IN THE SUPREME COURT OF BELIZE, A. D. 2010

Transcription

1 CLAIM NO. 878 of 2010 IN THE SUPREME COURT OF BELIZE, A. D (BANKS HOLDINGS LIMITED ( ( AND ( (BELIZE CITRUS GROWERS ASSOCIATION (INVESTMENT COMPANY LIMITED (CITRUS PRODUCTS OF BELIZE LIMITED Respondent/Claimant Applicant/1 st Defendant 2 nd Defendant Before: Justice Minnet Hafiz Dr. Elson Kaseke for the Applicant/1 st Respondent Mr. Dereck Courtenay SC along with Vanessa Retreage for the Respondent/Claimant D E C I S I O N Introduction 1. In this Application which was heard on the 3 rd May, 2011, the Applicant, Belize Citrus Growers Association Investment Company Limited, applied to the court for an interim declaration until the trial of the Claim or further order that the Resolutions made at an Extra General Meeting of Citrus Products of Belize Limited on the 17 th December, 2010 are valid and effective and that: (a) (b) the appointment of Henry Canton with Citrus Products of Belize Limited was terminated with immediate effect as from the 17 th December, A committee comprised of Denzil Jenkins, Roselia Zabaneh and a Banks Holdings Limited nominee on the Citrus Products of Belize 1

2 (c) Limited Board of Directors was created and became operative with effect from the 17 th December, 2010, for the purposes of the tasks specified in the Resolution. The firm Howarth Belize LLP stood appointed as the independent auditors of the Citrus Products of Belize Limited to conduct a feasibility study of each of the subsidiaries of the Citrus Products of Belize Limited with effect from 17 th December, 2010 and required to report to the membership of Citrus Products of Belize Limited within two months. Grounds of Application 2. The grounds of the application are that: (a) Banks Holdings Limited (BHL), by notice of an urgent application, applied in this Claim for an urgent interim injunction to restrain, inter alia, the Citrus Growers Association Investment Company Limited (ICL) from convening or holding an Extra Ordinary General Meeting of Citrus Products of Belize Limited (CPBL) or from causing the ICL from convening or holding such a meeting pursuant to a Requisition Notice lodged with CPBL by ICL as shareholders of the CPBL dated 2 nd December, (b) The Application by BHL for the urgent interim injunction was refused by the Court. (c) Thereafter, on the 17 th December, 2010, an Extraordinary General Meeting of Citrus Products of Belize Limited was held and the Resolutions were duly passed. (d) To ensure the good corporate governance of CPBL, the Applicant seeks an interim declaration, until trial or further order, that the Resolutions passed at the Extraordinary General Meeting of 17 th December, 2010 are binding and effective. 2

3 The background 3. These proceedings began by Claim Form and Statement of Claim dated 13 th December, 2010, by BHL which claimed against ICL and CPBL inter alia for: (1) A Declaration that the Investment Agreement is valid and binding as between the Claimant, 1 st Defendant and the 2 nd Defendant. (2) A Declaration that the Claimant, by virtue of the Investment Agreement, is entitled to participate in the management of the Company pursuant to and in accordance with the terms of the Investment Agreement. (3) A Declaration that, pursuant to the terms of the Investment Agreement, a 2/3 majority of the Board of Directors is required for the removal and appointment of any executive of the Company, including but not limited to the Chief Executive Officer; (4) A Declaration that pursuant to the Investment Agreement, the powers of the Board of Directors of the 2 nd Defendant can only be delegated by a 2/3 majority vote of the Board of Directors. (5) A Declaration that the material differences concerning the management of the 2 nd Defendant which have arisen among the Claimant, 1 st Defendant and the 2 nd Defendant must be settled through arbitration as provided by Clause 30 of the Investment Agreement. (6) A Declaration that the Claimant has properly commenced the process for settlement of material disputes in accordance with the Investment Agreement and, that the 1 st and 2 nd Defendants are obliged to comply with that process. (7) An order that ICL and CPBL are restrained from engaging in any conduct which would infringe the jurisdiction of any arbitrator or arbitrators appointed by the parties or which would delay or frustrate the arbitration process initiated by BHL in respect of material 3

