Supreme Court
Action No. 227 of 2000
18th July, 2002
A.O. Conteh, C.J.

Mr. Leo Bradley, for the Plaintiff.
Mr. Jeremy Courtenay, for the Defendants.

Company Law - Second and Third Defendants purportedly Plaintiff from being a shareholder of First Defendant Company - Sale of Land - Second and Third Defendants purchasing land from Plaintiff - Title to land vested in First Defendant Company - Sale agreement specifying that Plaintiff was to have a 5% share in First Defendant Company - Plaintiff applying for declarations to declare his purported removal as a shareholder of First Defendant Company void.

J U D G M E N T

By a writ dated 19th June, 2000 the Plaintiff sued all three Defendants claiming the following:

"1. A declaration that the purported removal by the 2nd and 3rd Defendants of the Plaintiff as a shareholder is void as it was not carried out in compliance with the Articles of Association of the 1st named Defendant Company.

2. An Order of the Court for specific performance by the 2nd and 3rd named Defendants as Directors of the 1st named Defendant Company to issue share Certificates to the Plaintiff.

3. A Declaration that the Plaintiff as a shareholder in the 1st Defendant Company has an interest in the 200.67 acres of land located at Frank's Eddy on the Western Highway, Belize District owned by the 1st Defendant.

4. An Order of the Court for an account by the Defendants of what is due to the Plaintiff as a shareholder of the 1st named Defendant Company from the earnings that might have been so, received by the Plaintiff but for the 2nd and 3rd named Defendants' willfuly default or neglect.

5. An order for the payment by the Defendants to the Plaintiff of what is found due on taking the said account.

6. Damages for loss of earnings incurred by the Plaintiff as a result of action taken by the Defendants in preventing the Plaintiff and his agents and employees from engaging in transporting tours into the Frank's Eddy area and more specifically into Jaguar Paw Resort, an eco-tourist resort owned by the 1st named Defendant.

7. Interest.

8. Costs."

2. After several averments in the body of his Statement of Claim dated 7th September 2000, the Plaintiff claimed substantially the same reliefs against the Defendants.

3. The Defendants for their part in their Defence dated 17 November 2000, although they did not expressly deny several substantive averments in the Plaintiff's Statement of Claim however inferentially denied them. For example, in relation to paragraphs 7 and 8 of the Statement of Claim which, to my mind, are critical to the claims and reliefs sought by the Plaintiff, and these paragraphs aver as follows:

"7. The Plaintiff in or around July 1992 negotiated with the 2nd and 3rd Defendants with the intention of forming a Company that would be the parent company for an eco-tourist destination, Jaguar Paw Resort (hereinafter called the Resort).

8. In those negotiations, although no exact figures were defined, it was agreed inter alia that the Plaintiff would be compensated adequately both in cash and in shares in the 1st Defendant Company for his efforts to obtain the land and place same in the name of the 1st Defendant Company and start development on the land so that eventually he would be involved in the running of the Resort and thus profit from revenue earned and be repaid."

4. To these the Defendants in their Defence at paragraphs 12, 13 and 14 say as follows:

"12. The Plaintiff made the said representations in order to induce the Second and Third-named Defendants to give to the Plaintiff a small percentage ownership in their intended hotel business as consideration for the provision of assistance by the Plaintiff in the start up of the said business which he represented he could and would provide.

13. By means of the said representations and acting on the faith thereof and in the belief that the same were true the Second and Third-named Defendants were induced to give to the Plaintiff as consideration for his services a small percentage ownership in their intended hotel business.

14. The said representations were, and each of them was, false and untrue."

5. The Defendants also appended a counterclaim to their Defence. I must say right away however, that the Defendants did not say what the counterclaim is about nor have they given particulars of the damages and loss if any, they claim to have suffered.

6. The First-named Defendant, Travellers Rest Lodge (Belize) Ltd. is, as borne out by the evidence, in truth and in fact, the subject matter of this litigation between the parties, in particular the Jaguar Paw Resort it operates in Frank's Eddy in Cayo District.

