The battle over the fate of chief executive officer of Citrus Products of Belize Limited (CPBL) — the processing arm of the citrus industry of Stann Creek District, Dr. Henry Canton, has moved closer to a possible showdown with a decision issued today in the Supreme Court.
This afternoon, Justice Minnet Hafiz-Bertram granted three declarations sought by attorney for the embattled Canton, Andrew Marshalleck, Senior Counsel, namely that the contract Canton signed with CPBL in 2002 to join it as CEO was valid and binding; that under clause 2(3) of that contract, he is entitled to remain as a director of CPBL and its subsidiaries while the contract subsists (that is, is in effect); and that any removal of him as director that does not comply with that clause is a breach of the contract and therefore void.
The case was presented as a claim for default judgment, on the grounds that attorneys for CPBL, the company that employs Canton, had, after almost two years since the documents with the statement of claim were forwarded to them, failed to file a defence in court within the specified time.
This is even after they were given the go-ahead by their clients in April of last year following a major judgment in which the rights of the company’s shareholders to appoint directors to the CPBL board in certain circumstances were clarified.
Following Justice Hafiz-Bertram’s decision not to add the Citrus Growers Association (CGA) and its Investment Company Limited (ICL) as defendants to the case rather than interested parties, Nigel Ebanks, attorney for CPBL, rose to make the application for extension of time to file a defense.
Acknowledging that they had had almost two years to do so, Ebanks nonetheless maintained that “the ends of justice” should be the primary consideration in granting the application. He said that their defense was good, that the matter was one of public interest because of the nature of the industry as the primary employer in the South, and particularly due to the appointment of new directors to the Board in April of 2010.
According to Ebanks, this change of circumstances allowed CPBL to make a decision to challenge the claim rather than ignore it, as it had previously. The previous decision was the work of the prior board of directors, which included Canton himself, Frank Redmond and Mike Duncker.
Ebanks argued that the court had seen no evidence of prejudice against Canton by his removal as a director, or any reflection of his ability to run the affairs of the company any differently if he were still a director in addition to being CEO, as provided for in his contract.
Despite the many attempts to remove him as CEO and director, he continues to hold the former position.
Ebanks was joined by attorney for the CGA and ICL, Ashanti Arthurs-Martin, who attacked the validity of the provision in Canton’s employment contract that named him a director of CPBL as well as its CEO, as a necessary condition for his employment.
It was “trite law,” she pointed out, that shareholders to a company are strictly reserved the right to appoint and remove directors as they see fit. She also presented an affidavit from CGA CEO, Henry Anderson, that reviewed events between the filing of the claim and the present day, including the Extraordinary General Meeting called in December of 2009 that voted to remove Canton, and the letter sent to him in December of 2010 announcing his termination, both of which he survived with the key assistance of minority shareholder, Banks Holdings Limited of Barbados, who co-signed the Investment Agreement with ICL and hold 46.5% of shares in CPBL, entitling them to four directors on the board of nine.
The disagreement between Banks Holdings and ICL, she said, made them unable to agree on any issue, least of all removing Canton.
Marshalleck in reply stated that the defendant had failed to meet the criteria set by Belize’s Civil Procedure Rules for extension of time, in that their failure to comply was clearly intended, with no good reason or explanation, and that they are now complying with the rules, practices and procedure in making the application. He added that they had presented no reason why they could not have done what they were doing today, much earlier.
Justice Hafiz-Bertram agreed and the matter moved forward to the case proper.
In making the application, Marshalleck stated that Canton was approached by ICL to lead what would become CPBL when ICL was in negotiations to buy CPBL’s predecessor, Del Oro Belize Limited, in 2002. The two sides agreed to the terms of the contract, with effect from October 1, 2002.
Marshalleck revealed in court that under the terms of the contract, Canton can be terminated without cause (and can leave without cause), but only with 2 months’ notice, and he would be entitled to various salaries and benefits. There are also provisions in the contract with regard to termination for cause.
Later, after counter-arguments by Ebanks and Arthurs-Martin concerning company law and authority regarding board compositions and appointments, by which they sought to advance their view that the provisions of such a contract ran the risk of making the entire contract void, Marshalleck responded that Article 84 of the Articles of Association of CPBL came into effect almost five years after the signing of the contract, and had no effect whatsoever on it.
The contract was still binding, he said, and ought to be honored, because under its provisions it is easy to terminate Canton – but CPBL, not ICL on its own, must do it.
Justice Hafiz-Bertram granted all three declarations, stating that she would put her reasons in writing at a later date.
Outside court after the morning session, Marshalleck told reporters that CPBL, in the view of his client, had effectively breached Canton’s contract by its actions, or more specifically, those of ICL as majority shareholder.
In response to Amandala’s question concerning Canton’s status at the company at present due to the various attempts to remove him, Marshalleck said: “Yes, there have been a couple of attempts to remove him by the shareholder(s) of CPBL, not by CPBL itself— and therein lies the rub, and the reason why there is a question mark over whether or not he has been properly removed,” adding that his loss of position as a director on the Board, though not as CEO, would entitle him to certain reliefs as a breach of contract.
Asked whether the rights of ICL as majority shareholder were being circumscribed, Marshalleck argued that ICL effectively limited its own rights without anticipating future events: “Undoubtedly, ICL as majority shareholder of CPBL has certain rights. ICL has however entered into certain commercial agreements with third parties circumscribing and defining how those rights are to be exercised. And now it’s seeking to exercise those rights in breach of those voluntary agreements restricting the exercise of those rights, and therein lies the problem. If ICL as majority shareholder had not entered into agreement seeking to limit its own power, then there would have been no case. It has entered into such agreements to CPBL as well as on its own — on its own in relation to Banks Holdings because it signed that investment agreement, and through CPBL in relation to Dr. Canton’s contract.”