Home Information Cases Richard Andrew Campbell v Robert Campbell (2018)

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Richard Andrew Campbell v Robert Campbell (2018)

Summary

Where a partnership between two brothers was being dissolved and its assets being distributed by the court, and the claimant brother had a good arguable case that the defendant brother would owe him some £8.3 million by way of an equalisation payment and costs orders resulting from his breaches of duty, a freezing injunction over the defendant brother's non-partnership assets was just and convenient.


Facts

The claimant applied for a freezing injunction to prevent the defendant from freely dealing with his half of a Jersey-registered company that they owned in equal shares.

The claimant and defendant were brothers and had also been partners in a jewellery business until their relationship broke down. The instant hearing had arisen in the course of substantive proceedings to dissolve the partnership, in which the trial judge found that the defendant had breached his duty to the claimant by transferring shares in some of the partnership's assets to his wife and children in Thailand without informing the claimant or obtaining his consent, and without due provision to protect the partnership assets. The judge proposed to wind up the partnership by distributing the assets and providing for an equalising payment to ensure that each brother obtained an equal share in financial terms. The Jersey company was not part of the partnership's assets but had been the subject of litigation there, in which the claimant had successfully claimed a 50% interest in its shareholding and was anticipating a costs award of £800,000. The defendant wanted to sell his half of the Jersey company and take the proceeds to Thailand.

The claimant submitted that the defendant would owe him some £8.3 million by way of the equalisation payment and various costs orders, and the freezing injunction over the defendant's shareholding in the Jersey company was necessary to prevent him from dissipating that asset.

Held

Should the injunction be granted? - Yes. Applying the three factors set out in Alternative Investment Solutions (General) Ltd v Valle de Uco Resort and Spa SA [2013] EWHC 333 (QB), the injunction was just and convenient. First, the claimant had a good arguable case on the merits of the substantive claim. The terms of the order made by the trial judge were such that the claimant had a good arguable case that the winding up of the partnership would require an equalising payment in his favour. Also, for the purposes of the instant hearing, the defendant had not contested the quantum of the sums that might be due to the claimant, so the claimant had a good arguable case that some £8.3 million would be due to him by way of the equalisation payment and various costs orders, including the Jersey costs. Second, the defendant clearly had assets. Third, there was a real risk that he would dissipate those assets other than in the ordinary course of business or living, such that there was a real risk of a judgment in the claimant's favour going unsatisfied if the freezing injunction was not granted, Alternative Investment and TTMI Ltd of England v ASM Shipping Ltd of India [2005] EWHC 2666 (Comm) applied. The defendant's intention to sell his shares and transfer over £8 million of the proceeds to Thailand could not be regarded as in the ordinary course of business or living and might of itself raise sufficient risks to warrant an injunction. In any event, the claimant had further evidence in the fact of the defendant's past practices. The defendant had breached his partnership duties over an extended period by appropriating shares in which the claimant had a beneficial interest and putting them beyond the claimant's control. There was a real risk that he would do the same, to equally detrimental effect, with cash proceeds beneficially owned by him. Although he had complied with all the court orders made during the trial proceedings, that merely indicated that he was likely to comply with any freezing injunction ordered by the instant court; it did not negate the risk of dissipation in the absence of a court order, Ras Al Khaimah Investment Authority v Bestfort Development LLP [2017] EWCA Civ 1014followed (see paras 22, 29-30, 35-39, 42 of judgment).

Should the injunction also be in aid of the Jersey proceedings? - Yes. Given that the claimant had won his case in Jersey, he had at least a good arguable case that he would obtain costs of £800,000 in his favour. It would be inexpedient to force him to make a second and separate freezing injunction application in Jersey in relation to those costs. Therefore, the freezing injunction should also protect his anticipated costs order in the Jersey proceedings (para.28).

Application granted

Chancery Division
Sarah Worthington QC
Judgment date
3 November 2017
References
LTL 22/11/2017