Hayward et Al
| Jurisdiction | Bahamas |
| Judge | Adderley, J. |
| Judgment Date | 10 November 2008 |
| Court | Supreme Court (Bahamas) |
| Docket Number | Common Law and Equity Division CLE/GEN/FP 0223A of 2006; Common Law and Equity Division CLE/GEN/FP 223B of 2006 |
| Date | 10 November 2008 |
Supreme Court
Adderley, J.
Common Law and Equity Division CLE/GEN/FP 0223A of 2006; Common Law and Equity Division CLE/GEN/FP 223B of 2006
Julian Matins, Q.C., Esq.; Frederick Smith, Esq. with him for the plaintiffs.
Stephen Moverley Smith, Q.C., Esq.; Charles Mackay, Esq. and Maurice Glinton, Esq. with him for the 1st defendant.
Roger Ellis, Q.C., Esq.; Andre Feldman, Esq. with him for 2nd defendant.
Thomas Evans, Q.C., Esq.; Khalila Dorsett with him for the 3rd and 4th defendants.
Alan Steinfeld, Q.C., Esq.; Alfred Sears, Esq. with him for the 5th defendant.
Brian Moree, Esq.; Timothy Eneas, Esq. with him for the 6th defendant.
Shane Doyle, S.C., Esq; Sir Orville Turnquest, Q.C., Esq. with him for the 7th defendant.
Criminal practice and procedure - Pleadings — Application to strike out — Amendment of pleadings — Whether undue prejudiced would be caused if amendments allowed.
This is a hearing of applications on behalf of the defendants to strike out various pleadings pursuant to Order 18, rule 19 of the Rules of the Supreme Court and on the part of the plaintiffs to amend their originating summons filed 12 November 2006 (“the Originating Summons”). The applications are set out below:
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(1) for the plaintiffs by summons filed 1 February 2008 to amend the Originating Summons;
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(2) for the second defendant, Hannes Babak (“Mr. Babak”) by summons filed 16 March 2007 to strike out the action pursuant of Order 18, rule 19 of the Rules of The Supreme Court;
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(3) for the sixth defendant, Seashell Investments ‘Limited (“Seashell”) by summons filed 8 February 2008 pursuant to Order 18, rule 19 of the Rules of the Supreme Court and the inherent jurisdiction of the Court to strike out paragraphs 21, 22, 23, 52, and 53 of the Points of Claim filed 11 December 2007 on certain grounds;
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(4) for the seventh defendant, Intercontinental Diversified Corporation (“IDC”) by summons filed 7 August 2007 to strike out the action pursuant to Order 18, rule 19 of the Rules of the Supreme Court or further or alternatively:
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(a) That pleadings be ordered pursuant to Order 28, rule 4 or in the alternative the proceeding FP/223B/06 be converted to a court action pursuant to Order 28, rule 4, noting in particular Order 28, rule (83);
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(b) An order that Caroline St. George be removed from the proceeding as an improper party pursuant to Order 15, rule 6(2)(a) of the Rules of the Supreme Court;
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(5) for the first defendant Sir Jack Hayward (“Sir Jack”), filed 15 October 2008 pursuant to Order 18, rule 19 of the Rules of the Supreme Court and/or the inherent jurisdiction of the Court that:
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(1) proceeding 2006/CLE/GEN/FP223B be struck out as against the first defendant,
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(a) further or alternatively certain parts of the plaintiffs points of claim be struck out.
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By Order filed 30 May 2007 Allen SJ bifurcated this Action into two parts as follows:
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37. For all of the aforementioned reasons, I make the following orders to ensure the fair, expeditious and economic trial of the issues in this case:
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…3 That Originating Summons filed herein on 12 November 2006 be treated as follows:
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i. Paragraphs one through six (1-6) inclusive, which relate to the ownership of IDC and the fifth defendant, be continued as if begun by Writ pursuant to Order 28 rule 8 of the Rules of the Supreme Court. That action shall have a file reference CLE/gen/FP/0223A/06.[“the Ownership Proceedings'
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ii. Paragraphs seven through thirteen (7-13) inclusive, which relate to corporate management issues shall be continued, as begun, by originating summons and shall have a file reference 0223/06CLE/gen/FP/ (“the Oppression Proceedings”]
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The trial in the Ownership Proceedings has been completed and Allen SJ made an order on 30 August 2007 whereby she determined that fifty per cent (50%) of the shares in IDC (“the Hayward Family Interest”) was owned by Seashells and fifty per cent (50%) (“the Estate's Interest”) was owned by FMS as bare trustee for the estate of Edward St. George (“the Estate”).
