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Former gym owner wins legal battle over business merger

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The former Olympic Club

A former gym owner has won a seven-year legal battle arising from the merger of his business with a rival.

Assistant Justice Jeffrey Elkinson has found in favour of Scott Stallard in his claim against defendants The Athletic Club Limited (in liquidation) and its sole shareholder, Kym Herron Scott.

Mr Justice Elkinson also dismissed a counterclaim by the defendants.

He awarded the plaintiff the sum of $126,000, the amount that was to have been paid under a merger agreement between the parties at the rate of $3,000 a month for a period of 42 months.

As that amount should have been paid in full by June 1, 2019, according to the agreement, Mr Justice Elkinson said, the plaintiff was entitled to interest at the statutory rate of 3.5 per cent from that date until the date of payment.

The Supreme Court judge ruled that these amounts are to be paid to the plaintiff by the defendants by January 25.

Mr Justice Elkinson also ruled that the defendants are liable to the plaintiff for an outstanding payment in respect of the plaintiff’s social insurance in the amount of $2,116.62. Should there be interest due and owing to the Accountant General on that amount, the defendants are also liable to pay interest on this amount to the plaintiff.

On November 12, 2014, there was a merger agreement between Mr Stallard and The Olympic Club Limited, of which he was the principal, on the one side and The Athletic Club Limited and its principal, Ms Scott, on the other.

Mr Stallard received no payments under the agreement, which the defendants walked away from, claiming that Mr Stallard had breached its terms.

The defendants sought a declaration that the merger agreement was void and that they have no obligations pursuant to it. They also sought monetary compensation by way of counterclaim in an amount of approximately $500,000.

But Mr Justice Elkinson, who heard the matter over two days in the Supreme Court, wrote in a 23-page judgment: “Given the failure of the defendants to substantiate the allegations which they made in their counterclaim and given the conclusions reached in respect of the main plank of their argument that the plaintiff was in breach by locking them out of the premises and for all the reasons set out in this judgment, I find that the plaintiff is entitled to judgment in respect of his claim, being $3,000 for a period of 42 months.”

There was a resolution of members that The Athletic Club Limited go into voluntary liquidation as of September 3, 2020. However, the court heard that the liquidation has not progressed beyond that resolution.

The Athletic Club no longer operates a fitness club of that name.

Ms Scott, who testified at the hearing via Zoom, has left Bermuda to live in Florida.

Assistant Justice Jeffrey Elkinson: finds for plaintiff Scott Stallard (File photograph)

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Published January 26, 2022 at 7:58 am (Updated January 27, 2022 at 8:03 am)

Former gym owner wins legal battle over business merger

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