F&C Alternative Investments (Holdings) Ltd. v Barthelemy & Anor

This ruling refuses an application by the defendants (supported by F&C) to withhold a draft judgment from being handed down so that a conditional settlement could take effect. The court applied its discretion, weighing the private interests of the parties against several public interest considerations. Key legal principles considered include the proper use of the practice of providing draft judgments to parties (with reference to Prudential Assurance v McBains Cooper and Liverpool Roman Catholic Archdiocesan Trustees v Goldberg), the public interest in informing the Financial Services Authority about findings affecting regulated persons and entities, the public interest in vindicating the reputations of witnesses found to be honest, and the public interest in publishing judgments that develop the law (in particular on the Limited Liability Partnerships Act 2000 and section 994 of the Companies Act 2006, implication of contractual terms and fiduciary obligations). The judge concluded that these public interests, taken together, outweighed the parties' interest in suppressing the judgment and ordered the judgment to be handed down.

This matter arises from long and hard-fought litigation between F&C Alternative Investments (Holdings) Ltd ("Holdings") and two members/managers of F&C Partners LLP, Mr Barthelemy and Mr Culligan (the Defendants). The dispute concerned the operation of an LLP established under a December 2004 agreement, including the Defendants' contention that they validly exercised put options on three occasions and cross-claims and petitions under section 994 of the Companies Act 2006 alleging unfairly prejudicial conduct. The trial was lengthy, involved many witnesses and detailed factual findings.

The court had prepared and circulated a lengthy draft judgment to the parties for correction. After receipt of the draft judgment the parties reached a conditional settlement on the basis that the court would not hand down the final judgment in open court. The Defendants applied for the court to withhold hand-down of the judgment so that the settlement could take effect.

The issues for the court were whether, in the exercise of its discretion, the judge should refuse to hand down the judgment to enable the parties' conditional settlement to operate. The court summarised and balanced the relevant interests: (i) the parties' reasonable wish to settle and end protracted litigation, (ii) the public interest in the settled practice and limits on using draft judgments to facilitate settlement, and (iii) four specific public interest considerations that weighed heavily against suppression. Those four were (a) the need for the Financial Services Authority to have the full, final judgment when the judgment contains detailed findings about regulated persons and entities, (b) the particular fact that the LLP had notified the FSA of alleged wrongdoing by the Defendants and the court had now fully examined and resolved those issues, (c) the interest of third parties and witnesses whose reputations had been publicly attacked and who had been exonerated by the judgment, and (d) the public interest in publishing a judgment that settles and develops important points of law (notably on the Limited Liability Partnerships Act 2000, attribution under section 994 of the Companies Act 2006, implication of terms including Mackay v Dick type terms, and aspects of fiduciary obligations referenced to Bristol and West Building Society v Mothew).

Weighing these matters the judge concluded that the public interest factors, particularly when taken together, outweighed the private interest in suppressing the judgment. The court therefore dismissed the application and directed that the judgment be handed down. The judge observed also that the parties had knowingly taken a risk in agreeing a settlement condition dependent on the court's discretion and that there remained scope for settlement on quantum and costs even after hand down. The ruling concluded with a note that no application for permission to appeal was made and the judgment was subsequently handed down with a neutral citation [2011] EWHC 1731 (Ch).

The application by the defendants (supported by F&C) to withhold the draft judgment so that their conditional settlement could take effect is dismissed. The judge exercised his discretion after balancing the parties' private interests against public interest considerations and concluded that publication of the final judgment should proceed so that the Financial Services Authority and other interested third parties have the court's full findings, the reputations of exonerated witnesses are publicly vindicated, and important points of law (including on the Limited Liability Partnerships Act 2000 and section 994 Companies Act 2006) are authoritatively decided.