Inversiones Frieira SL & Anor v Colyzeo Investors II LP & Anor

The issue in the action is: to what documents can a general partner be ordered to provide access to limited partners in order that they may understand the business in which they have invested?

In my first judgment [2011] EWHC 1762 I sought to give an answer in principle to that question, rather than to specify individual documents amongst the many claimed in each of the 60 categories which Inversiones sought in the Schedule attached to the Part 8 Claim Form. I invited the parties to apply those principles, reach agreement on the documents to be produced, and to restore the case for the resolution of any remaining disputes. Regrettably this has led the parties into poring over the first judgment as if it was a statute.

The restored hearing took place on the 12 and 13 January 2012. No agreement had been reached at all.

In my first judgment I endeavoured to set out (in paragraph 23) what principles underpinned the right of a partner to inspect “the books of the partnership” and to describe the general nature of those “books”. But I pointed out (in paragraph 23 (k)) that what would be required would vary from case to case depending on the nature of the partnership business and its mode of conduct and the terms of the partnership agreement (and any associated arrangements) read in the light of current business practice: the test being essentially a functional one. I took the view that, in general, if it would be necessary or advantageous for the general partner or its delegate to rely on a document to establish rights as against a third party or to determine rights as between the members of the partnership themselves, then the document should be available for inspection by the limited partners. Further, if it was a document for which the partners had themselves paid then that might also be taken to be a document which related to the affairs of the partnership (because otherwise it could not properly have been charged directly to the account of the partners).

The parties have not reached agreement upon what books of the partnership IFS and IVS (I will call them together “Inversiones”) have to be shown to enable them to examine into the state and prospects of the partnership business and to confer with the other limited partners thereon. This is because of a fundamental difference of approach. That of Inversiones is to focus on “entitlement”; to look at each of the categories of document production of which is claimed, and then to ask in relation to that category whether if documents of that type existed then their production for inspection could be justified according to the principles set out in the judgment. That of Capital and CIM was to review what documents actually existed and then to assess each document that actually existed against the principles set out in my first judgment to see whether it formed part of the “partnership books” to inspection of which the limited partners were entitled. This detailed review (which was undertaken by a team of three solicitors over three months) produced 76 files of documents, 44 of which contained material the production of which the Defendants had previously resisted. It should be recorded that the Defendants afforded the opportunity for Inversiones to participate in this review process: but the opportunity was not taken up. The reason for that was that Inversiones fundamentally disagreed with the whole “documentary capture and review process being conducted before the relevant principles were applied”.

It is regrettable that this metaphysical debate should have stood in the way of getting to Inversiones the documents they need for an understanding of the affairs of the partnership. Insofar as it arises from any lack of clarity in the first judgment I apologise to the parties. I had intended clearly to communicate my view that what must be shown to the limited partners will vary from case to case (depending on the nature of the partnership business and its mode of conduct), that there was little to be gained by looking at decided cases to see if they established categories of document which as a matter of law every partnership had to maintain and which every partner had a right to inspect; and that the whole process should be grounded upon what documents actually existed, and their function, and not upon abstract categories.

As a starting point, the process undertaken by the Defendants was essentially that which I envisaged. Whilst I recognise (and would underline) the fact that affording to limited partners access to the partnership books is not a process of disclosure (like that under the CPR) I do agree with the sentiment expressed in a letter from Clifford Chance dated 15 August 2011:-

An examination of the material provided establishes:-

That there are no real property or marketable securities directly owned by the Partnership.

The Partnership investments consist of participation in SPVs which ultimately own the underlying assets, and there may be multiple layers of SPVs between the Partnership and the underlying asset.

In no case does the Partnership wholly own an SPV which in turn wholly owns the underlying asset.

Accordingly, in no case can the worth of an investment held by the Partnership be determined simply by reference to the market value of the underlying asset. Every investment held by the Partnership has to be attributed a “Fair Market Value” assessed quarterly. So in relation to the Partnership’s Accor investment, what is being valued is the Partnership’s interest in CZ2 Day (a Luxemburg co-ownership entity) which in turn owns 45% of ColDay (another Luxemburg co-ownership entity) which in turn owns some derivatives of the Accor shares. The “Fair Value” analysis varies from SPV to SPV – depending on the nature of the underlying asset. It may be conducted by reference to market value, third party valuation, third party appraisal, earnings multiple or discounted cash flow. The analysis is summarised in a “FMV Package” for the investment.