7. The Plaintiff and the Second-named Defendant testified as did several witnesses for the Plaintiff. I must also say that I did not find the testimony of these witnesses for the Plaintiff of much, if any help, in deciding the issues in contention between the parties.

8. From the pleadings and the evidence, it appears that the first-named Defendant is the bone of contention between the parties or more accurately the interest, if any, the Plaintiff might have in it and the operation of its resort, the Jaguar Paw Resort.

9. The land on which the First Defendant's resort, Jaguar Paw Jungle Resort, is situated in Frank's Eddy in the Cayo District, was acquired by the Plaintiff on a 20 years lease from the Government sometime in 1990. Although the initial acreage of the lease was stated to be 151.696 acres, it turned out, on a subsequent survey, to be actually 200.67 acres.

10. The Plaintiff met the Second and Third Defendants sometime in 1992 and some discussions ensued between them about the formation of a company that would operate in the tourist industry. In the meantime in June 1992 the Plaintiff applied to purchase the 200 acres plus land he had leased in 1990 and this was approved (See Exhibits TG 3 and 4).

11. It is the testimony of the Plaintiff that he wanted to get the best development plan for the land he had acquired and to this end negotiations took place between him and the second and third Defendants about forming a parent company for an eco-tourist project to be named Jaguar Paw. The Plaintiff further testified that the land would be used for this purpose; and that it was agreed in those negotiations that he would be adequately compensated for this both in cash and shares. He further testified that the partial cash settlement was $90,000.00 and 50 shares in what was to become the First named Defendant Company. This company was duly formed bearing the name of the First Defendant, that is, Travellers Rest Lodge (Belize) Ltd..

12. The Plaintiff also testified that he signed the documents relating to the formation of the company, that is, the First Defendant, and he tendered in evidence the Articles of Association of the First Defendant Company as Exhibit TG 6. This has the Plaintiff as one of the two subscribers to the Articles of Association, with the Plaintiff described as having taken two shares of the company and the other subscriber, one John Malcolm taking one share. The Plaintiff also tendered in evidence a copy of the Certificate of Incorporation of the First Defendant dated 5th August 1992.

13. The Plaintiff said that he was confident that the arrangement with the Second and Third Defendants was progressing satisfactorily and in his desire to complete his own part of the bargain with them, he wrote a letter to the Commissioner of Lands and Survey on 20 July 1992 requesting that as he had paid for the land in Frank's Eddy area in the Cayo District, the title thereto be put in the name of "Travellers Rest Co. Ltd.;" that is, the First named Defendant Company. A copy of this letter was tendered in evidence as Exhibit TG 8. A Minister's Fiat authorizing the entry of the land in the name of the First Defendant was duly issued, with the former address of the Plaintiff as the First Defendant's address. This fiat was tendered in evidence as Exhibit TG 9.

14. The first Annual Return of the First Defendant showing a list of persons holding shares in it as of the 27 August 1993 and of persons who had held shares in it since the last Return, was also tendered in evidence as Exhibit TG 10. This had the Second and Third Defendants as holding 475 shares each and the Plaintiff as holding 50 shares.

15. The arrangement between the parties culminated in the construction of the resort popularly known as Jaguar Paw Jungle Resort or Jaguar Paw Lodge in the Frank's Eddy area, Caves Branch in the Cayo District with funds provided by the Second and Third Defendants.

16. There seems to have been, from the evidence, some differences concerning the construction or improvement of the road leading off from the Western Highway onto the location of the resort. The Defendants from the testimony of the Third Defendant, were not happy about the way the US $10,000.00 given to the Plaintiff for this work was spent or accounted for or the rate of progress in the construction of the lodge itself, which the Plaintiff, it would seem, was to have superintended in the absence of the Second and Third Defendants.

