Young v Dewar, Cheddesingh and Zip (103) FM Ltd

• Jurisdiction: Jamaica
• Judge: Sykes J
• Judgment Date: 11 May 2017
• Neutral Citation: [2017] JMSC Comm 12
• Docket Number: CLAIM NO. 2015CD00119
• Court: Supreme Court (Jamaica)
• Date: 11 May 2017

[2017] JMCC COM 12

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

COMMERCIAL DIVISION

Sykes, J.

CLAIM NO. 2015CD00119

Between

Ervin Moo Young

Claimant

and

Debbian Dewar

First Defendant

and

Marshanee Cheddesingh

Second Defendant

and

ZIP (103) FM Limited

Third Defendant

Symone Mayhew and Kimberley Morris for the claimant

Tana'ania Small Davis, Sidia Smith and Kerri-Ann Allen Morgan instructed by Livingston Alexander and Levy for the first and second defendant

Elizabeth Salmon instructed by Rattray Patterson Rattray for the third defendant

CIVIL PROCEDURE — APPLICATION FOR RECUSAL — WHETHER JUDGE DISQUALIFIED BY REASON OF ADJUDICATING ON PRIOR MATTER INVOLVING LITIGANT — APPARENT BIAS

IN CHAMBERS

Sykes J

The application

1 Mr Ervin Moo Young has a serious concern. He is of the view that this court as constituted may be biased against him. The reason for this is view is based on two things. First, he refers to a judgment delivered by Sykes J in Joni Ann Young Torres (As Administrator of the Estate of Karl Angus Young) v Ervin Moo Young and others [2016] JMSC Civ 17 (‘the Young Torres judgment’). Mr Moo Young says that in that case I expressly rejected his evidence despite the fact that there was no cross examination. Second, he says that during a case management conference he formed the view that I had ‘already arrived a (sic) determination of the matter.’ He did not set out in his affidavit what it was that I had said and the context in which it was said.

2 The application was heard and refused on May 4, 2017. A brief oral judgment given with a promise to deliver a written judgment. This is now the fulfilment of that promise. Miss Elizabeth Salmon, on behalf of the third defendant, did not support the application. Miss Sidia Smith, on behalf of the second defendants, opposed the application. The court accepted for the most part the submissions of Miss Smith.

3 In respect of the Young Torres judgment Mr Moo Young identified the following paragraphs as those that gave him concern. They are paragraphs 44 and 63 – 69. The court will set them out in full. This is paragraph 44:

The proper analytical approach was stated thus at page 835:

In their Lordships' opinion it is necessary to start with a consideration of the power whose exercise is in question, in this case a power to issue shares. Having ascertained, on a fair view, the nature of this power, and having defined as can best be done in the light of modern conditions the, or some, limits within which it may be exercised, it is then necessary for the court, if a particular exercise of it is challenged, to examine the substantial purpose for which it was exercised, and to reach a conclusion whether that purpose was proper or not. in doing so it will necessarily give credit to the bona fide opinion of the directors, if such is found to exist, and will respect their judgment as to matters of management; having done this, the ultimate conclusion has to be as to the side of a fairly broad line on which the case falls. (emphasis added)

4 And there are paragraphs 63 – 69:

• [63] This court would say the same in respect of determining whether the person acted for an improper purpose. If it is desired to say that Ervin exercised his director's power for an improper purpose then he should have been subjected to cross examination especially since he is the only director alive who was at that meeting. Ervin seems to be saying in his affidavit that he never addressed him mind to the purpose and presumably (the argument is that if he did not address his mind to the issuing of shares) the foundation for the exercise of the power for a proper purpose is non-existent and therefore he did not exercise his power for a proper purpose unless there is contrary evidence or at least evidence that neutralises this possible inference.

• [64] That is not the end of the story. It is important to examine the minutes of the July 8, 2010 board meeting more closely. The minutes record that Ervin and Chad were present. Chad is recorded as the chairman. It also says that the minutes from the previous directors' meeting were read, signed and confirmed. On the crucial issue of allotment of shares, it reads that the directors had discussions and it was agreed that 490,000 shares would be issued to Chad. The return of allotment was signed by Ervin. The date on the return of allotment is September 9, 2010. An examination of the document shows that it is headed return of allotment. At the bottom of the first page the box ticked indicated that the shares in question were newly issued shares. On the second page the particulars of shares indicated that 490,000 were to be issued. The third page indicated that the allottee was Chad. The fifth page bears Ervin's signature and the box ticked that he was a director. What could possibly be complicated about this that Ervin did not or could not understand?

