Cavendish Square Holding B.V. v Team Y&R Holdings Hong Kong Ltd [2018] EWHC 2755 (Comm)

Claim No. CL-2015-000901[2018] EWHC 2755 (Comm)IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTS OF ENGLAND & WALESCOMMERCIAL COURT (QBD)Date 26 October 2018
Before
DANIEL TOLEDANO Q.C.(SITTING AS A DEPUTY HIGH COURT JUDGE)
Between
CAVENDISH SQUARE HOLDING B.V.TEAM Y&R HOLDINGS HONG KONG LIMITEDClaimants/ApplicantsvJOSEPH GHOSSOUBDefendant/Respondent
Joanna Smith Q.C., Richard Leiper Q.C. and Emily McKechnie (instructed by Simkins LLP) for Claimants/ApplicantsCharles Béar Q.C. and Edward Levey (instructed by Holman Fenwick Willan LLP) for Defendant/RespondentHearing Hearing Dates: 11 and 16 October 2018
JUDGMENTFactual Background: the SPA
[1]This is the Claimants’ application for summary judgment. The Claimants seek a declaration that the Defendant (“Mr Ghossoub”) is a Defaulting Shareholder within the meaning of a Sale and Purchase Agreement dated 28 February 2008 (the “SPA”).[2]By the SPA, the WPP group acquired from Mr Ghossoub and his then business partner (Mr Makdessi) a majority stake in a group of media businesses based in the Middle East known as the TEAM Group. Initially, the purchaser was identified as Young & Rubicam International Group BV but, by a novation, the purchaser became the First Claimant. As a result of the SPA, the First Claimant became the majority shareholder in the Second Claimant owning 60% of the issued share capital. Mr Ghossoub and Mr Makdessi remained the holders of 40% of the shares between them.[3]From around September 2009 the group of businesses headed by the Second Claimant (and previously trading as TEAM) were rebranded under the name “Menacom” which I will use in this judgment.[4]The SPA contained specific provisions dealing with Protecting the Goodwill of the Business.[5]Clause 11.1 provided that “Each Seller recognises the importance of the goodwill of the Group to the Purchaser and the WPP Group which is reflected in the price to be paid by the Purchaser for the Sale Shares. Accordingly, each Seller commits as set out in this Clause 11 to ensure that the interest of each of the Purchaser and the WPP Group in that goodwill is properly protected”.[6]Clause 11.2 restrained Mr Ghossoub from undertaking certain activities that could damage goodwill. Clause 11.2 provided that:
“Until the date 24 months after the Relevant Date, no seller will directly or indirectly without the Purchaser’s prior consent: (a) carry on or be engaged, concerned or interested in competition with the Group, in the Restricted Activities within the Prohibited Area; (b) solicit or knowingly accept any orders, enquiries or business in respect of the Restricted Activities in the Prohibited Area from any Client; (c) divert away from any Group Company any orders, enquiries or business in respect of the Restricted Activities from any Client; or (d) employ, solicit or entice away from or endeavour to employ, solicit or entice away from any Group Company any senior employee or consultant employed or engaged by that Group Company”
[7]Pursuant to clause 11.4, “directly or indirectly” means “carrying out any of the prohibited activities on the Seller’s own behalf or jointly with, or as servant, agent, manager, employee, consultant, director or shareholder of any other person, firm, company or body”.[8]By schedule 12 of the SPA:8.1 “Relevant Date” means the later of the date of termination of Mr Ghossoub’s employment by Menacom, the date that he no longer holds any Shares or the date of payment of the final instalment of the Option Price pursuant to Clause 15.5(b) of the SPA;8.2 “Restricted Activities” means the provision of products and/or services of a competitive nature to the products and/or services provided by Menacom in the 12 months prior to the Appropriate Date.8.3 “Prohibited Area” means any countries in which Menacom has carried on the Business at any time in the period of 12 months prior to the Appropriate Date.[9]The Appropriate Date for the purposes of this application is 31 March 2008.[10]The significance of clause 11.2 in the context of this application is that the SPA defines a Defaulting Shareholder as including a Seller who is in breach of clause 11.2.[11]If a Seller is a Defaulting Shareholder, then the First Claimant has the right to require that Seller to sell his shares at the Defaulting Shareholder Option Price pursuant to Clause 5.6 of the SPA, which provided as follows:
“Each Seller hereby grants an option to the Purchaser pursuant to which, in the event that such Seller becomes a Defaulting Shareholder, the Purchaser may require such Seller to sell to the Purchaser (or its nominee) all (and not some only) of the Shares held by that Seller (the Defaulting Shareholder Shares). The Purchaser (or its nominee) shall buy and such Seller shall sell with full title guarantee the Defaulting Shareholder Shares (free from all Encumbrances but together with the benefit of all rights attaching to the Defaulting Shareholder Shares at the date of transfer) within 30 days of receipt by such Seller of a notice from the Purchaser exercising such option in consideration for the payment by the Purchaser to such Seller of the Defaulting Shareholder Option Price.”
