IN THE HIGH COURT OF JUSTICE BETWEEN

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1 REPUBLIC OF TRINIDAD AND TOBAGO CV: IN THE HIGH COURT OF JUSTICE BETWEEN IN THE MATTER OF THE COMPANIES ACT, 1995 (AS AMENDED) (CHAP 81:01) AND IN PARTICULAR SECTIONS 242 AND 498 THEREOF AND IN THE MATTER OF FORTY FOUR LIMITED AND CLUB PRINCESS LIMITED AND IN THE MATTER OF THE SUPREME COURT OF JUDICATURE ACT CHAP. 4:01 BETWEEN DALLAS CORP. THOMAS BAKER Claimants AND ALNANDO CORPORATION SUDI OZKAN ZAFER HAKAN UNAL CHRISTLYN MOORE FORTY FOUR LIMITED CLUB PRINCESS LIMITED Defendants Before the Hon. Madam Justice Eleanor J. Donaldson-Honeywell Appearances: Mr. Seenath Jairam SC, Mr. Anil Maraj and Ms. Rhea Libert for the Claimants Ms. Deborah Peake SC, Mr. Kerwyn Garcia and Ms. Sasha Franklin for the Defendants Delivered on May 24, 2017 Page 1 of 35

2 Judgement I. Introduction [1] The parties to this claim alleging oppression are largely non-nationals of Trinidad and Tobago. Thomas Baker, [ the Second Claimant ] is a United States of America [ US ]. citizen who sought by investment in a St. Christopher and Nevis [ St. Kitts ] registered company Dallas Corp [ the First Claimant ] owned by a fellow US citizen Charles Frost (now deceased) to share in the management of and profits from two companies [ the Fifth and Sixth Defendants ] operating in the casino industry in Trinidad and Tobago. There was a falling out with the Turkish nationals [including the Second and Third Defendants] connected with the St. Marten based company Alnando Corporation [ the first Defendant ] which together with Dallas Corp. jointly owned the fifth and sixth Defendant companies. Essentially, the intervention of Thomas Baker after Charles Frost died in 2011 brought a new dynamic to the business relations concerning the fifth and sixth Defendant companies. Thomas Baker and Dallas Corp complain that they have been shut out of the business since [2] The matter has been before the Court since then with no resolution due partly to the fact that there was a four year stay pending the results of parallel litigation in St. Kitts and Florida, USA. Additionally, there have been numerous pre-trial matters raised by the parties. The Trial commenced on 9 May, Oral hearing of the evidence ended in May last year followed by a Site Visit in 29 July, Permission was granted to the parties to file written closing submissions and that time was extended thereafter. Finally, in April this year submissions were closed. Having considered the evidence and submissions my conclusion is that the claim for relief for oppression is justified and there will be judgment for the Claimants. [3] The Claim is brought pursuant to S. 242(1) of the Companies Act, Chap. 81:01 [ the Act ]. By fixed date claim filed on 16 November, 2011, the Claimants claimed against the Defendants the following reliefs: Page 2 of 35

3 i. A declaration that the Claimants are proper applicants and thus complainants within the meaning of the Act and in particular section 239 thereof; ii. A declaration that the Defendants and each of them whether jointly and/or separately are guilty of oppression as defined in and/or specified in section 242(2) (a), (b) and (c) of the Act in relation to each of the Claimants and the Claimants are entitled to apply for an order in accordance with the said section; iii. A declaration that the First Claimant is beneficially entitled to a 50% shareholding in the Fifth and Sixth Defendants; iv. An order directing the Fourth Defendant and in lieu of same the Registrar of Companies to issue such shares in the Fifth and Sixth Defendants as to achieve a 50% shareholding in each company in the name of the First Claimant; v. An order that the Second Claimant be appointed to the respective Board of Directors of the Fifth and Sixth Defendants; vi. An order requiring an investigation of the Fifth and Sixth Defendants and/or each of them pursuant to the provisions of 242(3)(m) and/or section 498 of Part VII Division 2 of the Act; vii. An order requiring the Fifth and Sixth Defendants and or each of them to produce an account of all monies earned and expended by the Company for the period 1 June 2011 to 14 November, 2011 and/or for such other period as to the Court as shall seem just and/or in such forms as the Court may determine; viii. An order requiring the First, Second and Third Defendants or any of the them, to forthwith pay to the Fifth and Sixth Defendants and/or each of them such sum/s together with interest thereon at such rate and for such period as the Court may determine are due and owing by any and/or all of them; Page 3 of 35

4 ix. Repayment of all sums unlawfully and/or improperly removed from the Fifth and Sixth Defendants either by or with the complicity of the First, Second, Third and Fourth Defendants, their servants and/or agents and/or any of them and acting together with any other person or persons unknown or howsoever otherwise; x. An order appointing a receiver-manager of the Fifth and Sixth Defendants; xi. An inquiry into damages and/or compensation including aggravated and/or exemplary damages; xii. Damages, including aggravated and/or exemplary damages and/or compensation against the First, Second, Third and Fourth Defendants; xiii. Any and/or all of the orders or relief specified in section 242(3) of the Act as to the Court as shall seem just, whether interim or final; xiv. All necessary and consequential directions; xv. Such further and/or other relief as this Honourable Court deems fit; xvi. Interest thereon at such rate and for such period as shall seem just pursuant to the equitable jurisdiction of this Honourable Court and/or pursuant to section 25 of the Supreme Court of Judicature Act, Chap.4:01; and xvii. Costs. II. Factual Background [4] In around the Second Defendant and Charles Frost met to discuss and agreed to establish a casino business in Trinidad and Tobago. The agreement stipulated that the Page 4 of 35

