Commercial High Court grants relief to Sweden investor in hotel project

The Commercial High Court entered an extensive Judgment on 14 May in an action instituted by Olenka Matinkoski the petitioner on the basis that she had been oppressed in the company as a shareholder and the company had been seriously mismanaged by the controlling director, Ajith Fernando. 

Olenka Matinkoski who is a Swedish citizen instituted this case in 2011 under and in terms of Section 224 and 225 of the Companies Act against Olenka Sun Side Beach Hotel Ltd. alleging that though she had contributed a total sum exceeding Rs. 71 million to the 2nd Respondent, Ajith Fernando in order to construct Olenka Sun Side Beach Hotel, she had been side-lined from the affairs of the company, Olenka Sun Side Beach Hotel Ltd., and her rights as a shareholder had been affected. 

Through her Petition Olenka Matinkoski further alleged that the primary asset of the company, which is the hotel, has been mismanaged through the acts of Ajith Fernando owing to the reason that inter alia she was never provided with the company’s Financial Statement and appointment of Auditors to Olenka Sun Side Beach Hotel have been effected in violation of law.

The Respondents, Olenka Sun Side Beach Hotel Ltd. and Ajith Fernando in their Objections inter alia took up the position that the aforesaid acts of Ajith Fernando did not fall under the preview of Oppression and Mismanagement which is stipulated in Section 224 and 225 of the Companies Act, No. 7 of 2007. 

During the inquiry, the Petitioner led Suranga Mathugamage, a representative of the Registrar of Companies and Frederick Gregory, a representative from the Hatton National Bank PLC to provide evidence in addition to the Petitioner’s evidence. 

The Respondents commencing their defence in the inquiry led the 1st Respondent company’s former Auditor as the only witness, Kankanam Sagarage Karunadasa, Partner of M/s. K.S. Karunadasa & Co. Kankanam Sagarage Karunadasa to give evidence on behalf of the Respondents. 

Pursuant to an extensive inquiry which took place between 2012 to 2017 Commercial High Court Judge, Ruwan Fernando considering all evidence placed before Court and the written submissions filed by the respective parties entered Judgment on 14 May 2018 granting certain reliefs sought by Olenka Matinkoski.

Commercial High Court Judge Ruwan Fernando through his Judgment dated 14 May 2018 held that the affairs of Olenka Sun Side Beach Hotel had been conducted by Ajith Fernando in a manner oppressive to Olenka Matinkoskias a shareholder within the meaning of Section 224 of the Companies Act and that the affairs of Olenka Sun Side Beach Hotel have been conducted by Ajith Fernando in a manner prejudicial to the interests of aforesaid hotel within the meaning of Section 225 of the Companies Act. 

Further, through the aforesaid Judgment dated 14 May, an Order was granted to remove Ajith Fernando as a director of Olenka Sun Side Beach Hotel Ltd. and to appoint auditor, Ranwatta and Co. to inquire into whether out of the receipts and payments of the 1st Respondent company between 2003 and 2011 Ajith Fernando has received illegal advantages not due for the 2nd Respondent. 

Olenka Matinkoski was represented in the Commercial High Court by Kuvera de Zoysa, P.C, Nishan Premathiratne and Yasith Hirimburegama, Attorneys’ at Law on the instructions of Equity Chambers.

Ajith Fernando and Olenka Sun Side Beach Hotel Ltd. were represented by Romesh De Silva, P.C and Hilary Livera, Attorney at Law on the instructions of Ganga Livera.