Richard Kreis v Terry Beck

• Jurisdiction: Belize
• Judge: Goonetilleke, J.
• Judgment Date: 12 April 2024
• Docket Number: CLAIM No. CV 425 of 2022
• Court: Supreme Court (Belize)

Between:

Richard Kreis

Claimant

and

[1] Terry Beck

[2] Becker Coconut Belize Ltd.

Defendants

CLAIM No. CV 425 of 2022

IN THE HIGH COURT OF BELIZE

Appearances:

Mr. Allister Jenkins for the claimant

Defendants absent and unrepresented

Liability for damages, Oral Contract, Rescission of Contract

Goonetilleke, J.

1 The Claimant, Richard Kreis, a Canadian national now resident in Belize, filed this claim seeking damages of One Hundred and Fifty Thousand U.S. Dollars (US $150,000.00) from the 1 ^st defendant and for Thirty-Seven Thousand and Five Hundred U.S. Dollars (US $37,500.00) jointly and severally from the 1 ^st and 2 ^nd defendants for a shareholder loan granted to the 2 ^nd defendant, which formed part of the One Hundred and Fifty Thousand U.S. Dollars (US $150,000.00) claimed from the 1 ^st defendant.

Background

2 The 1 ^st defendant, a Canadian national residing in Belize had incorporated the 2 ^nd respondent's corporation, Becker Coconut Belize, a tour business, in Belize. He was its sole shareholder and managing director. The 1 ^st defendant was also a shareholder in another company, Becks Belize Limited, a golf cart rental business which was also incorporated in Belize by the 1 ^st defendant.

3 The claimant and the 1 ^st defendant had been acquainted in Canada previously and in conversations and negotiations between them which took place on Facebook and by email had agreed for the claimant to invest in the 1 ^st defendant's businesses in Belize and obtain shares in the businesses and for the claimant to move to Belize in November 2021 and help the 1 ^st defendant to run these businesses.

4 Consequently, the claimant transferred One Hundred and Fifty Thousand U.S. Dollars (US $ 150,000.00) in four (4) separate and equal payments of Thirty-Seven Thousand and Five Hundred U.S. Dollars (US $37,500.00) to the claimant by wire transfers, in Canada. One (1) tranche of Thirty—Seven Thousand Five Hundred U.S. Dollars (US $37,500.00) was used as a shareholder's loan to the 2 ^nd defendant company. The claimant thereafter moved to Belize in or about May 2021.

5 The claimant states that he was not issued with shares in any of the 1 ^st defendant's businesses and that there have been no payments made in terms of the Shareholder's Loan Agreement with the 2 ^nd defendant's company. In the circumstances, he states that he terminated the agreement with the 1 ^st defendant and now claims One Hundred and Fifty Thousand U.S. Dollars (US $150,000.00) from the 1 ^st defendant and Thirty-Seven Thousand Five Hundred U.S. Dollars (US $37,500.00) from the 1 ^st and 2 ^nd defendant's jointly and severally, such sum being part of the One Hundred and Fifty Thousand U.S. Dollars (US $150,000.00) given to the 1 ^st defendant.

6 The defendants jointly filed a defence and acknowledged that the payments of the said sums were made. However, the defence denied that the sums were for shares in the 1 ^st defendant's businesses (in the plural). In the defence, it is stated that the 1 ^stdefendant being the majority shareholder in the 2 ^nd defendant and its managing director, wanted to sell his fifty-one per cent (51%) stake in that business and that the claimant agreed to invest in that business by purchasing shares in it. The defence states that the only other business owned by 1 ^st defendant is Beck's Belize Ltd. which is a golf cart rental business which the 1 ^st defendant jointly owns with his ex-wife and that in terms of a court order, he is prohibited from disposing of his wife's fifty per cent (50%) shareholding of that business or its assets and that therefore, the investment of the claimant was only in respect of the 2 ^nd defendant company.

7 It is also stated in the defence that the agreement of the parties was for instalments in regard to the shareholder loan given by the claimant to be paid back to the claimant by settling it off against the claimant's living expenses in Belize, which was done.

8 The defence also states that part of the agreement was that the claimant obtain a work permit to work in Belize and help the 1 ^st defendant to run the business, which the claimant allegedly failed to do. The defence also stated that the claimant brought a 3 ^rd party to live with him which increased the cost of living of the claimant which had to be funded by the defendants. In those circumstances, the defendants counterclaimed for damages of Twelve Thousand Belize Dollars (BZD 12,000.00) for labour and work to manage the business and Forty-Eight Thousand Belize Dollars (BZD 48,000.00) as living expenses paid on the claimant's behalf.

