RECOVERY PARTNERS GP LIMITED AND ANOR v MR IRAKLI RUKHADZE AND OTHERS

RECOVERY PARTNERS GP LIMITED AND ANOR v MR IRAKLI RUKHADZE AND OTHERS

The defendants are liable to account for all profits and benefits derived from the appropriated Recovery Services business opportunity, subject to a 25% equitable allowance for their skill, effort, and risk. Delay and the claimant’s conduct do not reduce the account. The correct valuation of assets is determined asset-by-asset, with the DoT Annex figures providing a limited sense check. No further deduction is allowed for general overheads or unproven expenses. The only responsive investment within the account is excluded for lack of sufficient connection. The account is not limited by any alleged antecedent profit-sharing agreement.

Parties
Claimant: Recovery Partners GP Limited; Claimant: Revoker LLP; Defendant: Mr Irakli Rukhadze; Defendant: Mr Igor Alexeev; Defendant: Mr Benjamin Marson; Defendant: Hunnewell Partners (UK) LLP; Defendant: Hunnewell Partners (BVI) Limited; Defendant: Park Street (GP) Limited; Defendant: Park Street (BR) Limited; Defendant: Park Street (GS) Limited; Defendant: Park Street (L) Limited
Jurisdiction
England and Wales
Judgment Date
25 March 2022
Procedural Posture
Commercial Court Civil Claim (account of Profits for Breach of Fiduciary Duty) / Final Judgment After Phase 2 Liability/quantum Trial
Outcome
Defendants ordered to account for profits derived from the Recovery Services opportunity, subject to a 25% equitable allowance for skill, effort, and risk. Final quantum to be determined after further submissions on the valuation of Rustavi asset.
Legal Topics
Account of Profits, Breach of Fiduciary Duty, Remedies for Breach of Fiduciary Duty, Equitable Allowance, Delay and Laches, Valuation of Assets, Joint Venture Disputes
Equity Commercial Law Fiduciary Law Account of Profits Breach of Fiduciary Duty Remedies for Breach of Fiduciary Duty Equitable Allowance Delay and Laches +2 more

Case Brief

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Parties

Recovery Partners GP Limited

Claimant

Revoker LLP

Claimant

Mr Irakli Rukhadze

Defendant

Mr Igor Alexeev

Defendant

Mr Benjamin Marson

Defendant

Hunnewell Partners (UK) LLP

Defendant

Hunnewell Partners (BVI) Limited

Defendant

Park Street (GP) Limited

Defendant

Park Street (BR) Limited

Defendant

Park Street (GS) Limited

Defendant

Park Street (L) Limited

Defendant

Procedural Posture

Commercial Court Civil Claim (account of Profits for Breach of Fiduciary Duty) / Final Judgment After Phase 2 Liability/quantum Trial

Legal Issues

  1. 1 What is the proper scope and quantum of the account of profits remedy for breach of fiduciary duty in appropriating a business opportunity?
  2. 2 Are the defendants entitled to an equitable allowance for skill, effort, and risk?
  3. 3 Does delay or the claimant's conduct affect the remedy?

Ratio Decidendi

The defendants are liable to account for all profits and benefits derived from the appropriated Recovery Services business opportunity, subject to a 25% equitable allowance for their skill, effort, and risk. Delay and the claimant’s conduct do not reduce the account. The correct valuation of assets is determined asset-by-asset, with the DoT Annex figures providing a limited sense check. No further deduction is allowed for general overheads or unproven expenses. The only responsive investment within the account is excluded for lack of sufficient connection. The account is not limited by any alleged antecedent profit-sharing agreement.

Court Disposition

Defendants ordered to account for profits derived from the Recovery Services opportunity, subject to a 25% equitable allowance for skill, effort, and risk. Final quantum to be determined after further submissions on the valuation of Rustavi asset.

Orders

  • Defendants to pay to claimants the sum of US$142.536 million less a 25% equitable allowance, plus the value of Rustavi (to be determined), less responsive expenses as found.
  • Further submissions and/or evidence to be provided on the valuation of Rustavi Steel LLC.