BL-2025-000377 - [2025] EWHC 2976 (Ch)

Fecha: 13-Nov-2025

Background

Background

CVL BVI was established as an investment vehicle for a project (“the Project”) in respect of a property at 18 Vine Street and 15-29 Eyre Street, Clerkenwell, London EC1R 5DZ (“the Property”), and involving a proposed comprehensive redevelopment thereof. For the purposes of the Project, the Property was owned by CLL BVI’s wholly-owned subsidiary, Clerkenwell Lifestyle (UK) Ltd (“CLL UK”), a company incorporated under the laws of England and Wales. It was CLL UK that was to carry out the development itself with funding provided, in a significant part, by CLL BVI using funds raised by the subscription of shares by Mr Dekel and others.

How the development by CLL UK was funded is set out in detail in paragraph 12 et seq of an affidavit made on 8 November 2025 by Mr Sean Gaskell (“Mr Gaskell”), a director of CLL UK and CLL BVI, on behalf of CLL BVI in proceedings brought by Mr Dekel in the BVI to which I will return. In summary, the position is that CLL BVI raised £21,077,660 from investors including Mr Dekel who acquired shares in CLL BVI. CLL BVI used £6,035,442 of the funds so raised to subscribe for 6,035,442 shares of £1 each in CLL UK. The balance of just over £15m was then lent by CLL BVI to CAF6 Luxembourg SA (“CAF6”) at a rate of interest of 7% per annum. CAF6 then used these monies, together with other monies borrowed from mezzanine lenders, to make a loan of £27.25m to CLL UK.

As Mr Gaskell then describes in paragraph 14 of his affidavit, CAF6 subsequently advanced further funds to CLL UK. Further, as set out in paragraph 15 et seq of Mr Gaskell’s affidavit, CLL UK received a significant number of additional loans directly from other lenders.

10.

By the Management Agreement, CLL BVI appointed GMG Real Estate to manage the Project, with the Management Agreement setting out CLL BVI’s requirements and GMG Real Estate’s responsibilities.

11.

The following provisions of the Management Agreement are of particular importance for present purposes, namely:

The definition of “Subsidiaries” in clause 2.1.25 included CLL UK.

ii)

Clause 4 thereof set out the obligations imposed on GMG Real Estate under the terms of the Management Agreement, including performing the Property Management services set out in Schedule 1 to the Management Agreement. By way of example of the obligations imposed by clause 4 of the Management Agreement, clause 4.1.2 provided that GMG Real Estate should perform the services that it was required to carry out diligently and with the care and skill reasonably to be expected of a suitably qualified and experienced manager undertaking similar duties in respect to properties similar in scale and character to the services for properties similar to the Property.

iii)

Clause 11.2 thereof provided that GMG Real Estate might not assign or transfer the Management Agreement or any of its rights or obligations under it without the express written prior consent of CLL BVI.

iv)

Clause 20 thereof provided as follows:

“20
Rights of Third Parties
20.1
The Property Manager agrees that pursuant to the Contracts (Rights of Third Parties) Act 1999:
20.1.1
The Subsidiaries and any Associated Entity shall be entitled to enforce for its benefit any of the provisions of this Agreement; and
20.1.2
any other party that has/will have an interest in and/or has acquired/will acquire an interest in and/or who has provided finance and/or refinance and/or will be providing finance and/or refinance in connection with the Property and/or any part or parts thereof comprising the Project or any part or parts thereof, the works comprising the Project and/or in each case any part or parts thereof shall be entitled to enforce for its benefit any of the provisions of this Agreement on issue to the Property Manager of a notice confirming the identity and interest of such third party.”

12.

So far as Mr Dekel’s involvement is concerned, he was, as I have already touched upon, one of the investors who subscribed for shares in CLL BVI. He contributed £4m in exchange for 4m “Participating Shares” in CLL BVI. This £4m formed part of the £21,077,660 raised from investors referred to in paragraph 8 above that was then applied as referred to above by CLL BVI.

