Olivier Azoulay v Registrar of The Belize Companies and Corporate Affairs Registry

• Jurisdiction: Belize
• Judge: Hondora J
• Judgment Date: 05 August 2024
• Docket Number: CLAIM No. Civ 181 of 2024
• Court: Supreme Court (Belize)

BETWEEN:

Olivier Azoulay

Claimant

and

Registrar of The Belize Companies and Corporate Affairs Registry

Defendant

CLAIM No. Civ 181 of 2024

IN THE HIGH COURT OF BELIZE

Company law — Section 223 of the Companies Act, 2022 — statutory law on the restoration of dissolved companies to the companies register — Application for restoration filed more ten years after date of compulsory dissolution — Application excluded by section 223(2)(b) of the Companies Act — Whether the High Court has inherent jurisdiction to order restoration — Section 95(1) of the Constitution — Pleas invoking the court's inherent and equitable jurisdictions must be sufficiently particularised — The High court's inherent jurisdiction is not the same as its equitable jurisdiction — Restoration sought to avoid/minimise a capital gains tax liability — Whether in the interests of justice to order restoration

Appearances:

Rt. Hon. Dean O. Barrow, SC for the claimant

Ms Kimberly Wallace for defendant

Hondora J

1 Mr Olivier Azoulay, the claimant seeks the restoration to the companies' register of a company known as Euclid Networks Ltd (Euclid Networks). In his claim form, the claimant seeks:

• “(a) An order pursuant to section 223 of the Companies Act 2022 and/or the court's inherent jurisdiction that [the] deemed dissolution of the Euclid (sic) be set aside and that the name “EUCLID NETWORKS LTD” be entered on the Register of Belize Companies and Corporate Affairs Registry.

• (b) A declaration that EUCLID NETWORKS LTD is deemed never to have been dissolved.

• (c) Any other order the Court deems just.

Background

2 The claimant incorporated Euclid Networks Ltd. on 8 December 2005 under the International Business Companies Act (IBC Act) and he was a sole shareholder and director. The IBC Act was repealed in 2022 and all companies in Belize are now regulated under the new Companies Act, 2022.

3 In his affidavit the claimant explains that Euclid Networks provided online marketing and traffic generation services. It made its clients' websites more visible on the internet, including through direct advertising on search engines like Google, Yahoo, MSN and others. Euclid also paid search engines on a pay-per-click basis and engaged in Wholesale Traffic Acquisition activities through traffic brokers.

4 The claimant also explains that: (a) he “was responsible for ensuring the payment of the Company's annual licence fees and other outgoings”; (b) “due to an administrative oversight on [his] part and also by [his] administrative staff, the annual licence fees were not paid in 2009”; (c) he “was not prompted by the Company's registered agent [based in Belize] that the [annual] fees were outstanding and as a result the fees owed to the Registrar of the International Companies Business Companies were not paid”; and (d) the “oversight continued until 2024 when [he] was advised, to [his] alarm, that the Company was struck off for non-payment of the annual fees by [the] registered agent, International Corporate Services”.

5 The claimant stated that he did not pay the fees because he was “preoccupied by a high volume of business activity”. However, he does not provide any information on the relevant period when he was otherwise preoccupied and why he did not attend to the payment of annual fees when he was no longer thus preoccupied. He also states that “because business activity slowed considerably in 2009 and onwards, this administrative requirement completely fell ‘off our radar’”. I note that the claimant did not refer to or attach any of the company's annual financial reports in support of his assertions on the period that was characterised by a high volume of business and the period from 2009 onwards during which he says the business slowed down considerably.

6 The claimant attaches to his affidavit an extract dated 28 February 2024 from the Belize Companies and Corporate Affairs Registry, which states that Euclid Networks “ was deemed compulsorily dissolved on 10 January 2012 due to non-payment of Government fees.” The extract is not authenticated. However, the defendant does not dispute the correctness of the information contained in the document.

7 In these proceedings, the claimant is seeking an order restoring Euclid Networks' name to the register for personal tax mitigation reasons. He explains that as a citizen and resident of Canada he is required to disclose his personal earnings to the Canada Revenue Agency (CRA). He explains that the CRA informed him that since Euclid Networks “was not properly registered in 2009 and [because] money was still moving to and from the Company” from 2009, that money would be deemed to be capital gains.

