Neutral Citation Number: [2018] EWHC 661 (Ch)
Case No: HC-2016-000142
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
BUSINESS LIST (CHANCERY DIVISION)

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 28 March 2018

Before:

RICHARD SPEARMAN Q.C.
(sitting as a Deputy Judge of the Chancery Division)
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Between:

	RICHARD PEASE	Claimant	
	
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	HENDERSON ADMINISTRATION LIMITED	Defendant	
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Richard Leiper QC and Zac Sammour (instructed by Michelmores LLP) for the Claimant
Daniel Oudkerk QC and Adam Woolnough (instructed by Simmons & Simmons LLP) for the Defendant

Hearing dates: 22-26 January and 29 January-1 February 2018
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Judgment
TABLE OF CONTENTS

	Para.	
Introduction	1	
The issues in outline	3	
The parties and the formation of the Contract	7	
The ESSF	10	
The evidence of the witnesses	13	
Key events	22	
The applicable legal principles	23	
Mr Pease’s claim for management fees	26	
Mr Pease’s claim that Henderson breached Clause 3.6.1	88	
Mr Pease’s claim for damages for breach of Clause 3.6.1	137	
Henderson’s claim under Clause 3.6.2 	189	
Conclusion	201	

Introduction
1.	This is a claim for breach of a written contract of employment dated 5 June 2009 (“the Contract”), made between the Claimant (“Mr Pease”) as employee and the Defendant (“Henderson”) as employer. Important aspects of the Contract relate to an investment fund known as the European Special Situations Fund (“the ESSF”). I have had regard to all the provisions of the Contract, although I will set out only the most crucial terms in this judgment. Clause numbers referred to without qualification relate to the Contract.
2.	Mr Richard Leiper QC appeared for Mr Pease and Mr Daniel Oudkerk QC for Henderson. I am grateful to them for their clear and helpful written and oral submissions.
The issues in outline
3.	Mr Pease makes two central claims. First, that Henderson has wrongfully refused to pay him his share of the management fees relating to the ESSF. Second, that, following his decision to terminate his employment, Henderson refused to permit him to replace the relevant Henderson group company as manager of the ESSF as stipulated by the Contract. Mr Pease contends that the latter breach substantially delayed the time when he was able to assume control of the funds within the ESSF, and that this delay in turn caused him (a) loss of the management fees that he would otherwise have earned during the period of delay and (b) further losses, on the basis that the extent of the funds under management was irreversibly depleted during that period, both because a number of existing investors sold their investments and because the fund lost potential new investors. The claim in relation to these further losses is complicated by various considerations: (i) Mr Pease’s starting point is that the value of the new fund management company that was set up to manage the ESSF, Crux Asset Management Limited (“Crux”), and thus the value of shares in Crux, is directly related to the funds under management in the ESSF, (ii) next, Mr Pease contends that he has suffered losses as a shareholder in that he owns 70% of the shares in a company (Pease Co Limited) which in turn owns 75% of the shares in Crux (causing him to limit his claim in closing to 52.75% of the overall reduction in the value of Crux, although I consider that the correct calculation is 75% x .7 = 52.50%), and (iii) the claim for loss of potential new investors, and thus for part of the loss of value in Crux, is a claim for loss of a chance.     
4.	Henderson accepts that it has not paid Mr Pease a share of all the management fees received by the Henderson group in respect of the management of the ESSF during the term of Mr Pease’s employment, but contends that on the proper interpretation of the Contract it was entitled to defer those fees and, ultimately, to forfeit those fees if they remained unvested on termination of his employment. Further, Henderson disputes Mr Pease’s second claim on various grounds, including that it did not act in breach of the Contract and that he has not made out his claim for damages. In addition, Henderson raises a set-off and counterclaim in respect of 50% of the management fees generated by the ESSF in the 12 months following the date of termination of Mr Pease’s employment in June 2015, on the basis that Mr Pease was obliged under the Contract to procure the payment of those fees to Henderson, which (as he accepts) he has not done.
5.	In answer to Henderson’s case as to non-payment of 50% of the post-termination management fees generated by the ESSF, Mr Pease originally took two points. First, that Henderson’s entitlement, if any, should be calculated by reference to the investments that were in the ESSF at the time when Crux took over management alone, and without regard to any further investments that were made in the ESSF during that period of 12 months. Mr Leiper abandoned that point during the trial. However, Mr Pease’s second point remains live. This is that, in accordance with the Contract, the events which trigger his liability to procure the payment of those fees have not arisen.
6.	At the beginning of the trial, an issue arose as to whether Mr Pease was entitled to rely on a Schedule of Loss which he had served on 2 October 2017 and had amended on 6 December 2017 (to correct an error as to the proper currency in one part of the calculation, which had the effect of reducing the overall claim from £47m to £31.5m). For reasons contained in a separate judgment, I ruled that Mr Pease was entitled to rely on this Schedule of Loss, and to call factual evidence in support of it (but not expert evidence, for which neither side had either sought or obtained permission). The sums claimed in this Schedule of Loss take no account of Mr Pease’s claims for management fees that he says have been wrongly withheld by Henderson, which are claimed in the sum of £4,380,800, or of Henderson’s set-off and counterclaim, which is in the sum of £3,973,125.50. Mr Pease’s claim for the far larger sums set out in the Schedule of Loss formed no part of his original Claim Form and Particulars of Claim, and was first raised in a set-off and Part 20 claim in response to Henderson’s set-off and counterclaim.
The parties and the formation of the Contract
7.	Mr Pease is a very experienced fund manager. He joined New Star Asset Management in 2001, where he launched and managed several funds. One of those funds was the New Star European Fund, in which he invested his own seed capital. In 2009, New Star Asset Management was acquired by the Henderson group, which is how Mr Pease came to enter into the Contract and to be employed by Henderson as Director of European Equities. Mr Pease conceived the ESSF, which was launched in 2009 with seed money provided by Mr Pease and his friends, and of which he was fund manager. 
8.	Henderson is a member of the Janus Henderson Group, which is an independent asset manager specialising in active investment. The Janus Henderson Group is dual-listed on the New York Stock Exchange and the Australian Securities Exchange and has a market capitalisation of approximately US $7 billion.
9.	Henderson’s acquisition of New Star Asset Management was achieved through an unconditional offer for shares and took effect on 9 April 2009. After the acquisition, Mr Pease continued to manage various New Star funds, and Henderson made clear to him that it wanted him to stay on and manage funds for them. Among the matters raised by Mr Pease were that he wanted to set up the ESSF, which he said that he would seed, and that he wanted to be able to take that fund with him if he left Henderson. This appears to have been the genesis of the provisions relating to the ESSF which found their way into the Contract. Although the date of the Contract is 5 June 2009, the start of Mr Pease’s employment by Henderson was back dated to 1 May 2009. Both parties were represented by experienced lawyers in the negotiation of the Contract.
The ESSF
10.	Before the Contract had been finalised, from about early May 2009, Mr Pease and Henderson began work on launching the ESSF. It was proposed that the fund would be known as the “New Star European Special Situations Fund” and would be housed under an umbrella Open Ended Investment Company (“OEIC”). Mr Pease stated in his witness statement that the ESSF was set up as a sub fund of an existing Henderson umbrella OEIC “without reference to me”, but he accepted under cross-examination that he was “a key man in the process” and that he did know about this proposal.
11.	The ESSF was launched on 1 October 2009. In summary:
(1)	An OEIC is a vehicle designed for the purposes of pooled investment, which can contain several sub-funds with distinct investment strategies and management. 
(2)	An Authorised Corporate Director (“ACD”) assumes full responsibilities for the management of an OEIC, including the distribution of the shares in the OEIC.
(3)	The ESSF was set up as a sub-fund within an umbrella Henderson OEIC (“the Henderson OEIC”) – which, until the FSA approved a name change on 7 January 2010 (effective on 6 April 2010), was called the New Star OEIC. This was in accordance with Henderson’s standard practice.
(4)	Initially, the Henderson OEIC contained seven other sub-funds, but only the Henderson Global Financials Fund (“GFF”) was still in operation in 2014 during the negotiations regarding the transfer of the ESSF pursuant to Clause 3.6.1.
(5)	Pursuant to an ACD Agreement dated 6 April 2010, the ACD of the Henderson OEIC was Henderson Investment Funds Limited (“HIFL”). 
(6)	It was the evidence of Mr Bowers that retaining responsibility for the marketing and/or sales effort in relation to the funds in the Henderson range enables Henderson to pursue a coherent sales strategy across the range of products and service offerings that it has. 
(7)	Pursuant to an Investment Management Agreement (“IMA”), Henderson Global Investors Limited (“HGIL”) was appointed as the Investment Manager of the ESSF. HGIL had discretionary authority to deal with the assets of the ESSF in pursuit of the investment strategy of the ESSF set out in its prospectus, but under the supervision of HIFL. HGIL delegated day-to-day responsibility for making investment decisions to Mr Pease as the investment manager.
(8)	The ESSF was serviced by a variety of third-party service providers including NatWest Trustee & Depositary Services, BNP Paribas Securities Services and International Financial Data Services Limited.
12.	Under Mr Pease’s management, the ESSF enjoyed great success, and generated very substantial management fees. By the end of 2013, the ESSF had more than £1 billion of assets under management, and had repeatedly provided top decile returns to investors.
The evidence of the witnesses
13.	I heard oral evidence:
(1)	on behalf of the Claimant from Mr Pease, Alastair Reid, the Chief Executive Officer of Crux (“Mr Reid”), and Mark Little, the Distribution Director of Crux, who was formerly employed by Henderson (“Mr Little”); and 
(2)	on behalf of the Defendant from Andrew Formica, the Co-Chief Executive Officer of Janus Henderson, who was formerly the Chief Executive Officer of Henderson (“Mr Formica”), Jacqui Irvine, the Group General Counsel and Company Secretary of Janus Henderson (“Ms Irvine”), James Bowers, the Global Head of Product and Distribution of Henderson (“Mr Bowers”), and Shelly Ribbons, the Share Plan Manager of Henderson (“Ms Ribbons”). 
14.	I am satisfied that they all gave honest evidence before me, although, in my view, much of it was either irrelevant to the issues which I have to decide or gave rise to differences of perspective or emphasis or recollection which I do not need to resolve. Further, the fact that their evidence was honest does not mean that it was reliable in every respect. 
15.	Mr Oudkerk was largely uncritical of the evidence of Mr Pease. Indeed, he submitted that in large part that evidence supported Henderson’s case. However, Mr Oudkerk also submitted that Mr Pease’s answers in cross-examination suggested that he had allowed claims to be made on his behalf which he did not truly support, and that in certain important respects his evidence was misleading, exaggerated or incomplete, such that his credibility was in doubt even though he often accepted instances where his evidence was inaccurate. In my view, Mr Pease’s overall credibility was not put in issue by the cross-examination, although, as discussed below, I consider that there is some force in these points in so far as they relate to his claim for damages for breach of Clause 3.6.1.    
16.	As Mr Oudkerk pointed out, Crux has a stake in the outcome of this litigation: it may be that the fact that Crux will make any payment that is due to Henderson pursuant to Clause 3.6.2 should not have come as any surprise in light of the fact that Mr Pease’s obligation thereunder is to “procure payment” to Henderson, but it only became clear during the course of the trial that Crux is funding this litigation. This appeared to lead Mr Reid to some extent to fight Mr Pease’s corner when giving oral evidence, and it casts some doubt on the dependability of some of his answers. However, I consider that similar points apply, in respect of Henderson’s case, with regard to Mr Formica, and even to some extent to Ms Irvine. All these witnesses were professional and impressive, but that did not prevent them from demonstrating at times some signs of partiality.
17.	Contrary to Mr Oudkerk’s submissions, I do not consider that Mr Little was an unreliable witness, and I specifically acquit him of the charge of not telling the truth about his knowledge of Mr Pease’s plans to leave Henderson and of having planned to leave to join Crux. I agree with Mr Oudkerk that this account is surprising, in light of the longstanding relationship between Mr Pease and Mr Little, the fact that they both used Mr Ferguson, the fact that Mr Little joined Crux not long after he left Henderson and had a substantial role and shareholding at Crux, and the fact that Mr Pease told Mr Formica in July 2013 that it was likely that Mr Little would go with him if he left Henderson. However, I paid careful attention to Mr Little’s demeanour in the witness box, and I believed him when he said in evidence: “I didn’t know. Simple, my Lord”. That is not to say that I feel able to rely upon all the evidence that he gave in support of Mr Pease’s claim for damages for breach of Clause 3.6.1, and I return to this below.
18.	I consider that Mr Bowers and Ms Ribbons were each manifestly knowledgeable, helpful and reliable, and I accept their evidence without any significant reservation.      
19.	The witness statements contained details of the negotiations which preceded the Contract, which both sides accepted at trial were irrelevant and inadmissible to the determination of the proper interpretation of the Contract. The essential factual matrix is uncontentious, and can be shortly stated, as I have endeavoured to do above.
20.	A major issue in the case concerns the events following Mr Pease’s decision to leave Henderson’s employment and what was done by way of implementation of Clause 3.6.1, and I received much evidence about these matters in the witness statements and as a result of cross-examination. In my view, however, the points that matter emerge from the contemporary documents and are not materially affected by this additional evidence. To take but a single example, time was spent on exploring Crux’s perspective of these matters, and (among other things) Mr Oudkerk submitted that Crux’s Regulatory Business Plan dated 1 April 2014 prepared for the FCA recognised that the precise means of implementing Clause 3.6.1 would depend upon discussions between the parties to the Contract. However, although such evidence is of potential relevance to the likelihood that those parties ultimately reached agreement not only that a particular mechanism would be adopted but also that adopting that mechanism would discharge Henderson’s obligations under Clause 3.6.1, what matters is whether or not any such agreement was made. If that was not agreed, it matters not whether Crux envisaged that it might be agreed; and if it was agreed, what Crux envisaged is also beside the point. Whether any such agreement was made turns on the documented exchanges between the parties; and whether any estoppel arises also does not depend on Crux’s views. Still less do Crux’s views assist with deciding the proper interpretation of Clause 3.6.1.
21.	In my judgment, the one significant area in which the evidence of the witnesses, and the answers elicited in cross-examination, are of central importance is that of Mr Pease’s claim for damages for breach of Clause 3.6.1, and I return to this as appropriate below.
Key events
22.	The parties agreed the following chronology (in which “Scheme of Arrangement” refers to the mechanism which the parties in fact adopted pursuant to Clause 3.6.1):
5 June 2009	The Contract was signed. 	
1 October 2009 	ESSF launched and housed within New Star OEIC.	
6 April 2010	Change of name from New Star OEIC to Henderson OEIC effective.	
February 2011 	2011 Annual Review Statement from Henderson concerning Mr Pease’s remuneration for the 2010 performance year.	
February 2012 	2012 Annual Review Statement from Henderson concerning Mr Pease’s remuneration for the 2011 performance year.	
March 2013	2013 Annual Review Statement from Henderson concerning Mr Pease’s remuneration for the 2012 performance year.	
6 February 2014 	Mr Pease informs Mr Formica that he was mostly likely to leave Henderson and establish a new firm to manage the ESSF.	
March 2014	2014 Annual Review Statement from Henderson concerning Mr Pease’s remuneration for the 2013 performance year. 	
31 March 2014 	Crux applies to the FCA for authorisation to carry on the activity of a fund management business.	
1 April 2014	Date of the Crux Regulatory Business Plan.	
4 July 2014	Mr Pease provides Henderson with a note of advice he had received concerning his right to replace the manager of the ESSF and asks that negotiations to give effect to that right take place between the parties’ respective legal representatives.	
11 July 2014	Telephone conference between the parties’ respective legal representatives, Charles Ferguson (“Mr Ferguson”) on behalf of Mr Pease and Ms Irvine on behalf of Henderson.	
24 July 2014	Meeting between Mr Ferguson and Ms Irvine and Mr Bowers.	
7 August 2014	Meeting between Mr Reid and Ms Irvine and Mr Bowers.	
14 August 2014	Telephone conference between Crux and the FCA to discuss Mr Pease’s replacement of Henderson as manager of the ESSF.	
31 August 2014	Mr Reid emails Ms Irvine concerning Mr Pease’s willingness to accede to a Scheme of Arrangement.	
1 September 2014	Mr Reid and Mr Ferguson meet with Ms Irvine and Phil Wagstaff of Henderson.	
	Mr Ferguson emails Ms Irvine concerning Mr Pease’s willingness to accede to a Scheme of Arrangement. 	
3 September 2014	Ms Irvine emails Mr Ferguson stating that she agrees that there is no merit in discussing the interpretation of the Contract given that they seemed to be in agreement that the transfer of management of the ESSF will be achieved by way of a scheme of arrangement.	
25 September 2014 	Mr Ferguson emails Ms Irvine concerning Mr Pease’s willingness to accede to a Scheme of Arrangement; and stating that he had advised Mr Pease that the Scheme of Arrangement was in breach of his contractual rights and that Mr Pease reserved all of his rights.	
29 September 2014 	Mr Reid and Mr Little meet Mr Bowers and Ms Irvine.	
	Ms Irvine emails Mr Ferguson concerning Henderson’s view of the Scheme of Arrangement; asking Mr Ferguson what rights he is reserving on behalf of Mr Pease; and stating that Henderson was proceeding on the basis that the parties have agreed a route [the Scheme of Arrangement] to exercise Mr Pease’s rights under his contract.	
	A side letter concerning the parties’ obligations in respect of the Scheme of Arrangement and the termination of Mr Pease’s employment is dated 29 September 2014 (and was signed by Mr Pease on 1 October 2014 and by Henderson on 3 October 2014).	
14 October 2014	Crux approved by the FCA to carry out business of fund management.	
15 October 2014	Public announcement of the transfer of the ESSF by a scheme of arrangement from Henderson to Crux and Mr Pease’s planned resignation from Henderson.	
13 January 2015	FCA approves the Scheme of Arrangement.	
March 2015 	Mr Pease receives 2015 Annual Review Statement from Henderson concerning his remuneration for the 2014 performance year.	
11 May 2015	Mr Reid emails Mr Bowers stating amongst other things that Mr Pease intends to honour his commitment regarding the payment under Clause 3.6.2.	
 12 May 2015	Mr Ferguson emails Mr Bowers stating that it is clear that they needed to comply with the terms of Clause 3.6.2.	
15 May 2015	Mr Reid emails Mr Bowers stating that he does not believe there is any dispute as to the formula to be applied under Clause 3.6.2.	
4 June 2015 	Mr Pease’s employment with Henderson terminates.	
6 June 2015	ESSF merged with the FP Crux European Special Situations Fund.	
The applicable legal principles
23.	There was no dispute between the parties concerning the principles which apply to the interpretation of contracts, and they are almost too well known to need to be rehearsed.
24.	One recent review of some of these principles was carried out by the Court of Appeal in Cosmetic Warriors Ltd & Anor v Gerrie [2017] EWCA Civ 324. In that case, Henderson LJ said at [20]-[22] that (especially in light of the consideration that this approach was endorsed by the Supreme Court in Wood v Capita Insurance Services Ltd [2017] AC 1173) it was helpful to refer to the approach summarised by Lord Neuberger PSC in Arnold v Britton [2015] AC 1619, at [15] (omitting citations): 

