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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Pease v Henderson Administration Ltd [2019] EWCA Civ 158 (15 February 2019) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2019/158.html Cite as: [2019] EWCA Civ 158 |
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ON APPEAL FROM THE BUSINESS AND PROPERTY COURTS OF
ENGLAND AND WALES
BUSINESS LIST (ChD)
Mr Richard Spearman QC (sitting as a deputy judge of the High Court)
HC-2016-000142
Fetter Lane, London EC4A 1NL |
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B e f o r e :
LORD JUSTICE HENDERSON
and
MR JUSTICE NUGEE
____________________
RICHARD ![]() | Claimant/Respondent |
|
- and – |
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![]() ![]() |
Defendant/Appellant |
____________________
Richard Leiper QC and Zac Sammour (instructed by Michelmores LLP) for the Respondent
Hearing date: 5 February 2019
____________________
Crown Copyright ©
Mr Justice Nugee:
Introduction
The Contract
"3.6 European Special Situations Fund and New Star Hedge Funds
3.6.1 In circumstances where you have in 2009 while employed by the Company set up a European Special Situations Fund OEIC, and you subsequently resign from employment with the Company, you (or any entity which you set up or join) will, following the later of the date of termination of your employment and 1 February 2010, be permitted to replace the relevantHenderson
Group company as manager of (a) the European Special Situations Fund OEIC and also (irrespective of whether you have in 2009 while employed by the Company set up a European Special Situations Fund) (b) the New Star European Hedge Fund and (c) the New Star European Leveraged Hedge Fund (all three together, the Funds). For the avoidance of doubt, in circumstances where (i) you have while employed by the Company set up a 'mirror fund' to the European Special Situations Fund as a result of the fund raising exceeding the limits set or arising from a new source, or (ii) any of the Funds changes its name but in all other respects remains the same Fund, the provisions of this clause 3.6 shall continue to apply.
3.6.2 Where you (or any entity which you set up or join) replace anyHenderson
Group company as manager of the Funds in the circumstances set out in clause 3.6.1 above, you will procure payment to the Company (or other
Henderson
Group company nominated by the Company) of 50% of the Management Fees After Deductions generated by any such Fund in the 12 months following such replacement of the relevant
Henderson
Group company as manager (the First Replacement Year). Management Fees After Deductions means the total fees received in relation to the management of the Funds after deduction of any management fee rebates and/or commissions and also less an amount in respect of the costs associated with running the Funds, subject to a cap equal to the amount that would have been deducted by the Company in respect of costs under clause 3.7.1 below had a
Henderson
Group company remained as Manager of the Funds for the First Replacement Year. You will promptly on request disclose to
Henderson
details of the managements [sic] fee rebates and/or commissions deducted from such total fees."
Facts
"The [ESSF], currently managed by Richard [MrPease],
will be transferred by a scheme of arrangement from
Henderson
to a third-party authorised corporate director, subject to obtaining regulatory and client approval…
RichardPease
will remain an employee of
Henderson
until the transfer of the [ESSF] is given effect and throughout that period will continue to manage the [ESSF] during the transfer of the fund to Crux."
"a scheme of arrangement is the most appropriate means of transferring the management of the [ESSF] to Crux. Mr.Pease
will remain employed by
Henderson
and manage the [ESSF] until the scheme of arrangement is completed, and when the authorised corporate director of the fund changes from HIFL to [FP], and Crux is appointed manager of the fund, Mr
Pease's
employment with
Henderson
will terminate, and he will be employed by Crux."
It also attached the draft press release.
The Judgment below
"In my view, it is clear that HIFL was the "relevantHenderson
Group Company manager" for purposes of Clause 3.6.1. Accordingly, on the face of it, the entitlement conferred on Mr
Pease
by Clause 3.6.1 was to have HIFL replaced either by himself personally or by an entity that he set up or joined. As appears from the above synopsis, this could have been achieved by replacing HIFL as the ACD of the
Henderson
OEIC with a third party ACD, and then appointing Crux as the investment manager of the ESSF. It would have been necessary to follow that course, because there was no ACD (i.e. manager) of the ESSF alone, due to the fact that the ESSF had been set up under the umbrella of the
Henderson
OEIC and the
Henderson
OEIC contained an additional sub-fund (i.e. the GFF). It was therefore not possible to replace HIFL as the ACD of the ESSF alone. This was a product of the fact that
Henderson
chose to set up the ESSF as a sub-fund of the
Henderson
OEIC. It seems likely that the potential ramifications of the decision to structure matters in this way was not appreciated when the Contract was made, and indeed that Clause 3.6.1 would have been drafted differently if the parties had envisaged that no European Special Situations OEIC as such would be set up."
He then said (at [100]) that it was common ground that this course was not followed.
Summary of parties' arguments
Do cl 3.6.1 and 3.6.2 refer to the ESSF?
Effect of reading cl 3.6.1 as referring to the ESSF
Principles of construction
Did the ESSF transfer to the FP OEIC?
"100. As appears from the above synopsis, the ESSF was merged (or in Mr Bowers' words the ESSF was moved or transferred) through the mechanism of the Scheme of Arrangement into a new OEIC.
101. That process produced the end result that the ESSF moved to a new OEIC and, as the third party ACD of that new OEIC delegated management of the ESSF to Crux, that management was then carried out by an entity which MrPease
had set up or joined."
"In fact, as Mr Leiper submitted, the manager of theHenderson
OEIC has not changed: the
Henderson
OEIC remains in place, HIFL remains its ACD, its delegated investment manager remains HGIL, and the ESSF remains on the FCA's register."
Did cl 3.6.1 require Henderson
to permit Mr
Pease
to have a new ACD of the
Henderson
OEIC appointed?
Did Henderson
permit Mr
Pease
to replace the manager of the ESSF?
Conclusion
Lord Justice Henderson:
Sir Geoffrey Vos, Chancellor of the High Court