University of Trinidad and Tobago v Julien et Al

• Jurisdiction: Trinidad & Tobago
• Judge: Kokaram, J.
• Judgment Date: 11 April 2014
• Neutral Citation: TT 2014 HC 170
• Docket Number: CV 212 of 2013
• Court: High Court (Trinidad and Tobago)
• Date: 11 April 2014

High Court

Kokaram, J.

CV 212 of 2013

University of Trinidad and Tobago

and

Julien et al

Appearances:

Mr. Vincent Nelson Q.C.and Mr. Gerald Ramdeen instructed by Mr. Varun Debidee for the claimant.

Mr. John Jeremie S.C. and Mr. Kerwin Garcia instructed by Ms. Kahaya Kesara Nanhu for the firstdefendant.

Mr. Douglas Mendes S.C. and Mr. Ravi Heffes-Doon for the seconddefendant.

Mr. Stuart R. Young instructed by Mr. Anthony Bullock for the third, fourth and sixth defendants

Civil practice and procedure - Striking Out — Summary Judgment — Whether claim against multipledefendants should be dismissed in relation to the sub — lease pursuant to CPR Rule 26.2(c) — Whethermultiple defendants could bring a claim for summary judgment pursuant to CPR Rule 15.2(b) — Applications failed — Company law Fiduciary Duties — Whether the directors acted in breach of their fiduciary duty to exercise care, skill and diligence — Particular of Loss — Whether the Company suffered loss where the directors allegedly expended unnecessary expenditure in continuingthe sub-lease.

Kokaram, J.

INTRODUCTION

1 The defendants are former members of the Board of Directors of the claimant, the University of Trinidad and Tobago (“UTT”). The first defendant was UTT's former President. For the most part these defendants were members of the UTT Board over the period 2005 to November 2010. The present Board of UTT resolved recently in 2012, after conducting a legal and financial audit of UTT's affairs, to commence an action against these directors for breach of their fiduciary duty and failure to exercise care, diligence and skill in the management of UTT's business affairs under section 99 of the Companies Act, Chap. 81:01 and as a fiduciary in relation to two transactions. The first transaction was the entering into (and maintaining) a sub-lease with Consolidated Services Limited (CSL) for a five year renewable lease for a residential/resort complex in Aripo (“the Aripo facility”) at a monthly rental of TT$50, 000.00.

2 UTT contends that this sub lease was defective and that the defendants failed to carry out any due diligence searches before entering into this transaction. Further during the term of the sub lease they were advised by its legal department to terminate the sub lease as a result of the discovery of alleged defects in its title. The defendants failed to terminate the lease. UTT as a result of the defendants' alleged failure to act prudently, seeks the return of the sums of money paid in rental and for the cost of operating the Aripo facility for the duration of the term.

3 The second transaction relates only to the first defendant. This transaction involved the accommodation of two guests at the Aripo Guest House, Reverend Juliana Pena and her companion. Itis contended by UTT that the first defendant in breach of his fiduciary duty instructed that those persons be accommodated there in the absence of any Board resolution approving UTT rates for those persons or approving of their accommodation in the said Guest House of personal guests of Board members, or accommodating visitors with noconnection to UTT. The first defendant paid for the accommodation personally and had those persons been charged the normal visitor rates it would have resulted in additional income to UTT of TT$126, 393.00. As a result of theloss sustained on these transactions UTT claims declaratory relief that the defendants are in breach of their fiduciary duties. UTT also seeks as against the defendantsdamages in the sum of $10, 899, 999.10 the total sum of the rental and maintenance of the Aripo facility and additionally against the first defendant the payment of the said sum of $126, 393.00.

4 All the defendants save for the 5th defendant now seek to dismiss the claimagainst them in relation to the sub lease, the first transaction, pursuant to CPR rule 26.2(c) on the basis thatthere is no ground for bringing the claim, alternativelypursuant to CPR rule 15.2 (b) that there is no reasonable prospect of success on this claim. Both applications are draconian remedies. There is no gainsaying the wealthof judicial pronouncements locally, regionally and in the Commonwealth on the approach to be adopted when a Court is asked to dismiss a claim under these and similar provisions before there is further management of the claimtowards a full trial.

