Momoh Ansumana v Voytovich Rostislav 2 (FTCC 031/2015 )  SLHC 1134 (11 January 2017);
IN THE HIGH COURT OF SIERRA LEONE
(COMMERCIAL & ADMIRALTY DIVISION)
IN THE MATTER OF THE COMPANIES ACT NO 5 OF 2009
INCLUDING SECTIONS 230 – 241 & 256 OF THE SAID ACT
MOMOH ANSUMANA - PLAINTIFFS
(Suing as Shareholder of Lora Golden Wings (SL) Limited)
4 SNA Quarters, Lungi, Kaffu Bullom Chiefdom, Port Loko District
(Suing as Shareholder of Lora Golden Wings (SL) Limited)
(Suing as Shareholder of Lora Golden Wings (SL) Limited
Through his Attorney: BORIS FARFELL above-mentioned)
Both of 29 Off Beach Road, Lumley, Freetown
VOYTOVICH ROSTISLAV - DEFENDANTS
(Sued as Director/Shareholder of Lora Golden Wings (SL) Limited)
29 Off Beach Road, Lumley, Freetown
(Sued as Managing Director of Lora Golden Wings (SL) Limited)
29 Off Beach Road, Lumley, Freetown.
Mr. M. P. Fofanah for the Plaintiffs
Mr. Y. H. Williams
Mr. B. Jones for the Defendants
FINAL JUDGMENT DELIVERED THIS 11TH DAY OF JANUARY, 2017 BY THE HON. MS. JUSTICE F. BINTU ALHADI J.
The Plaintiffs action commenced by Writ of Summons filed on 21st April 2015 against the Defendants jointly and severally for the following Orders to wit:-
- Full Statement of Account by the 1st and 2nd Defendants herein, being Director and Managing Director respectively (and in the case of the 1st Defendant being also a Shareholder) of Lora Golden Wings (SL) Limited (herein called “the Company”), of all accounts and transactions of the Company as well as a Statement and production of an Inventory of the assets of the Company from July 2013 to date;
- An injunction restraining the said Defendants herein, their privies, assigns, servants, agents and representatives from continuing to deal or transact in, dispose of, transferring, assigning or in any other way interfering with the assets of the company, inclusive of its liquid/cash assets, bank accounts, land concessions and acquisitions, real property and equipment, gadgets and machinery of the Company pending the determination of this action.
- An Order restraining the Defendants from dealing or transacting in, doing business with or in any other way from accessing their respective and/or joint assets/properties, shareholdings, dividends, profits and entitlements in various other companies incorporated by them in Sierra Leone or in which they hold respective shares/equities, namely, LGW Incorporated (SL) Limited, LGW Logistics (Sierra Leone) Limited, LGW Mining Company and LGW Foundation Trust Limited, among other companies pending the determination of this action.
- An Order attaching the assets, shareholdings, dividends and entitlements of the Defendants herein in the companies listed in paragraph 3 above to the assets of the Company herein (namely, Lora Golden Wings (SL) Limited).
- Immediate recovery of the said assets, shareholdings, dividends and entitlements of the Company from the Defendants.
- Damages for breach of trust and for the arbitrary and dishonest conduct by the Defendants herein against the interests/shareholdings of the Plaintiffs in the Company.
- An Order that the Defendants herein (who are non-Sierra Leonean citizens) provide security or enter an undertaking/bond for their personal appearance in Court in order to answer to the claims made herein against them by the Plaintiffs until the determination of this action; and
- Costs of this action to be borne by the Defendants.
- The Defendants entered appearance on the 29th day of April 2015, followed by a Statement of Defence filed on the 18th of May 2015 and a Counter-Claim filed on the 29th of December 2015 claiming: ‘that a detailed account be provided by the Plaintiffs in respect of all monies, machinery, equipment and materials received by them during the period March 2013 to 31st July 2014.’
- Five witnesses for the Plaintiffs filed Witness Statements and testified, including the 2nd Plaintiff.
- Two Witness Statements were filed for the Defendants.
