Mr Michael Gott v Mr Rune Hauge
| Jurisdiction | England & Wales |
| Judge | Andrew Lenon |
| Judgment Date | 08 June 2020 |
| Neutral Citation | [2020] EWHC 1473 (Ch) |
| Court | Chancery Division |
| Docket Number | CR-2019-007011 |
| Date | 08 June 2020 |
[2020] EWHC 1473 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMPANIES COURT (ChD)
IN THE MATTER OF PROFILE PARTNERS LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2006
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
Andrew Lenon Q.C. (sitting as a Deputy Judge of the Chancery Division)
CR-2019-007011
James Potts QC and Andrew Blake (instructed by Kerman & Co) for the Petitioner
Kuldip Singh QC (instructed by Fieldfisher) for the Respondents
APPROVED JUDGMENT
Hearing date: 19 May 2020
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.
The Application
This is an application for injunctive relief brought in the context of proceedings under s. 994 of the Companies Act 2006. The Petitioner (“Mr Gott”) is a minority (15%) shareholder in the Fifth Respondent (“the Company”), a company incorporated in England and Wales and the holding company of a group of companies carrying on business as sports media rights consultants (“the PP Group”). The remainder of the shares in the Company (85%) are beneficially owned by the First Respondent (“Mr Hauge”) and/or the Second Respondent (“Ms Davey”).
The other Respondents to the application are as follows:
2.1 the Third Respondent (“PML”) and Fourth Respondent (“PP Guernsey”), Guernsey companies which act as nominees for Mr Hauge and/or Ms Davey;
2.2 the Sixth Respondent, another Guernsey company, the shares in which are held in the same proportions as those in the Company but which is not formally a parent or subsidiary, and
2.3 the Seventh and Eighth Respondents (respectively, a German limited partnership and a German private limited company, “PP Munich KG” and “PP Munich GmbH”) which are wholly owned subsidiaries of the Company carrying on the PP Group's business in Germany, Switzerland and Austria.
A group structure chart is attached to this judgment.
Mr Gott is seeking the following relief:
3.1 An injunction to restrain Mr Hauge and Ms Davey from committing what are alleged to be threatened breaches of contractual undertakings given by them not to use funds belonging to the Fifth to Eighth Respondents to defend on their own behalves the Petition and not, without giving at least 35 days' written notice to Mr Gott, to cause to be paid monies from accounts used by companies in the PP Group to any account used by the Mr Hauge or Ms Davey;
3.2 An injunction to restrain the Fifth to Eighth Respondents from incurring any expenditure on legal or other professional services for the purposes of the Petition and/or the Respondents' counterclaims and/or any other aspect of the dispute between Mr Gott and the First to Fourth Respondents;
3.3 An injunction to restrain the Fifth to Eighth Respondents from paying two invoices dated 2 March 2020 from Mr Hauge until final judgment;
3.4 An injunction to restrain the First to Fourth Respondents from causing or permitting the Fifth to Eight Respondents from taking directly or indirectly the actions set out in paragraphs 3. 2 or 3.3 above.
Background
Mr Hauge is Norwegian and resident for tax purposes in Guernsey. He was formerly a football agent. In about 1995 he established a business in the field of sports media rights. Mr Gott, who is German, was prior to 2005 the manager of a German sports marketing agency. According to the Petition, in 2005 he and Mr Hauge and others agreed to form a business, the purpose of which was to combine the expertise of Mr Gott and others in buying and selling media rights, particularly in Germany, with Mr Hauge's expertise in advising media rights owners, particularly in Scandinavia.
Between 2005 and 2018 Mr Gott was the managing director of PP Munich GmbH and PP Munich KG and from 2008 the managing director of the Company. The business was conducted principally from Germany. According to the Petition, Mr Hauge is a de facto or shadow director of the Company. Ms Davey, who is Mr Hauge's life partner, is a director of a number of companies in the PP Group. Counsel for the Respondents informed me that, contrary to the assertion in the Petition that the Company is beneficially owned by Mr Hauge and/or Ms Davey, Mr Hauge beneficially owns 85% of the shares in the Company and Ms Davey owns none. This discrepancy does not matter for the purposes of the present application.
