Wright v Rowland & Anor, Court of Appeal - Commercial Court, October 09, 2017, [2017] EWHC 2478 (Comm)

Issuing Organization:Commercial Court
Actores:Wright v Rowland & Anor
Resolution Date:October 09, 2017
 
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Neutral Citation Number: [2017] EWHC 2478 (Comm)

Case No: CL-2015-000488

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Rolls Building

7 Rolls Building

Fetter Lane

London EC4A 1NL

Date: 09/10/2017

Before :

MR CHRISTOPHER BUTCHER QC

(Sitting as a High Court Judge)

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Between :

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Mr Philip Marshall QC and Mr Paul Casey (instructed by Charles Fussell & Co. LLP) for the Claimant

Mr Ali Malek QC and Mr James Evans (instructed by Forsters LLP) for the Defendants

Hearing dates: 3 - 6 July & 10 - 13 July 2017

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Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

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MR CHRISTOPHER BUTCHER QC

Mr Christopher Butcher QC:

  1. In the present action, the Claimant claims that the Defendants contractually agreed that he should have an option to purchase up to 5% of the shares of Banque Havilland S.A. (``BH'') for an option exercise price of €2.5 million. He claims that that agreement has been repudiated, and claims damages accordingly. Alternatively he claims a quantum meruit for services which he contends that he rendered to the Defendants, including the introduction to the Defendants of the opportunity to acquire Kaupthing Bank Luxembourg S.A. (``Kaupthing Luxembourg'').

    The parties

  2. The Claimant (``Mr Wright'') qualified as a solicitor in 1997, and worked at several firms in London, before seeking to establish a career as an entrepreneur and businessman. His last practising certificate was issued in May 2010.

  3. The First Defendant (``David Rowland'') is a successful and very wealthy businessman and investor. As he described it, his investment experience began with the founding of Fordham Investment Group, which he set up in 1965 and successfully sold in 1970 for £10 million, of which his share was £2.5 million. After that, he was involved in commodities industries, and investing in a wider range of businesses. In the late 1990s he began introducing his children into certain businesses. The Rowland family businesses' financial and investment management activities are now extensive.

  4. The Second Defendant (``Jonathan Rowland'') is David Rowland's eldest son. He left school at 16, and came to be involved in a number of Rowland family businesses, by which is here meant businesses in effect funded by David Rowland and in which one or more of his children are involved in some way. In 2013 he had a serious stroke, which curtailed his involvement in business activities.

    The nature of the claim

  5. Mr Wright's case is that he was selected as ``lieutenant'' for Jonathan Rowland, with whom he was or became friendly, and started working for the Rowlands in 2008 to help them locate and acquire investments. He contends that this was pursuant to an oral agreement which he initially dated to 2 April 2008, or alternatively to an agreement concluded by conduct, whereby he would have a monthly retainer, expenses, and a profit share of either 10% or 33% depending on whether the Rowlands' money was at risk. This arrangement has been described by Mr Wright and those representing him as ``the 2008 Agreement''.

  6. Mr Wright contends that he became a fully integrated member of the Rowlands' management and investment team. He was initially given office space at Blackfish Capital Management Ltd (``Blackfish Capital''), which is a financial services business in Savile Row, and which to some extent functioned as a Rowland family office. Later he moved to Monaco to work there with Jonathan Rowland, and was given an office in the Monaco subsidiary of BH.

  7. Mr Wright's essential claim in the present action is that, in late 2008, he was introduced by a mutual friend to Sigurdur ``Siggi'' Einarsson, the former Chairman of Kaupthing Luxembourg, the distressed Luxembourg arm of the collapsed Icelandic banking group, Kaupthing Bank hf. He contends that, through Mr Einarsson, he sourced and introduced to the Rowlands the opportunity to acquire Kaupthing Luxembourg, and then worked as a senior member of the Rowlands' deal team to negotiate, structure and close the acquisition (``the BH Transaction'').

  8. The BH Transaction involved the demerger of Kaupthing Luxembourg into a new private ``good bank'', BH, which was named after David Rowland's Guernsey home, and an SPV (which has been described as a ``bad bank'') called Pillar Securitisation Sarl (``Pillar''). BH was incorporated in Luxembourg as a public company limited by shares. All the issued shares of BH were held by Luton Investments SA (``Luton''), a Luxembourg shelf company acquired as the purchase vehicle. Luton acquired 100% of the shares of BH for a consideration of €50 million contributed by the Rowlands, and a slightly larger contribution by the Luxembourg government. Luton became solely owned by a Guernsey company, controlled by David Rowland, called Braseton Ltd (``Braseton'').

