Blackstone successfully defends $365m dishonest assistance claims
In a judgment handed down on 23 June 2026, Mr Justice Adam Johnson dismissed in their entirety the claims brought by Hipgnosis Music Limited (in liquidation) against the music industry executive Merck Mercuriadis, the former FTSE 250 listed Hipgnosis Songs Fund Limited and its investment adviser, both now owned by Blackstone (Hipgnosis Music Limited v Mercuriadis [2026] EWHC 1500 (Ch)). The case raised significant questions about the limits of the maturing business opportunity doctrine, the attribution of knowledge to a company and the principles governing an account of profits against dishonest assistants.
The claim was brought by the liquidators of Hipgnosis Music Limited ("HML"), suing both in its own right and as assignee of the causes of action of its subsidiary, Hipgnosis Copyrights Plc ("Copyrights"). Mr Mercuriadis is the former manager of artists including Sir Elton John, Guns N’ Roses, Beyoncé and Morrissey, the former lead singer of the Smiths. HML alleged that, while a director of HML and Copyrights, Mr Mercuriadis had diverted for his own benefit a "maturing business opportunity", namely the idea of acquiring music publishing catalogues in anticipation of the growth in music streaming in the 2010s. That opportunity, it was said, was pursued first through a failed 2017 IPO (HSFL1) and then through the successful July 2018 IPO of the Second Defendant, Hipgnosis Songs Fund Limited ("HSFL2"), which acquired music catalogues on the investment advice of the Third Defendant, Hipgnosis Song Management Limited ("HSML"). HSFL2 amassed a portfolio of music catalogues that was worth, at its highest, over US$2 billion. HSFL2 and HSML were sued as accessories who were said to have dishonestly assisted Mr Mercuriadis in his breaches of fiduciary duty. The Claimant sought an account of profits of over US$365 million.
HML’s claims were comprehensively dismissed. The Judge rejected the allegation that Mr Mercuriadis had acted dishonestly. On the central issue of whether the music publishing catalogues idea qualified as an "opportunity" within the continuing duty imposed on former directors by section 170(2)(a) of the Companies Act 2006, the Judge held that it did not. Applying the indicia identified by Lord Leggatt in Recovery Partners GP Ltd v Rukhadze [2025] UKSC 10 at [137], he found the idea to be no more than a general insight or concept, available to music industry participants generally, of which Mr Mercuriadis had been aware before he became a director — and which therefore did not come to his knowledge in the course of and by reason of his fiduciary role. The various features HML relied upon described the mechanics by which the idea might be exploited, not a protectable opportunity in the relevant sense, and amounted to part of the "general fund of knowledge and expertise" a director is free to deploy elsewhere. As Mr Mercuriadis was not in breach of duty, the accessorial claims against HSFL2 and HSML necessarily failed.
The Judge went on to address, in case he was wrong, two further issues related to the claim in dishonest assistance, both of which he resolved in favour of the Defendants. On attribution, he held that even if Mr Mercuriadis had committed a dishonest breach, his knowledge could not have been attributed to HSFL2, as he was neither a director nor a shadow director. On an account of profits, the Judge accepted HSFL2’s submissions that, even had it been liable as a dishonest assistant, no account should be ordered. As a non-fiduciary, HSFL2's liability fell to be assessed under Novoship (UK) Ltd v Mikhalyuk [2014] EWCA Civ 908, applying common-law rules of causation. The Judge held that the catalogues idea provided no more than the occasion for HSFL2's profits, their effective causes being the decisions of investors to risk their capital, the independent investment decisions of the board, and favourable movements in the market. In any event, an account would have been disproportionate, handing the Claimant very substantial profits it could never itself have earned, at the expense of a company whose investors knew nothing of any wrongdoing.
Neil Kitchener KC, Patrick Harty and Dominic Li, instructed by Herbert Smith Freehills Kramer LLP, acted for the Second and Third Defendants.