“When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean”, … And it does so by focusing on the meaning of the relevant words … in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provision of [the contract], (iii) the overall purpose of the clause and the [contract], (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s intentions.”
25.	Other relevant principles were also not in issue, and are referred to separately below. 
Mr Pease’s claim for management fees
26.	The list of issues agreed between the parties identifies the following issues in respect of Mr Pease’s original claim for management fees (referred to in that list as “the Fees”):
(1)	On the proper construction of the Contract, were the Fees payable to Mr Pease under Clause 3.7.1 an “award” within Clause 3.3.1 such that they could be deferred? 
(2)	If so, did Clause 3.3.1 permit Henderson to provide also that part of the deferred Fees could be forfeit? 
(3)	To the extent that any such power to provide for forfeiture was discretionary, was an exercise of such discretion in order to provide for forfeiture on Mr Pease’s resignation irrational and/or perverse and so wrongful? 
(4)	Were the terms of deferral for each of the years 2012-2015 effectively communicated to Mr Pease and/or did he agree to that deferral and, if so, what was the effect of that communication/agreement (or the absence thereof)? 
(5)	Were the terms for the deferral of Fees, insofar as they provided for forfeiture on resignation, in restraint of trade and unenforceable? 
(6)	If the withholding of Fees was wrongful, what sums (if any) are due to Mr Pease?
“Awards” and “Management Fees”
27.	Clause 3 is entitled “Remuneration and benefits”, and contains 12 sub-headings. Clause 3.3 is headed “Awards”, and Clause 3.7 is headed “Management Fees”. At its simplest, the difference between Mr Pease and Henderson boils down to whether management fees are governed by Clause 3.3 or by Clause 3.7. Mr Oudkerk submits that they are “Awards” within the meaning of Clause 3.3, whereas Mr Leiper submits that they are not “Awards” and are instead governed by Clause 3.7, such that Mr Pease’s entitlement to be paid 50% of the net management fees received by the Henderson Group in respect of the management of (among other things) the ESSF is governed by Clause 3.7.2. This provides: “You will not be entitled to receive (other than payments accrued but unpaid) any element of the Management Fee following the termination of your employment, however occurring”. Mr Leiper contends that the elements of management fees which form the subject of Mr Pease’s claim comprise “payments accrued but unpaid”, such that Mr Pease is entitled to receive the same following termination of his employment.
28.	Clause 3.3.1 provides:
	“A proportion of any award (other than the awards set out in clause 3.2 and any other awards payable up to March 2010, which for the avoidance of doubt includes the First Shortfall Payment (as described in clause 3.9)) may at the Company’s discretion be paid in the form of shares in Henderson Group plc. The Company may require you to defer a proportion of any award (other than the awards set out in clause 3.2 and any other payable up to March 2010, which for the avoidance of doubt includes the First Shortfall Payment) into the Company’s current deferral scheme. The terms of the current deferral scheme will be communicated to you in the event that your bonus award reaches the appropriate deferral threshold.”
29.	Clause 3.7 provides:
“3.7.1During the term of your employment (subject to clause 3.9), you will receive 50% of the Net Management Fees received by the Henderson Group in respect of the Management of the Fund. Net Management Fees means the management fees calculated in accordance with the conditions set out in the prospectus of each Fund and received in relation to the management of the Funds less any management fee rebates and/or commissions and less an amount equal to the costs associated with running the Funds, being (a) the employer’s National Insurance contributions in respect of the 50% of the Net Management Fees payable to you together with (b) the cost of the Sales Incentive Scheme (or replacement scheme) associated with the sales of any of the Funds and (c) the appropriate proportion of the costs borne by the Company in providing West End office accommodation. 
3.7.2	You will not accrue or be entitled to receive (other than payments accrued but unpaid) any element of the Management Fee following the termination of your employment, however occurring.”
30.	Clause 3.2 is headed “Retention Payments” and provides, in short, that Mr Pease is entitled to receive two payments of £50,000 each, on or shortly after 31 December in 2009 and in 2010, provided that on the relevant payment date he is still employed by Henderson and he has not given notice of termination of his employment to Henderson.
31.	Clause 3.9 is headed “Minimum Fee Payments”. Clause 3.9.1 provides, in short, that in order to ensure that Mr Pease is compensated in the event that his share of the fees stipulated by Clause 3.7 (entitled “Management Fees”) and Clause 3.8 (entitled “Performance Fees”) falls “below the expected level” he will be eligible to receive two additional payments. The first of these additional payments is set out in Clause 3.9.1(a), which provides, in short, that Mr Pease is entitled to receive “the First Shortfall Payment” comprising a “cash bonus” of £375,000 on 31 December in 2009, provided that on that date he is still employed by Henderson and he has not given notice of termination of his employment to Henderson. The second of these additional payments is set out in Clause 3.9.1(b), which provides, in short, that Mr Pease is entitled to receive “the Second Shortfall Payment” to compensate him for any shortfall between his “Total Earnings” and £750,000 in the period between 1 May 2009 and 30 June 2010, provided that on 30 June 2010 he is still employed by Henderson and he has not given notice of termination of his employment to Henderson. However, Clause 3.9.1(b) makes clear that the Second Shortfall Payment is to be made not in cash but instead in the form of ordinary shares in Henderson Group plc, following a recommendation by Henderson to the Board Remuneration Committee. Moreover, Clause 3.9.1(b) provides that “Such share award, if approved, will be made under [Henderson’s] Restricted Share Plan in accordance with the Rules of the Plan”. 
32.	The first sentence of Clause 3.3.1 carves out from the “awards” to which it refers, first, “the awards set out in Clause 3.2”, and, second, “other awards payable up to March 2010 … [including] the First Shortfall Payment (as described in Clause 3.9)”. Accordingly, applying ordinary principles of contractual interpretation, both the “Retention Payments” set out in Clause 3.2 and the “First Shortfall Payment” described in Clause 3.9 are “awards” within the meaning of Clause 3.3.1. If that were not so, there would be no need to carve these payments out from the operation of Clause 3.3.1.
33.	On the other hand, it seems clear that not all of the categories of “Remuneration and benefits” which form the subject of Clause 3 are “awards” within the meaning of Clause 3.3. For example, Clause 3.4 (entitled “Medical Insurance”) makes provision for Henderson to pay contributions to a private medical scheme to provide cover for Mr Pease. However, it would make no sense, and indeed would defeat the purpose of Clause 3.4, if at the discretion of Henderson such contributions could be paid in the form of shares in Henderson Group plc, let alone deferred into Henderson’s current deferral scheme. Yet this result would follow if “Medical Insurance” is treated as an “award” for purposes of Clause 3.3.1. Accordingly, it does not follow from the premise that the “Retention Payments” and the “First Shortfall Payment” are “awards” within the meaning of Clause 3.3.1 that so also are the “Management Fees” in Clause 3.7.
34.	Mr Leiper submitted that the ordinary meaning of “award” is “a benefit that one person decides to confer on another”. Further, the fact that “award” is used in this ordinary sense in Clause 3 is confirmed by the final sentence of Clause 3.3.1, which suggests that the subject of Clause 3.3.1 comprises payments that are of a discretionary or bonus nature: “The terms of the current deferral scheme will be communicated to you in the event that your bonus award reaches the appropriate deferral threshold”. Consistently with this analysis, Mr Leiper submitted that the “Retention Payments” set out in Clause 3.2 and the “First Shortfall Payment” described in Clause 3.9 are both properly described (i) as discretionary and (ii) as “bonus awards”. Indeed, he pointed out that the “First Shortfall Payment” is expressly described as a “cash bonus” in Clause 3.9.1(a).
35.	Mr Oudkerk submitted that Clause 3.3.1 expressly applies to “any award”, and that the ordinary meaning of “award” is “any amount of money given as an official payment”. Accordingly, subject only to the carve-out for “Retention Payments” and the “First Shortfall Payment”, all remuneration is caught by Clause 3.3.1. He further submitted that the “Retention Payments” and the “First Shortfall Payment” were clearly not discretionary or bonus payments, and that as it had been necessary to carve out these payments from the operation of Clause 3 it followed that Clause 3 did not only cover payments that are of a discretionary or bonus nature. He suggested that the fact that the “First Shortfall Payment” comprises compensation that relates to Mr Pease’s entitlement to “Net Management Fees” reinforces the argument that “Management Fees” are awards. Further, Mr Oudkerk submitted that the fact that Clause 3.3.1 does not apply to all the “Remuneration and benefits” which form the subject of Clause 3, including the “Basic salary” which forms the subject of Clause 3.1, does not assist Mr Pease: a distinction is commonly drawn between fixed and variable remuneration, and if the expression “awards” is taken to apply to variable remuneration, then “Management Fees” are within it. Finally, Mr Oudkerk submitted that, on Mr Pease’s construction, the deferral provision in Clause 3.3.1 would not apply to any of his remuneration, which would be contrary to the basic principle that all parts of a contract should be given effect where possible and no part should be treated as inoperative or surplus, a fortiori where the contract was negotiated between experienced lawyers.
36.	Mr Leiper answered this last point by submitting that, on Mr Pease’s construction, the deferral provision in Clause 3.3.1 would apply to part of Mr Pease’s remuneration, namely that described in Clause 3.11, which is entitled “Incentive schemes” and which makes reference to “any incentive scheme in which [Mr Pease] [may] have participated during [his] employment”. Such schemes are described in paragraph 3.13.3 of the Henderson Global Investors Employee Handbook (“the Handbook”). According to the Contract, Mr Pease’s contract of employment is made up of the terms of the Contract together with the contractual sections of the Handbook. 
37.	Paragraph 3.13.2 of the Handbook is entitled “Short Term Incentive Scheme (STI)”. Paragraph 3.13.3 of the Handbook is entitled “Other Schemes”, and provides:
	“The Company operates a variety of other incentive schemes, such as GEBS (Growth Equity Bonus Scheme, used within the Listed Area), Performance Fees (used by Listed Assets and Property), Profit Share (used by Private Capital) and Sales Incentive Schemes (for Sales staff). The terms of these schemes will be communicated to you in the event that you are eligible to participate.
	… Except where the Company has set out any other arrangement in writing, and element of any award you may receive may be subject to mandatory deferral through the Company’s current deferral scheme. The size of the pool for distribution and method by which the pool is determined, and any bonuses awarded under the scheme are entirely at the discretion of the Company …”
38.	Paragraph 3.13.4 of the Handbook is entitled “Bonus deferral”, and provides:
	“Henderson operates a deferral scheme under which individuals might be required to defer an element of their annual bonus award, if it exceeds a defined amount.
	The deferral applies to all discretionary awards (except Profit Share).
	The amount of the bonus deferred is deferred into the Company Deferred Equity Plan (DEP) managed by Ogier Trust.
	Under DEP, the deferred amount is deferred into Henderson Group Shares …”
39.	Mr Leiper submitted, and I agree, that (a) it is implicit in these provisions of the Handbook that all incentive scheme awards other than “Profit Share” are capable of deferral into the DEP, and (b) Clause 3.3.1 applies to the “rights or benefits under any incentive scheme” which are referred to in Clause 3.11, as they are plainly “awards” within the meaning of Clause 3.3.1. In my view, that is sufficient to meet Mr Oudkerk’s argument that, on Mr Pease’s construction of the Contract, Clause 3.3.1 is otiose. 
40.	In my opinion, it does not matter whether, in fact, Mr Pease was or became eligible to participate in any “incentive scheme”. It is sufficient that, as the incorporation of Clause 3.11 shows, it was contemplated at the time the Contract was made that Mr Pease might be entitled to participate in “Incentive schemes”, such that it was sensible for the Contract to make provision for that eventuality. In fact, that eventuality was not hypothetical: Mr Formica confirmed that Henderson had a discretion to pay Mr Pease an award in relation to his management of the Henderson European Growth Fund.
41.	Because, in accordance with Henderson’s construction, the “First Shortfall Payment” is an “award” within the meaning of Clause 3.3.1, I asked Mr Oudkerk whether, on Henderson’s case, the “Second Shortfall Payment” which forms the subject of Clause 3.9(b) is also an “award” for that purpose. He answered that question in the negative.
42.	On proper analysis of Henderson’s case, it seems to me that the explanation as to why the “First Shortfall Payment” is an “award” within the meaning of Clause 3.3.1, whereas the “Second Shortfall Payment” is not must be because Clause 3.9(b) contains a regime concerning the “Second Shortfall Payment” which is incompatible with the regime envisaged by Clause 3.3.1. On the one hand, Clause 3.9(b) provides that, in the events therein stipulated, Henderson will recommend to the Board Remuneration Committee that Mr Pease should be given shares in Henderson Group plc and that; “Such share award, if approved, will be made under [Henderson’s] Restricted Share Plan in accordance with the Rules of the Plan”. On the other hand, Clause 3.3.1 makes provision for “awards” to be deferred into Henderson’s “current deferral scheme”. The deferral scheme current when the Contract was made involved a Committee of at least three directors of Henderson Group plc recommending to the trustees of the Henderson Employee Trust 2008 (or any other trust established in conjunction with the Henderson Group plc deferred equity plan (i.e. the DEP)) the allocation of shares to employees who were nominated to that Committee for participation in the DEP, and those trustees deciding in the exercise of their discretion whether to make that allocation: see Rules 2 and 3 of the Henderson Group plc DEP dated 27 August 2008.  It follows that the “Second Shortfall Payment” is not an “award” within the meaning of Clause 3.3.1.
43.	In any event, the like reasoning applies to the provision relating to “Management Fees” in Clause 3.7. On the face of it, Clause 3.7.1 states that during the term of his employment Mr Pease will receive 50% of the material net management fees; and Clause 3.7.2 provides that, following the termination of his employment, he will be entitled to receive any payment of those fees which is “accrued but unpaid” at that time. I consider that this regime is different from, and is incompatible with, the provisions relating to “awards” that are contained in Clause 3.3.1. Given the obvious importance of his share of “Management Fees” to Mr Pease – whose salary was highly likely to be dwarfed by his share of “Net Management Fees” - I consider that clear words would be needed elsewhere in the Contract to override the otherwise straightforward provision contained in Clause 3.7.2. I am unable to extract any such clarity from Clause 3.3.1. 
44.	Even if, contrary to the foregoing, Clause 3.3.1 is properly to be read as applying to the provision for payment of “Management Fees” during the term of Mr Pease’s employment that is contained in Clause 3.7.1, such that Henderson was entitled to defer the same into its current deferral scheme, and even if payments that are deferred in that way are generally liable to forfeiture on termination of employment in accordance with the terms of that deferral scheme, I am unable to accept that any such general provision for forfeiture could properly be regarded as taking precedence over Clause 3.7.2.
45.	Indeed, “Management Fees” were subject to unique treatment in the Contract, in that Clause 3.6.2 made provision for Mr Pease to procure the payment to Henderson of 50% of “Management Fees After Deductions” generated by the ESSF over 12 months in the circumstances described in Clause 3.6.1. These Clauses are considered further below. 
46.	I consider that Mr Pease’s interpretation of the Contract produces an element of symmetry: Mr Pease is entitled to receive 50% of “Net Management Fees” generated during the time that he remains employed by Henderson; and Henderson is entitled to be paid 50% of “Management Fees After Deductions” during that immediately subsequent 12 months. Conversely, on Henderson’s interpretation, there is a lack of symmetry, because, in respect of the “Net Management Fees” generated during the final 3 years of his employment with Henderson, Mr Pease would receive significantly less, and Henderson would receive significantly more, than 50% of those fees. 
47.	Mr Oudkerk submitted that this is the wrong way of looking at the Contract, and that the relevant bargains were: first, that Mr Pease was remunerated in return for his work as an employee during his employment, including by the share of “Net Management Fees” that Henderson has in fact paid him or has accepted that it is liable to pay him; and, second, that Mr Pease had a right to take the ESSF on termination of his employment, but in return he was required to pay 50% of such fees to Henderson in the following 12 months. Accordingly, it neither lacked commercial common sense, nor undermined the quid pro quo in the Contract, for Mr Pease to forfeit part of his share of “Net Management Fees”. In my view, however, the problem with that analysis is that it does not explain why Mr Pease’s remuneration for his work during his employment should exclude the share of fees which Henderson now contends it has a right to forfeit.   
48.	I consider it more likely than not that the parties would have intended a straightforward arrangement which has an appearance of symmetry in respect of “Management Fees”, as opposed to a relatively complicated “sliding scale” of dividing up those fees in respect of the final 3 years of Mr Pease’s employment with Henderson in a manner which favoured Henderson to the extent of very large sums of money. This is, therefore, an additional reason for preferring Mr Pease’s interpretation of the Contract.       
49.	Accordingly, even if “Management Fees” constitute an “award” with the meaning of Clause 3.3.1, and even if Henderson was entitled to defer payment of those fees to Mr Pease during the term of his employment, I do not consider that Henderson can rely on Clause 3.3.1 to claim to be entitled to forfeit the same on termination of employment.
50.	Mr Oudkerk submitted that Clause 3.7.2 did not apply to deferred “awards” because such awards are “unvested”, and, moreover (in the events which happened during the course of Mr Pease’s employment) Mr Pease “has not paid tax on them”. In these circumstances, Mr Oudkerk submitted that such awards “have not accrued”. 
51.	I am unable to accept this argument. Clause 3.7.1 provides that, during the term of his employment, Mr Pease “will receive” part of the “Net Management Fees” received by the Henderson Group. In other words, in my view, Mr Pease’s share accumulates and falls due for payment to him as and when those fees are received by the Henderson Group. Clause 3.7.1 and Clause 3.7.2 have to be read together. Approached in that way, it seems to me that in Clause 3.7.2 the word “accrues” is used as a synonym for “accumulates and falls due for payment”. In consequence, Mr Pease’s share continues to accumulate and fall due for payment until his employment comes to an end. Thereafter, no further element of those fees accumulates and falls due for payment to him, and he has no entitlement to receive any part of those fees save for any fees that have accumulated and have not been paid at the date of termination of his employment. 
52.	If “vested” means the same as “accrued” (in the sense described above), it is wrong to say that Mr Pease’s entitlement to receive his share of those fees during the term of his employment is “unvested”. If “vested” means something different, there is no warrant to read any part of Clause 3.7 as if it referred to “vested” instead of “accrued”.             
53.	Mr Oudkerk sought to support the conclusion that Clause 3.3.1 applies to Mr Pease’s share of “Net Management Fees” by a number of what he termed “policy and commercial considerations”, all of which were matched by arguments to the contrary effect from Mr Leiper. I do not consider that these points further Henderson’s case.
54.	First, Mr Oudkerk submitted that deferral provisions are a common feature of the asset management industry, and reflect the legitimate aims of employers to retain valuable employees, reward loyalty, and build up the employers’ long-term business success. However, while those considerations explain why both Henderson and Mr Pease might have agreed that “awards” should be subject to deferral arrangements (as indeed they did by Clause 3.3.1), they do not help with whether they are likely to have agreed or whether they in fact agreed by the Contract that Mr Pease’s share of “Net Management Fees” should be deferred, let alone forfeit on termination of his employment. 