Each SPV has its own income flow and its own expenses, recorded on its own financial recording system (albeit that this is maintained centrally).

No SPV has its own independent capital funding. Instead, the acquisition costs of the underlying investment (both price and acquisition costs and expenses, including any due diligence) and any funding costs (such as loan repayments or premiums on hedging transaction) are simply passed up the chain of SPV’s until the appropriate proportion is treated as a disbursement to be paid by the Partnership out of the capital contributed by the limited partners or out of lines of credit available to the Partnership, these amounts being recorded in “a Funding Package”.

At the hearing it was accepted by Inversiones that there was extensive duplication of requests within the 60 categories of documents sought. It was accepted by Capital that investors were entitled to see (subject to any necessary redaction to preserve the confidentiality of co-investors) the SPV constitutions under which the Partnership rights arise, the FMV Packages, the Funding Packages, the general ledger entries which record the dealings ultimately summarised on the financial statements provided to each partner, and the papers provided to CIM to enable it to make decisions about Partnership affairs (“the decision files”).

The points of difference were recorded on a 69 page Scott Schedule, the general nature of which was canvassed at the hearing and details of which I have considered in the course of preparing judgment. But before I address the issues in detail I would note four general themes.

First, this litigation is brought by two out of a number of limited partners. They are seeking to exercise their rights as such. No doubt considerable expense will have been incurred in the preparation of documents for provision, which expense might well be charged to the Partnership generally. It is important not to lose sight of the interest of other partners when considering the rights of IVS and IFS. As Collins LJ said in Bevan v Webb[1901] 2 Ch 59 at 68 “their rights are qualified and regulated by the corresponding rights of the other partners”. Whatever further provision of documents might be considered, that provision must be such as is truly appropriate to address real and substantial (and not merely theoretical) issues. Equally, it is important not to lose sight of the fact that whatever it is held must be provided to Inversiones must also be made available to every other limited partner of the Partnership.

Second, what the general partner is obliged to do is afford access to the relevant “partnership books”. The exercise by Inversiones of the right to inspection of partnership books does not require the general partner or its delegate to create “partnership books” or to constitute partnership papers which are not already in existence. If such partnership books or papers ought to have been prepared (in performance of the obligation to keep full and accurate books of the partnership and such books records and information as is necessary for recordings its business and affairs) then a limited partner may inspect the primary documents in the possession of the Partnership or its delegate from which such partnership books and records ought to have been created. But that is a substitutionary right in lieu of specific performance of the contractual obligation to keep proper records.

Third, at the hearing Inversiones advanced the argument that they had the right to inspect documents belonging to all the SPVs either as a matter of general legal right or under specific contractual provisions in particular Management Agreements. As to general legal right, Inversiones submitted that a general partner could not reduce his obligation to provide documents about the business of the partnership to limited partners by relying on the fact that the economic activity was actually carried out by SPVs, because that in effect empowered the general partner to control what he would tell the limited partners about the business. As to specific contractual provision, it was, for example, provided in a Management Advisory Agreement entered into between an SPV that was a wholly owned subsidiary of the Partnership (“the Owner”) and a Colony advisory company (“the Manager”) that:-

This was a development of the original claim. In their Claim Form the Inversiones companies had said that they were seeking “inspection and copying of the books of [the Partnership]”; and in their evidence had specifically confirmed that “Inversiones do not seek any papers which do not belong to the Partnership”. Although there was some complaint at this expansion of the case it seems to me better to grapple with the real issues that have emerged from the disclosure of the precise structure of the Partnership’s investments.

It is not possible to address the issue in the sweeping way suggested by Inversiones. I think the approach has to be much more refined: my approach is as follows.

What are the partnership books that have to be produced will vary from case to case depending on the nature of the partnership business and its mode of conduct and the terms of the governing documents read in the light of current business practice.

The Partnership Deed itself provided that each Partner should be afforded access to the Partnership books maintained by CIM, such access being for purposes reasonably connected to that Partner’s interests as partner. This is an individual right that Inversiones can call upon Capital (as party to the Management Agreement with CIM) to enforce. That is why Capital has made available CIM’s papers (minus any confidential information relating to the dealings of any third party). The obligation relates to papers that CIM actually has.

