The Caribbean Court of Justice (CCJ) has upheld a decision of the Guyana Court of Appeal which it said acted upon correct principles of law in upholding the 2015 ruling of the High Court which had ordered the winding up of S. A. Nabi & Sons Limited.
In a ruling yesterday, the CCJ said it was satisfied that the Court of Appeal had enough evidence to hold that Ashmidphiraque Sheermohamed was a shareholder of the company and was therefore legally entitled to file a petition for S.A Nabi Ltd., to be wound up.
The apex court said it also found that the Court of Appeal did not misapply the just and equitable principles, as there was an abundance of evidence to support the finding that the parties were in deadlock, while noting that “the general decision-making process within the company had broken down and there was no realistic prospect of it being repaired.”
Referencing the facts surrounding the litigation, the court noted that following the incorporation of the company, its relationship with shareholders deteriorated and on 11th November, 2009 Sheermohamed filed a petition in the High Court seeking an order that the company be wound up under section 354 (e) of the Companies Act.
He premised his application on the basis that it was just and equitable to do so. Then High Court Judge Rishi Persaud granted the order for the just and equitable winding up of the company.
The appellants— Shir Affron Nabi, Rafael Nabi and the estate of Shir Amineen Nabi filed an appeal against Justice Persaud’s 2015 order, that the company be wound up.
Some months later, they applied for a stay or revocation of the same order. Justice Persaud, however, refused this application and instead appointed a receiver-manager.
In 2016 the appellants also appealed this order to the Court of Appeal—making it their second appeal.
The respondents in the matter were Sheermohamed, S.A. Nabi & Sons Limited and Maurice Solomon (in his capacity as Liquidator/Receiver/Manager).
The Court of Appeal would subsequently hold that it had the legal authority to hear the first appeal but not the second.
It dismissed the first appeal on its merits.
The appellants would then appeal to the Trinidad-based CCJ—Guyana’s court of last resort, arguing that the local appellate court made an error when it upheld the decision which granted the order to wind up the company.
The CCJ said in its ruling, however, that it was satisfied that the Court of Appeal acted upon correct principles.
The apex court said that the question it had to answer was whether the Court of Appeal misapplied those principles to the evidence before it, as contended by the appellants.
Finding that it did not, the CCJ dismissed the appeal and ordered the appellants to pay the respondents’ costs.
The CCJ said that the notice of appeal before it of 10th April 2019 disclosed a single but amply argued ground of appeal—that being that the Court of Appeal made an error in all the circumstances of the case in upholding the discretion exercised by Justice Persaud to grant the order for the winding up of the company.
In its ruling, the CCJ said it 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 also said that it 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 of the Companies Act, Cap 89:01.
The CCJ said it was satisfied that there was sufficient evidence available to the Court of Appeal to hold that Sheermohamed was a shareholder or was in the position of a shareholder and accordingly was a contributory within the meaning of Section 350 and therefore could commence the Section 354 (e) winding up petition.
The apex court said it 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.”
Among its findings also, the CCJ said that the appellate court 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.
This, the CCJ said, was as clear a case of company deadlock as can be imagined.
It noted that the general decision-making process within the company had irreparably broken down; adding that this was not an appropriate case to order a buy-out of the company’s shares, as there could 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 said it found that the equitable maxim “he who comes to equity must come with clean hands” applied to the exercise of the Section 354 (e) just and equitable winding up jurisdiction.
The CCJ did, however, disagree with the Court of Appeal’s reason for rejecting the appellants’ ‘unclean hands’ argument.
On this ground the CCJ said it felt bound to emphasise that the Court of Appeal should have considered only the “hands of the first respondent” (Sheermohamed), and that there was no need to balance his misconduct against that of the appellants.
In all of the circumstance, the court dismissed the appeal and ordered the appellants to pay cost to the respondents.
The case was presided over by Justices Jacob Wit, Winston Anderson, Maureen Rajnauth-Lee, Denys Barrow and Andrew Burgess.
The appellants were represented by attorney-at-law Devindra Kissoon, while the respondents were represented by attorneys Christopher Parker, QC, William Hare and Miguel Vasquez.
