SPL Private Finance (PF1) IC Ltd & Ors v Arch Financial Products LLP & Ors
2014
COMMERCIAL COURT
United Kingdom
CORAM
- MR JUSTICE WALKER
Areas of Law
- Corporate Law
- Contract Law
- Civil Procedure
- Evidence Law
2014
COMMERCIAL COURT
United Kingdom
CORAM
AI Generated Summary
Arch Financial Products LLP (Arch FP) managed the Arch-Cru funds using an incorporated cell company (ICC) in Guernsey. Claims were brought against Arch FP by 18 cells alleging that investment decisions were driven by Arch FP’s financial interests, breaches of fiduciary duties, and negligence. Additionally, claims were made against Mr. Robin Farrell, CEO of Arch FP, for dishonest assistance and inducing breaches of contract. The High Court found Arch FP's actions were driven by financial self-interest and resulted in substantial financial losses for the cells. The court held that Arch FP breached its fiduciary duties and failed to exercise reasonable skill and care. Mr. Farrell was found to have dishonestly assisted in the breaches. The claimants were entitled to equitable compensation and damages for the financial losses incurred.
Judgment
Mr Justice Walker:
A. Introduction 1 A1. The claims and the outcome 1 A2. Companies, partnerships and individuals 8 A2.1 Descriptions of companies, partnerships and individuals 8 A2.2 Arch FP, Arch UK, AIGHL, Mr Farrell and Mr Addison 9 A2.3 Mr King, Mr Jeffs, Mr Derks, Mr Smith and Mr Ruparell 13 A2.4 The OEICs, the UK funds and sub-funds, and Capita FML 14 A2.5 The ICC, the cells, AT1, Bordeaux, Mr Radford and Mr Meader 19 A2.6 Carey Olsen, Moore Stephens and Fortis 23 A2.7 Club Easy, Mr Hayes and Storeys 24 A2.8 FCL, Mr Barkman, Mr Montague, FHL and “Foundations” 28 A2.9 FPP, Mr Blythe and Blythe Financial 30 A2.10 PKF and Cobbetts 31 A2.11 Mr Scott, Mr Davey and Spearpoint 33 A3. Lonscale: overview of events 34 A4. The FSA investigation 60 A5. The issues at trial 62 B. The trial 72 B1. The trial: introductory 72 B2. Factual evidence 74 B2.1 Factual evidence: general 74 B2.2 Factual evidence of Mr Scott 76 B2.3 Mr Davey 80 B2.4 Mr Farrell 84 B2.5 Mr Addison 87 B2.6 Mr Jeffs 89 B2.7 Hearsay evidence: Mr Radford and Mr Meader 91 B2.8 Hearsay evidence of Mr King 92 B3. Expert evidence 93 B3.1 Expert evidence: general 93 B3.2 Expert evidence of Mr Walton 95 B3.3 Expert evidence of Mr Rees 97 B4. The defendants’ general observations about the trial 100 B5. Inequality of arms 109 C. Aims and events in 2007 111 C1. Aims and events in 2007: general 111 C2. Aims and events prior to 18 August 2007 112 C3. Aims and events in the remainder of 2007 128 C4. Disclosure to, and consent by, the cells 140 C5. Processes involved in the acquisition 151 C6. The defendants’ evidence as to events in 2007 157 D. Duties and entitlements 164 D1. Duties and entitlements: general 164 D2. Mandate: powers and duties 165 D3. Management powers and duties 171 D4. Duties of loyalty 172 D5. Disclosure as an answer to breaches of duties of loyalty 182 D5.1 Disclosure: general 182 D5.2 Oral disclosure to Mr Radford and Mr Meader 184 D5.3 The alleged Base Prospectus 186 D5.4 Disclosure in other ways 199 E. Failures of care in October 2007 200 E1. Failures of care in October 2007: general 200 E2. Arch FP’s approach to Storeys’ valuations 204 E3. PKF’s identified need for a capital injection 217 E4. Risk/reward analysis in October 2007 226 E5. Conclusion on reasonable care in October 2007 233 F. Failures of care after October 2007 234 G. Breaches of fiduciary duty 243 G1. Breaches of fiduciary duty: general 243 G2. Advice on fair management of conflicts 246 G3. Alleged fair managem