Re Equipment Maintenance Ltd

JurisdictionJamaica
CourtSupreme Court (Jamaica)
Judge SYKES J.
Judgment Date16 October 2008
Judgment citation (vLex)[2008] 10 JJC 1601
Date16 October 2008
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
SUIT NO. E 505 OF 2001

IN THE MATTER OF

EQUIPMENT MAINTENANCE LIMITED
AND

IN THE MATTER OF

IN COURT

Michael Hylton Q.C., Anna Grade, Kalaycia Clarke instructed by Rattray Patterson Rattray for the applicants
John Vassell Q.C., Julianne Mais Cox, Cindy Lightbourne instructed by DunnCox for the respondents

COMPANY LAW - Subsidiaries - Separate legal personality - Subsidiaries different from parent company

INTERPRETATION - Consent Order - Application for interpretation - Principles of contractual interpretation

NOTICE OF MOTION - APPLICATION FOR INTERPRETATION OF CONSENT ORDER - PRINCIPLES OF CONTRACTUAL INTERPRETATION - COMPANY LAW - SEPARATE LEGAL PERSONALITY - SUDSIDIARIES DIFFERENT FROM PARENT COMPANIES

SYKES J
1

This is an application by Dwight Clacken and Lynne Clacken for the following:

The procedural objection

  • 1. A declaration as to the meaning of the words "in the ordinary course of business" as appear in paragraph 7 of the consent order of Anderson J. dated May 29, 2002.

  • 2. A declaration as to whether the property located at 25 Balmoral Avenue, Kingston 10 in the parish of St. Andrew ("the said property") and/or the monies received in respect of the sale of the said property fall within the judicial interpretation of "in the ordinary course of business".

  • 3. A declaration that the restraining order set out in paragraph 7 of the said order applies to:

    • a. the net proceeds of the sale of the said property;

    • b. the other real estate owned by Equipment Maintenance Limited and its subsidiaries as at May 29, 2002 and to the net proceeds of the sale of any of those properties;

  • 4. An order that the net proceeds of the sale of any of the properties referred to in paragraph 3 above be paid into an interest bearing escrow account in the joint names of the attorneys for the applicants Dwight and Lyn (sic) Clacken and the respondents Michael and Richard Causwell on or before May 2, 2008.

  • 5. Costs of this application to be agreed or taxed.

2

Mr. Vassell Q.C. raised a highly technical objection to the court hearing this application. Mr. Vassell submitted that the entire application of the applicants was invalid on three grounds. First, the application cannot be accommodated under the liberty to apply provision in the order of Anderson J. Second, there must be a genuine ambiguity in the meaning of the order and if there is, then the proper way to frame the application is by saying that there is an ambiguity and then urge on the court an interpretation that avoids the ambiguity. According to Mr. Vassell, the applicants did not say that there was an ambiguity but took a definitive position which they are asking the court to endorse. This is a venal sin which can be purged. However, according to Queen's Counsel, the third objection amounts to a cardinal sin for which neither penance nor purgatory is available. The third objection is this: the applicants did not seek to enforce the order of Anderson J. By this Mr. Vassell meant that they should have tried to enforce the order and if in enforcing the order it was discovered that it could not be enforced because the meaning of the order was unclear, then they could return to court and ask for an interpretation of the clause.

3

As far as the ambiguity submission and the stance of the applicants are concerned, the distinction sought to be drawn by Mr. Vassell while easy to conceptualise does not lead to any result in practice that is such that a court ought to be detained by it. The very fact that the application is opposed and a contrary interpretation put forward by the respondents is proof itself that the words used by Anderson J. in his order is capable of bearing to two interpretations. The ultimate basis for hearing the matter is that there is indeed a dispute over the interpretation of the relevant clause and I am not of the view that the verbal formulation of the application is of much moment. The form is irrelevant. It is the substance of the matter that is crucial and if on the face of it there is some ambiguity that can affect the operation of the order then the court is duty bound to hear the rival submissions and adjudicate accordingly. I have absolutely no doubt that (a) the application can be accommodated under the liberty to apply provisions; (b) there is an ambiguity in the meaning of the order; and (c) there is no precondition that there must be an attempt to enforce the order before a clarification can be sought.

