Sally Fulton v John Ramson
| Jurisdiction | Jamaica |
| Judge | Palmer Hamilton J |
| Judgment Date | 15 October 2021 |
| Court | Supreme Court (Jamaica) |
| Docket Number | CLAIM NO. 2018 CD 00342 |
[2021] JMCC COMM 37
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
CLAIM NO. 2018 CD 00342
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Mr Michael Hylton QC and Miss Stephanie Ewbank instructed by Myers, Fletcher & Gordon for the claimant
Mrs Georgia Gibson Henlin QC, Miss Stephanie Williams and Miss Nicola Richards instructed by Henlin Gibson Henlin for the 1 st, 2 nd, 3 rd, 4 th and 5 th defendants
Mr Ransford Braham QC and Miss Carissa Mears instructed by BRAHAMLEGAL for the 6 th defendant
Civil Practice and procedure — conduct which is oppressive or unduly prejudicial or unfair — Section 213A of the Companies Act — Summary judgment — Rule 15.2 of CPR — Beneficial interest in shares — whether Buy Out Order appropriate.
There are four applications before this court. Two filed by the claimant, one by the 1 st to 5 th defendants and the other by the 6 th defendant.
The claimant's applications are outlined hereunder:
i. an application for share purchase orders dated July 24, 2020; and
ii. an application for the appointment of an independent accountant dated July 30, 2020.
The applications of the defendant directors and the company are substantially the same, both seeking, among others, orders for summary judgment. The applications are dated November 6, 2020; they were filed on November 9, 2020.
I will continue to refer to the parties as claimant (Mrs Fulton) and defendants (whether 1 st to 6 th) to avoid confusion given the number of applications which have been filed and the consequent changes in the designation of applicant.
It is noteworthy that the applications stem from a main claim; I will therefore provide a brief background to aid understanding.
Chas E. Ramson Limited (‘Chas’ or ‘the company’) is a limited liability company owned by the Ramson family. The principal activities of the company are the sale and distribution of merchandise. It commenced its operations in or around 1922. Chas went through a number of changes to its structure. In 1984 it became an Industrial and Provident Society (‘IPS’) and so continued until 2001. Thereafter, it was incorporated as a limited liability company on 26 November 2001. John Ramson (‘John’), the 1 st defendant, was the managing director of the company. All the director defendants are shareholders in the company.
The director defendants of Chas are the relatives of Mrs Fulton. Mrs Fulton is the sister of John and Susan Silvera, the 2 nd defendant; she is the aunt and in law of the other directors of the company. Unlike the director defendants, Mrs Fulton has not been involved in the operations of the company and she has averred that in or around July 2014, she discovered for the first time that she has shares in Chas. Mrs Fulton is generally displeased with how the affairs of the company have been conducted. She has complained about the following:
i. Her deliberate exclusion from the company by the director defendants;
Mrs Fulton asserts that she has been excluded from participating in the affairs of the company from inception to present date. She states that prior to 2014, she was not sent any notices of annual general meetings. She further stated that a resolution to have her daughter, Anne Fulton, appointed to the Board of Directors was rejected by the directors.
ii. The failure to provide her with information in respect of the company;
According to Mrs Fulton, despite several requests the director defendants have refused to provide details of the terms of the service contracts between each of the directors and the 6 th defendant. They have also failed to provide other pertinent information to which she is entitled as a shareholder.
iii. Unlawful director payments;
Mrs Fulton alleges that for the accounting years 2008 to 2014, the director defendants were paid emoluments in excess of $70,000,000.00 from the 6 th defendant without the requisite approval via a general meeting and in breach of Article 79 of the 6 th defendant's Articles of Association.
iv. Unlawful benefits; and
She further states that the director defendants have at all material times received payments from the 6 th defendant for their personal expenses to which they are not lawfully entitled.
v. The company's no dividend policy
She also laments that since the incorporation of the 6 th defendant to 2015, she has not received any dividend or any other benefit from her shares.
Mrs Fulton's grievance with the above led to her filing a claim form and particulars of claim 1 alleging that the 1 st to 5 th defendants have carried on or conducted the business affairs of the 6 th defendant and/or exercised their powers as directors of the 6 th defendant in a manner that is oppressive or unfairly prejudicial to her interest as a shareholder. Her claim was instituted pursuant to sections 213 A (2) of the Companies Act (‘the Act’).
