II. Factual Background

[4] In around 2004-2005 the Second Defendant and Charles Frost met to discuss and agreed to

establish a casino business in Trinidad and Tobago. The agreement stipulated that the

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business was to be equally owned and the profits equally shared from the business. The

Second Defendant and Charles Frost respectively are described as the “alter egos” of the

First Defendant and First Claimant companies. These two companies held equal shares in

the casino business incorporated into the Fifth and Sixth Defendant companies.

[5] Although no shares have been issued in either the Fifth or Sixth Defendant, they have at all

times operated on the mutual and continuing agreement and understanding of the First

Claimants and First Defendant that they were and are owned equally between them. The

Claimant claims that all management decisions, divisions of profits and investments in the

Fifth and Sixth Defendants have been undertaken on the basis of 50% ownership and it was

agreed that the First Claimant and the First Defendant each would enjoy the right to have

one director on the boards of both the Fifth and Sixth Defendants.

[6] The Fourth Defendant was the Corporate Secretary of the Fifth and Sixth Defendants. A

members’ club by the name of Club Princess Members Club [“the Members Club”] was

registered by her in 2005. The members included the Second, Third and Fourth Defendants.

The Sixth Defendant operated as the manager of the members club on behalf of the

membership and earned income from providing the said management services. The location

of the Members Club was a building at 44 Independence Square, Port of Spain rented from

its owner, the Fifth Defendant Company.

[7] Charles Frost and Chrain Frost were the owners of the First Claimant up until 2011, with

51% and 49% shareholding respectively. Up until June 2011, the payments to the First

Claimant from the Fifth and Sixth Defendants would be in the form of cash lump sum to

Charles Frost or by wire transfer to the First Claimant’s bank accounts. Charles Frost fell

ill in December 2010 and in June 2011 Charles Frost resolved to transfer his shareholding

in the First Claimant to the Second Claimant. This was, according to the Second Claimant,

in consideration of moneys outstanding to the Second Claimant and due to their close

personal relationship.

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[8] Pursuant to Charles Frost’s decision, Mr Glenford Hamilton, corporate secretary of the First

Claimant was instructed by Charles Frost to prepare a stock power to transfer his interest.

The Claimant alleges that it was prepared, executed and witnessed by two nurses at the

hospital at which Charles Frost had been admitted and was near death. This stock power

document was produced to the court. Charles Frost also executed a unanimous shareholder

resolution replacing himself with the Second Claimant as director of the First Claimant.

This document was purportedly signed by the two nurses as well as Chrain Frost. Thereafter,

a share certificate was issued in the Second Claimant’s name. There was also documentation

to the effect that the Second Claimant was appointed by Frost to replace him as the

Managing Director of the Fifth and Sixth Defendant companies.

[9] In July 2011, the Second Claimant attended the office of the Fifth and Sixth Defendants and

produced these documents, demonstrating his authority as the nominee of the First Claimant

and requested that:

- Shares be issued to the First Claimant in the Fifth and Sixth Defendants;

- There be a payment of dividends and/or profits to the First Claimant from the Fifth and

Sixth Defendants

- He be appointed as a director on the boards of the Fifth and Sixth Defendants

[10] Thereafter the Second Claimant attended the premises of the Fifth and Sixth Defendants

and operated in the former capacity of Charles Frost which he says was as Managing

Director. He was never paid a salary for such duties but he occupied the office space.in the

Members Club building formerly utilised by Charles Frost as Managing Director. The room

was equipped and laid out as a Managing Director’s office. He claims he was provided with

a vehicle, bodyguards and an apartment at Bayside Towers during this period. The

Defendants deny this was given to him as Managing Director, stating that the

accommodation was provided only to reduce hotel costs on his visits and that the vehicle

and bodyguards were not provided but commandeered.

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[11] Around September 2011, the Fourth Defendant gave written legal advice to the First

Defendant that the First Claimant was entitled to appoint the Second Claimant as its

nominee and that permission from the First Claimant should be sought to determine to

whom dividends should be paid. In October 2011, the Second Claimant wrote to the Fourth

Defendant requesting that:

- He be advised of the identity of the First Defendant, including place of incorporation

and shareholders;

- 50% of all shares in the Fifth and Sixth Defendants be issued to the First Claimant;

- The First Claimant be registered as a 50% shareholder in the companies;

- Charles Frost be removed as the named director and replaced with the Second

Claimant; and

- The Second Claimant be listed as a signatory to the accounts of the Fifth and Sixth

Defendants.

[12] At the Fourth Defendant’s request, Mr Glenford Hamilton sent company documents

concerning the First Claimant Company to her. The Second Claimant requested from her

copies of these documents. He then sent two men to retrieve his original documents from

the offices of the Fourth Defendant. The Fourth Defendant claims she felt threatened by

these men.

[13] Thereafter, a letter was sent to the Sixth Defendant from Messrs. Byrne and Byrne,

Attorneys-at-law for the brothers of Charles Frost, stating that they were seeking to set aside

the transfer of Charles Frost’s shareholding to the Second Claimant. The Fourth Defendant

then gave undertakings not to make any payments to the First Claimant until legally advised.

[14] On 10 November, 2011 the Fourth Defendant wrote to the Claimants’ Attorneys-at-law

advising that the Second Claimant would no longer be permitted entry onto the business

premises until the matters raised by the Frost brothers were determined in the courts.

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[15] The Claimants claim that they have been put in severe financial hardship due to the refusal

of the Defendants to issue their shares and pay out dividends. They allege that the

Defendants are guilty of oppressive and unlawful conduct towards them by:

i. Failing to issue shares to the First Claimant in the Fifth and Sixth Defendants;

ii. Failing to permit the Claimants and/or any of them access to all corporate records

of the Fifth and Sixth Defendants;

iii. Failing to make payments of dividends and/or profits to the Claimants;

iv. Controlling to the exclusion of the Claimants all business and income of the Fifth

and Sixth Defendants;

v. Failing to account to the Claimants in respect of all corporate and/or banking

records of the Fifth and Sixth Defendants;

vi. Failing to permit the Claimants and/or any of them access or information as to

finances of the Fifth and Sixth Defendants;

vii. Failing to permit the First Claimant to enjoy any representation upon the boards of

directors of the Fifth and Sixth Defendants;

viii. Directing the employees of the Fifth and Sixth Defendants to exclude the Claimants

from all business operations; and

ix. Failing to identify the other company officers or provide relevant information to

the Claimants as shareholder and director respectively.

