A HIGH COURT judge has refused to grant an injunction to siblings of the Fernandes family in a squabble over a company that sold the Trinidad Country Club land in Maraval to the US Embassy for $316 million.
On Friday, Justice Margaret Mohammed dismissed an application for an injunction sought by Luisa Fernandes and three companies – Domus Trust, AM Investments, and Poui Investments, two of which are owned by her siblings – against Joseph Fernandes and Champs Elysees Ltd, formerly known as the Trinidad Country Club Ltd (TCC).
Joseph Fernandes is the majority shareholder in CEL, personally or through Aquila Ltd. Luisa Fernandes, Domus, AM, and Poui hold 21 per cent non-voting (B) shares in CEL.
In the application, filed on March 25, Luisa Fernandes claimed she was entitled to 138 of those B shares.
On March 25, she, Domus, and the two investment companies filed an injunction application asking for the 138 B shares held by the Rathbones Trust in CEL to be registered or issued in her name.
She also wanted a declaration that the business or affairs of CEL were conducted in a manner that was unfairly prejudicial or disregarded their interests under the Companies Act.
They also asked for independent auditors to be appointed to look at the books, records, and accounts of CEL; for an independent firm to examine CEL’s unaudited accounts; and for an interim order that all proceeds from the sale should be held in escrow and paid into court.
They also wanted an order to replace the board of CEL.
Representing the claimants were attorneys Om Lalla, Dereck Balliram, and Sue Chin Hing Ramdhanie. Attorneys Stephen Singh and Amanda Adimoolah represented Joseph Fernandes and CEL.
In her ruling, Mohammed said in deciding whether to grant the interim orders, she had to determine what order would result in the “least risk of irremediable prejudice.”
“The prejudice to the defendants is greater as it would prevent it from having access to the proceeds of the sale of one of its main assets, to continue the business of CEL by operating its wine shops, its restaurant, and developing land in Tobago.
“It would also deprive CEL of funds to meet its administrative expenses.
“In my opinion, placing all or any of the sums received from the sale into escrow would cause irreparable damage.”
She also said part-payment of the proceeds from the sale of the property into court was unworkable.
“There is no basis in law to support an order for the payment of 34 per cent of the proceeds of the sale of the property as this is not the declared dividend.”
She said even if the court made such an order it would be difficult to supervise, and if CEL is to invest the remaining 66 per cent of the sale and declare a dividend, then the issue that would arise is whether Louisa and the other claimants would be entitled to receive part of it.
“At this stage of the action the defendants have a stronger case based on the issues to be tried,” the judge said.
To support their application, Luisa; her sister Ana Maria De Meillac, and a director of AM; brother John Paul Fernandes, managing director of Poui; and Hafeez Ali, Louisa’s attorney and a director of Domus, filed affidavits giving the history of the family’s trusts.
They said sometime in April 2021, Joseph Fernandes was fielding offers from the US for the sale of the Country Club property. While the siblings were not objecting, they wanted the sale documents to review before they could vote.
In response, Joseph Fernandes and CEL maintained the four were not proper claimants in law, since they were non-voting shareholders and were not entitled to accounts or audited financial information, nor did they have any right to CEL’s property. They were only entitled to declared dividends from realised profits of 20 per cent, in this case.
It was also argued the four have received dividends from the family’s Fernandes Industrial Centre up to 2021, and since they had no rights as non-voting shareholders they had no input in the management of CEL.
In her ruling, Mohammed said they were not shareholders with voting rights, and this limited the nature of their complaints of CEL and ruled that Luisa’s dispute over the 138 B shares was a matter for the court of the British Virgin Islands according to the terms of the trust.
She said in exercising her discretion on the injunction, she noted the claimants did not give an undertaking to pay damages if it was later found that granting of interim relief was wrong.
“I am strongly of the view that based on the nature of the order sought with respect
to the payment into court of the proceeds of the sale of the property which is in the sum of $316 million, this is a case where the failure to provide an undertaking in damages is fatal to the application.
“Indeed, if I am to make the order to deposit the sum into court and the claimants are not successful at the end of the trial, the defendants would have been deprived of access to substantial funds required to run its business and make investments.”
She said the claimants can still be compensated in damages for any loss they suffered if successful at trial.
“There is no reason to deviate from the status quo,” she said.