13.

Prior to investing this £4m, Mr Dekel and the others to whom Participating Shares were allotted were provided, amongst other things, with a presentation prepared by GMG Real Estate, and an Investment Memorandum (“the Investment Memorandum”). Mr Dekel then entered into a Subscription Agreement on 24 November 2017 (“the Subscription Agreement”).

14.

The Investment Memorandum stated that its purpose was to:

“ … Provide information to identified private potential subscribers in order to assist such potential subscribers in the evaluation of the merits of their investment in the Company [i.e. in CLL BVI], which shall eventually use the aggregate Subscription Amount (as defined below) of up to GBP £27,250,000 … or such other amount (of a greater or lesser sum) as the director of the Company shall in its sole discretion determine for the purposes of the Objectives and inter-alia the purchase the Property and such other Property Projects as the director in its sole discretion may determine.”

15.

The Investment Memorandum referred, amongst other things, to the following:

“Distribution Policy
Unless otherwise used for working capital in connection with the Objectives, subject to applicable law and at the absolute discretion of the Director, any surplus of cash available for distribution will be distributed to the holders of Participating Shares.
…
Realisation Event
The first to occur of: (i) the sale of the Property or any part thereof; or (ii) any other form of realisation and/or repayment of the aggregate Subscription Amounts; or (iii) the failure of a Participating Shareholder to pay any sum called in respect of the Participating Shares that have been issued with any amount of capital outstanding.
Agreed Redemption of Shares
Upon the occurrence of a Realisation Event or at any time thereafter (“Valuation Day”) the Director shall have the option exercisable as its sole discretion for an agreed redemption of the Participating Shares on their respective holders (“Agreed Redemption”) against the payment to each holder of Participating Shares of its pro-rata share of the net assets value of the Company after deduction of all liabilities including debts, payable dividends and fees and payments to the Property Manager on the Valuation Day as shall be determined by the Property Manager. The Agreed Redemption shall be effected by issuance of a notice of an agreed redemption on the respective holder of the Participating Share specifying the net assets value on the Valuation Day and the respective pro-rata portion of the specific holder.
…
The Proposal
The Company will use substantially all of the proceeds, directly or indirectly through such other entities as may be determined by the Company in order to achieve the most efficient investment treatment for taxation and for the purpose of purchasing and funding the acquisition and development of the Property and completing the Objectives.
The Company will thereafter raise such further finance (by borrowing or otherwise) upon such terms as the Director of the Company shall in its sole discretion determine in order to complete the Objectives.
The Company may provide such security over the Property or other assets of the Company in order to secure such additional finance as may be required for the purposes of the Objectives. Additional finance may take prior security over the assets of the Company and its subsidiaries so that any investment or returns thereon may not be returned until such finance has been repaid.”

16.

As to the Subscription Agreement:

Recital (B) thereto recited that Mr Dekel wished to “subscribe for Participating Shares, of a par value of GB1.00 each, in consideration for payment of GBP 4 MILLION in the terms set out in the [Investment] Memorandum and subject to the provisions of the [Investment] Memorandum and the Incorporation Documents of the Company.”

ii)

By clause 1, Mr Dekel, in consideration of the issue of Participating Shares by CLL BVI to him, undertook, represented and warranted to CLL BVI as therein set out, including that:

“1.10
[he] understands that [his] capital contribution cannot be withdrawn from the Company except by way of redemption of the Participating Shares upon the occurrence of a Realization Event in accordance with the terms outlined in the [Investment] Memorandum, that [his] investment may be invested in assets that are illiquid, and that [he] has no right to demand distribution from the Company prior to the Company’s termination other than by redemption of Shares …”

17.