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[16] The Claimants filed an application on 16th November, 2011 for an injunction and

investigation into business of the Fifth and Sixth Defendants. An interim order was made

against the Defendants inter alia for the payment of the sum of USD$12,000 per month to

the Second Claimant and to cease from evicting the Second Claimant from the Bayside

accommodation. The order was made on November 18, 2011 by Madam Justice Jones as

she then was.

[17] In January 2012, the brothers of Charles Frost (“the Frosts”) filed a claim against the

Claimants and Mr. Glenford Hamilton in the Eastern Caribbean Supreme Court, St

Christopher & Nevis claiming, inter alia that the transfer of shares from Charles Frost to the

Second Claimant was unlawful. Then on 1 March, 2012 the Frosts filed a Notice of

Application to intervene in the instant proceedings, relying on a death certificate of Charles

Frost bearing inaccurate particulars i.e. an inaccurate date of death. Madame Justice Jones

(as she then was) dismissed the Application on 20 April, 2012 but ordered a stay of the

instant proceedings pending the outcome of the St Kitts proceedings.

[18] On 23 February, 2015, the St Kitts Court of Appeal proceedings were determined essentially

upholding a Florida Court decision made summarily due to the lack of attendance of the

Frosts. Both Courts dismissed the Frosts’ case holding that the transfer of ownership in the

First Claimant Company to the Second Claimant herein was valid. The current proceedings

were then resumed by lifting of the stay order in June 2015.

[19] By that time the Defendants had long ceased honouring the order made by Jones J for

payments to the Second Claimant and to provide him with accommodation. In addition the

Defendants ceased operation of the Fifth and Sixth Defendants in or around May 2015 in

breach of the spirit of the Order. The Defendants had sought by Notice of Application dated

November 2014 to vary that order instead of complying with it. The reasons cited included

inability to pay and that the landlord cancelled the lease for the Bayside Towers apartment.

[20] Simultaneously, with the closing down of the casino business at 44 Independence Square,

the Claimant observed that the Fourth Defendant was involved in the development of other

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casinos at Chaguanas, Movie Towne Port of Spain and San Fernando under the “Princess”

brand which was operated internationally by the Second Defendant. That information was

admitted into evidence in the Claimant’s witness statements as I accepted it as relevant to

the pleaded allegations concerning financial impropriety and shutting the Claimant’s out of

business decisions. However, I make no finding herein as to whether such actions per se

amounted to further oppression on the part of the Defendants. It is clear however that in the

event of an investigation herein such matters will be further examined.

[21] Shortly after the Defendants applied to vary the interim relief orders made by Jones J, the

Claimants applied to have the Defendants sanctioned for contempt at court. These

applications were the subject of Case Management and Court of Appeal decisions including

an order made on 9 May, 2016 that there be a Taking of Accounts of the Fifth and Sixth

Defendants before the Registrar. The said Taking of Accounts, despite the best efforts of

the Registrar, has not commenced to date due inter alia to the complexity of the subject

matter and preliminary points being taken by the parties. Having gleaned this explanation

for the delay from the Registrar, having also made inquiries intermittently of the parties as

to progress of the accounts and having noted the preliminary points being taken as recorded

in the Court File a decision to stay further taking of accounts by the Registrar by authority

of CPR 42.6 is included in the determination of this matter. The said exercise will be taken

over by a Forensic Auditor.

[22] As soon as the results of the St. Kitts case were known, then presiding Judge Jones J.

commenced case management geared in accordance with Civil Proceedings Rules, 1998

[“CPR”] 25.1(e) towards encouraging the parties to settle the case in terms that are fair to

each party. Thereafter, in continuing the case management process, after I took conduct in

June 2015, the parties were encouraged in accordance with CPR 25.1(c) to use the most

appropriate form of dispute resolution to arrive at a settlement. The parties sought a Judicial

Settlement Conference for this purpose and Hon. Justice Kokaram graciously facilitated this

approach. The parties however failed to achieve a resolution after one year of this process.

They indicated that they opted for continuation of the litigation and the Trial was

commenced in May 2016.

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III. Issues

[23] The issues for determination are as follows:

i. Whether locus standi to bring this action has been established by the

“complainants” under Section 239 of the Act, namely,

a. The First Claimant

b. The Second Claimant

ii. Whether oppression has been proven and in particular -

a. Was there a breach by the Defendants of the reasonable expectations

and/or the contents of the agreements and/or understandings between

Frost and/or the First Claimant and the First Defendant and/or the

Second Defendant pursuant to which the Fifth and Sixth Defendants

were incorporated and/or operated;

b. If so, was such breach caused by conduct on the part of the Defendants

that amounts to “oppression”, “unfair prejudice” or “unfair disregard”;

and

c. If the answer to the above is yes, what is the appropriate remedy

IV. Evidence and Analysis

[24] The Claimants filed two witness statements on 30 September, 2015 as follows:

i. Thomas Baker (Second Claimant and a Director of the First Claimant)

ii. Gershon Forde (Former employee at the Defendants’ casino business)

These witnesses were both cross-examined when the Trial commenced on 9 May, 2016

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[25] The Defendant filed five witness statements:

i. Sudi Ozkan (Second Defendant, alter ego of Alnando, Director of the Fifth

Defendant and principal of Princess International Group of Companies “Princess

Group”)

ii. Christlyn Moore (Fourth Defendant and corporate secretary of the Fifth and Sixth

Defendants)

iii. Harun Erbay (Former Finance Manager for the Fifth and Sixth Defendants and

current General Manager of the Sixth Defendant since 2011)

iv. Anil Baraichi (Accounts Manager for the Fifth and Sixth Defendant companies)

v. Oguzhan Tayanc (Current Director of Operations at Princess Group with

responsibility for overseeing growth in casinos in the Group’s Trinidad and Tobago

and former Director of Business Development of the Sixth Defendant)

[26] Of these, only two of the Defence witnesses were called, namely, Oguzhan Tayanc and

Christlyn Moore. Sudi Ozkan was not called due to his absence for reasons of alleged recent

ill health. He has at no time over the duration of these proceedings attended Court. An

application was made by the Claimants to have his witness statement admitted into evidence

in his absence. His witness statement was struck out by ruling herein dated July 28, 2016.