5 Essentially, at therisk of over simplifying the relevant tests and the nuances of interpretation of the respective rules, the primary caveat in considering these applications is that the Court should not conduct a mini trial without giving theparties ample opportunity to present their evidence through witness statements, the process of disclosure and further information. In considering these applications which I shall conveniently refer to collectively as “applications to dismiss a claim”, the Court is engaged in an exercise of discretion to give effect to the overriding objective. In so doing it seeks to achieve what is just in the circumstances of the case which invariably is to arrive at a decision which is not only economical in light of saving expense and properly allocating the parties' and Court's resources, but also giving due regard to equality of arms and proportionality of orders in the overall management of a case. One also bears in mind that trial dates are no longer shrouded in mystery or lies beyond the litigant's reach in the far horizon. Under the CPR trial dates are fixed and achievable in a relatively short space of time. A court is therefore always anxious not to strike out a claim prematurely. It is in this context that I view the well-known tests of whether a claim discloses a ground for bringing the claim or whether there is any prospect of success in the claim. Both parties must be protected: the claimant from being prematurely driven from the seat of judgment when its case deserves fuller investigation or the defendants from expending unnecessary resources in defending a claim which is unmeritorious.

6 There is of course a fundamental difference between the two tests under CPR rule 26 and rule 15. When invoked simultaneously by a party the Court is engaged in an exercise of testing and assessing the strengths of the claimant's case on what I will term a “soft” and then a more rigorous standard. If a claim discloses some ground for a cause of action it is not “unwinnable” and should proceed to trial. It may be a weak claim but not necessarily a plain and obvious case that should be struck out and the claimant “slips past that door”. The Court is however engaged in a more rigorous exercise in a summary judgment application to determine of those weak cases, which may have passed through the “rule 26.2 (c) door” whether it is a claim deserving of a trial, whether the evidence to be unearthed supports the claim and whether there is a realistic as opposed to fanciful prospect of success. If there is none, the door is closed on the litigation and brings an end to its sojourn in this litigation.

7 In this case for the defendants to succeed the Court must be satisfied either there is no ground for pursuing this claim for breachof fiduciary duty by UTT in relation to the sub lease. If there is some ground to pursue that claim that there is no realistic prospect of success at a trial. In reality it is a rolled up question to assess the strength of the claimant's case and on this application the defendant's application is made on a very simple, yet important point. Assuming for the purpose of this application that even if the claimant can prove that the defendants did breach their fiduciary duty to UTT in relation to the sublease, is there a reasonable basis to assert or a realistic possibility of proving actionable loss suffered by UTT? If not there is no cause of action and the claim should be dismissed now. I have answered this question asfollows:

In relation to the claim that the defendants breachedtheir duty in entering into and maintaining the sub lease of the Aripo facility, accepting the claimant's allegations to be true in relation to the entering into and continuing the sub lease, UTT's claim raises an arguable ground for bringing the claim for breach of trust and forequitable damages or compensation. Examining the facts and the applicable law at this stage, the prospect of success of UTT in maintaining a claim for declaratory relief and damages cannot be said to be fanciful and undeserving of the right to advance its case fully at trial. Theissue of compensatable loss sustained by UTT cannot at this stage, without a fuller investigation of the facts at trial, be said to have no real prospect of success.

FACTUAL BACKDROP: THE ARIPO FACILITY

8 In the claimant's statement of case it contends that the prospects of acquiring a lease of the Aripo facility came to light in a memorandum dated 21St December 2005 addressed to the President from Mr. Dave Bhajan the VP Capital Projects and Institutional Planning of UTT. In this memorandum, the question of finding a cost effective method of accommodating visitors and staff of UTT was assessed by Mr. Bhajan. He projected the cost of hotel accommodation for UTT visitors and staff over a five year period from 2006 to 2010 and compared it to the investment in a proposed five year lease for the Aripo facility. The location of the Aripo facility at the foothills of the Northern range was adjacent to Wallerfield and was said to readily serve the main UTT Campus, E-Teck development at Tamana, E-Teck Park, O'meara and other UTT campuses. The complex comprised: a main house of approximately 6, 000 sq. ft. comprising 5 ensuite bedrooms, large living, dining and reception areas, kitchen, laundry and house-keeper room, one cottage with two ensuite bedrooms and kitchenette, one adjacent building with 4 one-bedroom suites, one house withtwo ensuite bedrooms and large living/kitchen area. Thiswas all located...