Leofelis SA & Anor v Lonsdale Sports Ltd & Ors

Where an appellate order requires payment in a foreign currency, compliance requires payment in that currency or its sterling equivalent calculated at the time of payment, together with the interest properly accruing on the ordered sum. A solicitor holding money under an earlier order may be joined to a consequential application where directly affected by the order and the dispute over compliance. If the interest due cannot be agreed, the issue may be referred to a Master for inquiry and report. Related contribution or indemnity claims should generally be pursued separately where privilege would otherwise create unequal disclosure.

Following the Court of Appeal’s judgment and order dated 1 July 2008 on appeals from orders made by Mr Justice Evans-Lombe in the Chancery Division, the appellants sought consequential declarations and payment. A euro sum paid into the claimants’ solicitors’ sterling client account had been converted and repaid using an earlier exchange rate. The solicitors, Dorsey & Whitney (Europe) LLP, were joined to resolve compliance with the appellate order. The central issues were the proper construction of the repayment order, the effect of the conversion on principal and interest, and the procedure for resolving disputed interest. The earlier appellate judgment was cited as [2008] EWHC Civ 640.

Lord Justice Lloyd delivered the judgment of the court. Consequential orders were made on the appellants’ application.

1. Joinder. Dorsey & Whitney (Europe) LLP was properly joined because it held the relevant sums under the earlier order and was directly affected by the Court of Appeal’s order and the dispute about compliance.
2. Construction of the repayment order. On the true construction of paragraph 11(2) of the Court of Appeal’s order dated 1 July 2008, the respondents were required to pay £2,500,000 and €1,662,500, or the sterling equivalent calculated at the time of payment, together with interest accrued on those sums. The relevant sterling equivalent was declared to be £1,319,444.44.
3. Effect of the conversion. The euro sum had been converted into sterling when paid into Dorseys’ client account and held in sterling thereafter. That did not satisfy the order. An adjustment was required so that the appellants received the correct principal and only the interest that would have accrued on a euro deposit of €1,662,500. The evidence did not establish that the appellants had agreed to the conversion merely because all sums were paid into the same sterling account.
4. Outstanding interest. The disputed calculation of interest was referred under rule 52.10(2)(b) of the Civil Procedure Rules 1998 to a Master of the Chancery Division for inquiry and report. The appellants were directed to seek directions from the Master unless the amount was agreed.
5. Separate claims and costs. Potential contribution or indemnity claims between the respondents and Dorseys were not entertained in this application and were to be brought separately. Costs were reserved, and all parties were given liberty to apply.

• Court of Appeal (Civil Division): On the consequential application, the court joined Dorsey & Whitney (Europe) LLP, construed the earlier repayment order, made declarations, and referred the disputed interest calculation to a Master.
• High Court of Justice, Chancery Division: Mr Justice Evans-Lombe had made orders dated 19 March and 8 May 2007. Appeals from those orders led to the Court of Appeal’s earlier judgment and order dated 1 July 2008, cited as [2008] EWHC Civ 640.