Banks Holdings Ltd v Belize Citrus Growers Association Investment Company Ltd et Al

• Jurisdiction: Belize
• Judge: Hafiz, J.
• Judgment Date: 05 April 2011
• Court: Supreme Court (Belize)
• Docket Number: No. 878 of 2010
• Date: 05 April 2011

Supreme Court

Hafiz, J.

No. 878 of 2010

Banks Holdings Limited

and

Belize Citrus Growers Association Investment Company Limited et al

Appearances:

Mr. Dereck Courtenay SC for the applicant/claimant.

Mr. Eamon Courtenay SC along with Mrs. Ashanti Martin for the 1st respondent.

Civil practice and procedure - Injunction — Application for interim injunction — Whether balance of convenience lay in granting the order.

INTRODUCTION

Hafiz, J.

1 On 16th December, 2010, an application for an interim Injunction was made by the applicant, Banks Holdings Limited (BHL). On the hearing of the application the court refused the interim injunction sought and promised to put the reasons in writing.

2 The Order sought by BHL are:

1

Until the conclusion of the trial of this matter the 1st respondent be restrained from convening or holding an Extraordinary General Meeting or Meetings of Citrus Products of Belize Limited (hereinafter “CPBL”), or from causing the 2nd respondent to convene an Extra Ordinary General Meeting or Meetings and that the 2nd respondent be restrained from holding any such meeting or Meetings pursuant to a Notice lodged with CPBL by Belize Citrus Growers and Investment Company Limited (hereinafter “ICL”) and the Citrus Growers Association (hereinafter “CGA') as shareholders of CPBL dated 2nd day of December, 2010, or any such requisition for the purpose of passing the following resolutions: a. That Henry Canton's employment with CPBL be terminated; b. That Henry Anderson be appointed as the interim Chief Executive Officer of the 2nd respondent; c. That a committee comprised of Denzil Jenkins, Roselle Zabaneh and a nominee of the applicant be constituted and tasked with setting the terms and conditions of the appointment of the interim Chief Executive Officer and appointing a new Chief Executive Officer upon such terms and subject to such conditions as to remuneration, tenure and otherwise as the committee shall deem to be in the best interest of CPBL or for the purpose of passing any resolution having the like effect; and, d. That the quorum for the committee will be two members and the committee shall make decisions based on majority vote of its members. 2. That the respondents be restrained until the conclusion of the trial of this matter or further order from engaging in any conduct which would infringe upon the jurisdiction or any arbitrator or arbitrators appointed by the parties or which would delay or frustrate the arbitration process initiated by the applicant in respect of material differences which have arisen between the parties hereto, including but not limited to: 1. causing to occur or conducting any meeting of CPBL whose purpose is to pass a resolution or resolutions having the effect of altering the current management arrangements under which CPBL is governed until the conclusion of the trial of the this matter; 2. terminating the employment contract of Henry Canton with CPBL as Chief Executive Officer or at all until the trial of this matter; 3. establishing any committee to manage any aspect of the affairs of CPBL, including the terms, remuneration and appointment of the Chief Executive Officer.

3 An Order that the 1st respondent, Belize Citrus Growers Association Investment Company Limited, do pay the costs of this application.

