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Global Partners Fund Ltd V. Babcock And Brown Notes

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LOBAL PARTNERS FUND LTD V. BABCOCK AND BROWN (AUSTRALIA) G

FACTS The applicant (GPF) is the managing general partner of an investment scheme (the
Partnership) constituted as a limited partnership under the Limited Partnership Act
1907 (UK). In proceedings instituted in the Commercial List of this Court, GPF
sought to recoup from the respondents losses allegedly suffered by the Partnership on
an investment made prior to GPF becoming the managing general partner. The first respondent, Babcock & Brown Limited (in liquidation) (BBL) was at all
relevant times the holding company of the Babcock & Brown Group (BB Group). The
second to fourth respondents (BBI, BBGUP and BBUS) were, at all relevant times,
BB Group members.
BB Group made an investment by the Partnership of approximately €52 million
(US$70 million) in the acquisition of Coinmach Service Corporation (Coinmach), a
Delaware company. In 2007, a "deal team" within the BB Group (BB Coinmach Deal
Team) identified and developed a proposal to acquire Coinmach. In June 2007,
approval was given on behalf of the Partnership to invest approximately US$70
million of the Partnership's money in the acquisition of Coinmach. The Partnership
was to make its investment as part of a consortium that included other BB Group
entities or associates, together with the Royal Bank of Scotland (RBS). In or about
November 2007, RBS decided that it did not wish to proceed with the Coinmach
acquisition. RBS proposed to the BB Coinmach Deal Team that the consortium
withdraw from the Coinmach acquisition, on the basis that RBS would pay the whole
of the Cancellation Fee. The BB Coinmach Deal Team rejected the RBS Proposal
and instead negotiated with RBS and Coinmach an arrangement which enabled the
Coinmach acquisition to complete on 20 November 2007. GPF alleges that the completion of the transaction was delegated to the BB Coinmach
Deal Team (which included, or was supervised by, relevant BB Group senior
executives), and that the conduct of the BB Coinmach Deal Team, in rejecting the
RBS Proposal and proceeding with the investment, involved: (i) a failure to obtain
fully informed consent from the Partnership; (ii) failure to disclose material facts that
the Partnership was entitled to know before proceeding; (iii) a failure to act strictly in
the interests of the Partnership, and with reasonable care and diligence. GPF's case is that BBL, BBI and BBUS are responsible at law for the conduct of the
BB Coinmach Deal Team. Each of BBL, BBI, BBUS and BBMGP is therefore said to
be liable for breach of fiduciary duty (as principal or accessory) and for breach of a
common law duty of care to the Partnership.
Furthermore, on 23 December 2009 solicitors acting on behalf of "The Babcock &
Brown Group" wrote a Pre­Action Letter to GPF in accordance with the English Civil
Procedure Rules, foreshadowing proceedings by BBMGP to recover amounts claimed
to be due as management fees and compensation for termination of its appointment as
managing general partner of the Partnership.

On 29 January 2010 GPF commenced the proceedings in this Court. On that same day
solicitors for GPF in London replied to the Pre­Action Letter disputing BBMGP's
entitlement to management fees and termination compensation, in large measure, on
the basis of the conduct raised in the proceedings in this Court. On 1 February 2010 BBMGP, BBI and BBUS commenced proceedings in the
Commercial Court, Queens Bench Division of the High Court of Justice seeking
recovery of management fees and compensation for termination. Going beyond
the Pre­Action letter, the applicants in those proceedings also sought a negative
declaration to the effect that they had not breached any duties owed, and had no
liability to, the Partnership and GPF in relation to the Coinmach transaction. All
respondents, other than BBL, have submitted to the jurisdiction of the English courts. With respect to the negative declarations sought in London, I note that in the
proceedings in this Court, GPF seeks to agitate the claims for management fees and
termination compensation by means of a similarly negative pleading. Limited Partnership Agreement Of particular relevance to these proceedings is the "exclusive jurisdiction" clause in cl

18.11 of the Limited Partnership Agreement. That provision is in the following
terms: "This Agreement and the rights, obligations and relationships of the parties
hereto under this Agreement and in respect of the Private Placement
Memorandum shall be governed by and construed in accordance with the
laws of England and all the parties irrevocably agree that the courts of
England are to have exclusive jurisdiction to settle any disputes which may
arise out of or in connection with this Agreement or the Private Placement
Memorandum or the acquisition of Commitments, whether or not governed by
the laws of England, and that accordingly any suit, action or proceedings
arising out of or in connection with this Agreement or Private Placement
Memorandum or the acquisition of Commitments shall be brought in such
court." BBL, BBI and BBUS are not parties to the LPA. However, they are members of the
"Babcock and Brown Group" as defined in the LPA and as referred to in the Private
Placement Memorandum. Arguments GPF accepted that cl 18.11 applied to some of the issues which arise between GPF and
BBMGP. BBMGP is a party to the LPA and issues such as those which arise with
respect to its claim for fees and termination compensation are clearly encompassed
within cl 18.11. However, in the case of all defendants, GPF contended that its causes of action, other
than those involving the termination of BBMGP, do not "arise out of or in connection

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