Rickie Davis v Wellesley Stokes

• Jurisdiction: Jamaica
• Judge: Plamer Hamilton, J.
• Judgment Date: 16 June 2023
• Docket Number: CLAIM NO. SU2021CD00060
• Court: Supreme Court (Jamaica)

In The Matter of Riviera Insurance Agency Limited

and

In The Matter of S. 213A of The Companies Act

Between

Rickie Davis

1 ^st Claimant

and

Dorma Davis

2 ^nd Claimant

and

Wellesley Stokes

1 ^st Defendant

and

Keroy Myers

2 ^nd Defendant

and

Dalou Wong

3 ^rd Defendant

and

Prescilla Stokes

4 ^th Defendant

and

Riviera Insurance Agency Limited

5 ^th Defendant

[2023] JMCC COMM 01

Plamer Hamilton, J.

CLAIM NO. SU2021CD00060

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

IN THE COMMERCIAL DIVISION

Civil Practice & Procedure — Company Law — Section 213A of the Companies Act — Conduct that is oppressive and/or unfairly prejudicial and/or unfairly disregards interest of shareholder, director or officer of the company — Reasonable expectation — Appropriate Remedy

TRIAL IN CHAMBERS

Mrs. Daniella Gentles-Silvera K.C. and Mr. Alexander Corrie instructed by Livingston, Alexander & Levy for and on behalf of the 1 ^st Claimant

Ms. Dianne Edwards of Counsel for and on behalf of the 2 ^nd Claimant

Mr. Stephen Shelton K.C. and Ms. Stephanie Ewbank instructed by Myers, Fletcher & Gordon for and on behalf of the Defendants

Plamer Hamilton, J.

1 I wish at the outset to note that at the time when this trial was heard Learned Counsel Mrs. Gentles-Silvera was appointed as King's Counsel, and therefore I have referred to her as such.

BACKGROUND

2 The 1 ^st Claimant by way of an Amended Fixed Date Claim Form filed on the 30 ^th day of November, 2022 is seeking the following orders and declarations under section 213A of the Companies Act on the grounds that the business or affairs of the 5 ^th Defendant Company have been carried on or conducted in a manner that is oppressive and/or unfairly prejudicial and/or unfairly disregards the interest of the 1 ^st Claimant as a shareholder of the 5 ^th Defendant Company and the powers of the directors of the 5 ^th Defendant Company have been exercised in a manner that is oppressive and/or unfairly prejudicial and/or unfairly disregards the interest of the 1 ^st Claimant as a shareholder of the 5 ^th Defendant Company:

• (a) A Declaration that the business or affairs of the Company have been carried on or conducted in a manner that is oppressive and/or unfairly prejudicial and/or unfairly disregards the interests of the 1 ^st Claimant;

• (b) A Declaration that the powers of the directors have been exercised in a manner that is oppressive and/or unfairly prejudicial and/or unfairly disregards the interest of the 1 ^st Claimant;

• (c) An Order to appoint the Claimant, Rickie Davis, a director of Riviera Insurance Agency Limited (“the Company”) in addition to the current directors Wellesley Stokes, Dalou Wong and Keroy Myers;

• (d) An injunction to restrain the Defendants whether by themselves or by their servants or agents or otherwise howsoever from increasing the share capital of Riviera Insurance Agency Limited and issuing and allotting shares in the said Company until further order of this court;

• (e) An Order setting aside the increase in share capital of the Company on the 13 ^th day of June, 2019 by 12,000;

• (f) An Order setting aside the issue and allotment of shares to Wellesley Stokes, Keroy Myers and Prescilla Stokes made on the 11 ^th October, 2019 and the 27 ^th November, 2020 as reflected on the Return of Allotment dated 27 ^th November, 2020;

• (g) An Order that the Register of Members is rectified within two (2) days of the date hereof to reflect the names of the shareholders before the 27 ^th November, 2020 and the amount of shares they hold;

• (h) An Order that within thirty (30) days of the date hereof the Defendant shall produce to the Claimant, Audited Accounts of the Company for the last ten (10) years;

• (i) Costs; and

• (j) Such further and/or other relief as this Honourable Court deems fit.

3 I wish to note that order (h) was complied with and is no longer being pursued by the 1 ^st Claimant. The 1 ^st Claimant makes this Claim in his capacity as shareholder of the 5 ^th Defendant Company, hereinafter referred to as ‘the Company’, and is made pursuant to section 213(A) of the Companies Act. By way of an Order of the Court, the 2 ^nd Claimant was added as party to the proceedings pursuant to Part 19 of the Civil Procedure Rules. The 2 ^nd Claimant in her affidavit is seeking the following Orders:

• (a) A Declaration that the business affairs of the 5 ^th Defendant have been carried on or conducted in a manner that is oppressive and/or unfairly prejudicial and/or disregards the interest of the Claimant;

• (b) A Declaration that the powers of the Directors of the 5 ^th Defendant have been exercised in a manner that is oppressive and/or unfairly disregards the interest of the Claimant;

• (c) An order that I be appointed a director of the 5 ^th Defendant;

• (d) An Order setting aside the increase in share capital of the 5 ^th Defendant on the 13 ^th day of June, 2019;

• (e) An Oder that the Defendants produce to the Claimant the Audited Accounts of the 5 ^th Defendant for the last ten (10) years; and

• (f) An Order that the Register of Members is rectified to reflect the names of the shareholders before the 27 ^th day of November, 2020.

