F & C Alternative Investments (Holdings) Ltd v Barthelemy and another (No 3)

JurisdictionEngland & Wales
CourtChancery Division
Judgment Date28 October 2011
Neutral Citation[2011] EWHC 1731 (Ch),[2011] EWHC 2807 (Ch)
Docket NumberCase No: HC09C00709

[2011] EWHC 2807 (Ch)



Royal Courts of Justice

Strand, London, WC2A 2LL








The Honourable Mr Justice Sales

Case No: HC09C00709

No. 15000 of 2010

No. 3555 of 2010

F&C Alternative Investments (Holdings) Limited
Claimant/Part 20 Defendant
(1) Francois Barthelemy
(2) Anthony Culligan
Defendants/Part 20 Claimants

In the Matter of F&C Partners LLP

In the Matter of the Companies Act 1985

In the Matter of the Limited Liability Partnerships Act 2000

(1) Francois Barthelemy
(2) Anthony Culligan
(1) F&C Alternative Investments (Holdings) Limited
(2) F&C Partners LLP
(3) F&C Asset Management plc

In the Matter of F&C Partners LLP

In the Matter of the Companies Act 2006

In the Matter of the Limited Liability Partnerships Act 2000

In the Matter of the Limited Liability Partnerships

(Application of Companies Act 2006) Regulations 2009

F&C Investments (Holdings)
(1) Francois Barthelemy
(2) Anthony Culligan
(3) F&C Partners LLP

Miss Catherine Newman QC, Mr Andrew Ayres & Mr Sam O'Leary (instructed by Norton Rose) for the Claimant

Mr Andrew Thompson (instructed by Jeffrey Green Russell) for the Defendants

Hearing dates: 11/10/11–12/10/11

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.


This is the ruling on costs and other matters following the judgment on liability handed down on 14 July 2011: [2011] EWHC 1731 (Ch) ("the judgment"). In this ruling, I use the same terms as are used in the judgment.


The parties have decided not to appeal. I made an order dated 4 October 2011 dealing with various matters, the main part of which provided for payment of the price to each of the Defendants for the purchase of their respective interests in the LLP pursuant to the First Put Option Notices served on 25 February 2009, which I held in the judgment to be valid notices. The parties were agreed as to the amount of the price payable, namely £3,914,359.20 to each Defendant. Those sums were paid to the Defendants on 7 October 2011.


The issues which I have to determine at this stage are (i) what costs orders should be made; (ii) what interest should be paid in relation to the principal sums payable to the Defendants under the First Put Option Notices; and (iii) what interest should be paid to the Defendants in respect of payments they have had to make to meet their legal expenses in the course of the proceedings. I address those issues in turn below.

Costs orders


The question of the costs orders to be made in this case is no small matter, given the very high cost to both sides of contesting bitterly fought litigation, including through a trial lasting some 95 days. In this ruling, for convenience, I refer to proposals for costs orders to be made against F&C, but it should be noted that if costs orders are to be made against F&C entities the parties invited me to adjourn consideration of whether orders should be made against F&C plc while discussions continued regarding possible assurances given by F&C plc regarding payment of costs by any other F&C entity.


In devising suitable costs orders which meet the justice and merits of a particular case in exercise of its discretion under CPR Part 44 there is considerable value in attempting to keep things as simple as is reasonably possible, in order to minimise the detail and complexity (and hence the time and cost) involved both in arguing about what costs orders should be made and, once made, of arguing about how they should be implemented. In this case, in my judgment, it is not appropriate to engage in a finely detailed analysis of the issues and sub-issues on which parties may have succeeded or failed. That is particularly so since, by reason of the broad and relatively indeterminate legal standards provided by the obligation of utmost good faith in clause 13.6 of the Agreement and the concept of unfair prejudice in section 994 of the Companies Act 2006, there was a plethora of issues and sub-issues raised by both sides which had to be gone into in the course of arriving at an overall judgment of who was more in the wrong and who more in the right and so deserving of relief from the court. A fairly broad brush approach is more likely to meet the overall justice of the case while keeping the cost of arriving at a fair result within proportionate and reasonable limits. In adopting this approach I am proceeding in line with the guidance in a range of authorities which caution against overly finely detailed analysis when deciding questions regarding costs orders: see e.g. Re Southern Counties Fresh Foods Ltd [2011] EWHC 1370 (Ch).