The trial of the Oppression Proceedings is set to commence 15 December 2008 and the plaintiffs seek to amend the Originating Summons and the points of claim relating thereto, but the defendants pursuant to Order 18, rule 19 of the Rules of the Supreme Court wish to strike out the Oppression Proceedings or alternatively strike out portions of the points of claim.
The basis for the relief claimed in the Oppression Proceedings is that the affairs of the third and fourth defendants (“the Port Companies”) have been conducted in an oppressive way within the meaning of section 280 of the Companies Act, 1992 (“the Act”). The claims are set out in paragraphs (7) – (13) of the Originating Summons as follows:
“Management of Port Group Limited and the Grand Bahama Port Authority Ltd.
(7) A declaration that the first and second defendants have conducted the business and affairs of the third and fourth defendants and their affiliates in a manner that is unfairly oppressive to and unfairly disregards the interests of the plaintiffs and the interests of the third and fourth defendants, their employees and licensees.
(8) An order removing the Second defendant from any and all positions he may have with the third and fourth defendants and their affiliates
(9) An order appointing a receiver-manager to manage the affairs of the third and fourth defendants and their affiliates pending the appointment of a managing director of the said companies
(10) A declaration that the second defendant has no contract of employment with the third and fourth defendants or any of their affiliates, further or alternatively setting aside any such contract.
(11) Directions regarding the sale or purchase of shareholdings in IDC by one shareholder to another.
(12) An order requiring the receiver-manager appointed under (9) above to conduct an investigation into and produce a report on the financial affairs of the third and fourth defendants and their affiliates since June 2006 (the date the second defendants assumed control of the said companies), including any and all distributions made and/or concessions granted to the Second defendant, his associates and affiliates and any companies in which he has a direct or indirect interest.
(13) Such further or other relief as the Court may think fit to grant pursuant to its powers under section 280(3) of the Companies Act, 1992 and/or the inherent jurisdiction of the Court.
This relief is sought pursuant to s. 280 of the Companies Act, 1992 and the inherent jurisdiction of the Court.”
Paragraph (7) sets out the claim of oppression and paragraphs (8) – (13) detail the relief sought by the plaintiffs should the Court find that there was in fact oppression under Section 280.
None of the proposed amendments to the Originating Summons or the points of claim put forward any change to paragraph (7), except for the amendment proposed by the summons filed 1 February 2008 to add after the word “affiliates” the words:
“(including Fiduciary Management Services Limited and Intercontinental Diversified Corporation)”
The plaintiffs' claim as set out above in the pleadings is distilled. in paragraph 26 of their skeleton arguments delivered at the hearing on 27 October 2008 as follows:
“26 the oppression complained of is the scheme, concocted and executed by Hayward and Mr Babak, to exclude the Estate and Lady Henrietta (its representative) from participating in, and [deriving] any benefit from, PGL, GBPA and their affiliates (i.e. IDC) ….”
The alleged acts of oppression are set forth in the points of claim and an effort is made in paragraphs 41 and 43 to plead that the oppressive acts come within the wording of section 280 (2) of the Act by stating the following:
“41 Each of the facts and matters set out in paragraphs 27 to above constitutes either (i) an act or omission of, and/or (ii) conduct or carrying on of the business or affairs of, and/or (iii) an exercise of the powers of the directors of PGL, GBPA and/or /DC which was oppressive of and/or unfairly oppressive of and/or unfairly disregarded the interest [of the Estate] and/or Lady Henrietta St George within the meaning of s. 280(2) of the Act.
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43. Each of the facts and matters set out in the above paragraph also constitutes oppressive and/or unfairly prejudicial conduct of the business and affairs of PGL, GBPA and/or IDC within the meaning of sub-section 280(2)(b).”
The claim that the Estate was the victim of the oppressive acts is set out at paragraph 45 as follows:
“45. All such acts and omissions as are set out above were oppressive or unfairly oppressive of or unfairly disregarded the interests of the Executors as shareholders:”
It is not expressly alleged in the Originating Summons or in the points of claim that the acts or omissions of the Port Companies or of any of its affiliates were oppressive or unfairly oppressive of, or unfairly disregarded the interests of any director, including Lady Henrietta St. George (“Lady Henrietta”), or officer in their capacity as such.
As stated in paragraph 5 of the points of claim FMS is a Cayman Islands Company incorporated in 1982, and in paragraph 11 IDC is stated to be a Cayman Island Company incorporated on 21st November 1984. No allegation is made either in the Originating Summons or the proposed amendments that any of these companies have registered as foreign companies under the Act. Counsel for the plaintiffs conceded earlier in these proceedings that Seashell having been incorporated in The British Virgin Islands is also a foreign company that has not been registered under the Act.
As submitted by counsel for the plaintiffs the court should exercise its discretion to strike out an action only...
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