[12]The “Defaulting Shareholder Option Price” is defined as: “an amount equal to the Net Asset Value on the date that the relevant Seller becomes a Defaulting Shareholder multiplied by A%, where “A%” means the number of Shares sold by the relevant Seller as a proportion (expressed as a percentage) of the entire issued share capital of the Company”.[13]By contrast, where the Seller is not a Defaulting Shareholder, it is the Seller that has the right to put his shares on to the First Claimant so as to require the First Claimant to buy him out at the Option Price pursuant to clause 15.1.[14]There may be a significant difference between the two prices since the Defaulting Shareholder Option Price is defined by reference to the Net Asset Value on the date that the relevant Seller becomes a Defaulting Shareholder whereas the Option Price is defined by reference to 8 x operating profits after tax. The former does not include an element to reflect the goodwill of the business. Whether the two prices would produce a substantial difference in this case is not a matter that I need to decide. Factual Background: Notice of alleged default[15]By a letter dated 21 December 2015 the Claimants served notice pursuant to clause 5.6 of the SPA requiring Mr Ghossoub to sell his shares to the First Claimant at the Defaulting Shareholder Option Price. To date, Mr Ghossoub has refused to transfer his shares.[16]The Claimants contend that Mr Ghossoub is a Defaulting Shareholder because he acted in breach of clause 11.2 of the SPA and that Mr Ghossoub has no real prospect of establishing the contrary at trial. Mr Ghossoub denies that he is a Defaulting Shareholder and contends that the issues which this raises are not suitable for determination on a summary judgment application. Mr Ghossoub says that the inquiry that is needed is intrinsically fact sensitive. Legal Principles: summary judgment[17]I have been referred to a number of authorities dealing with the test to be applied by the Court on a summary judgment application. These authorities include: Swain v Hillman [2001] 1 All ER 91; Royal Brompton Hospital NHS Trust v Hammond (no 5) [2001] EWCA Civ 550; Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63; Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) per Lewison J at [15]; Lexi Holdings (In Administration v Pannone & Partners [2009] EWHC 2590 (Ch) per Briggs J at [4]; Mellor v Partridge [2013] EWCA Civ 477 at [3]; Arcadia Group Brands Ltd v Visa Inc [2014] EWHC 3561 (Comm) per Simon J at [19]; Aquila WSA Aviation Opportunities II Limited v Onur Air Tasimacilik AS [2018] EWHC 519 (Comm) per Cockerill J at [27].[18]I do not understand there to be any real dispute between the parties as to the principles which apply. The overriding test is that the court must consider whether Mr Ghossoub has a “realistic” as opposed to a “fanciful” prospect of success. A “realistic” claim means one that carries some degree of conviction and is more than merely arguable.[19]The authorities make it clear that summary judgment is not appropriate if the application requires the Court to conduct a “mini-trial”. Nor is it appropriate if the Court concludes that reasonable grounds exist for believing that a fuller investigation into the facts at trial would add to or alter the evidence available to the trial judge and so affect the outcome of the case. However, this does not mean that the court must take at face value and without analysis everything that a party says in his statements before the Court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous evidence. Moreover, it is not enough for the respondent to argue that the case should be allowed to go to trial because evidence currently unavailable might turn up in time for trial. In order for the Court to conclude that there is a real prospect of a successful defence, the Court must be in a position to conclude that there is a real prospect that material will become available in time for trial that will make good the defence relied upon. If instead the Court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. Legal Principles: contractual construction and construction of the SPA[20]So far as issues of contractual construction arise, I was referred, in particular, to the decision of the Supreme Court in Wood v Capita Insurance Services Ltd [2017] AC 1173 (Lord Hodge at paras 8-14).[21]I was also referred to the judicial consideration of the SPA in the Cavendish v Makdessi litigation which arose out of a breach of clause 11.2 by Mr Ghossoub’s business partner, Mr Makdessi. That case went up to the Supreme Court in relation to the question of whether clauses 5.1 and 5.6 were unenforceable as penalties: see [2016] AC 1172. The Supreme Court allowed the appeal on this point and concluded that the judge at first instance had been right to conclude that clauses 5.1 and 5.6 were enforceable. This was because Cavendish had a legitimate interest in the observance of the non-competition provisions which extended beyond the recovery of loss attributable to breach, since the goodwill of the business was critical to its value and the loyalty of Mr Makdessi and Mr Ghossoub was critical to that goodwill. Lords Neuberger and Sumption stated at [75]:
“The goodwill of the business was critical to its value to Cavendish, and the loyalty of Mr Makdessi and Mr Ghossoub was critical to the goodwill. The fact that some breaches of the restrictive covenants would cause very little in the way of recoverable loss to Cavendish is therefore beside the point. As Burton J graphically observed in para 43 of his judgment, once Cavendish could no longer trust the sellers to observe the restrictive covenants, “the wolf was in the fold”
