Guyana Furniture Manufacturing Ltd v Ramcharan and National Bank of Industry and Commerce
| Jurisdiction | Caribbean States |
| Judge | Bernard, JCCJ |
| Judgment Date | 11 June 2012 |
| Court | Caribbean Court of Justice |
| Docket Number | CCJ Appeal CV 9 of 2011; GY Civil Appeal 40 of 2009 |
| Date | 11 June 2012 |
Caribbean Court of Justice
Byron, J. CCJ; Saunders, J. CCJ; Bernard, J. CCJ; Wit, J. CCJ; Anderson, J. CCJ
CCJ Appeal CV 9 of 2011; GY Civil Appeal 40 of 2009
Dr. Fenton Ramsahoye SC, Mr. Roopnarine Satram and Mr. C V Satram for the appellant.
Mr. Robin M Stoby QC and Mr. Edward A Luckhoo QC for the first named respondent.
Mr. Rafiq Turhan Khan for the second named respondent.
Company Law - Receivership — Remuneration of receivers — Variation of receiver's commission without company's consent.
The appeal to this Court is from the Court of Appeal of Guyana dismissing an appeal against the judgment of Chang, C.J. (Ag.) who had earlier dismissed the appellant's claim against the respondents at a trial in the High Court. The controversy surrounds two debentures executed by the appellant, Guyana Furniture Manufacturing Ltd. (the Company). The first debenture was with the Inter-American Investment Corporation (IIC) (not a party to the proceedings) and later the second with the second-named respondents, the National Bank of Industry and Commerce (the Bank). The first-named respondent, Robert Ramcharan, is a receiver/manager appointed by the Bank.
On 5th March, 1993 the Company executed the first debenture in favour of IIC for the sum of US$500,000 (approximately GUY$63,000,000) with a charge on the Company's property situate at 55 Beterverwagting, East Coast Demerara, and its equipment therein. Under the terms of IIC's debenture, if the capital sum became due then IIC, as the debenture holder, could appoint a receiver/manager of the Company's property as the Company's agent.
On 13th October, 1998 the Company executed another debenture, this time in favour of the Bank for the sum of GUY$90,000,000, charged on the same property and equipment. Clause 8 of the terms of the Bank's debenture specified the rates of commission on the gross amount of all monies received by a receiver, if so appointed. If no rate was specified the default rate was to be payment at a rate of 5%, and if another rate were agreed to it could not exceed 10%. Under a deed of priorities executed on 24th June, 1999 the debentures in favour of IIC and the Bank ranked pari passu, which means they ranked equally.
The Company at some point in time defaulted on its payments to the Bank. On 24th October, 2001 the Bank appointed Mr. Ramcharan as receiver/manager of the charged property of the Company, in accordance with the terms of the debenture at an agreed commission of 1% of all monies received by him. This was increased to 3% on 8th April, 2002 after agreement between Mr. Ramcharan and the Bank, allegedly due to an arrangement for Mr. Ramcharan to assume additional responsibility for management of the Company in order to improve its profitability. Mr. Ramcharan's increased commission of 3% took effect in March 2002, effective on all the monies received up to that point. Later, on 26th August, 2002 the first debenture holder, IIC, appointed one Maurice Solomon at an agreed commission rate of 4% in accordance with the terms of its debenture.
In the result, there were now two receivers of the Company's property, a situation which has contributed in some measure to the disputes which have arisen between the Company and Mr. Ramcharan. Mr. Ramcharan operated as Receiver from October 2001 until February 2004, when the receivership came to an end. Mr. Solomon was active as Receiver from January 2003 until February 2004, overlapping Mr. Ramcharan for his entire year of service. There was no testimony from Mr. Solomon regarding the extent of his involvement, but Mr. Ramcharan indicated that they shared responsibilities until February 2004 when the receivership came to an end.
In an action filed in the High Court the Company made two claims against Mr. Ramcharan. First, for the sum of GUY$11,100,888 allegedly over-collected by him as a result of the increase in his rate of commission from 1% to 3%. The Company contended then and throughout all subsequent proceedings that the increase of Mr. Ramcharan's commission was unlawful, as the commission could not be varied without the Company's consent. Second, the Company claimed US$21,592 or its equivalent, allegedly wrongfully and unlawfully paid out of the Company's export retention fund to Mr. Solomon as a commission for monies received during his one-year service as Receiver. The Company alleged that Mr. Ramcharan knew that Mr. Solomon had been paid by the IIC, and so the additional payment by Mr. Ramcharan out of the Company's export retention fund was wrongfully made. Having heard evidence from the Company's Managing Director, Mr. Mohabir Singh and Mr. Ramcharan, the learned Chief Justice (Ag.) dismissed the entire claim, except for an unrelated award of GUY$19,459 calculated as an overpayment to Mr. Ramcharan.
With regard to the claim that Mr. Ramcharan's commission could not be varied without the consent of the Company, after a review of the evidence and relevant case law, the learned Chief Justice (ag.) found no provision in the debenture executed by the Bank precluding it from varying the commission that was contractually fixed between the Bank and Mr. Ramcharan. With regard to the alleged payment of commission to Mr. Solomon, the Chief Justice (Ag.) found that there was absolutely no evidence of any payment of any such commission by IIC to Mr. Solomon, and no evidential basis for finding that Mr. Solomon was paid US$21,592 by IIC, let alone for finding that Mr. Ramcharan knew of any such payment. While payment of US$21,000 was made to Mr. Solomon from the Company's export retention fund as the latter's commission on gross monies received during his one-year tenure as Receiver, the Chief Justice (ag.) concluded that it was the Company which was rightly responsible for paying Mr. Solomon's 4% commission. Mr. Ramcharan could not be found to have acted wrongfully or unlawfully by paying Mr. Solomon his commission out of monies received on behalf of the Company, whether from the export retention fund or otherwise.
The same issues that were decided by the Chief Justice (Ag.) arose again for determination before the Court of Appeal, and after extensive arguments the appeal was dismissed.
After a review of the findings of both Courts below, this Court has identified two issues which need to be determined:
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i. Whether the variation of Mr. Ramcharan's commission from 1% to 3% in the absence of the specific consent of the Company was lawful, and
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ii. Whether payment of commissions to the two receivers appointed under separate debentures was lawfully made from all monies collected on behalf of the Company.
Mr. Ramcharan's increased commission to 3% did not find favour with the Company, which deemed it unlawful in that the alleged tripartite arrangement under the second debenture for the payment of 1% remuneration was contractually binding on the Company and its funds; hence it could not be varied without its involvement.
The Company's contention overlooks the fact that the relationship arising out of the appointment of a receiver, though involving the mortgagor (the Company), the debenture holder/mortgagee (the Bank) and the Receiver, is legally a relationship between the Bank and the Receiver to the exclusion of the Company. Clause 8 of the debenture executed...
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