Dejoria and Island Company Ltd v Osco-Bingeman et Al
| Jurisdiction | Anguilla |
| Judge | Gordon, J.A.,Barrow, J.A.,Rawlins. J.A. |
| Judgment Date | 24 April 2006 |
| Neutral Citation | AI 2006 CA 1 |
| Docket Number | Civil Appeal No. 4 0f 2005 |
| Court | Court of Appeal (Anguilla) |
| Date | 24 April 2006 |
Court of Appeal
Gordon, J.A.; Barrow, J.A; Rawlins, J.A.
Civil Appeal No. 4 0f 2005
Mr. Kenneth MacLean, QC with Ms. Jenny Lindsay for the appellants
Mr. James Corbett, QC with Mr. Keithley Lake, Mr. Mark Brantley and Ms. Cora Richardson Hodge for the respondents
Company law - Unanimous shareholder's agreement — Validity — Enforceability as a matter of Anguillan law.
By a fixed date claim the respondents, as claimants, sought the determination of certain questions in relation to the interpretation of a document called “Unanimous Shareholders Agreement” and dated 13th July 1996 (hereafter referred to as “the Shareholders’ Agreement” or “the Agreement”) entered into by Martin Crowley and John Paul Jones De Joria (De Joria). The Shareholders’ Agreement was by its terms to be governed by the laws of Anguilla. Martin Crowley died and the 1st and 2nd respondents are the executors of his estate and also the trustees of the Windsong Trust established under a declaration of trust dated August 17, 2001. The Windsong Trust is the sole residuary beneficiary under the will of Martin Crowley.
By order of the Court the 2nd appellant (hereafter “Island”) and the 3rd respondent (hereafter “Pendragon”) were joined as parties in the proceedings. Island is a company incorporated in Anguilla and is principally or wholly owned by De Joria (nothing turns on this) whilst Pendragon is a company, also incorporated in Anguilla, and was wholly owned by Martin Crowley. Crowley and De Joria were business partners who through the instrumentality of Island and Pendragon were the ultimate beneficiaries of the ownership of certain shares in a number of companies the most important of which was Caribbean Distillers Corporation Limited (CDC).
The questions posed by the respondents (Claimants) in the Fixed Date Claim for
the determination of the Court, to the extent relevant for this appeal, were:
- Is the Shareholders Agreement valid and enforceable as a matter of Anguillan law? 2. As a matter of Anguillan law, could Crowley and de Joria specifically contracting with each other as individuals bind companies and impose contractual obligations on companies which were not parties to the agreement and in which Crowley and De Joria held no direct interest? 3. As a matter of Anguillan law does a disregard of corporate formalities invalidate the Shareholders Agreement or make it unenforceable as a matter of public policy? 4. If the Court finds that the Shareholders Agreement is valid and enforceable as a matter of law, is it valid and enforceable as against or in relation to CDC.
In her judgment, the learned trial judge sets out in a most clear manner the factual background and little better can be done than to borrow from that judgment:
“(a) Crowley and De Joria, conducted certain business interests together in Anguilla and caused various companies to be incorporated in Anguilla for this and other purposes. On 13th July, 1996, Crowley and De Joria, as individuals, executed the [Shareholders] Agreement. The Agreement was drafted by Justice Ian D. Mitchell QC, then a lawyer practicing in Anguilla who later ascended to the bench as a judge of the high Court and is now retired. He said in his witness statement that the Agreement was prepared on the joint instructions of Crowley and De Joria, and that it took several months and several revisions before Crowley and De Joria and their US counsel were happy with the draft and ready to sign it.
“(b) Recital A of the Agreement stated as follows:
“The Shareholders are currently the sole legal and beneficial owners of all the issued and outstanding shares of the Anguillian Corporations listed in Schedule A hereto … and as signed by the shareholders and as amended from time to time.”
Schedule A of the Agreement listed the following entities:
(1) St. Maarten Spirits Limited (“SMS”)— “held as to 50% by Crowley through his wholly owned and controlled Anguillian company Pendragon International Limited, and as to the other 50% by De Joria through his wholly owned and controlled Anguillian company The Island Company Limited”
(2) Anguilla Rums Limited — “held as to 50% by De Joria and as to the other 50% by Crowley”
(3) Sea Grape Beach Club Limited — “held as to 50% by Crowley through the said Pendragon International Limited and as to the other 50% by De Joria through the said Island Company Limited”
SMS, Anguilla Rums Limited (“Anguilla Rums”) and Sea Grape Beach Club Limited will hereafter together be referred as “the Schedule A Corporations”.