4 differences which have arisen between the parties hereto, including but not limited to: 1. Causing to occur or conducting any meeting of CPBL whose purpose is to pass a resolution or resolutions having the effect of altering the current management arrangements under which CPBL is governed until the conclusion of the trial of this matter. 2. Terminating the employment contract of Henry Canton with CPBL as Chief Executive Officer or at all until the trial of this matter. 3. Establishing any committee to manage any aspect of the affairs of CPBL, including the terms, remuneration and appointment of the Chief Executive Officer. 4. On the 13 th December, 2010, BHL also applied to the court in these proceedings seeking an urgent interim injunction prohibiting both the ICL and CPBL from holding an extraordinary general meeting or meetings pursuant to a Requisition Notice dated 2 nd December, 2010 for the purpose of passing the following resolutions. a. That Henry Canton s employment with CPBL be terminated; b. That Henry Anderson be appointed as the interim Chief Executive Officer of the 2 nd Respondent; c. That a committee comprised of Denzil Jenkins, Rosella Zabaneh and a nominee of the Applicant be constituted and tasked with setting the terms and conditions of the appointment of the interim Chief Executive Officer and appointing a new Chief Executive Officer upon such terms and subject to such conditions as to remuneration, tenure and otherwise as the committee shall deem to be in the best 4

5 interest of CPBL or for the purpose of passing any resolution having the like effect; and, d. That the quorum for the committee will be two members and the committee shall make decisions based on majority vote of its members. 5. This Court heard the application for the urgent interim injunction on the 16 th December, 2010 and refused the injunction sought for reasons stated in that decision. The extraordinary general meeting of CPBL was thereafter duly convened and held on the 17 th December, 2010 and certain resolutions were passed. The present application of ICL 6. The Applicant, ICL seeks an interim declaration that the Resolutions are valid and effective so that CPBL can enforce those resolutions. This application is supported by the affidavits of Denzil Jenkins and Eccleston Irving both sworn on 29 th March, Mr. Irving deposed that to ensure good governance of CPBL the applicant is seeking an interim declaration that the Resolutions passed at the Extraordinary General Meeting are valid and effective. See Mr. Irving s affidavit for evidence of serious cash flow problems. 8. Mr. Jenkins deposed that on 16 th February, 2011, Richard Cozier, CEO/Managing Director of BHL wrote an e mail to the Secretary of the Citrus Growers Association which was copied to him stating that as far as they are aware the CEO (Dr. Henry Canton) still functions fully in that capacity, the CPBL Board has not cancelled his contract nor terminated his services, and only they can do so. See DJ 2 for a copy of the said . 5

6 9. At paragraph 8 of his affidavit he deposed that on February 11, 2011, Directors Rosella Zebaneh, Antonio Zabaneh, Ivan Williams, Henry N. Anderson and himself had written to Richard Cozier stating that at the Extraordinary General Meeting of CPBL held on the 17th December, 2010, the tenure of office of the CEO of CPBL was determined. See DJ 3 for a copy of the letter to Richard Cozier dated 11th February, 2011, which was copied to all CPBL Directors and transmitted by e mail and fax to each of them. 10. Mr. Jenkins then further deposed that on Friday 18 th February, 2011, the Directors of CPBL met at the Radisson Fort George Hotel in Belize City. Further, that Dr Henry Canton was present at the meeting, and the Directors appointed by Banks Holdings Ltd insisted that the Board of Directors recognized him as the Chief Executive Officer of CPBL, otherwise there would be no meeting. There was no agreement by the Board members on that issue, so the Directors appointed by Banks Holdings Ltd walked out of the meeting, thereby causing the meeting to be aborted. 11. At paragraph 12 of his affidavit, Mr. Jenkins deposed that as a consequence, the business reflected in the Agenda for the meeting could not be done and, for all practical purposes, the Board of Directors of CPBL is not functional, among other things over the issue of Dr Henry Canton, and in the meantime CPBL is making huge losses as reflected in the 2008/2009 audited financial statements of CPBL which were approved by the Board of Directors of CPBL, and in the audited financial statement of CPBL for the financial period 2009/2010, which could not be approved by the Board of Directors of CPBL at the meeting of 18 th February, 2011 because the Directors appointed by Banks Holdings Ltd. walked out of that meeting. 6

