Peak Hotels and Resorts Ltd (Claimant) (1) Tarek Investments Ltd and Others (Defendants) (1) Phrl Holdings Ltd (First Named Third Party) (2) Omar Sharif Amanat (Second Named Third Party) (3) Lalit Modi (Third Named Third Party)
| Jurisdiction | England & Wales |
| Judge | The Hon Mr Justice Barling,Mr Justice Barling |
| Judgment Date | 17 July 2015 |
| Neutral Citation | [2015] EWHC 1997 (Ch) |
| Docket Number | Case No: HC-2014-000497 |
| Court | Chancery Division |
| Date | 17 July 2015 |
[2015] EWHC 1997 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon Mr Justice Barling
Case No: HC-2014-000497
John Brisby QC and Alexander Cook (instructed by Candey Ltd) for the Claimant
Mark Howard QC and David Caplan and Richard Eschwege (instructed by Herbert Smith Freehills LLP) for the First Defendant
Michael Brindle QC and Paul Sinclair (instructed by Berwin Leighton Paisner LLP) for the Third and Fourth Defendants
Hearing dates: 20, 21 and 22 May 2015
Approved Judgment
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.
Introduction
On 20, 21 and 22 May 2015 I heard two applications in these proceedings. One of the applications is by the third and fourth defendants, Sherway Group Ltd ("Sherway") and Mr Carl Johan Eliasch (together "the Sherway defendants") for an interim payment pursuant to CPR 25.7 of c.US$ 23 million against the claimant, Peak Hotels and Resorts Ltd ("PHRL") ("the Interim Payment Application"). The other application is by PHRL for payment out of court of US$ 9 million, being part of a sum of US$ 10 million which PHRL has paid into court as fortification of cross-undertakings as to damages given in support of injunctive relief granted to it ("the Payment Out Application"). This application is opposed by both the first defendant, Tarek Investments Ltd ("TIL") and the Sherway defendants.
Mr John Brisby QC with Mr Alexander Cook appeared for PHRL, Mr Mark Howard QC with Mr David Caplan and Mr Richard Eschwege for TIL, and Mr Michael Brindle QC with Mr Paul Sinclair for the Sherway defendants.
Background
Both applications arise in the course of a complicated and acrimonious dispute about the ownership and control of a group which owns and runs a chain of small luxury hotels and resorts in Asia, Europe and the Americas under the brand name Aman Resorts. The business was founded over twenty years ago by Mr Adriaan Zecha, who is a minority shareholder in PHRL. The pleadings are very lengthy, running to several hundred paragraphs, and raising numerous issues of fact and law. What follows is a very brief outline of how the present issues arise.
A family trust connected with Mr Omar Sharif Amanat, the second-named third party, controls, directly or indirectly, PHRL. Mr Vladislav Doronin controls TIL, and Mr Eliasch, the fourth defendant, controls Sherway. In January 2014, Mr Amanat and Mr Doronin together acquired Aman Resorts for US$ 358 million through a joint venture company, Peak Hotels and Resorts Group Ltd ("the JVC"). Approximately 65% of the shares in the JVC, which is the second defendant, were held by Mr Doronin's corporate vehicle, TIL, and the remainder of the shares were held by Mr Amanat's company, PHRL.
The relationship between the shareholders in the JVC is governed by a shareholders' agreement dated 31 January 2014 ("the SHA"). The SHA was structured so as to give TIL and PHRL equal management and control of the JVC, and each of them had the right to nominate two directors to the JVC's board.
In April 2014, Mr Amanat and Mr Eliasch agreed that Sherway would lend US$ 50 million to PHRL ("the Loan Agreement"). A number of related agreements were entered into. These included provision for 53% of the loan to be converted into shares in a new intermediate holding company, PHRL Holdings Ltd ("Holdings"), to hold PHRL's shares in the JVC. Holdings is the first-named third party. This arrangement would result in Mr Eliasch (through Sherway) acquiring an indirect stake of about 14% in the JVC itself. The Loan Agreement and the various other related agreements are collectively called "the Sherway Agreements".
The loan of US$ 50 million was drawn down in full on 2 April 2014. A few days later, Mr Eliasch replaced Mr Amanat as one of the two directors of the JVC nominated by PHRL. However, the envisaged new shareholding structure through Holdings was not implemented.