55.	Provisions which, from the perspective of employers, are aimed at retaining staff, rewarding loyalty, and building up the value of their businesses are, from the perspective of employees, prone to cost them money if they move jobs and accordingly to tend to restrict their freedom of movement. If and to the extent that highly valued employees may be able to negotiate packages with new employers which compensate them for the losses they incur by leaving their employment that may militate against those adverse effects for them. However, that also means that such arrangements have reduced efficacy from the point of view of employers. In the present case, it was an important feature of the contract that Mr Pease could take over management of the ESSF if he moved. The parties had opposing interests: it would have suited Henderson to agree contractual provisions which reduced the prospect that this would occur, whereas it would not have suited Mr Pease to agree terms which cost him money if he decided to exercise his freedom of choice in that regard. These latter factors led Mr Leiper to submit that Mr Pease’s construction of the Contract is the one that makes commercial sense; and it was Mr Pease’s evidence that Henderson’s case on forfeiture was “completely inconsistent with my right of portability”. I am unable to accept that Mr Oudkerk’s first point is persuasive in favour of Henderson for all these reasons.
56.	Second, Mr Oudkerk submitted that, although Remuneration Codes produced by City regulators such as the FCA and the PRA (formerly the FSA) did not require part of Mr Pease’s remuneration to be deferred, a provision for deferral accorded with “appropriate and responsible” remuneration practices or policies “for sound and effective risk management”. In this regard, it was Henderson’s case that (a) Clause 3.3.1 permitted deferral of “awards” into Henderson’s current deferral scheme, whereupon they became subject to the deferral terms and conditions of that scheme which deal with the vesting of awards and the forfeiture of any unvested part, (b) at all material times it was Henderson’s standard policy to apply deferral provisions to all UK based employees in respect of their variable remuneration, (c) at all material times, the current deferral scheme provided for “awards” to vest in tranches, and for any unvested part to be forfeit on termination of employment (subject to limited exceptions), and (d) in any event, once an “award” was deferred into the current deferral scheme, it was open to Henderson unilaterally to review and amend (i) its deferral and forfeiture policy as reflected in that scheme, and thus (ii) the employee’s right to complain of forfeiture. 
57.	If there is a connection between the level of variable remuneration and the taking of risks by the employee, in principle it may contribute to effective risk management to hold back some or all of that remuneration until it has become apparent whether or not it was the product of unacceptable risk taking, and to forfeit it in the event that it was. It is less clear that, as a matter of logic and rational policy, effective risk management could justify retention let alone forfeiture of any variable part of an employee’s remuneration which has nothing to do with risk taking (such as administration or IT staff, all of whom, on my understanding of Mr Formica’s evidence, are subject to Henderson’s deferral regime). In addition, as Mr Leiper submitted, a policy and practice of forfeiting part of an employee’s variable remuneration on termination of employment according to a set formula which applies to all employees effectively means that there is no connection between the nature and extent of the individual employee’s risk-taking and the sanction or consequence of forfeiture. On the contrary, employees who are beyond reproach lose as much on termination as those who turn out to have been reckless or imprudent, and the latter suffer no greater adverse financial consequences on termination than the former. I am unable to accept that such a flawed approach towards risk management provides any support for interpreting Clause 3.3.1 of the Contract as conferring on Henderson a power to defer “Management Fees”.
58.	In fact the requirements of the Remuneration Codes produced by the FCA with the objective of ensuring that firms promulgate remuneration policies and practices which are consistent with and promote sound and effective risk management focus on appropriate deferral and vesting provisions, and include requirements (a) that variable remuneration should be risk-adjusted and should ensure that performance is assessed with respect to financial and non-financial factors and is based on the performance of the individual, business unit concerned and the overall results of the firm and (b) that any variable remuneration, including a deferred portion, is paid or vests only if it is sustainable according to the financial situation of the firm as a whole, and justified on the basis of the performance of the firm, the business unit and the individual concerned.
59.	It is not obvious to me that these Codes suggest, let alone require, that effective risk management should provide for forfeiture of variable remuneration on the termination of employment (as opposed to such remuneration being, first, deferred, and, second, not paid or not vesting in circumstances where payment and vesting appear inappropriate in light of, for example, the performance of the individual and/or the finances of the firm). In the present case, there is no suggestion that Henderson had grounds for exercising a power to forfeit Mr Pease’s share of “Management Fees” on grounds of his performance or the performance of his team or of Henderson overall. There is also no suggestion that forfeiture was justified on the grounds that paying him that share would not be sustainable in accordance with Henderson’s financial position. In fact, on the evidence before me, Henderson retains variable remuneration that is forfeited on termination of employment in the scheme into which it has been deferred, and uses it to reduce the sums that Henderson would otherwise be required to pay into that scheme to meet Henderson’s deferred variable remuneration obligations towards other employees. On the face of it, there is no obvious connection between that practice and any Code. 
60.	Third, Mr Oudkerk relied on Mr Formica’s evidence to the effect that during his time as CEO of the Janus Henderson Group he has never agreed to a UK based employee falling outside of deferral, and that he would not have sanctioned, and did not sanction, the removal of Henderson’s power of deferral from the Contract. The first aspect of this evidence overlaps with the preceding point made by Mr Oudkerk, and I have already addressed it in that context. As to the second aspect, what matters is what the Contract provides, and not what Mr Formica regarded it as acceptable to agree with Mr Pease. I am therefore unable to accept that this point assists Henderson’s case on interpretation. 
61.	For these reasons, I conclude that the share of management fees payable to Mr Pease under Clause 3.7.1 is not an “award” within the meaning of Clause 3.3.1, and that, even if that is wrong, and even if Clause 3.3.1 permitted Henderson to defer payment of that share into Henderson’s current deferral scheme, Clause 3.3.1 did not permit Henderson to forfeit payment of that share on the termination of Mr Pease’s employment. In a nutshell, the provision in Clause 3.7.2 that Mr Pease is entitled following the date of termination of his employment to be paid such part of his share of “Net Management Fees” as has not been paid before that date is inconsistent with, and takes precedence over, any interpretation of the Contract to the effect that this part is forfeit on that date.
The Handbook
62.	I have reached these conclusions without the need to refer to the Handbook. However, in my judgment, the Handbook provides additional or alternative support for them. 
63.	I accept that, in principle, Clause 3.3.1 could have the effect of providing that “Management Fees” should be subject to the DEP provisions contained in the Handbook. However, the reference to “bonus award” in the final sentence of Clause 3.3.1 suggests that Clause 3.3.1 is concerned with bonuses. In my view, that interpretation is not undermined by the fact that the “Retention Payments” set out in Clause 3.2 and the “First Shortfall Payment” described in Clause 3.9.1(a) are “awards” within the meaning of Clause 3.3.1, because I consider that both of those classes of payment are properly described as “bonuses” (although I do not accept Mr Leiper’s submission that these particular bonuses are also properly described as “discretionary”). 
64.	The “First Shortfall Payment” is described in terms in Clause 3.9.1(a) as “a cash bonus”. The “Retention Payments” set out in Clause 3.2 are payments that Mr Pease is eligible to receive in addition to, and independent of, his other remuneration in the event that he remains employed by Henderson until the dates stipulated and has not given notice of termination by those dates. A bonus may take the form of a sum of money added to an employee’s pay in the event that they achieve a goal or milestone. As was stated in Patural v DG Services (UK) Ltd [2016] IRLR 286 at [34] “there may be some bonuses which are guaranteed in contrast with those which are discretionary”.
65.	If Clause 3.3.1 is construed as applying only to bonuses, there is no difficulty about reading it together with the DEP provisions contained in the Handbook, because, as set out above, the Handbook makes express provision for bonus deferral.
66.	However, if Clause 3.3.1 is construed as applying to payments which are not bonuses, then it is necessary to read the DEP provisions contained in the Handbook as if those provisions had an extended meaning which covers not only bonuses and discretionary awards but also other forms of payment. In my opinion, contrary to Mr Formica’s belief that Mr Pease’s entitlement to receive a share of “Net Management Fees” was “discretionary” because it was “dependent on those revenues”, that entitlement was not discretionary. Further, as Mr Oudkerk appeared to accept in his opening submissions, and in disagreement with the suggestion to the contrary in his closing submissions, I consider that the better view is that such entitlement was not a “bonus”. While it is not impossible to interpret those provisions in the Handbook in this way, in my judgment the interpretation which much more readily accords with the words used in the Handbook is that they do not apply to other forms of payment. Henderson’s case therefore involves reading both Clause 3.3.1 and the Handbook in a strained and unusual way. I prefer Mr Leiper’s submissions concerning the terms of the Handbook.
The DEP and the MDAs
67.	Arguments were also addressed to me concerning the DEP rules and Henderson’s Mandatory Deferral Arrangements (“MDAs”) for each of the years of Mr Pease’s employment, some of which were said to be relevant to his claim for “Net Management Fees”. 
68.	The “Mandatory Deferral” provisions in Rule 3.2 of the DEP Rules for each of the years 2012-2015 related to “an amount in excess of which any amount of a Participant’s annual bonus” was, in effect, eligible to be deferred into the DEP. This form of words suggests that these particular provisions only applied to bonuses. 
69.	The MDAs for the years 2012-2014 stated: “In accordance with the FSA Code on Remuneration and as part of our reward strategy, Henderson operates a mandatory deferral policy for discretionary awards above a defined monetary threshold set by the Board Remuneration Committee in line with FSA Guidelines”. Those MDAs went on to state that: “Discretionary awards subject to the deferral policy include but are not restricted to … Management Fees”. Those MDAs further stated, in sum, that any employee whose employment terminated for reasons other than death, ill health or redundancy, and subject always to the discretion of the Board Remuneration Committee, would forfeit: (a) the entire deferred award if the termination occurred within one year; (b) two thirds of the deferred award if termination occurred within two years; and (c) one third of the deferred award if termination occurred within three years. 
70.	In 2015, the wording of the MDA was changed to state: “Henderson Group plc … operates mandatory deferral arrangements as an integral element of the Henderson Group Remuneration Policy and to comply with prevailing regulatory remuneration codes. The policy operates in relation to the cumulative variable remuneration awarded in respect of a relevant performance (calendar) year” and that these arrangements applied to “the following variable incentive remuneration awards: annual incentive awards … including … any other discretionary or formulaic funding frameworks (including, but not limited to, management fee sharing arrangements) which are operated by the Company from time to time …”  This MDA provided that awards would vest and become available for release in three equal tranches on the first, second, and third anniversaries of grant, and that if the employee ceased employment before the end of the vesting period (other than for reasons such as death, disability or redundancy) the employee “may forfeit some or all of the unvested deferred awards”.      
71.	In my opinion, and in light of the consideration that the provisions of the DEP Rules take precedence over the MDAs, the better view is that the MDAs for the years 2012-2014 did not apply to Mr Pease’s share of “Net Management Fees” stipulated in Clause 3.7. On the face of it, these MDAs applied to discretionary awards. It may be that, in the case of some employees, their entitlement to share in management fees was discretionary, and, so far as they were concerned, it would have made sense for the MDAs to spell out that the classes of discretionary award which were subject to the deferral arrangements that Henderson had chosen to implement included the class of “Management Fees”. In Mr Pease’s case, however, he was entitled to receive a 50% share of “Net Management Fees” during the term of his employment by Clause 3.7, and Henderson had no discretion to award him some different or lesser share or no share. It would therefore have been inaccurate to describe Mr Pease’s 50% entitlement as a “discretionary award”. Still less could that non-discretionary entitlement have been converted into a “discretionary award” because Henderson promulgated wordings in the MDAs which were capable of applying to it and which termed it “discretionary”. Accordingly, the only sensible reading of the MDAs is that they did not apply to Mr Pease’s Clause 3.7 entitlement. Alternatively, if the MDAs are properly to be read as purporting to applying to that entitlement, they were inoperative to affect that entitlement in law, subject always to arguments concerning matters such as estoppel and variation of the Contract, none of which are relied upon by Henderson in this case.
72.	As to the wording of the MDA for the year 2015, I consider that, on the face of it, the wording “formulaic funding frameworks … including … management fee sharing arrangements” is apt to cover Mr Pease’s entitlement to a share of “Net Management Fees” pursuant to Clause 3.7. It may be that this change to the MDA for 2015 was inconsistent with, and ineffective in light of, the ambit of Rule 3.2 of the DEP Rules. Even if that is not so, if that entitlement was not caught by Clause 3.3.1, Henderson had no legal right to alter that entitlement without Mr Pease’s agreement. Accordingly, this MDA was inoperative to effect his entitlement in law, in the absence of arguments concerning estoppel and variation of contract which do not arise on the facts.
Discretion and restraint of trade 
73.	In these circumstances, it is unnecessary to decide the interesting arguments raised by Mr Leiper to the effect that (a) if the Contract conferred on Henderson a power of forfeiture, Henderson’s exercise of the discretion to forfeit Mr Pease’s share of management fees was untenable on grounds of irrationality, further or alternatively perversity, and so wrongful, and (b) if and in so far as the Contract provided for forfeiture of that share on Mr Pease’s resignation, it was in restraint of trade and accordingly unenforceable. On the one hand, these issues do not turn on any matters of fact in respect of which there is any significant dispute, such that the Court of Appeal would be at any disadvantage in considering them in the event that there is an appeal in which they require to be determined. On the other hand, these issues involve points of law of potentially wide ranging effect. For these reasons, it is preferable that these issues should be determined in a case in which they are necessary for the decision.
Communication to Mr Pease
74.	The issues of whether the terms of deferral for each of the years 2012-2015 were effectively communicated to Mr Pease and whether he agreed to that deferral arise, on his case, in the event that he fails on his primary contentions (1) that the power to defer contained in Clause 3.3.1 did not apply to his share of “Management Fees”, alternatively (2) that even if this power did apply to “Management Fees” it was confined to a power to defer and did not extend to a power to forfeit. At all events, it is clear that the subsequent conduct of the parties is irrelevant to the construction of the Contract, so that these matters do not help in that regard (see, for example, James Miller and Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583, Lord Reid at 603: “it is not legitimate to use as an aid in the construction of the contract anything that the parties said or did after it was made”). As I have found in favour of Mr Pease on those points, these issues, also, do not in the event need to be determined. 
75.	If, contrary to my findings on these points, Henderson was entitled to exercise the power contained in Clause 3.3.1 in respect of Mr Pease’s share of “Net Management Fees” stipulated in Clause 3.7, the question arises whether the terms of the “current deferral scheme” were communicated to Mr Pease in accordance with Clause 3.3.1. 
76.	Mr Leiper submitted that Clause 3.3.1 imposes a condition precedent on the exercise of any discretion to defer, that Henderson did not comply with that condition precedent because it never communicated the terms of the DEP (either the DEP Rules or any of the MDAs) to Mr Pease, and that in those circumstances the exercise of the discretion to defer (and forfeit) was in breach of the Contract. 
77.	Mr Oudkerk submitted that Mr Pease was informed about Henderson’s deferral policies and had access to the details throughout his employment. Ms Ribbons’ evidence included that the MDA is provided to every employee affected by deferral within that employee’s pay review pack; that the MDA and DEP rules are made available on the “Share Plan Website”, accessible on Henderson’s intranet; and that the Annual Review Statements that were provided to Mr Pease set out the awards subject to deferral under the Rules of the DEP. (I interpose that on Henderson’s construction of Clause 3.3.1 the MDAs would apply to Mr Pease’s share of “Net Management Fees” stipulated in Clause 3.7 for all the years 2012-2015). In addition, Mr Pease did not disagree with Henderson’s electronic data showing that he had accessed the state of his deferred holdings by computer on a total of 25 occasions during the time of his employment. 
78.	Indeed, although Mr Leiper made clear that his closing submissions did not replace his opening submissions and that the two should be read together, he made no mention of an “inadequate communication” argument in his closing submissions.
79.	In my judgment, it is clear that Mr Pease knew that deferral had been and was being applied to his share of “Net Management Fees” for much if not all of the time of his employment. Indeed, it was his evidence (undisputed by Mr Formica) that Mr Formica told him (incorrectly, as I find, although this may have reflected Mr Formica’s personal belief at the time) that deferral of management fees was a regulatory requirement, and, further, that he did not particularly object to deferral as it had tax advantages for him. Accordingly, the live question, in my opinion, is whether what Mr Pease was told and was able to find out and did find in fact out for himself amounted to a sufficient communication for purposes of Clause 3.3.1. I answer that question in the affirmative.
The 2015 management fees 
80.	In his opening submissions, Mr Leiper identified the three main questions that arise in respect of Mr Pease’s claim for unpaid management fees as: (i) did the Contract confer a discretion on Henderson to defer and forfeit any part of such fees; (ii) if it did, did Henderson exercise that discretion rationally in deferring and forfeiting such fees, and (iii) in any event, was the deferral and forfeiture of such fees in restraint of trade. However, in both opening and closing Mr Leiper submitted that, even if Henderson’s case on these three points was correct, Mr Pease was and is entitled to be paid the sum of £1,481,000 in respect of his share of “Net Management Fees” for 2015 down to the date of termination of his employment, on the basis that (a) no award of deferred shares was made to Mr Pease in 2015, and (b) in accordance with the Rules of the DEP, the provisions for forfeiture on termination apply only to shares that have been awarded.
81.	In this regard, Rule 13.2(a)(i) of the Rules of the DEP provides:
	“Subject to Rule 13.2(b) [which provides that Henderson may, in its absolute discretion, waive forfeiture having given due consideration to the circumstances of an employee leaving Henderson and an employee’s service to Henderson] where a Participant ceases to be employed by an employing Company for any reason other than a reason listed in Rule 13.1(a) [which covers death, disability or redundancy] during the Restricted Period [the period prior to the vesting date of an award] any Award, and any Restricted Shares or Restricted Investment Fund Interests comprised in such Award, will be forfeited pursuant to Rule 14”.