. Loyalty is indivisible. Its absence in a business like this introduces a very significant business risk whose impact cannot be measured simply by reference to the known and provable consequences of particular breaches. It is clear that this business was worth considerably less to Cavendish if that risk existed than if it did not...”[22]A further point that is made in this paragraph of the judgment of Lords Neuberger and Sumption is that the parties to the SPA were, on both sides, “sophisticated, successful and experienced commercial people bargaining on equal terms over a long period with expert legal advice”. The terms of the SPA were heavily negotiated over six months, with each side represented by well-known and very experienced solicitors: Allen & Overy acting for Cavendish; Lewis Silkin acting for Mr Ghossoub: Cavendish v Makdessi [2012] EWHC per Burton J at paras 2(ii), 13(iv), 14(ii), 15(viii). Construction of the SPA: Discussion[23]In order for Mr Ghossoub to be in breach of cl 11.2 of the SPA he must, as at the date of alleged breach, namely 31 March 2008, have directly or indirectly and without Cavendish’s prior consent, carried on or been engaged, concerned or interested, in competition with the Menacom group, in the Restricted Activities, being the provision of products and/or services of a competitive nature to the products and/or services provided by Menacom, within the Prohibited Area.[24]There is no dispute between the parties that the activities relied upon by Claimants in the present application took place in Dubai (i.e. in the Prohibited Area). Nor is there any dispute that Cavendish did not consent at the time to any such activity.[25]It follows from this that, in order to succeed on this application, the Claimants must be able to demonstrate two key matters. First, that Mr Ghossoub had the requisite interest in another business or other businesses as at 31 March 2008. This raises both an issue of fact as to what interest Mr Ghossoub had in any other business or businesses at the relevant time and an issue of construction as to whether any such interest is caught by clause 11.2.[26]The second matter that the Claimants need to demonstrate is that the relevant business in which Mr Ghossoub is alleged to have been interested was a business that competed with Menacom as at 31 March 2008 by providing products or services of a competitive nature to those which Menacom had provided at some point during the 12 months leading up to 31 March 2008. I do not consider that it would be enough for Menacom to have been capable of providing the product or service, for example by having a business within its group which had a team that could be directed to do so. Rather, the Menacom group company or companies must have actually provided the products and/or services relied on in the 12 month period.[27]So far as the point of contractual construction is concerned, the Claimants contend that the terms “carry on, or be engaged, concerned or interested”under clause 11.2 are not qualified. They are not confined to an “economic” or “financial” interest. The Claimants say, on the contrary, the clause is drafted widely, containing an absolute prohibition and extending to indirect as well as direct conduct, interests or concerns. Mr Ghossoub, on the other hand, contends that “nominal or ministerial” involvement in other businesses would not constitute a breach of this clause. As the facts about the four companies relied on by the Claimants and described below show, three issues arise in particular:27.1 Whether clause 11.2 extends to shareholdings even where it is alleged that an agreement to transfer away the relevant shareholding has been concluded but where the steps needed to effect the transfer have not yet been completed.27.2 Whether clause 11.2 extends to shareholdings even where it is alleged that the shareholding is only being held as a security for a loan.27.3 Whether clause 11.2 extends to involvement of the “nominal or ministerial” kind described by Mr Ghossoub.[28]Three relevant authorities were cited by the parties:28.1 First, Smith v Hancock [1894] 2 Ch 377 in which it was held that the Defendant had not breached the restrictive covenant against carrying on or being in any way interested in a similar business by introducing his wife to local bankers, assisting her in obtaining the lease of the shop in her name, introducing his nephew to wholesale merchants and writing a circular inviting old customers to return. Lindley LJ stated that “the utmost that can be said is that he has assisted his wife and Kerr [his nephew] to do what he agreed not to do himself.” The court accepted that the Defendant himself did not have any pecuniary interest in the business and was not himself carrying on the business.28.2 Second, William Cory & Son v CW Harrison [1906] AC 274 in which it was held that the defendant was not concerned or interested in the relevant business in the sense which had to be attributed in context to those words. Lord Halsbury LC stated that it was not possible to lay down with precision what is or is not comprehended in words such as “interested or concerned in”. He considered instead that it was necessary to look at the facts of the particular case and at the business meaning of the words. He concluded that simply being a creditor of the firm was not enough to be “concerned or interested in” it.28.3 Third, Egon Zehnder Ltd v Tillman [2017] EWCA Civ 1054 in which the restrictive covenant contained in the Defendant’s employment contract provided that she could not “directly or indirectly engage or be concerned or interested in any business carried on in competition with any of the businesses”. The judge held that the covenant did not prevent the Defendant from becoming a shareholder in a competitor and that therefore it was not in unreasonable restraint of trade and was enforceable. The Court of Appeal allowed the appeal and held that the clause did prohibit the acquisition of a shareholding and was therefore impermissibly wide and in restraint of trade. In the course of argument, Sales LJ asked Mr Laddie QC for the Claimant to spell out the construction for which he contended. He submitted that the words should be construed as meaning “actively participate in”, such that a majority shareholding might be restrained because it would inevitably involve active participation, whereas a small shareholding would not be, depending on the facts of the case. Longmore LJ [at 24] expressly rejected this submission as inherently unsatisfactory since it begged the question of what sort of participation would constitute “active participation”. Instead, the Court of Appeal concluded that the clause prohibited any and all shareholdings. Longmore LJ [at 14] referred to the William Cory case and said that the result would surely have been different had Mr Harrison actually held shares in the company. I am told that the Supreme Court has granted permission to appeal in this case.