Dorset Limited v. Panagiotis Triantafyllidis – High Court of Justice – [2024] EWHC 1583 (Ch) – Case Summary

Relevant for:

Trust law practitioners, corporate lawyers, tax practitioners

This case concerned an application for summary judgment by Dorset Limited, an investment company, against Panagiotis Triantafyllidis, regarding the transfer of shares held in trust and the associated costs and tax liabilities.

TLDR:

• Dorset Limited sought a mandatory injunction for the transfer of shares held by the defendant.
• The defendant was entitled to an indemnity for costs and potential Swiss gift tax liabilities.
• The court ruled in favor of the defendant regarding costs and potential tax liabilities.
• The claimant was ordered to pay the defendant's costs of the application.

The claimant, Dorset Limited, is an investment company incorporated in the Marshall Islands, while the defendant, Panagiotis Triantafyllidis, is a private individual. The dispute arose over 293,800 shares in Trax Limited, valued at approximately US $24 million, which the defendant held on trust for the claimant. The trust was established through an agreement in December 2014, where the defendant agreed to hold the shares on behalf of the claimant after receiving US $2.6 million.

The defendant contended that he held the shares at the request of Ms. Eugenie Coumantaros, a beneficiary of the trusts owning the claimant. The claimant sought a mandatory injunction requiring the defendant to transfer the shares and equitable compensation for breach of trust and fiduciary duty. The defendant argued that he was entitled to an indemnity for all costs and potential Swiss tax liabilities arising from holding and transferring the shares.

The court considered whether the claimant's proposed payment was sufficient to meet the defendant's indemnity for costs and potential tax liabilities. The claimant's offer of £200,000 for legal costs and CHF 50,000 for Swiss taxes was deemed insufficient. The court ruled that the defendant was entitled to protection for his future costs and potential tax liabilities, rejecting the claimant's submission for immediate transfer of the shares without adequate indemnity.

The court also addressed the issue of potential Swiss gift tax. The defendant's lawyer advised that there was a small risk of gift tax being levied on the transfer of the shares. The Swiss tax authorities later confirmed that gift tax would not be payable, but the court noted that the risk was real at the time of the application. The court concluded that the claimant acted unreasonably by not providing a personal guarantee for the potential tax liability.

In conclusion, the court ordered the claimant to pay the defendant's costs of the application, recognizing the defendant as the successful party on the issues of future costs and potential tax liabilities.

Legal representatives: Matthew Hardwick KC (instructed by Squire Patton Boggs) LLP) for the Claimant, Justin Higgo KC (instructed by Wallace Llp LLP) for the Defendant

Judicial Panel: Master Clark

Case Citation Reference: [2024] EWHC 1583 (Ch)