7 12. Mr. Jenkins further deposed that the CPBL Board of Directors is dysfunctional and the company is suffering huge losses. As such, to ensure the good corporate governance of CPBL, his position as a Director is that the Resolutions passed at the Extraordinary General Meeting of CPBL on the 17 th December, 2011 should be declared valid and binding by the court, even on an interim basis. Evidence for Respondent, BHL 13. Mr. Allan Fields, Chairman of the Board of Directors of the Claimant/Respondent, BHL deposed that the initial resolution proposed the termination of Henry Canton s appointment as CEO and the appointment of Henry Anderson as interim CEO of the Company. It further proposed the appointment of a committee to determine the terms and conditions of the engagement of the interim CEO of CPBL as well as the terms and conditions of appointment of the new CEO of CPBL when appointed. That this proposed resolution was unilaterally altered by the Chairman in the course of the meeting so that it no longer proposed the appointment of an interim CEO of CPBL and only the provisions relating to the establishment of the appointments committee and the appointment of the independent auditor remained for consideration by the meeting. Further, that BHL never received notice of the proposed amendments, nor did it agree to any such amendment to the Notice or to the resolutions contained therein. 14. Mr. Fields at paragraphs 12 to 15 of his affidavit, deposed on the financial position of CPBL. In answer to both the Jenkins Affidavit and the Irving Affidavit as to losses of CPBL, Mr. Fields deposed that both Affidavits failed to disclose a full and complete picture of the financial experience of CPBL in the financial years of 2002 to That the losses which CPBL suffered in the financial years 2008/9 and 2009/10 cannot fairly be attributed to the fact that Henry Canton has been and 7

8 remains the Chief Executive Officer of CPBL. Nor do the results in those two years evidence a negative trend, having regard to the financial results in the other years of that period. That there are several reasons for the recorded losses, including but certainly not limited to: i. significant capital investment by CPBL in its groves and feed processing mill ii. impact of reduction in world citrus prices iii impact of a diminishing volume of fruit deliveries by the farmers 15. Mr. Fields deposed at paragraphs 16 to 22 as to the Management of CPBL. He deposed that both the Investment Agreement (as amended), as well as the Articles of Association of CPBL provide expressly that the business of the Company shall be managed by the Directors. See Exhibits AF 4 and AF 5 for copy of the Investment Agreement (as amended) and the Memorandum and Articles of Association. 16. Mr. Fields deposed that the purported appointment of a committee to appoint an interim CEO and a new CEO and determine the terms and conditions of such appointment by a shareholders resolution is outside the scope of the powers of the shareholders and as such, cannot be deemed to be a valid resolution. Further, the alleged appointments committee has not been validly constituted, if constituted at all, for the reason, among others that BHL has not been invited to nominate and has not in fact nominated any member thereto with the result that no such committee exists and as such, cannot be declared to have created and became operative. 17. Mr. Fields further deposed from paragraphs 23 to 26 as to the current position of the CPBL. He deposed that since the December 17 th, 2010 meeting, the senior management of CPBL has been under constant attack 8

9 and threats from ICL. Specifically, ICL unilaterally has sought, without resolutions of the Board of Directors of CPBL to do the following: (i) delegate all functions of the CEO to the Chief Financial Officer, Mr. Kent Herrera; (a copy of the letter evidencing such attempted delegation is produced and shown to me marked AF6 and is exhibited hereto); (ii) relieve Henry Canton of his duties as CEO ( a copy of the letter sent to Henry Canton attempting to relieve him of his duties as CEO is now produced and shown to me marked AF7 and is exhibited hereto); (iii) restrict Henry Canton s use of CPBL property including the telephone and motor vehicle given to him for his use as CEO; (iv) advertised for the position of CEO using the logo of CPBL; ( a copy of the advertisement as it appeared on the television is now produced and shown to me marked AF8 and is exhibited hereto); and, (v) published several articles in the newspaper notifying the public that Henry Canton is no longer the CEO of CPBL (a copy of one such article is now produced and shown to me marked AF9 and is exhibited hereto. 18. Mr. Fields deposed that it is the position of BHL that ICL has no power to act on behalf of CPBL for the above purposes even if the resolutions were treated as being valid. That, ICL would not be in a position to act on behalf of CPBL despite its status as majority shareholder. Further, that if 9

