Royal Investment ordered to pay US$2M balance plus US$2.5M interest

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…Guyana Stores’ sale unpaid balance

Chief Justice Roxane George on Thursday ordered Royal Investment Incorporated (RI) to pay the National Industrial and Commercial Investments Limited (NICIL) over US$4 million which represents monies owed by the company for the purchase of 70 per cent of the capital shares owned by the Government of Guyana in Guyana Stores Limited (GSL).

GSL was privatised in 2000. On October 4, 2000, when an agreement was made between NICIL and RI, the entity that owns and operates GSL, for the purchase by RI of 70 million shares or 70 per cent of the shares in GSL. NICL, a Government-owned corporation through negotiations executed the sale.

RI agreed to the purchase price of US$6 million of which US$4 million was paid at the time of the signing of the agreement. It was agreed that the balance of US$2 million was to be paid by September 30, 2002. RI failed to pay the monies, which resulted in NICIL filing a lawsuit against the company.

NICIL, in its claim, asked the court to order RI to pay the balance or its equivalent in Guyana dollars at the selling rate of exchange at the date of payment as fixed by the National Bank for Industry and Commerce which is now Republic Bank, plus interest from October 1, 2001, to the date of payment. The interest was to be calculated at the rate of US Treasury Bills on that date, which was 4.4 per cent. As of the date that the decision was handed down in the High Court by CJ Roxane George on Dec 17, 2020, some 19 years ago, a calculation of the interest showed that this would amount to US$2.592 million, for a total repayment of US$4.592 million.

RI, however, contended that it was not liable to NICIL and filed a counterclaim seeking damages for misrepresentation, fraud, and deceit as regards to non-disclosures and misrepresentations as to: (1) the property being sold, (2) the continuation of agency agreements, (3) the payment of a dividend, (4) the execution of a promissory note and (5) other operational matters that it contends negatively affected GSL.

The company also complained about the failure by NICIL to carry out a collateral agreement that Ministries and other agencies of the Government of Guyana would continue purchasing from RI, all of which were to the detriment or disadvantage of RI as the purchaser of these shares.

As the case unfolded before the Chief Justice, former Chairman of NICIL, now Head of the Gas-to-Shore Taskforce Winston Brassington testified for NICIL, and Tony Yassin, on behalf of Royal Investment Inc.

They were regarded as the main witnesses. Brassington was found to be the more credible witness by Justice George concerning the documentation about the sale of the shares, the correspondence that passed between NICIL and RI, and the course of dealing between the parties.

In addressing the first issue, Justice George, among other things, held, “I believe Mr Brassington that he made no representations that other properties apart from the Universal Building at Lot 22/23 Church Street and the Hardware Store at Lot 19 Water Street were part of the assets of GSL that would have passed on the sale of the shares […] as forming the assets of GSL, and specifically excludes other property which is referred to as surplus properties that will not benefit the purchaser of the shares in GSL.”

Moreover, RI claimed that the claim should be or is a representative one as it was the Government of Guyana that was really selling the shares. But Justice George found this contention to be without merit.

In doing so, she underscored that there was no reason to lift the corporate veil of NICIL to consider who are its principals or sole owners. She, therefore, concluded that NICIL, as the owner of the shares, did not have to sue in a representative capacity. In a similar vein, Justice George noted that it was unclear what was meant by RI in its contention that NICIL failed to carry out its collateral agreement.

“There is no evidence of such a collateral agreement. There is nothing to support the contention that there was an implied term that the Government and its other agencies would continue to purchase from RI,” the Chief Justice noted in her 19-page written judgement.

It was Yassin’s evidence that he inadvertently initialled a promissory note document in the confusion that ensued at the signing of the Share Sale and Purchase Agreement. He said he had been given a document the week before and it did not have a promissory note.
Further, the businessman testified that JSM Worrell from NICIL signed and initialled the documents and he did too, so he was unaware of the promissory note, as he did not read the documents he signed.

While the Chief Justice pointed out that Yassin’s evidence tended to suggest that the promissory note was inserted without his knowledge even though he had been given the agreement the week before to peruse, she said there was a clear reference in the main agreement to the promissory note.

“It is passing strange that he would have read and accepted the rest of the agreement but not these clauses. Therefore, I do not accept his evidence that he was totally unaware of it,” the Chief Justice said in rejecting Yassin’s evidence.

Justice George added that Yassin tried to portray himself as a naïve businessman, yet he was dealing with a US$6 million transaction, not an insignificant sum of money in circumstances where the evidence disclosed that his company was part of the consortium that made up RI that was involved in the initial negotiations for the purchase of the shares.

“Given all the documentation, I find that RI was well aware of most, if not all, the issues that are being complained of in [its] defence and counterclaim. I, therefore, hold that RI has not proven that there was any misrepresentation, fraud, or deceit on the part of NICIL that would absolve RI from paying the balance of the purchase price in the sum of $2 million US with interest as stipulated above, or entitle it to damages.”

In dismissing RI’s counterclaim, Justice George ordered the company to pay NICIL the monies owed for the shares, along with interest to be calculated at the US Treasury Bill Rate with effect from October 1, 2001, until fully paid. Considering the amount of the claim, RI was also ordered to pay $5 million in court costs to NICIL.

This matter had been ongoing in the court since 2006 and arguments were concluded in January 2017; the Chief Justice rendered her decision nearly four years later. Throughout the proceedings, NICIL was represented by Senior Counsel Rafiq Khan. Senior Counsel Sase Narain, Senior Counsel Rex McKay and Senior Counsel Edward Luckhoo appeared on behalf of RI.