Similar clauses in other Management Agreements between an asset owning SPV and a Manager (such as that quoted above) are different in effect. Insofar as they create rights that can be enforced by a non-party in whose favour a promise is made, the beneficiary of the promise is “the Partnership”. The Partnership deals with the outside world (whether that is the SPV or the Manager) only through its general partner; and the general partner is not obliged to act at the behest of any one limited partner. So these provisions do not give an individual limited partner (such as IFS) a direct or indirect right to inspect the documents.

Where the documents belong to or are in the possession of an SPV Inversiones has no individual right to call for or compel their production for inspection. If the SPV is wholly owned by the Partnership then Capital (as general partner) will have the right and power to exercise the Partnership’s rights as shareholder or as beneficiary of any contractual promise. If the SPV is an intermediate SPV or an asset-owning SPV then Capital will (as general partner) have sole authority to deal with the outside world (including such SPVs) on behalf of the Partnership. But in neither case can IFS alone compel Capital to act in any particular way e.g to demand production of agreements between the SPV and other third parties. Capital is not bound to exercise rights that belong to the Partnership at the behest of an individual partner.

If in the course of transacting the business of the Partnership Capital or CIM has obtained copies of agreements between the SPV and third parties then of course those documents (if of a nature and significance to make them part of the books, documents and records of the Partnership) become partnership documents. I reject the submission that it is bizarre to allow the extent of “partnership documents” to be determined “at the whim of CIM”. The “partnership documents” are what exists: and what exists is to some extent determined by chance.

The fourth point to make is that Inversiones were anxious to stress (i) that they were seeking to exercise contractual and equitable rights to inspect partnership books and documents (and doing so by means of a Part 8 claim); and (ii) they were not seeking to enforce an obligation to make specific disclosure. Accordingly, they argued that to obtain an order they did not have to establish that the claimed documents existed, or that there were any gaps in the documents contained in the 76 files which Colyzeo had disclosed. They simply had to establish their technical entitlement to documents of the type included in any given category, and it was then for the court to order production and inspection of every document within that category. If documents of type “X” existed then the Court had to order production of all type “X “ documents, and neither the Court nor the general partner could restrict Inversiones’ right to only such of the documents of type “X” as would be sufficient for it them to understand the partnership business. The order must be made: if there were none, or no more than had already been provided, then Capital/CIM had to do nothing.

I disagree. The matter is not to be approached on such an abstract basis. Capital has, in the light of the principles set out in my first judgment, identified and collated a substantial body of documents which it acknowledges are partnership documents. In practice the onus is now on Inversiones to indicate in what respects the available documents are not sufficient to enable Inversiones to examine into the state and prospects of the partnership business and consult with the other limited partners thereon, or indicate the existence of other documents that would be just as material to that exercise as those which have been provided. That is partly because the court will not grant an injunction which has no practical effect. It is partly because the court will not direct the incurring of expense which may have to be borne by the partners generally simply upon the request of one limited partner who cannot demonstrate that the incurring of that expense secures any practical advantage. In this area (as in others where competing rights are involved, such as easements) the law does not seek to identify the precise outer limits or prescribe the entire and exact content of every rule: it provides for the core obligation and expects the associated rights to be exercised in a reasonable manner (and it will assist their exercise in that reasonable manner).

I therefore turn to consider the categories of documents sought. Inversiones claimed 60 categories of document. Inversiones acknowledged that there was considerable duplication and overlap between the different categories. For the restored hearing they therefore identified 16 consolidated categories: and at the end of the first day they had narrowed the request further. These I will now address in turn.