[27] The only available Director of either of the casino business companies, Zafer Hakan Unal,

neither filed a witness statement nor was he called as a witness. As a founding Director of

the Sixth Defendant, he was not merely a potential witness who could have given evidence

about the expectations based on which the companies were run, but was also the Third

Defendant herein.

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[28] The Defendants’ claim that the decision not to call the other two named witlessness was

made at the end of the Trial. The reason given was that as a result of the paucity of the

evidence of the Claimants it was not necessary to rely on all their witnesses. As will be

evident from my further analysis in this judgment I do not agree that it was unnecessary for

the Defendants to support their case by evidence of the Second and Third Defendants as

well as the evidence of the two other witnesses with intimate knowledge of the finances,

operations and reasonable expectations regarding the Fifth and Sixth Defendants.

[29] Thomas Baker, though quite loud and somewhat brusque in his manner of addressing

Counsel, did not strike me as a person who by virtue of his alleged poor personality should

reasonably have been excluded from continued involvement in the operations of the Fifth

and Sixth Defendants. He impressed me as a witness of truth in all relevant respects as to

the basis for his claim.

[30] Firstly, I found that he gave consistent and compelling evidence about the things Charles

Frost told him. That evidence was admitted pursuant to a hearsay notice. The evidence was

relevant as to the fact of conversations that Baker had with Frost based on which Baker

formed his views on what were the reasonable expectations founding the Fifth and Sixth

companies he was to become a part owner of. The evidence that Charles told him that

Dallas was entitled to shares, directorship, dividends and business information on the Fifth

and Sixth Defendants was credible because Baker was not shaken on it under cross

examination.

[31] There was no evidence of anyone else that contradicted that these were the reasonable

expectations since the Defendants relied solely on Sudi Ozkan to prove this. His evidence

was not admitted.

[32] Baker’s evidence was also logical. It made sense that Baker bought into Dallas because he

believed, from his discussions with Frost, that Dallas had reasonable expectations of receipt

of shares, meaningful participation by directorship in business decisions and a share in the

profits. If that was not what Frost told him why would he have taken the time, money and

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years of litigation to stake his claim in the said companies? It is clear from his actions,

including coming to Trinidad and Tobago and taking as active a role as that of Managing

Director that these were the Claimants’ reasonable expectations.

[33] Oguzhan Tayanc’s evidence was that it was he and not Frost or the Second Claimant who

had the top management role in the Fifth and Sixth defendant companies business as

Director of Business Development (See para. 12 of his Witness Statement). He said under

cross-examination that he did not accept that while Charles Frost was alive, he was regarded

as Managing Director of either the Fifth or Sixth Defendants. He said there was never any

Managing Director position in the organisational structure.

[34] Tayanc’s performance under cross examination however did not lend credit to his claim to

have been in charge. He testified in a manner that left me with the impression that he lacked

in depth knowledge on management issues concerning the business that would have been

gained from day to day involvement in its operations. Instead he had more of an

overarching, superficial perspective from his role in the operations of the International

Princess Group. He could not answer questions about personnel. Particularly, when asked

about the alleged sexist remarks made by the Second Claimant, he could not name the

employees who had complained. The Second Claimant by contrast spoke with authority

regarding the affairs of the business under his brief tenure when he operated at the location

as Managing Director.

[35] That Baker served as Managing Director is also credible, though denied by the two Defence

witnesses. His evidence as to the treatment he was afforded when he first came to take over

from Frost tends to corroborate that he was operating as Managing Director. He had all the

trappings of the office including an Executive Office room and apartment, a car and body

guard. He also received daily reports as a Managing Director would. He was able to

commandeer the staff and took charge of projects such as renovation works at the casino.

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[36] It was only when Baker’s personality was found to be incompatible that the Defendants

stopped treating him like a Managing Director. The first hand testimony about the

disagreeable personality of Mr Baker came from the fourth Defendant, a senior female

Attorney-at-Law. From Mr Baker’s demeanour in Court in response to cross-examination

by female Senior Counsel I formed the impression that he may have been trying to get away

with not giving due respect. Senior Counsel, perhaps to emphasise a point relevant to her

case, allowed this to continue thereby underscoring that it would have been offensive other

persons such as the Fourth Defendant had they been treated in a similar manner. That was

partly the gist of the complaint regarding Baker’s behaviour towards the Fourth Defendant.

[37] I noted however that Mr Baker attempted to treat his own Senior Counsel similarly under

re-examination but stopped when he was firmly rebuffed. In my view Baker’s abrasive

style, loud voice and exaggerated pleas as to difficulty hearing soft voices were not

endearing but did not justify him being shut out from the business without being bought out

or compensated. There was no evidence of malevolence on his part. From the evidence he

merely sought forcefully to reap his due rewards from his business investment in the Fifth

and Sixth Defendants.

[38] This was further borne out in the evidence of his own witness Mr Forde. Forde said that

he witnessed Baker having heated arguments with the “Turkish element” at the members

club when the relationship was deteriorating. Baker himself in his witness statement

highlights one such confrontation when he was asking Oguzhan Taynac about unexplained

wire transfers and financial irregularities. This caused Tayanc to walk off and retract a prior

promise to have shares issued. The evidence of these confrontations in my view was not

sufficient reason per se to shut the Second Claimant out. Instead it provided a basis for the

Defendants to negotiate for an alternate representative of Dallas to be consulted in

management decisions or to buy out the interests of the Claimants in the business.

