The FA v Millwall FC: due diligence in practice

David Phillips QC has chaired a FA Regulatory Commission which heard charges against Millwall FC alleging that the club had failed to ensure that its spectators had conducted themselves properly.  The specific complaint was of racist chanting at the Everton FC match that took place on 26 January 2019.  Millwall admitted the charge (which was an offence of strict liability) but sought to mitigate the penalty by arguing that the elements of the due diligence defence provide by FA Rule E20 applied.  The Written Reasons contain an analysis of the correct approach to the application of the due diligence defence, following on from the decision of the Regulatory Commission in the West Ham case, which David also chaired.  The decision itself is unusual because the Commission was not unanimous.  The decision that Millwall was unable to establish the elements of the due diligence defence was made 2-1.  Millwall was fined £10,000 and ordered to comply with the terms of an Action Plan devised by the Regulatory Commission.

The Written Reasons can be read here.

National Joint Stock Company Naftogaz of Ukraine v Public Joint Stock Company Gazprom [2019] EWHC 658 (Comm)

Alan Gourgey QC and Bobby Friedman successfully appeared for the respondent in National Joint Stock Company Naftogaz of Ukraine v Public Joint Stock Company Gazprom [2019] 2 Lloyd’s Rep. 20, resisting an application in the Commercial Court for immediate enforcement of an arbitral award of almost $3 billion, pending a challenge to the arbitral award before the supervising court (Sweden). Sir Michael Burton reviewed the authorities on the principles guiding the exercise of the Court’s discretion under s.103(5) Arbitration Act 1996. He decided that immediate enforcement should be refused even though the Swedish court had refused an application for a stay of execution.

Ingenious Games LLP and others v HMRC [2019] UKUT 0226 (TCC)

Jonathan Davey QC has received judgment from the Upper Tribunal in the long running, high profile and high value Ingenious litigation. The Upper Tribunal (Mrs Justice Falk, Judge Herrington) dismissed the LLPs’ grounds of appeal in their entirety and accepted HMRC’s grounds of appeal in relation to aspects of the decision of the First-tier Tribunal (Judge Charles Hellier, Julian Stafford) ([2016] UKFTT 521 (TC)). The case concerns whether limited liability partnerships involved in the film and games industries were trading with a view to a profit, whether millions of pounds of expenditure was incurred wholly and exclusively for the purposes of the partnerships’ trade, and whether the partnerships’ accounts were drawn up in accordance with generally accepted accounting principles. The loss claims in dispute (including in respect of follower partnerships) amount to over £1.6 billion.

Jonathan is acting for HMRC with Malcolm Gammie QC (One Essex Court), Catherine Addy QC (Maitland Chambers), Michael Jones (Gray’s Inn Tax Chambers), Imran Afzal (Field Court Tax Chambers), Ruth Hughes (5 Stone Buildings), Sam Chandler (5 Stone Buildings), Nicholas Macklam (Radcliffe Chambers) and Oscar Schonfeld (One Essex Court). The Appellant LLPs are represented by Pushpinder Saini QC (Blackstone Chambers), David Milne QC (Pump Court Tax Chambers), Richard Vallat QC (Pump Court Tax Chambers), James Rivett QC (Pump Court Tax Chambers), Edward Waldegrave (Pump Court Tax Chambers) and George Molyneaux (Blackstone Chambers).

Read the full judgment here.

Cuadrilla v Persons Unknown

Tom Roscoe (of Wilberforce Chambers) and Julie Dilcock (assisted by Shona Jenkins) of Eversheds Sutherland (International) LLP have successfully acted for long-standing client Cuadrilla Bowland Limited (and others) on an application to commit three respondents for their breach of a High Court injunction preventing unlawful forms of protest at Cuadrilla’s hydraulic fracturing site at the Preston New Road in Lancashire.

Tom and Julie previously acted for Cuadrilla on the grant of the injunction in July 2018 against “persons unknown” preventing trespass, obstruction of vehicular access to the site and conspiracy to injure Cuadrilla by unlawful interference with its supply chain ([2018] 7 WLUK 223).