[29]I will return to the issues of construction in the context of my analysis of the four businesses relied on by the Claimants. I will now turn to consider those four businesses and the evidence about them. Venture Communications FZ LLC (“Venture”)[30]Venture was an advertising agency which had offices in the UAE and Lebanon.[31]Mr Ghossoub accepts that he held 60% of the shares in Venture through a Panamanian company he owned called Maltex Investments Inc (“Maltex”). However, he contends that around the time of the negotiations with WPP, in about December 2007, he agreed to transfer his interest in Venture to Mr Chamat, the co-founder of that business. According to Mr Ghossoub, this was because he had no intention of retaining his interest in Venture post signing the SPA with WPP, nor did he wish for Venture to be included in the sale to WPP.[32]It is accepted by Mr Ghossoub that the “formal arrangements to give effect to that transfer” were not completed until 2009. However, Mr Ghossoub says that as at 31 March 2008, it was clearly understood between him and Mr Chamat that he did not have any interest in the business even though the formalities had not been taken care of.[33]The explanation Mr Ghossoub gives as to why he was not able formally to transfer his interest prior to 2009 was that he and Mr Chamat did not want to jeopardise Venture’s banking facility, which had originally been organised by Mr Ghossoub and on which Mr Ghossoub was a signatory. Mr Ghossoub’s evidence is that Venture’s account was overdrawn at the time and the bank would have withdrawn the facility had he transferred his interest. Once Mr Chamat was in a financially stable position, he then took over responsibility for the facilities. Mr Ghossoub accepts that this means that, until 2009, he was “nominally involved in the account operation” but he says he had “…no economic interest in the business,…played no active role in any management decisions and…derived no financial benefit from the business and was not intended to derive any…”[34]Mr Ghossoub had not been able to locate the agreement to transfer the shares in Venture to Mr Chamat at the time of his first witness statement but he had located it by the time of his second witness statement. The agreement, which was exhibited by Mr Ghossoub, is dated 3 December 2007 and is signed by Mr Ghossoub for Maltex. It is not, however, signed by Mr Chamat, although Mr Ghossoub says that he believes that a copy of the agreement must also have been signed by Mr Chamat at the time. The document records that the parties had agreed that Maltex would sell and transfer with immediate effect its shareholding in Venture to Mr Chamat.[35]A point heavily relied on by Mr Béar QC for Mr Ghossoub is that although Mr Oxnard, a consultant in the firm of Simkins LLP, had spoken to Mr Chamat for the purposes of preparing his 4th witness statement in support of this application, he had chosen not to discuss whether the alleged transfer had been agreed even though this was a matter pleaded in Mr Ghossoub’s Defence. Mr Oxnard’s explanation for this omission in his 5th witness statement was that he did not discuss this matter with Mr Chamat because(a) Mr Ghossoub had already accepted that the transfer was not concluded until 2009 and(b) there was other evidence of Mr Ghossoub’s concern and interest in Venture well into 2009 and beyond. Although I accept Mr Oxnard’s explanation of the position taken by the Claimants, it nonetheless means that an important issue has not been raised with Mr Chamat and his evidence on it is not before the Court.[36]Mr Ghossoub claims that the role he played at Venture during the period from December 2007 until 2009 was a nominal involvement consistent with his position as a mentor to businesses in the Lebanese community living in the United Arab Emirates generally and, in Dubai, in particular. He put it as follows:
“I am very well known within the Lebanese community as a successful businessman. I am aware that I am sometimes referred to as the ‘Godfather of the Lebanese’ within the community on account of the assistance I frequently give to people, both in terms of their business ventures and their personal lives…Three of the Four Companies [those relied on by Cavendish] were set up by Lebanese business people…As part of the [Dubai Media City] start-up process, it is sometimes necessary for me to organise the account and with the consequence that I may be named as a signatory to and have a mandate on the company’s account. Although I am associated with the companies in that way, that does not mean that I have any economic interest in them, nor am I involved in the management of those businesses and nor do I play any role in promoting those businesses. On the contrary, my association with those companies is a formality and my association with them is a nominal one. If there is any need to sign cheques that is never more than my signing whatever the company presents to me. I have no role whatsoever in deciding what or who should be paid.”