5 business was to be equally owned and the profits equally shared from the business. The Second Defendant and Charles Frost respectively are described as the alter egos of the First Defendant and First Claimant companies. These two companies held equal shares in the casino business incorporated into the Fifth and Sixth Defendant companies. [5] Although no shares have been issued in either the Fifth or Sixth Defendant, they have at all times operated on the mutual and continuing agreement and understanding of the First Claimants and First Defendant that they were and are owned equally between them. The Claimant claims that all management decisions, divisions of profits and investments in the Fifth and Sixth Defendants have been undertaken on the basis of 50% ownership and it was agreed that the First Claimant and the First Defendant each would enjoy the right to have one director on the boards of both the Fifth and Sixth Defendants. [6] The Fourth Defendant was the Corporate Secretary of the Fifth and Sixth Defendants. A members club by the name of Club Princess Members Club [ the Members Club ] was registered by her in The members included the Second, Third and Fourth Defendants. The Sixth Defendant operated as the manager of the members club on behalf of the membership and earned income from providing the said management services. The location of the Members Club was a building at 44 Independence Square, Port of Spain rented from its owner, the Fifth Defendant Company. [7] Charles Frost and Chrain Frost were the owners of the First Claimant up until 2011, with 51% and 49% shareholding respectively. Up until June 2011, the payments to the First Claimant from the Fifth and Sixth Defendants would be in the form of cash lump sum to Charles Frost or by wire transfer to the First Claimant s bank accounts. Charles Frost fell ill in December 2010 and in June 2011 Charles Frost resolved to transfer his shareholding in the First Claimant to the Second Claimant. This was, according to the Second Claimant, in consideration of moneys outstanding to the Second Claimant and due to their close personal relationship. Page 5 of 35

6 [8] Pursuant to Charles Frost s decision, Mr Glenford Hamilton, corporate secretary of the First Claimant was instructed by Charles Frost to prepare a stock power to transfer his interest. The Claimant alleges that it was prepared, executed and witnessed by two nurses at the hospital at which Charles Frost had been admitted and was near death. This stock power document was produced to the court. Charles Frost also executed a unanimous shareholder resolution replacing himself with the Second Claimant as director of the First Claimant. This document was purportedly signed by the two nurses as well as Chrain Frost. Thereafter, a share certificate was issued in the Second Claimant s name. There was also documentation to the effect that the Second Claimant was appointed by Frost to replace him as the Managing Director of the Fifth and Sixth Defendant companies. [9] In July 2011, the Second Claimant attended the office of the Fifth and Sixth Defendants and produced these documents, demonstrating his authority as the nominee of the First Claimant and requested that: - Shares be issued to the First Claimant in the Fifth and Sixth Defendants; - There be a payment of dividends and/or profits to the First Claimant from the Fifth and Sixth Defendants - He be appointed as a director on the boards of the Fifth and Sixth Defendants [10] Thereafter the Second Claimant attended the premises of the Fifth and Sixth Defendants and operated in the former capacity of Charles Frost which he says was as Managing Director. He was never paid a salary for such duties but he occupied the office space.in the Members Club building formerly utilised by Charles Frost as Managing Director. The room was equipped and laid out as a Managing Director s office. He claims he was provided with a vehicle, bodyguards and an apartment at Bayside Towers during this period. The Defendants deny this was given to him as Managing Director, stating that the accommodation was provided only to reduce hotel costs on his visits and that the vehicle and bodyguards were not provided but commandeered. Page 6 of 35

7 [11] Around September 2011, the Fourth Defendant gave written legal advice to the First Defendant that the First Claimant was entitled to appoint the Second Claimant as its nominee and that permission from the First Claimant should be sought to determine to whom dividends should be paid. In October 2011, the Second Claimant wrote to the Fourth Defendant requesting that: - He be advised of the identity of the First Defendant, including place of incorporation and shareholders; - 50% of all shares in the Fifth and Sixth Defendants be issued to the First Claimant; - The First Claimant be registered as a 50% shareholder in the companies; - Charles Frost be removed as the named director and replaced with the Second Claimant; and - The Second Claimant be listed as a signatory to the accounts of the Fifth and Sixth Defendants. [12] At the Fourth Defendant s request, Mr Glenford Hamilton sent company documents concerning the First Claimant Company to her. The Second Claimant requested from her copies of these documents. He then sent two men to retrieve his original documents from the offices of the Fourth Defendant. The Fourth Defendant claims she felt threatened by these men. [13] Thereafter, a letter was sent to the Sixth Defendant from Messrs. Byrne and Byrne, Attorneys-at-law for the brothers of Charles Frost, stating that they were seeking to set aside the transfer of Charles Frost s shareholding to the Second Claimant. The Fourth Defendant then gave undertakings not to make any payments to the First Claimant until legally advised. [14] On 10 November, 2011 the Fourth Defendant wrote to the Claimants Attorneys-at-law advising that the Second Claimant would no longer be permitted entry onto the business premises until the matters raised by the Frost brothers were determined in the courts. Page 7 of 35