- The 1st Defendant Mr. Voytovich Rostisnov testified in Court. The 2nd Defendant, Mr. Eduardo Myronenko did not.
On the 19th of September 2016 a Ruling was delivered by this Court in which the following findings were enumerated: that,
- the Court is of the opinion that all of the parties have been in breach of their fiduciary duties towards the company of Lora Golden Wings (SL) Limited and have not observed the utmost good faith towards the company in their transactions or dealings with it or on its behalf; Section 231 of the Companies Act No. 5 of 2009. They have not exercised their powers and discharged the duties of their office honestly, in good faith and in the best interests of the company; nor exercised the degree of care, diligence and skill which reasonable prudent directors would exercise; Section 232 of the Companies Act No. 5 of 2009;
- as directors of the company, they were trustees of the company’s monies and properties and as such must account for all the monies over which they exercised control and refund any monies improperly paid away; Section 233 of the Companies Act (supra). They acted ultra vires the powers conferred on them by the Act or the company’s Memorandum and Articles of Association; Section 234 of the Companies Act (supra); and they placed themselves in positions in which their duty to the company conflicted with their personal interests and as a consequence, used for their own advantage monies and property of the company, and made secret profits and unauthorized benefits; Section 235 of the Companies Act (supra);
- In their actions with the company, there was evidence of deliberate deception to secure unfair and unlawful gain and to deprive each other/shareholder of their legal right. The Court will not allow a company to be used as an instrument of fraud; and where it is clear that incorporation of a company is being used as a method of evading obligations, incorporation will be ignored and the persons controlling the company will be personally liable;
- Most of the financial transactions were between a company called Neftegazservice, Lidon Trade and another company called Golden Century. These were companies that were not registered in Sierra Leone and ones that the Court had no knowledge about. They did not have any direct business relationship with Lora Golden Wings (SL) Limited; except in the very limited period that they did business and that was when Eduard Myronenko joined Lora Golden Wings (SL) Limited. Most of the transactions before then, were complex and unusually large patterns of transactions for which there was absent an apparent commercial or lawful purpose. In other words there were suspicious activities involved in the manner of business of the companies involved. It was also noted that there was an absence of transparency of legal persons and arrangements utilised by the parties in transacting business to do with the running of Lora Golden Wings (SL) Limited;
- As a result of these activities, it was impossible for the company to make a profit thereby depriving the Government of Sierra Leone of much needed tax revenue.
- In order to assist the Court in establishing a true and fair assessment of the state of affairs of the company, the Court invoked Section 268 (1) and (2) (a) to (e) of the Companies Act No. 5 of 2009 which empowers the Court to appoint a competent Inspector to investigate the affairs of the company.
- After the pronouncement of the Interim Ruling, two qualified and competent Accountants were suggested by the Court. The parties were not asked to come up with names because they were not able to coordinate and agree on even identifying a security firm for the protection of the assets of the company. However, both parties counsel were able to examine each prospective Inspector in open court and both decided to choose KPMG Services Proprietary Limited. KPMG was appointed by the Court and charged with the responsibility of presenting a report on the state of affairs of Lora Golden Wings (SL) Limited within two months from the date of the Ruling; which was by the 21st of November 2016.
- Unfortunately, it took that period of time for KPMG to conduct due diligence. Following a meeting held between the parties and KPMG and a meeting held between all and the Court on the 5th of December 2016, it was decided that the Court should proceed to Final Judgment, since the estimated fees requested by KPMG was in the region of US$ 475,000 (Four Hundred and Seventy Five Thousand United States Dollars) which both sides found this to be exorbitant.