[37]Ms Smith QC who appeared for the Claimants made various points in response to this evidence. First, she pointed to a number of documents which she said demonstrated that Mr Ghossoub had considerable involvement with Venture in the period 2008-2009 which went beyond the “nominal” involvement described by Mr Ghossoub. Secondly, she submitted in the alternative that, even if Mr Ghossoub’s involvement was limited in the way he suggested, he still held an interest in Venture within the meaning of clause 11.2 by virtue(a) of his majority shareholding held through Maltex until the transfer to Mr Chamat was completed in 2009 and(b) of his “nominal” involvement in Venture in particular as account signatory designed, as Mr Ghossoub says, to ensure that the bank overdraft remained available to Venture.[38]As to Ms Smith QC’s first point, I have carefully considered the documents relied upon. Certainly they show that Mr Ghossoub continued to play a role at Venture after December 2007 in particular in relation to the Venture bank account such as by signing cheques. However, it seems to me that such documents are, prima facie, consistent with the evidence of Mr Ghossoub as to his “nominal” involvement. I do not consider that I can infer from the documents on this application that Mr Ghossoub’s involvement in Venture went beyond that which he has accepted in his evidence. The position may of course prove to be otherwise once Mr Ghossoub’s evidence has been tested at trial. By way of example, it is not possible on a summary judgment application to know what, if anything, can be ascertained from the fact that the Bank of Sharjah referred in an email dated 10 May 2009 to Venture (and indeed to two of the other companies relied on by the Claimants, namely, Spot Light Events and Meeting Minds) as falling “under Joseph Ghessoub’s Group” or from the fact that, on 11 May 2009, Mr Ghossoub wrote a letter on Venture notepaper asking for confirmation that no claims were outstanding for the purposes of preparation of “our” financial statements. The significance of these and similar documents in relation to the nature and extent of Mr Ghossoub’s interest in Venture as at 31 March 2008 can only be properly ascertained if this issue were to be considered at trial.[39]Moreover, I am concerned about placing too much weight on the small selection of documents that the Claimant has relied upon without further investigation as to their context and true meaning. The Defendants complain that the documents have been cherry picked and that they have not had an opportunity to consider other documents that might put the ones relied on by the Claimants in context. The Claimants say that WPP parties in related proceedings in Hong Kong have already listed 41,000 documents which could have been inspected by Mr Ghossoub at any time since mid-July. However, mutual disclosure and inspection in the Hong Kong proceedings has not yet taken place (mutual disclosure is not due to take place until 30 November 2018 with mutual inspection within 14 days from the date of disclosure) and there is a limit in any event to what review Mr Ghossoub could have undertaken prior to putting in his witness statement for this application on 20 August 2018.[40]It follows that for Ms Smith QC to succeed on this application she must persuade the Court that it is in a position on this application to conclude that her alternative submission is correct i.e. that Mr Ghossoub retained an interest in Venture within clause 11.2 as at 31 March 2008 in any event by virtue(a) of his majority shareholding held through Maltex until the transfer to Mr Chamat was completed in 2009 and(b) of his “nominal” involvement in Venture in particular as account signatory.[41]I will come back to this submission once I have considered the second of the two points that arises relating to whether Venture and Menacom were in competition at the relevant time.[42]So far as the alleged competition is concerned, the Claimants say that it is clear that Menacom and Venture competed at the relevant time because they both provided marketing communications services. Venture, unlike the other three companies relied on by the Claimants, was a “full service” advertising and communications agency operating in Dubai. The Claimants relied on a number of press reports which described Venture’s business in the period 2006-2008.[43]However, Mr Ghossoub says that the client base of Venture and the client base of Menacom was different and that therefore they were not in competition. He says that Menacom focused on larger blue chip companies whereas Venture was a small local media business which had small local companies as clients. He also says that rather than competing with Menacom, Venture actually provided revenue to Menacom by providing it with requirements for media purchasing on behalf of clients. The Claimants dispute Mr Ghossoub’s contentions.[44]So far as Menacom’s clients are concerned:44.1 The Claimants point to the Due Diligence report dated 8 February 2008 prepared by Deloitte on behalf of WPP (the “DD Report”) which describes Menacom as having a “broad client base”. This supports the Claimants’ case but does not, without more, demonstrate competition.44.2 The Claimants rely on specific examples of small local car dealerships which were clients of Menacom. Mr Ghossoub accepts that this was so but he says that this only occurred because Jaguar Land Rover requested Menacom to take them on as clients.44.3 The Claimants say that Menacom had many clients which brought in only small amounts of revenue. But Mr Ghossoub says that his point is not about the amount of revenue a client brought in but rather about the type of client.44.4 The Claimants point to a Menacom agency called Classic Partnership which they say, based on a conversation with Mr Ghnatios of Menacom, had many small local clients. Mr Ghossoub does not admit this in his second witness statement and also says that Classic Partnership was exceptional and in a different position to the other parts of the Menacom group. The Claimants rely on a spreadsheet of revenue received by Classic Partnership in Dubai in 2008. This shows small amounts of revenue being received from various companies, many of which appear to be local companies. However, there is little, if any, evidence about the companies in question, in particular as to their nature or size at the relevant time. All that the Court has is Mr Ghnatios’ comments (recorded in Mr Oxnard’s witness statement) about the businesses in question which are very limited (e.g. “local mall” or “real estate”) and which have not been corroborated, still less tested. I also note that the spreadsheet appears to relate to the calendar year 2008 whereas, for the purposes of the SPA, it is necessary to consider whether as at 31 March 2008 Venture, in competition with Classic Partnership, was providing services of a competitive nature with those Classic Partnership had been providing for the twelve months prior to that date (i.e. it is necessary to consider what services Classic Partnership had been providing between March 2007 and March 2008).