Kingston Telecom Ltd v Zion Dahari et Al

• Jurisdiction: Jamaica
• Judge: RATTRAY, J
• Judgment Date: 27 July 2004
• Judgment citation (vLex): [2004] 7 JJC 2701
• Date: 27 July 2004
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. HCV-2433 of 2003

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

John Graham for Second and Third Defendants instructed by John G. Graham and Company

David Henry watching proceedings for First Defendant

Conrad George watching proceedings on behalf of National Commercial Bank Jamaica Limited.

CLAIM NO. HCV-2433 of 2003

BETWEEN

KINGSTON TELECOM LTD

CLAIMANT

AND

ZION DAHARI

1 ^st DEFENDANT

AND

RAHUL SINGH

2 ^nd DEFENDANT

AND

COMMONWEALTH COMMUNICATIONS LLC

3 ^rd DEFENDANT

FREEZING ORDERS - Removal of assets - Evidence of risk - Contract for telecommunications services - Breach - Effect of non-disclosure of material facts - Whether claimant has a good arguable case - Whether courts have jurisdiction to hear matter

RATTRAY, J

1 On the 17 ^th December, 2003 the Honourable Mr. Justice Marsh granted a Freezing Order on the ex parte application of Kingston Telecom Limited restraining Zion Dahari, Rahul Singh and Commonwealth Communications LCC, whether by themselves, their se vants or agents from disposing of and/or dealing with their assets wheresoever situate up to a limit of US $1,800,00.00 for a period of 28 days.

2 This Order was varied on the 14 ^th day of January, 2004 by the Honourable Mr. Justice James, inter alia to add the Claimant's undertaking as to damages and to permit the Defendants the use of such sums as would be required for normal living expenses, as well as legal fees incurred in relation to this suit. The application was then adjourned to the 2nd day of February 2004, when it first came before this Court on the inter parties hearing for the Freezing Order to be extended until the trial of this action.

3 Kingston Telecom Limited is a limited liability company incorporated in or about May, 2002 for the purposes of establishing and operating a full services telecommunications network in Jamaica.

4 Zion Dahari is an Israeli National, resident in the State of Florida in the United States of America, who at all material times was a director of and shareholder in Kingston Telecom. Rahul Singh is an American citizen also resident in the State of Florida in the United States of America. Commonwealth Communications LLC is a limited liability corporation registered in the State of Florida and its only members are Zion Dahari and Rahul Singh, the latter of whom at all material times exercised control over its operations.

5 In the Affidavit of Marc Diamond sworn to in December, 2003 on behalf of Kingston Telecom, it is alleged that on or about the 21 ^st April 2003, Zion Dahari was appointed Managing Director of the Claimant company with full authority to execute any and all documents on its behalf on such terms as he deemed fit and to manage the day to day operations of the company.

6 The complaint raised by Kingston Telecom is that Zion Dahari, in breach of his fiduciary duty as a member of the Board of Directors of the company conspired with Rahul Singh and Commonwealth Communications LLC to defraud and/or deceive Kingston Telecom and thereby caused the company financial loss and damage. Specifically, it is alleged that Zion Dahari caused the company to enter into a contract with Rahul Singh for the supply of telecommunications equipment, services and software on terms that were adverse to Kingston Telecom and which gave substantial commercial advantage to Rahul Singh.

7 It is further alleged that Mr. Dahari caused Kingston Telecom to enter into an exclusive contract for the provision of telecommunication services to Commonwealth Communications LLC, again on terms adverse to the company's interest.

8 That contract is alleged to have been entered into without making full and proper disclosure to the company of the interests of Zion Dahari and Rahul Singh in the transaction and without advising as to the existence of the exclusive contract, which gave substantial commercial advantage to Commonwealth Communications LLC. It is argued by Kingston Telecom that in acting as alleged, all the revenues generated by the company's telecommunications network were received by the Defendants and applied to their own use without any or any proper accounting to the company.

9 Kingston Telecom's claim against Rahul Singh is inter alia, for damages for breach of the contract for the supply of telecommunications equipment. The complaint in this regard is that on the 6 ^th December 2003, Rahul Singh forcibly and unlawfully entered the company's premises by cutting the locks and using a security code assigned to him by Zion Dahari. It is alleged that he then removed all of the company's telecommunications equipment and office furniture, thereby effectively bringing Kingston Telecom's telecommunications network to a complete standstill.

10 These steps were taken at a time when the Claimant company says it was not in breach of its obligation as regards payment for the said equipment. It further says that Zion Dahari and Rahul Singh were the ones in complete control of the revenues of Kingston Telecom and were responsible for servicing the company's debt to Rahul Singh. The Claimant company also contends that the goods and equipment purchased from Rahul Singh were supplied to the company free of any lien or encumbrance.

11 Kingston Telecom's complaint against Commonwealth Communications LLC includes a claim that it is in breach of its obligation to pay for services provided by the Claimant company under the Exclusive Carrier Services Agreement. It alleges that from the commencement of services under the contract in July, 2003 up to and including December 6, 2003, when the contract was effectively terminated by the Defendants, it received no payments from Commonwealth Communications, the company managed and/or owned by Messrs Dahari and Singh, for services rendered.

12 Marc Diamond in his Affidavit goes on to allege that for the period April 22, 2003 to December 6, 2003, Zion Dahari and Rahul Singh were in complete control of the operations of Kingston Telecom and they transacted the company's business without making any or any proper report to the Board of Directors.

13 Pivotal to the success of the company's telecommunications network is its compliance with an Interconnection Agreement between Kingston Telecom and Cable and Wireless Jamaica Limited, under which Cable and Wireless terminated incoming international calls that originate with Kingston Telecom's customers outside of Jamaica. The company alleges that in the purported exercise of his powers as Managing Director, Zion Dahari appointed himself and Rahul Singh as the persons who were directly and solely responsible for the administration and management of the said Interconnection Agreement. As a consequence, it further alleges that it has received no information regarding the state of the company's indebtedness to Cable and Wireless and it fears that the Defendants will dissipate the funds of the company or act in such a manner as to breach the company's financial obligations to Cable and Wireless.

14 The Claimant company, through the Affidavit of Marc Diamond, maintains that it has been unable to secure access to financial information, cash and other assets of the company which are and have been in the custody, management and control of the Defendants.

15 Kingston Telecom obtained the leave of the Court to issue and serve the Claim Form in this action and all subsequent process on the Defendants out of the Jurisdiction by leaving sealed copies at the addresses in the United States of America as stated in the Order granted on the 17 ^th December, 2003. Acknowledgements of Service of Claim Form have been filed on behalf of Rahul Singh and Commonwealth Communications LLC. No such Acknowledgement has been filed on behalf of Zion Dahari. However in these proceedings learned Counsel Mr. David Henry is watching proceedings on his behalf.

16 Counsel for the Second and Third Defendants Mr. John Graham referred to and relied on the Affidavit of Rahul Singh sworn to on the 13 ^th January, 2004 in opposition to this application. In that Affidavit, Rahul Singh joins issue with the Claimant company on practically every material allegation contained in the Affidavit of Marc Diamond. By way of his Affidavit Mr. Singh: -

• 1) states that the equipment used to operate the network up to December 6, 2003 was owned by him and he exhibits an Agreement in support of his contention.

• 2) denies that the installed capacity for the conveyancing of international voice calls was 9 million minutes per month as alleged, but was instead, between 1 million to 1.25 million carrier minutes per month.

• 3) says that bills from Cable and Wireless show the actual amount of traffic minutes used, which could easily have been ascertained from that Company...