[39] The Claimants’ witness Gershon Forde struck me as frank, forthright and credible. He

admitted that his employment with the Defendants at 44 Independence square where he was

once assigned to the Second Claimant had been terminated. Though clearly very fond of

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the Second Claimant who hired him on an ad hoc basis after he was excluded by Defendants,

Mr. Forde gave honest evidence about his bad temper and arguments with Casino Staff and

Management. He was unshaken under cross-examination as to the fact that Frost previously

occupied the Executive office used by Baker and that he was instructed by Mr. Erbay to

follow the Second Claimant’s instructions. He states that he recognised him as Managing

Director, as the person in charge of the direction of the company, based on the behaviour of

Mr. Erbay.

[40] The Fourth Defendant’s evidence was largely clinical in nature based on her role as

Corporate Secretary. She spoke to the other reason for the continued exclusion, namely,

the Defendants’ alleged concerns as to whether the Second Claimant was genuinely a

shareholder and Director of Dallas. As it relates to the unworkable relationship between

the Defendants and the Second Claimant, her evidence set in contrast the pleasing

personality of Charles Frost who the Second Claimant sought to replace. She spoke with

great affection about Frost lauding, inter alia, his soft spoken, conciliatory nature.

V. Law and Analysis

Standing

[41] The Claimants first hurdle in answer to the Defendants’ submissions was to show that they

have standing to make this claim under the Act. S.239 of the Act provides, inter alia, that:

“‘complainant’ means –

(a) a shareholder or debenture holder, or a former holder of a share or debenture

of a company or any of its affiliates;

(b) a director or an officer or former director or officer of a company or any of its

affiliates;

(c) the Registrar; or

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(d) any other person who, in the discretion of the Court, is a proper person to make

an application under this Part.”

First Claimant

[42] The Defendants claim that the Second Claimant had to prove that he was authorised to

commence the oppression action on behalf of the First Claimant. They claim that he failed

to discharge this burden due to the lack of evidence of consulting or seeking approval from

the other shareholder. They rely mainly on an affidavit of Chrain Frost, 49% shareholder of

the First Claimant which stated her opposition to the litigation.

[43] As argued by the Claimants, however, this challenge was neither pleaded nor properly

supported by admissible evidence in this action. The affidavit of Chrain Frost filed in

relation to the failed attempt by the Frost brothers as interveners to join the matter, was

never formally tendered into evidence and thus, never formed part of the Defendants’ case.

Chrain was also not called in person by the Frost brothers or as a witness for the Defendants

and so this affidavit remained untested. The Defendants’ counsel has authority only to

represent the Defendants. There is, therefore, no basis for them making submissions that

could only be made on behalf of Chrain Frost who has not sought in any way to have the

First Claimant struck out as a Claimant herein, though (if it is true that she in fact signed an

affidavit for the Frosts) she clearly knows about the proceedings.

[44] With regard to the Defendants’ argument on the lack of evidence of consultation, it is clear

that the First Claimant is not required to disclose to the Court or the Defendants the legal

advice it may have received as to how to commence the case as well as whether it has a

written Dallas Corp Board resolution on the matter.

[45] The Defendants further submit that despite documents disclosing the Second Claimant’s

authority based on a “stock transfer”, he is not lawfully a shareholder or director of Dallas

because he forced Charles Frost to sign over the stock against his will when he was very ill.

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The current challenge as to whether the Second Claimant had approval from Chrain Frost

to commence this action by the First Claimant was not part of the pleaded Defence and there

was no Evidence in Chief from the Defendants on the point. Instead the Defendants at an

early stage of proceedings said they would await the results of litigation by relatives of Frost

in St. Kitts, where the Dallas share transfers were executed, as to whether the Second

Claimant was a lawful shareholder in Dallas Corp. Proceedings herein were stayed for four

years for that purpose.

[46] Eventually, after proceedings in both St. Kitts and Florida, there was a final decision by the

St. Kitts Court of Appeal confirming the Florida Court decision that the Second Claimant

was lawfully a shareholder of Dallas [though technically, the Frost relatives failed to

participate in the proceedings so only one side was heard]. Although the said decisions may

not have been properly tendered in evidence they are a matter of public record of which the

Court can take Judicial Notice. The stay of these proceedings was lifted based on both

parties informing the Court of the said Court decisions from St. Kitts.

[47] In all the circumstances, particularly the lack of pleadings, evidence and locus standi of the

Defendants to complain about how the Second Claimant got the 1st Claimant company

shares from Charles Frost, that issue as to whether the Second Claimant is a lawful

shareholder in Dallas Corp, is not before me for determination. I accept that the Second

Claimant was a Shareholder and Director of the First Claimant and that the First Claimant

appointed him to be their representative on the Fifth and Sixth Defendant Boards. The

Defendants have not established that the Second Claimant was not authorised to start this

claim in the name of the First Claimant. Any challenge to locus standi of the First Claimant

is therefore rejected.

Second Claimant

[48] It is my finding that the Second Claimant was “de facto” and “de Jure” Managing Director

of the Fifth and Sixth Defendant companies.

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[49] In Northern Trust Co. v. Butchart1, the Chief Justice of the Manitoba King's Bench Court

stated in relation to an allegation of misfeasance and breach of trust against the directors

whom he found jointly and severally liable for these acts:

“Whether they were legally elected or not makes no difference. They were de facto

directors, and for all acts of omission or commission on their part, they are liable in the

same manner and to the same extent as if they had been de jure as well as de facto

directors.”

[50] It follows that as liability can be placed upon de facto directors, their actions are considered

acts of the company.

[51] The Federal Court of Appeal in Wheeliker v Canada [1999] FCJ No. 401 cited with

approval the case of MacDonald v Drake (1906), 16 Man. R. 220 (C.A.) at 223:

“As early as 1906, the Manitoba Court of Appeal in MacDonald v. Drake rejected the

defendants' contention that a statutory provision making directors jointly and severally

liable for unpaid wages could only be enforced against de jure directors. The Court found

that although the defendants were not de jure directors because they did not hold the

required shares in their own right, they were ostensibly elected, attended and took part in

the meetings as well as acted as directors. They were de facto directors and, therefore,

personally liable.”