The PP Group's clients are or have been principally national sports leagues (e.g. the Swedish Ice Hockey League and the Austrian Football League), sports associations (e.g. the Austrian Skiing Federation and the Swiss Ice Hockey Association) and sports clubs. The PP Group assists its clients with the marketing and sales of their media rights. According to the Petition, the PP Group has generated and was projected to generate substantial revenues. An investment bank report prepared in 2017 in connection with an anticipated sale of the business showed the PP Group's projected income for the period 2017 to 2027 to be in the order of €134.7 million.
On 24 July 2018 and 16 August 2018, Ms Davey wrote to Mr Gott purporting to terminate his employment relationship with PP Munich KG and PP Munich GmbH and his office as managing director of PP Munich GmbH. On 10 September 2018, Ms Davey wrote again to Mr Gott stating that he was prohibited from acting on behalf of PP Munich GmbH or PP Munich KG or the Company. On 17 September 2018 a notice recording the termination of Mr Gott's appointment as a director of the Company was filed with the Registrar of Companies.
Mr Gott's Petition was served in draft form on the Respondents on 19 February 2019. The covering letter enclosing the Petition sought undertakings from Mr Hauge and Ms Davey that the funds of the PP Group would not be used to defend the proposed proceedings and that no monies would be paid directly or indirectly from any bank account within the PP Group to or for the benefit of Mr Hauge or Ms Davey without Mr Gott's prior approval.
Following correspondence between the parties, on 21 June 2019 Mr Hauge and Ms Davey entered into contractual undertakings set out in their solicitors' letter of 21 June 2019 (“the Contractual Undertakings”). The Contractual Undertakings included the following:
“… Subject to the matters below. .. the Individual Respondents (and each of them) hereby contractually undertake to Mr Gott as follows, pending the resolution of the current dispute between the parties as set out in the letter before action:-
8.1 that they shall not use funds belonging to the PP Companies [defined to include each of the Fifth to Eighth Respondents, amongst others] or any of them to defend on their own behalves any petition presented and served on them in the same or substantially the same form … as that sent in draft under cover of a letter dated 19 February 2019 from Mishcon de Reya LLP;and
8.2 that they shall not, without giving at least 35 days' written notice to Mr Gott … cause to be paid to any bank account used by or on behalf of any Individual Respondent any monies directly or indirectly: (i) from a bank account used by any of the PP Companies; or (ii) from a debtor of a PP Company on terms that such payment shall discharge any part of the debtor's liabilities to the relevant PP Company.”
Paragraph 9 of the letter provided for exceptions in relation to any “Regular Payment” including payments in respect of Mr Hauge's remuneration for services that he had provided and was providing pursuant to a consultancy agreement with an annual fee of €1 million. Paragraph 12 confirmed that the agreement was without admission as to the “validity or quantum of the Regular Payments”. Paragraph 13 provided that Mr Hauge and Ms Davey confirmed that nothing in the letter would be construed as any admission, authorisation or ratification of any payment or use of funds.
The Petition was presented on 21 October 2019, The Petition includes the following principal allegations:
11.1 The Company was established as a quasi-partnership between Mr Gott and Mr Hauge.
11.2 Mr Hauge caused a breakdown in trust and confidence and acted in breach of the agreement/understandings between him and Mr Gott by insisting on significant withdrawals from the PP Group, depleting its tax and liquidity reserves, and by causing purported invoices to be submitted which put Mr Gott in an impossible position.
11.3 Until 20 December 2016, Mr Gott tolerated these on the basis of a “withdrawal agreement” pursuant to which an account of withdrawals would be kept (ensuring that Mr Gott received his proportional entitlement). Mr Gott did not consent to any withdrawals between 20 December 2016 and 8 March 2017 and only to €75k per month from 9 March 2017 to 30 July 2018 and to none from 31 July 2018 onwards. A number of withdrawals were therefore made without Mr Gott's consent and, as such, were made in breach of duty. In any event, Mr Hauge has refused to settle the account of their withdrawals.
11.4 Since 24 July 2018 Mr Gott has been wrongfully excluded from the business in breach of his contractual or equitable rights and in breach of duty. Since his exclusion there has been further misconduct and...
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