Shiraffronnabi v Ashmidphiraque Sheermohamed
| Jurisdiction | Caribbean States |
| Judge | Mr Justice Wit, JCCJ,Mr. Justice Burgess, JCCJ |
| Judgment Date | 28 August 2020 |
| Court | Caribbean Court of Justice |
| Docket Number | CCJ APPEAL No GYCV2019/012 GY Civil Appeal No 41 of 2015 |
| Date | 28 August 2020 |
IN THE CARIBBEAN COURT OF JUSTICE
Appellate Jurisdiction
CCJ APPEAL No GYCV2019/012
GY Civil Appeal No 25 of 2016
GY Civil Appeal No 41 of 2015
(in his capacity as Liquidator/Receiver/Manager)
Section 354 (e) of the Companies Act, Cap 89:01 — winding up — breakdown of relationship-exclusionary jurisdiction of the court — equity — clean hands — appeal dismissed
On 11 November 2009 Ashmidphiraque Sheermohamed filed a petition in the High Court of Guyana seeking an order that S.A. Nabi & Sons Limited (the company) be wound up pursuant to Section 354 (e) of the Companies Act, Cap 89:01 of Guyana (the Companies Act) on the basis that it was just and equitable so to do.
The company is family owned. Following its incorporation, the relationship between the shareholders became acrimonious. In these circumstances Ashmidphiraque Sheermohamed, (the first respondent in this appeal) filed his petition in the High Court seeking the winding up order. The High Court (Persaud J) granted the order for the just and equitable winding up of the company on 10 June 2015.
On 1 July 2015, the appellants filed an appeal against the order of Persaud J (the first appeal). On 5 February 2016, Persaud J refused to grant the application by summons made on 29 June 2015 (seeking a stay or revocation of the winding up order) and appointed a receiver manager. The Appellants appealed this order to the Court of Appeal on 25 February 2016 (the second appeal). The Court of Appeal held that it had jurisdiction to hear the first appeal of 1 July 2015 but that it had no jurisdiction to hear the second appeal of 25 February 2016. That appeal, however, was dismissed on the merits by the Court of Appeal on 26 June 2018. The Appellants then appealed to the CCJ. The notice of appeal of 10 April 2019 disclosed a single but amply argued ground of appeal, namely, that the Court of Appeal made an error in all the circumstances of the case in upholding the exercise of discretion by Persaud J to grant the order for the winding up of the company.
The CCJ agreed with the Court of Appeal's finding that the “just and equitable” provision “enables the court to subject the exercise of legal rights to equitable considerations”. The CCJ was satisfied that the Court of Appeal acted upon correct principles of law in upholding Persaud J's section 354 (e) discretion in ordering the winding up of the company on just and equitable grounds. The question which the CCJ had to solve therefore became whether the Court of Appeal of Guyana misapplied those principles to the evidence before it as contended by the appellants.
The CCJ agreed with the Court of Appeal that the clear law is that a shareholder, or someone in the position of a shareholder, is a contributory as defined by section 350. The CCJ was satisfied that there was sufficient evidence available to the Court of Appeal to hold that the first respondent was a shareholder or was in the position of a shareholder. Accordingly, the first respondent was a contributory within the meaning of section 350 and therefore could commence the section 354 (e) winding up petition.
The CCJ found that the Court of Appeal did not make an error in making findings of fact unsupported by evidence, and found that in its admirably well-reasoned judgment, the Court of Appeal meticulously made its findings of fact based on the record. The CCJ also found that the Court of Appeal did not misapply the just and equitable principles and that there was an abundance of evidence to support the finding that the parties were in deadlock. The CCJ found that this was as clear a case of company deadlock as can be imagined. The general decision-making process within the company had broken down and there was no realistic prospect of it being repaired. The CCJ also found that this was not an appropriate case to order a buy-out of the company's shares, as there can be no order for a buy-out where there is such profound uncertainty about the subject matter of the buy-out, namely, the number of shares to be bought.
Finally, the CCJ found that the equitable maxim “he who comes to equity must come with clean hands” applies to the exercise of the section 354 (e) just and equitable winding up jurisdiction. The CCJ disagreed with the Court of Appeal's reason for rejecting the appellants' ‘unclean hands’ argument. The CCJ felt bound to emphasise that the Court of Appeal should have considered only the hands of the first respondent, and that there was no need to balance the misconduct of the first respondent against that of the appellants. For the foregoing reasons the CCJ dismissed the appeal and ordered the appellants to pay the respondents' cost.
The Court therefore made the following order:
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(a) The appeal is dismissed, and the judgment of the Court of Appeal is affirmed.
