Supreme Court
Action No. 84 of 1999
10th May, 2002
Shanks, J.

Mr. Dons Waithe for the Plaintiff
Mr. Dean Lindo for the Defendants

Partnership - Partnership property - Dissolution of partnership

J U D G M E N T

1. This is, in form at least, a partnership action. As is often the case with such actions, the pleadings do not clearly define the real dispute and the case appears to be intractable. I heard the case on 19 April, 2000. I received evidence from the Plaintiff, the second Defendant and an accountant, Pedro Vasquez.

2. The Plaintiff and the second Defendant had an association going back long before the start of the restaurant business called Dukes Place which is the subject of this Action. Mr. Shisler owned a property on Coconut Drive in San Pedro and had an apartment on the top floor, but he lived most of the year in the US where he ran a business. Mr. Guerra acted as his agent in San Pedro. Mr. Shisler told me (and I accept) that he had supported Mr. Guerra through various unsuccessful business ventures, most recently a shop which had operated from the ground floor of his building on Coconut Drive. At some stage, probably in late 1992, Mr. Guerra came to him with the proposal that they should open a restaurant on that ground floor. He reluctantly agreed to this proposal provided that Mr. Guerra invested some of his own money in the business.

3. During 1993 a kitchen was added to the ground floor and it was fitted out as a restaurant and all the necessary utensils and equipment were imported from the US. Mr. Guerra's case was that he invested a total or $48,917 as part of this exercise and that he took out a loan with Belize Bank in order to finance the greater part of it. Mr. Shisler did not accept that all, or even a substantial portion of this money, had been spent by Mr. Guerra on the restaurant and Mr. Lindo, his Counsel, was able to make some compelling points based on the account produced by Mr. Guerra. (It included, for example, a sum of $8,440 which had actually been repaid to Mr. Shisler himself in respect of a loan that he (Shisler) had made to Mr. Guerra.) Insofar as it matters, I would find that Mr. Guerra did not make contributions to the level he has claimed. There is no doubt, however, that Mr. Shisler made substantial contributions to the business in that he paid for the imported equipment and Mr. Guerra accepted that sums of $6,000, $6,000, $1,150 and $11,895 at least were provided by him.

4. The agreement between the parties as to the basis on which the business would be carried on is vague and unclear. The Plaintiff told me that the loan he took from Belize Bank was repayable over a five-year period, and that it was agreed between him and Mr. Shisler that it would he repaid out of the business over the five-year period, at the end of which he and Mr. Shisler would decide what to do with the business. Mr. Shisler was also to be paid rent out of the business for the use of his ground floor premises. Mr. Shisler expressly denied any arrangement for the repayment of Mr. Guerra's loan from the business. He told me there had been many conversations about the terms on which they would run the restaurant and he produced a two page hand-written document, which he said recorded terms. This was not entirely clear but it appears to confirm an arrangement that he would be paid $1,500 a month in high season and $1,000 a month in low season with his investment bearing 10% interest. It also states "5 year lease, with 5 year renewal clause if conditions have been met", which to some extent, appears to confirm the Plaintiff's account.

5. There is no doubt that the restaurant began trading under Mr. Guerra's management with his wife working there in late 1993, and that before it started, a company was formed on 18 November 1993, which is the first Defendant. Mr. Shisler told me (and I accept) that this was done at his instigation in order to give them the protection of limited liability, and that Mr. Guerra agreed to the proposal albeit without enthusiasm. It was common ground that the agreement was that the shares should be divided 51/49 in Mr. Shisler's favour, but, for some reason, the Articles of Association show Mr. Shisler as subscribing for 10 shares and Mr. Guerra for 5. There is also no doubt that in 1996 Mr. Guerra instructed the accountant, Mr. Vasquez, to prepare and audit accounts for the company, which he duly did in respect of the calendar years 1993, 1994, 1995 and 1996. Mr. Guerra provided Mr. Vasquez with all the information he requested in order to prepare the accounts and he signed a letter in respect of each of them as manager and director which stated: "All information given to you, are to the best of our knowledge true and correct."

6. The accounts, which were produced to the Court by Mr. Guerra himself as part of his evidence, have the following features:

(1) the kitchen utensils and equipment and the building improvements are shown as assets of the company;

(2) the Belize Bank loan (which steadily reduces in amount) is shown as a liability; there is also a substantial liability ($65,000 odd) shown as "Jerry Shisler investment".

