Island Lubes Distributors Ltd v John Levy

• Jurisdiction: Jamaica
• Judge: Laing, J
• Judgment Date: 19 August 2021
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. SU2021CD00268

[2021] JMCC COMM. 27

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

CLAIM NO. SU2021CD00268

Between:

Island Lubes Distributors Limited

1 ^ST Claimant

and

West Indies Petroleum Limited

2 ^ND Claimant

and

John Levy

1 ^ST Defendant

and

Donna Levy

2 ^ND Defendant

and

Sprint Fuels & Lubricants Limited

3 ^RD Defendant

and

Courtney Wilkinson

4 ^TH Defendant

and

Ecomarine Energy Company Limited

5 ^TH Defendant

and

Eco Petroleum Limited

6 ^TH Defendant

IN CHAMBERS

Mrs. Georgia Gibson Henlin QC, Ms. Stephanie Williams and Ms. Peta-Shea Dawkins instructed by Henlin Gibson Henlin for the 1 ^st and 2 ^nd Claimants

Mr. Nigel Jones and Ms. Kashina Moore instructed by Nigel Jones & Co Attorneys-at-Law for the 1 ^st, 2 ^nd and 3 ^rd Defendants

Mrs. Symone Mayhew QC and Ms. Ashley Mair instructed by Mayhew Law, Attorneys-at-Law for the 4 ^th and 5 ^th Defendants

Injunction — Principles to be applied —

Breach of fiduciary duty — Whether maintainable against former director and officer Wrongful interference with contractual relations and Procuring breach of contract — Distinction and principles to be applied

Breach of Confidence — Principles to be applied

Laing, J

The Claim

1 The Claimants are limited liability companies incorporated under the laws of Jamaica. The 1 ^st Claimant (“Island Lubes”) is a wholly owned subsidiary of the 2 ^nd Claimant (“WIPL”). Both Claimants are involved in the distribution of lubricants and other products.

2 The 1 ^st Defendant (“Mr. Levy”), was a director of the 1 ^st Claimant until 16 ^th March 2021 and of the 2 ^nd Claimant until 9 ^th February 2021. He is currently a Director and Shareholder in the 3 ^rd and 5 ^th Defendants.

3 The 2 ^nd Defendant (“Mrs. Levy”), was the Company Secretary of the Island Lubes up until her resignation by letter dated the 29 ^th April 2020. The Claimants assert that she was a de facto director of Island Lubes.

4 The 3 ^rd Defendant (“Sprint”), is a limited liability company incorporated under the laws of Jamaica. Mr. Levy and Mrs. Levy are its sole Shareholders and Directors.

5 The 4 ^th Defendant (Mr. Wilkinson”), was until 9 ^th February 2021 a director of WIPL. He is currently a Director and Shareholder of the 5 ^th Defendant.

6 The 5 ^th Defendant (“Ecomarine”) is a limited liability company incorporated under the laws of Jamaica on the 16 ^th February 2021. Mr. Levy and Mr. Wilkinson are its sole Shareholders and Directors.

7 Mr. Levy and Mrs. Levy (“referred to together herein as “the Levys”, were shareholders in Island Lubes. Pursuant to an Agreement for Sale dated the 14 ^th October 2019 the Levys and other shareholders, sold their shares in Island Lubes to WIPL (“the Shares”). The Shares were transferred to WIPL on or about 18 ^th February 2020.

8 At the time of the transfer of the Shares, Mr. Levy and Mr. Wilkinson were Directors of WIPL and Mrs. Levy was its Company Secretary.

9 There is an allegation that the Levys failed to hand over Island Lubes' property in a timely manner and that Mrs. Levy did not resign her position as Company Secretary in the time as contemplated by Clause 4.3 of the Agreement for Sale. The Claimants have asserted that this amounts to a breach of contract. However, these allegations are not material for purposes of the application which is before the Court.

The claim for breach of duty and/or conflicts of interest/interference with contractual relations

10 The Claimants aver that the Levys and Mr. Wilkinson as directors and officers of Island Lubes and/or WIPL have a duty to act honestly and in good faith with a view to their best interest.

11 The Claimants aver that the Levys and Mr. Wilkinson, by virtue of their relationship with the Claimants knew that the Claimants owned certain property and had contracts that support their core business directly and indirectly. These included the contract between BP Marine Limited and Island Lubes for the supply and resale of Castrol branded Marine lubricants within the territory of Jamaica and the Cayman Islands dated the 24 ^th day of June 2015. Also included was the Contract dated the 1 ^st July 2020 between Island Lubes and Kingston Wharves Logistics Limited and Western Terminals Limited.