8 [15] The Claimants claim that they have been put in severe financial hardship due to the refusal of the Defendants to issue their shares and pay out dividends. They allege that the Defendants are guilty of oppressive and unlawful conduct towards them by: i. Failing to issue shares to the First Claimant in the Fifth and Sixth Defendants; ii. Failing to permit the Claimants and/or any of them access to all corporate records of the Fifth and Sixth Defendants; iii. Failing to make payments of dividends and/or profits to the Claimants; iv. Controlling to the exclusion of the Claimants all business and income of the Fifth and Sixth Defendants; v. Failing to account to the Claimants in respect of all corporate and/or banking records of the Fifth and Sixth Defendants; vi. Failing to permit the Claimants and/or any of them access or information as to finances of the Fifth and Sixth Defendants; vii. Failing to permit the First Claimant to enjoy any representation upon the boards of directors of the Fifth and Sixth Defendants; viii. Directing the employees of the Fifth and Sixth Defendants to exclude the Claimants from all business operations; and ix. Failing to identify the other company officers or provide relevant information to the Claimants as shareholder and director respectively. Page 8 of 35

9 [16] The Claimants filed an application on 16 th November, 2011 for an injunction and investigation into business of the Fifth and Sixth Defendants. An interim order was made against the Defendants inter alia for the payment of the sum of USD$12,000 per month to the Second Claimant and to cease from evicting the Second Claimant from the Bayside accommodation. The order was made on November 18, 2011 by Madam Justice Jones as she then was. [17] In January 2012, the brothers of Charles Frost ( the Frosts ) filed a claim against the Claimants and Mr. Glenford Hamilton in the Eastern Caribbean Supreme Court, St Christopher & Nevis claiming, inter alia that the transfer of shares from Charles Frost to the Second Claimant was unlawful. Then on 1 March, 2012 the Frosts filed a Notice of Application to intervene in the instant proceedings, relying on a death certificate of Charles Frost bearing inaccurate particulars i.e. an inaccurate date of death. Madame Justice Jones (as she then was) dismissed the Application on 20 April, 2012 but ordered a stay of the instant proceedings pending the outcome of the St Kitts proceedings. [18] On 23 February, 2015, the St Kitts Court of Appeal proceedings were determined essentially upholding a Florida Court decision made summarily due to the lack of attendance of the Frosts. Both Courts dismissed the Frosts case holding that the transfer of ownership in the First Claimant Company to the Second Claimant herein was valid. The current proceedings were then resumed by lifting of the stay order in June [19] By that time the Defendants had long ceased honouring the order made by Jones J for payments to the Second Claimant and to provide him with accommodation. In addition the Defendants ceased operation of the Fifth and Sixth Defendants in or around May 2015 in breach of the spirit of the Order. The Defendants had sought by Notice of Application dated November 2014 to vary that order instead of complying with it. The reasons cited included inability to pay and that the landlord cancelled the lease for the Bayside Towers apartment. [20] Simultaneously, with the closing down of the casino business at 44 Independence Square, the Claimant observed that the Fourth Defendant was involved in the development of other Page 9 of 35

10 casinos at Chaguanas, Movie Towne Port of Spain and San Fernando under the Princess brand which was operated internationally by the Second Defendant. That information was admitted into evidence in the Claimant s witness statements as I accepted it as relevant to the pleaded allegations concerning financial impropriety and shutting the Claimant s out of business decisions. However, I make no finding herein as to whether such actions per se amounted to further oppression on the part of the Defendants. It is clear however that in the event of an investigation herein such matters will be further examined. [21] Shortly after the Defendants applied to vary the interim relief orders made by Jones J, the Claimants applied to have the Defendants sanctioned for contempt at court. These applications were the subject of Case Management and Court of Appeal decisions including an order made on 9 May, 2016 that there be a Taking of Accounts of the Fifth and Sixth Defendants before the Registrar. The said Taking of Accounts, despite the best efforts of the Registrar, has not commenced to date due inter alia to the complexity of the subject matter and preliminary points being taken by the parties. Having gleaned this explanation for the delay from the Registrar, having also made inquiries intermittently of the parties as to progress of the accounts and having noted the preliminary points being taken as recorded in the Court File a decision to stay further taking of accounts by the Registrar by authority of CPR 42.6 is included in the determination of this matter. The said exercise will be taken over by a Forensic Auditor. [22] As soon as the results of the St. Kitts case were known, then presiding Judge Jones J. commenced case management geared in accordance with Civil Proceedings Rules, 1998 [ CPR ] 25.1(e) towards encouraging the parties to settle the case in terms that are fair to each party. Thereafter, in continuing the case management process, after I took conduct in June 2015, the parties were encouraged in accordance with CPR 25.1(c) to use the most appropriate form of dispute resolution to arrive at a settlement. The parties sought a Judicial Settlement Conference for this purpose and Hon. Justice Kokaram graciously facilitated this approach. The parties however failed to achieve a resolution after one year of this process. They indicated that they opted for continuation of the litigation and the Trial was commenced in May Page 10 of 35

