THE Michael Lee-Chin-controlled AIC (Barbados) Limited, which had hauled Verticast Media Group (VMG) Limited to court seeking damages for contract breaches relating to the sale of majority shares in local television station CVM-TV, has been granted more than US$2 million in damages sought, plus interest, by the Supreme Court.

The legal stand-off, which began in 2003, had its genesis in a 2022 share sale agreement between AIC and Verticast. According to that arrangement, AIC was to sell to Verticast, 22,937,010 shares, representing 90 per cent of its total shares in CVM Television Limited. The agreed purchase price was US$18,000,000.

The agreement was that US$100,000 would be paid over on execution of the agreement, US$15,700,00 on the completion date and the balance of US$2,000,000 on or before the final payment date of May 31, 2023.

Verticast was also required to provide a letter of credit or bank guarantee, issued by a financial institution of US$2,000,000, on or before that final payment date.

However, the entity, according to court documents, “defaulted on all of its obligations for payment and for the support document, save for the first, and failed to complete the share sale agreement despite a notice being issued”.

As a result, AIC terminated the share sale agreement. A subsequent arrangement initiated by Verticast saw the companies agreeing to it making a US$16,070,000 payment by July 2022 at which time AIC “would reinstate the terminated share sale agreement”. Verticast, however, reneged on that agreement.

A third attempt was made to revive the transaction, again at the request of Verticast, at which point it paid a total of US$17,200,000 to AIC, including US$17,000,000 reinstating the agreement. It was then left for Verticast to pay the remaining US$800,000 on or before January 31, 2023; and US$2,000,000 on or before September 30, 2023.

AIC subsequently transferred the shares to Verticast but according to court documents, Verticast “failed to pay to AIC the sum of US$800,000… and has also failed to deliver the letter of credit or bank guarantee providing for payment of US$2,000,000” leading to the court battle to recover those sums.

Verticast, for its part, filed a defence and an ancillary claim contending that AIC “failed to comply with the terms of the share sale agreement and also with the terms of the first supplemental letter agreement”. Verticast further “alleged negligent or fraudulent misrepresentations and non-disclosure by” AIC and claimed damages. It also contended that it was entitled to damages for expenses incurred in mitigating the effects of what it said are fraudulent and/or negligent misrepresentations made by AIC, and for non-disclosure, against any amount that it owes to AICB.

The Supreme Court, in its ruling in February, said it accepted as valid a “no set-off clause” contained in share sale agreement which made it so that the purchaser could make payments without set-off or counter-claim. It said this provision “in effect prohibits Verticast from asserting any form of set-off, whether legal or equitable”.

“The no set-off clause is drafted in clear and unambiguous terms and there is no reason to depart from its plain meaning. The clause is unequivocal in its prohibition of set-offs or counter-claims. The clause was clearly designed to ensure that payments under the agreement are made in full, without any deductions or disputes regarding unrelated claims,” the court said.

“There is no provision in the agreement which allows for exceptions to the no set-off clause, and neither has (Verticast) advanced any argument to suggest that there is a valid exception to the no set-off clause in this case. There is no suggestion that the clause is unenforceable or should be interpreted narrowly to allow for equitable set-offs,” it said further.

“There can be no doubt that the purpose of a no set-off clause was to ensure that the amounts due under the contract are paid in full, irrespective of any claims which may arise. For the reasons outlined above, I find that VMG’s ancillary claim cannot be used as a basis to reduce or withhold the payments owed under the share sale agreement. VMG’s attempt to set-off the ancillary claim against the sums due to AICB under the reinstated agreement is precluded by the terms of the contract,” the court stated.

As such, it said Verticast “is unable to rely on its ancillary claims to reduce the payments owed under the agreement”. It, however, ruled that Verticast’s counter-claim that AIC falsely reported on the extent of
CVM-TV’s litigation exposure will proceed to trial, with a case management conference set for June 2 this year.

In the meantime, AIC was awarded damages for breach of contract in the sum of US$800,000 plus interest dating from February 1, 2023 until it is paid; damages for breach of contract in the sum of US$2,000,000 plus interest from October 2023 until it is paid.

AIC acquired the majority interest in the CVM Communications Group in 2006 from Neville Blythe’s UGI Group.