Phenee Anthony Plummer v John Glen Plummer
| Jurisdiction | Jamaica |
| Judge | Batts J. |
| Judgment Date | 08 April 2020 |
| Date | 08 April 2020 |
| Docket Number | CLAIM NO. SU2019CD00013 |
| Court | Supreme Court (Jamaica) |
[2020] JMCC Comm 6
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
IN THE COMMERCIAL DIVISION
Batts J.
CLAIM NO. SU2019CD00013
Tamara Francis Riley-Dunn and Karlane McFarlane instructed by Nelson-Brown, Guy & Francis for the Claimants.
Keith Bishop and Andrew Graham instructed by Bishop Partners for the Defendants
Companies Act — Sections 174,193, 213 and 213A — Mining lease granted to 1 st Defendant's son — Duty of director — Whether breach of trust — Whether implicit agreement to permit 1 st Defendant to make such a decision — Whether 1 st Defendant as managing director acted lawfully — Whether duty to disclose-Whether secret profit — Expert report admitted by consent — Whether Defendants entitled to challenge the expert's methods and findings — Remedies — Measure of damages.
This case concerns a family owned and operated Company. The 1 st and 2 nd Claimants and the 1 st Defendant are siblings. They are also shareholders in the 3 rd Claimant, which is a duly registered Company, under the Companies Act of Jamaica. It has its registered office at Race Course P.O. in the parish of Clarendon. Their father Ezekiel Plummer bequeathed to them, and their other siblings, shares in the 3 rd Claimant. The 1 st Defendant received 10 percent of the shareholding which made him the single largest shareholder. The 2 nd Defendant is the son of the 1 st Defendant. He became a shareholder in the 3 rd Claimant after the 1 st Defendant transferred some shares to him (see evidence in cross-examination of 1 st Defendant). Since the death of Ezekiel Plummer, on or about the 27 th day of April 1975, the 1 st Defendant has been the managing director of the 3 rd Claimant. This continued until 25 th March 2019 (see paragraph 8 witness statement of Vince Plummer filed on 16 th December 2019). The Managing Director of the 3 rd Claimant is now Vince Plummer.
The dispute between the parties concerns the 1 st Defendant's management of the 3 rd Claimant, and in particular, his grant of a mining lease to the 2 nd Defendant and the sale of other company land. The property leased for mining is located at Denbigh in the parish of Clarendon and is registered at Volume 1467, Folio 152 of the Register Book of Titles (see exhibit 5). It is hereinafter referred to as the said land.
It is not in dispute that most of the 3 rd Claimant's shareholders lived outside of Jamaica. The Claimants say that initially the lines of communication were open and decisions collectively made. However, for the last 15 years or so this has not been so. They say the 1 st Defendant failed to provide information and stopped participating in board meetings. The 1 st Defendant says decisions were never collectively made. It is common ground however that for a long time the 1 st Defendant was relied on, or allowed, to take decisions in relation to the 3 rd Claimant. Ezekiel Plummer in his will had appointed the 1 st Defendant as Managing Director. This fact, along with the fact that the 3 rd Claimant's land was primarily used for agricultural production and that the 1 st Defendant is an Agronomist, probably explain the reliance placed on the 1 st Defendant by the other directors and shareholders.
The Claimants commenced action by Claim Form and Particulars of Claim on the 21 st day of June, 2017. The claim was transferred to the Commercial Division of the Supreme Court. An Amended Claim Form and Particulars of Claim were filed on the 29 th day of April, 2019. The statements of case reference two lease agreements, both dated the 31 st day of December, 2015, between the 3 rd Claimant and the 2 nd Defendant. Both leases are signed, on behalf of the 3 rd Claimant, by the 1 st Defendant and allow for mining on the said land. The 1 st and 2 nd Defendants owned and controlled Plummer Aggregates Ltd which did the sand mining. The Claimants assert that they have suffered loss and damage in consequence of the entry into the lease agreements.
