The long-running saga in McKillen v Misland (Cyprus) Investments Ltd seems to be nearing its end. I have already discussed the stage of the case which concerned open justice, and the first instance judgment of Richards J on the substantive issue (see  EWHC 2343 (Ch)). The aim of this post is to note both the final outcome of the substantive action and the ultimate resolution of the dispute in London (though an Irish offshoot may still be ongoing).
The plaintiff, the formerly reclusive but now well known Irish property developer, Mr Paddy McKillen, owned 36.2% of the shares in Coroin, which owned and managed three leading hotels in London – Claridge’s, the Connaught (pictured) and the Berkeley. Derek Quinlan owned 35.4% of the shares. In January 2011, a company associated with Sir David and Sir Frederick Barclay bought Misland (Cyprus) Investments Limited, (Misland), which then owned 24.7% and ultimately owned 28.36% of the shares. During the remainder of 2011, the Barclays and associated companies sought to take control of Coroin. McKillen alleged that the steps they took amounted to a breach of pre-emption in provisions in a shareholders’ agreement which required shares to be offered to other shareholders before being sold elsewhere, and that the pre-emption provisions were also triggered by charges over Mr Quinlan’s shares to secure Mr Quinlan’s bank borrowings becoming enforceable. He also alleged that the steps taken by the Barclays in 2011 (including the purchase of Quinlan’s loans from Nama, giving them effective control over his shares) amounted to a conspiracy to cause loss by unlawful means and to breaches of contractual duties of good faith. He further alleged that three directors appointed by the Barclays were in breach of their duties to the company.
At first instance ( EWHC 2343 (Ch) (10 August 2012)) Richards J dismissed McKillen’s claims. He held that no agreements were made with Mr Quinlan which triggered or breached the pre-emption provisions and that the security over Mr Quinlan’s shares had not become enforceable. He also held that there were no breaches of the duties of good faith in the shareholders’ agreement, and that the directors appointed by the Barclays did not breach their duties as directors of the Company, save in one respect which caused no loss to the company or prejudice to Mr McKillen as a shareholder.
Richards J had already dismissed two preliminary issues in the proceedings (see  EWHC 3466 (Ch) (21 December 2011)) and McKillen’s appeals against those decisions were dismissed (see  EWCA Civ 179 (24 February 2012) and  EWCA Civ 864 (27 June 2012)). His appeal against this decision suffered the same fate (see  EWCA Civ 781 (03 July 2013)). Arden LJ held that there was “no act or omission of Coroin” of which Mr McKillen could complain:
 … The practical effect of the arrangements between Mr Quinlan and the Barclay interests did not breach the pre-emption provisions in clause 6 of the shareholders’ agreement.
The Arrangements did not involve the transfer of a proprietary interest in Mr Quinlan’s shares contrary to clause 6.17 of the shareholders’ agreement.
The Arrangements did not result in a breach of the good faith clause in clause 8.5 of the shareholders’ agreement.
The 2004 charge did not “become [..] enforceable” for the purposes of clause 6.6 of the shareholders’ agreement because BOSI did not make the declaration of the immediate enforceability required by the conditions forming part of the 2004 charge.
The 2005 charge became enforceable at the latest on 9 November 2009. However, the one month period within which the directors had power under clause 6.6 to deem a transfer notice to have been given in respect of Mr Quinlan’s shares has expired without their exercising that power. They did not know that the 2005 charge had become enforceable and Mr McKillen cannot therefore complain about the failure to exercise the power.
There is no implied term which has the effect of extending the one month period in clause 6.6. Clause 6.17 in any event prevents any disposal of an interest in shares contrary to clause 6. A member of Coroin may apply to the court for an order rectifying the register of members to restore the name of the previous holder if a share transfer in breach of clause 6 is registered in that register.
In any event, the directors have not evinced an out and out refusal of Mr McKillen’s request to consider whether that power should be exercised. Even if they had so refused, Mr McKillen has power under the articles of Coroin to convene a board meeting himself.
Moore-Bick and Rimer LJJ largely agreed. Leave to appeal against the decision in one of the preliminary issues and against this decision was refused (see UKSC 2012/0176 (27 Nov 2012) (pdf) and UKSC 2013/0174 (11 Nov 2013) (pdf)). The Barclays then sought to compel McKillen to sell his shares in Coroin, and HHJ Behrens sitting as a Judge of the High Court held that the case could proceed in London (see  EWHC 3859 (Ch) (25 November 2014)).
It now seems that this long and bitter dispute between McKillen and the Barclays is coming to an end, at least in the English courts. Constellation Hotels, which is owned by Qatar Holding, part of the sovereign wealth fund backed by the Qatari royal family, has bought the Barclay, Quinlan and McKillen stakes in the hotels, and has announced that McKillen will continue to lead, direct and develop the assets. It is probably a bittersweet outcome for him. In an interview in 2014, he said that the hotels are “jewels, to be cherished … I love those buildings, and I’m not letting them go”.
However, although these deals mean that McKillen and the Barclays will drop all of their actions pending in London relating to the ownership of the hotels, there is no mention of McKillen withdrawing a claim he is pursuing in the Irish courts – in January, he succeeded in joining the Barclays to a High Court case that he is taking against the National Asset Management Agency (Nama), alleging that Nama leaked private financial information about him to the Barclay brothers during the London proceedings. It seems that there may yet be more legal fall-out from the dispute.