Blair v Garel and Others

• Jurisdiction: Jamaica
• Judge: CORAM: MORRISON, J (Ag.)
• Judgment Date: 12 February 2009
• Judgment citation (vLex): [2009] 2 JJC 1201
• Date: 12 February 2009
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. 2004 HCV 827

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

IN THE CIVIL DIVISION

CLAIM NO. 2004 HCV 827

BETWEEN

TREVOR BLAIR

1st CLAIMANT

AND

DAVID GAREL

2 ^ND CLAIMANT

AND

WALTECH CONSTRUCTION CO. LTD.

3 ^RD CLAIMANT

AND

KEITH EDWARDS

1 ^ST DEFENDANT

AND

FREE FORM FACTORY LTD.

2 ^ND DEFENDANT

CONTRACT - Business contract - Fundamental term - Breach of contract - Credibility of witnesses

CORAM: MORRISON, J (Ag.)

By way of an Amended Claim Form dated March 2, 2005 the Claimants Trevor Blair, David Garel and Waltech Construction Limited, through Mr. Gentle Wallace, claimed from the Defendants the sum of US$37,500.00 being monies paid over to the Defendants pursuant to an agreement which was breached by the Defendants and which the 1 ^st Defendant agreed would be paid back to the Claimants.

The 1 ^st Defendant was at all material times a majority shareholder and a director of the 2 ^nd Defendant. The 2 ^nd Defendant is a limited liability company incorporated under the Laws of Jamaica.

The parties at bar fashioned an agreement roundabout May 2003. The agreement was for the parties to form a company named M2 Jamaica Limited (M2J) which company was to be incorporated and whose purpose was to engage in the manufacturing of business panels made of polystyrene foam wrapped in steel wire.

Further, it was agreed that some of the machinery essential to their undertaking would be sourced from a company in Italy called M2Emmedue Limited (Emmmedue). It was their common understanding that the 2 ^nd Defendant, a client/customer of Emmedue would use its prior course of dealing with Emmedue as leverage in the purchase of the equipment adverted to above. The equipment so obtained was to become the property of M2J. The Claimants propound that it was a fundamental term that each party to the agreement would be an equal partner in the formation of M2J as well as the business venture. Specifically, that it was understood and agreed that M2J would be owned equally through shares issued to each party. As the purchase price of the machinery was US$50,000.00 each party was to contribute the sum of JA$5,000,000.00 with the balance of the purchase price to be funded by the parties' joint effort. Faithful to the agreement each Claimant paid over to the 1 ^st Defendant on or about June 12, 2003 the sum of US$12,500.00 towards the purchase of the machinery from Emmedue. The 2 ^nd Claimant came to the aid of the 1 ^st Defendant by paying on behalf of the latter the obligatory sum due on the initial deposit as to constitute the 1 ^st Defendant an equal shareholder in M2J. The cheques in this regard were made payable to Emmedue with the explicit understanding that the 1 ^st Defendant would deliver the said cheques to Emmedue.

Ensuing therefrom, the said cheques were encashed and the respective accounts of the Claimants debited accordingly.

Paragraph 9 of the Claimant's Particular of Claim contains the gravamen of the complaint. It is repeated in extenso.

"In or around August 2003, the 1 ^st Defendant sought to alter the agreement so as to confer upon himself a majority shareholding in the proposed company, M2 Jamaica Limited. Further, the Claimants state that it was never discussed and/or agreed that the 1 ^st Defendant's shares in the 2 ^nd Defendant would be his contribution to the shares in the proposed company M2 Jamaica Limited. This would result in the 1 ^st Defendant assuming majority shareholding in the proposed venture and this was not the agreement of the parties as evidenced by the meeting held on or about June 12, 2003:" See Exhibits of minutes of meeting.

In the end, the Claimants withdrew from the agreement owing to the 1 ^st Defendant's unilateral breach. This information was communicated to the 1 ^st Defendant by the 2 ^nd Claimant, who acted on behalf of all Claimants, on or around August 22, 2003. Thus informed, the 1 ^st Defendant indicated that he would proceed in the venture on his own and he also undertook to repay the Claimants by September 2003. The 1 ^st Defendant failed so to do upon the several requests made of him by the Claimants.

The Defendants joined issue with some of the above averments.

Firstly, that it was always understood that the title to the machinery was to be in the name of M2J when in fact, they say, that title to the machinery would be placed in the name of the 2 ^nd Defendant. The Defendants also denied the issue of equal shareholding by the parties; that, though it was discussed it was contingent on the parties establishing that they had the capital base and resources; that the precise sum of JA$5,000,000.00 that each party was to pay was, "not in fact paid by any of the parties ..."

The 1 ^st Defendant in his reference to paragraph (9) of the Claimants particulars of Claim gave a qualified admission. It bears worthwhile repetition and is quoted i psissima verba: "Paragraph 9 of the Particulars of Claim is admitted and the 1 ^st Defendant avers and says that the decision to assume majority shareholding in the proposed company arose out of the fact that the Claimants at a meeting in or around August 2003 advised the 1 ^st Defendant that the initial capital that they had intended to invest in the proposed company was not forthcoming.

The 1 ^st Defendant further avers and says that the estimated value of the assets of the 2 ^nd Defendant which the 1 ^st Defendant brought to the table at the material time was $70,000,000.00. The assets of the 2 ^nd Defendant included inter alia machines ... The 1 ^st Defendant further avers and says that the Claimants before entering the business agreement were fully aware of the extensive capital that the 1 ^st and 2 ^nd Defendants possessed and what was required of them to create an equal shareholding of the company."

The 1 ^st Defendant denied that he was consulted by the 2 ^nd Claimant who advised that the varied agreement was unacceptable to the Claimants and that the 1 ^st Defendant undertook to repay all sums paid by the Claimants pursuant to the agreement. Instead, his rebuttal is that the Claimants having informed him that they did not have the funds required to create the equal shareholding in the company, he the 1 ^st Defendant made the decision to assume majority shareholding.

To this end, the 1 ^st Defendant, "decided to try to complete the purchase of the equipment," from Emmedue on his own through private financing and that contingent to his getting the loan he would "consider refunding the sums(which had been) forwarded by the Claimants" to Emmedue.

Not without significance, the...