[52] According to the Halsbury’s Laws of England on De facto directors2, citing Re

Hydrodam (Corby) Ltd [1994] 2 BCLC 180:

“A de facto director (or a 'director in fact') is a person who assumes to act as a director;

he is held out as a director by the company, and claims and purports to be a director,

although he is never actually or validly appointed as such. In order to establish that a

person is a de facto director of a company, it is necessary to plead and prove that he

undertakes functions in relation to the company which could properly be discharged only

1 [1917] M.J. No. 37; 35 D.L.R. 169; [1917] 2 W.W.R. 405 2 Companies (Vol. 14 (2016)) [1761]

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by a director. The touchstone is whether the alleged de facto director has been part of the

corporate governing structure, and inherent in that touchstone was the distinction between

someone who participated (or had the right to participate) in collective decision making on

corporate policy and strategy and its implementation, on the one hand, and others who

might advise or act on behalf of, or otherwise for the benefit of, the company, but did not

participate in decision making as part of the corporate governance of the company”.

[53] It is therefore the position under both Canadian and UK law that in order to be considered

a de facto director; one must prove that the person undertakes functions in relation to the

company which could properly be discharged only by a director. In the present case, the

Second Claimant has actively participated in decision-making within the company during

the period in which he was present at the office. He claims to have been in charge of

handling renovations and also played an active role in employment of staff. This is

supported by the layout of his office and the evidence of Gershon Forde regarding his role.

It is evident that the Second Claimant stepped into Charles Frost’s shoes after he took over

his shares in Dallas. This was formalised by resolution of Dallas appointing him as their

representative director on the two companies.

[54] Although Section 84 of the Act provides for election of a director such that being a Director

would normally be a pre-requisite to being a Managing Director, the business reality of this

case was that that could not practically be done. There is now only one director of each of

the Fifth and Sixth Defendant companies and he is an officer of the First Defendant, the

Shareholder that was antagonistic to the Second Claimant. Prior to that there were always

two directors. The practicality of how they would agree on a Managing Director is not

clear. In any event there is no evidence on how the Fifth and Sixth Defendants operated in

this regard.

[55] As a matter of “business realities” however, I accept that Charles Frost operated as

Managing Director and was a de facto director. This was evident from my view of the

working environment both he and the Second Claimant operated from which was the focus

of a Site Visit to the building at 44 Independence Square. On the visit to the premises the

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office used by these two men was seen to be a large rectangular room, with a full sized

executive desk, a conference table and an en suite bathroom with shower. It was not

outfitted as a multi-purpose or surveillance room as contended by the Defendants but rather

as an executive office with conference capabilities.

[56] The Legal opinion prepared by the Fourth Defendant in 2011 also confirms that the Second

Claimant was entitled to be appointed as a director based on mutual understanding of the

First Claimant and First Defendant of each being entitled to appoint a director. I accept as

factual the evidence of the Second Claimant as to his managerial functions which included

supervising staff and overseeing renovations to the premises. Even if the Second Claimant

was not a Managing Director he was an officer of the Fifth and Sixth companies based on

his evidence of his role there which I accept as truthful.

[57] It is however my finding that both the Second Claimant and Charles Frost before him

served as Managing Director of the Fifth and Sixth Defendants as a matter of “business

realities” Based upon the Stock Power (Exhibit “TBF”), the Appointment of Manager

(Exhibit “TBE”), the special resolution (Exhibit “CMC”) and the further special resolution

(Exhibit “CMD”) unequivocal steps were taken by the First Claimant, its alter ego Charles

Frost and his successor the Second Defendant to have the Second Defendant replace Frost

as Dallas’s Director of the Fifth and Sixth Defendants.

[58] Furthermore, the Second Claimant made efforts to have the said appointment formalised

by the Corporate Secretary of the Fifth and Sixth Defendants. These actions as well as the

corroborated evidence of the Second Claimant’s operations within the business from the

time of the production of his authority to act on behalf of the First Claimant until he was

prevented from entering the business premises, sufficiently proved that he was the

Managing Director of the said Fifth and Sixth Defendants. Thus I hold that the Second

Claimant also has locus standi under S. 239 (b) and s. 242 of the Companies Act.

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Oppression

Reasonable expectations

[59] S. 242 of the Act provides:

“(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.”

[60] For the Claimants to succeed in their oppression action, they must prove that the acts

complained of are in breach of their reasonable expectations, and that such breach was

caused by conduct of the Defendants that amounts to “oppression”, “unfair prejudice” or

“unfair disregard” of a relevant interest – BCE Inc. v. 1976 Debenture holders [2008] 3

SCR 560.

[61] The Court in the case of Demerara Holdings Limited & others v Demerara Life

Assurance Company of Trinidad and Tobago Limited & others CV2006-00099

considered:

“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. Thus in the Canadian case of Walker v Betts Mr Justice D. M. Smith

propounded the following:

“The essence of oppressive and unfairly prejudicial conduct is the abrogation

of the reasonable expectations of a shareholder in the position of the

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applicant. The “reasonable expectations” standard is also applicable to a

finding that it would be “just and equitable” to grant an oppression remedy.

In determining a shareholder’s reasonable expectations, the court must apply

a modified objective test. This test requires objectively identifiable

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.””

[62] The Claimants’ reasonable expectations as outlined in the Statement of Case are

summarised as follows:

i. Shareholdings: that no shares have been issued in either the Fifth or Sixth

Defendants, but that these companies have at all times been and are expected to be

operated on the mutual and continuing agreement and understanding of the First

Claimant and the First Defendant that they were and are owned equally by the First

Claimant and First Defendant;

ii. Directorship: that it was at all times agreed and it is expected that the First Claimant

and First Defendant would enjoy as owners the rights to each have one director on

the boards of both the Fifth and Sixth Defendants;

iii. Management: it was at all times agreed and expected that all management decisions,

divisions of profits and investments in the Fifth and Sixth Defendants would be

undertaken on the basis of a 50% ownership in each company of the First Claimant

and First Defendant.

iv. Provision of records: from the inception of the business and continuing, the practice

has been for financial statements, management accounts and audited financial

statements to be provided to the Claimants

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[63] The Defendants do not entirely agree that these were the reasonable expectations upon

which the Claimants could base the oppression claim. They contend that only Charles Frost

and the Second Defendant Sudi Ozkan were privy to the discussions that based the

understanding on which the Fifth and Sixth Defendants were incorporated. They say from

those discussions the reasonable expectations of the Second Claimant could not have been

those pursued in this Claim.

