(1) Eton Consultants Holdings Ltd (2) James Spencer Greene Applicants/Claimants v (1) Dorot Properties and Holdings Ltd (2) Dorot Malta Ltd (3) Dr. Zvi Dinstein (4) Mr Matis Cohen (5) English & Continental Holdings Ltd (6) English and Continental Properties Ltd (7) Ramon Greene Respondents/Defendants
| Jurisdiction | British Virgin Islands |
| Judge | HARIPRASHAD-CHARLES J |
| Judgment Date | 07 January 2008 |
| Neutral Citation | VG 2008 HC 1 |
| Judgment citation (vLex) | [2008] ECSC J0107-1 |
| Date | 07 January 2008 |
| Court | High Court (British Virgin Islands) |
| Docket Number | Claim No. BVIHCV2007/0209 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
(CIVIL)
Claim No. BVIHCV2007/0209
Mr Richard Morgan of Maitland, London with Mr Philip Kite and Ms Emma Sparshott of Harney Westwood & Riegels for the Applicants
Ms Jo Cunningham and Ms Arabella di Iorio of Maples & Calder for the First to Fourth Respondents
Mr Paul Dennis of O'Neal Webster for the Seventh Respondent
On 17 September 2007, I granted an interim injunction restraining the First to Fifth Respondents from causing or procuring the Fifth Respondent, English & Continental Holdings Ltd ("ECH") by its board of directors, from passing or implementing any resolution, save in accordance with a unanimous vote of its Directors in favour of a resolution passed at a lawfully convened meeting.
This is the first return date and the Applicants seek to continue the Order until trial or further order. The First to Fourth Respondents (conveniently referred to as "the Respondents") tenaciously opposed the application. They say firstly, the Applicants are unable to demonstrate that there is a serious issue to be tried, and secondly, their failure to make full and frank disclosure of all material facts and to present fairly to the Court at the ex parte hearing, matters which the Respondents might rely upon by way of defence is sufficient ground to discharge the injunction.
The First Applicant, Eton Consultants Holdings Limited ("Eton") owns 30% and the Second Applicant, James Spencer Greene ("James Greene") owns 20% of the issued and paid up share capital of ECH, a company incorporated in the British Virgin Islands ("BVI"). Eton is beneficially owned by Mr Julian (Jack) Reilly.
The First Respondent, Dorot Properties and Holdings Limited ("DPH") owns the Second Respondent, Dorot (Malta) Limited ("Dorot Malta") (collectively called the "Dorot parties") which owns the remaining 50% of the issued and paid up share capital of ECH.
The Third Respondent, Dr Zvi Dinstein and the Fourth Respondent, Mr Matis Cohen are directors of ECH appointed by or on behalf of DPH or Dorot Malta. The other two directors are Clermont Corporate Services Limited (a Company incorporated in Monaco), appointed as a director of ECH at the request of Eton and James Greene. The business of ECH is in real estate development.
The Sixth Respondent, English & Continental Propertied Ltd ("ECP") and the Seventh Respondent, Mr Ramon Greene ("Ramon Greene") are joined in a formal capacity as being parties to the agreements dated 30 June 2005 and 27 March 2006 respectively. The latter agreement is at the core of the dispute in this action. Ramon Greene is James Greene's father.
ECH was originally incorporated on 5 September 2001 as a company limited by shares under the International Business Companies Act, Cap. 291 with all of the issued share capital being held by James Greene. From 2001 onwards, the Dorot parties became involved in a number of business opportunities and joint ventures with Ramon Greene. One of those joint ventures was related to a group of companies held by ECP. In turn, the shares of ECP were held equally by Dorot Malta and ECH. Between 2001 and 2005, ECP was short of funds and the Dorot parties provided several substantial loans and securities to ECP and the joint venture companies held by ECP. It is alleged that by June 2005, significant debts were due and owing to the Dorot parties and as security for those debts, Ramon Greene granted a charge over ECH's shares in ECP in favour of DPH. Additionally, by mid-June 2005, the Dorot parties had a claim against Dock Lane Properties Limited, a company whose original sole shareholder was Ramon Greene, for approximately £2.65 million in damages arising out of alleged misappropriation of funds.