11 III. Issues [23] The issues for determination are as follows: i. Whether locus standi to bring this action has been established by the complainants under Section 239 of the Act, namely, a. The First Claimant b. The Second Claimant ii. Whether oppression has been proven and in particular - a. Was there a breach by the Defendants of the reasonable expectations and/or the contents of the agreements and/or understandings between Frost and/or the First Claimant and the First Defendant and/or the Second Defendant pursuant to which the Fifth and Sixth Defendants were incorporated and/or operated; b. If so, was such breach caused by conduct on the part of the Defendants that amounts to oppression, unfair prejudice or unfair disregard ; and c. If the answer to the above is yes, what is the appropriate remedy IV. Evidence and Analysis [24] The Claimants filed two witness statements on 30 September, 2015 as follows: i. Thomas Baker (Second Claimant and a Director of the First Claimant) ii. Gershon Forde (Former employee at the Defendants casino business) These witnesses were both cross-examined when the Trial commenced on 9 May, 2016 Page 11 of 35

12 [25] The Defendant filed five witness statements: i. Sudi Ozkan (Second Defendant, alter ego of Alnando, Director of the Fifth Defendant and principal of Princess International Group of Companies Princess Group ) ii. Christlyn Moore (Fourth Defendant and corporate secretary of the Fifth and Sixth Defendants) iii. Harun Erbay (Former Finance Manager for the Fifth and Sixth Defendants and current General Manager of the Sixth Defendant since 2011) iv. Anil Baraichi (Accounts Manager for the Fifth and Sixth Defendant companies) v. Oguzhan Tayanc (Current Director of Operations at Princess Group with responsibility for overseeing growth in casinos in the Group s Trinidad and Tobago and former Director of Business Development of the Sixth Defendant) [26] Of these, only two of the Defence witnesses were called, namely, Oguzhan Tayanc and Christlyn Moore. Sudi Ozkan was not called due to his absence for reasons of alleged recent ill health. He has at no time over the duration of these proceedings attended Court. An application was made by the Claimants to have his witness statement admitted into evidence in his absence. His witness statement was struck out by ruling herein dated July 28, [27] The only available Director of either of the casino business companies, Zafer Hakan Unal, neither filed a witness statement nor was he called as a witness. As a founding Director of the Sixth Defendant, he was not merely a potential witness who could have given evidence about the expectations based on which the companies were run, but was also the Third Defendant herein. Page 12 of 35

13 [28] The Defendants claim that the decision not to call the other two named witlessness was made at the end of the Trial. The reason given was that as a result of the paucity of the evidence of the Claimants it was not necessary to rely on all their witnesses. As will be evident from my further analysis in this judgment I do not agree that it was unnecessary for the Defendants to support their case by evidence of the Second and Third Defendants as well as the evidence of the two other witnesses with intimate knowledge of the finances, operations and reasonable expectations regarding the Fifth and Sixth Defendants. [29] Thomas Baker, though quite loud and somewhat brusque in his manner of addressing Counsel, did not strike me as a person who by virtue of his alleged poor personality should reasonably have been excluded from continued involvement in the operations of the Fifth and Sixth Defendants. He impressed me as a witness of truth in all relevant respects as to the basis for his claim. [30] Firstly, I found that he gave consistent and compelling evidence about the things Charles Frost told him. That evidence was admitted pursuant to a hearsay notice. The evidence was relevant as to the fact of conversations that Baker had with Frost based on which Baker formed his views on what were the reasonable expectations founding the Fifth and Sixth companies he was to become a part owner of. The evidence that Charles told him that Dallas was entitled to shares, directorship, dividends and business information on the Fifth and Sixth Defendants was credible because Baker was not shaken on it under cross examination. [31] There was no evidence of anyone else that contradicted that these were the reasonable expectations since the Defendants relied solely on Sudi Ozkan to prove this. His evidence was not admitted. [32] Baker s evidence was also logical. It made sense that Baker bought into Dallas because he believed, from his discussions with Frost, that Dallas had reasonable expectations of receipt of shares, meaningful participation by directorship in business decisions and a share in the profits. If that was not what Frost told him why would he have taken the time, money and Page 13 of 35

14 years of litigation to stake his claim in the said companies? It is clear from his actions, including coming to Trinidad and Tobago and taking as active a role as that of Managing Director that these were the Claimants reasonable expectations. [33] Oguzhan Tayanc s evidence was that it was he and not Frost or the Second Claimant who had the top management role in the Fifth and Sixth defendant companies business as Director of Business Development (See para. 12 of his Witness Statement). He said under cross-examination that he did not accept that while Charles Frost was alive, he was regarded as Managing Director of either the Fifth or Sixth Defendants. He said there was never any Managing Director position in the organisational structure. [34] Tayanc s performance under cross examination however did not lend credit to his claim to have been in charge. He testified in a manner that left me with the impression that he lacked in depth knowledge on management issues concerning the business that would have been gained from day to day involvement in its operations. Instead he had more of an overarching, superficial perspective from his role in the operations of the International Princess Group. He could not answer questions about personnel. Particularly, when asked about the alleged sexist remarks made by the Second Claimant, he could not name the employees who had complained. The Second Claimant by contrast spoke with authority regarding the affairs of the business under his brief tenure when he operated at the location as Managing Director. [35] That Baker served as Managing Director is also credible, though denied by the two Defence witnesses. His evidence as to the treatment he was afforded when he first came to take over from Frost tends to corroborate that he was operating as Managing Director. He had all the trappings of the office including an Executive Office room and apartment, a car and body guard. He also received daily reports as a Managing Director would. He was able to commandeer the staff and took charge of projects such as renovation works at the casino. Page 14 of 35

