Causewell (Michael) et Al v Clacken (Dwight) et Al

• Jurisdiction: Jamaica
• Judge: SMITH, JA.: , BINGHAM, JA:
• Judgment Date: 16 May 2004
• Neutral Citation: JM 2004 CA 2
• Judgment citation (vLex): [2004] 2 JJC 1804
• Court: Court of Appeal (Jamaica)
• Date: 16 May 2004

IN THE COURT OF APPEAL

BEFORE:

THE HON. MR. JUSTICE BINGHAM, J.A THE HON. MR. JUSTICE WALKER, J.A THE HON. MR. JUSTICE SMITH, J.A

BETWEEN:

MICHAEL CAUSWELL

RICHARD CAUSWELL

APPELLANTS

AND

DWIGHT CLACKEN

LYNNE CLACKEN

RESPONDENTS

John Vassell, QC Mrs. Julianne Mais-Cox Dunn Cox

David Batts Miss Daniella Gentles Livingston, Alexander and Levy

COMPANY LAW - Winding up - Petition pursuant to Companies Act sections 196 and/or 203 - Consent Order - Variation of Consent Order - Whether terms of Order may be varied without the consent of the parties

SMITH, JA.:

1 The appellants Michael and Richard Causwell are shareholders in Equipment Maintenance Limited ("the Company"). The respondents, Dwight and Lynne Clacken are also shareholders in the Company. On the 5 ^th October, 2001, the respondents filed a Petition to wind up the Company pursuant to section 196 and/or section 203 of the Companies Act.

2 On the 29 ^th May, 2002, Anderson J, by and with the consent of the parties, made an Order (the May Consent Order) which embodied the terms of an agreement between the parties for the resolution of their dispute. The May Consent Order provided specific time frames for the performance of various actions. It also provided for liberty to apply to either party generally. On the 22 ^nd August, 2002 the May Consent Order was varied by Anderson J with the consent of the parties to enlarge the time for the valuation of the respondents' shares.

3 On the 4 ^th October, 2002 the respondents filed a summons seeking to vary the terms of the May Consent Order pursuant to the "liberty to apply" provision. By Order made on the 20 ^th November, 2003, Anderson J varied the terms of the May Consent Order in the face of opposition from the Causwells. This appeal is from the November 20 Order varying the May Consent Order. The principal issue in this appeal is whether the terms of the May Consent Order may be varied without the consent of the parties and, if so, to what extent.

4 The Consent Order

5 In Open Court before the Hon. Mr. Justice Roy Anderson on the 29 ^th day of May, 2002:

"Upon the Petition of Dwight and Lynne Clacken...IT IS HEREBY ORDERED BY AND WITH THE CONSENT OF THE PETITIONERS AND THE RESPONDENTS THAT:

• 1. Michael Causwell and Richard Causwell (hereinafter referred to as "the First and Second Respondents") do purchase 6,666 ordinary shares in the capital of Equipment Maintenance Limited (hereinafter referred to as "the Company") presently registered in the name of the Petitioners (as to 3,334 each) at a price to be fixed by the accounting firm of Peat Marwick and Partners of 6 Duke Street, in the parish of Kingston (hereinafter referred to as "the valuer").

• 2. The Valuer is directed to value the Petitioners' shares in the said company within ninety (90) days of the date of this order, or such other period as may be approved by the Court from time to time, by reference to the market value of all the assets owned by the Company inclusive of fixed and personal property on a net assets value basis as a going concern and shares at market value in Windshield Centre Limited and Rodeo Holdings Limited, goodwill and receivables of the Company as at the 31 ^st day of December, 2001 without any discount for the fact that the Petitioners' shareholding is a minority shareholding. The Valuer shall take into account any assets or funds of the company which have been diverted, utilised or paid by or to any of the shareholders and/or any of the following companies including but not limited to Ranchero Investments Limited, Startech Services Limited, Econocar Rentals Limited and Auto Auctions Limited and/or paid by the Company and/or its subsidiaries, and for this purpose the valuer is authorized to make such enquiries and examine such records, books and documentation including, but not limited to the affidavits and documentation filed in these proceedings as are necessary to ascertain the value of the said assets or the amount of the said funds or any amount of which the company is entitled to demand repayment from the shareholders concerned and that any such assets, funds and/or amounts shall be brought into account for purposes of the valuation aforesaid and shall attract interest being the Government of Jamaica treasury bill rates as published by the Bank of Jamaica. The valuer may use in-house figures for the financial year ending the 31 ^st day of December, 2001 in the absence of Audited Financial Statement for the said year. In the event of any dispute relative to the aforesaid valuation of the assets the valuer's decision in that regard shall be final.