[64] As summarised at paragraph 13 of Propositions of Law filed herein on October 26, 2015

the Defendants say that “In the context of the corporate relationship in this particular case,

the Defendants’ conduct in not issuing shares to the first Claimant, in not acceding to the

appointment of the Second Claimant as a director, in not declaring dividends and in not

permitting the Second Claimant unlimited and/or unsupervised access to financial records

and information, is not contrary to the reasonable expectations of the First Claimant and

the First Defendant and/or Charles Frost Jr and Sudi Ozkan, but has been consistent with

the protection and/or fulfilment of same.”

[65] According to the Halsbury’s Laws of Canada3 at HBC-298:

“The identification of the reasonable expectations of the parties is partly a question of law

(i.e., what are the complainant's rights), and partly a question of fact (i.e., what were the

complainant's reasonable expectations within the context of those rights)… Useful factors

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.”

[66] It is my finding that the reasonable expectations were as stated by the Second Claimant in

his evidence. General commercial practice dictates that a shareholder be issued his shares

in the company and any dividends earned. Further, from the testimony of the Second

Claimant, he was informed by Charles Frost that there was an understanding that each

3 Business Corporations (McGuinness)

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company would be entitled to elect a director. There is nothing in the evidence that would

sufficiently contradict these expectations. In fact the legal opinion of the Fourth Defendant

supports them. Further, in relation to the provision of reports, even if there may not have

been any previous requests by the shareholders for such information that does not mean that

a shareholder would not have been entitled to receive same if requested.

[67] I do not accept therefore that there was, as alleged by the Defendants an understanding that:

- the Fifth and Sixth Defendants would operate like a partnership,

- there would be no issuing of shares,

- there was no need for the First Claimant to have a director on the Boards of the Fifth

and Sixth Defendants and

- there was no need for the Claimants to receive financial information on the companies.

[68] I do not accept as stated by the Defendant’s counsel at paragraph 27 of submissions that the

Claimants were unable to give any evidence as to reasonable expectations since only the

First Defendant and Charles Frost had such knowledge. I agree with the Claimants’ counsel

that there were also the other living initial directors of the Fifth and Sixth defendants Zafer

Unal and Chrain Frost who would have knowledge of what was expected at the time of the

incorporation of the companies. There was also the Fourth Defendant who was corporate

secretary of both from inception.

[69] Additionally, there was the evidence of the SecondClaimant [supported by a hearsay notice]

that spoke to what Charles Frost would have told him about the understandings on which

the Fifth and Sixth companies were operated. The Defendants, themselves, failed to call

Unal and Ozkan. However, the evidence of these witnesses could have been useful to the

Court and possibly to the Defendants’ own defence.

[70] There are therefore adverse inferences to be drawn from their election not to call these

witnesses. As the case stands, however, there is no evidence from the only person alive,

Sudi Ozkan, who was privy to the initial discussions based on which the Fifth and Sixth

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Defendant companies were incorporated, and no evidence from the other directors of the

company who would have been aware of the understanding reached between the “alter

egos” of the First Claimant and First Defendant.

[71] The evidence of the Defendants’ own witness, Fourth Defendant, Christlyn Moore

supported the Claimants in that under cross-examination her legal opinions confirming

entitlement to shares and directorship were admitted into evidence. All in all the evidence

of the Second Claimant was un-contradicted by any admitted evidence and I accept that the

reasonable expectations were those outlined in his testimony.

Breach

[72] Halsbury’s Laws of Canada4 examining legislation from which the Companies Act of

Trinidad and Tobago was modelled states:

“the Act gives no indication as to the type of conduct that is “oppressive or unfairly

prejudicial or that unfairly disregards the interests” of potential complainants. Quite likely

because of this silence, the section has spawned a considerable amount of case law,

through which the courts have attempted to graft some meat onto the bare bones of the

legislation. To gain a clear understanding of the meaning and scope of the oppression

provisions of the CBCA and its equivalents across the country, it is necessary to start with

first principles.”

[73] Halsbury’s further explains:

“the classic case of prejudice or oppression exists where a corporation conducts its

business or affairs to confer a benefit on some of its shareholders that it denies (or that is

not available) to its shareholders generally, or seeks to impose excessive costs or risks on

one group rather than another. It is oppressive for the majority to misuse their control over

the payment of dividends to force a minority shareholder to sell his or her shares.”

4 Business Corporations (McGuinness) HBC-292

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[74] It is to be noted that relief granted under s. 242 of the Act is not limited to cases of actual

oppression; it is sufficient to show that the complainant's interests have been unfairly

disregarded or unfairly prejudiced.

[75] In Re BCE Inc., the Supreme Court of Canada provided guidance on the distinction

between “oppression”, “unfair prejudice” and “unfair disregard”. The Court held that

oppression “carries the sense of conduct that is coercive and abusive, and suggests bad

faith”. By contrast, unfair prejudice may permit “a less culpable state of mind that

nevertheless has unfair consequences”.

[76] Further, in Mora Ven Holdings Limited & others v Krishna Persad and Associates

Limited; Persad, Krishna H.C.2839/2002 the learned judge, citing Brant Investment Ltd.

–v- Keeprite 3OR (3d) 289 per Mc Kinlay, L.J. considered at [36]:

“the cases require the Plaintiffs to prove bad faith on the part of the Defendants in proof of

oppressive conduct; on the other hand, bad faith is not required in proof of unfair prejudice

or unfair disregard of the Plaintiffs’ interests as shareholder and/or director, although it

may be relevant in determining whether the Defendants have acted unfairly; the issue in

such cases is whether the matters complained of have effected an unfair result.”

