Security company owners fall out over joint venture

Adrien Briggs, shareholder of Safeguard Security Services Ltd., has filed a winding up petition for the security firm alleging that the 60 percent shareholder, Stuart Bostock, caused the company to pay $140,000 “wrongly and without any justification” to The Security Centre Limited, another company Mr. Bostock owns.

The petition claims that the payment was prompted by Mr. Bostock’s attempt to cover losses at The Security Centre caused by a former employee accused of misappropriating nearly $1 million from the security company.

The employee, Patti Jane Ebanks, is due to stand trial on theft, money laundering and forgery charges in the Grand Court this month. It is alleged she stole $936,000 from the Security Centre between April 2010 and June 2013.

The issue is complicated by court documents from December 2010 – applying for Safeguard Security to be restored to the Cayman Islands company register – which show that Ms. Ebanks at the time also acted as a director for Safeguard.

While Mr. Briggs’s daughter was one of the directors of Safeguard, the company was effectively operated by Mr. Bostock.

Safeguard Security, founded under the name Capricorn Security, was formed in 2006 as a joint venture between Mr. Briggs’s Capricorn and the Security Centre which merged the company’s respective guarding businesses, according to the petition.

While Mr. Briggs’s daughter was one of the directors of Safeguard, the company was effectively operated by Mr. Bostock.

The petition claims Mr. Bostock did not maintain appropriate accounting and financial records that properly separated Safeguard’s assets, liabilities and affairs from those of the Security Centre, contrary to the shareholders’ agreement.

Mr. Briggs further alleges that guard dogs owned by Safeguard had been used by The Security Centre to service contracts made on its own behalf without paying Safeguard for their use.

The petition claims that such a contract constituted competing business for the services offered by the joint venture and had therefore breached the shareholders’ agreement and the intention that Safeguard would be run as a “quasi-partnership.”

Moreover, the court filing states that Safeguard had been charged for expenses that did not relate to its business but were incurred by separate affiliates of the Security Centre and a cross charge had been wrongfully levied against Safeguard.

“As a consequence, the shareholders’ relationship, based on trust and goodwill and constituting a ‘quasi-partnership’ has irretrievably broken down,” the petition said. And the company should therefore be wound up.

In addition, the petition asks the court to order The Security Centre to buy Mr. Briggs’s shares at a fair value determined by the court or an independent valuer with a premium to reflect the losses suffered by the company.

“In the event of the liquidation of [Safeguard] the Petitioner anticipates that there would be a surplus for contributories. Further and in any event, the Petitioner has an interest in the proper inquiry into the affairs of [Safeguard] and the repatriation of funds and assets belonging to the Company or the pursuit of compensation in respect of assets and business opportunities that have been diverted, by [The Security Centre], away from and which belong to [Safeguard],” the winding up petition states.

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