• 3. The respondents shall pay to the Petitioners or their legal representatives the purchase price of the said shares as determined by the Valuer aforesaid on the following terms:

  • (a) A deposit of 22% of the purchase price to be paid within ninety (90) days after the valuation is delivered to the respondents or their legal representatives whichever is earlier.

  • (b)The balance purchase price is to be paid within one hundred and eighty (180) days thereafter or within a further ninety (90) days if the respondents are unable to pay the balance purchase price within the one hundred and eighty days (180) as stipulated.

  • (c) Interest shall accrue on the balance purchase price at the Government of Jamaica treasury bill rates as published by the Bank of Jamaica from the date the deposit becomes payable until payment and any such interest shall be computed monthly and payable within five (5) days of the end of each month until the balance purchase price is paid.

• 4. If the Respondents fail to pay the deposit within the stipulated time or the entire purchase price and interest is not paid within 270 days after the valuation is delivered and upon the expiration of seven (7) days notice served on the Respondents or their legal representatives, it is hereby ordered that the Company be wound up pursuant to the provisions of the Companies Act and a Chartered Accountant, to be agreed upon by the parties and if not agreed to be appointed by the Court under liberty to apply, be appointed liquidator for the purpose of winding-up the Company which shall take immediate effect.

• 5. On the signing of this Consent Order, the Petitioners shall execute and deliver to their legal representatives, Instruments of Transfer of the said shares to be held by the said legal representatives on their undertaking to send if to the Respondents' Attorneys-at-law on payment and receipt of the purchase price.

• 6. Pending completion of the said purchase in the aforesaid manner and time the Petitioners shall continue to exercise all rights and privileges as shareholders.

• 7. Pending completion of the said valuation and purchase of shares and/or winding up of the company as the case may be the respondents, Michael and Richard Causwell are hereby restrained whether by themselves, their servants and/or agents or otherwise, howsoever from removing, dissipating and/or otherwise disposing of the assets of the company except in the ordinary course of business and from excluding the Petitioners from Directors and/or Shareholders meetings.

• 8. The Petitioners shall not for a period of Eighteen (18 months) from the date hereof use any confidential information obtained in their capacity as Directors of the Company and shall not solicit clients of the company for the said period of eighteen (18) months.

• 9. Pending completion of the said valuation and purchase of shares and/or winding-up of the company as the case may be, the Respondents, Michael and Richard Causwell shall maintain the existing insurance as at the 31 ^st day of December, 2001 on all of the properties owned by the company and its subsidiaries specifically, Windshield Centre Limited and Rodeo Holdings Limited except computer equipment and property at la Montrose Road such insurance to be based on the existing terms and conditions.

• 10. Each party is to bear their own legal costs of transfer of the shares.

• 11. Costs of the valuation to be borne by the Company.

• 12. Each party is to bear their own legal costs of the Petition.

• 13.There be Liberty to Apply to either party generally".

6 The First Application Under Liberty to Apply

7 Pursuant to paragraph 2 above the valuation of the shares ought to have been completed by the 22 ^nd of August, 2002. As a result of the failure to meet this requirement, the first application under "Liberty to Apply" was heard by Anderson J on the 22 ^nd August, 2002. At that time an Order "by Consent" was made which varied paragraph 2 of the May Consent Order by extending the time period of ninety (90) days for the completion of the valuation of the petitioners' shares by a further period of thirty one (31) days from the 22 ^nd August, 2002 to the 23 ^rd September, 2002. The August 22 Order also gave the attorneys of the parties until September 17, 2002 to agree on the adjustment of the other dates contained in the May Consent Order, failing which the matter of the adjustment of the dates and the issue of costs were to be set down for hearing during the week of the 23 ^rd September, 2002. Further, by the August 22 Order the Causwells were to "cause to be paid over to KPMG Peat Marwick" a cheque in the amount of $425,000 plus GCT of $63,750.00 by the 26 ^th day of August, 2002.

8 The Second Application Under Liberty to Apply

9 The valuation of the shares was not done during the extended period under the August 22 Order. Undoubtedly, this was to the great detriment of the respondents. Consequently, they filed another Summons pursuant to "Liberty to Apply" seeking to amend the May Consent Order. This summons was heard by Anderson J on the 15 ^th October 2002. On the 20 ^th November, 2002 Anderson J made the following Order:

• 1. The Valuer is directed to value the...