15 [36] It was only when Baker s personality was found to be incompatible that the Defendants stopped treating him like a Managing Director. The first hand testimony about the disagreeable personality of Mr Baker came from the fourth Defendant, a senior female Attorney-at-Law. From Mr Baker s demeanour in Court in response to cross-examination by female Senior Counsel I formed the impression that he may have been trying to get away with not giving due respect. Senior Counsel, perhaps to emphasise a point relevant to her case, allowed this to continue thereby underscoring that it would have been offensive other persons such as the Fourth Defendant had they been treated in a similar manner. That was partly the gist of the complaint regarding Baker s behaviour towards the Fourth Defendant. [37] I noted however that Mr Baker attempted to treat his own Senior Counsel similarly under re-examination but stopped when he was firmly rebuffed. In my view Baker s abrasive style, loud voice and exaggerated pleas as to difficulty hearing soft voices were not endearing but did not justify him being shut out from the business without being bought out or compensated. There was no evidence of malevolence on his part. From the evidence he merely sought forcefully to reap his due rewards from his business investment in the Fifth and Sixth Defendants. [38] This was further borne out in the evidence of his own witness Mr Forde. Forde said that he witnessed Baker having heated arguments with the Turkish element at the members club when the relationship was deteriorating. Baker himself in his witness statement highlights one such confrontation when he was asking Oguzhan Taynac about unexplained wire transfers and financial irregularities. This caused Tayanc to walk off and retract a prior promise to have shares issued. The evidence of these confrontations in my view was not sufficient reason per se to shut the Second Claimant out. Instead it provided a basis for the Defendants to negotiate for an alternate representative of Dallas to be consulted in management decisions or to buy out the interests of the Claimants in the business. [39] The Claimants witness Gershon Forde struck me as frank, forthright and credible. He admitted that his employment with the Defendants at 44 Independence square where he was once assigned to the Second Claimant had been terminated. Though clearly very fond of Page 15 of 35

16 the Second Claimant who hired him on an ad hoc basis after he was excluded by Defendants, Mr. Forde gave honest evidence about his bad temper and arguments with Casino Staff and Management. He was unshaken under cross-examination as to the fact that Frost previously occupied the Executive office used by Baker and that he was instructed by Mr. Erbay to follow the Second Claimant s instructions. He states that he recognised him as Managing Director, as the person in charge of the direction of the company, based on the behaviour of Mr. Erbay. [40] The Fourth Defendant s evidence was largely clinical in nature based on her role as Corporate Secretary. She spoke to the other reason for the continued exclusion, namely, the Defendants alleged concerns as to whether the Second Claimant was genuinely a shareholder and Director of Dallas. As it relates to the unworkable relationship between the Defendants and the Second Claimant, her evidence set in contrast the pleasing personality of Charles Frost who the Second Claimant sought to replace. She spoke with great affection about Frost lauding, inter alia, his soft spoken, conciliatory nature. V. Law and Analysis Standing [41] The Claimants first hurdle in answer to the Defendants submissions was to show that they have standing to make this claim under the Act. S.239 of the Act provides, inter alia, that: complainant means (a) a shareholder or debenture holder, or a former holder of a share or debenture of a company or any of its affiliates; (b) a director or an officer or former director or officer of a company or any of its affiliates; (c) the Registrar; or Page 16 of 35

17 (d) any other person who, in the discretion of the Court, is a proper person to make an application under this Part. First Claimant [42] The Defendants claim that the Second Claimant had to prove that he was authorised to commence the oppression action on behalf of the First Claimant. They claim that he failed to discharge this burden due to the lack of evidence of consulting or seeking approval from the other shareholder. They rely mainly on an affidavit of Chrain Frost, 49% shareholder of the First Claimant which stated her opposition to the litigation. [43] As argued by the Claimants, however, this challenge was neither pleaded nor properly supported by admissible evidence in this action. The affidavit of Chrain Frost filed in relation to the failed attempt by the Frost brothers as interveners to join the matter, was never formally tendered into evidence and thus, never formed part of the Defendants case. Chrain was also not called in person by the Frost brothers or as a witness for the Defendants and so this affidavit remained untested. The Defendants counsel has authority only to represent the Defendants. There is, therefore, no basis for them making submissions that could only be made on behalf of Chrain Frost who has not sought in any way to have the First Claimant struck out as a Claimant herein, though (if it is true that she in fact signed an affidavit for the Frosts) she clearly knows about the proceedings. [44] With regard to the Defendants argument on the lack of evidence of consultation, it is clear that the First Claimant is not required to disclose to the Court or the Defendants the legal advice it may have received as to how to commence the case as well as whether it has a written Dallas Corp Board resolution on the matter. [45] The Defendants further submit that despite documents disclosing the Second Claimant s authority based on a stock transfer, he is not lawfully a shareholder or director of Dallas because he forced Charles Frost to sign over the stock against his will when he was very ill. Page 17 of 35