82.	Further, Rule 14.1 of the Rules of the DEP provides “where Rule 13.2(a)(i) … applies … any Restricted Shares and Restricted Investment Fund Interests held on behalf of the Participant shall be immediately forfeited.”
83.	Mr Oudkerk submitted that this was a technical and inconsequential complaint, on the basis that “It would have served no purpose for these fees to have been formally deferred into the DEP only then to be immediately forfeited pursuant to the applicable policy”. Mr Oudkerk relied on the fact the fees for the relevant part of performance year 2015 had been calculated by Henderson in a way that was consistent with the policy on deferral and forfeiture, that this and the approach that was being taken by Henderson had been explained to Mr Pease, and that Mr Pease had not contended at the time that Henderson should enter these fees into the DEP before forfeiting the same.
84.	I consider that Mr Leiper is right on this point. If an employer contracts for a power to defer fees into a deferral scheme, and if the terms of that scheme provide for fees that have been deferred into it to be forfeit on termination of employment, it seems to me that the employer must either operate that power according to its terms or if the employer wants to achieve the same result without operating that scheme it must obtain the express agreement of the employee that he or she agrees to that consequence. That applies with particular force where the right of forfeiture is not mentioned in the contract and only arises under the terms of the scheme, and where the amount at stake is as much as £1,481,000. Accordingly, as Henderson took neither of those courses, I would hold that Mr Pease is entitled to these fees even if all his other arguments failed.
The amount of the claim
85.	According to a table produced by Mr Leiper, Mr Pease’s claim for unpaid management fees comprises: £1,481,000 in respect of 2015, 3 x 170,488 Henderson shares in respect of 2014, 2 x 105,295.33 Henderson shares in respect of 2014, and 78,660.33 Henderson shares in respect of 2012. According to a table produced by Mr Oudkerk, the sums paid to Mr Pease for the performance years 2012-2014 and for the performance year to 4 June 2015 amount to in total £5,101,000, the sums deferred over the same period amount in total to £3,267,400, and the value of what was forfeited at termination in respect of the same period amounts in total to £2,733,201. These tables contain identical figures for the value of fees in each of the years 2012-2014 and the amounts that were in fact deferred in each of those years. They also contain the same figure for the total value of fees for part of the year 2015, save that Mr Oudkerk’s table treats £908,000 of those fees as “paid” on the basis that this sum is subject to set off against Henderson’s cross-claim under Clause 3.6.2. 
86.	I am not clear whether there is a difference in money value between Mr Leiper’s calculation of what is due to Mr Pease, which comprises a mixture of money sums and Henderson shares, or Mr Oudkerk’s calculation, which comprises money sums alone. I am also unclear as to the tax implications of this aspect of Mr Pease’s claim. Provisionally, however, I should have thought that (a) payments should be made in the same form, and subject to the same tax deductions, as applied while Mr Pease was still employed in respect of the share of fees that Henderson accepted to be payable to him outright, however (b) if Henderson is no longer able to deduct tax because Mr Pease has ceased to be an employee, these payments should be made gross, and he should pay tax on them, and (c) one way or another, it is important that all appropriate tax is paid. 
87.	If the parties are unable to agree these matters, I will hear further argument on them.
Mr Pease’s claim that Henderson breached Clause 3.6.1
88.	Clause 3.6 is entitled “European Special Situations Fund and New Star Hedge Funds” and provides:
“3.6.1 In circumstances where you have in 2009 while employed by the Company set up a European Special Situations OEIC, and you subsequently resign from employment with the company, you (or any entity which you set up or join) will, following the latter of the date of termination of your employment and 1 February 2010, be permitted to replace the relevant Henderson Group company as manager of (a) the European Special Situations OEIC and also (irrespective of whether you have in 2009 while employed by the Company set up a European Special Situations Fund) (b) the New Start European Hedge Fund and (c) The New Star European Leveraged Hedge Fund (all three together the Funds). For the avoidance of doubt, in circumstances where (i) you have while employed by the Company set up a ‘mirror fund’ to the European Special Situations Fund as a result of the fund exceeding the limit set or arising from a new source, or (ii) any of the Funds changes its name but in all other respects remains the same Fund, the provisions of this clause 3.6. shall continue to apply.
3.6.2	Where you (or any entity which you set up or join) replace any Henderson Group company as manager of any of the Funds in the circumstances set out in clause 3.6.1 above, you will procure payment to the Company (or other Henderson Group company nominated by the Company) of 50% of the Management Fees after Deductions generated by any such Fund in the 12 months following such replacement of the relevant Henderson Group company as manager (the First Replacement Year). Management Fees After Deductions means the total fees received in relation to the management of the Funds after deduction of any management fee rebates and/or commissions and also less an amount in respect of the costs associated with running the Funds, subject to a cap equal to the amount that would have been deducted by the Company in respect of costs under clause 3.7.1 below had a Henderson Group company remained as manager of the Funds for the First Replacement Year. You will promptly on request disclose to Henderson details of the management fees rebates and/or commissions deducted from such total fees.”
89.	The list of issues agreed between the parties identifies the following issues in respect of Mr Pease’s claim that Henderson breached Clause 3.6.1: 
(1)	Whether Henderson permitted Mr Pease to exercise his right under Clause 3.6.1 to replace the relevant Henderson Group company with Crux as manager of the ESS (including whether Henderson agreed a mechanism which would be an exercise of that right)?
(2)	Is Mr Pease estopped from denying that the Scheme of Arrangement was agreed and implemented in exercise of his rights under Clause 3.6.1?
The relevance of the failure to set up a European Special Situations OEIC 
90.	As Mr Leiper submitted in opening, the first of these issues turns on a question of contractual interpretation, namely whether the Scheme of Arrangement permitted Mr Pease to “replace the relevant Henderson Group company as manager of [the ESSF]”.
91.	However, although this did not form part of the agreed list of issues, logically the first point taken by Mr Oudkerk before me is that Clause 3.6.1 envisaged that Mr Pease would set up a European Special Situations OEIC and that, in fact, he did not do this. Accordingly, as I understand the argument, Clause 3.6.1 is not engaged for this reason: the Clause refers to replacing the manager of the European Special Situations OEIC, but that was not possible because there was no such entity - there was only the ESSF.
92.	In my view, the short answer to this point is that it was the intention of the parties to focus on the ESSF, and that the establishment of the European Special Situations OEIC, and references to the European Special Situations OEIC in Clause 3.6.1, were only of relevance because it was envisaged that the ESSF would be set up under that umbrella. 
93.	This is reflected in the wording of Clause 3.6, in which (a) the focus is on the ESSF and (b) the European Special Situations OEIC and the ESSF are referred to interchangeably, for example in the heading of Clause 3.6 and in the provision in Clause 3.6.1 that Mr Pease should be permitted to replace the relevant Henderson Group company “as manager of the European Special Situations OEIC and also (irrespective of whether [he has] in 2009 while employed by the Company set up a European Special Situations Fund) [as manager of two other Funds] (all three together, the Funds)”. This also accords with Clause 3.6.2, which refers to Mr Pease (or an entity which he sets up or joins) replacing any Henderson Group company as manager of “any of the Funds”, and which entitles Henderson, in the circumstances there set out, to receive fees generated “by any such Fund”. If the reference to “any of the Funds” in Clause 3.6.2 was construed, so far as concerns the “Fund” first mentioned in Clause 3.6.1, as a reference to “the European Special Situations OEIC” as opposed to “the ESSF”, and if Clause 3.6 made that distinction material, Henderson’s cross-claim under Clause 3.6.2 would be unsustainable, in light of the fact that there was no European Special Situations OEIC.
94.	In these circumstances, I consider that Mr Pease does not need to rely upon an alternative argument raised by Mr Leiper, namely that the effect of Henderson’s payment of very substantial “Net Management Fees” to Mr Pease over several years, calculated carefully and specifically by reference to the performance of the ESSF, was that the parties agreed by conduct to vary the Contract so as to replace references to the European Special Situations OEIC with references to the ESSF. However, I consider that Mr Pease would be entitled to succeed on this point also. The test for implied variation to a contract is subject to the same principles as the test for the implication of a contract by conduct, and requires, in a sentence, conduct which is inconsistent with any other explanation: see Ilkerler Otomotiv ve Ticaret Anonim Sirketi v Perkins Engines Co Ltd [2017] 4 WLR 144, Longmore LJ at [17]-[18]. I consider that this test is satisfied on the facts of the present case. Henderson’s conduct in engaging with Mr Pease over the implementation of his rights under Clause 3.6.1 is also only explicable on the basis that Henderson owed contractual obligations to him under the Clause, which would not be so if it required the setting up a European Special Situations OEIC.
The parties’ core submissions
95.	On the basis that, so far as material to the present dispute, Clause 3.6.1 is concerned with replacing “the relevant Henderson Group company” as manager of the ESSF, Mr Leiper’s core submissions were as follows:
(1)	The ESSF was housed as a sub-fund under the umbrella of the Henderson OEIC. The Henderson Group company which managed the Henderson OEIC also managed the ESSF – there was no other company that carried out that function - and, at the time Mr Pease sought to exercise his right under Clause 3.6.1, was identified in the prospectus of the Henderson OEIC dated 3 March 2014. The ACD is a director, and under Regulation 34(4) of the OEIC Regulations 2001 the business of a company must be managed by its directors. The ACD of the Henderson OEIC was defined in that prospectus as HIFL. Under Part 2, entitled “Management and Administration”, it stated: “The ACD is responsible for managing and administering the Company’s affairs in compliance with the FCA Rules and the OEIC regulations”. It also stated: “the ACD is responsible for continuing to manage and administer the affairs of the Fund in compliance with, inter alia, the OEIC regulations and COLL”. Thus, HIFL was the Henderson Group company which managed the ESSF for purposes of Clause 3.6.1.
(2)	In accordance with that prospectus, HIFL was also the entity to which management fees were payable. In accordance with Clause 3.6.2, it was envisaged that management fees payable in respect of the ESSF would be paid to Mr Pease (or an entity which he set up or joined). If that was not so, he would not be able to procure payment of part of those fees to Henderson pursuant to Clause 3.6.2. The ACD is ultimately entitled to receive fees for the management of the funds. This supports the conclusion that it was envisaged that the manager would be replaced by an ACD, and this fits in with HIFL being the Henderson Group company which managed the ESSF for the purposes of Clause 3.6.1.
(3)	Accordingly, as at the date that Mr Pease sought to exercise his rights under Clause 3.6.1, his contractual right was to replace HIFL. To give effect to that right, it was necessary for Henderson to transfer the responsibilities of HIFL as ACD of the Henderson OEIC to Mr Pease (or his nominee). 
(4)	In the events which happened, it would make no difference, if, contrary to the above, the “relevant Henderson Group company” was not HIFL but HGIL. It appears from the 2014 prospectus that HIFL subcontracted the performance of certain investment management services in relation to the two sub funds within the Henderson OEIC to HGIL, which was defined in the 2014 prospectus as “the Investment Manager”. On this alternative hypothesis, it would have been necessary, in order to give effect to Mr Pease’s right under Clause 3.6.1, for Henderson to permit Mr Pease (or his nominee) to replace HGIL as the delegated investment manager for the ESSF.
(5)	Henderson took neither of the options set out above. Despite being repeatedly advised by Mr Pease as to his contractual rights, Henderson refused to allow Mr Pease to replace the ACD of the Henderson OEIC or to replace the sub-contracted investment manager of the ESSF.
(6)	The effect of Clause 3.6.1 is that Mr Pease was entitled to take over the management of the ESSF in its existing form, without needing to disrupt investors and without having to spend considerable sums (and effort) establishing his own FCA regulated fund to house them. By refusing to allow Mr Pease to do this, and by requiring him to go to the effort of setting up a new fund and implementing a Scheme of Arrangement, Henderson breached the Contract.
96.	Mr Oudkerk’s core submissions were as follows:
(1)	The Scheme of Arrangement was an agreed exercise of Mr Pease’s right under Clause 3.6.1. Further, Mr Pease agreed to honour his obligation to procure the payment of fees to Henderson pursuant to Clause 3.6.2. Henderson made clear the basis upon which it was proceeding, and Mr Pease elected to proceed. The correspondence records the agreed termination date of the Contract, reflecting the consensus reached. This was a valid exercise, alternatively variation, of Clause 3.6.1. The fact that the FCA sought agreement between the parties, and that the parties confirmed their agreement, underscores the fact that there was agreement.
(2)	Mr Pease’s attempt to reserve his rights regarding the use of the Scheme of Arrangement was ineffective because: (a) he had no rights to reserve and (b) Henderson made clear that it was proceeding on the basis that the parties had reached agreement and there was therefore no effective reservation of rights.
(3)	Further or alternatively, Mr Pease is estopped from now contending that the Scheme of Arrangement was a breach of clause 3.6.1.
(4)	Mr Pease’s reliance on the literal wording of Clause 3.6.1 does not assist him. Even if it was possible to ignore the above agreement, Mr Pease’s case that he should be awarded damages based on his literal construction of Clause 3.6.1 makes no sense. The material part of Clause 3.6.1 provides that “in circumstances where you have … set up a European Special Situations OEIC… you will… be permitted to replace the relevant Henderson Group company as manager of … the European Special Situations OEIC…”. As there was no European Special Situations OEIC, on a literal reading no right arises. Either the Clause was uncertain and so the parties had to agree something by way of clarification (which Henderson contends they did on the basis that Clause 3.6.1 was silent as to the mechanism by which the prescribed result was to be achieved and the Scheme of Arrangement was a permissible option) or Mr Pease’s right did not arise at all. It is common ground that the parties proceeded to the agreement that they reached on the basis that “OEIC” in Clause 3.6.1 should be read as “Fund”. That was obviously sensible. However, Mr Pease cannot have his cake and eat it. He cannot contend both that “OEIC” should be read as “Fund” and that he should have damages on the basis that the Clause required no clarification.
(5)	While the immediately preceding point is fatal to Mr Pease’s case, it reinforces Henderson’s case that the Contract was unclear and the parties therefore agreed the Scheme of Arrangement in exercise of Mr Pease’s rights under Clause 3.6.1. Mr Pease did not have any other right to take what was, in essence, a £1bn fund. Mr Pease’s suggestion that he could take a very valuable fund other than in exercise of his Clause 3.6.1 rights is contrary to commercial common sense, and to the fact that he and his solicitors agreed that he would honour Clause 3.6.2.
(6)	Mr Pease’s right under Clause 3.6.1 only arose “following the later of the date of the termination of [his] employment (i.e. 5 June 2015)”. There could be no breach of the right prior to 5 June 2015. On Mr Pease’s own case the transfer to Crux took place on 5 June 2015. It follows that Mr Pease’s pleaded claim that “Had the Defendant complied with Clause 3.6.1 of the Contract, Crux would have become the fund manager of the ESS no later than 14 October 2014… by reason of the Defendant’s breach, the implementation of the Scheme of Arrangement had the consequence that Crux was unable to start managing the fund until 8 June 2015” must fail. Mr Pease cannot bring a claim based on a right that had not arisen.
97.	In broad terms, Mr Leiper focussed on the wording of Clause 3.6.1 and Mr Pease’s reservation of rights in respect of the Scheme of Arrangement, whereas Mr Oudkerk concentrated on what he submitted to be the overall objective of the Clause, namely to enable the end result that the management of the ESSF was transferred to Mr Pease (or an entity nominated by him) to be achieved, by (as he submitted) whatever means Henderson might choose. Mr Oudkerk further submitted, in substance, that, in any event, Mr Pease expressly agreed that Henderson could perform Clause 3.6.1 by transferring management through the mechanism of a Scheme of Arrangement that was in fact adopted, alternatively that Mr Pease was estopped from denying that a transfer by these means constituted performance of Clause 3.6.1. Mr Oudkerk also relied on a number of additional points, including: the need for Henderson to act in its clients’ best interests and to treat customers fairly; the way in which matters were presented to the FCA; and the implications of adopting any alternative to a Scheme of Arrangement.
The different ways of transferring management to Mr Pease or his nominees 
98.	So far as concerns the available mechanisms for effecting a transfer of management, the following description and comments are largely based on Mr Oudkerk’s submissions:
(1)	Replace HIFL as the ACD of the Henderson OEIC
A third party ACD would replace HIFL as the ACD of the Henderson OEIC and then appoint Crux as the investment manager of the ESSF. Henderson’s evidence was to the effect that this mechanism was impractical, fraught with legal, regulatory and reputational risks and contrary to the best interests of the investors in the GFF. It also required the negotiation of further distribution agreements, a new IMA between HGIL and the new ACD and disruption to the investors in GFF. When Mr Bowers was asked about hypothetical situations where the GFF remained in the Henderson OEIC, with the same investment manager and the same distribution agreements in place, he explained that (a) once the ACD was replaced it would have been in charge of the OEIC and it could have changed the investment manager or the distribution agreements and (b) with regard to GFF investors: “we couldn’t have found a reason why it was in their interests to move them to a smaller … less well known, corporate entity and change the name of the fund from a Henderson fund to an FP Henderson fund. I couldn’t … [think] what would we put in the letter to those investors and their advisers to justify this change, and it came back to: we would only be serving the narrow commercial interests of Mr Pease”.
(2)	Transfer both the ESSF and the GFF
The parties would agree commercial terms for Mr Pease to also take over the GFF, thereby taking over management of both sub-funds within the Henderson OEIC. However, Mr Pease had no legal right to take over the GFF. Further, Henderson’s evidence was that this approach ignored the best interests of investors in the GFF: (a) Crux did not have the capability to manage a global financial strategy; and (b) the GFF was aimed at retail investors, the least sophisticated class, and, irrespective of the fact that the GFF was smaller than the ESSF, Henderson could not disregard their interests to simplify the process for Mr Pease and there was no commercial rationale for the necessary corporate action from the perspective of GFF’s investors. The fact there were fewer investors in GFF did not allow their interests to be outweighed by Mr Pease’s interests or those of the investors in ESSF.
(3)	Merge the GFF out of the Henderson OEIC
The GFF would be merged into a different OEIC controlled by Henderson by way of a scheme of arrangement leaving the ESSF as the sole fund in the Henderson OEIC. This would have required a vote from the shareholders of GFF and Henderson’s evidence was that such a transfer was not in their best interests. 
(4)	Replace HGIL or sub-contract the Investment Manager of the ESSF 
