Supreme Court Claim No 712 of 2010

IN THE SUPREME COURT OF BELIZE, A.D. 2012 CLAIM NO. 712 of 2010 PROGRESSO HEIGHTS LIMITED CLAIMANT AND WILFRED P. ELRINGTON 1st DEFENDANT PITTS AND ELRINGTON 2nd DEFENDANT Hearings 2011 20th October 3rd November 9th December 2012 4th January 20th January 28th February Mr. Eamon Courtenay SC and Ms. Pricilla Banner for the claimant. Mrs. Alfia Elrington-Hyde for the defendants. LEGALL J. JUDGMENT The Parties 1. The claimant is private limited liability company incorporated in Belize on 21st July, 2003 under the Companies Act Chapter 250 with 1 registered offices, according to the Memorandum of Association, at Cedar Bluff, Cayo District, in Belize. According to the first defendant, the registered office of the claimant is 50 North Front Street, Belize City, in a building where the law office of the defendants are located, though the claimant never operated out of that office. The share capital of the claimant is $10,000 divided into 10,000 shares of $1.00 each. There are three subscribers to the share capital, namely Lawrence Schneider holding 5,500 shares, his son, Adam Schneider, with 2500 shares and Wilfred Elrington, the first defendant holding 2000 shares. The claimant has two directors – Lawrence and Adam Schneider – and its objects are, among other things, to purchase and acquire and develop land in Belize for sale as residential, commercial and industrial properties. 2. The No. 1 defendant is an attorney-at-law and senior counsel, and was retained for purposes of the incorporation of the claimant. As from the 8th February, 2008, he held a ministerial position in the Government of Belize, as Attorney General and with responsibility for foreign affairs and foreign trade. At present, he holds the responsibility for foreign affairs and trade. Prior to February, 2008 he says he was a practicing partner in the law firm Pitts and Elrington – the second defendant; but his name still appears on letter head documents of that firm. The second defendant is a law firm with about five attorneys and clerical staff situate at 50 North Front Street, Belize City. 2 The Fundamental Disputes 3. Several pieces of land in Belize were acquired by the claimant for investment purposes, including a large piece of land at Progresso Village, Corozal District, for subdivision and development and sale. The first defendant believed that major sales of properties by the claimant located at the said Progresso Village exceeded US$5.7 million and that his share of the proceeds should have been, according to him, approximately US$1.144 million; but to date he says he was only paid US$253,800. The first defendant also alleged that directors of the claimant made other payments from funds belonging to the claimant, in contravention of its objects, for their personal use; and the use of other companies and individuals and without lawful authority of the claimant. It was also alleged by the first defendant that the claimant, in its administration and operations and functions, failed to comply with several provisions of the Companies Act and also acted contrary to its own objects as stated in its Memorandum of Association. After attempts to resolve the above disputes failed, the first defendant in June 2010 filed a Claim No. 566 of 2010 in which he claimed against the claimant in this action several reliefs as follows: “1. A declaration that the affairs of the defendant be investigated; 2. A declaration that the two directors and majority shareholders are acting illegally and dishonestly in relation to the defendant; 3. An order appointing a competent inspector in investigate the affairs of the 3 defendant including investigations of the financial statements to determine the assets and liabilities of the Company and the legality or otherwise of disbursements of the earnings made by the defendant; 4. An order that any and all rights and entitlements of the claimants since the 21st day of July 2003 should be accorded and or be paid to the claimant; 5. An order that pending the completion of the report of the inspector the defendant be restrained from dealing with or alienating or disposing of any of its real estate and other assets; 6. An order that the two directors personally pay for the cost of the investigation; 7. Any and such other relief which the court thinks fit." 4. The defendant in the above claim (the claimant in this action) filed on 12th October, 2010 this claim against the defendants for the following reliefs: “1. The delivery up of all closing documents including documents, certificates of title, and receipts in the defendants’ possession or control for properties sold by the said claimant to various purchasers over the period September, 2009 to June, 2010. 2. Payment of the sum of $26,120.22 had and received by the defendants. 3. Damages including special damages. 4. Interest. 5. Costs. 4 6. Any further or other relief which this Honourable Court deems just.” Applications 5. An application was made by the defendants in this claim for the matters to be heard together, which application was objected to by the claimant. After hearing arguments by both sides, I ruled that both claims 566 and 712 of 2010 would be heard together. In both claims, the parties are largely the same. In both claims, allegations of fraud and unlawful behaviour of the company are raised. Holding separate trials would seem to result in the court having to take and consider aspects of the same evidence twice. Moreover, I thought that hearing the matters together would result in the matters being dealt with expeditiously, in accordance with the overriding objective of the Rules. 6. Having ruled that the matters would be heard together, the court at the same time made case management orders requiring the parties in both claims to make standard disclosures, to file and serve witness statements at specified dates; and the court fixed 7th June, 2011 a date for pretrial review. On that date, the parties in both claims had not complied with the case management orders, and an extension of time was applied for and granted for them to do so, at which time the parties complied with the case management orders, and the 10th October, 2011 at 9:00 was fixed for trial of both claims. 5 7. Before that trial date arrived, the claimant in this action applied on 30th September, 2011, that the witness Lawrence Schneider be permitted to give evidence and be cross-examined by video link or teleconferencing, on the general ground that, if he came to Belize, to give evidence, he would suffer personal harm, and that the “respondent will cause me to be arrested on criminal charges,” to use his own words in paragraph 14 of his affidavit. The defendants objected to the application on the general ground that “the alleged fear of arrest and imprisonment in paragraph 14 of his affidavit is wholly unfounded”: see paragraph 22 of the first defendant affidavit. The parties, surprisingly, on 3rd November, 2011, agreed to a consent order that Lawrence Schneider give evidence by video link which order was entered and perfected on 29th November, 2011. 8. At the said hearing on the 3rd November, 2011, the learned senior counsel for the defendant in claim No. 566 of 2010 informed the court that he was prepared to advise his client to agree to the inspection – reliefs claimed in the said action – and try to agree on an order for the appointment of an inspector. Learned counsel on the other side had no objection to that proposal. It was agreed by the parties that a draft order would be prepared. As a result of that position, the court fixed 8th November, 2011 to lay over the draft consent order, and fixed the trial of the other claim, this matter 712 of 2010, for 9th December, 2011. Up to now the draft order has not been submitted to the court. 6 9. The trial in this matter commenced on 3rd January, 2012, and two witnesses testified in the whole case – Lawrence Schneider for the claimant and Wilfred Elrington for the defendants. Schneider filed a witness statement, clause 1 of which states that he was duly authorized to make the statement on behalf of the claimant. It was submitted that the claim must fail because the claimant has produced no evidence that it decided to institute this action or that Schneider was duly authorized to make the witness statement. The evidence is that there are two directors of the claimant – Lawrence Schneider and Adam Schneider holding the majority shares in the claimant. In relation to decisions of the claimant’s affairs, the evidence is that Lawrence Schneider always discussed matters with the other director before decisions are made. Moreover, Lawrence Schneider testified that there are ratifications that were prepared about three or four months ago ratifying the directors actions. In relation to whether there is any signed document by the directors which states that Lawrence Schneider has the authority to make the witness statement on behalf of the claimant, this witness testified that he did not have it in his possession and that it is retained by his attorney. On the above evidence, I think that the claimant has proven, on a balance of probabilities, that the claimant duly authorized the claim and that Schneider was duly authorized, as he swore he was, to make the witness statement on behalf of the claimant. 10. The defendant also raised the issue of authorization by the claimant to its counsel to represent it in the claim, and relies on the well known 7 case of Danish Mercantile Co.

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