4 Such further or other relief as the Court sees fit.

3

The grounds of the application are: i) By way of written agreement dated 31st May, 2006 and further amended on 22nd January, 2007 (hereinafter collectively referred to as “the Investment Agreement'), between the applicant, the 1st respondent and the 2nd respondent, it was acknowledged and agreed, inter aria, as follows: a. That the purpose of the Investment Agreement was to regulate the relationship between the applicant and the 1st and 2nd respondent and certain aspects of the affairs of and their dealings with CPBL. b. That CPBL would cause its directors to undertake and transact all of the business of the Company other than routine day to day business; c. That CPBL, without a ? majority of its Directors would not enter into any contract with any of its Directors or with any associate of a Director and in respect of that, would not permit such power of the Directors to be delegated to any executive Director or committee of Directors. d. That all decisions of the Board of Directors of CPBL shall require the vote of at least two (2) of the applicant's Directors appointed to the Board; e. That the CPBL shall retain the services of Henry Canton for a period of five years commencing in 2006 and expiring in 2011. f. That the 1st respondent will exercise its powers in relation to the CPBL so as to ensure that the CPBL fully and promptly observes performs and complies with its obligations under the Investment Agreement. ii) On 3rd December, 2010, the applicant received a Notice that the ft respondent was convening an extraordinary general meeting of the Company pursuant to a requisition lodged with the Company on 13th October, 2010 for the purpose of passing a resolution to effect the managerial changes in CPBL as shown in paragraph 1 above. iii) By virtue of Clause 3(a)(ii) of the Investment Agreement, the 1st and 2nd respondents agreed to retain the services of the current Chief Executive Officer, Dr. Henry Canton for an initial period of five (5) years commencing 2006 and expiring in 2011 with an option for renewal. iv) By virtue of Clause 16(2) of the Investment Agreement, ICL undertook to exercise its powers in relation to CPBL to ensure that CPBL fully and promptly observes performs and complies with its obligations under the Investment Agreement. If the resolution to terminate the employment of Henry Canton with CPBL is passed, not only will ICL breach the Investment Agreement, but it will cause CPBL also to breach its employment contract with Henry Canton. v) By virtue of Clause 6(1)(d), CPBL agreed that it would cause its directors to undertake and transact all of the business of CPBL other than routine day to day business and, cause the business of CPBL to be carried on pursuant to policies laid down from time to time by the directors. vi) Clause 9(3) of the Investment Agreement provides that all decisions of the Board of Directors shall require the vote of at least two Nominated Directors appointed by the applicant. vii) By virtue of clause 6(2)0), the Company agreed that it would not without a two thirds majority of the Directors, enter into, or vary any contract with any of its Directors or any majority shareholder or any associate of a Director or majority shareholder. By seeking to engage Henry Anderson, a Director of CPBL to act as Chief Executive Officer using a simple majority vote of the Company in general meeting, the 1st respondent has breached and will cause the 2nd respondent to breach the terms of the Investment Agreement viii) Clause 6(2)(y) of the Investment Agreement prohibits the delegation of the powers of the Board of Directors of the CPBL in relation to entering into contracts with Directors, the Majority Shareholder or any associate of Directors or the Majority Shareholder. If ICL is not restrained from appointing Henry Anderson as Chief Executive Officer and, appointing a committee to set the terms of and appoint a new Chief Executive Officer, it will breach and cause CPBL to breach the terms of the Investment Agreement. ix) Clause 9(6) of the Investment Agreement further provides that if a Director shall serve as an executive of the Company, his terms and conditions, including his remuneration shall be determined by a ? majority of the Board of Directors. ICL by seeking to appoint a committee for the purposes of determining the remuneration and tenure of Henry Anderson as Chief Executive Officer by shareholder's resolution and not by a ? majority of the Directors, has breached and will cause CPBL to breach the terms of the Investment Agreement. x) Alternatively or in addition to the terms of the Investment Agreement, Article 122 of CPBL's Articles of Association, pursuant to which the requisitionists purport to act, confers on the Board of Directors the power to appoint a director as managing director and that director, so appointed can be removed by the Company in general meeting. The current Chief Executive Officer of the Company is not a Director of the Company and as such, his tenure as CEO cannot be determined by the Company in General Meeting. xi) Alternatively or in addition to the terms of the Investment Agreement, Article 101 of the Articles of Association of CPBL explicitly provides that the business of the Company shall be managed by the Directors and the Directors may (at their option) exercise all powers of CPBL not required by the Articles to be exercised by the Company in general meeting. There is no explicit or special provision contained in the Articles permitting the Company in general meeting to usurp the functions of the Board in seeking to pass the resolutions contemplated. xii) The Directors have, since April 2010, (when the last Annual General Meeting was held), been unable conduct its business in the ordinary way and pass any substantive resolutions in relation to the Company since, the applicant and the 1st respondent have been unable to agree on material issues which directly affect the management of the Company, including but not limited to: a. The employment of the Chief Executive Officer. and, b. The Chairman of the Board of Directors xiii) Clause 30 of the Investment Agreement provides for the settlement of material disputes by referring the same to arbitration and the applicant has invoked the arbitration clause in the Investment Agreement to seek to settle the deadlock which exists on the Board of Directors. xiv) The 1st respondent by seeking to pass the above resolutions, using its majority power would effectively circumvent the terms of the Investment Agreement and defeat its objects...