[77] It has frequently been stated that each case of oppression turns upon its own particular facts5.

In the present circumstances, my findings are as follows:

i. Failure to issue shares - I find oppression was proved based on the Second

Claimant’s evidence regarding receipt by the Fourth Defendant of instructions from

Charles Frost as alter ego of the First Claimant for shares in the Fifth and Sixth

Defendants to be issued to the First Claimant, by evidence of a share certificate in

the Sixth Defendant prepared for Charles Frost by the Fourth Defendant on March

15, 2006 and by evidence of the Fourth Defendant’s legal opinion in 2011 based on

which the shares in both the Fifth and Sixth Defendants were to be issued to the

5 Guerrera v. Damiani, [2012] Q.J. No. 12679, 2012 QCCA 2007 (Que. C.A.); BCE Inc. v. 1976 Debenture holders, [2008] S.C.J. No. 37, [2008] 3 S.C.R. 560 (S.C.C.)

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First Claimant. From these facts I have determined that it was clearly always the

intention of all concerned that the First Claimant would be issued shares.

Furthermore, I agree with Counsel for the Defendants that it defies logic that no

shares were to be issued. If so, why incorporate the businesses as companies?

Two principles commended to the Court by the Claimants in closing

submissions are taken into account. Firstly, to refuse to issue shares to a person who

has a right to said shares is oppressive. Secondly, such a person meets the definition

of complainant under section 239 of the Act. See Canwest International Inc. and

Anor. v Atlantic Television limited and Anor. (1994) 48 WIR 40 [Tab 13 in the

propositions of law filed by the Claimants on 27 Oct 2015]

ii. Failure to give access to financial records – Counsel for the Claimants in closing

submissions underscores that the evidence is clear that, before his death, the alter

ego of the First Defendant Mr. Frost was able to access daily reports about the

performance of the members club, attend the offices, speak to staff and discuss

operational and financial issues with management. Subsequent to his death, there

was initially the same arrangement with the Second Claimant until he was excluded

from the business. So, on the evidence, the First Claimant’s director would get this

information from the company.

In Gibbons v Medical Carriers Ltd. (2001) 17 B.L.R. (3d) 280 (Man Q.B.)

every shareholder was a director of the corporation and had a reasonable

expectation to be provided with weekly management reports and monthly financial

information and meaningful input in how the corporation ran its business. Gibbons

was removed as a director, and then the corporation stopped providing the

information to Gibbons on the basis that she was no longer a director. The Court

held that “the new majority shareholders treated MCL as their own without regard

for the legitimate interests of the minority shareholders. They have inequitably

used their voting powers to exclude the minority members from participating in the

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management of the company. Their actions violate both sections 207 and 234 of

the Act.”

Similarly, in the case at bar the 2nd Claimant initially received his daily reports

and thereafter he was literally shut out of the companies and all company

information. He ceased having reports provided on the basis that according to the

Defendants he was not a legitimate person to receive same.

There was a definite breach of the Claimant’s reasonable expectation when

the Defendants ceased to provide representatives of the First Claimant with daily

financial information as they had during the initial period when he had acted as

Managing director ([83] of the Second Claimant’s Witness Statement). It was not

a submission with merit made by the Defendants that all they had to give regarding

disclosure of financials to their shareholders was what was provided for in the Act

i.e. audited annual financial statements. In any event audited financials were not

prepared until 2013 and not given to the Claimants. Even when filed in Court they

were not duly signed by a director so they were not duly formalised as Audited

Financials.

This aspect of the oppression was aggravated by evidence that the accounting

approach for the Members Club receipts was altered to the detriment of the First

Claimant in 2013 after the Second Claimant was shut out of all management

decisions and information concerning the Fifth and Sixth Defendant companies. It

was not just the change of accounting that was oppressive but that it was done

without the agreement of the half owner of the companies namely, the First

Claimant.

There was un-contradicted evidence of skimming and record destruction since

Harun Erbay was not called as a witness. The Defendants claimed that this was

never pleaded by the Claimants. However, in the statement of case at [35D] the

Claimants averred that the First, Second, Third and/or Fourth Defendants exercised

their management powers in the Fifth and Sixth Defendants in such a way as to

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cause monies to be provided to entities and/or persons affiliated to the Royal

Princess International groups of companies for extended periods of time without

formal or any arrangements for repayment and without security. This is sufficient

to put the Defendants on notice that the management of funds would be called into

question.

The court order by Jones J that Defendants should pay a fixed sum monthly to

the Claimants was breached and the companies were eventually shut down with no

financial information given to the Claimants as to why either of these developments

happened. The Defendants merely filed an application to vary the order. That

Application has yet to be determined and the question as to whether the Fifth and

Sixth Defendants could not pay the sums is an issue to have been determined in the

Registrar’s taking of accounts.

iii. Not allowing the Claimants to share in controlling of the business of the Fifth

and Sixth Defendants – This was oppressive in that the Claimants were excluded

from major business decisions such as the change of the accounting system as to

how profit was determined, the apparent failure to protect the intellectual property

of the businesses i.e. the Princess Club name and logo; shutting down the

companies and leaving all assets idle; failing to keep even the First Claimant’s

corporate secretary Glenford Hamilton informed even though there was no

complaint against him that he was as difficult to get along with as the Second

Claimant; and the involvement of the Fourth Defendant in competing clubs while

still a director of the Fifth and Sixth Defendants.

iv. In the Defendants’ Reply submissions they belatedly say they may not have

objected to making another person, representative of the First Claimant, a Director

and thus would have shared information with that person. However, this suggestion

was never made to the First or Second Claimant thereby unduly compounding and

prolonging the oppressive exclusion of the First Claimant from business decisions

and information.