Designed to take account of the significant debts and also a way forward, the parties decided to draw a line and entered into a new joint venture agreement on 30 June 2005 ("the 2005 Agreement") whereby the shares in ECH were allocated amongst three parties such that Dorot Malta holds 50%, James Greene holds 20% and Eton 30%. The Agreement also contained provisions for repayment of significant debts due to the Dorot parties. 1 It was signed by Mr Jehuda Maimon on behalf of the Dorot parties and Ramon Greene and James Greene ("the Greenes") on behalf of ECP and ECH. Following that Agreement, Mr Reilly was appointed as Manager and Eton became the legal owner of the 30% shareholding referred to in the 2005 Agreement.
The Applicants alleged that in or about March 2006, Messrs Ernst & Young, the auditors of DPH were finalising the preparation of the consolidated accounts for 2004 and 2005 for DPH in Israel and needed to see documentary evidence for audit and accounting purposes. They alleged that it was in these circumstances DPH, its lawyers or accountants drafted up the 2006 Agreement which was executed by all the parties thereto on 27 March
2006 ("the 2006 Agreement"). The Dorot parties dispute this allegation and say that they were unaware of such agreement which if it were presented to their board of directors, would not have been approved since it was contrary to the interest of the Dorot parties or ECH. As already stated, this Agreement is at the heart of the dispute in this actionOn or about 25 October 2006, the Memorandum and Articles of Association of ECH were amended and restated. Despite the express provision in Clause 2 of the 2006 Agreement, neither the minutes nor the amendments in the Articles of Association reflect the provision that all resolutions adopted by the board of directors should be adopted unanimously. In fact, article 68 of the restated Articles of Association expressly provides that "questions arising at any meeting shall be decided by a majority of votes; in case of an equality of votes the Chairman shall have a second or casting vote."
In about late 2006/early 2007, it became palpably clear that the relations between the various parties were declining which resulted in a falling out between Dr Dinstein and Mr Maimon 2. Following the schism, relations between the Applicants and the Respondents worsened. As a consequence, the parties entered into negotiations which led to the execution of an Agreement on 9 March 2007 ("the 2007 Agreement"). The Applicants agreed, amongst other things, to sell and transfer their shares in ECH to Dorot or its nominee and forgive all debts owed to them in consideration of the payment of £400,000 along with a full and final settlement of all claims against them by Dorot or any of its subsidiaries and by ECH and any of its subsidiaries and vice versa. It was an express term of the Agreement that the parties would use their best endeavours in relation to the performance of the Agreement which to date, has not been performed but which, for present purposes, I need not be troubled with.
The application for the ex parte injunction came before me at 4.38 p.m. on 17 September 2007 on very short notice and as a matter of urgency; the scurry being that a board
meeting was scheduled to take place at 9.00 a.m. GMT on 18 September 2007. Fully cognizant of the fact that I did not have much time to sufficiently acquaint myself with the application, Learned Counsel for the Applicants, Mr Kite took me through the affidavit of Richard James Bamforth("Mr Bamforth") which supported the application as well as some of the exhibitsThe Applicants alleged that a board meeting of ECH is scheduled to take place in less than 12 hours and one of the items listed on the Agenda to be considered was the composition of the board of directors of the Company and its subsidiaries. They feared that Dr Dinstein and Mr Cohen proposed to vote to remove the Applicants' appointed directors from the board of ECH, by using the casting vote of Dr Dinstein.
It was further alleged that no papers had been provided to the directors in advance of the meeting but it was apparent that the intention of the Dorot parties was to continue with their strategy of removing James Greene and Clermont from the board by (i) convening a board meeting again giving the minimum possible notice; (ii) ensuring that the board meeting is scheduled to take place at a time least convenient for James Greene and (iii) using the Chairman's casting vote in order to remove the Directors nominated by Eton/ James Greene from the board, thereby enabling them to take control of ECH, wholly in breach of the 2006 Agreement and more specifically, Clause 2 3 which expressly provides:
"Eton, JG and Dorot Malta agree that any and all decisions brought before any shareholders or class meeting of ECH and any resolution proposed to be adopted by ECH's board of directors (or any committee thereof), may only be adopted unanimously. The parties shall take all necessary actions in order to implement the same in ECH's organizational documents."
The Applicants' case is that the Dorot parties and ECH expressly agreed that unanimity was going to be required in decisions not only at shareholder level but at board level when they executed the 2006 Agreement. They also say that even though the 2006 Agreement does not show the signatures of James Greene or his father, the Greenes did sign the Agreement and that no issue had previously been raised as to its validity.
The Applicants alleged that at a board meeting of ECH on 28 March 2007, the board unanimously resolved that "the appointment of Dr Dinstein as Chairman of the board until further notice shall be...
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