The investment management function would be taken over by Crux. However, save in very limited instances, where such an arrangement is in the investors’ best interests and there is a commercial rationale, Henderson does not sub-contract investment management services to third parties. On Henderson’s case, further difficulties included: (a) Crux would remain subject to HIFL’s oversight of its investment management services; (b) HIFL would remain responsible for the marketing and distribution of shares in the ESSF alongside the marketing and distribution of Henderson’s own funds with competing strategies; (c) this required the negotiation of either or both a distribution agreement between HIFL and Crux and/or an IMA between HIFL or HGIL and Crux; and (d) there was no certainty that such agreements could be reached, or as to the timescale for reaching them, and the Contract did not address the terms of such agreements. 
(5)	Scheme of Arrangement
Henderson would set up a new OEIC into which the ESSF would be merged (subject to an investor vote achieving a majority of 75% of those who voted). The new OEIC would have a new third party ACD and, pursuant to an IMA, the ACD would delegate the management to Crux. This was Henderson’s preferred option as Henderson considered it least likely to cause disruption to investors, including investors in the GFF. Mr Bowers’ evidence justifying the choice of the Scheme of Arrangement included that “the scheme of arrangement was the fairest and actually the most effective way of transferring the fund from Henderson to Crux” and that  “[other] options failed a very simple sense test, i.e. thinking ahead, how would I construct a letter to an investor or speak to an adviser or a discretionary fund manager and persuade them of the merits of moving their clients either to Crux, to a Global Financials Fund management team which hadn’t been identified or hired, or secondly, to move their investments from a well-established OEIC shell into a mirror shell, the justification for which was to allow another third party, another fund manager, to take his assets with him because that was in his contract of employment when he joined the firm several years earlier. It just didn’t stand up to scrutiny at any level.” Mr Bowers also explained:
“I think in our letter to the ESSF investors we were very clear that Mr Pease was moving companies and had the right to take this fund with him. In actual fact, the scheme of arrangement was a totally fair way of doing that. Mr Pease had triggered this corporate action and the scheme of arrangement was a method by which the investors could vote on the corporate action. They weren’t just being told what was happening, they could vote on it. It was cost-effective because Mr Pease was picking up all the costs of the transition. It was tax-efficient for the vast majority of investors, and it gave Mr Pease total control of the fund, which is what he wanted. So … it was not difficult at all to justify to the ESSF investors why the scheme of arrangement was the best method of transferring them to Crux. It was the obvious way of doing it.” 
Compliance with Clause 3.6.1
99.	In my view, it is clear that HIFL was the “relevant Henderson Group company manager” for purposes of Clause 3.6.1. Accordingly, on the face of it, the entitlement conferred on Mr Pease by Clause 3.6.1 was to have HIFL replaced either by himself personally or by an entity that he set up or joined. As appears from the above synopsis, this could have been achieved by replacing HIFL as the ACD of the Henderson OEIC with a third party ACD, and then appointing Crux as the investment manager of the ESSF. It would have been necessary to follow that course, because there was no ACD (i.e. manager) of the ESSF alone, due to the fact that the ESSF had been set up under the umbrella of the Henderson OEIC and the Henderson OEIC contained an additional sub-fund (i.e. the GFF). It was therefore not possible to replace HIFL as the ACD of the ESSF alone. This was a product of the fact that Henderson chose to set up the ESSF as a sub-fund of the Henderson OEIC. It seems likely that the potential ramifications of the decision to structure matters in this way was not appreciated when the Contract was made, and indeed that Clause 3.6.1 would have been drafted differently if the parties had envisaged that no European Special Situations OEIC as such would be set up.  
100.	It is common ground that this course was not followed. Instead, as appears from the above synopsis, the ESSF was merged (or, in Mr Bowers’ words the ESSF was moved or transferred) through the mechanism of the Scheme of Arrangement into a new OEIC.  
101.	That process produced the end result that the ESSF moved to a new OEIC and, as the third party ACD of that new OEIC delegated management of the ESSF to Crux, that management was then carried out by an entity which Mr Pease had set up or joined. 
102.	In my opinion, however, Mr Pease was not thereby permitted to exercise his right under Clause 3.6.1. Mr Pease was not able to take over the management of the ESSF in its existing form, as I consider that Clause 3.6.1 contemplated and required Henderson to permit him to do. On the contrary, he was only able to take over that management after a complex process which involved (among other things) getting investors to vote for it.
103.	In fact, as Mr Leiper submitted, the manager of the Henderson OEIC has not changed: the Henderson OEIC remains in place, HIFL remains its ACD, its delegated investment manager remains HGIL, and the ESSF remains on the FCA’s register. In response, Mr Oudkerk submitted that (a) the substance of the implementation of the Scheme of Arrangement is that the ESSF remained as a sub-fund of an umbrella OEIC and that Mr Pease took over the management of the ESSF, and (b) this is how matters have been presented to the market and investors, for example, in the statement on the Crux website (in which the Crux European Special Situations Fund is referred to as “CESSF”) that “[Mr Pease] has managed the CESSF fund since its launch in October 2009” and in Crux’s marketing of the CESSF fund to investors on the basis of its performance since launch on 1 October 2009. In my view, these points are not an answer to the correct legal analysis, which is that given by Mr Leiper. It may well be that it would have made no difference to Mr Pease whether Henderson permitted him to take over the management of the ESSF in accordance with Clause 3.6.1 or whether the Scheme of Arrangement was implemented, and to that extent the substance of the end result would be all that mattered. However, there was a real and substantial difference between those two alternatives, and in the event that this mattered to Mr Pease he is entitled to complain that Henderson did not comply with the contractual rights that the Clause conferred on him (subject only to other considerations, which I address below). 
104.	I am unable to accept that Henderson was relieved from its obligation to perform Clause 3.6.1 according to the terms which it had agreed with Mr Pease by the difficulties and concerns identified by Mr Bowers. Nor do I consider that Henderson was entitled to perform Clause 3.6.1 in some other way that produced the end result that Mr Pease gained control of the ESSF because it was from Henderson’s perspective the obvious or best or fairest or most cost-effective way of transferring the ESSF investors to Crux or was regarded as tax-efficient for the vast majority of investors. These difficulties and concerns were the product of the bargain that Henderson struck with Mr Pease. It was not suggested on behalf of Henderson that they meant that Henderson could not perform Clause 3.6.1 in the manner Mr Pease contended it was obliged to do. 
105.	Henderson’s concern ought not to have been with identifying to itself (or, in so far as performance of Clause 3.6.1 involved affecting the rights and interests and views of others such as the investors in the GFF or advisers or discretionary fund managers, other persons) a justification for taking steps which appeared to be solely in the interests of Mr Pease, but rather with analysing objectively what Clause 3.6.1 obliged it to do and then identifying how it could honour its contractual obligations to Mr Pease. 
106.	If confronted with a tension between, for example, on the one hand, taking the course that Mr Pease contended that he was entitled to require and, on the other, protecting its relationship with the investors in the GFF and the interests of those investors, Henderson should have focussed on how to manage and protect those competing interests while also performing Clause 3.6.1 according to its terms, rather than on how it might transfer the ESSF to Mr Pease without having any effect on those interests.
107.	As far as I can see, it would have been possible to implement mechanism (1) summarised above while at the same time protecting the investors in the GFF against any change in investment manager or distribution agreements by appropriate agreements with Mr Pease or the new ACD, and to follow that up, if Henderson thought that necessary or desirable, by implementing mechanism (3) summarised above, and thus bringing the GFF fully back under a Henderson umbrella. Mr Pease had no entitlement to manage the GFF and, on the evidence before me, no interest in managing it, and thus no basis for obstructing the negotiation of appropriate protections. If, contrary to my understanding of Henderson’s evidence, it was not merely difficult or inconvenient but either legally or practically impossible to follow such a course, Henderson was placed in an unfortunate predicament. However, that did not mean that Henderson became entitled to perform Clause 3.6.1 other than according to its terms.
108.	Mr Leiper accused Henderson of intransigence in the face of Mr Pease’s consistent claim as to how it was obliged to perform Clause 3.6.1, and there was undoubtedly some evidence that Henderson had put other interests and concerns above the recognition of that claim. For example, Mr Wagstaff wrote at one stage “we will need to decide if it is in our interests to make it easy for [Mr Pease] to take the assets and our staff”; and Mr Bowers said in evidence that “Our commitment to our investors we always felt overrode any requirement to implement Mr Pease’s rights”. 
109.	However, for purposes of Mr Pease’s case it is unnecessary to make findings on these matters. It is sufficient, as Mr Leiper submitted, to say that if Henderson chose to heed or prioritise other considerations instead of complying with the wording of Clause 3.6.1, the consequence of that may be that it acted in breach of contract, as I consider that it did.    
110.	For these reasons, I consider that Henderson did not permit Mr Pease to exercise his right under Clause 3.6.1 to replace the relevant Henderson Group company as manager.
The agreement to the Scheme of Arrangement
111.	Mr Oudkerk submitted that following a commercial negotiation which is evidenced by a series of emails and meeting notes, during the course of which the parties discussed the various options and put forward their views as to the construction of the Contract and the best way to proceed, the parties reached a clear agreement. 
112.	This agreement was that, in preference to any alternative method proposed by Mr Pease, the “transfer of the ESSF” should be effected by Henderson’s proposed method, namely a Scheme of Arrangement involving Fund Partners Limited (“Fund Partners”) being appointed as the ACD of a new Fund into which the ESSF would be merged, and Fund Partners then delegating the investment management function to Crux. 
113.	Mr Oudkerk placed considerable reliance on the fact that the FCA was concerned to know what mechanism it was being asked to approve, and that in a letter to the FCA dated 3 October 2014 signed on behalf of both Henderson and HIFL and by Mr Reid on behalf of Crux it was stated that Henderson and HIFL on the one hand and Mr Pease on the other hand “have agreed that a scheme of arrangement is the most appropriate means of transferring the management of [the ESSF] to Crux”. The letter, which was mirrored in a press release issued by Henderson and Crux, continued as follows:
“Mr Pease will remain employed by Henderson and manage [the ESSF] until the scheme of arrangement is completed, and when the [ACD] of the fund changes from HIFL to Fund Partners, and Crux is appointed manager of the fund, Mr Pease’s employment by Henderson will terminate, and he will be employed by Crux.”
114.	Mr Leiper submitted that it is nothing to the point that (as Mr Pease inevitably accepts) Mr Pease agreed to take part in the Scheme of Arrangement. The relevant questions are: (a) whether the Scheme of Arrangement implemented Mr Pease’s contractual right under Clause 3.6.1, and (b) if not, whether Clause 3.6.1 was varied so as to be capable of performance by the Scheme of Arrangement. As to the first of those questions, Mr Leiper submitted that (as I have found) the Scheme of Arrangement did not implement Clause 3.6.1: Mr Pease has replaced neither HIFL nor HGIL in their respective roles in relation to the ESSF. Further, the parties did not at any time express themselves as agreeing that the Scheme of Arrangement implemented Clause 3.6.1: on the contrary, Mr Pease made it clear throughout that he considered that it did not give effect to his contractual right contained in Clause 3.6.1. As to the second question, there was plainly no express variation of Clause 3.6.1, and any suggestion that there was an implied variation by conduct is doomed in light of the test for implied variation set out above. 
115.	Moreover, Mr Leiper complained that the contention that there was a variation of the Contract is not pleaded. (Nor, I would add, is it included in the list of issues agreed between the parties). 
116.	Mr Leiper submitted that Henderson’s case in relation to these questions repeats in the context of the relevant correspondence the same mistake that Henderson has made with regard to the wording of Clause 3.6.1, namely that the right conferred on Mr Pease was to “take the ESSF” rather than to replace the relevant Henderson Group Company as manager. Henderson’s repeated references to it being “common ground” that Clause 3.6.1 was silent as to the mechanism by which the right contained in the Clause would be implemented have to be seen in that light. Mr Pease has always accepted that Clause 3.6.1 did not set out the detailed steps by which the relevant Henderson Group Company was to be replaced as manager, but he has consistently adhered to the position that this was the relevant right that required to be implemented. Viewed in that way, the correspondence does not support Henderson’s case on either question.
117.	Mr Leiper placed particular reliance on the following documents (emphasis added):
(1)	On 4 July 2014, Mr Pease shared with Henderson a note of advice prepared by Mr Ferguson for Mr Pease, which included the following:
“…on a proper construction of [Clause 3.6.1], there seems to be no doubt that should you resign you or any entity you replace will be permitted to replace the Henderson Company as manager of the fund. What is missing from the clause is any indication as to how the replacement of the Henderson Company might be achieved.
…
It is [Leading Counsel’s] view that, on a proper construction of [Clause 3.6.1] the “Manager” referred to is [HIFL], the ACD of the Henderson OEIC …”
(2)	On 22 July 2014 Mr Ferguson wrote to Ms Irvine to like effect.
(3)	On 14 August 2014 Mr Ferguson wrote to Ms Irvine stating:
	“At the risk of sounding like a stuck record I must repeat that it is important to bear in mind the contractual rights/obligations. Richard’s right is to replace the current “manager”.”
(4)	On 22 August 2014, Mr Ferguson wrote to Ms Irvine as follows:
	“We have yet to agree the means by which Richard’s right is to replace the current “manager” of ESS.
	…
	Leaving aside for the moment who is correct on the question of construction, my client is prepared to explore a means of implementing his right which is acceptable to both parties, whatever his strict contractual right: that said, my client’s flexibility and willingness to seek a solution satisfactory to all should not be read as a willingness on his part to suffer material disadvantage as a consequence.” 
(5)	On 31 August 2014 Mr Reid sent an email to Ms Irvine stating:
	“I should mention that Richard is being advised that accepting a Scheme of Arrangement is less than his contractual entitlement, it may complicate matters with the FCA who have told us that Crux becoming the delegated [sic] manager would be their preference and it will require Richard to incur more time, risk, cost and inconvenience than would otherwise be the case. Richard is willing to compromise on some matters to bring this matter to a mutually-satisfactory conclusion, but not if it means material detriment to him.”
(6)	On 1 September 2014, Mr Ferguson sent an email to Ms Irvine stating:
	“…It is a statement of the obvious that your and my interpretation on the provisions of Richard’s contract differ; as I told you, the view we have come to is that the fact that these issues exist and are unresolved should not be an impediment to seeking a solution which progresses the transfer of the ESS fund; the investors interests will not be best served by addressing our differences now; those interests will be best served by shelving the differences and working to achieve certainty as quickly as practically possible.” 
(7)	On 25 September 2014, Mr Ferguson sent an email to Ms Irvine stating: 
	“I have advised my client that Henderson’s insistence that we proceed by way of a scheme of arrangement is a breach of their obligations under Richard’s contract; that said we accept that it would be in no-one’s best interest, least of all the investors’, to get involved in Court proceedings now. In any event, it is not, for the moment, certain that my clients will suffer any loss as a consequence. 
	Nonetheless I hope you understand that I have no alternative but to inform you that Richard’s position and that of Crux is formally reserved.” 
(8)	The letter dated 29 September 2014 signed (a) by Mr Pease and (b) on behalf of HIFL and Henderson, which records the steps that Mr Pease and Henderson will take “to facilitate the implementation of the scheme of arrangement”, is not in any way expressed to be connected to the Contract. 
118.	In support of his argument (a) that the parties needed to agree, and did agree, a clarification of “the route by which the ESSF would transfer” in accordance with Clause 3.6.1, alternatively (b) that the parties agreed a variation of Clause 3.6.1 as to “the precise mechanism for giving effect to the substance of the right”, Mr Oudkerk relied on the following documents and submissions:
(1)	Mr Pease’s acceptance in cross-examination that the parties needed to agree a way of allowing him in practical terms to implement his rights under Clause 3.6.1 and the parties needed to try and agree something to make it work.
(2)	The contents of Mr Ferguson’s memorandum dated 11 July 2014, in which he stated  that there were “a number of different ways” of dealing with Mr Pease’s rights under the Contract”, together with (a) Mr Pease’s agreement to the use of a Scheme of Arrangement to transfer the ESSF, and (b) Mr Pease’s acceptance in cross-examination that “the most beneficial way of exercising the right was some form of agreement” and that, absent agreement, he would have been in a far worse position, and that the negotiations were about agreeing how his right under Clause 3.6.1 would be implemented.
(3)	Mr Pease’s stance that his agreement to the Scheme of Arrangement was only given because he felt that he had no other choice is of no legal relevance in the absence of a case based on duress. Mr Pease is a commercial man; he knew the options open to him; he made a choice; and he must be held to that choice. 
(4)	Throughout the negotiations, it was clear that the parties were seeking to agree terms to give effect to Clause 3.6.1. For example: 
(i)	on 24 July 2014, Ms Irvine stated in an email to Mr Ferguson that they were seeking to agree terms “by which to effect the provisions in clause 3.6.1”; 
(ii)	the memorandum of meeting held on 24 July 2014 recorded a proposal that the parties should “enter into an agreement the purpose of which would be to agree the process by which [Mr Pease] exercise[s] his right to replace the manager of ESS as set out in his contract by specifying precisely how [his] right as set out in his contract would be implemented”; 
(iii)	on 5 August 2014, Mr Ferguson stated that: “at present we are endeavouring to agree the best way to give effect to Richard’s contractual right”; 
(iv)	on 22 August 2014, Mr Ferguson stated in an email to Ms Irvine “leaving aside for the moment who is correct on the question of construction, my client is prepared to explore a means of implementing his right which is acceptable to both parties, whatever his strict contractual right” (omitting the words upon which Mr Leiper placed emphasis); and
(v)	on 31 August 2014, Mr Reid sent an email to Ms Irvine stating that Mr Pease “is prepared to accept your proposal that his entitlement to replace the manager of the ESSF will be implemented by a Scheme of Arrangement on condition that Henderson accept some very important conditions”.
(5)	On 29 September 2014, Ms Irvine sent an email to Mr Ferguson stating in relation to the letter dated 29 September 2014 that was signed by Mr Pease on the one hand and Henderson and HIFL on the other hand that “I believe this letter is meant to address the agreed process by which Richard will exercise his right notwithstanding the fact that the employment contract signed in 2009 is silent on the mechanism”, and, further, that:
“Henderson is proceeding on the basis that we have agreed a route with Richard Pease as to how we will implement the replacement of the manager. 
We disagree that the scheme of arrangement is a breach of obligation and do not accept any assertion that Richard Pease has been forced into signing the letter of undertaking but that he is signing it based on relevant advice.
Please advise what rights you are formally reserving on behalf of Richard Pease? We are proceeding on the basis that we have agreed a route by which he can exercise his right which has two conditions attached to it – that of regulatory and investor consent. If it is the case that these conditions are not met, we would expect to have a discussion about how he can exercise his right in the alternative”.

