Galantis v Alexiou and another

The oppression remedy under the Bahamian Companies Act 1992 is broad, but it addresses an existing oppressive or unfair state of affairs capable of correction by court intervention. The conduct causing oppression may be past, but the oppressive state must exist when proceedings begin. The remedy is directed to a functioning company and, on the statutory wording, to current directors or officers. An order must go no further than necessary to rectify the wrong.

Section 272 preserves liabilities existing when a company is removed from the register. It does not create a liability or preserve the mere possibility of a future discretionary order under section 280. Such liability arises only when the court exercises its discretion. The appeal was therefore allowed.

The respondent was a judgment creditor of Ali-Cat Designs Ltd. The company failed to pay the judgment debt and was removed from the register and dissolved in July 2008. The respondent then brought proceedings against its former directors under section 280 of the Bahamian Companies Act 1992, alleging oppressive conduct and unfair disregard of his interests.

The Supreme Court found oppression and unfair disregard but refused relief because the wrong was no longer ongoing. The Court of Appeal allowed the respondent’s appeal, granted declarations and ordered compensation, holding that section 272 continued the directors’ liability after dissolution. The central issue before the Privy Council was whether the section 280 exposure was a liability preserved by section 272 and whether an existing oppression capable of remedy remained when proceedings commenced.

1. Appeal allowed. The Board accepted the unchallenged findings that the first appellant had acted oppressively and that the second appellant had unfairly disregarded the respondent’s interests. Those findings did not, however, establish entitlement to relief under section 280 at the time proceedings were commenced.
2. Conduct giving rise to oppression need not continue until the application is made. Sections 280(2)(b) and (c) deliberately contemplate past conduct. There must nevertheless be an existing oppressive or unfair state of affairs requiring restraint or remedy. The intervention must be timely and capable of correcting an existing wrong. Here, the company had been dissolved, the appellants were former directors and court intervention in the company’s affairs was no longer possible. The wording of section 280 also supported the conclusion that the provision addressed a company and its current directors or officers.
3. The remedy is corrective and discretionary. An order must go no further than necessary to rectify the oppression. The Board adopted the guidance in Wilson v Alharayeri [2017] 1 SCR 1037: personal liability must be a fair way of dealing with the situation, must vindicate reasonable expectations rather than serve a tactical purpose, and must be assessed in the wider corporate-law context. The court must decide case by case whether imposing personal liability is fit.
4. Section 272 preserves liabilities existing when the company is removed from the register; it does not create liability. Although the term liability is broad enough to include accrued statutory and common-law liabilities, exposure to a possible future order under section 280 is not such a liability. The exercise of judicial discretion is a precondition to liability, and a future possibility cannot be enforced. The Board further observed that section 280 creates a jurisdiction or power to seek discretionary relief rather than a cause of action, so limitation cannot run before relief is granted, although delay may justify refusal.
5. The respondent could have sought restoration of the company under section 271(4), followed by permission to bring a derivative action under section 279 for breach of the directors’ duty under section 81. That route was not pursued. The Board advised that the appeal be allowed and invited submissions on costs.

1. Privy Council. In [2019] UKPC 15, the Board allowed the appeal and held that sections 272 and 280 did not permit the respondent’s claim against the former directors after the company’s dissolution.
2. Court of Appeal of the Commonwealth of The Bahamas. On 4 May 2016, for reasons delivered on 7 December 2016, the court allowed the respondent’s appeal from the Supreme Court, granted declaratory relief and ordered compensation.
3. Supreme Court of The Bahamas. The court found oppression and unfair disregard but refused substantive relief on the basis that the oppressive conduct was no longer ongoing. It had earlier held that the respondent was a proper complainant under section 278.