(3) there is an item for "executive salaries" of about $9,000 shown in each year; there was no very clear evidence as to whether Mr. Guerra received a salary, but there is an outstanding liability of $30,437.71 shown as at 31 December, 1996 in respect of "salary payable".

(4) there are figures for rent of $18,000, $15,000 and $12,000 respectively in each of the trading years 1994-1996.

(5) the trading results for those years were unimpressive:

1994	$11,535	loss
1995	$ 672	profit
1996	$19,689	loss

(6) the balance sheet as at 31 December, 1996 showed a deficit of $38,954 and the assets included $32,419 for kitchen equipment and $46,713 for the building improvement (which experience would indicate, were figures unlikely to be realised on any kind of winding-up) and the liabilities included the figures for "salaries payable" mentioned above, $16,443 in respect of the Belize Bank loan, an overdraft of $5,519, a Ruben Guerra investment of $1,287 and a Jerry Shisler investment of $64,741.

7. Not surprisingly perhaps, in the light of this trading record, Mr. Shisler determined to bring an end to the restaurant business being carried on by Mr. Guerra. Unfortunately, instead of seeking some proper agreed winding-up of the affairs between them, he ultimately resorted to evicting him from the restaurant premises with effect from 31 January, 1998 (I should say that plenty of notice was given). No accounts for the company have been prepared subsequent to the 1996 accounts. Mr. Shisler told me (and I accept) that he has personally paid off all the company's creditors (bar, I would imagine, Mr. Guerra). He has since rented out the premises and equipment for a total of $1,000 a month to a new restaurateur. Mr. Guerra told me he had to pay off the last $5-6,000 of his loan with further borrowed funds. He has also apparently started a new restaurant trading as "Dukes Place". In May 1999 he started this Action with a view to winding-up matters between himself and Mr. Shisler.

8. The relief claimed by Mr. Guerra was, in summary, as follows:

(1) a declaration that he was a partner in a business known as "Dukes Place", operated as "Dukes Place Limited";
(2) an account of the worth of the business;
(3) an order for dissolution of the partnership;
(4) all necessary accounts and enquiries;
(5) the appointment of a Receiver;
(6) alternatively:

(a) damages for conversion of the equipment used in the restaurant;
(b) a mandatory injunction that the equipment be handed over to him or sold by order of the Court.

Mr. Shisler's defence appears to accept that there should be an order for a dissolution of the partnership and consequential orders and also raises a counterclaim for damages.

9. Notwithstanding the terms of the defence, I do not believe that it would be appropriate to grant any of the relief sought by the Plaintiff. It is clear that the parties had agreed, and were in fact carrying on their business through the medium of their company, Dukes Place Ltd. This is a fact which I cannot possibly ignore. In the circumstances, the only appropriate relief might have been an order for the winding-up the company, but no such order was sought by either party. The claim by Mr. Guerra to ownership of the kitchen utensils was wholly misconceived. These belonged either to the company, as shown in the accounts which he (Guerra) had prepared, or to Mr. Shisler who, it was agreed, had paid for them. The only basis for saying they belong to Mr. Guerra was that they were imported in his name to take advantage of a duty concession, but this was clearly done only for that limited purpose. It seemed to me that his evidence might (I stress "might") have given rise to a claim for breach of some agreement by Mr. Shisler to keep the business going for five years to allow the Belize Bank loan to be paid off; but again, this does not feature in any way in the relief claimed. As to Mr. Shisler's counterclaim for damages, I do not recall this being pursued in submissions or see how it was to be formulated, and I do not therefore propose to consider it further.

10. I therefore dismiss both the claim and the counterclaim. Mr. Waithe indicated in argument that his client might now apply to wind-up the company. Quite apart from the fact that any such action might well be considered an abuse of the process after Mr. Guerra has brought this action, I find it hard to believe that this would do him any good. It is clear that the company has no viable future and that the assets realised (if any) by a liquidation would go primarily to pay Mr. Shisler. I very much doubt that there is any sense in either party spending any more money in relation to what must unfortunately be regarded as a failed business venture. So far as the costs of this Action are concerned, as presently advised, I think it must be right that Mr. Guerra, who brought a misconceived Action should pay them, to be taxed if not agreed.

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