Greck v. Henderson Asia Pacific Equity Partners & Ors [2008] ScotCS CSOH_2 (08 January 2008)

Greck v. Henderson Asia Pacific Equity Partners & Ors [2008] ScotCS CSOH_2 (08 January 2008)

The court held that, on the proper construction of the Limited Partnership Agreement, Archer Capital Pty Limited fell within the contractual definition of a competitor, given the broad language covering businesses involved in unquoted equity investments. The pursuer joined Archer within six months of leaving Henderson, and thus, under the agreement, was a Bad Leaver. The General Partner's discretion to treat a Bad Leaver as a Good Leaver was not exercised in the pursuer's favour, and there was no evidence of improper exercise of that discretion. Accordingly, the pursuer forfeited his entitlement to carried interest.

Citation
[2008] ScotCS CSOH_2
Parties
Pursuer: Scott Greck; First Defender: Henderson Asia Pacific Equity Partners (FP) LP; Second Defender: Henderson Equity Partners (GP) Limited; Third Defender: Henderson Equity Partners Limited; Fourth Defender: Roger Greville
Jurisdiction
Scotland
Judgment Date
08 January 2008
Procedural Posture
Declarator / First Instance Judgment
Outcome
Action dismissed
Legal Topics
Interpretation of Partnership Agreements, Employee Incentive Schemes, Good Leaver/bad Leaver Provisions, Private Equity Fund Management, Employment Termination Consequences
Contract Law Employment Law Partnership Law Interpretation of Partnership Agreements Employee Incentive Schemes Good Leaver/bad Leaver Provisions Private Equity Fund Management Employment Termination Consequences

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Parties

Scott Greck

Pursuer

Henderson Asia Pacific Equity Partners (FP) LP

First Defender

Henderson Equity Partners (GP) Limited

Second Defender

Henderson Equity Partners Limited

Third Defender

Roger Greville

Fourth Defender

Procedural Posture

Declarator / First Instance Judgment

Legal Issues

  1. 1 Whether the pursuer was a 'Bad Leaver' or 'Good Leaver' under the Limited Partnership Agreement
  2. 2 Whether Archer Capital Pty Limited is a competitor of Henderson or its associates within the meaning of the agreement
  3. 3 Whether the General Partner properly exercised discretion under the agreement regarding leaver status

Ratio Decidendi

The court held that, on the proper construction of the Limited Partnership Agreement, Archer Capital Pty Limited fell within the contractual definition of a competitor, given the broad language covering businesses involved in unquoted equity investments. The pursuer joined Archer within six months of leaving Henderson, and thus, under the agreement, was a Bad Leaver. The General Partner's discretion to treat a Bad Leaver as a Good Leaver was not exercised in the pursuer's favour, and there was no evidence of improper exercise of that discretion. Accordingly, the pursuer forfeited his entitlement to carried interest.

Court Disposition

Action dismissed

Orders

  • Decree of absolvitor granted in favour of the defenders
  • No declarator granted as sought by the pursuer