18 The current challenge as to whether the Second Claimant had approval from Chrain Frost to commence this action by the First Claimant was not part of the pleaded Defence and there was no Evidence in Chief from the Defendants on the point. Instead the Defendants at an early stage of proceedings said they would await the results of litigation by relatives of Frost in St. Kitts, where the Dallas share transfers were executed, as to whether the Second Claimant was a lawful shareholder in Dallas Corp. Proceedings herein were stayed for four years for that purpose. [46] Eventually, after proceedings in both St. Kitts and Florida, there was a final decision by the St. Kitts Court of Appeal confirming the Florida Court decision that the Second Claimant was lawfully a shareholder of Dallas [though technically, the Frost relatives failed to participate in the proceedings so only one side was heard]. Although the said decisions may not have been properly tendered in evidence they are a matter of public record of which the Court can take Judicial Notice. The stay of these proceedings was lifted based on both parties informing the Court of the said Court decisions from St. Kitts. [47] In all the circumstances, particularly the lack of pleadings, evidence and locus standi of the Defendants to complain about how the Second Claimant got the 1 st Claimant company shares from Charles Frost, that issue as to whether the Second Claimant is a lawful shareholder in Dallas Corp, is not before me for determination. I accept that the Second Claimant was a Shareholder and Director of the First Claimant and that the First Claimant appointed him to be their representative on the Fifth and Sixth Defendant Boards. The Defendants have not established that the Second Claimant was not authorised to start this claim in the name of the First Claimant. Any challenge to locus standi of the First Claimant is therefore rejected. Second Claimant [48] It is my finding that the Second Claimant was de facto and de Jure Managing Director of the Fifth and Sixth Defendant companies. Page 18 of 35

19 [49] In Northern Trust Co. v. Butchart 1, the Chief Justice of the Manitoba King's Bench Court stated in relation to an allegation of misfeasance and breach of trust against the directors whom he found jointly and severally liable for these acts: Whether they were legally elected or not makes no difference. They were de facto directors, and for all acts of omission or commission on their part, they are liable in the same manner and to the same extent as if they had been de jure as well as de facto directors. [50] It follows that as liability can be placed upon de facto directors, their actions are considered acts of the company. [51] The Federal Court of Appeal in Wheeliker v Canada [1999] FCJ No. 401 cited with approval the case of MacDonald v Drake (1906), 16 Man. R. 220 (C.A.) at 223: As early as 1906, the Manitoba Court of Appeal in MacDonald v. Drake rejected the defendants' contention that a statutory provision making directors jointly and severally liable for unpaid wages could only be enforced against de jure directors. The Court found that although the defendants were not de jure directors because they did not hold the required shares in their own right, they were ostensibly elected, attended and took part in the meetings as well as acted as directors. They were de facto directors and, therefore, personally liable. [52] According to the Halsbury s Laws of England on De facto directors 2, citing Re Hydrodam (Corby) Ltd [1994] 2 BCLC 180: A de facto director (or a 'director in fact') is a person who assumes to act as a director; he is held out as a director by the company, and claims and purports to be a director, although he is never actually or validly appointed as such. In order to establish that a person is a de facto director of a company, it is necessary to plead and prove that he undertakes functions in relation to the company which could properly be discharged only 1 [1917] M.J. No. 37; 35 D.L.R. 169; [1917] 2 W.W.R Companies (Vol. 14 (2016)) [1761] Page 19 of 35

20 by a director. The touchstone is whether the alleged de facto director has been part of the corporate governing structure, and inherent in that touchstone was the distinction between someone who participated (or had the right to participate) in collective decision making on corporate policy and strategy and its implementation, on the one hand, and others who might advise or act on behalf of, or otherwise for the benefit of, the company, but did not participate in decision making as part of the corporate governance of the company. [53] It is therefore the position under both Canadian and UK law that in order to be considered a de facto director; one must prove that the person undertakes functions in relation to the company which could properly be discharged only by a director. In the present case, the Second Claimant has actively participated in decision-making within the company during the period in which he was present at the office. He claims to have been in charge of handling renovations and also played an active role in employment of staff. This is supported by the layout of his office and the evidence of Gershon Forde regarding his role. It is evident that the Second Claimant stepped into Charles Frost s shoes after he took over his shares in Dallas. This was formalised by resolution of Dallas appointing him as their representative director on the two companies. [54] Although Section 84 of the Act provides for election of a director such that being a Director would normally be a pre-requisite to being a Managing Director, the business reality of this case was that that could not practically be done. There is now only one director of each of the Fifth and Sixth Defendant companies and he is an officer of the First Defendant, the Shareholder that was antagonistic to the Second Claimant. Prior to that there were always two directors. The practicality of how they would agree on a Managing Director is not clear. In any event there is no evidence on how the Fifth and Sixth Defendants operated in this regard. [55] As a matter of business realities however, I accept that Charles Frost operated as Managing Director and was a de facto director. This was evident from my view of the working environment both he and the Second Claimant operated from which was the focus of a Site Visit to the building at 44 Independence Square. On the visit to the premises the Page 20 of 35