10 the interim declarations which are sought are granted, it would result in the following: (i) (ii) (iii) (iv) (v) Henry Canton will be removed from his office as CEO without the Board of Directors having resolved to remove him (as is required by the Articles of Association and the Investment Agreement); The present CEO will be absent at a time when the Directors are in deadlock and therefore unable effectively to give support direction and supervision to those who must carry on the business of the Company; ICL may with impunity arrogate to the shareholders the management functions of the Board of Directors; The shareholders of the Company would, by relying on the provisions of the Articles of Association and ignoring the provisions of the Investment Agreement be able to pass resolutions concerning management by simple majority without obtaining the concurrence of BHL as required by the Investment Agreement; BHL will thus have been denied the agreed protection from absolute control of the Company by the majority shareholder which was the basis upon which BHL agreed to make its investment in CPBL. 19. Mr. Fields further deposed that the Investment Agreement was deliberately drafted to provide the necessary protection for BHL and its Investment in the Company against the absolute control by the majority shareholder and this is the basis on which BHL made its investment in CPBL. That, if ICL is allowed to persist in its course of action, the entire Investment Agreement would serve no useful purpose. 10

11 The submissions 20. Dr. Kaseke for ICL submits that the application is urgent as things are not well at CPBL as Dr Henry Canton, despite of having had his contract duly terminated by CPBL in extraordinary general meeting effective 17 th December, 2010, has refused and continues to refuse to demit office. Further, that the position of the majority shareholder of CPBL, namely, ICL, the Applicant, is that the employment of Dr. Henry Canton as CEO of CPBL was effectively terminated by CPBL by the Resolution of CPBL in extraordinary general meeting on 17 th December, Further, that the Resolution is a decision of CPBL [and not of either BHL or BCGAICL], which was duly passed in accordance with section 71 of the Companies Act, Chapter 250, and which is binding on CPBL. 21. Dr. Kaseke referred to the evidence of both Mr. Irving and Mr. Jenkins to show that CPBL has been losing millions of dollars in the past two consecutive years under the managerial leadership of the former CEO of CPBL, Dr Henry Canton. 22. Dr. Kaseke contends that the matters for which the interim declarations are sought therefore relate purely to the internal management of CPBL, and as a general rule, Courts are very slow to interfere in the internal management of the companies. Learned Counsel relied on Burland v Earle [1902] AC 83, at 93, per Lord Davey and Isle of Wright Railway Co. v Tahourdin [1883] 25 Ch.D. 320 (CA) where the court refused an application by the Directors of a statutory company for an injunction to restrain the holding of a general meeting with a purpose to appoint a committee to reorganize the management of the company. 23. See further the case of Marshall s Valve Gear Company Ltd v Manning, Wardle & Co. Ltd [1909] 1 Ch. 267 where it is stated that the majority shareholder has a right to enforce Resolutions of a company if the 11

12 majority shareholder knows that the Resolutions are not being enforced, whether by the Directors of the company or by the company itself. At p. 273, Neville J held that I ought not interfere with the progress of the present action, because it is brought with the approval of the majority of the shareholders in the company, and, upon the decisions which I have referred to, they are the persons who are entitled to say aye or no, whether the litigation shall proceed. 24. Learned Counsel relying on the said authorities submits that it is therefore lawful for the majority shareholder of CPBL, namely ICL, to ensure that where CPBL makes decisions by Resolutions in general or extraordinary meeting, CPBL carries those Resolutions into effect. Further, from the evidence of Mr. Jenkins the Board of Directors of CPBL could not and cannot transact business because of the Dr. Canton matter. Learned Counsel submits that where the Board cannot function, company law principles dictate that the company, in either general, extraordinary or special meeting, will make the necessary decisions, because the company belongs to the shareholders who are the investors in the company. See Barron v Potter [1914] 1 Ch Learned Counsel, Dr. Kaseke further submits that Article 122 of CPBL s Articles of Association specifically vests in CPBL in general meeting the power to terminate the employment of the CEO or any other manager. See Shaw And Sons (Salford) v Shaw [1935] 2 KB 113 (CA) where Greer LJ held that where by the Articles of Association certain powers are vested in the company in general meeting, the company in general meeting, and no one else, is the entity which at law is authorized to exercise those powers. 26. Learned Counsel submits that in the case at bar, CPBL exercised the powers vested in it by Article 122 of its Articles of Association, and the 12