“(c) SMS and CDC were incorporated in Anguilla on 9th September 1993. Anguilla Rums was incorporated in Anguilla on 7th July, 1994. There were two Sea Grape Companies and there is some confusion as to which of them was intended to be listed in Schedule A. Suffice it to say however, that whichever of them it referred to, is not relevant for the purposes of these proceedings since one was struck off the register of companies on 19th January 2000 and the other disposed of by sale and the proceeds dealt with between the parties and thus not in issue. Pendragon and Island were incorporated sometime prior to the Agreement”.
“(d) CDC's main business is the manufacture and distribution of the Patron brand of ultra premium tequila and to all intents and purposes is a highly successful operation. The shares of CDC held by Pendragon represent the bulk of the value of Crowley's Estate”.
“(e) SMS merged with and into CDC on or about March 22nd 2002 pursuant to an agreement and plan of merger dated 11th March 2002, and SMS was subsequently struck from the Register of companies.”
“(f) Crowley died in Anguilla on April 19th 2003. Letters Testamentary and Letters of Administration were issued by the Courts of California and Anguilla respectively, on 20th June 2003 and November 4th 2003”.
“(g) Prior to Crowley's death he had defended proceedings in the California Court (“the California Palimony Proceedings”) brought by his former paramour Edelstein who had claimed an interest in certain of Crowley's assets including his interests held In the various Anguillian entities”.
“(h) Clause 5 of the Agreement provided a sell/purchase provision in favour of the surviving shareholder upon the death of the other at a selling price to be determined in accordance with Clause 6 of the Agreement. Clause 5 also provided that the trigger date for determining the price of the deceased shareholder's shares was the date of death of such Shareholder”.
“(i) The Agreement also provided, inter alia, for restriction on the sale, transfer or disposition of the shares in the Schedule A Corporations and the Shareholder's certificates for shares held by them were to bear legends reflective of such restrictions”.
“(j) Crowley having died, De Joria has sought to invoke the provisions of the Agreement, specifically Clauses 5 and 6 thereof, in respect of the sale and purchase of Pendragon's shares in CDC and the price to be paid therefor, the contention being that Crowley and himself intended to bind and did bind Pendragon, Island, and the Schedule A Corporations to the Agreement, and by extension, CDC to the Agreement”.
“(k) The Claimants (the respondents herein) aver that they did in fact appoint an appraiser for Pendragon's 50% share in CDC purportedly in pursuance of the terms of the Agreement but say this was at the insistence of De Joria who had produced the Agreement to them just a few days after Crowley's death when they were in a state of bereavement and before they were able to fully read or understand the same or had an opportunity to seek legal advice thereon. They say this was the first time they became aware of the existence of the Agreement. The valuation resulting from this placed the value of Pendragon's 50% ownership in the region of US $43 million”.
“(I) Whilst Crowley was alive, there were third parties namely, Campari International (“Campari”) and Barcardi Limited (“Barcardi”) interested in purchasing CDC or its assets. Campari in April, 2003, had indicated its interest in purchasing CDC's assets for US$ 150 Million. De Joria in a letter to Crowley on 12th April, 2003 described the Campari offer as “very low”. After Crowley's death in April, 2003 Barcardi renewed its interest in purchasing CDC or its assets or Pendragon's shares and made this interest known to Pendragon by letter dated May 18th 2004 and indicated that they believed Pendragon's shares to be worth in the region of US $200 Million”.
“(m) The 1st and 2nd Claimants say that Crowley's investment banking firm had estimated the fair market value of Pendragon's shares to be approximately $US 150 – 175 Million shortly after Crowley's death”.
The trial judge, after a fulsome enquiry into the relevant law and a commendable analysis of the factual circumstances came to the following conclusion at paragraph 48 of her judgment:
“Based on the foregoing, I answer the questions posed in the Fixed Date Claim Form thus:
1. “The purported Unanimous Shareholders Agreement dated 13th July 1996 and entered into as between Martin Crowley and John Paul Jones De Joria on the other hand is not valid and enforceable as a matter of Anguillan Law.”
The trial judge makes it perfectly clear in the body of her judgment that her decision does not go to the legality of the contract, in the strict sense of that phrase, but rather its enforceability in the context of the /is between the parties to the suit. Learned Queen's counsel for the appellants urges that if this Court finds that the agreement is valid and enforceable as a matter of Anguillan law, then the appeal must be allowed. Counsel made the throwaway argument — based on the authority of Cie Noga SA v Australia and New Zealand Banking Group1 (an English Court of Appeal case) — that appeals are against orders not reasoned judgments.
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