The Channel Islands Co-op will have to pay its former chief executive £600,000 of his £3.5 million compensation payout while pursuing an appeal against the judgment.
Last year, the Royal Court awarded Colin MacLeod a total of £3,515,407 – a combination of the past and future earnings he lost, as well as damages – after finding the Co-op directors had “acted in bad faith” and caused him psychological injury.
Payment of damages had been frozen pending the retailer’s appeal but, in a Royal Court judgment published this morning, Commissioner Matthew Thompson ordered the Co-op to release £600,000 of the compensation payout within 14 days.
He found that Mr MacLeod needed funds to pay mounting legal debts, repay loans from his elderly parents and continue fighting the case through the appeal courts.
Mr MacLeod had originally sought £740,000, including money to clear legal fees, repay family loans and cover future appeal costs.
The Co-op opposed the application, arguing there was a risk it would not recover the money if it later succeeded on appeal.
Lawyers for the retailer questioned the extent of Mr MacLeod’s assets and liabilities and criticised the lack of formal documentation surrounding loans from his parents.
The court heard that Mr MacLeod owns two Jersey properties, including his current home and another occupied by his former partner and children.
In evidence, Mr MacLeod said he had limited cash savings and owed around £240,000 in legal fees, while loans from his father used to support the litigation and living expenses totalled £300,000.
The commissioner accepted that Mr MacLeod’s financial circumstances were genuine and rejected suggestions that the court had previously been misled.
“Ultimately, the affidavit of Mr MacLeod and his father were not challenged and no evidence was filed in opposition,” the judgment stated.
The court also rejected the Co-op’s argument that Mr MacLeod had to prove his situation had changed before the payment freeze could be altered, pointing out that the original ruling had already allowed him to come back to court and ask for changes if needed.
Commissioner Thompson said the key issue was balancing fairness to both sides while the appeal continues.
He concluded that Mr MacLeod’s Jersey home provided sufficient protection because its value far exceeded the amount being released and Mr MacLeod had formally undertaken not to sell or mortgage it before the appeals are resolved.
The judge also noted that the litigation could continue for years if the dispute ultimately reached the Privy Council in London.
In the ruling, the Commissioner said there “must be good reason to deprive a successful plaintiff of the right to enforce his judgment”.
Commissioner Thompson said the £600,000 payment represented “an appropriate balancing exercise” because it amounted to only around one-third of the equity in Mr MacLeod’s home.
He added: “If the appeal was successful, Mr MacLeod would be left in exactly the same position as he is presently, namely owing around £600,000 to his legal adviser and to his parents.
“The only difference by granting the variation is that that sum would now be owed to the Co-op, but the financial situation that Mr MacLeod would face in either scenario is the same and would require a sale of his home.”
However, requests to allow repayment of interest allegedly owed to Mr MacLeod’s parents on the family loans were refused.
The court also declined to order regular quarterly payments while the appeal process continues.
The wider appeal against the original damages award is still pending.
