Frederick John Wingfield Digby v Melford Capital Partners (Holdings) LLP and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice McCombe |
| Judgment Date | 04 December 2020 |
| Neutral Citation | [2020] EWCA Civ 1647 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2020/0726 |
| Date | 04 December 2020 |
[2020] EWCA Civ 1647
Lord Justice Lewison
and
Lord Justice McCombe
Case No: A3/2020/0726
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Mr Justice Birss
BL-2020-000588
Royal Courts of Justice
Strand, London, WC2A 2LL
Thomas Grant QC and Thomas Munby (instructed by Thomas Mansfield) for the Appellant
Philip Shepherd QC, Bajul Shah and Aidan Eardley (instructed by Kerman & Co.) for the Respondents
Hearing date: 26 November 2020
Approved Judgment
Lord Justice Lewison and
This is the judgment of the court.
This is the appeal of Mr Frederick Wingfield Digby (“the Appellant”) brought against part of the Order of 23 April 2020 (sealed on 27 April 2020) of Birss J ordering him to pay the costs of the Respondents (Melford Capital Partners (Holdings) LLP, Melford Capital Partners LLP, being the first two Respondents, and eleven others) of an application by them for an interim injunction restraining use of what they claim to be confidential information, delivery up of a laptop computer and related relief. It was ordered further that such costs were to be assessed immediately (if not agreed), with an interim payment on account of such costs in the sum of £166,384.50 to be paid by the Appellant by 4.30 p.m. on 7 May 2020. The costs schedule (with an accompanying note) delivered by the Respondents in respect of the services of their “English legal team” in relation to hearings on 8 and 23 April 2020 specify total costs of the application at £277,307.50, not including costs of Guernsey lawyers also said to be in respect of work on “these proceedings”.
Permission to appeal against the material part of the judge's order was given by Arnold LJ by his order of 14 July 2020, with a stay of execution of the costs assessment in the meantime. The Appellant says that Birss J was wrong to make the order that he did and that he should have made an order reserving the costs. The interim order made by the judge has been complied with, and the Appellant seeks an order that that sum be repaid.
In what follows, in stating the issues in dispute between the parties, we have drawn upon the pleadings served by them under directions given by the judge. While those pleadings post-date the judge's order, they are a convenient route to some understanding of the issues to be resolved in the action. The issues are complex and, as it seems to us, they were, and are, (as the judge himself accepted) quite incapable of even prima facie evaluation to any satisfactory extent, in interim proceedings. What we now set out as the background facts can be no more than a summary and no doubt, in doing so, one or other side will consider that we are misstating the matter.
The Respondents, thirteen of them, are all limited partnerships or corporations forming part of a group, known in these proceedings, and perhaps generally, as “the Melford Group”. They are established/incorporated variously in Guernsey, England and Wales, the Isle of Man and Scotland. The two principal Respondents are the First and Second Respondents, established under the laws of Guernsey and of England and Wales respectively. The Group's business has been investment in the real estate market in London and the south east of England, using capital raised from a variety of investors, said to be typically university endowment funds, charitable foundations, and the like. It appears that the business was set up in 2008, initially under the aegis of the Second Respondent, the English LLP, by Mr Harry Hart, Mr James Osborne and the Appellant (Mr Wingfield Digby). The size of the respective interests in the business is in dispute: in the Particulars of Claim of 6 May 2020 the Respondents plead that the Appellant's interest is/was a “15% membership interest” in the First and Second Respondents; the Respondents say that Mr Hart and Mr Osborne own 42.5% each of the equity, with the Appellant having a “junior equity role”. That position is said by the Appellant to be more complicated for a variety of reasons, as pleaded in the Defence dated 5 June 2020. The rights and wrongs of the point do not matter for present purposes, save to the extent of saying that it is just one of the large number of matters hotly in dispute between the parties to which we have already referred.