9 This matter was taken up for case management on 11 ^th November 2023. The claimant was represented, and the 1 ^st defendant appeared in person. Directions were given for witness statements to be filed and the trial was set for 18 ^th January 2024. The 1 ^st defendant who was present in court indicated that due to his financial situation, he may not be able to retain an attorney to represent him at the trial. The court indicated that he should obtain legal aid or take suitable steps to represent himself.

10 Prior to the trial, the 1 ^st defendant wrote to the Registry stating that he would not participate in the trial. The defendants were absent and unrepresented at the trial. Consequently, the attorney for the claimant moved that the Court proceed in the absence of the defendants. Therefore, in terms of Rule 39.4(b) of the Supreme Court ( Civil Procedure) Rules 2005, the Court being satisfied that the defendants were aware of the trial and had notice of the relevant dates and were absent, directed that the trial proceed in the absence of the defendants.

11 The claimant, Richard Kreis, and his witnesses, Ms. Rebecca Prediletto and Mr. Yahiya Mohamed Harmouche gave evidence on behalf of the claimant. No evidence was led for the defence. As the defendants were absent and unrepresented and as no witnesses gave evidence for the defence, the witness statements filed on behalf of the defence are disregarded as they have not been proved in court. As there has been no evidence to support the counterclaim of the defendants, the counterclaim is disregarded.

12 The court is left with having to consider whether the claim has been proved with evidence that is available before the court.

13 From the pleadings, the following facts are not in dispute:

• (i) The claimant paid and the 1 ^st defendant received One Hundred and Fifty Thousand Dollars (US $150,000.00);

• (ii) 2 ^nd defendant and the claimant entered into a Shareholder's Loan Agreement on or about the 1 ^st of April 2021, for a sum of Thirty-Seven Thousand and Five Hundred U.S. Dollars (US $37,500.00) to be repaid in Eighty-Four (84) monthly instalments of Four Hundred and Forty-Six U.S. Dollars and Forty-Three Cents (US $446.43) commencing on the 1 ^st of November 2021.

• (iii) No shares in any companies owned by the 1 ^st defendant have been transferred to the claimant as of the date of the claim.

• (iv) The claimant has not obtained a work permit to work in Belize.

Issues

14 The following issues arise to be determined by the court:

• A. What were the terms of the contract?

• B. Was there a novation of the contract by the claimant paying the One Hundred and Fifty Thousand U.S. Dollars (US $150,000.00) ahead of time and moving to Belize earlier than previously agreed?

• C. Was there a failure on the part of the 1 ^st and/or the 2 ^nd defendant to perform the contract?

• D. Was there a failure on the part of the claimant to perform the contract?

• E. Was there a valid termination or rescission of the contract?

• F. Is the claimant entitled to damages? If so, how much?

Analysis

15 First Issue: what were the terms of the contract? The contract between the claimant and the 1 ^st defendant is not contained in a single document but has to be ascertained from the communications between them contained in emails and exchanges on Facebook which have been produced as Annex 1 to the second amended statement of claim.

16 The offer to invest emanated from the 1 ^st defendant. The offer was for the claimant to invest in the businesses of the 1 ^st defendant and for the claimant to be a working partner. To this end, the email of 12 ^th March 2021 from the 1 ^st defendant states the terms on offer and states that the two businesses of the 1 ^st defendant in Belize were valued as follows:

“ Carts appraisal came in between $ 299,000 – $ 349,000 USD as a market Evaluation. Tours Appraisal came in at $ 49,000 to $59,000 USD…. Thus, I am ready to take on a working partner shareholder…we can talk…but if you want in as a partner…equitable 50/50 partner…then I am so excited … I will just market value my companies at $300,000 USD for our purposes. Could be low but fair. I would be asking for $150k USD…or $200k Cdn… the $150k investment would be in the form of a Shareholder's Loan…that would be taken out monthly to live on. Depending upon the performance of the company…should be a 5–8 year payout… but the company will pay our bills. By doing this, we do not have to pay tax. 1.75% Business Tax…paid monthly…doing tax right now… and we charge 12.5% GST which we remit and remains a neutral or positive for the company. That's it.

So, approximately $1500 USD a month for housing – fixed costs includes internet etc…we would be roommates and split at $750 USD per month. The company can pay this and we will have a working office…then we could draw an additional $ 1000 per month or $250 USD a week as our shareholders' draw – which is more than enough running around money. In essence, we would put as much through the company as possible and live off the shareholder's draw of Housing, Entertainment, Company Vehicles, and still have $ 1000 USD a month for each of us to do what we want…

My proposal is:

• 1. $ 37,500 USD or approx. $ 50 k Cdn on April 1 ^st, 2021, to cement the deal …

• 2. July 1 — $37.5 k USD

• 3. Oct 1—$ 37.5 K

• 4. Jan...