She has claimed the following:
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i. An order compelling the defendants to produce and make available to the claimant all financial statements and other accounting and banking
records for the past 15 years.
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ii. An order that a qualified and independent forensic accountant be appointed to audit the financial documents of the 6 th defendant.
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iii. An order that the defendants instruct KPMG to provide the financial information and documents requested by Levy Cheeks (formerly Cheeks & Co.) on behalf of the claimant.
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iv. A declaration that all annual general meetings of the 6 th defendant prior to 2014 are invalid and of no effect.
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v. An order that all payments made to the 1 st, 2 nd, 3 rd, 4 th and 5 th defendants by way of directors' emoluments from the 6 th defendant are immediately repaid to the 6 th defendant together with interest at a rate of 19.75% per annum.
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vi. An order that Ann Fulton or her nominee be appointed as a director of the 6 th defendant.
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vii. An order that the 6 th defendant serve the claimant with all future notices convening general meetings of the 6 th defendant.
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viii. Costs.
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ix. Any further or other relief that this Honourable Court deems just.
In her particulars of claim, Mrs Fulton has outlined the particulars of oppression or unfair prejudice as follows:
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i. Deliberately failing to send the claimant any notices of annual general meetings of the 6 th defendant for the period 2001 to 2014.
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ii. Deliberately failing to send the claimant copies of financial statements or any other financial information relating to the affairs of the 6 th defendant prior to approving same at the annual general meetings for the period 2001 to 2014.
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iii. Deliberately failing to provide the claimant with other pertinent requested information regarding the 6 th defendant's affairs, including the terms of service contracts and information on benefits paid by the 6 th defendant.
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iv. Deliberately excluding the claimant from participating in the management of the 6 th defendant.
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v. Causing and/or permitting unlawful director payments to be paid by the 6 th defendant to the director defendants without the requisite approval in general meetings in breach of Article 79 of the 6 th defendant's Articles of Association.
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vi. Causing and/or permitting unlawful benefits to be paid by the 6 th defendant to third parties.
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vii. Deliberately operating a restrictive dividend policy so that the claimant cannot benefit financially as a shareholder of the 6 th defendant.
The director defendants and the company filed defences 2 vehemently denying many of Mrs Fulton's allegations. The defences are quite similar. In addition to filing further amended defences, the defendants have all filed counterclaims.
The 1 st defendant sought the following orders by way of counterclaim:
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i. A declaration that the claimant owns seven (7) shares in the 6 th defendant company.
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ii. An order that the claimant's shares in the 6 th defendant be valued by an independent chartered accountant to be agreed between the parties and failing agreement a chartered accountant appointed by the court from a list of three submitted to the Registrar of the Supreme Court on behalf of all the defendants and the claimant.
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iii. An order that the 1 st defendant and/or the shareholders be permitted to purchase the shares in accordance with Article 29 A (ix) of the Articles of
Association of the 6 th defendant and the share value provided by the appointed chartered accountant. -
iv. An order that if the shareholders are unable to purchase the shares, the 6 th defendant be permitted to do so for the price per share provided by the appointed chartered accountant.
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v. Costs to the 1 st defendant to be taxed if not agreed.
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vi. Such further and/or other relief and/or directions as the court deems necessary.
The 2 nd defendant sought the following orders by way of counterclaim:
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i. A declaration that the claimant has only seven (7) shares in the 6 th defendant company.
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ii. An order in any event that the claimant's share (s) in the 6 th defendant be valued by an independent chartered accountant appointed by the court from a list of three submitted to the Registrar of the Supreme Court on behalf of all the defendants and the claimants.
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iii. An order that the 2 nd defendant and/or the shareholders be permitted to purchase the shares in accordance with Article 29A (ix) of the Articles of Association of the 6 th defendant and the share value provided by the appointed chartered accountant.
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iv. An order that if the shareholders are unable to purchase the shares, the 6 th defendant be permitted to do so for the price per share provided by the appointed chartered accountant.
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v. Costs to the 2 nd...
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