8 The claimant indicates that the capital gains tax liability has been calculated at CAN $557,951 or USD $411,000 00. In addition, the claimant estimates that when interest and penalties are added, his tax liability exposure is over CAN $1,259,389 or USD $927,000.00 - an amount, he says, he cannot afford to pay.

9 The claimant explains that:

“Without the restoration of the Company [to the register he] will be personally penalized and taxed on any amounts that the Company might have received during that period as those sums will be treated as personal taxable income.”

10 The claimant does not explain the basis upon which the CRA would tax him on “any amounts…the Company might have received” rather than on amounts received and/or earned. In addition, the relevant tax periods are unclear although they appear to relate to the period 2009-2024.

11 The claimant also explains that:

“The funds coming into the Company were used to settle expenses at the time and had no end benefit other than to pay for operational expenses. This tax claimed by the CRA is oppressive and punitive. Furthermore, the CRA will likely allege legal misconduct and will levy substantial additional penalties.”

“It is vital that the Court allow [] the restoration of the Company to the Register of the Belize Companies and Corporate Affairs Registry so that [he is] able to address and settle this matter with the CRA.”

12 I note in passing that the claimant has not provided any information supporting his assertion that the funds received by the company were used solely to settle expenses and had no end benefit other than paying for operational expenses. It is also unclear whether the claimant's case is that the tax liability assessed by the CRA is “oppressive and punitive” as a matter of law or that he has initiated or plans to initiate legal proceedings challenging the tax assessment on those grounds.

13 The claimant has undertaken to pay all outstanding fees and penalties that may be levied by the Registrar of Companies and to keep Euclid Networks in good standing.

Chronology of the proceedings

14 In his fixed date claim form, the claimant cited the Registrar of the Belize Companies and Corporate Affairs Registry (the Registrar) as the defendant. The first hearing was scheduled for 13 June 2024.

15 In these proceedings, the claimant is represented by the Rt Hon. Dean Barrow SC (Mr Barrow SC) and the defendant is represented by Ms Kimberly Wallace of Bradley Ellis Co LLP (Ms Wallace).

16 On the return day, i.e., on 13 June 2024, I requested both Mr Barrow SC and Ms Wallace to address me on the claimant's entitlement to the restoration of the dissolved company to the register under section 223 since the company was dissolved more than ten years ago, i.e., in 2012. That issue had not been addressed in the claimant's application. In addition, the defendant had not filed any affidavit evidence or submissions directly addressing the issue. Furthermore, the parties had not submitted written submissions addressing the claimant's plea on the court's inherent jurisdiction and the remedies seeks thereunder.

17 Since this was a fixed date claim and the matter turned on points of law, I exercised my case management powers as set out in Rules 25 and 26 of the Civil Procedure Rules and ordered the parties to file written submissions on the apparent ten-year time-bar and the court's inherent jurisdiction.

18 I pause here to note that when she appeared for the defendant on 13 June 2024, Ms Wallace had not filed a defence. She indicated that her instructions were not to object or consent to the claimant's plea. I found this approach peculiar given the legal issues arising for resolution and the impact of this court's decision on the defendant's policy (if any) regarding the restoration to the companies register of companies that had been dissolved for more than ten years. Mr Barrow SC did not object to the defendant's participation in the proceedings. I suspect that he adopted this position in view of the defendant's litigation position. I commend the Registrar's new approach to this type of litigation. 1

19 Mr Barrow SC filed his written submissions on 14 June 2024. Ms Wallace filed her written submissions on 28 June 2024.

20 After I considered both parties' written submissions, I directed the parties on 2 July 2024 to file additional written submissions no later than 15 July 2024 addressing, among others, the following points:

• (a) the impact, if any, of the use of the word “shall” in section 223(2)(b) of the Companies Act; and

• (b) the claimant's submission that the High Court has a supplemental inherent jurisdiction to restore dissolved companies' names to the register.

21 Both Mr Barrow, SC and Ms Wallace filed their additional written submissions with commendable expedition for which I am grateful.

Issues arising

22 As noted in para. 1 above, the claimant pleaded his case in the alternative. He asserts that as a shareholder and director of Euclid, he is entitled to have the dissolved company restored to the companies register pursuant to section 223 of the Companies Act and/or the court's inherent jurisdiction. I will address each plea in turn. In this judgment, I use...