21 office used by these two men was seen to be a large rectangular room, with a full sized executive desk, a conference table and an en suite bathroom with shower. It was not outfitted as a multi-purpose or surveillance room as contended by the Defendants but rather as an executive office with conference capabilities. [56] The Legal opinion prepared by the Fourth Defendant in 2011 also confirms that the Second Claimant was entitled to be appointed as a director based on mutual understanding of the First Claimant and First Defendant of each being entitled to appoint a director. I accept as factual the evidence of the Second Claimant as to his managerial functions which included supervising staff and overseeing renovations to the premises. Even if the Second Claimant was not a Managing Director he was an officer of the Fifth and Sixth companies based on his evidence of his role there which I accept as truthful. [57] It is however my finding that both the Second Claimant and Charles Frost before him served as Managing Director of the Fifth and Sixth Defendants as a matter of business realities Based upon the Stock Power (Exhibit TBF ), the Appointment of Manager (Exhibit TBE ), the special resolution (Exhibit CMC ) and the further special resolution (Exhibit CMD ) unequivocal steps were taken by the First Claimant, its alter ego Charles Frost and his successor the Second Defendant to have the Second Defendant replace Frost as Dallas s Director of the Fifth and Sixth Defendants. [58] Furthermore, the Second Claimant made efforts to have the said appointment formalised by the Corporate Secretary of the Fifth and Sixth Defendants. These actions as well as the corroborated evidence of the Second Claimant s operations within the business from the time of the production of his authority to act on behalf of the First Claimant until he was prevented from entering the business premises, sufficiently proved that he was the Managing Director of the said Fifth and Sixth Defendants. Thus I hold that the Second Claimant also has locus standi under S. 239 (b) and s. 242 of the Companies Act. Page 21 of 35

22 Oppression Reasonable expectations [59] S. 242 of the Act provides: (1) A complainant may apply to the Court for an order under this section. (2) If, upon an application under subsection (1), the Court is satisfied that in respect of a company or any of its affiliates (a) any act or omission of the company or any of its affiliates effects a result; (b) the business or affairs of the company or any of its affiliates are or have been carried on or conducted in a manner; or (c) the powers of the directors of the company or any of its affiliates are or have been exercised in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, any shareholder or debenture holder, creditor, director or officer of the company, the Court may make an order to rectify the matters complained of. [60] For the Claimants to succeed in their oppression action, they must prove that the acts complained of are in breach of their reasonable expectations, and that such breach was caused by conduct of the Defendants that amounts to oppression, unfair prejudice or unfair disregard of a relevant interest BCE Inc. v Debenture holders [2008] 3 SCR 560. [61] The Court in the case of Demerara Holdings Limited & others v Demerara Life Assurance Company of Trinidad and Tobago Limited & others CV considered: In determining whether oppression exists, the court would therefore have regard to, among other matters, the reasonable expectations standard of a shareholder in the position of the applicant. Thus in the Canadian case of Walker v Betts Mr Justice D. M. Smith propounded the following: The essence of oppressive and unfairly prejudicial conduct is the abrogation of the reasonable expectations of a shareholder in the position of the Page 22 of 35

23 applicant. The reasonable expectations standard is also applicable to a finding that it would be just and equitable to grant an oppression remedy. In determining a shareholder s reasonable expectations, the court must apply a modified objective test. This test requires objectively identifiable expectations that a shareholder in the applicant s position reasonably would expect to have. Identifying those reasonable expectations is the starting point in determining if conduct was oppressive or unfairly prejudicial. [62] The Claimants reasonable expectations as outlined in the Statement of Case are summarised as follows: i. Shareholdings: that no shares have been issued in either the Fifth or Sixth Defendants, but that these companies have at all times been and are expected to be operated on the mutual and continuing agreement and understanding of the First Claimant and the First Defendant that they were and are owned equally by the First Claimant and First Defendant; ii. Directorship: that it was at all times agreed and it is expected that the First Claimant and First Defendant would enjoy as owners the rights to each have one director on the boards of both the Fifth and Sixth Defendants; iii. Management: it was at all times agreed and expected that all management decisions, divisions of profits and investments in the Fifth and Sixth Defendants would be undertaken on the basis of a 50% ownership in each company of the First Claimant and First Defendant. iv. Provision of records: from the inception of the business and continuing, the practice has been for financial statements, management accounts and audited financial statements to be provided to the Claimants Page 23 of 35

24 [63] The Defendants do not entirely agree that these were the reasonable expectations upon which the Claimants could base the oppression claim. They contend that only Charles Frost and the Second Defendant Sudi Ozkan were privy to the discussions that based the understanding on which the Fifth and Sixth Defendants were incorporated. They say from those discussions the reasonable expectations of the Second Claimant could not have been those pursued in this Claim. [64] As summarised at paragraph 13 of Propositions of Law filed herein on October 26, 2015 the Defendants say that In the context of the corporate relationship in this particular case, the Defendants conduct in not issuing shares to the first Claimant, in not acceding to the appointment of the Second Claimant as a director, in not declaring dividends and in not permitting the Second Claimant unlimited and/or unsupervised access to financial records and information, is not contrary to the reasonable expectations of the First Claimant and the First Defendant and/or Charles Frost Jr and Sudi Ozkan, but has been consistent with the protection and/or fulfilment of same. [65] According to the Halsbury s Laws of Canada 3 at HBC-298: The identification of the reasonable expectations of the parties is partly a question of law (i.e., what are the complainant's rights), and partly a question of fact (i.e., what were the complainant's reasonable expectations within the context of those rights) Useful factors in determining whether a reasonable expectation exists include: general commercial practice; the nature of the corporation; the relationship between the parties; past practice; steps the claimant could have taken to protect itself; representations and agreements; and the fair resolution of conflicting interests between corporate stakeholders. [66] It is my finding that the reasonable expectations were as stated by the Second Claimant in his evidence. General commercial practice dictates that a shareholder be issued his shares in the company and any dividends earned. Further, from the testimony of the Second Claimant, he was informed by Charles Frost that there was an understanding that each 3 Business Corporations (McGuinness) Page 24 of 35

