Mackenzie v Rewa Co-Operative Dairy Co Ltd [1998] FJHC 116; Hbc0129.98 (30 July 1998)

Fiji Islands - Mackenzie v Rewa Co-Operative Dairy Co Ltd - Pacific Law Materials

IN THE HIGH COURT OF FIJI

AT SUVA

CIVIL JURISDICTION

ACTION NO. HBC0129 OF 1998

BET

:

SHARON JULIE ANNE MACKENZIE AND OTHERS
trading as Gatward Farming Partnership of Korovou, Tailevu
First Plaintiffs

AND:

JAGINDAR SINGH AND OTHERS
trading as J S Singh & Sons of Korovou, Tailevu
Second Plaintiffs

AND:

REWA CO-OPERATIVE DAIRY COMPANY LIMITED,
a co-operative dairy company incorporated in Fiji, of 4 Miles Nabua, Suva
First Defendant

AND:

RAM CHAND AND OTHERS
Second Defendants

H.K. Nagin for the Defendants
K.R. Bulewa for Sam Speight one of Second DefendantsDates of Hearing and Submissions: 12th, 30th June, 8th July 1998
Date of Judgment: 30t: 30th July 1998

JUDGMENT

The First Plaintiffs are significant shareholders in Rewa Co-operative Dairy Company Limited (the 'Company') holding nearly 194,000 shares with a Paid-Up value of approximately $169,648.00 giving them the rights under the Articles of Association of the Company to 477 votes. Now before the Court is an Originating Summons issued by the Plaintiffs on the 18th of February 1998 seeking four declarations:

(1) A DECLARATION that Article 77 of the Company relating to the voting of members is valid and not in breach of the Fair Trading Decree.

(2) AN ORDER that the Second Defendants forthwith re-convene the 1997 Annual General Meeting of the Company to complete the business to be concluded thereat, including the election of new directors in accordance with the Articles of the Company.

(3) DIRECTIONS as to the manner in which Meeting referred to in 2 above is to be called, held and conducted and all such ancillary and consequential directions as the Court may consider expedient.

(4) AN ORDER that Rewa pay to the Plaintiffs the costs of these proceedings.

The Summons is supported by an affidavit of Sharon Julie Anne Mackenzie on behalf of the First Plaintiffs in which she refers first to certain events in the months preceding the month of March 1998 which she says have resulted in uncertainty (at least on the part of some shareholders) as to the effect of certain of the Articles of Association of the Company, in particular Article 77. This Article allocates the number of votes which each shareholder of the Company is entitled to exercise at meetings of the Company in accordance with the value of the person's shareholding. It has been alleged that some of the Articles are being undemocratic and unfair to small farmers because voting rights are determined in accordance with shareholding.

These allegations are made particularly in Action No. HBC 77 of 1998 in this Court between Ram Achal & Others against the Company in which broadly it is alleged that various Articles of the Company are in breach of the Fair Trading Decree of 1992.

The Originating Summons in that action was issued on the 29th of January 1998 and a perusal of the Court file shows that it is making almost snail-like progress. Since the 18th of February the action has come before the Deputy Registrar of the Court and other Judges seven times and has been adjourned for the eighth time and only for mention on the 29th of July. No attempt has been made to have the action set down for hearing although on the 18th of February 1998 the solicitors for the Plaintiffs in this action issued a Summons for consolidation of both action No. 77 and the present action.

The Plaintiffs' complaint on the present Summons is that on the 19th of December 1997 an Extraordinary General Meeting was held in Suva seeking the passing of various resolutions relating to the method of voting prescribed by Article 77. Two resolutions were dealt with at the meeting and the third relating to the election of further members of the Board was adjourned for further consideration.

On the 30th of January 1997 the Annual General Meeting of the Company was held in Suva at which six specific items were listed on the Business Agenda. The last of these concerned the election of directors. When this was reached the Chairman Mr. Ram Chand who is a well-known solicitor in Fiji, informed the shareholders that because there was an action in this Court relating to the issue of voting (Action No. 77) voting could not proceed as in Mr. Chand's opinion the matter was sub judice.

There was some discussion on this culminating in the Chairman declaring the meeting closed.

In an affidavit sworn and filed in May 1998 in response to the Plaintiffs' affidavit Mr. Chand agrees that the matters just mentioned took place and that he declared the meeting closed because he did not consider it prudent to proceed any further because of High Court Action No. 77 of 1998.

When the parties came before me on the 12th of June I suggested to them that on what I had read so far I could see no reason why the Annual General Meeting should not be re-convened but counsel for the Company requested leave to file written submissions which he said would explain the Company's opposition to the Plaintiffs' request.

I have received submissions from the Company and from the Plaintiffs. The Company and the other Defendants say that they are not asking for an indefinite adjournment but only an adjournment so that both this action and No. 77 could be heard by the same Judge.

I cannot accept this submission.

Section 133 of the Companies Act makes it mandatory for an Annual General Meeting to be held as the name implies every year and penalties are provided for failure by a company to comply with the section.

In my judgment there is no reason why the resumption of the Annual General Meeting of this Company should be delayed any longer. I see no merit in the reasons given by the Chairman for adjourning the meeting as it is clear to me that both actions seek different relief. To accede to the Defendants' submissions would in my opinion cause unnecessary harm to shareholders of the Company and they should be given their rights to vote on the election of directors and any other matters which may now have arisen at the earliest opportunity. For this reason I direct that the Annual General Meeting of the Company is to be re-convened no later than the 22nd of August 1998. I also order the Defendants to pay the Plaintiffs' costs which I fix at $350.00.

Since dictating the above judgment I have read a submission on behalf of Sam Speight one of the Second Defendants, which was filed without my knowledge nearly three weeks over-due on the 23rd of July 1998, for which the member of the Court Registry responsible has been reprimanded. In fairness to the Plaintiffs I gave their counsel leave to reply to the Speight submission on the same day and this submission was filed on the 24th of July.

Having read both these last submissions I find no reason to any way vary or withdraw any of the reasons I have earlier given. The first two paragraphs of the Speight submission appear to be based on the assumption that the Plaintiffs would proceed on the Article 77 issue in this action.

In their written submissions dated the 8th of July 1998 the Plaintiffs state that they had made clear to counsel for the other Defendants except Mr. Speight that they were prepared not to take any further steps on the Article 77 question in order to get some movement on the Annual General Meeting issue, if necessary even being prepared to abandon the Article 77 issue altogether.

I find the letter dated 20th July 1998 from Rewa Dairy to the Defendant Speight's solicitor annexed to the submissions by Mr. Speight very curious. This letter informs the solicitor for Mr. Speight that a meeting of all parties concerning the two Court actions and the members of the Board was to be held on Friday, 24th July at the Registered Office of the Company. I ask myself whether it was by coincidence or deliberate that this meeting was to be held on the day after the Speight submission was filed in the Court. The timing of the two seems to me strange given the contents of the Speight submission.

As I have said I remain unpersuaded that there is any good reason for delaying the resumption of the Annual General Meeting any longer. Any changes to the Company's Articles or settlement of litigation and any other matters which may be raised at the resumed meeting will be the function of the elected Board. To summarise my conclusion, I say that I think time has run out for the present Board. In my judgment there has been too much procrastination by that Board already; I am not prepared to let it indulge itself any longer.

JOHN E. BYRNE
JUDGE

Legislation referred to in Judgment:

Companies Act Cap. 247.

Cases referred to in argument:

Hinckley and South Leicestershire P.B.S. v. Freeman (1941) Ch. 32.
Maxwell v. Keun (1928) 1 K.B. 645.