The Tenesheles Trust et Al v Bdo Mann Judd et Al
| Jurisdiction | Bahamas |
| Judge | Adderley, J. |
| Judgment Date | 30 October 2009 |
| Court | Supreme Court (Bahamas) |
| Docket Number | CLE/GEN 399 of 2004 |
| Date | 30 October 2009 |
Supreme Court
Adderley, J.
CLE/GEN 399 of 2004
Mr. Maurice Glinton, for the plaintiffs
Ms. Metta MacMillan-Hughes, Mr. Marco Turnquest with her, for the first and second defendants.
Mrs. Diane Stewart, Ms Justine Cleare with her, for the third defendant.
Mr. David Higgins, Ms Bernadette Butler and Mrs. Ingrid Cooper-Brooks with him for the Attorney General as Amicus Curiae on behalf of the Registrar General
Company law - Striking company off Register — Whether Registrar could restore a company to the IBC register if it had been struck off for non—payment of fees — No express provision in IBC Acts, 2000 — The courts had no power to substitute its will for that of the Legislature where the language of the relevant provisions of a statute were clear and unambiguous — When the plaintiffs filed writs and statements of claim seeking damages from the defendants they lacked juristic capacity as they had not been legally restored to the Register — Writ and statement of claim struck out and action dismissed.
The applications seek to strike out the writ of summons filed herein on 7 April 2004 under Order 18, rule 19 of the Rules of the Supreme Court on the ground that it is scandalous, frivolous or vexatious and under its inherent jurisdiction because it is an abuse of the process of the court. Alternatively, the defendants apply to have the judgments in default of defence entered on 30 June 2004 set aside and the order for assessment of damages stayed on the ground that each of the defendants has a good defence.
The applications on behalf of the first and second defendants are by summons filed 29 April, 28 June and 9 July 2004 and those on behalf of the third defendant by summonses filed 5 July, 19 October and 15 December 2004. They were re-filed on 25 September 2007 upon direction of the Listing Officer.
The writ of summons was filed 7 April 2004. A memorandum of appearance of the third defendant was filed 20 April 2004. A memorandum of appearance of the first and second defendants was filed 23 April 2004. A statement of claim was filed 10 June 2004. The writ and statement of claim sought damages against the defendants for breach of contract, breach of fiduciary duty, loss caused by breach of confidentiality and conflict of interest, misrepresentation, repayment of monies paid to them, exemplary damages, interest and costs. The primary claim is that the defendants wrongfully induced the Securities Commission of The Bahamas to place the 35 underlying companies which comprise The Hawthorne-Sterling Family of Funds (“the Fund Companies”) into a “protective liquidation”. This liquidation according to the plaintiffs was carried out by the defendants in such a way that it stripped the Fund Companies of their monetary assets which primarily went by way of payment of fees to the defendants, their servants and agents.
The defendants having filed summonses to strike out the action requested by letter to the plaintiffs that the filing of defences abide the outcome of the strike out action. They also filed summonses in which they requested an extension of time in which to file their defences.
The plaintiffs refused the extension and entered a default judgment against the first defendant for damages to be assessed plus interest and costs and against the second defendant for $208,850.30, plus interest and costs. Preliminary Issues
The defendants raise two preliminary issues:
1) the first plaintiff “the Tenesheles Trust” lacks juristic capacity
2) the second plaintiff lacked juristic capacity at the time the action was commenced having been struck off the Register of Companies (“the Register”) for non-payment of fees and the purported restoration to the Register by the Registrar General (“the Registrar”) is a nullity.
The court invited the Office of the Attorney General to present submissions as amicus curiae on behalf of the Registrar on the second of the preliminary issues.
For the reasons given below I strike out the writ and statement of claim and dismiss the action.
The defendants maintain that the Fund Companies which have allegedly suffered loss must be parties to the action and that the third plaintiff who is a director and trustee of the Fund Companies cannot sue for the reflective loss allegedly sustained by them. Nor does she, they contend, have a cause of action in her own right because all of the alleged loss was sustained in her capacity as trustee and director of the Fund Companies. Nor according to the defendants, can she sue in a representative capacity because she has not been so authorized by the companies.