[45]So far as Venture’s clients are concerned:45.1 Based on information received from Mr Chamat, the Claimants contend that between 2005-2012 Venture handled all advertising requirements in the UAE for GEMS Education, an international education company founded and head-quartered in Dubai but with offices in the UK, USA, Singapore, India, Saudi Arabia and elsewhere. However, Mr Ghossoub complains with some justification that there is no direct evidence or documentation to support this and that the Claimants have chosen not to put in a witness statement from Mr Chamat or even an attendance note of Mr Oxnard’s discussions with him. I do not feel in a position to reach conclusions about Venture’s relationship with GEMS Education on the material currently before the Court.45.2 The Claimants contend that Venture also had very large clients including three identified to them by Mr Chamat – namely, Canon, Ericsson and the Dubai Roads and Transport Authority. On the face of it, the three examples would seem to contradict Mr Ghossoub’s characterisation of the Venture business. However, as Mr Ghossoub pointed out in his evidence, the three examples were all of work undertaken in 2009 or later and not as at the date of alleged breach on 31 March 2008. It is fair to say that the evidence relied on by the Claimants at least in the first round of evidence did not seek to address the date of breach point and was inadequate in that important respect. The Claimants respond to the date point by saying that it is unreal to suggest that Venture was not competing as at the date of alleged breach in the same manner as they claim it did in 2009, since the date of alleged breach was only 9 months earlier. However, I do not consider that this is the type of point that can be resolved on a summary judgment application. The Claimants may well be right but whether they are right depends upon the ways in which and how fast the business was developing over this period, which I am not in a position to assess on this application.[46]Although the Claimants emphasised the benefits of the Court reaching a decision now in terms of narrowing the issues between the parties, shortening the length of any ultimate trial in this jurisdiction and providing assistance to the court in Hong Kong where Mr Ghossoub has launched an Unfair Prejudice Petition, I have reluctantly come to the view that the Court is not in a position to reach a conclusion on the competition point on the present application. Whether the Venture business was in competition with Menacom businesses at the relevant time is a matter that requires factual investigation of those businesses and of the differences and similarities between them. I am satisfied that the type of investigation that is needed can only happen at trial.[47]I now return to consider whether the Court is in a position on this application to determine that Mr Ghossoub retained an interest in Venture within clause 11.2 as at 31 March 2008 by virtue(a) of his majority shareholding held through Maltex until the transfer to Mr Chamat was completed in 2009 and(b) of his “nominal” involvement in Venture as account signatory.[48]Mr Béar QC submitted that these important issues of construction would be better decided at trial when the Court would be more familiar with the facts and in a better to position to assess the rival submissions. He suggested that Mr Ghossoub’s evidence about his “Godfather” type role might be significant and that this role might have fallen outside of the form of wording adopted by the parties in clause 11.2. However, Ms Smith QC rightly pointed out that, in so far as this was an attempt to rely on alleged factual matrix material, no factual matrix is pleaded by Mr Ghossoub, either in his original Defence or in his Amended Defence. Mr Béar QC said that, if needed, a further amendment could cure this but no further amendment has actually been formulated. However, I also have to take into account(a) that certain facts relevant to the issues of construction and concerning the circumstances of the December 2007 transfer and the precise nature and extent of the alleged “nominal and ministerial” involvement are disputed in a way that cannot be resolved on this application and(b) that, even if I were to decide the issues of construction now, it would not obviate the need for a trial on the Defaulting Shareholder issue because, as I have already indicated, the issue of competition will need to be resolved at trial.[49]Taking into account all the circumstances, I have decided that it would be inappropriate for me to decide the issues of construction on this application and that I should not do so. Rather, they ought properly to be decided by the trial judge in light of all of the evidence which will include the circumstances of the alleged agreement to transfer and the nature and extent of Mr Ghossoub’s involvement with Venture thereafter.[50]In my judgment, the same conclusions apply for similar reasons to the other three businesses relied on by the Claimants. Since my conclusions are the same for similar reasons, I will address each of the other three businesses in relatively short form. SpotOn Media & Events (“SpotOn”)[51]SpotOn was, according to Mr Ghossoub’s evidence, in the business of arranging award ceremonies in the digital media industry although the Claimants do not accept that its business was as narrow as this would suggest.[52]Mr Ghossoub accepts that he assisted his friend, Ms Mazboudi, to set up the company and to open a bank account upon which he was a signatory. He also accepts that he provided her with a personal loan for the purposes of this business. However, he denies ever having an economic interest in it or deriving any financial benefit from it.