Key Facts
- •Enforcement dispute concerning a 2007 consent order (amended 2011) regarding the division of assets from Company X.
- •Applicant (XP) claims 25%/15% of net proceeds from respondent's (YP) shares in Company X, based on a company valuation.
- •Company X's assets were sold, and proceeds distributed as a capital dividend to YP (£32,792,669.42).
- •YP argues the order only applies to direct share sales, not dividends, and offers £1,000,000 ex gratia.
- •Significant increase in Company X's value since 2007 is a key point of contention.
- •Dispute over interpretation of 'net proceeds' – YP seeks to deduct various costs, including hypothetical salary and dividends.
Legal Principles
Construction of court orders: The starting point is the Privy Council decision in Sans Souci Ltd v VRL Services Ltd [2012] UKPC 6, considering the language of the order in light of the circumstances known to the court and parties.
Sans Souci Ltd v VRL Services Ltd [2012] UKPC 6, Deutsche Bank AG v Sebastian Holdings Inc [2023] EWHC 2563 (Comm), other cited cases.
Interpretation of contracts/orders: Consider the words used, commercial common sense, factual matrix, and potential unintended consequences. Even clear words may not reflect the true intention.
Arnold v Britton & Ors [2015] UKSC 36, Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, Hamilton v Hamilton [2013] EWCA Civ 13
Enforcement of court orders: Public interest in finality; court may refuse enforcement if manifestly inequitable due to significant changed circumstances invalidating the order's basis.
Thwaite v Thwaite [1982] Fam 1, Barder v Barder [1988] AC 20, L v L [2008] 1 FLR 13, other cited cases.
Interpretation of 'net proceeds': Typically excludes costs of sale and tax, but other deductions require explicit provision.
None explicitly cited, but derived from common usage and legal practice.
Outcomes
The applicant is entitled to a share of the capital distribution received by the respondent.
The court interpreted the order's reference to 'net proceeds of sale' to encompass the capital distribution, considering the parties' intentions and the objective factual matrix. The capital distribution was considered a sale for tax purposes.
The respondent's arguments for deducting additional costs from the 'net proceeds' were rejected.
These deductions were not considered costs of sale, but rather complaints about the overall fairness of the original order, given the unforeseen increase in Company X's value.
The respondent's arguments for non-enforcement based on changed circumstances were rejected.
The court found no significant change of circumstances invalidating the order's fundamental assumption. The increase in Company X's value was foreseeable, and the respondent significantly benefitted.