Goblin Hill Hotels Ltd v Thompson (John) & Thompson (Janet)
| Jurisdiction | UK Non-devolved |
| Judge | LORD DYSON |
| Judgment Date | 10 March 2011 |
| Neutral Citation | [2011] UKPC 8 |
| Date | 10 March 2011 |
| Docket Number | Appeal No 0076 of 2009 |
| Court | Privy Council |
[2011] UKPC 8
Privy Council
Lord Phillips
Lady Hale
Lord Brown
Lord Kerr
Lord Dyson
Appellant
Jeffrey Onions QC
Charles Piper (Jamaican Bar)
(Instructed by Myers, Fletcher & Gordon)
Respondent
Dr Lloyd Barnett
Gillian Burgess
(Jamaican Bar)
(Instructed by Simons Muirhead & Burton)
The facts
Goblin Hill Hotels Limited ("GHHL") is the registered proprietor of 11 and a half acres of land known as Goblin Hill, in the Parish of Portland, Jamaica. The company was incorporated in 1969 for the purpose of the development of Goblin Hill in phases as vacation homes. The development was structured so as to achieve approved hotel enterprise status and thereby gain certain tax relief. For this reason, a Cayman Islands company called San San Investments Limited ("SSIL") was involved.
All the original purchasers of shares in GHHL were required to sign three documents. These included an "agreement for the sale of options for the purchase of shares and grant of lease" between SSIL, GHHL and the purchaser which (i) recorded the undertaking by GHHL to construct 33 villa units and to operate them as a hotel; and (ii) granted the purchaser the option to purchase shares in GHHL and enter into a lease of a villa unit on the terms of the attached draft. By clause 4B of the draft lease, if the lease option was exercised by the purchaser, the lessee agreed to permit the leased villa to be operated by GHHL as a hotel, but only during the "Incentive Period". The Incentive Period was defined as the period ending on the 20th anniversary of the date specified for the commencement of the development as an "approved hotel enterprise". Sykes J, the trial judge in these proceedings, found that this period ended in 1989.
There was no right in GHHL to raise assessments in respect of the cost of maintaining the villa units and the grounds on purchasers who exercised the option to buy shares and enter into leases during the Incentive Period. It was the expectation of the developers that these costs would be met from the hotel earnings and that, if there were any shortfall, this would be paid by the shareholders. By article 91(1) of the articles of association and clause 5(b) of the draft lease, however, GHHL was entitled to raise assessments after the end of the Incentive Period.
The authorised share capital of GHHL was J$54, 000. 00. This was divided into three classes of shares of J$1. 00 each as follows: 30, 600 A ordinary shares; 15, 300 B ordinary shares and 8, 100 C ordinary shares. The Class C shares represented 15% of the total authorised share capital. Article 4(1) provided that the Class A shares were to be held in blocks, so that each block was allocated to one of the villa units comprising the 70 apartment bedrooms in Phase 1 of the development. Shares numbered A1 to A19, 976 related to 28 villa units comprising 44 apartment bedrooms and shares numbered A19, 977 to A30, 600 related to the villa units comprising the remaining 26 apartment bedrooms. Article 4(2) provided that the Class B shares were to be held in blocks so that each block was allocated to one of the villa units to be erected by GHHL in Phase 2 of the development. Class A and B shares entitled the holders to participate in the earnings of GHHL as from the date of the construction of the villa units relating to the shares. Article 4(3) provided that the Class C shares numbered C1 to C3, 564 entitled their holders to participate in the earnings of the company as from the date of completion of the construction of the 28 villa units to which the Class A shares numbered A1 to A19, 976 were allocated; and the Class C shares numbered C3, 565 to C8, 100 entitled their holders to participate in the earnings of the company as from the respective dates of completion of the units to which the remaining Class A shares and the Class B shares were allocated. The purpose of the Class C shares (which were issued to the developers) was described by Rosalie Goodman at para 10 of her witness statement as being "designed as an incentive to the developers to remain active and interested in the project after selling off the shares".
Article 91 of the articles of association provided:
"91. (1) After the twentieth anniversary of the date specified for the commencement of Goblin Hill San San as an approved hotel enterprise under the Hotel (Incentives) Act, 1968 the Directors shall at the beginning of each financial year or as soon thereafter as possible estimate the total sum of money required for the maintenance of the Company and the cost of carrying on the operation and performing the obligations of the Company with regard to the villa units or apartments at Goblin Hill San San and the grounds used therewith for the ensuing year and in particular but without prejudice to the generality of the foregoing words the amount of all water rates taxes rates insurance premiums and other outgoings and the cost of repairs and replacements and the necessary expenses of upkeep maintenance operation and any fees payable under any management contract entered into by the Company and in addition any amount to create a reasonable reserve for the purposes aforesaid and such amount as will meet any deficit incurred in any previous year of operations and the said total sum of money shall be borne by each member in proportion to his shareholding in the Company and the proportion of the annual cost estimated as aforesaid payable by each member shall be called 'an Assessment'. Each member shall pay the amount of the Assessment so made on him to the person and at the times and places and in the manner appointed by the Directors. An Assessment shall be deemed to be made when a resolution authorising such Assessment is passed (emphasis added).
(2) The Directors may from time to time make such further assessments upon the members as the Directors may deem necessary to meet any additional or unforeseen expenses of operating and/or maintaining the villa units or apartment and grounds as aforesaid and the said further sum of money shall be borne by each member in proportion to his shareholding in the Company and the proportion of the annual cost made as aforesaid payable by each member shall be called 'a Special Assessment'. Each member shall pay the amount of the Special Assessment so made on him to the person and at the times and places and in the manner appointed by the Directors. A Special Assessment shall be deemed to be made when a resolution authorising such Special Assessment is passed."
Article 12 provided that GHHL had a "first and paramount lien" on all shares held by any member of the company for all debts of such a member. Article 13 gave the company the right to sell any shares in respect of which it had a lien.
The leases between GHHL and those purchasers who took leases of the villa units were for 99 years at an annual rent of J$1. 00. By clause 2(a), the lessee covenanted to pay the amounts of assessments and any special assessments made "on the days and times and in the manner from time to time directed". By clause 4B(i) the lessee covenanted to permit the leased villa to be operated by GHHL as part of the hotel enterprise during the Incentive Period. By clause 5(b) it was agreed that:
"(b) After the end of the Incentive Period as hereinbefore defined the Company shall at the beginning of each financial year thereafter or as soon thereafter as possible estimate the total sum of money required for the maintenance of the Villa Units as a first class resort hotel for the accommodation of transient guests and the cost of carrying on the operation and performing the obligations of the Company with regard to the Villa Units and the grounds thereof for the ensuing year and in particular but without prejudice to the generality of the foregoing words the amount of all water rates taxes rates insurance premiums and other outgoing and the cost of repairs and replacements and the necessary expenses of upkeep maintenance operation and any fees payable under any management contract entered into by the Company and in...
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