Campbell v Campbell, Court of Appeal - Chancery Division, November 03, 2017, [2017] EWHC 2747 (Ch)

Issuing Organization:Chancery Division
Actores:Campbell v Campbell
Resolution Date:November 03, 2017
 
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Case No: HC-2015-002052

Neutral Citation Number: [2017] EWHC 2747 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: Friday 3 November 2017

Before :

Sarah Worthington QC(Hon)

(sitting as a deputy High Court judge)

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Between :

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Mr John Machell QC (instructed under the Bar Public Access Scheme) and Miss Gabriella McNicholas (instructed by Dickinson Gleeson) for the Claimant

Mr James Aldridge QC and Miss Narinder Jhittay (instructed by Taylor Wessing) for the Defendant

Hearing dates: 25 July 2017

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JudgmentMs Sarah Worthington QC(Hon) sitting as a deputy High Court judge:

Introduction:

  1. These proceedings concern an application on notice for a freezing injunction sought by Richard Andrew Campbell against his brother, Robert Campbell. The application forms part of wider proceedings relating to the dissolution of the partnership between the two brothers, and is made by Richard Campbell to protect his anticipated entitlements in that dissolution. For ease, but without intending informality, I shall refer to the two brothers as ``Richard'' and ``Robert'', as was done in earlier proceedings.

  2. The injunction seeks to prevent Robert from dealing freely with his principal asset, being his beneficial interest in 50 shares in Longton Holdings Limited (``Longton''), a Jersey-registered company. The other 50 shares in Longton are owned beneficially by Richard. Although the company is owned equally by the two brothers, it does not form part of their partnership assets. Longton's principal asset, worth in the order of £23 million, is a long leasehold title to property on Bond Street, London, currently used by the partnership business.

  3. In broad terms the proposed freezing injunction would prevent Robert dealing with his Longton shares other than by way of sale at a price not less than £11,500,000. From the sale proceeds, £11,500,000 would then need to be paid into the client account of Taylor Wessing LLP (Robert's lawyers) and used only to pay certain of Robert's own legal costs and costs liabilities to Richard, and otherwise held to the order of the Court. As usual, the terms would be subject to Richard's written agreement or the consent of the Court.

  4. The interim order made by the Chancellor on 16 June 2017 pending the outcome of this hearing is in similar form.

  5. The proposed figure of £11,500,000 represents coverage of £2,500,000 for Robert's past and future legal fees and costs, and £8,338,157 anticipated by Richard as likely to be owed to him in effecting the partnership dissolution (including certain anticipated costs orders against Robert in Richard's favour). These costs orders include orders anticipated in the partnership dissolution, plus an anticipated costs order of £800,000 (``the Jersey costs'') arising as a result of litigation in Jersey concerning the beneficial ownership of the Longton shares and certain loans owing to Longton.

  6. If the injunction is ordered, there is now no dispute as to the quantum to be covered by it, at least initially. Counsel for Robert made this concession on the morning of the hearing, thus reducing considerably the court's need to consider a great deal of disputed valuation evidence. This concession that Richard's potential claim is arguably as large as £8,338,157 is for the purposes of this application only, and involves no concession at all in respect of the underlying dispute as to quantum which will be resolved in the taking of the account in the partnership dissolution proceedings. In addition, Robert accordingly reserves the right to apply to vary any order of the court as and when such points on quantum are resolved. I note that Robert did not dispute the inclusion of the anticipated Jersey costs as protected by the requested injunction, these being merely noted as a potential reason for varying the order (as, prior to this concession, they had merely been noted in the dispute as to quantum).

  7. To complete the story, Richard is and it is proposed would remain subject to an undertaking recorded in the order of Mr Rosen QC dated February 2017 (``the Undertakings Order'') that he would not deal with any interest in his Longton shares without first giving Robert 28 days' prior written notice.

  8. Initially this application had also included related orders for disclosure, but various voluntary undertakings (in early July) and documentary disclosures (in mid-June) made by Robert to Richard rendered those associated orders unnecessary.

    Facts and background to earlier proceedings

  9. Robert and Richard have worked together for more than 20 years in a worldwide jewellery business initially run by their mother. In 2012 they fell out bitterly, and these proceedings and the underlying partnership dissolution are the result.

  10. Following a seven-day trial before Mr Rosen QC (sitting as a Deputy Judge of the High Court) in November 2016, the judge concluded, in a judgment handed down on 26 January 2017, that Robert's and Richard's interests in the partnership were equal, that the partnership assets included interests in various UK and overseas entities (detailed below), and that Robert had committed certain breaches of duty during the course of the partnership that would need to be brought into account in dissolving the partnership so as to ensure Richard was appropriately compensated. To effect that, the trial judge ordered that the accounts should go back 10 years, commencing on 1 January 2007, in order to ensure proper accounting of various partnership drawings and certain ``striking'' breaches of duty by Robert (judgment, para 148). Permission to appeal this decision was denied by the Court of Appeal on 26 April 2017, and the accounting process is now underway.

  11. The entities through which the partnership business was run include Lucie Campbell LP (``LCLP'', an English limited partnership) and Lucie Campbell Corporation (``LCC'', a New York company), both under the day-to-day control of Richard; and Milling Lock Limited (``MLL'') and RC Jewellery Trading Co Limited (``RCJL'') (both Thai companies) and Azure Gold Limited (``AGL'', a BVI company), all deemed to be under the day-to-day control of Robert.

  12. In the unusual circumstances of this case (described below), the trial judge envisaged the winding up being effected by an in specie distribution to each brother, with Richard acquiring sole ownership and control of the London and New York assets and Robert the Thai and BVI assets, and then an equalising payment to ensure that in financial terms each brother obtained an equal share of the partnership assets. However,...

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