[53]The Claimants do not accept that Mr Ghossoub’s interest in SpotOn was limited to the matters he describes. They rely on various documents which I have considered. The first document is an email dated 22 January 2006 but this is more than two years before the alleged date of breach. The other documents are not sufficiently clear on their own to enable the Court on this application to determine whether Mr Ghossoub’s involvement went beyond the matters he accepts in his evidence. Further investigation is required and this can only take place at trial. I do not consider that I should attempt to determine whether the nature and extent of Mr Ghossoub’s interest in SpotOn fell within clause 11.2 prior to the nature and extent of that interest being determined at trial.[54]The need for a trial is also clear in relation to whether SpotOn was in competition with Menacom at the relevant time. The Claimants say that certain Menacom companies were able to arrange award ceremonies. However, Mr Ghossoub says in response that the capability to arrange something is not the same as being a free-standing event management company. He says that the necessary competition was lacking.[55]The Claimants rely in particular on one Menacom company called Asdaa Dubai which it says had a specialist team which dealt with events management. The Claimants rely for this point on the DD Report. In response, Mr Ghossoub relies on the fact that the DD Report itself refers to Asdaa Dubai as a PR company albeit one that had an events management team. Whether the existence of that team is or is not enough for SpotOn to have been in competition with Asdaa Dubai at the relevant time is a matter that requires a proper evaluation of the two businesses in light of all the evidence. The mere existence of the team within Asdaa Dubai does not prove that it provided the relevant services within the 12 month period that is required by clause 11.2. I do not consider that the dispute about competition between the businesses at the relevant time can be resolved summarily. The facts need to be investigated at trial. Spotlight Events (“Spotlight”)[56]Spotlight was, according to Mr Ghossoub’s evidence, a business that arranged music festivals and other events for LG and other clients. Documents relied on by the Claimants show that the other clients included Wella Inter-Cosmetic gmbh, part of the large German hair care group, and the Korean National Tourism Organisation.[57]Mr Ghossoub accepts that he provided assistance to Spotlight, in relation to setting up a bank account and authorising payments. He says that he did this as a local sponsor to help out Mr Khoukhaji, the founder of the business, and another friend of his, Mr Khalid bin Haider. However, Mr Ghossoub again denies having any economic interest in the business or deriving any benefit from it.[58]The Claimants do not accept that Mr Ghossoub’s interest in Spotlight was limited to the matters he describes. They point in particular to a letter dated 1 March 2009 signed by Mr Bin Haider which states that Mr Bin Haider had no objection to the trade name of Spot Light Events being registered with Mr Ghossoub as the sole owner. The Claimants say that this must be a reference to Spotlight. I accept that this letter calls for an explanation and that no specific explanation has been given. I am not, however, persuaded that I am in a position, on a summary judgment application, to conclude from this document, alone or together with the other documents relied on by the Claimants, that Mr Ghossoub had an interest in Spotlight at the relevant time that went beyond the matters he has admitted. Mr Ghossoub will need to address this letter at trial and the Claimants will have an opportunity to cross examine him about it. I do not consider that I should attempt to determine whether the nature and extent of Mr Ghossoub’s interest in Spotlight fell within clause 11.2 prior to the nature and extent of that interest being determined at trial.[59]So far as the alleged competition is concerned, the Claimants contend that Spotlight’s business was wider in 2008 than Mr Ghossoub suggests. They point to the current website of the company which refers to the business starting in December 2005 and then moving “in a very short period” to a “fully integrated Events Management company”. It would seem from the website and from the financial report for Spotlight as at 31 May 2007 that Spotlight had organised events by 2007 with the Tweenies and that it had organised a seminar for Wella in 2007-2008 and a launch party for Gastech. It would appear that these events were not limited to the provision of musical entertainment although the evidence does not reveal the proportion of Spotlight’s services (whether in respect of these particular events or more generally) that related to music and the proportion that went beyond music.[60]Mr Ghossoub says that neither he nor Mr Khoukhaji (to whom he says he has spoken but from whom Mr Ghossoub has not adduced any direct evidence for the purposes of this application) considers that Spotlight was ever in competition with any of the Menacom companies. I note that there is no evidence before the Court on this application that any of the Menacom group companies was in the business of arranging music events or providing musical entertainment at the relevant time, albeit that this might well have fallen within the events management capabilities of companies such as Asdaa Dubai referred to above (as well as within the capabilities of another Menacom company called Raee). The Claimants relied on the fact that Wunderman, a Menacom company, had continued to organise events for LG even as late as 2009. However, Mr Ghossoub says that Wunderman was not arranging the festivals for LG directly. Rather, Wunderman was invoicing LG for events which had actually been organised by Spotlight. Wunderman would then take a percentage cut before paying Spotlight the balance of the fee.[61]In my judgment, as the description of the issues I have set out above readily demonstrates, the issues that arise in relation to the alleged competition require further investigation at trial and cannot be summarily determined on this application. Meeting Minds FZ LLC (“Meeting Minds”)[62]According to the evidence, this company was founded by a friend of Mr Ghossoub, Mr Nassar. It ran conferences in the Middle East. It appears to have only been established in January 2008 and was therefore a relatively new business as at the date of alleged breach.