(6)	The letter dated 29 September 2014 signed by the parties recorded the steps that they would take “to facilitate the implementation of a scheme of arrangement” by which Fund Partners would be appointed the ACD of a new OEIC into which the ESSF would be merged and for which Crux would be the investment manager. 
(7)	The email dated 3 October 2014 that was sent by Mr Reid to the FCA stated that the parties had agreed that there will be a scheme of arrangement put before investors and that “the [ESSF] and the managers will transfer from Henderson to Crux at the same time” and the joint letter to the FCA signed on 3 October 2014 stated that “the FCA asked that they be provided with more clarity on how Mr Richard Pease’s entitlement to change the manager of the Henderson European Special Situations Fund was to be implemented” and confirmed that there was an agreement “that a scheme of arrangement is the most appropriate means of transferring the management of the [ESSF] to Crux”. 
(8)	Mr Pease agreed in evidence that the FCA were told that the parties had reached this agreement and that there was an advantage to him in telling the FCA this because it meant that Crux would get the earliest possible approval.
(9)	The agreed joint press release dated 15 October 2014 stated: (a) that the ESSF, currently managed by Mr Pease, would be transferred by Scheme of Arrangement from Henderson to Crux’s nominated third party ACD; and (b) that post transfer the ESSF will continue to be managed by Mr Pease and his team at Crux. 
(10)	It was put to Mr Pease that there was an advantage to him in telling clients the above was agreed as it meant the he would keep the goodwill that the fund engendered and he replied that “It was essential … that it was agreed”. 
(11)	Between 29 September 2014 and 5 June 2015, the replacement of the management of the ESSF was implemented by way of the Scheme of Arrangement.
(12)	Finally, during the period of implementation:
(i)	On 13 November 2014, Mr Reid wrote to Henderson stating that it was “required to use best endeavours to allow Richard Pease to replace the manager of the European Special Situations Fund by means of a Scheme of Arrangement in a reasonable and timely manner”.
(ii)	On 22 January 2015, Mr Reid wrote to the FCA stating that “during the approval process detailed discussions were held with the FCA Application Dept … regarding which option should be used in the application. Following the FCA’s advice in a conference call on 14th August 2014 CRUX and Henderson  focussed on Option Three (the Scheme of Arrangement) … The fee calculation should therefore be based on Option Three i.e. no funds will be managed by CRUX until the end of the Scheme of Arrangement (currently pending FCA approval) in June 2015”.
(iii)	On 12 May 2015 Mr Ferguson stated in an email to Mr Bowers that “Clearly we need to comply with the terms of 3.6.2”; on 11 May 2015 Mr Reid stated in an email to Mr Bowers and others that Mr Pease “intends to honour his commitment re costs”; and on or about 20 May 2015 Mr Ferguson drafted a letter setting out how the formula in Clause 3.6.2 was to operate. These comments proceeded on the basis that Mr Pease had exercised his right under Clause 3.6.1.
119.	In my opinion, there remained at all times a disagreement between the parties as to the scope and content of Mr Pease’s rights and Henderson’s obligations under Clause 3.6.1. Nevertheless, while at the same time being careful to reserve his right to complain that Henderson was acting in breach of those obligations, Mr Pease was willing, if not anxious, to progress matters by the only means that he regarded as being in practice available to him in light of Henderson’s stance, namely by the Scheme of Arrangement. That was made clear to Henderson on behalf of Mr Pease. All that, in my view, is evident from the documents cited by Mr Leiper, and in particular the emails from Mr Ferguson dated 1 and 25 September 2014, which do not feature in Mr Oudkerk’s exposition of this aspect of Henderson’s case.
120.	Ms Irvine’s email dated 29 September 2014 did not produce an agreement where none existed before. In fact, it recorded the continuing disagreement between the parties as to whether implementing the Scheme of Arrangement was a breach of Henderson’s obligation under Clause 3.6.1. The answer to Ms Irvine’s question as to what right Mr Ferguson was formally reserving on behalf of Mr Pease was already apparent from Mr Ferguson’s email dated 25 September 2014, namely the right to complain of Henderson’s breach of Clause 3.6.1. Indeed, Ms Irvine’s statement that Henderson was proceeding on the basis that a route had been agreed by which Mr Pease could exercise his right under Clause 3.6.1 subject to two conditions which might or might not be met (in which case the matter would need to be revisited in order to discuss alternative arrangements) merely serves, to my mind, to emphasise the difference between the Scheme of Arrangement and compliance with the obligations contained in that Clause.
121.	In my judgment, that analysis is not contradicted by any of the communications, events, and extracts from the evidence of Mr Pease that are relied upon by Mr Oudkerk. The parties had indeed agreed a way forward, but this was pragmatic and not by way of either a binding compromise or resolution of their different contentions as to the proper interpretation of the Contract or an express or implied variation of Clause 3.6.1.
122.	As to the first limb of Mr Oudkerk’s argument that Mr Ferguson’s reservation of Mr Pease’s rights regarding the use of the Scheme of Arrangement was ineffective, I have already held that Mr Pease did have rights to reserve. As to the second limb of that argument, namely that Henderson made it clear that it was proceeding on the basis of an agreement and that by thereafter choosing to proceed Mr Pease gave up any reservation of his rights that would otherwise have been effective, Mr Oudkerk relied on the fact that it was only after Ms Irvine had sent her email dated 29 September 2014 that the parties then signed the letter dated 29 September 2014. Mr Pease signed that letter on 1 October 2014, and it was signed on behalf of Henderson and HIFL on or about 3 October 2014. As Mr Pease did not respond to or challenge the position set out in Ms Irvine’s email, Mr Oudkerk submitted that it was clear that by signing the letter Mr Pease was agreeing that his rights under Clause 3.6.1 would be implemented by the Scheme of Arrangement, and he therefore gave up any prior reservation of his rights.
123.	In my view, this argument seeks to place a weight on the signing of the letter dated 29 September 2014 which it cannot bear. Mr Pease’s antecedent reservation of rights was clear and express. It was not negated by Ms Irvine’s email dated 29 September 2014, and Ms Irvine did not say in that email that Henderson would only go ahead with the Scheme of Arrangement if Mr Pease gave up that reservation of rights. The letter dated 29 September 2014 recorded how the parties were indeed planning to go ahead with the Scheme of Arrangement, but it did not say that Henderson was only proceeding down this route on the basis that (contrary to Mr Pease’s previously expressed position) Mr Pease accepted it as fully discharging Henderson’s obligations under Clause 3.6.1.   
124.	For these reasons, I reject Mr Oudkerk’s arguments to the effect that the agreement and implementation of the Scheme of Arrangement constituted an exercise of Mr Pease’s rights under Clause 3.6.1, either as originally worded or as later varied by the parties. I also reject Henderson’s case that Mr Pease did not effectively reserve those rights.
The argument that there could be no breach prior to 5 June 2015
125.	Mr Leiper complained that the argument that Henderson complied with Clause 3.6.1 because Mr Pease’s right to replace the relevant Henderson Group company as manager of the ESSF did not arise until the date of termination of his employment on 5 June 2015, and Henderson permitted him to replace the manager on or immediately after that date, raised a new point which (a) had not been pleaded and (b) ought to have been pleaded. He submitted that if it had been pleaded Mr Pease would have met it by pleading that the Contract contained an implied term that the parties would cooperate in effecting such replacement prior to Mr Pease’s resignation, and that Henderson breached this implied term with the result that Mr Pease’s date of termination of employment had to be delayed until 5 June 2015, causing him the same losses as he claims were occasioned by Henderson’s failure to honour his Clause 3.6.1 right.
126.	Mr Oudkerk’s response was to say that the point had been pleaded, in paragraph 7 of Henderson’s Reply and Defence to Mr Pease’s Part 20 Claim, and that Henderson was not obliged to particularise all the reasons why there had been no breach of Clause 3.6.1. Mr Oudkerk further submitted that if Mr Pease wanted to rely upon an implied term of cooperation this ought to have been pleaded in Mr Pease’s Particulars of Claim.
127.	Paragraph 12 of Mr Pease’s Reply, Defence to Counterclaim and Part 20 Claim alleges “On his resignation, the Claimant sought to exercise his right to replace the relevant Henderson Group company as manager of ESS. In breach of contract, the Defendant refused to permit this”. It then pleads a series of facts and matters, including that in an email dated 22 July 2014 Mr Ferguson proposed to Henderson that HIFL should be replaced as ACD by an entity nominated by Mr Pease, that in an email dated 24 July 2014 Ms Irvine on behalf of Henderson proposed instead that a scheme of arrangement should be entered into, and that by his email to Ms Irvine dated 25 September 2014 Mr Ferguson informed Henderson that Mr Pease considered that a scheme of arrangement was a breach of Henderson’s obligations and that in agreeing to it Mr Pease’s rights were formally reserved. Paragraph 13 pleads that, for these reasons, Mr Pease denies that the Scheme of Arrangement was agreed and implemented in exercise of his rights.
128.	Paragraph 7 of Henderson’s Reply and Defence to Mr Pease’s Part 20 Claim pleads to paragraph 12 of Mr Pease’s Reply, Defence to Counterclaim and Part 20 Claim as follows:
“It is denied that the Defendant is in breach of contract as alleged at paragraph 12 or at all. As the contemporaneous documents make clear, the parties discussed and agreed the mechanism by which the Claimant’s right to replace under Clause 3.6.1 of the Contract was to be exercised, namely under the Scheme of Arrangement as particularised below”.
129.	I do not accept that the point which is based on the date of termination of Mr Pease’s employment is pleaded in Paragraph 7 of Henderson’s Reply and Defence to Mr Pease’s Part 20 Claim. Paragraph 7 is addressing a completely different point, namely whether Henderson acted in breach of contract by not permitting Mr Pease to replace the relevant Henderson Group company as manager of the ESSF and by instead implementing the Scheme of Arrangement. In keeping with what is pleaded in Paragraph 7, that point is reflected in the list of issues agreed between the parties, whereas the point based on the date of termination of Mr Pease’s employment is not. Moreover, it is wrong to say that it is open to Henderson, under the rubric of a general denial of breach of contract, to rely on reasons as to why it contends that there was no breach without pleading those reasons. On the contrary, CPR 16.5(2) provides: “Where the defendant denies an allegation … he must state his reasons for doing so”.
130.	Accordingly, as Henderson has made no application for permission to amend, I do not consider that this point is available to be taken by Henderson. 
131.	If that is wrong, I consider that fairness, justice and the overriding objective point to the conclusion that Mr Pease should be permitted to deploy in answer to it the arguments concerning the implied term of cooperation adumbrated by Mr Leiper. These arguments are based on the evidence and materials already before the Court, and were first flagged up in Mr Leiper’s opening submissions. Their late introduction therefore would not cause any prejudice to Henderson or jeopardise the trial hearing or result in any adverse consequences in relation to the use of the Court’s resources and other Court users. 
132.	On the footing that those arguments arise, I would accept them as a complete answer to Henderson’s new point. In summary:
(1)	Chitty on Contracts, 32nd edn, para 14-104 states (omitting citations): “The court may be willing to imply a term that the parties shall co-operate to ensure the performance of their bargain. Thus: “… where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectively be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.” However, the guidelines mentioned above for the implication of a term must be taken into account. [This is a reference to well-known authorities concerning the implication of terms on grounds of business efficacy and so forth]. Also the duty to co-operate and the degree of co-operation required is to be determined, not by what is reasonable, but by the obligations imposed—whether expressly or impliedly—upon each party by the agreement itself, and the surrounding circumstances.” 
(2)	The reasons for implying such a term in the present case are, in a nutshell, that Clause 3.6.1 would be unworkable without co-operation between the parties to put in place the necessary arrangements to permit Mr Pease to replace the relevant Henderson Group company as manager of the ESSF on the date following termination of his employment. This was especially so in light of the fact that his notice period was of only one month’s duration, that it was common ground that it would take longer than one month to put the necessary arrangements in place, and that it was also common ground that there were regulatory requirements and obligations towards investors that required input from both parties and that needed to be complied with in that context. 
(3)	The breach of that implied term and the consequences of that breach, involve, in my judgment, applying mutatis mutandis the same reasoning and the same considerations as apply to those topics in the context of the agreed issues identified by the parties which I have already addressed in detail above.
Estoppel
133.	Mr Oudkerk relied on the same facts and matters as he had relied upon in support of the contentions that (a) the parties agreed that the Scheme of Arrangement constituted the exercise of Mr Pease’s right in Clause 3.6.1, alternatively (b) the parties agreed a variation of Clause 3.6.1 to the effect that the Scheme of Arrangement would constitute the exercise of that right in Clause 3.6.1, and (c) in any event, Mr Pease had not effectively reserved his right, in support of his submission that Mr Pease is estopped from claiming that the Scheme of Arrangement was a breach of Clause 3.6.1. 
134.	This estoppel was said to arise because (1) Mr Pease and his representatives made clear and unequivocal representations, by virtue of his conduct, his written agreement and/or his silence where he had a duty to speak, and/or he acquiesced in Henderson’s express assumption, that the Scheme of Arrangement was to be used to transfer the ESSF in order to exercise his rights under Clause 3.6.1, further or alternatively (2) Mr Pease intended that Henderson would proceed to transfer the ESSF by way of the Scheme of Arrangement in exercise of Clause 3.6.1 and Henderson reasonably relied on his representations and acquiescence to its detriment in transferring the ESSF to him. 
135.	Mr Leiper submitted, and I agree, that this argument must fail for essentially the same reasons as have led me to decide the other points in relation to which Henderson relies upon the same facts and matters. 
136.	In summary:
(1)	Mr Pease and his representatives did not at any time clearly and unequivocally represent that implementation of the Scheme of Arrangement would give effect to his right under Clause 3.6.1. 
(2)	On the contrary, and in particular by the passages in the documents upon which Mr Leiper placed emphasis, Mr Pease made clear that it was his position that the opposite was true. 
(3)	Henderson’s decision to proceed with the Scheme of Arrangement, in light of Mr Pease’s clearly stated position from which he did not resile and indeed from which Henderson never asked him to resile, was at its own risk. 
(4)	Further, Mr Pease had no duty to respond to Ms Irvine’s email dated 29 September 2014 and engage in further debate on the points that had already been made. His silence in response to that email was therefore not capable of giving rise to an estoppel (see The Stolt Loyalty [1993] 2 Lloyd’s Rep 281, Clarke J at 289-290). 
(5)	There was, in my judgment, nothing unconscionable about Mr Pease’s action or inaction, even if, which I also do not consider to be made out on the evidence before me, Henderson could reasonably have believed that his failure to respond to that email should be interpreted as a representation or acquiescence by him that the correct position as to his right under Clause 3.6.1 was the reverse of the position which he had consistently asserted up to 25 September 2014. 
(6)	Finally, there was no detrimental reliance by Henderson. It had a contractual obligation to transfer the management of the ESSF to Mr Pease, it was adamant throughout (for all the reasons explained by Mr Bowers) that this obligation could and should be performed through the Scheme of Arrangement and not by any other means, and it simply proceeded to do what it was intent on doing all along.
Mr Pease’s claim for damages for breach of Clause 3.6.1
137.	The list of issues agreed between the parties identifies the following issue in respect of Mr Pease’s claim for damages for breach of Clause 3.6.1: If the Scheme of Arrangement was not an effective exercise of Mr Pease’s rights under Clause 3.6.1, is he entitled to damages for breach of that Clause (and, if so, in what sum)?
The period of delay 
138.	The starting point for Mr Pease’s claim for damages is that it took longer to bring about the replacement of the manager of the ESSF by him or an entity associated with him through the mechanism of the Scheme of Arrangement than if Henderson had complied with Clause 3.6.1. He claims that there was a substantial period of delay, and that as a result of that delay he has suffered considerable financial loss. He calculates the period of delay as extending from 14 October 2014, the date when Crux received FCA approval, by which time, on his case, management of the ESSF could and should have been transferred, to 5 June 2015, by which time he accepts that it was transferred.
139.	Mr Pease contended that if Henderson had permitted him to replace the ACD of the Henderson OEIC, negotiations to effect that change could and would have begun at or around the time of the discussion between lawyers that took place on 11 July 2014, and the process would have been completed in about 3 months. Mr Leiper submitted:
(1)	Those negotiations would not have been protracted. By 29 July 2014 Mr Pease had secured the agreement of Fund Partners to act as ACD, and had completed discussions with other suppliers. A series of formal agreements would then have been negotiated and concluded between Fund Partners and Crux, comprising an Investment Management Agreement and a distribution agreement. Mr Pease’s case, maintained by Mr Reid under cross-examination, is that those agreements would have been based on existing Fund Partners templates.
(2)	Further agreements would have been necessary as between Fund Partners and Henderson. First, an ACD Agreement would have been entered into between the Henderson OEIC and Fund Partners. Second, an Investment Management Agreement (“IMA”) and distribution agreement need to have been entered into between Fund Partners and HGIL in respect of the GFF. Those agreements, also, could and would have been concluded quickly. Henderson has an existing suite of agreements with Fund Partners in place in respect of the Verbatim Funds, as Mr Bowers confirmed under cross-examination. Those agreements, or if they were unsuitable for some reason any template which either Henderson or Fund Partners has in its possession, would have allowed a relatively quick resolution of terms. 
(3)	The negotiations as to the precise terms of those agreements could have proceeded, following an agreement in principle between the relevant parties, during the life of any notice period given to investors regarding the change to the ACD. There is no reason why the giving of that notice would have had to follow the final conclusion of all terms. 
(4)	These points are consistent with a contemporaneous project timetable produced by Henderson during negotiations with Mr Pease which records an estimated timeframe to “move the ESS away to third party ACD”, and gives a time of 65 days from the date on which terms and supplier availability have been established. The third assumption underpinning that plan, that approval had been granted for the merger of the GFF into a shell OEIC outside the Henderson OEIC, is immaterial as that merger was not necessary to satisfy Mr Pease’s contractual obligations, but would instead have been a commercial decision for Henderson. 
140.	It seems to me that these arguments focus on the most optimistic end of the spectrum even in accordance with some of the contemporary documents disclosed by Mr Pease. The view of Fund Partners expressed in an email to Mr Reid dated 19 September 2014 was: “Fund Partners would become the ACD of the OEIC through a change of ACD which from experience would take 3/4 months to complete”. The view expressed by Mr Ferguson in his email to Ms Irvine dated 25 September 2014 was: “the appointment of a new ACD (which requires notice to and approval by the FCA and notice to investors, but no vote) … could achieve transfer before the end of January 2015”. As reflected in part in the latter email, the timeline within which it would be possible to achieve replacement of the ACD is driven by FCA, investor and platform notification requirements, some of which would not have been entirely within Mr Pease’s control. 
141.	It was Henderson’s case that there was no significant difference between the time that it took to transfer management of ESSF using the mechanism of the Scheme of Arrangement and the time that it would have taken if, in keeping with Mr Pease’s case, the parties had gone down the route which Mr Pease contends accorded with his right under Clause 3.6.1, of transferring the responsibilities of HIFL as the ACD of the Henderson OEIC to a company nominated by Mr Pease (i.e. in practice, Fund Partners). The relevant time line, according to Henderson, would be about 155 days from the time that the mechanism was agreed in the case of the Scheme of Arrangement and about 150 days from that time in the case of appointing Fund Partners as a replacement ACD.
142.	In fact, the Scheme of Arrangement route took from 29 September 2014 to 5 June 2015 to implement, which is over 8 months and therefore more like 240 days. Henderson says that this was because various challenges arose in implementing that mechanism, and that a variety of issues could well lead to delays of this kind with any mechanism. 
143.	Henderson’s core submissions on these matters were set out in a helpful table of time lines which was produced at the end of the hearing. Concentrating on the mechanism which Mr Pease contends accorded with his right under Clause 3.6.1 (the replacement of HIFL by Fund Partners as the ACD of the Henderson OEIC and the appointment of HGIL as the investment manager of the GFF), the time line for which Henderson contends is based partly on the requirements contained in various documents and partly on the evidence of Mr Bowers, who, as I have said, I found to be an impressive and reliable witness. The basic structure is that there is a list of arrangements which need to be put in place, and, on the assumption that they would all be put in place, there is then a list of the times that, as Henderson contends, various stages in the process would take.
144.	The following arrangements are assumed to be capable of being put in place:
(1)	Approval of Crux (as investment manager) by the FCA.
(2)	Crux on-boarding by Fund Partners as ACD.
(3)	Fund Partners successfully completing due diligence on Crux (i.e. Crux to have operational readiness and satisfactory systems and controls).
(4)	Fund Partners successfully completing due diligence on HGIL.
(5)	HIFL successfully completing due diligence on Fund Partners.
(6)	HIFL, Fund Partners and Crux agreeing terms appointing HGIL, as investment manager to the GFF and as distributor of the GFF.
(7)	FCA giving approval to a Henderson branded and promoted fund in a Fund Partners managed OEIC umbrella.
(8)	Henderson and Fund Partners agreeing communication and data flows necessary to allow HGIL to manage the GFF on Fund Partner’s model.
(9)	Fund Partners on-boarding third party suppliers.
(10)	Terms have been agreed between both sides.
(11)	Supplier availability on both sides has been established.
(12)	Change in ISA Plan Manager is successfully approved for the ESSF and the GFF investors (80% active approval of ISA investors was required prior to December 2014).
145.	The timeframe - from a starting date (“SD”) when the mechanism is agreed - that Henderson claims to be reasonable (subject to unascertainable difficulties, as, on Henderson’s case, occurred in respect of the Scheme of Arrangement) is as follows: 