12 It is the Claimants’ case that Mr. Levy and Mr. Wilkinson were each removed as directors of WIPL on 9 ^th February 2021 and that after their removal the Defendants embarked on a course of conduct or were party to a course of conduct that caused harm to the Claimants. This the Claimants assert was in breach of the Levys and Mr. Wilkinson's duty as directors to act honestly and in good faith with a view to the best interest of Island Lubes and/or WIPL. It was further submitted that they failed to avoid circumstances that would constitute a conflict of interest whether directly or indirectly and that they exploited the Claimants' property and /or contracts for their benefit or that of connected persons.

13 An important element of the Claim is that the Defendants also interfered with Island Lubes' contracts and transferred or directed its business and funds to the Levys, Ecomarine and other connected persons or entities. The actions complained of included the following:

• a. Incorporating the 5 ^th Defendant on the 16 ^th February 2021, as a vehicle to compete with the Claimants and solicit and entice the business, suppliers and employees of the Claimants.

• b. Terminating the 1 ^st Claimant's contract with Kingston Wharves Limited by letter dated the 26 ^th February 2021 with effect from the 15 ^th March 2021 and directing that a new logistics services agreement be entered into with the 5 ^th Defendant. This letter was signed by the 1 ^st Defendant and copied to the 4 ^th Defendant.

• c. Terminating the 1 ^st Claimant's banking relationship with Sagicor on or about the 18 ^th day of March 2021 and directing the transfer of the balance in the 1 ^st Claimant's account to the 5 ^th Defendant in the sum of US$9450.00.

• d. Appropriating the 1 ^st Claimant's property in its email address islandlubes@gmail.com and the associated email server or emails which also contain the 1 ^st Claimant's customers and other proprietary information and which is linked to the 4 ^th Defendant's Samsung Galaxy Note and/or the 2 ^nd Defendant's email address levydm@hotmail.com as the recovery email.

• e. Commandeering the 1 ^st Claimant's inventory at Kingston Wharves Limited and placing at risk the 1 ^st Claimant's deliveries for the 18 ^th March 2021.

• f. Contacting the 1 ^st Claimant's customers and attempting to take over the business of the 1 ^st Claimant by representing that the 5 ^th Defendant is the new distributor of the 1 ^st Claimant's products.

• g. Contacting the 1 ^st Claimant's supplier, Caribbean Industrial & Lubricants Corp and representing that as of the 15 ^th March 2021, the 5 ^th Defendant “will take over from Island Lubes Distributors as the new supplier of Castrol Marine and Energy Lubricants in Jamaica and the Cayman Islands. “He further requested that “all future requests for quotations/nominations in the interim, be sent only to ecomarineandenergy@gmail. com and any calls be directed to [the 1 ^st Defendant] until further notified.”

14 It is also averred that these acts also directly or indirectly conflict with the interests of the 2 ^nd Claimant because “they” [presumably the Levys and Mr. Wilkinson] knew that WIPL acquired Island Lubes in order to expand its reach in the petroleum sector and that by interfering with and terminating Island Lubes' contracts, WIPL would suffer a loss on its investment. It is important to appreciate that the effect of the actions on WIPL is not a consideration for purposes of this Application, since it was brought by Island Lubes only.

15 In addition, the Claimants have also claimed for misappropriation, breach of fiduciary duty and/ or conflict of interest and duty of the Levys, Mr. Wilkinson and Ecomarine. These heads of the Claim are based primarily on activity related to Island Lubes' accounts and the transferring of funds therefrom.

16 There is also an allegation of fraud against the Levys, Mr. Wilkinson and Ecomarine, that they knew and/or ought to have known that they have no right or interest in Island Lubes’ supplier or client lists and/or email address but took control of them for the sole purpose of furthering their respective interests. It is further alleged that these same parties knew and/or ought to have known that they had no right or interest in the inventory of Island Lubes or its contract with Kingston Wharves Limited but terminated the contract including the contract dated the 1 ^st July 2020 and took or attempted to take control of its invention to further their personal interests.

The Notice of Application

17 By Notice of Application filed 11 ^th June 2021 Island Lubes sought a number of reliefs including a freezing order, a search order, or in the alternative, a preservation order and an interim injunction. The only relief which the Court granted was the interim injunction in terms of the order dated 16 ^th June 2021 (“the Order”). Having regard to the nature of the inter partes hearing and the submissions on behalf of the Defendants, it is necessary to reproduce the material portions of the Order despite its length as follows:

• 3. An injunction to restrain the 1 ^st, 2 ^nd and 4 ^th Defendants by themselves, their servants or agents or otherwise howsoever from using or misusing the confidential information or any information in relation to the contracts, suppliers, customers and employees of the Claimants or any part thereof for any purpose or otherwise exploiting the information.

• 4. An injunction restraining the 1 ^st, 2 ^nd and 4 ^th Defendants, their servants, and/or agents or otherwise from inducing or procuring breaches by unlawfully interfering in contracts between the Claimants, and their sub-contractors or suppliers or business relationships and to prevent them from committing a repetition thereof.

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