Category 1 related to funding documents. Inversiones sought disclosure of all credit agreements, loan facilities and interim or mezzanine financing sought or obtained (including all drafts and amendments): all bank and other lender loan schedules (including interest, repayments and draw downs); all bank and other lender loan documents (including bridging and “loan to value” agreements); and all correspondence with banks and other lenders. Insofar as these relate to credit lines and facilities established in the name of the Partnership and for which the limited partners may be liable, I agree that such documents ought to be provided (subject to the caveat (i) that routine correspondence having no impact upon the rights of liabilities of the Partnership should not be disclosed: and (ii) it is likely to be unnecessary to provide documents concerning facilities that were sought but not granted or offered but not taken up (depending on circumstances). As I understand it, Capital has provided the material relating to the Partnership’s credit facility, and all amendments to its lines of credit, and all relevant loan agreements (together with the ledgers, bank statements, draw down notices, interest notices and related correspondence). So far as the Partnership is concerned there therefore seems to be nothing more to provide. I am not persuaded that there is any point in an order for production (even though I agree that the credit facility, all amendments and the ledgers etc ought to be produced).

At the hearing the real battle seemed to be whether the same documents should be produced in relation to each credit facility of each SPV. Here what Capital has produced is (i) the relevant Funding Package for each investment by each SPV; and (ii) where there is a liability directly related to ownership of a particular investment, then the relevant FMV (where the fair market value of the SPV’s interest in the underlying asset can only be assessed taking into account the related liability). This information will only be in a summary form sufficient for Capital to make decisions about the Partnership’s investments and to produce accounts which can be audited. The evidence establishes that it was not the practice of the Partnership to call for, examine or retain copies of all transactional or operational documents of the SPV’s down the chain. If Capital or CIM did so, then those documents in principle form part of the books, documents and records of the Partnership. If they did not then the original documents belong to the SPV and Capital/CIM cannot be compelled by Inversiones to call for their provision by the SPV.

In fact it seems that Capital has amongst its Partnership papers (and has provided to Inversiones) the key documents relating to the Accor transaction and the key documents relating to the funding of the Carrefour investment because, in each case, these are documents which Capital or CIM asked for and kept. The one exception appears to be something called “the Nataxis credit agreement” relating to the acquisition of the original Accor shareholding: though my understanding of the evidence was that this original agreement was replaced by a facility extended by Credit Suisse (which has been provided). The Nataxis credit agreement (which I think was entered into by ColDay) would not be a “partnership document” (though any copy provided to Capital or CIM would be). If such a complete copy exists it ought to be provided. If it does not (and only the part produced in the available files exists) and Inversiones can explain why the missing part is material to its understanding of the business of the partnership as it now is, then I would expect a request for the obtaining of a copy to be made to ColDay: but it is a matter for the discretion of Capital how far to pursue this request.

The Claimants’ evidence did not establish that what was available was inadequate for the requirements of Inversiones. I decline to make any order in relation to this category. I have given an indication as to what I would expect in relation to the Nataxis credit agreement.

Category 2 (as refined) sought all prospectuses prepared for or on behalf of CZ2 Blue, Blue Partners, Blue Capital, CZ2 Day, and Col Day in order to obtain funding. These are the SPVs through which the Partnership’s participation in the Accor and the Carrefour investments were held. CZ2 Blue and CZ2 Day are both wholly owned subsidiaries of the Partnership: the other entities are SPVs in which those wholly owned subsidiaries have a non-majority interest. By the word “prospectus” is meant any document prepared in order for the SPV to obtain finance. The picture emerging from the evidence is that the wholly owned subsidiaries (CZ2 Blue and CZ2 Day) did not themselves raise finance, being funding by the Partnership out of its capital or loan facility. The SPVs that own the assets are not wholly owned subsidiaries of the Partnership. Insofar as the asset owning SPVs (and any intermediate entity) themselves raised finance, any relevant liability will be summarised either in the FMV Package or in the Funding Package. The information so available has been sufficient for the Partnership accounts to pass audit. The actual “prospectuses” themselves will belong to the asset owning and intermediate SPVs, and will not be “partnership books and records” save insofar as any copies have actually been provided to Capital or CIM. The position appears to be that no such prospectus has been provided. The purpose of seeking production of such “prospectuses” is to see what sources of funding might have been available to the relevant SPV and to try and work out why it selected its actual funding source rather than an available alternative.

I will refuse to make any order relating to this category because I am not satisfied that the documents sought (beyond the FMV Packages and Funding Packages already provided) are “partnership documents”, nor am I persuaded that it would be right to cast upon the Partnership generally the burden of pursuing documents which quite possibly do not exist and which are on any footing only of the most peripheral interest. What is being considered is a non-adopted proposal to an entity in which the Partnership has invested. If the Partnership had directly bought shares in X Co Ltd I do not think that anyone could suggest that an unsuccessful loan application by X Co Ltd was a “partnership record” which the managing partner was bound to obtain and produce.