Although otherwise identical the lease agreements differ as to the mode of computing rent. One lease dated 31 st of December, 2015 (exhibit 1) states compensation in the form of an annual rent of One Hundred Dollars ($100JMD) and 10% royalty on all quarry material sold. The other lease dated 31 st of December, 2015 (exhibit 2) states that the lessee was to pay rental of $250,000 monthly to the 3 rd Claimant. It must be noted that the Defendants allege that exhibit 2 is the true lease agreement. It was not registered on the certificate of title until the 3 rd day of October, 2017 (see exhibit 5).
There are several allegations made by the Claimants. The main one being that the Defendants acted in concert and caused the 3 rd Claimant to enter into the lease agreements without the knowledge or consent of the other directors or shareholders. It is alleged that the 1 st Defendant failed and/or neglected to inform any of the directors that there was sand, or minerals capable of being mined, on the said land. The Claimants further allege that the 1 st Defendant has been selling land, belonging to the 3 rd Claimant, without the approval or consent of the other directors and shareholders. The complaint is that the 1 st Defendant has done several acts which are unfair to them and profitable to the Defendants. There has, it is said, been a breach of fiduciary duty. The Claimants seek damages, an injunction restraining the 2 nd Defendant from mining the said land, an order to set aside the mining lease, an account of profits and the payment of all sums due to the Claimants with interest.
By way of defence the 1 st Defendant has alleged that the 3 rd Claimant was left solely in his hands. Although there were teleconferences, held on some occasions with his siblings to update them on the running of the 3 rd Claimant, he insists that these teleconferences were never for the siblings to tell him what to do. He says that they never objected to his taking decisions and operating the Company until now. He asserts that at all times he acted in the best interest of the 3 rd Claimant. The 2 nd Defendant, in his defence, asserts that the grant of the lease was within the power and authority of the 1 st Defendant.
On the first day of trial counsel, for the Defendants, sought to have the matter adjourned due to the absence of the 2 nd Defendant. The court was informed that he was ill and unable to attend. A document purporting to be a medical certificate was presented to me. I rejected the document as it did not describe the 2 nd Defendant's condition nor say why he was unable to attend court. It was brought to the court's attention, by counsel for the Claimants, that the 2 nd Defendant had been seen in the precincts of the Court of Appeal the day before. This was not denied. The application to adjourn was refused. The 1 st Defendant gave evidence at the trial but the 2 nd Defendant did not.
After all the evidence was in, each counsel made written and oral submissions. I will reference same and the evidence, only to the extent necessary to explain my decision.
The duty of a company's director is contained in sections 174 and 193 of the Companies Act. Section 213A provides remedies where a company has been operated in a manner that is oppressive or unfairly prejudicial. These sections state:
Section 174
“(1) Every director and officer of a company in exercising his powers and discharging his duties shall—
(a) act honestly and in good faith with a view to the best interest of the company; and
(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, including, but not limited to the general knowledge, skill and experience of the director or officer.
(2) A director or officer of a company shall not be in breach of his duty under this section if the director or officer exercised due care, diligence and skill in the performance of that duty or believed in the existence of facts that, if true, would render the director's or officer's conduct reasonably prudent.
(3) For the purposes of this section, a director or officer shall be deemed to have acted with due care, diligence and skill where, in the absence of fraud or bad faith, the director or officer reasonably relied in good faith on documents relating to the company's affairs, including financial statements, reports of experts or on information presented by other directors or, where appropriate, other officers and professionals.
(4) In determining what are the best interests of the company, a director or officer may have regard to the interests of the company's shareholders and employees and the community in which the company operates.
(5) The duties imposed by subsection (1) on the directors or officers of a company is owed to the company alone.”
Section 193:
“(1) A director or officer of a company who is—
(a) a party to a contract or proposed contract with the company; or
(b) a director or an officer of any body or has an interest in any body that is a party to a contract or proposed contract with the company; or
(c) an associate of a person who is a party to a contract, proposed contract or has an interest in any body that is a party to a contract or proposed contract with the company, shall disclose in writing to the company or request to have entered in the minutes of meetings of director the nature and extent of his interest.
(2) The contract referred to in subsection (1) shall be subject to the approval of the board of directors of the company and, subject to the provisions of the First Schedule, the director concerned shall not be present during any proceedings of the board in connection with that approval.
(3) ………
(4) The...
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