In doing so, I reject a substantial part of the submissions made by Miss Newman QC for F&C, which I consider involved an excessively finely detailed sub-division of issues and sub-issues in the proceedings, parcelling up the case into a list of some 34 issues and then suggesting that in relation to a significant number of them (24) F&C had won and the Defendants had lost, in order to propose that I make substantial costs orders in favour of F&C against the Defendants. F&C's list was highly tendentious in a number of respects. To take two, by way of illustration: (a) the list tended to separate out minor issues on which F&C had enjoyed a degree of success (e.g. "Alleged breach of contract in respect of Forex hedging", which featured hardly at all in the proceedings) and appeared to give them the same status as major issues (which could in theory have been broken down into a longer list of sub-issues) on which F&C had clearly lost (e.g. "Mr Mackay's investigation and report", which took up a great deal of time at the trial and constituted a major chapter both in submissions and the judgment); and (b) F&C claimed to have won on issues where it was strongly arguable that the Defendants had in fact won (e.g. on the item listed as "21 January 2009 meeting", which was the acrimonious meeting which finished with Mr Ribeiro withdrawing matters properly for the ManCom and referring them to a Members Meeting, thus subverting the governance structures within the LLP in a way which formed part of the serious breach of the Agreement which I found provided a ground for concluding that the First Put Option Notice was valid: see paras. [639]-[668] and [726]-[729] of the judgment).


To my mind, F&C's suggestion that there should be a more finely detailed approach to costs based on its list or a similar list exercise reinforced the wisdom of eschewing such an approach. The arguments required fully to debate the characterisation of the issues to be listed and then to debate who had won or lost on each issue would have been very prolonged indeed, and would have involved time and expense out of all proportion to what was required to produce a just outcome at the costs stage.


In another part of her submissions, Miss Newman took a different tack, so as to suggest that costs orders in favour of the Defendants should be limited to the narrowest of the issues required to resolve F&C's original claim for a declaration by which the Part 7 proceedings were commenced—essentially, whether Mr Ribeiro had or had not made a mistake in causing the non-payment of advance drawings to the Defendants by the LLP on 25 February 2009, which was the event which immediately led to them serving the First Put Option Notices. F&C's proposal here was that any element of a costs order in favour of the Defendants should be very modest because, it was suggested, such a narrow issue could have been resolved in a much shorter trial and it was unnecessary for the Defendants to have broadened the dispute beyond that in order to secure the relief which they did ultimately obtain from the court.


I reject that submission as well. In my view it would be utterly unrealistic, having regard to what was in issue between the parties and what was at stake in the litigation, to adopt such a narrow approach.


The issue of the claim by F&C on 6 March 2009 (para. [767] of the judgment) has the hallmarks of being a tactical device intended to put pressure on the Defendants if they did not come to heel, by sucking them into expensive and difficult litigation against a large, well-funded financial group: cf paras. [705] and [774]-[775] of the judgment. The issue of the claim was not preceded by a letter before claim as it should have been, in an effort to clarify the issues between the parties and see if there might be some way forward which did not require resort to litigation. The declaration sought by F&C was bound to provoke the Defendants, as it did, into counterclaiming that the First Put Option Notice was validly served and pleading a range of alleged breaches of the Agreement by F&C in support of that contention. F&C had no intention of accepting that the First Put Option was validly served, so it was in practice inevitable that the litigation which F&C began would draw the Defendants into pleading all breaches of the Agreement which they properly could in support of their claim that the First Put Option Notice was valid.


As events developed, and the Second and Third Put Option Notices came to be served, the parties were bound to be drawn into arguing about their validity as well, and since F&C disputed their validity the Defendants were drawn into pleading every breach of the Agreement which they properly could in support of their claims in relation to those notices.


At the same time, since F&C throughout disputed the validity of the First Put Option Notices (and...

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