17. The lodge itself is situated near the caves system by the Sibun River which is popular with the public and tourists. This was to provide a further spark to ignite the differences that emerged between the Plaintiff and the Defendants, and culminating in this Action. The Plaintiff who also runs a tour operation, Melmish Mayan Tours, was warned off from taking tourists to the resort (Exhibit TG 12). A notice was also put in the national press informing the public that the Plaintiff was in no way affiliated to the establishment known as Jaguar Paw (Exhibit TG 14).

18. The Third Defendant Mr. Claude Curtis Young III who testified for the Defendants, stated on the other hand that they purchased the land from the Plaintiff at a price which was settled at US$45,000.00 and that a deposit of US $3,800.00 was left with the Plaintiff and the balance would be paid when the fiat or title to the land was transferred into the First Defendant Company's name. Mr. Young also testified that shares in the First Defendant Company were offered to the Plaintiff as he was going to be instrumental in getting development concessions for the project and business for the hotel.

19. The agreement between the parties concerning the land on which the resort is situated was tendered in evidence as Exhibit TG 16. I find this item of evidence of considerable importance which, together with the testimony of the parties, as a whole, helps in unraveling the contentions between them. I shall return to this shortly.

20. It is clear from the evidence that the discussions and negotiations between the Plaintiff and the Second and Third Defendants sometime in 1992, which culminated in the agreement relating to the land which the Plaintiff had acquired from the Government in 1990 first, on a twenty-year lease, then on purchase of the freehold thereto, were not simply one-off. That is simply to sell the land to the Defendants. These discussions and negotiations resulted in Exhibit TG 16, the agreement between the parties concerning the land in question on which the resort Jaguar Paw is situated.

21. It is helpful, I think, to get a proper feel of the relationship between the parties to reproduce here as far as it is material the relevant clauses of this agreement in this regard.

22. After the recital of the particulars of the parties, that is, that the Plaintiff as vendor and the Second and Third Defendants as purchasers and indicating the land in question, the agreement then continues:

"NOW IT IS HEREBYAGREED AS FOLLOWS:

That the Vendor will sell and the Purchasers will buy for the price of forty-five thousand dollars currency of the United States of America (US $45,000.00) the said 200 acres of land mentioned above upon the terms following namely:

1. The Vendor acknowledges that a deposit of US $3,800.00 has been paid to the Vendor to account to the purchase price and the balance is to be paid at the time of the signing of the transfer document by the Vendor.

2. The Vendor shall use the said sum of US $3,800.00 to pay to the Government of Belize as the purchase price of the said property and shall continue the steps necessary to upgrade his title to a Fiat Grant or other title good in law as quickly and as diligently as possible and to place the fee simple title free from encumbrances in the name of Travellers Rest Lodge (Belize) Ltd., a company to be incorporated in Belize or to whom the Purchasers may direct.

3. The Vendor agrees that the sum of US $2,000.00 paid by the Purchaser to LIONEL L. R. WELCH, Attorney at Law is for legal fees and expenses in connection with the formation of Travellers Rest Lodge Company (Belize) Ltd. in which the Vendor is to have 5% of the total shares and the Purchasers are to have the remaining 95% and for fees in respect of application for work permits and for the preparation of this agreement.

4. The cost of the surveying of the 200 acres of the said property shall be paid by the (sic) all other expenses legal or otherwise shall be shared equally between the Vendor and the Purchasers.

IT IS HEREBY FURTHER AGREED AS FOLLOWS:-

5. That upon the vesting of the title of the said property (200 acres Franks Eddy/Sibun Area, Cayo District) in the name of Travellers Rest Lodge Company (Belize) Ltd. or in the name dictated by the Purchasers, the Purchasers shall provide funds to commence the building of a lodge on the property 200 acres of lands Franks Eddy/Sibun River Area, Cayo District.

6. That the Vendor shall apply for and make proper submissions for the obtaining of a Development Concession in the name of Travellers Lodge Rest Company (Belize) Ltd. or in the name of whom the said property was transferred into. The cost of obtaining the Development Concession shall be shared equally between the Vendor and Purchasers.