- The Order made on 19th September 2016 appointing KPMG as Inspector in accordance with Section 268 (1) and (2) of the Companies Act No. 5 of 2009 is hereby discharged; whilst I therefore make the following Final Orders:
- The Plaintiffs, like the 1st Defendant are shareholders and directors of Lora Golden Wings (SL) Limited. It was unlawful for the 1st Defendant to singularly remove them from participating in the affairs of the said company and its shareholdings. The Plaintiffs and the 1st Defendant therefore remain shareholders and directors of the said company, to the exclusion of the 2nd Defendant, Mr. Myronenko;
- The assets of Lora Golden Wings (SL) Limited belong to the said company alone and absolutely and not to the Defendants or any other entity. The said assets therefore should be managed by its directors jointly for and on behalf of the shareholders of Lora Golden Wings (SL) Limited. Where the directors and shareholders are unable to manage the assets jointly, they are to sell same and share the proceeds in accordance with their shareholdings. That is 40% to the 1st Defendant, Mr. Voytovich Rostislav, 25% to the 1st Plaintiff, Mr. Momoh Ansumana and 35% to be shared between the 2nd Plaintiff, Mr. Boris Farfell and the estate of Mr. Oleg Tsukanov.
- That the 2nd Plaintiff, Mr. Boris Farfell, the 3rd Plaintiff, Mr. Oleg Tsukanov (his estate) together with the 1st Defendant, Mr. Voytovich Rostislav should work with each other to account for their respective dealings with Lora Golden Wings (SL) Limited from June 2013 when the company was formed, to end of February 2014 when the 2nd Defendant, Mr. Myronenko took over the management of the company;
- That both Defendants, Mr. Rostislav and Mr. Myronenko must account for their dealings with the assets and affairs of Lora Golden Wings (SL) Limited from the beginning of March 2014 to date to the Plaintiffs;
- That the four LGW companies are distinct from Lora Golden Wings (SL) Limited and must return and account for every asset in their possession and custody to Lora Golden Wings (SL) Limited, its directors and shareholders;
- The Defendants are to work with the Plaintiffs (as directors and shareholders of Lora Golden Wings (SL) Limited and conduct a comprehensive inventory of all assets of Lora Golden Wings (SL) Limited since March of 2014 to date; in other words, the Plaintiffs and the Defendants are to work together as directors and shareholders of the said company to give full statements of account as directors of Lora Golden Wings (SL) Limited, of all accounts and transactions of the Company as well as Statements and production of inventories of the assets of the Company from March 2013 to date. This includes detailed account in respect of all monies, machinery, equipment and materials received by each party during the period March 2013 to date.
- The 1st Defendant, Mr. Rostislav is to pay damages of US$ 1,000,000 (One Million United States Dollars) to the shareholders and directors of Lora Golden Wings (SL) Limited for unlawfully removing them from the Board of the company and as shareholders and for interfering and wholly utilising the assets and facilities of Lora Golden Wings (SL) Limited without the consent of the said company’s shareholders and directors;
- The four LGW companies are perpetually injuncted from dealing with the assets of Lora Golden Wings company in any way;
- were the disagreements persist between the parties, the assets of the company, inclusive of its liquid/cash assets, bank accounts, land concessions and acquisitions, real property and equipment, gadgets and machinery should be disposed of and the proceeds distributed in accordance with the shareholdings of the shareholders.
- The 2nd Plaintiff, Mr. Boris Farfell and the 3rd Plaintiff, Mr. Oleg Tsukanov, through his Attorney Mr. Farfell, must account to the 1st Defendant, Mr. Voytovich Rostislav and Lora Golden Wings (SL) Limited their interests in Style Research and Roksolana Limited and return every asset in their possession and custody to Lora Golden Wings (SL) Limited.
- Save that Messrs Boris Farfell and the Estate of Oleg Tsukanov, should together with the 1st Defendant, Mr. Voytovich Rostislav, provide a detailed account in respect of all monies, machinery, equipment and materials received by them during the period March 2013 to 31st July 2014 to the said company, Lora Golden Wings (SL) Limited, the Defendants Counterclaim filed herein is dismissed.
- The lease agreement for the company Headquarters at 29 off Beach Road, Lumley, Freetown is to be registered in the company’s name of Lora Golden Wings (SL) Limited as the Lessee; and Mr. Boris Farfell is to be refunded for the rent he paid personally for the company’s premises.
- The NASSIT contributions that were to be paid by the company for staff during their period of employment must be calculated and paid forthwith to NASSIT.
- Each party to bear its own costs.
Hon. Ms. Justice F. Bintu Alhadi J.