4

Mr. Vassell submitted that in all the cases relied on by the applicants in support of their contention that the court can hear the application were ones in which the beneficiary of the order had sought to enforce it and in the enforcement of it an issue of interpretation arose. He stated that in none of the cases was there an application for an interpretation of the order in the absence of any attempt to enforce the order. His view was that what the applicants were really trying to do was to vary the terms of the order under the guise of seeking an interpretation of the order - a path that is not open to them.

5

I do not agree with Mr. Vassell that the cases cited by him and Mr. Hylton Q.C. are so limited. It is true that in the case of Warring-Davis v Secretary of State for Work & Pensions [2005] EWHC 3011 (Admin) (November 28, 2005) the issue of the interpretation of the order arose in an attempt to enforce the order but that is not the same thing as saying that the issue of the proper construction of the order cannot arise in any other way. All that Warring-Davis did was illustrate, as distinct from prescribe, one of the ways in which an issue of the proper construction of a court order can arise. Similarly, in the case of Emanuel Alexiou v James Campbell PCA No. 63 of 2006 (delivered February 26, 2007), on appeal from the Court of Appeal of the Commonwealth of the Bahamas, the Judicial Committee of the Privy Council did not attempt to delineate all of the circumstances in which an issue of the proper meaning of an order of the court may arise. That case, like the Warring-Davis case, was simply an example of the manner in which a proper construction of a court order may arise. The other thing to note is that no issue arose, in either Warring-Davis or Alexiou, in relation to the manner in which the proper construction of an order had to be placed before the court. That being so, the court did not address that issue and the cases proceeded on the basis that the issue was properly before the court. It is therefore difficult for Mr. Vassell to press these cases to serve the point he is making. Finally, two cases are simply too few to generalise, by way of the inductive process, into the major premise contended for by counsel. For these reasons, I do not accept Mr. Vassell's submission on this point.

6

Where Mr. Vassell is on good ground (and I do not think Mr. Hylton dissented on this) is that a court cannot, under the guise of interpreting an order, rewrite a consent order and change the obligations of the parties, where that consent order is in truth a contract between the parties (see Causwell v Clacken S.C.C.A. No. 129/2002 (February 18, 2004) per Smith J.A. at pages 15 – 18). A court can always accommodate an application under the liberty to apply provision if such an application is for the purpose of working out what was agreed between the parties. The cases use the expression "working out the order". Surely, if the order is directing a party to deal with or refrain from dealing with property in a particular manner and there is some dispute as to whether (a) a particular property or (b) proceeds from the sale of a property is covered by the order, I would have thought that is a matter that can be brought before the court under the liberty to apply provision. Unless this is done, how would the parties know which property is covered by the order when the properties to which the order referred were not identified by name, title or with any high degree of specificity?

The disputed clause

7

In the case before me, the parties disagree over whether certain properties are covered by clause 7 of Anderson J.'s order made on May 29, 2002. Clause 7 reads:

Pending completion of the said valuation and purchase of shares and/or winding up of the Company (sic) as the case may be the Respondents (sic), 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 (sic) from Directors (sic) and/or Shareholders (sic) meetings.

8

The crucial words are "in the ordinary course of business". How should the court approach the interpretation of these words? It has already been decided that the order in which these words occur is a contract between> the parties which has been embodied in a court order (see Causwell v Clacken per Smith J.A. at pages 17 – 18 ). This being so the next issue is to identify the correct principles to be used in the construction of this contract.

The applicable principles

9

Over the last three decades, there has been more open recognition that the process of construing a contract is not quite as easy as is suggested by expressions such as "the words are clear and unambiguous", "words are to be given their plain meaning", "the words have a natural meaning." In this regard, Lord Hoffman observed in the case of Charter Reinsurance Co. Ltd v Fagan [1996] 2 W.L.R. 726, 762:

I think that in some cases the notion of words having a natural meaning is not a very helpful one. Because the meaning of words is so sensitive to syntax and context, the natural meaning of words in one sentence may be quite unnatural in another. Thus a statement...

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