Sally Ann Fulton v Chas E Ramson Ltd

• Jurisdiction: Jamaica
• Judge: Mcdonald-Bishop JA,Edwards JA,Dunbar-Green JA (AG)
• Judgment Date: 10 June 2022
• Neutral Citation: JM 2022 CA 69
• Docket Number: SUPREME COURT CIVIL APPEAL NO COA2019CV00077
• Court: Court of Appeal (Jamaica)

BETWEEN

Sally Ann Fulton

Appellant

and

Chas E Ramson Limited

Respondent

[2022] JMCA Civ 21

BEFORE:

THE HON Mrs Justice Mcdonald-Bishop JA

THE HON Miss Justice Edwards JA

THE HON Mrs Justice Dunbar-Green JA (AG)

SUPREME COURT CIVIL APPEAL NO COA2019CV00077

IN THE COURT OF APPEAL

Michael Hylton QC and Bruce Levy instructed by Randolph Cheeks of Levy/Cheeks for the appellant

Ransford Braham QC, Mrs M Georgia Gibson Henlin QC and Ms Nicola Richards instructed by BrahamLegal for the respondent

Mcdonald-Bishop JA

1 This is one in a series of legal proceedings brought by Mrs Sally Ann Fulton (‘the appellant’) concerning the respondent, Chas E Ramson Limited (‘the company’), a family-owned and operated company in Jamaica. The appellant is a member of the Ramson family and one of nine shareholders of the company. There are five directors; the appellant is not one of them. Her brother, Mr John Ramson, is a director and the company's chairman. His wife is Mrs Mary Ramson. Mrs Ramson is not a shareholder or director of the company.

2 The history of the company and the conflict between the appellant and the directors relative to the operations of the company is usefully recorded in the judgment of this court in earlier proceedings cited as Chas E Ramson Limited v Sally Ann Fulton [2021] JMCA Civ 54 (‘ Chas E Ramson v Sally Ann Fulton’) at paras. [5] to [10]. For present purposes, it is not necessary to fully rehearse the factual background leading to this appeal. It suffices to provide a synopsis of the history of the litigation between the parties as the necessary backdrop to the appeal.

Proceedings in the Supreme Court

• a. The appellant's claims

3 The following outlines the series of actions commenced by the appellant in the Supreme Court with respect to the company:

• (i) Claim no 2015CD00107 (‘the first leave application’)

  By this claim filed on 11 August 2015 in the Commercial Division of the Supreme Court with the company named as respondent, the appellant sought leave to bring a derivative action in the name of and on behalf of the company against its directors for breach of their fiduciary duties as directors. The appellant asserted that the directors were using two of the company's assets for their benefit and that this has caused the company to incur significant losses. On 27 May 2016, Sykes J (as he then was) granted the appellant leave to file the derivative claim. The company appealed the decision of Sykes J, but the appeal was dismissed and the judgment of Sykes J affirmed in Chas E Ramson v Sally Ann Fulton. This is referred to as ‘the first leave application’.

• (ii) Claim no 2018CD00342 (‘the oppression action’)

  This claim was filed by the appellant on 7 June 2018 in the Commercial Division of the Supreme Court against the company and its directors. The appellant contended that the directors had carried on or conducted the business affairs of the company and/or exercised their powers as directors of the company in a manner that was oppressive or unfairly prejudicial to her. This claim is referred to as ‘the oppression action’.

• (iii) Claim no 2018HCV03849 (the discontinued leave application)

  On 3 October 2018, the appellant commenced this claim in the Civil Division of the Supreme Court against the company seeking leave to bring a derivative action in the name of and on behalf of the company against Mrs Mary Ramson. The appellant later discontinued this claim.

• (iv) Claim no 2018CD00567 (‘the second leave application’)

  For present purposes, this claim is referred to as the ‘second leave application’ and is the subject matter of this appeal. It was commenced by the appellant against the company on 3 October 2018 in the Commercial Division of the Supreme Court seeking leave to bring a derivative action in the name of and on behalf of the company against Mrs Mary Ramson. The claim was in the same terms as the second leave application. The appellant asserted that the directors of the company made unlawful salary payments and/or grants of benefits in kind to Mrs Mary Ramson for many years under a sham employment arrangement as Mrs Ramson did not perform any service for the company.

