Proteus Property Partners Ltd v South African Property Opportunities Plc

On 11 February 2011, shortly after the delivery of final submissions, I circulated a draft judgment in response to which I received suggested corrections from the parties. It was then agreed that written submissions should be made in relation to costs, interest and permission to appeal and these were exchanged on 4 March. The claimant’s solicitors had provided the defendant’s solicitor’s with a proposed draft order on 17 February 2011 and a copy in substantially that form had been provided to me with the claimant’s written submissions. I then incorporated an additional section of the judgment to reflect my decision on these issues and the judgment in what I believed would be the final form was handed down on 30 March 2011, [2011] EWHC 768 (QB), subject only to the order being drawn.

In the body of the judgment I had said (paragraph 61) that “the judgment in respect of the performance fee should be in the amount claimed” and I noted that the arithmetic on that aspect of the judgment was by then agreed, as was stated in paragraph 2 of the claimant’s submission of 4 March and was as implicit in section B of the defendant’s arguments as to the appropriate rates of interest “on the damages awarded”. At paragraph 9 of that section the defendant was submitting that interest between 14 January 2010 and 28 June 2010 on £4,961,792 (the Performance Fee) was £33,645.03 and elsewhere in its written submission made the point that the rate chosen was important because each 1% of interest on this figure was worth over £49,000 per annum.

The final form of the judgment was due to be handed down on 1 April 2011, but I was informed by the defendant’s solicitors on 25 March 2011 that the effect of the judgment was something that the market needed to know and the defendant’s interim results were due to be published on 31 March 2011. Accordingly, I brought forward the date for the handing down of the judgment to 30 March 2011. The terms of the defendant’s announcement were to the effect that the court had ordered the defendant to pay the aggregate of the two sums namely £5,074,180 “in respect of the Performance Fee to 30 June 2009 and additional unpaid management fees to 31 March 2010”.

The defendant now seeks to argue that the entitlement in respect of the Performance Fee under clause 6.7 of the Management Agreement was for a Performance Fee which should be satisfied as to 75% in cash and as to the balance of 25% by the allotment and issue to the claimant of “such number of ordinary shares which, when multiplied by the Net Asset Value per Ordinary Share on the date of issue results in a value equal to that of 25% of the Performance Fee”. The defendant argues that the pleaded case was for damages for breach of that clause and specific performance alternatively damages in lieu thereof. At no stage, it is argued, did the claimant abandon the pleaded claim for specific performance and it was therefore to be treated as advancing a claim for specific performance in relation to the 25% which should now be reflected in the proposed form of the judgment.

The claimant’s first argument, which I accept, is that the defendant has agreed that the damages figure is that proposed in the current draft and it is now too late to withdraw that agreement.

Additionally the claimant argues that the claim for specific performance was never advanced at trial and that it had elected to claim damages in lieu. Its written opening dated 19 January said in terms (paragraph 88) that the “claimant seeks damages in respect of the non payment of the Performance Fee amounting to £4,961,792 together with simple interest pursuant to Section 35A” and the written closing adopted the written opening. It is certainly my recollection that there was no argument at trial, either in the written or oral submissions, on the issue of specific performance nor was any evidence led as to what would have been needed in order to amount to compliance with clause 6.7(b) of the Management Agreement.

It is plain that the claimant was entitled to elect at trial to seek damages in the alternative to specific performance – see Johnson v Agnew [1980] AC367 at 392F-G. I recall no formal statement being made to me to that effect and suspect that a word search of the livenote will not uncover the word “elect” or for that matter “specific performance”. But the way in which the case was presented and argued leaves me in no doubt that that is what the claimant was doing. The specific performance claim was not pursued or considered at any stage and I was invited to find and found that there had been a breach of the Management Agreement in the form of non payment of the Performance Fee and that therefore damages were to be awarded on that basis.

I therefore rule that the draft form of final order advanced by the claimant in this case is the appropriate one.

On the assumption that the defendant will wish to test this ruling together with the other matters in respect of which it sought permission to appeal and was refused such permission by me, I would treat the defendant as having made the application for permission to appeal this ruling and would refuse it on the ground that I see no reasonable prospect for its success. If of course the defendant wishes to advance a potential ground not disclosed in its written submission of 19 April it is at liberty to do so but otherwise the application should be regarded as having been made and refused.