Archer and another v Fabian Investments Ltd and Others (Bahamas)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Reed |
| Judgment Date | 10 April 2017 |
| Neutral Citation | [2017] UKPC 9 |
| Court | Privy Council |
| Date | 10 April 2017 |
| Docket Number | Appeal No 0044 of 2014 |
[2017] UKPC 9
Privy Council
From the Court of Appeal of the Commonwealth of the Bahamas
Lord Mance
Lord Kerr
Lord Sumption
Lord Reed
Lord Hughes
Appeal No 0044 of 2014
Appellants
Paul Wallace Whitfield
(Instructed by Wallace Whitfield & Co)
Respondents
(not participating)
(Instructed by Maurice O Glinton & Co)
These proceedings, which began in 1994, are brought in the name of Petroleum Products Limited ("Petroleum"), a company incorporated under the law of the Bahamas, and four individual plaintiffs, whom I shall refer to as the individual plaintiffs. They are the appellants Mr Oswald Archer and Mr Rupert Watkins (now deceased: the appeal has however been pursued by his estate), and two other individuals. The defendants include Gulf Union Bank (Bahamas) Ltd ("Gulf"), Mr Rawle Maynard, Fabian Investments Ltd ("Fabian") and Mr Maurice Glinton. The relief sought in the statement of claim includes, amongst other orders, an order declaring that the shares in Petroleum are beneficially owned by the individual plaintiffs.
In 2007 the Supreme Court ordered that the question of the ownership of the shares should be tried as a preliminary issue. After a trial at which the defendants did not appear, Adderley J held on 26 February 2009 that the individual plaintiffs were the holders of the shares, but were not their beneficial owners. The action was therefore dismissed. On appeal, the Court of Appeal held on 3 April 2013 that the shares were owned both beneficially and legally by Fabian, and made a declaration to that effect. The appeal was therefore dismissed. The appellants now appeal against that decision. The defendants have not taken part in the appeal.
The points to be decided in the appeal are quite short, and the answers to them are clear. They arise, however, against a background of events which are complicated and to some extent obscure, not least because some of the documents which are central to those events are not before the Board.
In addition to being addressed by counsel, the Board was also addressed by Mr Archer in person. Although it was apparent that he has a strong sense of grievance, and has felt frustration over the protracted history of these and related proceedings, Mr Archer addressed the Board with moderation and courtesy. Their Lordships thought it right to permit Mr Archer to address them on factual matters which are not directly relevant to the legal issues arising in the appeal, but form part of the background history. In order to understand the context in which the legal issues arise, it is necessary to make some reference to that history. It should however be emphasised that the Board cannot and does not make any findings of fact, and that it has heard only one side of the story.
Petroleum was incorporated in 1958. In 1984 the individual plaintiffs purchased its issued share capital with a loan of $300,000 from Canadian Imperial Bank of Commerce ("CIBC"). The shares were held in their names, apart from one share which was held in the name of a nominee. CIBC required as security the hypothecation of the shares. The share certificates were deposited with CIBC, with endorsed forms of transfer executed in blank. The individual plaintiffs became the officers and directors of Petroleum.
In 1986 Petroleum found alternative financing with Gulf. In that regard, Adderley J found that Petroleum borrowed $537,000 from Gulf. As security for the borrowings, Gulf obtained a mortgage over certain land owned by Petroleum, a debenture, and personal guarantees from Mr Archer and Mr Watkins, all dated 12 December 1986. Gulf then paid in full the debts owed to CIBC by Petroleum and the individual plaintiffs. On 13 February 1987 the share certificates were delivered by the attorneys acting for CIBC to Mr Maynard, who (as Mr Archer confirmed) was the attorney acting on behalf of Gulf.
Before the Board, it was maintained on behalf of the appellants that the mortgage deed dated 12 December 1986, in which the loan agreement was recorded, was a fraud: the amount of the loan as stated in the document had been altered from $537,000 to $437,000. This fraud, it was argued, vitiated everything which happened subsequently. In his submissions to the Board, Mr Archer explained that he had expected Gulf to repay debts to CIBC totalling $337,000, and to grant Petroleum overdraft facilities up to a total limit of $200,000, on the basis that repayments would be made in monthly instalments of $13,500. In other words, the "loan" stated in the agreement was an overdraft limit, rather than an advance, beyond the $337,000 used to repay CIBC. The amount of the actual borrowings would depend on the extent of the overdraft from time to time. If that is so, then it would follow that neither $437,000 nor $537,000 represented the amount actually lent. Mr Archer identified his signature on the agreement, in which the amount of the loan is stated as $437,000, repayable in monthly instalments of $13,500. The document bears no sign of the amount having been altered. He also identified his signature on another document, in generally similar terms to the agreement just mentioned, in which the amount of the loan is stated as $537,000. He could not recall why two documents had been signed, stating the loan at different amounts. Only the first document was stamped and registered.
The allegation of fraud was unequivocally rejected by the judge, and was implicitly rejected also by the Court of Appeal. There is no basis on which the Board could properly interfere with that finding of fact. As will shortly be explained, it appears that the 1986 agreement was in any event superseded, so far the issues in this appeal are concerned, by a rescheduling agreement entered into in 1988. It is the latter agreement which is the source of the obligations which Gulf sought to enforce against the individual plaintiffs.
The payments due to Gulf fell into arrears, and on 8 August 1988 Petroleum and the individual plaintiffs entered into a rescheduling agreement with Gulf. That agreement is not among the papers before the Board. Their Lordships must therefore rely on the judge's findings as to the relevant terms. As the judge found, Petroleum covenanted to bring its payments up to date within six months from 24 July 1988, that is to say by 23 January 1989, and the individual plaintiffs bound themselves as primary debtors. In consideration of the agreement, the individual plaintiffs executed a guarantee in favour of Gulf (also not among the papers before the Board) which, as the judge found, provided that "in support of such guarantee [the individual plaintiffs]...
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