7. That the Vendor, through his company Melmish Maya Tours, the Purchasers and or their appointees, the company Travellers Rest Lodge (Belize) Ltd. shall work jointly in the business conducted on the said property 200 acres of land Franks Eddy/Sibun River Area, Cayo District (emphasis added).

23. From this, it is evident that the relationship between the Plaintiff and the Second and Third Defendants was not simply a buy-and-sell one, one-off relationship, that is. This relationship, of course, was based on the sale of the Plaintiff's land, but evidently in the context of an ongoing business relationship centered around the formation and operation of the first Defendant, Travellers Rest Lodge (Belize) Ltd. In this company, the Plaintiff was expressly stated to have 5% of its total shares and the 2nd and 3rd Defendants were to have the remaining 95%.

24. The Second and Third Defendants also agreed that upon the vesting of the title of the Plaintiff's land in the name of the First Defendant, they, that is, the Second and Third Defendants, would provide funds to commence the building of a lodge on the property 200 acres of land Frank's Eddy/Sibun River Area, Cayo District (Clause 5 above). This lodge from the evidence, is what is popularly known as Jaguar Paw Jungle Resort.

25. Also by the agreement (clause 7) it was provided that the Plaintiff through his own company Melmish Maya Tours, and the Defendants shall work jointly in the business conducted on the said property 200 acres of land Franks Eddy/Sibun River, Cayo District, that is, in the business of Jaguar Paw Jungle Resort. This to my mind evinces clearly a continuing business relationship between the parties, some form of partnership, if you will, at least in operating the business of Jaguar Paw Jungle Resort.

26. Unfortunately, the relationship between the parties, which began in 1992 on such high note and expectations, did not endure for long. Things seemed to have gone awry between the parties sometime in 1997. I have recounted some of the differences that ensued between the parties. However for the purposes of deciding the issues in this case, I do not think it is necessary to go into any detail of these, suffice it to say that it would now be difficult to describe the Plaintiff and the Second and Third Defendants as friends. The Plaintiff is not exactly persona grata at Jaguar Paw Jungle Resort any more.

27. I take cognizance of the mutually public denunciatory overtures that ensued between the parties as evidenced by Exhibits TG 12, 14 and 17. Exhibit TG 12 is a copy of a fax message bearing the letter head of 'Jaguar Paw Jungle Resort' for the attention of the owner of Melmish Mayan Tours, that is the Plaintiff, that from the date of the letter, 15 July 1998, he and his guests were not to use Jaguar Paw Resort facilities for anything. Exhibit TG 14 is a notice in The Amandala dated Sunday March 26, 2000 by the proprietors of Jaguar Paw Resort informing the public, especially the tourist industry, that the Plaintiff was in no way affiliated to the resort and that he had no authority to solicit any business or use the facilities of the resort and any representation by him that he could use those facilities would be false. As a kind of riposte as it were, Exhibit TG 17 is a letter by the Plaintiff in The Reporter dated Sunday 23 April 2000, in letters page, dissociating himself from the operators of Jaguar Paw Resort and making certain allegations against them.

28. The Third Defendant, Mr. Claude Young, testified that early in 1997, either in January or February, he and one Steven Baker and others had a Shareholders Meeting and because the Plaintiff did not fulfill any of his obligations under the contract (presumably Exhibit TG 16 already referred to) and did not pay anything for his shares nor did he return the US $10,000.00 for the improvement of the road, they, in his own words, that is the Third Defendants "basically voted him out."

29. The Plaintiff also testified that he exerted himself in various ways such as writing letters and visiting officials in Belmopan in order to get concessions and other benefits for the project of building the resort - see for example Exhibit TG 11, a letter from the Plaintiff requesting the then Minister of Natural Resources to declare the site of Jaguar Paw a nature reserve. All this, to my mind, lends some substance and weight to the position of the Plaintiff that his relationship with the Defendants was not simply to sell his land to them for $90,000.00. There was some evidence of an agreement to make the Plaintiff a partner, a shareholder, if you will, in the venture on which the sale and purchase of his land was premised. This venture, I find, was the formation and operation of the First Defendant Company. To this end, for example, when the First Defendant Company was incorporated, the Plaintiff was stated to be a shareholder thereof.