Category 3 consists of documents relating to the Partnership’s Advisory Committee (being presentations made to the PAC, minutes of meetings of the PAC, and documents referred to in those minutes). A second limb relates to the like documents belonging to CIM (the company to whom the Partnership delegated its investment management and operating services).

In the course of the hearing Inversiones clarified that by the term “Partnership Advisory Committee” they meant the Advisory Committee constituted under clause 14 of the Partnership Deed (consisting of between 5 and 9 limited partners selected by CIM). The PAC was to meet twice a year to discuss the performance and operations of the Partnership (including potential new acquisitions, potential disposals and financing): but CIM was not required to follow any advice tendered by the PAC, but was entitled to exercise its powers at its own discretion. I would regard the PAC’s agenda and its minutes as partnership documents: so does Capital, and it has provided a file of the relevant documents. It is pointed out that there are five meetings for which there is an agenda but no minutes. This complaint is not specifically addressed in Capital’s evidence in answer: but it was submitted that all that existed had been supplied. I would dispose of this by directing Captial (as general manager of the Partnership) to make a search for the five missing minutes and to confirm the result of that search by a witness statement. This is a minor matter.

I do not regard “presentations” or documents referred to in the agendas or minutes as generally being “partnership documents” simply because they are mentioned in the minutes. The minute book (and any annexures to the minutes) are the partnership record. There is a general duty on a partner to provide relevant information about the partnership business (though that is not the basis of the present application). A reasonable request to supplement the formal record by the provision of readily available and obviously relevant information (such as the contents of a report that the partnership committee resolve to accept) ought to be met.

I would decline to make any order in relation to presentations made to, minutes of meetings of, and documents referred to in the minutes of the meetings of CIM so far as they relate to Partnership investments. Paragraph 15(b) above contains my analysis of the legal position. Inversiones can call upon Capital to get partnership documents held by CIM for any purpose reasonably connected to the interests of Inversiones as partner. But the evidence does not establish that there is some document reasonably related to the interests of Inversiones as Partner which has not been produced in the 76 files of material. At the hearing the debate was conducted entirely in the abstract: if a presentation had been made to CIM then CIM’s consideration of it would have been charged as part of the management fee (and so become an expense of the partnership) and might have shown what options might have been available (other than the course of action actually embarked upon by CIM); and knowledge about that might enable Inversiones to judge whether at the time the decision was taken there was a better alternative. But in my judgment this is a clear instance in which Inversiones’ theoretical rights are qualified by the reality of the burden that would be cast upon the other Partners by the performance of this obligation (even if the actual costs of inspection and copying were borne by Inversiones).

Category 4 (as narrowed at the hearing) relates to all documents establishing collateral or margin calls on the SPVs through which the Partnership participates in the Accor and Carrefour investments. The short answer of Capital/Colyzeo to this claim is that all of the relevant material is contained in the decision files which form part of the additional material provided after my first judgment: that there is no omission from the material provided: and that from the material Inversiones can trace the entire debate about the manner in which the relevant margin calls were to be satisfied. There is fact in the evidence no criticism of the material provided. The debate at the hearing was once again conducted entirely in the abstract. I will not make an order because I am not satisfied that there is any real gap in the material provided which prevents Inversiones understanding what calls were made, when and in what amount. If that had been shown I would have identified who had the documents that would fill the gap and (if it were an SPV) would have applied the approach set out in paragraph 15 above.

The fifth category of documents sought is (to summarise a long list) the constitutional and participation agreements relating to the SPVs involved in the Carrefour investment. Not only are the actual effective documents sought, but also any drafts, or any notes or records of meetings or conversations where any decision to participate in the venture is considered, and any formal or informal records of understanding as to the investment strategies and operational practices of those SPVs. There is a specific request for all documentation setting out the basis upon which it was proposed that the investment of CZ2 Blue in the intermediate and ultimate owning SPVs was to be diluted, including instructions given to any independent experts to enable them to undertake their dilution assessment and their actual advice (and any drafts of such advice). Capital’s response to this request is to say that much of the material sought is already included in the FMV Packages (insofar as such material bears upon the valuation of the Partnership’s interest in the underlying investments), or alternatively in the “decision file” which contains the record of the actual decisions made by the Manager. But Inversiones say that this is no answer because such material records only the position as it was from time to time and they would wish to know, at each point in time, how that position had evolved (both the financial position that emerged from negotiations, and the legal position as it emerged from the circulating drafts). Inversiones relies heavily on the fact that the Partnership is one of the ultimate pay masters of those who produced and considered all this material.