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(b) The Appellants shall pay to the Respondents costs of this appeal, certified, to be taxed in default of agreement.
CCJ 15 (AJ) GY
IN THE CARIBBEAN COURT OF JUSTICE
Appellate Jurisdiction
ON APPEAL FROM THE COURT OF APPEAL OF GUYANA
CCJ APPEAL No GYCV2019/012
GY Civil Appeal No 25 of 2016
GY Civil Appeal No 41 of 2015
BETWEEN
SHIR AFFRON NABI
RAFAEL NABI &
THE ESTATE OF SHIR AMINEEN NABI
APPELLANTS
AND
ASHMIDPHIRAQUE SHEERMOHAMED
RESPONDENTS
S. A. NABI & SONS LIMITED
MAURICE SOLOMON
(in his capacity as Liquidator/Receiver/Manager)
Before the Honourables: Mr Justice J Wit, JCCJ
Mr Justice W Anderson, JCCJ
Mme Justice M Rajnauth-Lee, JCCJ
Mr Justice D Barrow, JCCJ
Mr Justice A Burgess, JCCJ
Appearances
Mr Devindra Kissoon for the Appellants
Mr Christopher Parker, QC, Mr William Hare, Mr Miguel Vasquez for the Respondents
of
The Honourable Justices Wit, Anderson, Rajnauth-Lee, Barrow and Burgess
Delivered by
The Honourable Mr Justice Wit and Mr Justice Burgess
on the 28 th day of August 2020
Mr. Justice Burgess, JCCJJUDGMENT OF THE HONOURABLES Mr Justice Wit, JCCJ AND
Section 354 (e) of the Companies Act, Cap 89:01 of Guyana provides that: “A company may be wound up by the court if…(e) the court is of the opinion that it is just and equitable that the company should be wound up”. Persaud J in the High Court made an order pursuant to this provision that Nabi and Sons Ltd (the company) be wound up. An appeal against that order to the Guyana Court of Appeal was dismissed by that court and Persaud J's winding up order upheld.
The appeal now before this Court challenges the decision of the Court of Appeal.
The company is a family owned and operated company. It was incorporated in Guyana on 11 September 1965 by two brothers, Shir Ahmad Nabi (Amin) and Azeez Sheer Mohamed (Azeez). Its main business as stated in its memorandum of association is construction and engineering. In the years following its incorporation, the affairs of the company were conducted by Amin, Azeez and another brother, Aslim Sheermohamed (Aslim). All three brothers held shares in the company at various points in time.
All three brothers have now died. Before their passing, the relationship between them became acrimonious and plagued with hostility for several reasons. After their passing, their sons, Shir Affron Nabi (Affron), Rafael Nabi (Rafael) and Ashmidphiraque Sheermohamed (Ashmid), continued the animosity towards each other, in the words of Khan JA (Ag), “as if by way of testamentary disposition”. This resulted, it would seem, in the eventual downfall of the company, which suffered from mismanagement and economic loss due to the family's persistent squabbles.
In the foregoing circumstances, Ashmid, (in the appeal before us the first respondent), on 11 November 2009 filed a petition in the High Court seeking an order that the company be wound up under section 354 (e) on the basis that it was just and equitable so to do. In the petition, Ashmid asserted that:
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(a) he is the owner of shares in the company and is a contributory.
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(b) his father Aslim is the owner of 463 shares in the company and the distribution of Aslim's shares to his heirs following his death is pending administration of his estate.
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(c) Aslim had managed the company for 10 years and served as a director for over 30 years. During Aslim's lifetime, the company secured vital construction contracts and made substantial profits.
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(d) however, disagreements between Aslim and Amin arose and since Aslim's death in 2006, Amin took over and managed the company.
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(e) since Amin took over: (i) the company has been unable to secure similar remunerative contracts as Aslim had been able to secure during his lifetime; (ii) there has been no financial accountability on the funds of the company on the funds transferred to accounts in the name of Amin and his relatives abroad; (iii) records of the company are not being kept, (iv) general meetings of the shareholders are not being kept, (v) director's vacancies are not being filled and as such, directors meetings are not being held, (vi) records of the company are not being kept, (vii) he (Amin) formed another company similarly named Nabi Construction Inc which carried on the same construction business as the company at the same address, (viii) the accountant for the company has been dismissed, (ix) the company failed to transfer Aslim's shares after his death to his heirs, (x) failed to declare and pay dividends;
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(f) there is insoluble deadlock in the affairs of the company due to the acrimonious and hostile relationship among the various persons claiming to be interested in the company to the extent that it is no longer doing construction business which was its primary purpose.
The...
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