30. Moreover, from the totality of the evidence in this case including the testimony in particular of the Plaintiff and the Third Defendant, and the several exhibits that were tendered in evidence, I am satisfied that the intention that animated the parties in this case as evidenced especially in Exhibit TG 16 was more than the selling and buying of the land in Frank's Eddy on which the Jaguar Paw Jungle Resort is located. It was the manifest intent of the parties to incorporate the First Defendant Company in whose name the freehold to the land in question would be vested, and that the Plaintiff should have a stake in this company (expressed to be 5% of its total shares), along with Second and Third Defendants who were to take the remaining 95% and they would all work jointly in the business conducted on the land, that is, in the operation of Jaguar Paw Resort.

31. That the Plaintiff was to have an interest in the First Defendant Company cannot, on the evidence, be seriously questioned. How else can the Plaintiff be explained as a subscriber to the Articles of Association of the First Defendant Company (Exhibit TG 6). How else can the fact that the First Annual Return of the First Defendant Company showing a list of persons holding shares in it as of August 27th 1993 had the Plaintiff as holding 50 shares (Exhibit TG 10) be explained away? Of course, the Articles of Association of the First Defendant can by resolution be altered removing the name of the Plaintiff. However, I have no evidence before me that there was a transfer of the shares the Plaintiff was stated as holding or that these were forfeited in accordance with regulation 24 of Table A of the Companies Act - Chapter 250 of the Laws of Belize, Revised Edition 2000. Moreover, there is no evidence that in accordance with clause7 of the First Defendant Company's Articles of Association (Exhibit TG 6) modifying Regulation 12 of Table 'A' of Chapter 250, calls were made on the shares of the First Defendant Company of the Plaintiff and the result, if any, of those calls. I find, in any event, on the evidence, that the Plaintiff was to have 5% of the total shares of the First Defendant Company.

32. Moreover, apart from the bare averment in paragraph 20 of the Defence, that because of the misrepresentation by the Plaintiff the pre-incorporation contract for allotment of shares to him was rescinded, there is no evidence that the Plaintiff's shares as stated in clause 3 of Exhibit TG 16 were regularly or properly taken away. I am also, on the evidence, not persuaded that there was any material misrepresentation by the Plaintiff which induced the Defendants to enter into Exhibit TG 16 with him.

33. On the other hand, I find that on the evidence, the prospect or promise that the Plaintiff would have an interest (5% of the total shares of the First Defendant) and that he through his company, Melmish Mayan Tours, together with the Defendants would work jointly in the business of Jaguar Paw Jungle Resort (clause 7 of Exhibit TG 16), all together form part of the consideration for the sale of his land at Frank's Eddy to the Defendants, the freehold to which was transferred to the First Defendant.

34. Things somehow did not work the way they were intended as sometimes happens even with the best of intentions.

35. I must perforce, therefore, find in favour of the Plaintiff in this case in the light of the available evidence, as he claims, with some slight modification which I shall indicate.

36. Accordingly, I find, declare and order as follows:

i) The purported removal of the Plaintiff as a shareholder in the First Defendant's Company was irregular and void;

ii) Consequently, the Plaintiff is entitled and should be issued with 5% of the shares and the share certificates representing this in the First Defendant Company by the directors of the First Defendant;

iii) This represents the interest of the Plaintiff in the operations by the First Defendant of the Jaguar Paw Jungle Resort at Frank's Eddy, Cayo District;

iv) I direct that an account be taken by the Registrar of the First Defendant's operation of Jaguar Paw Jungle Resort to ascertain what if anything, is due on the 5% share of the Plaintiff in the First Defendant;

v) And that any sum so duly found be paid to the Plaintiff;

vi) Any sum so found due shall carry interest at the rate of 6% from the date of the writ in this action until the date of this judgment.

37. Finally, I award costs in this action to the Plaintiff in the sum of $5,000.00.

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