13 decision arising therefrom should be given validity at law. That if those Resolutions are not given validity at law, it would mean that when the Court declined to grant the injunction restraining the holding of the extraordinary general meeting, on the 14 th December, 2010 the Court was acting in vain, because the Resolutions to be made thereat would in any event have no force or validity. Further, it would lead to the incongruous result that the Court effectively allowed CPBL to expend both time and money in holding an extraordinary general meeting when nothing would come out of the Resolutions made thereat. 27. On the applicable law of interim declaration, Learned Counsel submits that the CPR 2005 provides at R17 (1) (b) that the Court may grant interim remedies including an interim declaration. Dr. Kaseke pointed out however, that there is no decided case which could be found by attorneys for the Applicant where the applicable principles for the grant of interim declarations have been authoritatively and clearly stated by the courts. That courts have granted interim declarations on a case by case basis, based on the interests of justice, without enunciating clearly identifiable principles of law which apply in every case: see The NHS Trust v Ms T [2004] EWHC Dr. Kaseke went on to submit that there are however, some principles from judgments dealing with declaratory relief which Learned Counsel submits is applicable to the case at bar. He referred to Financial Services Authority v John Edward Bourke (Trading As J.E. Rourke & Co) [2001] EWHC 704 (ch) where Mr. Justice Neuberger stated, in respect of declarations, that It seems to me that, when considering whether to grant a declaration or not, the Court should take into account justice to the Claimant, justice to the Defendant, whether the declaration would serve a useful purpose and whether there 13

14 are any other special reasons why or why not the court should grant the declaration. (at p. 5) At page 4 the Learned Justice stated: the power to make declarations appears to be unfettered. As between the parties in this section, it seems to me that the Court can grant a declaration as to their rights, as to the existence of facts, or as to principle of law, where those rights, facts, or principles have been established to the Court s satisfaction. The Court should not, however, grant any declarations merely because the rights, facts or principles have been established and one party asks for a declaration. The court has to consider whether, in all the circumstances, it is appropriate to make such an order. 29. Learned Counsel, Dr. Kaseke further submits that in the interest of BHL, ICL and CPBL the issue that Dr Henry Canton s employment was determined effective 17 th December, 2010 should be resolved at an early stage, even on an interim basis, because (i) Dr Canton is still making managerial, financial and policy decisions for CPBL when CPBL s Resolution of 17 th December, 2010 effectively determined his employment contract forthwith, (ii) CPBL has been posting huge financial losses for the past two consecutive financial years under the leadership of Dr Canton, and serious legal consequences will arise if this trend continues, given that he is currently making managerial, financial and policy decisions for CPBL, (iii) the CPBL Board of Directors is paralysed because of divisions caused by the issue of whether Dr Canton is or is not CEO of CPBL. 30. Learned Counsel further submits that the special reasons applicable to this case is that there is no dispute under the Investment Agreement between BHL and ICL [on the one hand] and CPBL [on the other hand] relating the Resolution terminating the employment of Dr Henry Canton in particular, or of the Committee duly established to appoint his successor in office by 14