Following a two-day hearing, HHJ Pelling QC (sitting as a Judge of the High Court) on 28 June 2019 found each of the three respondents in contempt of court for every incident alleged, including a multi-hour “lock-on” on the highway at the entrance to the site and an unlawful means conspiracy to stop vehicles on the highway making deliveries to the site.

The judgment (a transcript of which is awaited) will be of interest as it relates to the enforcement of injunctions against “persons unknown”, and the Court’s conclusion that references to parties’ intentions in such orders does not render them too uncertain to be enforced via committal proceedings – thereby helping to clarify the effect of Boyd v Ineos Upstream [2019] EWCA Civ 515.

A further hearing is due to take place in September 2019 to determine sentencing and the respondents’ and Friends of the Earth’s application to vary the terms of the injunction.

The FA v Arsenal FC

David Phillips QC has chaired another FA Regulatory Commission considering the proper application of FA Rules E20 and 21. The incident in question occurred during Arsenal’s home match against Manchester United when a supporter ran onto the pitch, came into contact with a Manchester United player, and joined in the Arsenal players’ celebration the vicinity of the Manchester United goalmouth. The Commission gave guidance for the proper application of the first limb of the Rule E21 due diligence defence. The Commission found that Arsenal was able to establish the due diligence defence and dismissed the charge. The Written Reasons can be read here.

The Libyan Investment Authority v JP Morgan and others [2019] EWHC 1452 (Comm)

Judgment has been handed down by Bryan J this week in The Libyan Investment Authority v JP Morgan and others setting aside service on two defendants out of the jurisdiction. Alan Gourgey QC and Anna Littler, together with Adam Kramer of 3VB (instructed by PCB Litigation LLP) acted for one of the successful defendants in his jurisdiction challenge  – a Libyan businessman against whom a claim had been brought by the Libyan Investment Authority alleging fraud and corruption in relation to transactions that it had entered into with Bear Stearns bank in 2007.

Permission to serve the defendants outside the jurisdiction had been granted by the High Court ex parte in June 2018. However, on the application by those defendants to set aside service out of the jurisdiction, heard in May 2019, the Court found that the Libyan Investment Authority’s claim against them in fact had no real prospect of success because it was time-barred and did not therefore meet the required threshold to serve them out of the jurisdiction. Further, the judge found that there had been breaches by the Libyan Investment Authority of the duty of full and frank disclosure in their ex parte application, including in relation to the limitation position which in itself justified setting aside service.

Read the full judgment here.

London Luton Hotel BPRA Fund LLP v HMRC [2019] UKFTT 212 (TC)

Jonathan Davey QC has received judgment from the First-tier Tribunal (“FTT”) in an appeal concerning the Business Premises Renovation Allowances (“BPRA”) regime under Part 3A of the Capital Allowances Act 2001. The case concerns a hotel in the vicinity of Luton airport. The key issue in the dispute is that of the proper characterisation of a multi-million pound payment known as the “development sum” made by the Appellant LLP under a contract known as the “development agreement”, and, in particular, whether or not the LLP’s entitlement to BPRA extends to the full amount of the development sum. The FTT (Judge Brooks and Nicholas Dee) found that the Appellant’s entitlement does not so extend. The FTT therefore found for the Respondents on the point. As to the component parts of the development sum, the FTT found in favour of the Respondents in respect of some and in favour of the Appellant in respect of others. Jonathan Davey QC acts for the Respondents (HMRC) with John Brimsmead-Stockham (11 New Square), Ruth Hughes (5 Stone Buildings), Sam Chandler (5 Stone Buildings), Nicholas Macklam (Radcliffe) and Hugh Cumber (5 Stone Buildings). Malcolm Gammie QC (One Essex Court) and Jonathan Bremner QC (Pump Court Tax) act for the Appellant. Both parties have sought permission to appeal.

Read the full judgment here.

