Maranello Rosso Ltd v Lohomij BV
| Jurisdiction | England & Wales |
| Judge | Lord Justice Phillips,Lord Justice Arnold,Lady Justice Asplin |
| Judgment Date | 21 December 2022 |
| Neutral Citation | [2022] EWCA Civ 1667 |
| Docket Number | Case No: CA 2021 003236 |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 1667
Lady Justice Asplin
Lord Justice Arnold
and
Lord Justice Phillips
Case No: CA 2021 003236
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)
HHJ KEYSER QC, SITTING AS A DEPUTY HIGH COURT JUDGE
Royal Courts of Justice
Strand, London, WC2A 2LL
Justin Fenwick KC, Tim Chelmick and Usman Roohani (instructed by Mishcon de Reya LLP) for the Appellant
Simon Colton KC (instructed by Morrison & Foerster (UK) LLP) for the First and Fourth Respondents
Orlando Gledhill KC and Oliver Butler (instructed by RPC) for the Second, Third and Sixth Respondents
Matthew Collings KC (instructed by Kastle Solicitors) for the Fifth Respondent
Robert Weekes KC and Luka Krsljanin (instructed by Foot Anstey LLP) for the Seventh Respondent
Hearing dates: 21, 22 and 23 June 2022
Approved Judgment
This judgment was handed down remotely at 12 noon on Wednesday 21 December 2022 by circulation to the parties or their representatives by e-mail and by release to the National Archives
This appeal raises the familiar issue of whether an agreement for the settlement of “all and any claims” between the parties (whether or not known to them at the time), had the effect of compromising claims in fraud and dishonesty (and, in the present case, conspiracy), notwithstanding that claims of that nature were not expressly mentioned in the agreement.
On 6 September 2021 HH Judge Keyser QC (“the Judge”) summarily dismissed all of the claims brought by the appellant (“MRL”) against the respondents (and dismissed an application to amend those claims), save for one claim in conversion against the fourth respondent (“Mr Louwman”). The Judge held that:
i) all of MRL's claims in existence on 31 July 2015, including claims for conspiracy to injure by unlawful means and dishonest assistance, were compromised by a settlement agreement made between the parties on that date (“the Settlement Agreement”) 1; and
ii) even had they not been compromised, MRL's claims for breach of fiduciary duty, breach of a duty of good faith and dishonest assistance (being the alleged unlawful means used in the alleged conspiracy) had no real prospect of success; and
iii) freestanding claims arising after the Settlement Agreement (including for breach of the Settlement Agreement) were not credible.
MRL appeals the Judge's decision with permission granted by Arnold LJ. By ground 1, MRL contends that (i) on a proper construction, the Settlement Agreement did not compromise claims for unlawful means conspiracy, and/or (ii) it is realistically arguable that the respondents are precluded from relying on any such compromise by reason of the “sharp practice” principle. Grounds 2 to 5 challenge the Judge's findings that the unlawful means alleged were not reasonably arguable, and only arise for decision if MRL succeeds on ground 1. Ground 6, directed primarily at the dismissal of the post-Settlement Agreement causes of action, asserts that the Judge erred in conducting, in effect, a mini-trial.
The essential facts
In section D of his reserved judgment the Judge set out an extensive factual narrative. The following summary, sufficient for the purposes of the appeal, is drawn largely from that account.
MRL, a Guernsey company, was incorporated in 2013 for the purpose of purchasing Stelabar SpA (“Stelabar”), a San Marino company that owned a collection of classic cars comprising 33 Ferraris (including a very valuable Ferrari 250 GTO) and 38 Abarths, then maintained in the Violati Maranello Rosso Museum (“the Collection”). An option to purchase the share capital of Stelabar, granted to Graham Sullivan, Roy
Hilder and one other (the beneficial owners of MRL), was transferred to MRL by early 2014. MRL's intention was to on-sell the cars in the Collection at a profit, believing that, if auctioned separately, they would realise as much as €150mOn 9 April 2014, pursuant to the option, MRL entered an agreement with the owners of Stelabar for the sale and purchase of the entire issued share capital of that company for €80m, MRL paying a non-refundable deposit of just over €2m on exchange and agreeing to pay the balance on 29 May 2014 (“the SPA”).