Almost as soon as the JVC was formed relations between Mr Amanat and Mr Doronin had begun to break down. According to Mr Amanat and PHRL, this was an important element of the context in which the agreement with Mr Eliasch was reached. Mr Amanat and PHRL allege that Mr Eliasch falsely represented to Mr Amanat that he was not a close friend or business associate of Mr Doronin, and would safeguard and promote the interests of PHRL in the conduct of the JVC's business, whereas in fact Mr Eliasch and Mr Doronin were good friends, and their intention from the outset had been to pursue a strategy designed (including by a dilution of PHRL's shareholding) to exclude PHRL and those connected with it, including Mr Amanat and Mr Zecha, from the JVC, and to assume control of Aman Resorts.
Mr Doronin, Mr Eliasch, and their respective corporate vehicles deny these allegations. They contend that they have done their best to run the JVC and its business in the best interests of all the shareholders, but have been faced with a "greenmailing" strategy of disruption in the running and financing of the business. This, they contend, has been carried out by Mr Amanat (through PHRL and its nominated directors on the JVC board) in order to put pressure on Mr Doronin and TIL either to buy PHRL out of the JVC at a premium, or to sell TIL's share in it to Mr Amanat or a third party at a discount.
The proceedings to date
In order to deal with the present applications it is helpful to describe briefly some of the developments, including various applications for interim relief, which have taken place in this litigation to date.
PHRL issued proceedings on 25 June 2014 against TIL, the JVC and Sherway, seeking declaratory and injunctive relief and damages for breach of contract. On 17 July 2014, PHRL issued a further claim against the Sherway defendants, claiming rescission of the Sherway Agreements for fraudulent (alternatively negligent) misrepresentation, damages for misrepresentation, and (in the further alternative) damages on the footing that the agreements had been terminated by PHRL's acceptance of repudiatory breaches of contract by the defendants. Later, in September 2014, the two claims were consolidated, and consolidated pleadings were served. The trial of the consolidated proceedings is due to begin in November 2015 with a time estimate of five weeks.
Several judgments and orders for interim relief have been given. I refer, in particular, to the following:
• A judgment and order of Ms Catherine Newman QC (sitting as a deputy judge of the High Court) on 14 July 2014, granting interim injunctive relief to PHRL ( [2014] EWHC 2315 (Ch)) ("the Newman Judgment" and "the Newman Order").
• A judgment and order of Mr Robert Englehart QC (sitting as a deputy judge of the High Court) on 18 July 2014, granting PHRL interim injunctive relief ( [2014] EWHC 2693 (Ch)) ("the Englehart Judgment" and "the Englehart Order").
• A judgment and order of Rose J on 31 July 2014, granting PHRL interim injunctive relief ("the Rose Judgment" and "the Rose Order").
• A judgment and order of His Honour Judge Pelling QC (sitting as a judge of the High Court) on 19–21 September 2014, the return day for the various interim injunctions referred to above, ( [2014] EWHC 3066 (Ch)) ("the Pelling Judgment" and "the Pelling Order").
• A judgment and order of Henderson J on 20 February 2015, ordering PHRL to provide security for the costs of TIL and the Sherway defendants, and dismissing PHRL's application for security for the costs of TIL's counterclaim ( [2015] EWHC 386 (Ch)) ("the Henderson Judgment" and "the Henderson Order").
It is necessary to refer to some of these judgments and orders in a little more detail.
The Newman Order
Two of the issues with which the Newman Order was concerned arose as follows. First, TIL alleged that at a board meeting on 22 April 2014 Mr Zecha had resigned as CEO of the JVC and that Mr Doronin had been appointed in his place. PHRL, however, denied that Mr Zecha had resigned, contending that Mr Doronin's appointment was invalid. The second issue concerned calls for capital authorised by the board of the JVC including two calls on 6 June 2014 in the sums of US$ 50m and US$ 10m respectively, in respect of which notices demanding payment thereof by 3 July 2014 were subsequently sent out on 17 June 2014. PHRL contended that these calls were not validly made because the meeting was called at short notice and/or insufficient notice was given of the business proposed to be dealt with at the meeting.
When PHRL commenced proceedings on 25 June 2014 it applied for interim injunctive relief as follows: (1) an injunction to prevent the said capital calls from proceeding; (2) an injunction against Sherway in relation to steps taken by the latter to enforce agreements between PHRL and Sherway (and related entities) relating to the loan facility; and (3) an injunction reinstating Mr Zecha as CEO of the JVC.
Prior to the hearing before Ms Newman QC, which took place on 1 July 2014, TIL and Sherway offered undertakings on the applications relating to the capital calls and the Sherway enforcement action, to continue until the return date in September 2014. Thus, only the issue of Mr Zecha's reinstatement as CEO fell to be determined by Ms Newman QC. The Newman Order restored Mr Zecha to the position of CEO of the JVC...
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