The Carrefour investment is one of the key investments that sank in value: and that decline in value had significant implications for the extent of the Partnership’s participation in the investment. So I understand and would support a request for the documents necessary to understand precisely what rights the Partnership has (which fall to be valued and managed): and if it had been shown that the present disclosure did not provide these documents then I would have been minded to make an order (if it was proper applying the approach set out in paragraph 15). But the evidence is lacking.

As it is, in my judgment the position adopted by Inversiones is misconceived. Inversiones is entitled to see documents that Capital holds as general manager of the Partnership. This should include the constitutional documents of CZ2 Blue (which is a wholly owned subsidiary) and any agreement directly entered into by CZ2 Blue of which it has a copy. It should also include advice tendered directly to the Partnership about any dilution (and its basis). One would expect that the FMV Package which demonstrates the value of CZ2 Blue’s interest in the underlying Carrefour investment would include the constitutional documents of Blue Partners and Blue Capital, and copies of all relevant funding and hedging agreements relevant to establishing the fair market value of the Partnerships participation. To the extent of these documents are not within the possession of the Partnership (because neither Capital as General Manager nor the auditors in the proper performance of their duties have not thought it necessary to see the entirety of these documents) then the request of Invesiones is not for the production of documents (for the purpose of inspection and copying): it is for the provision of the information. Information which is necessary to explain any element of the fair market valuation ought to be provided if it can with reasonable ease and without undue expense to the general body of partners be obtained.

But there is no question of Capital having any obligation (as general manager of the Partnership) to make up Partnership books and records which do not at present in fact exist by using whatever share holder rights the Partnership’s wholly owned SPV may have directly or indirectly against the board of the intermediate SPV or of the ultimate holding SPV. Nor do I see any basis upon which Inversiones can require Capital to get drafts or notes of conversations or memoranda or informal records of understanding or drafts of expert reports, or correspondence between the intermediate or ultimate SPV on the one hand and third party co investors on the other. In no sense is this material part of the “books documents and records” of the partnership: and in my judgment the General Manager is not required to obtain it pursuant to any general duty to provide information about the Partnership. The suggestion that Inversiones has in some sense “paid for” this material is not tenable. They and the other limited partners have paid the charges and reimbursed the Manager’s general expenses. But that does not mean that Inversiones has bought a share in every piece of paper produced by anyone who has rendered a fee part of which has ultimately been borne out of the Inversiones contribution (or charged against income to which Inversiones would otherwise have been entitled).

There was a specific request for production of any management agreements entered into by the SPVs. I understand that there may be 6 additional management agreements to those disclosed in the additional files. If there are copies held by Capital or CIM then they should be provided: if no undertaking is forthcoming I will order their production. If there are no copies on file I would regard a request by Inversiones for their acquisition to be reasonable and not unduly burdensome, and would expect Capital to treat it as a request for information: but how far the request is pursued (if co-operation from the SPV is, surprisingly, not forthcoming) is a matter for the management discretion vested by the Partnership Deed in Capital, which is not bound to act at the behest of one limited partner.

The sixth category of documents consists of the like documents in relation to the Accor investment. I would deal with this request in precisely the same way as category 5.

The seventh category may loosely be called “hedging documents”. At the hearing this request was confined to hedging documents relating to the Partnership’s participation in the ownership of the Carrefour and Accor derivatives. The cost to the Partnership of participating in hedging transaction is undoubtedly significant: I was shown material which demonstrated that by July 2008 the Partnership’s share of the premium payable for “put” options on the Accor shares exceeded 20 million euros. But the importance of this material is acknowledged by Capital and (according to them) the relevant documents have already been included in the FMV Packages, the Funding Packages and the “decision files” which they have now provided. This is where one would expect to find that type of material within the Partnership’s books documents and records since (save for one currency hedge) the Partnership itself has not entered into any hedging transactions. Accordingly hedging transactions affect only the value of the Partnership’s participation in any intermediate or ultimate owning SPV. They do not impose any direct liability (though they may result in a funding request).

