Robert B. Millard v Eleuthera Properties Ltd
| Jurisdiction | Bahamas |
| Court | Supreme Court (Bahamas) |
| Judge | Madam Justice Deborah Fraser |
| Judgment Date | 26 May 2023 |
| Docket Number | 2018/CLE/gen/01348 |
In THE MATTER of a Share Purchase Agreement dated the 30 th June 2007 and made between Eleuthera Properties Ltd and Robert B. Millard
and
IN THE MATTER of the exercise of a put option set out at Article 12 of the aforementioned Share Purchase Agreement
Her Ladyship The Honourable Madam Justice Deborah Fraser
2018/CLE/gen/01348
COMMONWEALTH OF THE BAHAMAS
IN THE SUPREME COURT
COMMON LAW AND EQUITY DIVISION
Application for Further and Better Discovery — Order 24 Rules 3 and 7 of the Rules of the Supreme Court, 1978 — Prima Facie Case —— Documents in party's possession, custody or power — Relevance of Specified Documents — Subsidiary Company in possession of documents — Agency
Mr. Brian Simms KC with Mr. Wilfred P. Ferguson Jr. for Robert B. Millard
Mr. Robert Adams KC with Mr. Edward J. Marshall II for Eleuthera Properties Limited
This is an application for Further and Better Discovery filed herein on 31 May 2022 by the Claimant, Mr. Robert B. Millard (“Mr. Millard”).
Mr. Millard is a shareholder in the Defendant Company, Eleuthera Properties Ltd. (“EPL”).
EPL is a registered company incorporated under the laws of the Commonwealth of The Bahamas and the owner of approximately Four Thousand Six Hundred (4,600) acres of land situated in South Eleuthera, The Bahamas.
On 30 June 2007, the parties entered into a Share Purchase Agreement (“SPA”) where Mr. Millard agreed to purchase and EPL agreed to sell Ten Thousand (10,000) ordinary shares in the capital of EPL
Clause A of the SPA states:
“The Company has an authorized share capital of Four Hundred Thousand Dollars in the currency of the Commonwealth of The Bahamas (B$400,000.00) divided into Four Hundred Thousand (400,000) ordinary shares of B$1.00 each, of which One Hundred Sixty Six Thousand Five Hundred (166,500) have been issued and are fully paid or credited as fully paid and the remaining Two Hundred Thirty Three Thousand Five Hundred (233,500) ordinary shares in the authorized capital of the Company have not been issued or allotted.”
Clause 11.1 of the SPA provides:
“If the Company shall within two (2) years from the Closing Date, issue (other than to employees or contractually retained professional consultants of the Company as part of a formalized compensation plan) any ordinary shares at a price less than the Share Price, the Company shall (a) immediately notify the Purchaser in writing with respect thereto within fifteen (15) days of such issuance of shares (the Company Notice) and (b) immediately issue and grant to the Purchaser, free of any cost, stamp duty or charge of any kind or nature whatsoever, an amount of additional ordinary shares such that the Purchaser shall own and hold all of his ordinary shares at an effective price per share (for all of the Purchaser's shares) equal to the lowest price at which such new shares are issued.”
Subsequently and after speaking with the Chairman of the Sunshine Group of Companies, Sir Franklyn Wilson (“Mr. Wilson”), Mr. Millard invested an additional One Million Dollars ($1,000,000.00) into EPL resulting in Mr. Millard being transferred an additional Five Thousand (5,000) ordinary shares in EPL.
Clause 12 of the SPA provides:
“12.1 If the Purchaser retains at least Ten Thousand (10,000) shares in the Company for a period of at least ten (10) years from the Closing Date, the Purchaser shall have the option during the Option Period to sell all or any portion of his shares in the Company to the Company at a Strike Price per share equal to One Hundred and Twenty-five per cent (125%) of the Share Price.
12.2 The Purchaser shall exercise the Put Option by serving on the Company during the Option Period a Put Notice specifying the number of shares to be sold and the price payable for such shares. Upon exercise of the Put Option by the Purchaser, the Company shall be obliged to the purchaser the Option Shares at the Strike Price.
