Kenneth Went v Cable & Wireless (Barbados) Ltd

• Jurisdiction: Barbados
• Judge: ALRICK SCOTT
• Judgment Date: 12 January 2018
• Neutral Citation: BB 2018 HC 26
• Court: High Court (Barbados)
• Docket Number: CV 1779 of 2017
• Date: 12 January 2018

SUPREME COURT OF BARBADOS

IN THE HIGH COURT OF JUSTICE

Before:

The Hon. Mr. Justice Alrick Scott, Judge of the High Court (Acting)

CV 1779 of 2017

In the matter of the Amalgamation of Cable & Wireless (Barbados) Limited and CWB Ltd.;

And in the matter of Section 228 and Section 235 of the Companies Act, Chapter 308 of the Laws of Barbados.

Between

Kenneth Went

First Claimant

Omstand Investments Inc.

Second Claimant

Philip Osborne

Third Claimant

and

Cable & Wireless (Barbados) Limited

First Defendant

Allan C. Fields

Second Defendant

Hilary McD. Beckles

Third Defendant

Jenson K. Sylvester

Fourth Defendant

Garfield H. Sinclair

Fifth Defendant

Roderick Gregor Mcneil

Sixth Defendant

Maurice Adrian King

Seventh Defendant

Mr. Garth Patterson, Q.C., in association with Mr. Bartlett Morgan and Ms. Taylor Laurayne for the Claimants

Mr. Barry Gale, Q.C., in association with Sir Henry Forde, K.A., Q.C., Ms. Wendy Straker and Ms. Laura Harvey-Read for the Defendants.

Company Law Amalgamation — Cancellation of shares — Application for interim relief — Inunction — Interests on minority shareholders — American Cyanamid test — Whether there was a serious to be tried — Balance of justice — Oppression remedy — Take-over — Cynical breach of contract — Amalgamation squeeze out — Undertaking in damages — Delay depriving claimant of interim injunctive relief — Unreasonable delay — Laches — Futility of injunction — Delisting — Whether an order restraining company from delisting is prejudicial — Preservation of status quo.

DECISION

Nature of Application

1 This is an application by the Claimants for interim relief pending conclusion of the trial of the action. They seek that the Defendants be restrained from:

• (i) cancelling the shares held by the Claimants and/or any other minority shareholders of Cable & Wireless (Barbados) Limited (“Company”) in the Company;

• (ii) causing the Company to be de-listed from the Barbados Stock Exchange (“BSE”); and

• (iii) taking any further action that may be inconsistent with or prejudicial to the rights of the Claimants and/or any other minority shareholders of the Company.

2 The substantive action is for relief under section 228 of the Companies Act Cap. 308 of the Laws of Barbados (“Companies Act”’) for relief from oppression and/or a restraining order under section 235 of the Companies Act. The interim relief is sought in the context of an oppression remedy action.

Background

3 At the centre of the dispute is the amalgamation of Cable & Wireless (Barbados) Limited and CWB Ltd ( NEWCO). NEWCO was a wholly owned subsidiary of Cable & Wireless (West Indies) Limited ( CWWI). The amalgamated company (the First Defendant or “ AMALCO”), retained the name Cable & Wireless (Barbados) Limited. CWWI owned approximately 81.07 per cent of the common shares in the Company, prior to its amalgamation. Counsel for the Claimants makes a distinction between Cable & Wireless (Barbados) Limited, prior to the amalgamation, referred to in the Claimants' pleadings as the “Company” and the First Defendant, the amalgamated company, AMALCO.

4 The Claimants were shareholders of the Company prior to its amalgamation. The Second to Seventh Defendants were directors of the Company at the material time.

5 By a notice, dated 24 ^th July 2017, the Company gave notice of a special meeting of the

common shareholders of the Company to be held on 24 ^th August 2017. The notice of special meeting of the common shareholders incorporated a Management Proxy Circular and Directors' Circular issued by the Company and dated 24 ^th July 2017 (“Circular”).

6 The special resolution to be considered at the meeting provided for the approval of the amalgamation of the Company and NEWCO as well as the approval of an amalgamation agreement. The resolution also provided for the directors and officers of the Company to execute and deliver the amalgamation agreement on behalf of the Company.