• b. The company's application to strike out the second leave application

4 On 16 November 2018, the company applied to strike out the second leave application or, in the alternative, for a stay of the application pending the outcome of the appeal in the first leave application ( Chas E Ramson v Sally Ann Fulton). The application was supported by the affidavit of Kathryn Silvera sworn to on 16 November 2018. The company filed an amended application on 24 January 2019, and a further amended application on 9 May 2019, to amend the orders sought to include the court's permission for the company to file its affidavit in response if the order striking out or staying the second leave application was not granted.

5 The bases for the company's striking out application were that (i) the second leave application amounted to an abuse of process; and (ii) the statement of case disclosed no reasonable grounds for bringing the claim. The company contended that the appellant failed to file evidence in support of the second leave application as her claim was based on inadmissible hearsay statements. It further contended that the allegation of unlawful payments to Mrs Mary Ramson was already being litigated in the oppression action and the multiple proceedings concerning the same subject matter were an abuse of process.

• c. The learned judge's decision

6 The striking out application was heard by Batts J (‘the learned judge’), who on 15 July 2019 arrived at his decision in favour of the company. In his written reasons for judgment, cited as Sally Ann Fulton v Chas E. Ramson Limited [2019] JMSC Comm 32 (‘the judgment’), he made these orders:

• “1) Claim number 2018 CD00567 is struck out.

• 2) Costs to the Defendant to be taxed if not agreed.

• 3) Certificate for two counsel granted.

• 4) Leave to appeal granted.

• 5) Formal order to be prepared filed and served by the Defendant's attorneys at law [sic].”

7 The core reasons for the learned judge's decision to strike out the second leave application were in keeping with the contention of the company. In summary, he held that:

• (a) The subject matter of the second leave application (the alleged unlawful payments to Mrs Mary Ramson) is included and can sufficiently be addressed in the oppression action. The appellant will not be prejudiced. She may receive the relief sought in the derivation action as she could in the oppression action. On the other hand, the company would be in an unfavourable financial position if it had to defend the separate claims with similar facts and allegations before another judge of the court. The company should not be put to that expense. Furthermore, the same issues of fact before different courts “runs the embarrassing risk of different findings”. It is not in the interest of the company to be having multiple actions involving the same facts and allegations (paras. [22] and [23] of the judgment).

• (b) Due to lack of evidence, the appellant has failed to show any reasonable ground for the grant of leave to bring a derivative action. Her use of hearsay evidence to support her claim, as well as the absence of evidence in proof of her assertions, precludes an order granting leave to bring a derivative action (paras. [25] and [26] of the judgment).

The appeal

8 The appellant is seeking an order from this court to set aside orders 1), 2) and 3) of the learned judge on the following grounds:

• “(i) The Learned Judge erred in fact and law in ordering that the Appellant's application for leave to bring a derivative action on behalf of the [company] against Mary Ramson under section 212 of the Companies Act (the ‘Leave Application’) should be struck out as an abuse of process.

• (ii) the learned Judge erred in fact and law in finding that there was not enough evidence for the appellant to proceed with the application for leave to bring the Derivative action in the Supreme Court.

• (iii) The learned Judge erred in fact and law in refusing to exercise his discretion to stay the Application for leave to bring the derivative action pending the outcome of the ‘Oppression Action’ (Claim No. 2018 CD 00342 which is a claim pursuant to section 213A of the Companies Act in which it is alleged that the affairs of the [company] are being conducted in a manner which is unfairly prejudicial and/or oppressive to the Appellant's interests as a shareholder), instead of striking out the application in its entirety.

• (iv) The learned Judge erred in fact and law in finding that the issue of wrongful payments to Mary Ramson and the recovery ought to properly be ventilated and determined in the Oppression Action;

• (v) The learned Judge erred in fact and law in ordering costs to the [company];

• (vi) The learned Judge erred in fact and law in granting a Certificate of costs for 2 Counsel to the [company].”

9 For ease of analysis, the grounds of appeal have been reduced to the following three broad issues:

• (1) whether the learned judge erred in striking out the second leave application (grounds ((i), (ii), and (iv));

• (2) whether the learned judge erred in not granting an order staying the second leave application pending the outcome of the oppression action (ground iii); and

• (3) whether the learned judge erred in ordering costs to the company and in granting a certificate for two counsel (grounds (v) and (vi)).

10 In considering whether the learned judge was wrong to strike out the claim for leave to bring the derivative action with costs to the company, it is imperative to bear in mind the guidance of Lord Diplock in Hadmor Productions Ltd and others v Hamilton and others [1982] 1 All ER 1042 (‘ Hadmor’), regarding the standard of review of an appellate court in treating with the...