The Partnership itself will not have the actual hedging contracts entered into by the SPV: nor will it have any direct right as against the parties to the hedging transaction to obtain a copy. The copy itself is likely simply to be a ISDA Master Agreement. What is vital is the pricing; and so far as I can ascertain that is apparent from the material provided. I would therefore not make any order for the production of documents for inspection and copying. I would indicate that if Inversiones made a reasonably grounded request for sight of the full terms of any document summarised or referred to in the FMV Package or the Funding Package or the decision file which assists in the definition of the Partnership’s interest in the asset, and a request could (without undue expense to the Partnership) be made to the SPV that was party to or the addressee of that document, then I would expect Capital to make the request. But I would leave it to the discretion of Capital (the discretion conferred by the Partnership Deed itself) how far to pursue that request.

Category 8 is a request for material relating to a transaction that did not in fact occur. The decline in the Carrefour share price meant that the lenders to Blue Capital made a margin call (requiring, in effect, the provision of additional collateral security to maintain the “loan to value” ratio). CZ2 could not match its pro rata share and its co participant bore a disproportionate part of the margin call (on the footing that the rights would be adjusted as between itself and the Partnership). One possibility was that the limited partners in the Partnership would consent to the application of additional capital (beyond the concentration limits contemplated in the Partnership Deed) to reimburse this disproportionate funding. The alternative was a dilution of the Partnership’s interest. At the time the all relevant material was circulated to the limited partners: and the agent for Inversiones said that “[he] fully [understood] the Colyzeo II matter from every angle”. I accept that that comment does not amount to a waiver of any right to request further information: but it clearly demonstrates that Inversiones fully understood the problem and the proposed solution. They made their choice and decided not to agree to application of additional capital (with the result that the dilution took effect).

In that context a request for “all documentation” relating to a transaction that did not proceed, including all instructions (whether formal or informal) to advisers and all advice sought for and behalf of the Partnership (whether such advice be in draft or final form), any documentation setting out the basis upon which the scheme should be presented to the limited partners, and all documentation in relation to proposed alternatives that might have been considered, is simply unreasonable. Inversiones made their choice and the business of the Partnership (in relation to which they can seek to inspect books documents and records for the purpose of understanding that present business and conferring with the other limited Partners upon it) has been shaped by that choice. As I have indicated above, advice about dilution directly tendered to the Partnership is a partnership document that I would expect to be in the possession of Capital as general and managing partner (or of CIM, its delegate).

Category 9 seeks what is in substance primary transactional documentation. It seeks a complete break down of all commitments, including details of when those commitments were made and when the Partnership contributions were made in relation thereto. It seeks a complete break down of all investments, including full detail of the investments made, the amounts invested and when invested, and when the Partnership committed to the investments. It seeks all relevant sale and purchase agreements of investments and hedging products. It seeks investment income documentation. It seeks a schedule of investments (including opening balances, additions, disposals, revaluations, unrealised and realised gains and losses and details of the proceeds of sale). This is rather like a limited partner in a retail business asking for a copy of all till receipts. I do not understand from the submissions why the production of the Partnership’s General Ledger is insufficient, or why the “decision file” did not contain any sufficient explanation as why transactions were undertaken, or why the Funding Packages did not disclose how the investments were undertaken. Insofar as the request relates to primary accounting documents (such as income receipts) I could not understand why the audited accounts and statements were insufficient for the purpose. Since the focus of the request seemed to be the Accor and the Carrefour transactions (rather than every single transaction entered into by the Partnership) and they have been the subject of extensive disclosure, I would make no further order.

Category 10 (as refined at the hearing) is a request for the production of all opinions obtained for and on behalf of the Partnership. It is acknowledged that Capital has produced a file of advice tendered directly to the Partnership and for which the Partnership directly paid. The request is persisted in so as to obtain a copy of all legal advice tendered to the wholly owned SPVs, the intermediate SPVs and the ultimate owning SPVs. Thus, for example ColDay (the ultimate owning SPV for the Accor investment) paid a solicitor’s bill which included a charge for “drafting and issuing a Luxembourg law capacity legal Opinion”. Is that “a book document or record” of the Partnership? In my judgment it is not. It is a book, document or record of ColDay: and I have dealt above with what I consider is the correct approach to documents belonging to or in the possession of the SPV. I would refuse an order.