  9. Mr Wright contends that after the successful conclusion of the BH Transaction, David Rowland had a small party on board motor yacht ``101'', and that, on that occasion, and more specifically while the yacht was at Villefranche on 20 July 2009, it was agreed as follows:

    i) That the Rowlands (i.e. David Rowland and Jonathan Rowland) granted him an option to purchase up to 5% of the shares in BH for the same proportionate price that the Rowlands had paid to acquire the entire issued share capital of BH, i.e. €50 million (``the BH Option'');

    ii) That he would receive an annual fee of €50,000 for three years;

    iii) That a loan would be advanced to assist him with the purchase of the freehold interest in a house at 25 Flood Street in Chelsea;

    iv) That he would receive 10% or 33% (depending on whether the Rowlands had had to commit funds) of the profits made by the Rowlands from deals made by or through BH.

  10. Mr Wright's case is that the agreement which he contends was made on 20 July 2009 was a variation of the ``2008 Agreement'', alternatively was a free-standing agreement under which he was granted the BH Option.

  11. Mr Wright contends in the present action that the agreement made on 20 July 2009 was substantially performed, save in relation to the BH Option. In that respect, he contends, the agreement has been repudiated. What happened was that, after Jonathan Rowland's stroke in 2013, his relationship with the Rowlands deteriorated, and he was asked by David Rowland in June 2013 to clear out his offices at the premises of BH's Monaco subsidiary. There was then a meeting between him and David Rowland on 25 June 2013, at the offices of Blackfish Capital, which he partially recorded on his phone. At that point, Mr Wright contends, David Rowland repudiated the agreement reached on 20 July 2009, and the ``2008 Agreement'', in the following terms:

    ``David Rowland: No, I'm not giving you anything on the bank. I'm not giving you anything - you've had it all on the f-----g bank. `Cause this is why you got the bloody cut on the things in Denmark, this is why you're getting a cut on Hamleys .... You know, I'm not ... I don't ... you're not having a carried position on the f-----g bank forever...''

  12. The Claim Form was issued on 26 June 2015. The Particulars of Claim were served on Jonathan Rowland on 6 August 2015 and on David Rowland on 10 November 2015. They set out the claim the essence of which I have summarised in paragraphs 5 to 11 above.

    The nature of the defence

  13. The Defences of each of David and Jonathan Rowland were served on 22 December and 30 September 2015 respectively. In Jonathan Rowland's Defence, amongst other things:

    i) It was denied that there was any oral agreement in 2008 as to the basis on which Mr Wright would be remunerated, whether on or about 2 April 2008 or at all. It is also denied that there was any agreement by conduct of the terms said by Mr Wright to constitute the ``2008 Agreement''.

    ii) It was pleaded that there were discussions between Jonathan Rowland and Mr Wright in that period, but they were intended, on both sides, to be friendly and informal, and not to create legal relations. Had it been intended that there was to be a legally binding agreement, it would have been embodied in a written contract. Furthermore, Jonathan Rowland had not had any authority to enter into any agreement on behalf of David Rowland.

    iii) It was admitted that Mr Wright was included on the payroll listing of Blackfish Services Ltd (``Blackfish Services'') from 6 April 2009 until 31 August 2010, and for this period was paid £100,000 per annum. Further it was admitted that, given Mr Wright's relocation to Monaco in about August 2010, from September 2010 until May 2013 he received monthly payments of €25,000 from HC1 Ltd, equivalent to €300,000 per annum.

    iv) While it was admitted that Mr Wright was involved in ``some discussion'' in early 2009 with Mr Einarsson and representatives of Kaupthing Bank hf or its subsidiaries in relation to ``a proposed transaction concerning bonds'' which did not proceed, it was pleaded that the contact which led to the opportunity to acquire Kaupthing Luxembourg came ``subsequently''.

    v) It was pleaded that there was no legally binding oral agreement, or indeed any ``arrangements'', entered into on 20 July 2009 on yacht 101. Further or alternatively it was said that any discussions were friendly and informal, not intended to create legal relations, and too uncertain and incomplete to be a binding agreement. Further, insofar as it was said that this was a free-standing agreement, there was no good consideration for it.

    vi) There was no ``part performance'' of any such agreement, because no agreement had been made.

    vii) It was not admitted that, even if Mr Wright had been granted the BH Option, he could have exercised it.

    viii) It was denied that Mr Wright is entitled to claim any sum by way of a quantum...

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