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v. Failure to allow the First Claimant to be represented on Boards of the Fifth

and Sixth Defendants – The main reason for the Defendants refusing to allow for

the Second Claimant to be a Director of the Fifth and Sixth Defendants is that his

personality was so abrasive that there could be no workable relations with him as a

board member. Evidence of this concern came mainly from the testimony of the

Fourth Defendant. The rationale, apart from this alleged disagreeable personality,

for omitting representation of the First Claimant by the Second Claimant was the

challenge by the Frost brothers. As aforementioned that is not an issue herein and

in any event all parties herein agreed to await determination by the St. Kitts court.

That matter was decided.

Continued failure to have a representative of the First Claimant on the boards,

even one with a personality more suited to the Defendants, is clearly oppression in

all the circumstances. Moreover, the Fourth Defendant has, instead of including

the Second Claimant as a Director, repeatedly listed the deceased Charles Frost as

a director on annual returns for the companies.

vi. Exclusion of the Claimants from the Fifth and Sixth defendants business

operations – The allegations of the running down of the companies and allowing

competing entities to be set up in relation to which the First to Fourth Defendants

are involved were not pleaded by the Claimants and therefore will not be considered

herein.

vii. Failure to identify other company officers who could provide information –

This is also oppressive in all the circumstances. Even in the Defendant’s witness

statements no named persons were identified as filling posts in the alleged

management structure of the companies who could provide the Claimants with

information.

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[78] Each of these instances amounted to oppression and unfair prejudice against the Claimants.

The claim for relief for oppression therefore succeeds.

Remedy

[79] The case of Demerara Holdings Limited (supra) stated:

“Section 242 of the Companies Act is modelled on the Canadian Business

Corporations Act (CBCA) 3 and provides a wide range of statutory remedies

against oppression and unfair prejudice in corporate affairs. The section 234

(CBCA) remedy has been described as the broadest, most comprehensive and most

open-minded shareholder remedy in the common-law world. It gives the Court a

wide discretion to remedy virtually any corporate conduct that is unfair. In view of

this, each case will largely depend on its facts.”

[80] Under the oppression remedy, the court has sufficient latitude to rescind a contract even at

the instance of a third party6. In the present case, however, the reliefs claimed do not affect

any third parties. It is a simple matter of the Claimants being given their due share and

control of the companies. The Claimants should therefore be granted their share of the

profits of the Defendant companies.

[81] There is, however, the suggestion from the Defendants that a winding up is required due to

the insolvency of the Fifth and Sixth Defendants. However, I do not accept that winding up

of the Fifth and Sixth Defendants is appropriate. Subject to any eventual finding from the

taking of accounts, my view is that winding up at this stage, where a venture that was once

profitable became non-existent after the Second Claimant arrived on the scene in 2011,

would only allow for further oppression to the advantage of the Defendants. It would not

give an opportunity for ascertaining how this transition occurred and if there was any

improper diversion of earnings or failure to pursue business opportunities or to determine a

mechanism for compensation of the Claimants.

6 Markus Koehnen, Oppression and Related Remedies (Thomson Carswell 2004) p.374

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[82] If, as I have found, the shutting out of the Claimants from the business decisions of the Fifth

and Sixth Defendants (with the resulting possible skimming, destroying of records,

diverting resources to competing clubs etc.) was in fact happening, winding up would

finally allow the Defendants to reap the benefits and permanently deny the Claimants the

prospect of gaining just returns. Instead it is my view that investigative relief is required. I

would therefore award all the relief set out at paragraph 280 of the Claimants’ closing

submission.

VI. Conclusion

[83] In conclusion, the Claimants have both successfully proven their standing to bring this

oppression action. With regard to the Second Claimant bringing the action on behalf of the

First Claimant, there has been no intervention by the other shareholders or directors of the

First Claimant and the affidavit of Chrain Frost, not forming part of the Defendants’ case,

is not sufficient to prove dissent by the shareholders. With regard to the Second Claimant’s

position as a de facto director of the Fifth and Sixth Defendant, his position as managing

director has been borne out by actions during the period that he attended the premises of the

Fifth and Sixth Defendants, namely:

i. His actions in managing the affairs of the company, undertaking

renovations and managing employees;

ii. The actions of the Second and Fourth Defendant in allowing provision of

the company vehicle, accommodation, business cards and an office to the

Second Claimant;

iii. The opinion drafted by the Fourth Defendant expressing the companies’

duty to appoint the Second Claimant as a director.

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[84] The Claimant’s reasonable expectations have been breached through:

i. The failure to issue shares

ii. The failure to give access to financial records

iii. Not allowing the Claimants to share in controlling of the business of the

Fifth and Sixth Defendants

iv. The failure to allow the First Claimant to be represented on Boards of the

Fifth and Sixth Defendants

v. The exclusion of the Claimants from the Fifth and Sixth defendants business

operations

vi. The failure to identify other company officers who could provide

information

[85] It is therefore ordered as follows:

i. The Defendants are to issue 50% of the shares in each of the Fifth and Sixth

Defendant companies to the First Claimant forthwith;

ii. Preparation and delivery of the relevant share certificates to the First Claimant

is to be done forthwith;

iii. The Second Claimant is to be appointed as a Director on the boards of the Fifth

and Sixth Defendant companies forthwith;

iv. A receiver manager is to be appointed to run the affairs of the Fifth and Sixth

Defendants;

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v. The Order for the Taking of Accounts before the Registrar is stayed and in its

stead there is to be a forensic audit of the 5th and 6th Defendants to determine

whether there has been an unlawful breach of the Order of Madam Justice Jones

in the non-payment of US$12,000 per month to the 2nd Claimant;

vi. The parties are to agree to an Auditor within 14 days of the date hereof failing

which the Registrar will give directions as to the Auditor to be appointed to take

over the taking of the account;

vii. On completion of the Audit the parties are hereby granted liberty to apply to the

Registrar to appoint an investigator into the affairs of the Fifth and Sixth

Defendants;

viii. The Defendants are to pay forthwith the costs of the Claimants fit for Senior

and Junior Counsel in an amount to be assessed by the Master if not agreed;

ix. Liberty to Apply; and

x. Stay of Execution 14 days.

………………………………………

Eleanor J Donaldson-Honeywell

Judge

Assisted by Christie Borely JRC 1

republic of trinidad and tobago in the high court of justice...

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