CLL BVI’s “Incorporation Documents” included its Memorandum and Articles of Association. So far as the latter are concerned, I note the following:

Clause 5.1 thereof provided that CLL BVI was

“… authorised to issue a maximum of 27,300,002 Shares of GBP1.00 par value each, comprising two classes of shares as follows:

(a)

2 Management Shares; and

(b)

27,300,000 Participating Shares.

Each class of Shares has the rights and privileges outlined in Clause 6 …”

ii)

Clause 6 thereof provided as follows, under the heading “Rights of Shares”:

6.1

Each Shareholder shall be entitled to one vote on any resolution of Shareholders irrespective of the number or class of shares held.

6.2

Each Management Share in the Company shall also confer upon the Shareholder the right to an equal share in the distribution of the surplus assets of the Company, but no participation rights to share with Participating Shares in any dividend paid by the Company.

6.3

Each Participating Share in the Company shall also confer upon the Shareholder:

(a)

the right to an equal share in any dividend paid by the Company; and

(b)

the right to an equal share in the distribution of the surplus assets of the Company.

6.4

The Company may redeem Participating Shares without the consent of the holder in accordance with the terms of the Information Memorandum and Subscription Agreement.

18.

Although Mr Dekel subscribed for 4m Participating Shares in CLL BVI, his shareholding was reduced in 2018 to 2,800,000 shares in circumstances that are somewhat controversial. A Business Plan Review 2024 prepared by RE Capital refers to an acquisition loan of £12m having been obtained shortly after acquisition, and to this assisting in “repaying the shareholders 30% of their investment (£6.3m), as well as reducing the mezzanine debt by c£2.9m.” In submissions, the Defendants referred to this as being a redemption of shares as anticipated by the Investment Memorandum, and as provided for by Clause 6.4 of CLL BVI’s Memorandum Articles of Association. On behalf of Mr Dekel, a rather different interpretation of events was suggested to which I shall return.

19.

By a Deed of Assignment of Contract and Subcontract dated 28 May 2021 between (1) GMG Real Estate and (2) GMG Real Estate Holdings Ltd (“GMG Holdings”), GMG Real Estate purported to assign “all its rights, title, interest and benefit in and to the [the Management Agreement] to” GMG Holdings with effect from the date of that deed, and GMG Holdings agreed “to perform all of [GMG Real Estate’s] obligations under the [Management Agreement] from” the date of the deed.

20.

By a further Deed of Assignment of Contract and Subcontract dated 28 May 2021, i.e. the same day, between (1) GMG Holdings and (2) RE Capital, GMG Holdings purported to assign “all its rights, title, interest and benefit in and to [the Management Agreement] to” RE Capital with effect from the date of that deed, and RE Capital agreed “to perform all of [GMG Holding’s] obligations under the [Management Agreement] from” the date of the deed.

21.

CLL BVI’s Register of Members shows that, as at the date of the Management Agreement, the two “Management Shares” in CLL BVI were vested in GMG Real Estate. The Register of Members further shows that on 28 May 2021, the two Management Shares were transferred to GMG Holdings and then, the same day, by GMG Holdings to RE Capital.

22.

There is an issue between the parties as to whether these latter events merely effected an assignment of the benefit of the Management Agreement to RE Capital, such that the obligations thereunder had simply been subcontracted to RE Capital without RE Capital being bound by any obligations to CLL BVI or to any other party entitled to enforce the Management Agreement, or whether, alternatively, these latter events effected a novation of the Management Agreement such that RE Capital became the relevant contracting party with CLL BVI under what would have been, technically, a new agreement upon the terms of the Management Agreement.

23.

The Deeds of Assignment of Contract and Subcontract took place after 31 December 2020, when GMG Real Estate was acquired out of the GMG group of companies by Mr Newman Leech (“Mr Leech”), one of the founders of the GMG group, and an asset manager called Skybound Capital. GMG Real Estate became a subsidiary of RE Capital (of which Mr Leech was CEO), and RE Capital, by these deeds, replaced GMG Real Estate as “Property Manager” for the purposes of the Management Agreement.