15 everyone. Further, all that is requested of the Court is to pronounce on the validity of the Resolutions themselves to enable their enforcement. 31. Further, Learned Counsel submits that leaving Dr Canton operating as CEO of CPBL when CPBL terminated his employment contract effective 17 th December, 2010 would be foisting a CEO on CPBL when by its own very decision CPBL decided that it did not want Dr Canton as its CEO. In addition, the managerial, financial and policy decisions which are being made by Dr Canton on behalf of CPBL are very special reasons, why the interim declaration should be granted. As such, it is appropriate to make the interim declaration sought. Further, that in injunction law, the comparable principle is that of balance of convenience and in the case at bar, the balance of convenience favors the granting of the interim declaration sought. Submissions by BHL in response to application 32. Learned Senior Counsel, Mr. Courtenay submits that the principal reliefs sought in the Claimant s Claim Form are declarations pertaining to the validity and enforceability of the terms of the Investment Agreement dated the 31 st May 2006 to which the Claimant and Defendants are parties. Further, Learned Counsel submits that in the current Application made by way of interim relief and before a trial or determination of any of the issues raised by the substantive claim, it seeks to circumvent the binding provisions of the Investment Agreement governing the relationship of all three parties. That the application seeks to have the Court declare that Resolutions passed at the extraordinary general meeting on the 17 th December 2010 (i) are valid and effective and (ii) that certain events have in fact occurred as the result of the passing of those Resolutions. 15

16 33. Mr. Courtenay submits that the opposition to the current application is the fact that the three parties have freely entered into a contract governing the manner in which they shall conduct themselves and the business of CPBL, including the matters upon which declarations are sought, and to grant such declarations would be to sanction breaches of that contract. Further, the present application seeks to ignore any contractual imperative imposed by the Investment Agreement and to invoke the assistance of the Memorandum and Articles and the Companies Act in doing so. Further, it would be unusual if by the device of interim declaratory orders the Claimant was to be deprived of the opportunity of pursuing its contractual right to insist that the management of CPBL shall be conducted in the manner as the parties have contractually agreed that it should. Learned Counsel on the enforceability of such shareholder agreements, relied on Eton Consultants Holdings Ltd. and James Spencer Greene vs. Dorot Properties and Holdings Ltd. et al (unreported) BVI HCV2007/0209; Russell vs. Northern Bank Development Corp. Ltd. et al (1992) 3 All ER Learned Senior Counsel, Mr. Courtenay further submits that the terms of the Resolutions passed at the Extraordinary General Meeting held on the 17 th December 2010 are significantly different from the resolutions of which notice was given to the shareholders. That question arises as to the propriety of the passage of such Resolutions in their final form of which no prior notice was given to persons invited to attend the meeting. The Notice informed of the intention to nominate and appoint Mr. Henry Anderson as interim CEO upon terms to be determined by a proposed Appointments Committee. That what was put to those who attended the meeting was that the Committee should make the nomination and determine the terms of appointment. 16

17 35. Learned Senior Counsel, Mr. Courtenay submits that in relation to the third declaration sought, the Court is asked to declare that Howarth Belize, LLP stood appointed as the independent auditors.with effect from 17 th December, 2010 and were required to report to the membership of CPBL within two (2) months, i.e., by a date in February, Learned Counsel argued that as a practical matter, in the absence of any evidence at all as to what has transpired in this, it would be inappropriate for such a declaration to be made as to a state of affairs which may or may not in fact exist. 36. Further, Learned Counsel submits that with regard to the second declaration sought, to the effect that an appointments committee was created and became operative with effect from 17 th December, 2010, the establishment of such a committee is ultra vires the provisions of the Articles which provide for the delegation of any of the powers of the directors by the establishment of sub committees of the Directors to be appointed by the Board of Directors. That there is no provision in the Articles for appointment of such sub committees by the shareholders. 37. As for the first declaration sought, Learned Counsel submits that the language is in terms that it shall be declared prospectively, which is that Dr. Henry Canton s appointment with CPBL shall be terminated with immediate effect. That the Resolution passed does not purport to arrogate to the shareholders the power and responsibility of the Directors conferred by the Articles to actually terminate the appointment. Further, that the engagement and termination of employees is a function of the Board of Directors and the resolution in its terms did not purport to exercise that function. Learned Counsel further argued that Article 122 does not empower the Shareholders to remove a CEO. 17