The Appellant says that the Second Respondent (the English LLP) “manages” the Melford Group. In 2017, however, the Group was restructured, it seems primarily for fiscal reasons, with the creation of the First Respondent, a Guernsey limited liability partnership becoming the group holding entity. The Appellant pleads that at that time Mr Hart and Mr Osborne became resident in Switzerland while he remained a UK resident. He says that from that time they typically attended the Second Respondent's London office from Tuesdays to Thursdays only, while he worked there “full time”. The Respondents say that the Appellant was responsible initially for finance and administration but that his role was changed in 2018 to assisting with the organisation of investment opportunities. The Appellant describes his initial function as being responsible for the financing of deals and being chief financial officer with a compliance function; from 2018 he says he took over the running of deal origination and execution function. The precise details again do not matter for present purposes; everything is in dispute.
It is clear that by the middle of 2019 relations between the Appellant on the one hand and Mr Hart and Mr Osborne on the other had become strained; there were some discussions as to whether the Appellant could leave the business on an agreed basis on payment of a sum of money for his interest. The Appellant contends that the sum that Mr Hart and Mr Osborne envisaged paying significantly undervalued his share. On the other hand, they raised issues as to the Appellant's competence in the discharge of his functions in the business. It seems that by September 2019, Mr Hart and Mr Osborne had decided to take steps to expel the Appellant from participation in the Group's business. To that end, they convened, or purported to convene (depending on which of the parties' cases is correct) meetings of the First and Second Respondent respectively, over the period between September and December 2019 for the purpose of passing resolutions to expel the Appellant as a Managing Member of each LLP with effect from dates between November 2019 and January 2020. The Respondents contend that since that time the Appellant has raised serious and unjustified allegations of impropriety against Mr Hart and Mr Osborne for the purpose of extracting from them an enhanced payment for his share in the business. That too is one of the disputed issues in the action.
The provisions of the constitutional documents of the two LLPs have only been seen in outline for the purposes of the appeal; they are clearly convoluted, and their effect is also in dispute. The Appellant denies that the steps taken were effective to remove him from his positions in the two LLPs and, therefore, he contends that, apart from anything else, this action has been conducted, in the names of those two Respondents at least, without proper authority. Further, the Appellant alleges that in the course of the process of his “expulsion” he became aware of matters of concern relating to the setting up of the new structure in 2017 [… Redacted].
In about July 2019, a laptop computer had been acquired for the purpose of the Appellant's work; it seems to be agreed that it was and is the property of the Second Respondent. In the course of the emerging disputes, by a letter in November 2019, Mr Hart told the Appellant that he was to work at home, rather than at the London office; the Appellant says that he took the laptop with him to enable him to do that and that no request had been made of him to return it prior to the claim made in that regard in the present proceedings. Counsel for the Respondents confirmed before us that return of the laptop had not been sought prior to the institution of the action.
The Appellant, it seems, acknowledges that the computer held information downloaded from the Melford Group's cloud storage, but he denies that such downloading was wrongful, given his position at the relevant times. It seems also that it contained some information personal to the Appellant.
The Appellant says that his concerns about the group restructuring led him to consult solicitors and two leading counsel as to the steps that might be open to him to have them investigated. Indeed, it seems that Mr Hart has been prepared for the Appellant's concerns to be investigated by a Mr Bushnell, the non-executive chairman of one or other of the entities in the group. [… Redacted…]. A [… Redacted …] dispute, as to impartiality, arises as to the role of the group auditors in valuing the Appellant's interest in the business for the purpose of buying him out.
Solicitors for the Appellant and Guernsey lawyers, acting as they no doubt genuinely believe on behalf of the Respondents on the instructions of Mr Hart and/or Mr Osborne, have engaged in correspondence since the early months of 2020. The immediate prompt for the initiation of the action came in late March 2020 (23 March 2020) when the Appellant sought to convene a video conference meeting of limited partners (investors) in the group funds, as...
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