Category 11 comprises management accounts for 2010 and all annual or monthly financial budgets or forecasts. The evidence of Capital is that there are no such management accounts, since the Partnership is an investment partnership not a trading partnership. It maintains a General Ledger to record income and expenditure (which has been provided to Inversiones) and it produces quarterly accounts and valuations (of which no criticism has been or is now made by Inversiones). I see no grounds upon which to make any order for disclosure.

Category 12 requires Capital to disclose all investment proposal documents so that Inversiones can ascertain the basis for making each investment (their evidence suggesting that they have found none amongst the material provided by Capital). In fact the Partnership itself did not undertake any due diligence work but rather relied upon that undertaken by the ultimate holding SPVs (which is summarised in the CIA Investment Committee documents, copies of which have been provided). The summary is described as “distilled and collated… raw due diligence material”. This is the actual extent of the Partnership’s books documents and records. It sufficed to enable the General Manager to take the decision on behalf of the Partnership: and it has not been demonstrated that Inversiones, as a limited partner, is entitled to ask for more by way of the provision of information.

Category 13 as originally expressed sought the production for inspection and copying of all investment valuation working papers belonging to Capital or produced by any third party: but as refined at the hearing it became confined to a request for the due diligence documents relating to the Accor and Carrefour Investments. It was ultimately accepted that if such due diligence material as had been acquired by the Partnership had in truth been disclosed, then there was nothing further to be sought. No order is necessary.

Category 14 consisted of a generic request for Partners’ “draw down requests”. At the hearing it was asserted that these had already been disclosed, and it was accepted that if this was so (and Inversiones could not demonstrate otherwise) then there was nothing further to be produced. No order is necessary.

Category 15 was originally a request for a group of documents proving how various investments were held. At the hearing it was difficult to tease out in what respect these documents differed from documents caught by other categories: and in the end only one subcategory was pursued. That was “supplemental shareholder/partnership agreements for joint investments” for each of the ultimate owning SPVs. The Partnership does not own any physical assets nor any rights in action that can be traded on a market. It owns rights arising from shares in unlisted co-ownership entities and ultimately in contracts relating to listed shared. One might expect those who conduct the business of the Partnership to have a copy of whatever agreements it would be necessary to sue upon in order to establish the Partnership’s rights. To the extent that Capital has such agreements they have been provided. To the extent that the agreements do not exist but they bear upon the valuation of the Partnership’s interest, then they are summarised in the FMV Packages. To the extent that the summary is not an entire account of the terms of the agreement, Inversiones can ask the General Partner to provide information. I have nothing to add to the views expressed above about the provision of information.

In the result the only order I will make relates to the search for (and provision of) the missing minutes.

Mr de Verneuil Smith (who ably argued the case for Inversiones) said this would be a surprising result since in effect I would holding that Capital and CIM had made the correct judgment call about every document they did not put in the 76 “available files”. Of course I make no such finding. I have not seen the documents that were not in the available files (or even all of those that are). The result has come about because I consider that the rights of a limited partner are grounded in what is (not in what might have been or what might be assembled). Amongst what is, the limited partner has the right to see documents of the nature I outlined in my first judgment. If he is provided with a selection which the general partner holding the partnership documents says is complete, then the Court will assist the limited partner to exercise his statutory or contractual rights to obtain further partnership documents, if satisfied that they probably exist, that a demand for their production falls within the statutory or contractual right being asserted, and that it is appropriate, having regard to the interest of the other partners, to grant an injunction directing their production.

My provisional order on costs is that there should be no order. Capital/CIM undoubtedly adopted too restrictive approach to the provision of documents in response to the claim (which resulted in the order at the first hearing): Inversiones undoubtedly adopted too expansive an approach to the documents claimed (which has in substance resulted in no order at the second hearing). If either party is dissatisfied with this provisional indication then they should notify me by 4.00pm 1 June 2012 and I will consider the matter entirely afresh and give directions for the determination of the issue by written submissions.