Timeframe (SD) 	Action	
SD + 14	Complete drafting the client letter and obtaining internal approval and approval from Crux and FP	
SD + 21	Complete review and approval by NatWest (Depositary)	
SD + 21	Seek FCA approval for change of ACD	
SD + 51	FCA approval of the ACD move 	
SD + 51	Notification given to platforms (90 day notice period)	
SD + 90	Complete negotiation of IMA, distribution agreement and operational readiness between HIFL, FP and Crux (for GFF)	
SD + 90	Client notification (60 days prior to effective date) 	
SD + 141	End of platform notice period	
SD + 150	Effective date of the change of ACD and appointment of HGIL as Investment Manager to GFF	

146.	The evidence of Mr Bowers concerning notice to investors was that an ACD would be classified as a significant change, and would require 60 days’ advance notice to investors, and “investors would not have a challenge over that period. That would simply be the clock ticking down from 60 days to zero days for that change to be implemented after zero days. It wouldn’t be a right of reply.” 

147.	Mr Bowers said that there would be no need to consult the Investment Association Guidance on Classification of Change Events for Authorised Funds (“the IA Guidance”) “to establish whether or not the ACD transfer as one of the hypothetical proposals that was put forward would need to be fundamental”. He continued: “There was never any question in my mind that it would ever be fundamental, but certainly we regarded the significance of that ACD transfer to be something for which you would quite reasonably provide advance notice to your investors”. 