At the time it entered the SPA, MRL was in negotiations with two well-known auction houses, RM (a leading vintage car auctioneer in the USA) and the second respondent (“Bonhams”) as to the mechanism for financing the purchase of Stelabar and the most advantageous way to sell the cars, but had not reached agreement with either. By 19 May 2014 MRL had reached agreement in principle with RM whereby RM would purchase all but one of the cars on 29 May 2014 for €74m (thereby enabling MRL to pay the balance of the price due to Stelabar) and would then auction the cars (setting a reserve price for each car valued at over €1m), retaining €80m of the proceeds and an agreed percentage fee. The balance of the proceeds would be paid to MRL, generating, in effect, a risk-free profit.
Nonetheless, MRL's preference was to contract with Bonhams, having been advised that the best place to auction the cars was in the UK and given Bonhams' reputation as the leading vintage car auctioneer in this country. Negotiations took place between Mr Sullivan, Mr Hilder and Ben Walmsley (a solicitor at Spring Law) on behalf of MRL and Robert Brooks, a former chairman of Bonhams (whose estate is the fifth respondent) and the seventh respondent (“Mr MacLean”, then a non-executive director of Bonhams, on behalf of Bonhams. Bonhams proposed to raise finance for the purchase of the Collection from the Louwman Group, which carries on business in the automobile industry and is controlled by Mr Louwman.
On 22 May 2014 Mr MacLean confirmed to MRL by email (copied to Mr Brooks) that (1) a company in the Louwman Group would make funds available to MRL, subject to contract, to assist in acquiring Stelabar and (2) Bonhams would sell the cars in the Collection by public auction at the Goodwood Revival meeting in September 2014 or as might otherwise be agreed. The email went on to say that the above was subject to confirmation that, with immediate effect, the Louwman Group and Bonhams would have exclusive worldwide rights on the transaction and that neither MRL nor Mr Sullivan (or any associate) would enter discussions with anyone else and would immediately terminate discussions with RM.
That evening Mr Walmsley provided the requested confirmations on behalf of MRL, and thereafter MRL broke off discussions with RM, giving rise to what MRL describes as the Exclusivity Agreement.
MRL maintains that Mr MacLean's email of 22 May 2014 evidenced that Bonhams was proposing, subject to contract, to purchase the cars from MRL and then to auction them on similar terms to those agreed in principle with RM. As the Judge observed, the email does not so state, proposing instead that a member of the Louwman Group would make funds available to MRL (not Bonhams) to purchase Stelabar and that Bonhams would then sell the Collection at auction. That proposal was in due course broadly accepted by MRL and implemented as follows:
i) On 29 May 2014 MRL executed a Facility Agreement with the first respondent (“Lohomij”), a company in the Louwman Group based in the Netherlands, by which Lohomij agreed to provide MRL with a loan facility of €90m (repayable in full at the end of the year) for the purpose of acquiring Stelabar. MRL also agreed to pay Lohomij an arrangement fee of €10m, to pay fixed interest of €3.6m and to sell the cars through Bonhams.
ii) On the same date MRL executed a Debenture in favour of Lohomij by way of security for the loan and Mr Sullivan provided a personal guarantee.
iii) MRL immediately drew down the loan and completed the purchase of Stelabar pursuant to the SPA.
iv) On 30 June 2014 MRL, Lohomij and Bonhams entered an agreement (“the Commercial Agreement”) providing for the sale of the cars, expressed to have retrospective effect to 29 May 2014. It was agreed that the cars would be consigned to be sold by Bonhams (or one or more of its affiliates) at one or more sales to be determined by Lohomij and Bonhams in their discretion. 10 identified cars were to be sold without reserve price by the third respondent (“B&B”), Bonhams' USA affiliate, at Quail Lodge, California, on or about 14 August 2014. Otherwise reserve prices were to be determined by Lohomij and Bonhams, in consultation with MRL, but the former were entitled to determine that cars valued under £1m be sold without a reserve price.
v) Also on 30 June 2014 MRL entered an agreement with B&B (“the Consignment Agreement”) for the consignment to B&B of the 10 cars to be sold at Quail Lodge.
The auction duly took place at Quail Lodge on 14 August 2014. The 10 cars were sold for a total of US$59.95m, including what was then a world record sum of US$34.65m for the Ferrari 250 GTO. MRL asserted that the total realised was far less than assurances that had been given by Mr Brooks and projected values provided by RM, alleging that this was due to misconduct in the conduct of the auction by Bonhams, B&B and Mr Brooks. For the purposes of determining the applications before him, the Judge proceeded on the assumption that those allegations were well-founded.
Further cars were sold over the following months, including 17 at the Goodwood Revival on 13 September 2014. On 31 December 2014 the term for repayment of the outstanding balance of €56.46m was extended until 31 May 2015. A...
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