Leofelis SA & Anor v Lonsdale Sports Ltd & Ors

Where a repayment order requires payment of a foreign-currency sum or its sterling equivalent at the time of payment, the equivalent is calculated using the exchange rate applicable at that time. Conversion at an earlier date does not satisfy the order if it produces a different sterling amount. A solicitor holding money under an earlier order may be joined to a consequential application where directly affected by compliance issues. Mere payment into a sterling client account does not establish agreement to the conversion. A disputed interest calculation may be referred to a Master under the Civil Procedure Rules 1998.

The application followed appeals from orders made by Mr Justice Evans-Lombe on 19 March and 8 May 2007. The Court of Appeal’s order of 1 July 2008 required repayment of £2.5 million and €1,662,500, or the sterling equivalent at the time of payment, with interest.

The euro sum had been converted into sterling when paid into the client account of Dorsey & Whitney (Europe) LLP, which later repaid the appellants using the earlier conversion amount. The appellants sought declarations and payment of the balance. The central issues were the proper construction of the repayment order, whether Dorseys should be joined, whether the appellants had agreed to the conversion, and how interest should be calculated.

The application was granted in part. The court made declarations, joined Dorsey & Whitney (Europe) LLP, referred the disputed interest issue to a Master, and reserved costs.

1. The repayment order required payment of £2,500,000 and €1,662,500, or the sterling equivalent calculated at the time of payment, together with interest. The correct sterling equivalent of the euro sum was declared to be £1,319,444.44. Payment of the lower amount produced by converting the euros when they entered Dorseys’ sterling client account did not discharge the obligation.
2. Although the repayment obligation was expressed against the respondents, the money was held by Dorseys under the earlier order, which contemplated a further order. Dorseys were therefore properly joined to the application and were also bound, by the combined effect of the orders, to make the specified payments.
3. Dorseys’ contention that the appellants had agreed to the conversion was unsupported. Agreement could have affected the appellants’ entitlement to complain, but payment into a sterling account did not show that the appellants had been told of, or appreciated, the conversion. No directions for investigation of that issue were justified.
4. The parties had not agreed the interest which would have accrued if the euro sum had remained deposited in euros. That issue was referred under rule 52.10(2)(b) of the Civil Procedure Rules 1998 to a Master of the Chancery Division for determination and report. The parties were directed to seek procedural directions unless the amount was agreed.
5. Any consequential claims between the respondents and Dorseys for contribution or indemnity were to be brought in separate proceedings, partly to avoid privilege and disclosure difficulties. The final payment order and costs were reserved.

1. Court of Appeal (Civil Division), present application — The court construed and gave effect to its earlier repayment order, joined Dorsey & Whitney (Europe) LLP, and referred the interest issue to a Master.
2. Court of Appeal (Civil Division) — On 1 July 2008, following appeals from the orders of Mr Justice Evans-Lombe, the court made the repayment order referred to in this judgment, identified in the text as [2008] EWHC Civ 640.
3. High Court, Chancery Division — Mr Justice Evans-Lombe made orders dated 19 March and 8 May 2007 under which the relevant sums were paid into the claimants’ solicitors’ client account.