Home Top Stories Chief Justice orders Royal Investment to pay US $ 2M balance plus US $ 2.5M interest
Guyana Stores sale free balance
Chief Justice Roxane George on Thursday ordered Royal Investment Incorporated (RI) to pay over US $ 4 million to National Industrial and Commercial Investments Limited (NICIL) which represents money owed by the company for a 70 percent buyout of the Guyana Government-owned capital shares in Guyana Stores Limited (GSL).
GSL was privatized in 2000. On October 4, 2000, when an agreement was made between NICIL and RI, the entity that owns and operates GSL, to buy from RI 70 million shares or 70 percent of the shares in GSL . NICL, a Government-owned corporation, achieved through the sale negotiations.
RI agreed to a US $ 6 million purchase price of which US $ 4 million was paid at the time of signing the agreement. The balance of US $ 2 million was agreed to be paid by September 30, 2002. RI failed to pay the money, which resulted in NICIL filing a lawsuit against the company.
NICIL, in its allegation, asked the court to order RI to pay the balance or its equivalent in Guyana dollars at the sale exchange rate at the date of payment as determined by the National Bank for Industry and Trade which is now the Bank Republic, plus interest from October 1, 2001, up to the date of payment. The interest was to be calculated at the US Treasury Bill rate at that date of 4.4 percent. From the date the decision was passed in the High Court by CJ Roxane George on December 17, 2020, some 19 years ago, a calculation of interest showed that this would amount to US $ 2.592 million, for -a total payment of US $ 4.592 million.
RI, however, argued that it was not liable to NICIL and filed a counterclaim seeking damages for misrepresentation, fraud and fraud in non-disclosure and misrepresentation concerning: (1) the property being sold, ( 2) the continuation of agency agreements, (3) the payment of a dividend, (4) the implementation of a promissory note and (5) other operational matters that it claims have a negative impact on GSL.
The company also complained about NICIL’s failure to maintain a collateral agreement that the Ministries and other agencies of the Government of Guyana would continue to purchase from RI, all to the detriment or disadvantage of RI as the purchaser of these shares.
As the case progressed to the Chief Justice, the former chairman of NICIL, now Head of the Winston Brassington Beach Gas Task Force for NICIL, and Tony Yassin, testified on behalf of Royal Investment Inc.
They were seen as the chief witnesses. Brassington was found to be the more credible witness by Justice George regarding the documentation regarding the sale of the shares, the correspondence that passed between NICIL and RI, and the course of deals between the parties.
In addressing the first issue, Justice George maintained, among other things, “I think Mr Brassington made no representations that there were no properties other than the General Building at Lot 22/23 Church Street and the Hardware Store at Lot 19 Water Street part of GSL’s assets that would have transferred the sale of the shares […] as forming GSL assets, and in particular excluding other property referred to as surplus property which will not benefit the purchaser of the shares in GSL. “
Furthermore, RI asserted that as the Government of Guyana was actually selling the shares, the claim should be or be representative. But Justice George found this contention without merit.
In doing so, he underlined that there was no reason to raise NICIL’s corporate cover to consider who its principals or sole proprietors are. It concluded, therefore, that NICIL, as the owner of the shares, did not have to sue in a representative role. In a similar vein, Justice George noted that it was unclear what RI meant in her assertion that NICIL had failed to fulfill its collateral agreement.
“There is no evidence of such a collateral agreement. There is nothing to support the assertion that there is an implied term that the Government and its other agencies would continue to buy from RI, ”the Chief Justice noted in her 19-page written judgment.
Yassin’s testimony that he inadvertently started a promissory note document in the confusion caused by the signing of the Share Sale and Purchase Agreement. He said he had a document the week before and had no promissory note.
Further, the businessman testified that JSM Worrell of NICIL had signed and initiated the documents and he also did, so he was not aware of the promissory note, as he did not read the signed documents.
While the Chief Justice pointed out that Yassin’s evidence tended to suggest that the promissory note had been inserted without his knowledge even though he had the agreement the week before to look at it, he said clear in the main agreement to the promissory note.
“It’s very 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 not fully aware of, ”said the Chief Justice in rejecting Yassin’s evidence.
Justice George added that Yassin had tried to portray himself as a naive businessman, yet was dealing with a US $ 6 million transaction, not a trivial amount of money in circumstances where the evidence revealed that his company was part of the consortium that was part of RI that is part of the initial negotiations for the purchase of the shares.
“Given all the documentation, I find that RI is well aware of most, if not all, of the issues complained about [its] defense and counterclaim. I hold, therefore, that RI has not proven that there was any misrepresentation, fraud, or fraud on the part of NICIL that would free RI from paying the balance of the purchase price in the amount of $ 2 million US with interest as stated above , or claim it for compensation. ”
In dismissing RI’s counterclaim, Justice George ordered the company to pay NICIL the money due for the shares, plus interest to be accounted for on the U.S. Treasury Bill Rate effective from October 1, 2001, until that it has been paid in full. Given the amount of the claim, RI was also ordered to pay NICIL $ 5 million in court costs.
This matter had been ongoing in court since 2006 and controversies ended in January 2017; the Chief Justice gave her decision nearly four years later. Throughout the case, 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.