The Guernsey Court of Appeal has upheld CRGF GP’s appeal in a long running dispute concerning CRGF GP’s claim for investment management fees totalling more than US$23 million. The decision contains an important ruling concerning the powers of the Royal Court in relation to the liquidation of limited partnerships and a ruling significant for appellate practice in Guernsey.
Fonds Rusnano Capital was the only limited partner of a Guernsey limited partnership of which CRGF GP was the general partner. Seeking to end the partnership without liability for CRGF GP’s fees, in 2018 Rusnano sued to rescind the partnership agreement for fraud. Following a trial in 2019, the Royal Court dismissed the fraud claims but dissolved the limited partnership on just and equitable grounds.
Following a consequentials hearing in 2021, the Bailiff directed the Jurats that (i) under the partnership agreement strictly construed CRGF GP was not entitled to any fees, and (ii) the Jurats had a power under section 29(2) of the Limited Partnerships (Guernsey) Law 1995 to adjust the fees payable under the partnership agreement to a level they considered to be equitable. Following these directions, the Jurats ruled that CRGF GP should be entitled to fees but only at a level far below its claim, and less than the US$4.4 million fees CRGF GP had already received, with the consequence that CRGF GP was liable to repay more than US$2 million to the liquidator.
The Court of Appeal ruled that both directions were wrong. In relation to the first direction, properly construed CRGF GP was entitled under the partnership agreement to more than US$23 million in fees additional to those already paid. In relation to the second direction, section 29(2) empowers the Royal Court only to deal with the administration of the liquidation. It does not empower the Royal Court to re-write the bargain between the parties or otherwise to interfere with their pre-existing rights. By the terms of the partnership agreement, CRGF GP is entitled to recover its full fees in the liquidation in priority to any recovery by Rusnano.
The Court of Appeal also determined important points of appellate practice. CRGF GP had served the notice of appeal at the address for service (élection de domicile) Rusnano had given in the proceedings before the Royal Court. As Matthews JA explained, this was incorrect. The Court of Appeal (Civil Division)(Guernsey) Rules 1964 contains a separate regime for service which requires personal service notwithstanding that an address for service was given in the court below. However, the Court of Appeal broke new ground by ruling that Rule 19 empowers the Court retrospectively to validate steps in fact taken as good service, which the Court did.
Steven Elliott KC acted for CRGF GP Limited supporting Advocate Fay Warrilow of Ogier.
The judgment of the Court of Appeal is available below.
View Judgment