12.3 The Strick Price may, at the Company's option, be paid by any one of the following methods:
a) Conveyance of good and marketable fee simple title to land located in South Eleuthera of equivalent value to the Option Shares, free from any liens, mortgages or encumbrances (with respect to which, no less than five (5) acres shall be specifically identified and selected by the Purchaser, and which at the Purchaser's sole and absolute discretion, may consist of contiguous sand beachfront in the “Jack's Bay” area (if then still unsold to an Unaffiliated Investor) or such other parcel(s) of contiguous sandy beachfront of land then identified and selected by the Purchaser elsewhere in Eleuthera and then owned by the Company and/or any Affiliate thereof). The Purchaser's selection of land as aforesaid shall take place within a reasonable time following the Purchaser's receipt of notification from the Company that the Company intends to redeem the Option Shares by way of a transfer of land or a combination of cash and land and the land thus selected shall be appraised in the manner set out in clause 12.4 and the acreage reduced accordingly if its value exceeds the portion of the Strike Price to be paid in land.
b) ………
c) ………
12.4 To the extent that the Company elects to pay the Strike Price in whole or in part by a conveyance of land to the Purchaser, the value of such land shall be determined by an independent appraisal from a reputable professional appraiser licensed by the Bahamas Real Estate Association and mutually agreed on by the Company and the Purchaser….
12.5 ……
12.6 The Put Option shall expire: if it is not exercised by the Purchaser within the Option Period; or thirty (30) days after the formal listing and unrestricting trading of the ordinary shares of the Company…”
On or about 13 July 2017, Mr. Millard, in compliance with Clause 12 of the SPA gave written notice of his exercise of the Put Option for all shares, which he claims totals Seventeen Thousand Five Hundred (17,500) shares by virtue of the Put Notice to EPL. Mr. Millard claims that the additional Two Thousand Five Hundred (2,500) shares (at $400 per share) were given to him under similar terms to the initial Ten Thousand (10,000) ordinary shares. This, Mr. Millard claims, was orally agreed between himself and Mr. Wilson.
EPL refused to acknowledge the additional Two Thousand Five Hundred (2,500) shares and stated that it would honor the Fifteen Thousand (15,000) ordinary shares issued.
In anticipation that the Strike Price of the Put Option would be satisfied in whole or in part by conveyance of land to Mr. Millard, the parties jointly engaged Bahamas Realty Ltd. for a valuation on certain lots at Jack's Bay on or about January of 2018.
On or about 7 May 2018, a final joint appraisal report (“Report”) for a portion of Jack's Bay was prepared. It represented that:
“A detailed request response from a representative of the Defendant provided the following data with regard to transactions of lots in the Jack's Bay development that have occurred within the past year. We believe this data to be accurate and have relied upon as such.
Sales in Jack's Bay provided from the Defendant's representative.
Lot Number BF-2 in Jack's Bay in March 2018 for $1,000,000 gross…
Lot Number BF-4 in Jack's Bay in February 2018, for $1,000,000 gross…
Lot Number BF-5 in Jack's Bay in February 2018 for $1,000,000 gross…
Lot Number BF-V1 in Jack's Bay in February 2018 for $1,000,000 gross…
Note: Three additional transactions were provided for ocean view lots that sold in 2018 with an approximate average sales price of $6,250 per lineal foot. Jack's Bay beach front lot sales number approximately 5 in the past six months indicating an absorption rate of approximately 10 units per year”
The concluding summary of the Report was amended to include an estimate of how many lots would be required to satisfy a sum of USD$7,500,000.
The Report also stated:
“As per your request, please find a chart laying out the task of how many lots would be required to satisfy the $7,500,000 loan under the current analysis….
However, it is important to note that we are drawn back to the transactions reported at the subject property, which is identical to all characteristics of comparison and thus much of our weight is based on these transactions…”
On or about 21 June 2017, pursuant to Clause 12.3(a) of the SPA and in reliance of the Report, Mr. Millard by email via his agent purportedly identified lots 8–22 for the transfer of land in satisfaction of the USD$7,500,000.00 of the Put Option. This, however, is denied by EPL. It avers that Mr. Millard never definitively identified which lots he would accept in satisfaction of the USD$7,500,000.00 debt.
On 20 November 2018, Mr. Millard brought an action by way of Originating Summons (but by Order of the Honourable Justice Ruth Bowe-Darville, 03 February 2021, the matter was continued as if begun by Writ of Summons) for breach of contract. He claims, inter alia, that (i) EPL failed to act in good faith by instructing the independent appraiser to add information to the report without Mr. Millard's knowledge; and (iii) EPL inaccurately, fraudulently and/or negligently represented to him that 5 lots in Jack's Bay was sold within 6 months which significantly influenced the Report.
Mr. Miller claims various reliefs.
EPL filed a Defence and Counterclaim on 09 March 2021 denying the allegations made by Mr. Millard and puts him to strict proof.
Further pleadings were filed by the parties. For the purposes of this judgment, however, the Court will only focus on subsequent filings relevant to the application for Further Discovery.
The Honourable Senior Justice Indra Charles made an order on 07 April 2022 (filed 19 April 2022) directing the parties to, ...
To continue reading
Request your trial