25 company would be entitled to elect a director. There is nothing in the evidence that would sufficiently contradict these expectations. In fact the legal opinion of the Fourth Defendant supports them. Further, in relation to the provision of reports, even if there may not have been any previous requests by the shareholders for such information that does not mean that a shareholder would not have been entitled to receive same if requested. [67] I do not accept therefore that there was, as alleged by the Defendants an understanding that: - the Fifth and Sixth Defendants would operate like a partnership, - there would be no issuing of shares, - there was no need for the First Claimant to have a director on the Boards of the Fifth and Sixth Defendants and - there was no need for the Claimants to receive financial information on the companies. [68] I do not accept as stated by the Defendant s counsel at paragraph 27 of submissions that the Claimants were unable to give any evidence as to reasonable expectations since only the First Defendant and Charles Frost had such knowledge. I agree with the Claimants counsel that there were also the other living initial directors of the Fifth and Sixth defendants Zafer Unal and Chrain Frost who would have knowledge of what was expected at the time of the incorporation of the companies. There was also the Fourth Defendant who was corporate secretary of both from inception. [69] Additionally, there was the evidence of the SecondClaimant [supported by a hearsay notice] that spoke to what Charles Frost would have told him about the understandings on which the Fifth and Sixth companies were operated. The Defendants, themselves, failed to call Unal and Ozkan. However, the evidence of these witnesses could have been useful to the Court and possibly to the Defendants own defence. [70] There are therefore adverse inferences to be drawn from their election not to call these witnesses. As the case stands, however, there is no evidence from the only person alive, Sudi Ozkan, who was privy to the initial discussions based on which the Fifth and Sixth Page 25 of 35

26 Defendant companies were incorporated, and no evidence from the other directors of the company who would have been aware of the understanding reached between the alter egos of the First Claimant and First Defendant. [71] The evidence of the Defendants own witness, Fourth Defendant, Christlyn Moore supported the Claimants in that under cross-examination her legal opinions confirming entitlement to shares and directorship were admitted into evidence. All in all the evidence of the Second Claimant was un-contradicted by any admitted evidence and I accept that the reasonable expectations were those outlined in his testimony. Breach [72] Halsbury s Laws of Canada 4 examining legislation from which the Companies Act of Trinidad and Tobago was modelled states: the Act gives no indication as to the type of conduct that is oppressive or unfairly prejudicial or that unfairly disregards the interests of potential complainants. Quite likely because of this silence, the section has spawned a considerable amount of case law, through which the courts have attempted to graft some meat onto the bare bones of the legislation. To gain a clear understanding of the meaning and scope of the oppression provisions of the CBCA and its equivalents across the country, it is necessary to start with first principles. [73] Halsbury s further explains: the classic case of prejudice or oppression exists where a corporation conducts its business or affairs to confer a benefit on some of its shareholders that it denies (or that is not available) to its shareholders generally, or seeks to impose excessive costs or risks on one group rather than another. It is oppressive for the majority to misuse their control over the payment of dividends to force a minority shareholder to sell his or her shares. 4 Business Corporations (McGuinness) HBC-292 Page 26 of 35

27 [74] It is to be noted that relief granted under s. 242 of the Act is not limited to cases of actual oppression; it is sufficient to show that the complainant's interests have been unfairly disregarded or unfairly prejudiced. [75] In Re BCE Inc., the Supreme Court of Canada provided guidance on the distinction between oppression, unfair prejudice and unfair disregard. The Court held that oppression carries the sense of conduct that is coercive and abusive, and suggests bad faith. By contrast, unfair prejudice may permit a less culpable state of mind that nevertheless has unfair consequences. [76] Further, in Mora Ven Holdings Limited & others v Krishna Persad and Associates Limited; Persad, Krishna H.C.2839/2002 the learned judge, citing Brant Investment Ltd. v- Keeprite 3OR (3d) 289 per Mc Kinlay, L.J. considered at [36]: the cases require the Plaintiffs to prove bad faith on the part of the Defendants in proof of oppressive conduct; on the other hand, bad faith is not required in proof of unfair prejudice or unfair disregard of the Plaintiffs interests as shareholder and/or director, although it may be relevant in determining whether the Defendants have acted unfairly; the issue in such cases is whether the matters complained of have effected an unfair result. [77] It has frequently been stated that each case of oppression turns upon its own particular facts 5. In the present circumstances, my findings are as follows: i. Failure to issue shares - I find oppression was proved based on the Second Claimant s evidence regarding receipt by the Fourth Defendant of instructions from Charles Frost as alter ego of the First Claimant for shares in the Fifth and Sixth Defendants to be issued to the First Claimant, by evidence of a share certificate in the Sixth Defendant prepared for Charles Frost by the Fourth Defendant on March 15, 2006 and by evidence of the Fourth Defendant s legal opinion in 2011 based on which the shares in both the Fifth and Sixth Defendants were to be issued to the 5 Guerrera v. Damiani, [2012] Q.J. No , 2012 QCCA 2007 (Que. C.A.); BCE Inc. v Debenture holders, [2008] S.C.J. No. 37, [2008] 3 S.C.R. 560 (S.C.C.) Page 27 of 35