4 It is not in dispute that the Company is a private limited liability company that was incorporated in 1986. Mr. Keith Davis, the father of the Claimants, was the primary founding shareholder and a director of the Company until his death in 2005. The 1 ^st Defendant joined the Company in 1992 as the Financial Controller and Insurance Advisor. In 1994 he became a director and a shareholder. The shareholders of the Company were primarily members of Mr. Keith Davis' family.

5 In 1999 the 1 ^st Claimant was appointed as a director of the Company and remained a director until 2017, where he was not reappointed at a shareholders meeting. The 2 ^nd Claimant was also a director in the Company but that ceased in 1997. The current directors of the Company are the 1 ^st, 2 ^nd, 3 ^rd and 4 ^th Defendants. The 1 ^st Claimant and his father, along with the 2 ^nd Claimant and the 1 ^st Defendant were all shareholders in the Company. Mr. Keith Davis held majority of the shares until 2019.

6 On the 13 ^th day of June, 2019, the share capital of the Company was increased from 8,000,000 to 12,000,000 at an Extraordinary General Meeting. These shares were subsequently issued and allotted to the 1 ^st, 2 ^nd and 4 ^th Defendant. The 1 ^st Defendant is now the majority shareholder of the Company as he now has 51.01% of the issued shares of the Company. The 2 ^nd Defendant holds 10.50% of the issued shares and 4 ^th Defendant holds 5% of the issued shares. With the issuing and allotment of these shares, the Claimants' and their father's percentage in the Company has been reduced. Mr. Keith Davis' shareholding equates to 24.95%, the 1 ^st Claimant's shareholding equates to 3.51% and the 2 ^nd Claimant's shareholding equates to 0.38%. This is one of the actions which the Claimants are seeking to rectify. Their shares in the Company has been diluted and the new shares were never offered to the existing shareholders of the Company. The Claimants did not receive notice of the meeting nor for the issue and allotment of any shares in the Company.

7 The 1 ^st Defendant in his response to the Claim as set out by the 1 ^st Claimant, contended that he along with Mr. Keith Davis had agreed to purchase two properties in May Pen to be used by the Company. It was shortly after this that Mr. Keith Davis became ill and passed away. The 1 ^st Defendant was appointed Chief Executive Officer of the Company in the same year that Mr. Keith Davis died. The purchase of these properties did not take place until after Mr. Keith Davis' death. The 1 ^st Defendant contended that he used his personal money to purchase the properties as the Mr. Keith Davis' estate had no money to proceed with the purchase. The increase and allotment of the shares was therefore done as the Company was unable to reimburse him in cash for this purchase.

ISSUES

8 The issues for my determination are:

• (a) Whether pursuant to section 213A of the Companies Act, the actions of the actions of the Defendants are oppressive, unfairly prejudicial and/or unfairly disregards the interests of the Claimants; and

• (b) If this is so, what, if any, remedy is available to the Claimants.

SUBMISSIONS

9 I wish at this time to thank all Counsel involved in this matter for their very helpful written submissions which provided invaluable assistance to the Court in deciding the issues raised in this claim. I also wish to make it known that I carefully considered all the submissions and authorities before me whether they have been referred to or not.

The 1 ^ST Claimant's Submissions

10 Learned Counsel for the 1 ^st Claimant relied on the case of Sharma Persad Lalla v Trinidad Cement Limited and TCL Holdings Limited and Andy J. Bhajan (unreported decision H.C.A No. Cv. S-852/98 delivered 30 ^th November, 1998 which dealt with oppression. It was submitted that the affairs of the Company and the exercise of the powers of the directors of the Company were carried out in a manner that was oppressive and/or unfairly prejudiced and/or unfairly disregarded the interest of the 1 ^st Claimant. Based on the authorities submitted by Learned Counsel for the 1 ^st Claimant outlined the principles as it relates to establishing a case of oppression as follows:

• (a) The test to determine if an action is or is not oppressive depends on the facts;

• (b) To determine whether or not there has been oppression, the Court must determine what was the reasonable expectation of the parties;

• (c) For there to be oppression the conduct must fall within the concepts of “oppressions,” “unfair prejudice,” or “unfair disregard.” Oppressive conduct connotes burdensome, harsh and wrongful conduct; a wrong of a most serious tort; departure from the standards of fair dealing; lack of probity on the part of those...