18 38. In further submissions, Mr. Courtenay submitted that in keeping with the usual practice, CPBL s Articles of Association provide for the decision making function to be exercised by the Directors, except in those cases where the Companies Act or the Articles of Association require particular decisions to be made by the shareholders. Also, that the Investment Agreement assigns total responsibility for the management of the business of the Company to the Directors, in so far as the Companies Act does not make other provision. 39. On the interim declaration sought, Learned Senior Counsel, Mr. Courtenay submits that while there is provision in the Rules for granting interim declaratory relief, it will not be granted in run of the mill cases where alternative interim relief is available. See Zamir and Woolf The Declaratory Judgment at pgs and Bank of Scotland vs. A Ltd. (2001) 1 WLR 751 at p. 768). 40. Further Learned Senior Counsel argues that in exceptional cases where the Court will consider granting interim declaratory relief, the tests to be applied would be similar to those applied in granting injunctions with specific emphasis however on determining where the balance of convenience lies. (See Zamir and Woolf (supra) at page 95). 41. Mr. Courtenay contends that the central issue is where the balance of convenience lies. He referred to the Affidavit of Eccleston Irving and argues that the termination and replacement of a CEO and the commissioning of a feasibility study of subsidiaries are all matters which could be and are properly dealt with by the Board of Directors. Further, there is no evidence that any resolution to this effect has been placed before the directors and been considered or refused by the Board. That the majority shareholder has elected to avoid having these matters brought to the Board where the voting agreement requires that the 18

19 minority shareholder shall concur in the decision. Further, Learned Senior Counsel contends that the Court should not interfere by making declarations having the effect of sanctioning the circumvention of the protective clauses of the Investment Agreement and so interfering with the internal management of CPBL. Learned Counsel relied on Burland vs. Earle (1902) A C S 3 at p 93 Lord Davey said, It is an elementary principle of the law relating to joint stock companies that the Court will not interfere with the internal management of companies acting within their powers, and in fact has no jurisdiction to do so. Determination 42. The two shareholders of CPBL are BHL and ICL. ICL is the majority shareholder and BHL is the minority shareholder. It is the company CPBL that passed the resolution which is the subject of this application. Though the present application at bar was served on CPBL, they chose not to oppose or support same. Submissions were made only by ICL, the Applicant seeking the interim declarations. 43. Three resolutions were passed by the Company as shown below. The main contention is the one passed to terminate the appointment of Dr. Henry Canton, CEO of the Company. The affidavit of Mr. Irving at Exhibit 1 shows the resolutions which were passed by the shareholders. It states: RESOLVED THAT: In pursuance of Article 122 of the Articles of Association of the company and otherwise in pursuance of the powers of the company in general meeting, the employment of Henry Canton with the company shall be terminated with immediate effect. 19

20 RESOLVED THAT: 1. A committee comprised of the following persons: Denzel Jenkins Rosella Zabaneh BHL nominee on the CPBL Board shall hereby be constituted and tasked forthwith with: (1) Setting the terms and conditions of the appointment of the new CEO. (2) Appointing a new CEO upon such terms and subject to conditions as to remuneration, tenure and otherwise as the committee shall deem in the best interest of the company. 2. The quorum for the committee will be two members and the committee shall make decisions based on majority vote of its members. RESOLVED THAT: The firm of Horwarth Belize LLP shall be appointed as independent auditors to conduct a feasibility study of each of the Company s subsidiaries and to report back to the membership within two months. 44. The court is of the view, having carefully considered the evidence in this application and the submissions on both sides, that the balance of convenience lies in refusing the interim declarations sought. The court is not convinced by the evidence that Dr. Canton is the reason why CPBL is experiencing financial difficulties. Further, there has been a delay of 20

21 over four months before an application to determine the validity of the resolutions, has been made. All this while Dr. Canton continues to be the CEO of CPBL. Under such circumstances, the court does not find it appropriate to determine the validity of the resolutions at this interim stage in order to ensure good corporate governance of CPBL. See Financial Services Authority v John Edward Bourke (Trading As J.E. Rourke & Co) [2001] EWHC 704 Instead, the court intends to fast track the substantive action so that all the issues could be fully ventilated. Accordingly, the following order is made: 45. Order The Interim Declarations sought by the Applicant, Belize Citrus Growers Association Investment Company Limited is refused. An early trial date is to be fixed for the substantive action. Cost in the cause.... Minnet Hafiz Supreme Court Judge Dated this 26 th day of May,