After a long-running litigation in the Isle of Man, DQ's client, Paracale Gold Limited ("PGL") succeeded in its claim against George Michael Osborne ("Mr Osborne"). For the avoidance of any doubt, Mr Osborne is not the United Kingdom's Chancellor of the Exchequer! In this breach of contract case, DQ succeeded in obtaining an order for restitutionary damages for PGL.

PGL is the Isle of Man incorporated holding company of two Philippines subsidiary companies (the "Subsidiaries") which operate a gold mine in the Philippines. Mr Osborne acted in various capacities, including director and chief financial officer, for the Subsidiaries and the previous holding company.

A term of the agreement reached between PGL and Mr Osborne following PGL's takeover of the Subsidiaries (the "Agreement") was that he confirmed he did not have any claims against the Subsidiaries or the PGL Group. In breach of that term, Mr Osborne issued proceedings against the Subsidiaries in the Philippines for compensation for loss of office. As a consequence, PGL was forced to issue proceedings against Mr Osborne in the Isle of Man in order to recover the amount of the initial payment made to him under the Agreement and its costs of defending the claim issued by him in the Philippines.

Mr Osborne issued a counterclaim in which he alleged that he was entitled to breach the Agreement as it had already been breached by PGL, and that PGL's breach had caused him losses which he sought to recover. The value of Mr Osborne's counterclaim was approximately £1 million.

DQ's application for Mr Osborne's counterclaim to be struck out was successful with His Honour Deemster Corlett describing the counterclaim as "indefensible".

Following the strike out, the only issue to be determined at the hearing of the matter was PGL's claim against Mr Osborne for recovery of its losses caused by his breach of the Agreement. Following a two day hearing, His Honour Deemster Corlett found in favour of PGL and made an order for damages against Mr Osborne.

Restitutionary Damages

The usual measure of damages in a breach of contract case is to put the parties into the position they would have been in had such breach not occurred, which would have enabled Mr Osborne to retain the initial payment made to him under the Agreement. However, His Honour Deemster Corlett agreed with DQ's submission that doing so would result in Mr Osborne being unjustly enriched, and so made an order for restitutionary damages, in order to put PGL into the position it would have been in had the Agreement never been entered into. Accordingly, PGL was awarded the full amount of the initial payment made to Mr Osborne pursuant to the Agreement and its costs in defending the claim brought by him in the Philippines.

DQ's Expertise

DQ is a leading full service law firm in the Isle of Man advising on Isle of Man and BVI law. DQ's specialist dispute resolution lawyers have considerable experience in all aspects of commercial litigation and are recommended as leading lawyers by Chambers & Partners and Legal 500. For further information on all dispute resolution issues please contact Giles Hill or Walter Wannenburgh

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