 

Re Qunar Cayman Islands Limited

On 13^th May 2019, the Grand Court of the Cayman Islands handed down judgment in the case of Re Qunar Cayman Islands Limited. Qunar is one of China’s largest online travel companies, with headquarters in Beijing.  The company was taken private in 2017 by way of a merger under Part XVI of the Companies Law. There were eight dissenting shareholders who contended that the Merger Consideration and valuation which was subsequently arrived at by the Company and its experts in these proceedings significantly undervalue the company. Consideration was also given to undervaluation of Chinese companies taking place on US exchanges.

The Court accepted that the company’s trading price on NASDAQ was reflective of fair value at the relevant time. In its ruling, the Court adopted the approach used by the company’s expert of a blended approach of market trading valuation of the shares prior to the merger and discounted cash flow (DCF) methodology to reach a just and equitable outcome which determined fair value for the dissenters. You can download the full judgment here.

This is only the third consideration of the fair value of a Cayman Islands company’s shares under section 238 of the Companies Law, following Re Integra and Re Shanda Games. The case has attracted widespread media attention, including in The Lawyer here.

Tom Lowe QC successfully acted for Qunar and was instructed by Jessica Williams and Paul Madden of Harneys.

Gaia v Abbeygate Helical [2019] EWCA Civ 823

Last week, the Court of Appeal handed down its decision in Gaia v Abbeygate Helical [2019] EWCA Civ 823, a case about whether a developer, Abbeygate Helical, had fulfilled its obligation to use ‘reasonable endeavours’ to satisfy certain conditions ‘as soon as reasonably practicable’ so as to trigger an obligation to make a £1.4million overage payment.  The conditions related to ’site assembly’, specifically the acquisition of and variation to various interests to enable the development to take place.

The High Court (Norris J) had held that Abbeygate had not satisfied the obligation but, if they had, the overage would have been triggered at a time that entitled Gaia to claim the overage. Abbeygate Helical was, therefore, ordered to pay the £1.4m overage payment.

There were several grounds of appeal. But Abbeygate’s principal argument was that its endeavours obligation entitled it to have regard to its own commercial interests when deciding what steps to take to satisfy the conditions. It said that it would have been absurd and ‘commercially irresponsible’ if Abbeygate Helical had made commitments that would satisfy the conditions without first securing funding for the development (of a few tens of millions).

The Court dismissed Abbeygate’s appeal. On the endeavours point, it held that, in circumstances where Abbeygate had itself restricted access to funding, it was open to the first instance Judge to conclude that, even if access to funding was a relevant consideration, it could not be relied upon to show that it had used ‘reasonable endeavours’ to satisfy the conditions ‘as soon as reasonably practicable’. Abbeygate Helical’s manipulation of the timetable to take the satisfaction of the conditions beyond the long stop date for payment of the overage was “on any view” a breach of the obligation. The other grounds of appeal also failed.

Mark Wonnacott QC and Harriet Holmes acted for the successful respondent.

The full judgment can be found here.

Neville Andrew v Commissioners for HM Revenue and Customs [2019] UKFTT 768 (TC)

Jonathan Davey QC has received judgment in a First-tier Tribunal appeal regarding a pre-planned tax scheme involving the disposal of gilt strips. The issues raised in the appeal included the meaning of the phrase “the amount payable on the transfer” (paragraph 14A(3) of Schedule 13 of the Finance Act 1996). The First-tier Tribunal (“FTT”) (Judge Ashley Greenbank) held that on a purposive construction of the relevant legislation, the term “transfer” was to be interpreted more broadly than the Appellants contended, and, accordingly, on the facts of the case, the “transfer” in question comprised the aggregate of two amounts including a cash cancellation payment under an option agreement. The FTT therefore found the Respondents on the point. Jonathan Davey QC acts for the Respondents (HMRC) with Sam Chandler (5 Stone Buildings); David Yates QC (Pump Court Tax Chambers) for the Appellant.

Read the full judgment here.