[63]Mr Ghossoub accepts that he made a loan to Mr Nassar to help him set up the business and he also accepts that Juno Services Inc (“Juno”) (Mr Ghossoub’s Panamanian company) held shares in the business as security for the loan. The loan was not repaid until sometime in 2009. Prior to that, Mr Ghossoub says that he had a nominal involvement in the business but did not play a role in management decisions or derive any benefit from the business.[64]The Claimants rely on the fact that in his unamended Defence, Mr Ghossoub had denied ever having any interest in the business. Certainly, Mr Ghossoub has had to change his case significantly and now accepts that he did hold shares in Meeting Minds at the relevant time through Juno, albeit that Mr Ghossoub says in his evidence that, as far as he can recall, the documentation that he signed for Juno to take shares in Meeting Minds was never formally registered with the UAE authorities.[65]Mr Béar QC contends that the ownership of shares through Juno would not count as an interest within the meaning of clause 11.2 because the interest was only held by way of security for the loan and for no other purpose. He says that this makes the shares ancillary to the loan, the provision of which would not constitute an interest under clause 11.2 on the authority of William Cory & Son Ltd v Harrison (referred to above). Ms Smith QC disputes this. She says, in particular, that Mr Béar QC’s submission is wholly inconsistent with Longmore LJ’s observation in [14] of Egon Zehnder (also referred to above) that, had Mr Harrison actually held shares in the company, the result in William Cory would surely have been different. Ms Smith QC also points out that in the Amended Defence (para 59.4) Mr Ghossoub appears to accept that the shares held through Juno constitute an interest within the meaning of clause 11.2. However, the pleading in this paragraph of the Amended Defence is somewhat unclear and that is not the position that Mr Béar QC has taken on this application. She also points to documents dated 9 July 2008 which appear to show Mr Ghossoub wishing to transfer shares in Meeting Minds to another Panamanian company owned by him, Karatel Inc (“Karatel”). Mr Ghossoub says that these documents are in draft, inconsistent with other documents and that Karatel never held an interest in Meeting Minds.[66]In addition to the issues that arise relating to the alleged interest in Meeting Minds, there remains a factual dispute between the parties as to whether Meeting Minds was in competition with Menacom businesses as the relevant time.[67]So far as competition is concerned, Mr Ghossoub denies that Meeting Minds competed with Menacom. The Claimants once again respond by contending that Meeting Minds’ business was not as narrow as Mr Ghossoub suggests. According to Mr Ghossoub, Meeting Minds ran conferences in the Middle East and focused on the UAE Ministry of Health. The Claimants point to documents which show that by March 2008 it was holding itself out as supplying event marketing and management services to prospective clients such as Nokia and had also organised an event for Mars GCC, the Dubai based subsidiary of the international confectionary group.[68]The event for Mars was a pleasure cruise on 10 March 2008 which the Claimants say was very similar to events organised at the time by Menacom agencies. The example that they rely on is a ride and drive event organised by Y&R in Dubai for Ford in November 2008. However, since the Y&R event took place in November 2008, it did not fall within the 12 month period between March 2007 and March 2008. Mr Béar QC also pointed to differences between the Mars pleasure cruise (3 hour cruise at a modest cost) and the Ford ride and drive event (5 day event at a significantly greater cost).[69]The Claimants also rely on Mr Ghossoub’s own admission in his evidence that Menacom companies such as Asdaa Dubai and Raee provided events and conference organisation services. However, I do not consider that this admission provides a basis for summary judgment since I have no evidence about what conferences they provided or whether they were in the relevant 12 month period or whether they were of a competitive nature with the services provided by Meeting Minds.[70]For similar reasons to those expressed above, I do not consider that I can reach a view about the issues that arise in relation to competition on this application. They need to be investigated at trial.[71]I have therefore also concluded that it would be inappropriate for the Court to determine on this application the point of construction identified above about whether Mr Ghossoub had an interest in Meeting Minds within the meaning of clause 11.2 especially as the facts that are relevant to this point of construction remain in dispute notwithstanding Mr Ghossoub’s admission in relation to Juno. The facts that remain in dispute relate, in particular, to:(a) whether Juno’s share ownership was registered with the UAE authorities,(b) whether Mr Ghossoub/Juno’s purpose in taking shares was limited to obtaining security for the loan and(c) the position of Karatel. Other Points for Trial[72]Mr Ghossoub also resists summary judgment on the basis that this matter will proceed to trial in any event because there are a number of issues that will need to be resolved other than the Defaulting Shareholder issue. The Other Points for Trial include(a) whether the alleged breach or breaches of clause 11.2 were de minimis or material,(b) whether clause 5.6 is a penalty,(c) relief from forfeiture and(d) acquiescence and/or waiver. Mr Ghossoub’s case is that, since the matter will proceed to trial in any event, it would be better for all issues, including the Defaulting Shareholder issue, to be resolved at trial.[73]The Claimants contend that the existence of the Other Points for Trial does not support the need or desirability for a trial on the Defaulting Shareholder issue because(a) the Other Points for Trial are obviously bad points and the Court can reach a view about that now and/or(b) the Other Points for Trial do not significantly overlap with the Defaulting Shareholder issue such that there will be a considerable saving of time at trial if the Defaulting Shareholder issue is determined now.[74]In light of my conclusion about the need for a trial on the Defaulting Shareholder issue in any event, I decline to express any view about the strength or otherwise of the Other Points for Trial. It will be for the trial judge to determine all issues in light of all the documents and evidence that will then be available. Conclusion[75]Accordingly, I dismiss this application for summary judgment.