Lack of proof of prima facie damage to Elsynt shareholders as a result of the hotel and marina transactions
- As may be recalled, the hotel and marina transactions event was the only event in respect of which the trial court ruled that there were questions common to all the members of the class. The court also ruled that to the extent that there is substance to the appellants' claims that the price paid by Elsynt for the assets purchased in these transactions was exorbitant, then a personal cause of action arose for the shareholders and not only a cause of action on behalf of the company. However, since the appellants did not mention in their pleadings what happened to the shares of Elsynt held by them, it was also not proven that this event caused damage to the shareholders of Elsynt. In his words: "Even if the respondents wronged the applicants or breached various obligations towards them, they did not necessarily suffer damage, and this depends on the question of what happened to the shares of Alcinet held by them. In the absence of reference to this question on the part of the applicants, they did not show, even prima facie, that they suffered damage" (paragraph 47 of the trial court's decision).
This determination of the trial court raises the question of what burden was imposed on the appellants and whether they met it. Did the trial court rule that it was not proven, even prima facie, that the hotel and marina transactions caused damage to the appellants? These issues are at the heart of the appeal before us, but before proceeding to examine them, it is appropriate to clarify as a preliminary question to whom the cause of action belongs, if any, for the execution of these transactions. In other words, we must ask whether we are dealing with damage that gives rise to a personal (and class) claim by the shareholders, or whether, even assuming that the transactions did not serve Elsynt's interests, the damage resulting from them is Elsynt alone, and therefore it is possible that a derivative action has arisen, but there is no reason to approve a class action by the shareholders?