7 The Circular provided the terms of the then proposed amalgamation, when accomplished. The Circular provided that upon amalgamation, none of the shareholders of the Company, including CWWI, would receive shares in AMALCO, but would receive $2.86 for each common share held in the Company. Further, that no existing shareholder of the Company would have any ownership of shares in AMALCO or any other interest in AMALCO after the effective date other than the right to receive the consideration for his or her or its shares. The effective date was defined as the date shown on the Certificate of Amalgamation. The Circular further provided that under the amalgamation agreement, the NEWCO common shares would be converted on a one for one basis into common shares of AMALCO, resulting in CWWI becoming the sole shareholder of AMALCO. The Circular also provided that dissenting shareholders, if any, who have strictly complied with the procedures set forth in the Companies Act, would be entitled to be paid the fair value of the common shares held by such dissenting shareholders.

8 In addition, the Circular provided that CWWI intended to vote all of its common shares it held in the Company in favour of the amalgamation resolution, and that CWWI's shares were sufficient to approve the resolution. The Circular also informed shareholders that, upon completion of the amalgamation, AMALCO would instruct the BSE to de-list it from the board of the BSE, and that there would be no trading market for the common shares of AMALCO.

9 The special meeting was convened on 24 ^th August 2017. The resolution approving and authorizing the amalgamation was put to the floor for a vote. It was passed in terms of the amalgamation resolution appended to the Circular, approving the amalgamation of the companies. The minutes of the meeting show that 210 shareholders voted; 133 voted for the resolution representing 126,204,936 shares and 77 voted against the resolution representing 1,568,071 shares. Based on the affidavit of Philip Osborne filed on 22 ^nd November 2017, he and some other minority shareholders submitted formal dissents.

10 Following the adoption of the resolution, Articles of Amalgamation were filed with the Corporate Affairs and Intellectual Property Office (“Corporate Affairs”). On 1 ^stSeptember 2017, the Registrar of Corporate Affairs issued a Certificate of Amalgamation dated the same date. After the Certificate of Amalgamation was issued, the First Defendant began paying minority shareholders consideration for their shares. The First Defendant states that it has paid over $61.7 million to minority shareholders as at the time of this application.

11 It appears also from the affidavit of Philip Osborne that he and others consulted Mr. Garth Patterson, Q.C., on the 10 ^th October 2017, regarding the actions taken by the Company to amalgamate. The Claimants, through their attorneys-at-law, wrote to the First Defendant by pre-action letter dated 30 ^th October 2017, alleging, inter alia, oppressive conduct on the part of the Company in effecting the amalgamation transaction. The First Defendant, through its counsel, Sir Henry Forde, K.A., Q.C., by letter dated 13 ^th November 2017, replied stating, in summary, that the amalgamation is lawful and complies with the Companies Act. Sir Henry asserted that the provisions of the Companies Act expressly permit the transaction.

12 On the 22 ^nd November 2017, the Claimants filed a fixed date claim form (“FDCF”) claiming a number of reliefs under section 228 and/or section 235 of the Companies Act. These included a declaration that the amalgamation of the Company with NEWCO, pursuant to the amalgamation agreement dated the 30 ^th day of August 2017, effects a result that the business or affairs of the Company have been carried on or conducted in a manner, and/or that the powers of the directors of the Company have been exercised in a manner, that is oppressive and unduly prejudicial to, and unfairly disregards the interests of the Claimants and the other minority shareholders of the Company. The Claimants also seek an order that the amalgamation of the Company and NEWCO be set aside in part or in its entirety, or otherwise be varied. The Claimants further seek a number of orders for monetary compensation.

13 In the action the Claimants alleged, inter alia, that they were deliberately misled, were denied full and complete and accurate information regarding the true nature of the transactions and were deprived of their rights and protection afforded to them by the provisions of the Companies Act and the Companies (Take-Over Bid) Regulations 2002 (“Take-over Code”).

14 The Claimants desire to remain shareholders of the First Defendant to take part in its future success and reap rewards from their continuous investment. The Claimants contend, inter alia, that the amalgamation was in fact a take-over bid transaction designed as an amalgamation so as to obscure its true character for the purpose of unlawfully circumventing the Take-over Code. The Claimants state further that they were improperly excluded from the Company. Paragraph 44 of the affidavit of Philip Osborne catalogued some 26 complaints with the transaction. The Claimants also state that the de-listing of the First Defendant would eliminate the public market for the shares and make it more difficult for the Claimants to trade their shares.

15 In these proceedings, the Defendants deny that they carried out any improper act which is either oppressive, unduly prejudicial to or unfairly disregards the interest of the minority shareholders of the Company, including the Claimants, either as alleged or at all. The Defendants maintained that their actions and that of the Company are lawful and permitted by the Companies Act.

16 On the same day that the FDCF was filed, the Claimants also filed a notice of application for interim relief, which came before me on 7 ^th and 8 ^th December 2017. On the latter date, the First...