• [65] This court finds it difficult to accept that Ervin did not pass his eyes over the document before he signed for that is the only way he could have signed without appreciating what he was signing. The document is not long. It does not have complicated legal language. In his affidavit Ervin is not saying that Chad misled him as to the nature of the document. He is not even saying he did not know what the document was. He says he signed it ‘without thinking anything of it and without taking any legal advice.’ What does this mean? One meaning is that he did not think the document sufficiently complicated so as to require legal advice. If this is so, the likely reason for this is that the document was plain and simple and consistent with what was agreed by him at the July 8 meeting.

• [66] Indeed in his December 8, 2015 affidavit he is not saying that he did not attend the July 8, 2010 meeting. Ervin's December 8, 2015 affidavit was filed in response to Joni's affidavit dated October 28, 2015. It is Joni's affidavit that exhibits the minutes of the July 8, 2010 meeting. If he did not attend that meeting one would have expected him to say in his December 8, 2015 affidavit that he was not at the July 8, 2010 or if present the minutes do not accurately record what happened. Ervin even filed another affidavit dated December 23, 2015. In that affidavit he does not address the minutes of July 8, 2010.

• [67] He must have appreciated that 490,000 is more than one and that the effect of issue would make him a minority shareholder. The more reasonable conclusion, on the evidence, is that Ervin was at the July 8, 2010 meeting; he took part in discussions; agreed to the allotment and issuing of the shares; he recognised he would become a minority shareholder and had no difficulty with that. This is the best explanation for his statement that he signed ‘without thinking anything of it and without taking any legal advice.’

• [68] Thus based on the evidence it is this court's conclusion that Ervin did address his mind to the allotment and issuing of shares. Ervin has not said that he has never read the articles of association. He may not know all the details but he has not professed a complete ignorance of either their existence or contents.

• [69] In the absence of clear evidence to that effect this court is not able to infer that Ervin and Chad exercised the power to issue the shares for an improper purpose. As Mr Wood pointed out why should a lack of evidence lead to an adverse inference of lack of proper purpose when the burden is on Joni to establish that the directors did not issue the shares for a proper purpose? If it were otherwise then it would mean that virtually every decision by directors to issue share would be prima facie for an improper purpose unless they prove otherwise. Nothing that this court has indicates that this is how the law approaches the matter. The court therefore declines to find that the shares were issued for an improper purpose.

5 The passages cited were in the context of adjudication on claim in which it was being suggested that the shares in ZIP (103) FM Ltd were allotted for an improper purpose. Mrs Young Torres, in her capacity as Administratrix of the Estate of Mr Karl Young, sought to have the allocation of share to Mr Chad Young set aside. Mr Ervin Moo Young, based on the documents in the Young Torres case, was identified as one of the persons who signed the document allotting the shares. He provided an affidavit which did not deny signing the document but that he signed it without giving it much thought. The court was therefore analysing what he meant by that expression given that there was no cross examination his affidavit. In the absence of any admission that Mr Moo Young was part of an allotment of shares for an improper purpose and given that the only other director who participated in the allotment has died the court had to say whether Mrs Young Torres had made good her claim.

6 It is well established law that judicial officers of superior courts of record ought to give reasons for decisions and indicate his or her assessment of the evidence placed before the court. This was what the court was doing and has done in the Young Torres case. That is not the end of the matter because Mr Moo Young has now raised the issue of bias because this court is to hear a connected matter, this time with ZIP (103) FM Limited, in which Mr Moo Young is a litigant. It is now time to turn to the law on this area.

The legal position

7 In this case Mr Moo Young is not alleging actual bias. No particulars of actual bias have been put forward. That leaves apparent bias the test of which is ‘whether a fair-minded and informed observer, considering the facts would conclude that there was a real possibility that the tribunal was biased’ ( Porter v Magill [2002] 1 All ER 465).

8 There are two cases from the Court of Appeal of England and Wales where the issue in this case has been considered, namely, whether a...