Sir Owen George Glenn Knzm Onzm and Another v Eric John Watson and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Nugee |
| Judgment Date | 21 December 2016 |
| Neutral Citation | [2016] EWHC 3346 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No: HC-2015-001647 Claim No. HC-2014-000608 |
| Date | 21 December 2016 |
[2016] EWHC 3346 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
DERIVATIVE CLAIM
The Hon. Mr Justice Nugee
Claim No: HC-2015-001647
Claim No: 3224/2015
Claim No. HC-2014-000608
In the Matter of Spartan Capital Limited
And in the Matter of the Insolvancy Act 1986
Elizabeth Jones QC, Justin Higgo, Gareth Tilley, Paul AdamsandOliver Jones (instructed by Farrers) for the Claimants
Hannah Brown (instructed by Oury Clark) for the 1 st Defendant
Sa'ad Hossain QC, James Goldsmith, Adam Rushworth (instructed by Wilson Gilmore) for the 2 nd Defendant
Anna Boase (instructed by Excello Law) for the 3 rd and 4 th Defendants
Hearing dates: 23rd, 24th and 25th November 2016
Introduction
This judgment is a postscript to my judgment arising out of a recent CMC, which I handed down on 16 December 2016 and which has the neutral citation [2016] EWHC 3259 (Ch). It deals with the third application there referred to, namely Novatrust's application for specific disclosure. This was argued before me by Mr Jamie Goldsmith for Novatrust, and Ms Jones QC for the claimants. There are two classes of documents still in dispute. The first, which I will call "the Roten communications", are all documentary communications in the period September to November 2011 (inclusive) between Sir Owen, on the one hand, and Mr Roten or Messrs Miller and Dickson on the other hand, containing discussion of whether Sir Owen could or would influence the Corona Trust or have any connection with it. The second class, which I will call "the Wyoming Trust communications", are all non privileged documentary communications in the period September 2011 to July 2012 (inclusive) which show that a reason why US/Wyoming Trusts were proposed to be established for Sir Owen's US based children and grandchildren was because of the changes to the entitlements of such persons under or in respect of the assets held by the Corona and/or Regency Trusts in September/October 2011. In each case it is accepted that the communications should not include any privileged documents; it is also accepted that the relevant documents do not include documents recording the content of any tax advice or of Sir Owen's intentions in setting up the Trust structures or assets being transferred to the Trusts in 2009 (and it is accepted that the documents may be redacted accordingly).
The principles are not in dispute. By CPR r 31.12 the Court may make an order for specific disclosure. Before making such an order the Court will need to satisfy itself that the documents are or have been in the parties' control and that the documents are relevant to the issues pleaded in the proceedings, or at least that there is a prima facie case that these requirements will be met: see White Book at note 31.12. Relevance is judged by reference to the pleadings. If these requirements are satisfied the Court has a discretion whether to order disclosure, and will exercise such discretion by taking account of all the circumstances of the case and in particular of the overriding objective.
The Roten communications
Mr Roten is a lawyer at Duane Morris, a firm of Los Angeles attorneys. He acted as a transaction lawyer in the sale of OTSLG, a company held by the Corona Trust. I was shown by Mr Goldsmith extracts from an e-mail chain. This is heavily redacted but its subject matter is the "revised SPA", which I take to be a reference to the agreement for the sale of OTSLG, and it consists of e-mails passing between Mr Roten and a Ms Annelize Taylor, a lawyer acting for the proposed purchaser. On 1 October 2011 Mr Roten wrote, under the heading "Side Letter":
"The concept of "Connected Person" is inapplicable here. In the irrevocable third party trust structure, Owen is neither a trustee nor a beneficiary. He has no ability to procure what a "Connected Person" might do. There is no connection between Owen & the trust; otherwise the trust would be considered a sham, which absolutely must be avoided. Owen is the person with the relevant competitive knowledge & skill, & he would be restricted by the non-competition covenants affecting him personally."
A reply dated 6 October 2011 from Ms Taylor said:
"We do not see that Mr Glenn would have no ability to procure the actions of a Connected Person, as we assume the structure arises only for tax planning and is not managed and benefiting people unconnected to him."
Mr Roten's reply dated 26 October 2011 said:
"He [Sir Owen] cannot compel the Trust to do anything or refrain from doing anything. The Trust is irrevocable. Mr Glenn's relationship to the Trust will not change. It is a non-negotiable point that nothing can be done in the proposed transaction that would cast doubt on the validity & sanctity of the Trust. Mr Glenn will provide the requested non-compete, &c, in the Side Letter, but he will not agree to do anything that could be seen, directly or indirectly, as influencing the trust.
Mr Glenn personally is the individual who built the company and is the key person to prevent competing with the acquirer. He is willing to sign such an agreement, but he will not act in any respect to influence the trust. Your assumption about the ownership structure apparently designed primarily for tax planning is not correct."
Ms Taylor replied on 21 November 2011 to the effect that the purchaser was prepared to accommodate the concern and had removed reference to Connected Persons.
Mr Goldsmith says that what that e-mail chain appears to show is that the purchasers wished to have a covenant from Sir Owen not to compete with the business being sold; that Sir Owen was willing to give such a covenant himself; but Mr Roten was not willing that he should give a covenant in relation to the Trust not competing because of a concern that for him to do so might cast doubt on the proposition that he had no connection with the Trust; and he did not wish Sir Owen to enter into an agreement that could be seen directly or indirectly as suggesting that he was in a position to influence the Trust's actions. Mr Goldsmith says that the likelihood from the e-mail chain is that what Mr Roten said was approved by, or emanated from, Sir Owen himself. That, he says, is a...
To continue reading
Request your trial
-
Nellie Malic v Hugh Cornell Malic
...in the cause. Geneviève Chabot High Court Judge 1 Cap. 176, Rev. Ed. 2020. 2 Cap. 91, Rev. Ed. 2020. 3 Cap. 95, Rev. Ed. 2020. 4 [2016] EWHC 3346 (Ch). 5 Gilbert Kodilinye and Vanessa Kodilinye, Commonwealth Caribbean Civil Procedure, 2 nd ed. at 6 CPR 2.2(3)(c). See also Rutilia Olivia Su......