The defendants raised the further ground of issue estoppel. They contend that although the action is not res judicata within the principle of Henderson v. Henderson nevertheless the factual matrix is identical to that raised in Supreme Court Action No 585/2000 on its Equity Side: Securities Commission of The Bahamas v. Alastair-Prescott Ltd et al (“Action 585/2000”) where Lyons, J., as he then was, considered the same issues as those in the instant case and made findings of fact and dismissed the applications. The factual matrix, say the defendants, is also applicable to actions #889 of 2001 relating to the execution of a related Seizure Order dated 26 July 2001, and Public Action No 2004/Pubcon/00003. They submit further that on principle the findings of fact arising out of the post judgment summons, including what he called a final adjudication, that the second defendant's actions as receiver were entirely proper, are binding on the court because a final appeal to the Privy Council has already been denied by order of the Court of Appeal on 10 October 2007 in Appeal No. 85 of 2002. In the latter case the second and third plaintiffs were the 17th and 37th defendants respectively. In a post judgment summons taken out at the instance of the plaintiffs they contend that Lyons, J.'s decision in Action No 585 of 2000 is per incuriam because among other things it was based on evidence not before the court and because it went outside the remit of the Court of Appeal of their decision handed down on 10 October 2007. He also points out that Lyons J refused to grant a stay of Action No 2004/Pub-con/00003 because he determined that it concerned different legal issues.
During the course of the hearing I already upheld the submission of the defendants that the first defendant has no juristic capacity. It is trite law that a trust lacks legal capacity to sue; a trust is an arrangement not an entity. In Freeport Licencees and Property Owners Association (a Non-profit Trust …) v. The Grand Bahama Port Authority, Limited et al the Court of Appeal (Osadebay, Longley and Blackman, JJ.A.) dismissed the appeal made against the decision of Adderley, J. where he held that the appellants Freeport Licencees and Property Owners Association purporting to be a trust was not a body corporate and therefore lacked the legal capacity to constitute or maintain the action in its name.
Hawthorne-Sterling Family of Funds Inc, intended to be the second plaintiff, was struck-off the Register for non-payment of fees on 31 August 2002. The writ was filed 7 April 2004. It was purportedly restored to the Register by the Registrar on 7 June 2004. The International Business Companies Act, 2000 as amended by Statutory Instrument No. 128 of 2001 was the relevant Act in effect at the time.
To place the power of the Registrar to strike off and to restore in context counsel for the defendants helpfully traced the evolution of the International Business Companies Act.
The International Business Company (“IBC”) was introduced as a corporate vehicle in The Bahamas by The International Business Companies Act, 1989 (“the 1989 IBC Act”) which commenced on 15 January 1990.
In the 1989 IBC Act in separate sections the Registrar had the power to strike-off IBC's:
1) under section 97(4) for failing to comply with prescribed requirements.
2) under section 97(6) for failing to pay licence fees
If the Registrar had struck off an IBC certain persons could apply to the court (section 98(1)) to have it restored if it was struck off under s. 97(4). Alternatively they could apply to the Registrar (section 98(3)) if it was struck-off for non payment of fees under section 97(6).
The court had the power to restore a company that had been struck off for failing to comply with the prescribed requirements [section 98(2)]. The Registrar had the power to restore a company which had been struck off for non payment of fees [section 98(3)].
The 1989 IBC Act was repealed by Statutory Instrument No. 45 of 2000 except for part X which dealt with fees and penalties. This brought into force the International Business Companies Act, 2000 (“the 2000 IBC Act”) on 29 December 2000. That Act was amended by Statutory Instrument No. 19 of 2001 and later by No. 128 of 2001. Although there were two subsequent amendments it is the IBC, Act 2000 as amended up to S I No. 128 of 2001 that was in force when the second defendant was struck-off the Register for non payment of fees. Part X was repealed on 1 January 2002.
Like the 1989 Act, the 2000 IBC Act provided for a company to be struck off by the Registrar on two separate grounds:
1) under section 164(3) if he reasonably believed that the company no longer satisfied the prescribed requirements of an IBC;
2) under section 164(5) if he was of the opinion that the company was in default of paying any prescribed fee
Certain persons were enabled to apply to have it restored.
Both the court(section 166(2)) and the Registrar (section 163(3)), if application was made by the proper party within 5 years immediately following the strike-off, had the power to restore the IBC...
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