Philip Gamett v Paul Hughes & Anor

Facts

Mr Philip Gamett and Mr Paul Hughes have known each other since childhood and began a wholesale t-shirt business, Hardwear Inc, together in about 1994. Continental Clothing Company Limited was incorporated in July 1998 as its successor, and by 2001 the two men were equal shareholders and directors. In March 2003 Continental Clothing Company GmbH was incorporated in Germany and run by Mr Hughes; in 2005 Mr Gamett incorporated a US company which he owned outright. Mr Gamett contended that an oral agreement reached in 2002 provided that the German company would be a subsidiary of the Company, would account to it for all profits and would buy stock from it at arm's length prices. Mr Hughes maintained that the agreement was that he would keep profits from German sales, with non-German profits split equally, and pointed to payments totalling some £2.8m made to Mr Gamett between 2011 and 2019, to solicitors' correspondence sent on Mr Gamett's behalf in 2011 and to the Company's accounts. After the German company ceased operating in 2024, Mr Gamett sought permission under section 261 of the Companies Act 2006 to continue a derivative claim against Mr Hughes for breach of duty. Adam Johnson J had granted stage one permission on the papers in November 2025; the second-stage hearing came before the Deputy Judge.