148.	When Mr Leiper suggested to him that the IA Guidance indicated that a change of AFM would always be “significant”, Mr Bowers said:

“Yes, I think the general accepted best practice in the asset management industry in the UK is that when you change an ACD, it is a significant event, and that -- I think a good test of that is common sense because when you're changing an ACD from one company to another, you’re fundamentally changing the company that’s operating the scheme in which the investors are being looked after, so to suggest that we should -- that they should simply be given notice post event doesn’t align with the significance or the materiality of the change which the other ACD would be seeking to implement.
So I think it passes both the test from the guidance from both the FCA, the IA and data, and the common sense test from you as the ACD thinking about, well, how should these investors be treated and what sort of consideration should you give to them if you’re fundamentally changing or significantly changing, should I say, the operator of the scheme under which their investments are housed …
… I think there is very limited upside for any investment management firm or ACD to contradict these very well established, best practice guidelines, and I think in the example of this case, and one of the proposals is that we talked about with Crux at an early stage of our discussions, this was a proposal that the ACD be moved to a host third-party ACD with a start-up asset manager as the investment manager.
So for us to suggest that we should shorten that notice period to something less than what is recommended by the trade bodies within the asset management industry would be a risk for us and we could see no reason to do that.” 
149.	In fact, the trial papers included a letter dated 25 January 2010 giving 50 advisers and 120 investors not 60 days but instead 90 days’ notice of (among other things) the “in-house” replacement of New Star by Henderson as ACD and of a change of the investment manager to HGIL. The letter stated “No action is required by the shareholders in relation to the changes. The changes proposed will become effective place on 6 April 2010 [save for immaterial exceptions]”. Mr Bowers agreed with Mr Leiper that this was a fairly typical example of the notification that was given to the investors in relation to the change of the ACD. Mr Bowers continued:
“And of course New Star Investment Funds Limited, which was the relief ACD, was at this time a wholly owned part of the Henderson group, as was the ACD to which the business was transferred.
So all the material aspects of the fund management, the supplier arrangements, the operational arrangements, were all the same, so there was no material difference to the experience that the clients would have before and after the change.
… I suspect that this was 90 days’ notice because many of the platforms with whom Henderson New Star would have had agreements would contractually oblige us to provide them with 90 days’ notice of any material changes to the scheme, yes.” 
150.	Mr Bowers also explained in his witness statement that a new IMA and distribution agreement would need to be negotiated between HGIL and Fund Partners (the new ACD) in order that HGIL could continue to act as the investment manager of the GFF (which would remain within the Fund Partners OEIC) and “It is impossible to say how long this might have taken but it usually takes months, not weeks”. 
151.	Further, Henderson contended that the notice to investors logically would have to follow the negotiation of such terms in order not to run the risk of investors being informed of a change that, in the event, could not be successfully negotiated. On balance, and contrary to Mr Leiper’s submissions, I consider that this is right, or at least would be a reasonable stance for Henderson to adopt. The obligation to comply with Clause 3.6.1 did not oblige Henderson to act in a way that was contrary to what it reasonably regarded as best practice or as giving rise to reputational and other risks for Henderson. If terms were negotiated in principle and a notice was then sent to investors but some problem later arose with regard to finalising those terms which meant that the envisaged arrangements could not be put in place and investors had to be told about this, that would or might create a very bad impression with investors about Henderson.  
152.	I am unpersuaded that Henderson could or should have permitted Mr Pease to replace the manager of the ESSF by 14 October 2014. I prefer Henderson’s case that a more reasonable time frame, if everything had gone smoothly, would be of the order of 5 months. I also consider that it is fair and realistic to make some allowance for difficulties and delays which, by their very nature, could not be predicted with accuracy in advance, and, doing the best I can, that it would be right to add a further month to the time frame to take account of these matters. Accordingly, taking a starting date of early August 2014 (shortly after Mr Ferguson’s communications in July 2014 in which he proposed to Henderson that HIFL should be replaced by an entity nominated by Mr Pease), I consider that the appropriate completion date would be early February 2015.
153.	On this basis, the delay occasioned by Henderson’s breach of Clause 3.6.1 is not one of almost 8 months as claimed by Mr Pease, but is instead of the order of 4 months.
The loss of investments 
154.	This gives rise to problems with regard to Mr Pease’s larger claims for the losses allegedly sustained during the period of actionable delay. His pleaded case, and the evidence in support of it, focuses on the extent to which investors in the ESSF pulled out and potential new investments were lost during the period between October 2014 and June 2015, but not on the extent to which a delay of 4 months between February 2015 and June 2015 caused or contributed to those alleged heads of loss. This is illustrated by paragraph 8.7 of his first witness statement dated 13 October 2017:
“The fact that the Scheme of Arrangement process required nine months meant that the inevitable uncertainties arising from the transition period were greatly extended and when we started in business in June 2015 the favourable market conditions for sales no longer existed. If we had been in business in November 2014 there is no doubt that we would have been able to benefit from those favourable market conditions”.
155.	Mr Pease’s case, as presented by Mr Leiper, is that the material uncertainties arose not from the fact that there was a transition period as such (although the duration of that period is part of his case) but rather from the fact that the transfer of management of the ESSF was being effected by a Scheme of Arrangement as opposed to a replacement of the ACD. Mr Leiper made three principal points in support of that argument:
(1)	The ESSF was managed, on a day to day basis, by Mr Pease. Following a change of ACD it would have continued to be managed by Mr Pease on that basis. It would not have been placed under the regulatory control or responsibility of a start-up asset management company. The ACD which Mr Pease intended to nominate was Fund Partners, an experienced host ACD in whom investors could legitimately have had faith. The role of Crux was simply as the asset manager vehicle, giving effect on a day to day basis to the overall strategy set by Mr Pease. There would therefore have been no reason for investors to redeem funds, or for potential new investors to be deterred from investing in the ESSF, if they had been told of the proposed change of ACD rather than a Scheme of Arrangement.
(2)	This is reinforced by the fact that in the case of an ACD change investors would simply have had to be notified. They would have received a single letter informing them of the change, and downplaying the significance of the changes from the practical perspective of the investor. There would have been no requirement for any positive action by any investor. The engagement with investors would thus have been far less intense, far less protracted and far less uncertain if the different mechanism of a change of ACD had been adopted.
(3)	Henderson could be expected to have records of conversations between its sales staff and investors on its CRM database. Henderson’s sales staff were instructed by Simon Hillenbrand on 14 October 2014 to contact investors in the ESSF, and the evidence at trial was that the CRM system should be updated with any conversations had and that if those conversations related to redemptions, they would also be in there. However, Henderson has produced no record of any conversation between it and an investor in the ESSF in which the investor explained it was redeeming, or considering redeeming, its holding on the basis of the impending change of management (nor, for that matter, on the basis of the ESSF’s performance).
156.	I consider that there is some force in these points. However, they are far from being clear cut. For example, the substance of the matter is that the ESSF funds would remain under the day to day management of Mr Pease under the Scheme of Arrangement as well. Therefore, to the extent that investors prioritised Mr Pease’s management input, that was not affected by the adoption of the Scheme of Arrangement mechanism. Further, although the process was more complicated than if a change of ACD alone had been implemented, Mr Bowers made the point that the mere act of engaging with investors may cause them to review their investments and realise them or move them. Moreover, the investors voted to approve the Scheme of Arrangement, and so it seems to me that the necessary majority must have thought that it was in their interests. 
157.	At the same time, on any view the net effect of the transfer of management involved moving the ESSF out of the Henderson empire. As Mr Formica stated in evidence, there was a difference between Mr Pease working with the support of the Henderson organisation and in the environment of the much smaller Crux operation, and as Mr Little accepted in cross-examination, and even if they did not perceive Crux as a start-up management firm, some investors would take a cautious approach to change.   
158.	Mr Little’s evidence was that the three busiest and most important fund raising periods for a retail fund are (a) September to November, (b) January to March, and (c) May and June. On my findings: the first of these periods would have fallen in a transition period whichever mechanism had been adopted to transfer management of the ESSF away from Henderson; part of the second period would have fallen outside the transition period if Henderson had complied with Clause 3.6.1, whereas all of it fell within the transition period in the events which happened; and part of the third period fell within the transition period in the events which happened, whereas all of it would have fallen outside that period if Henderson had complied with Clause 3.6.1. Mr Little’s evidence was, further, that there was a strong appetite for investment in funds in the same sector as the ESSF in the first six months of 2015. In the events which happened, five of these six months fell within the transition period, whereas, on my findings, only three of these six months would have done so if Henderson had complied with Clause 3.6.1.
159.	Mr Little further gave evidence that 5 investors withdrew from the ESSF during the Scheme of Arrangement. With regard to this evidence: 
(1)	Investor 1 was a fund of funds. The lead manager spoke to Mr Little on or about 15 October 2014, saying “I do not want to get involved in any corporate activity whatsoever. I’m going to sell the fund”. This investor withdrew about £35m, but re-invested about £30m in or around January 2016 and “it is difficult to know whether this would have been made in addition to their original investment”. 
In my judgment, this evidence does not establish on the balance of probabilities that Investor 1 would not have withdrawn funds in any event once it was clear that the management of the ESSF was being transferred away from Henderson. Nor does it establish to that standard that the entire sum of about £35m was never reinvested in the ESSF, as opposed to £30m of that sum being later reinvested.
(2)	Investor 2 was  a family office based in Spain which told Mr Little that because of the Scheme of Arrangement it was obliged for tax reasons to withdraw its entire holding of about £20m in the ESSF. This Investor re-invested about £15m in April 2016 but “it is difficult to know whether this would have been made in addition to their original investment”.
In my judgment, this evidence does establish that the reason why Investor 2 withdrew funds was because of the Scheme of Arrangement. However, it does not establish that the entire sum of about £20m was lost for good to the ESSF, as opposed to about £15m of that sum being later reinvested in the ESSF.
(3)	Investor 3 was a large UK retail bank with a private wealth division. It was Mr Little’s understanding that immediately after the Scheme of Arrangement was announced Henderson changed its internal recommendation in relation to the ESSF from “buy” to “hold”. This meant that this Investor ceased to allocate incoming client funds to the ESSF. It also redeemed its entire holding of £100m, beginning in December 2014. This Investor has not reinvested in the ESSF. 
Mr Formica’s evidence was that this Investor had told Mr Hillenbrand that it had visited Crux and had decided that it was unable to commit to support Crux when Crux was at an early stage of its development.
In my judgment, this evidence does not establish on the balance of probabilities that Investor 3 either stopped investing funds or withdrew funds as a result of the Scheme of Arrangement. Even if it was right to assume that investment stopped because of the change of internal recommendation to “hold”, I doubt that Henderson’s approach towards recommending the ESSF would have been any different whatever mechanism had been chosen to transfer management of the ESSF away from Henderson. I do not consider that it is right to conclude that these funds were withdrawn due to the Scheme of Arrangement and that they would not have been withdrawn in any event once it became clear to Investor 3 that the management of the ESSF would be transferred away from Henderson.    
(4)	Investor 4 is a global private bank with a research function in London. It withdrew about £40m from the ESSF and had not reinvested.
In my judgment, this evidence does not establish on the balance of probabilities that Investor 4 withdrew these funds as a result of the Scheme of Arrangement. It is self-evident, and was also the evidence of Mr Formica, that there are numerous reasons why investors withdraw funds, and the fact that this withdrawal occurred during the period of the Scheme of Arrangement is not a sufficient basis for reaching the conclusion that this withdrawal was made for that particular reason.
(5)	Investor 5 is a life company that withdrew about £50m after the ESSF had been merged into the FP Crux ESSF. It told Mr Little that it had “found a fund manager of comparable qualities and similar approach elsewhere”.
In my judgment, as Investor 5 kept these funds in the ESSP until after the Scheme of Arrangement had been implemented, there is no logical basis on which it could be concluded that these funds were withdrawn due to the Scheme of Arrangement. I agree with Mr Oudkerk that the fact that this Investor is offered as an example of damage occasioned as a result of the choice of mechanism of the Scheme of Arrangement damages the credibility of this part of Mr Pease’s claim.
160.	Mr Little also stated that Morningstar changed its rating of the ESSF from “silver” to “under review” in October 2014 following the announcement that Mr Pease was leaving Henderson and moving the ESSF with him, and “this arose solely because of the state of limbo caused by the Scheme of Arrangement”. However, the explanation for the change of rating that was given by Morningstar included “uncertainty surrounding a start-up asset management firm warrants some caution and the fund is under review as we gain further clarity on the future parent”. I do not consider that it is safe to conclude that this assessment would have been any different if Henderson had complied with the obligations that Mr Pease contends it had under Clause 3.6.1. In substance, in accordance with whatever mechanism was used, and while the day to day management of the ESSF would have remained unchanged, Mr Pease was moving away from the parentage of Henderson and in to the territory of a start-up venture.
161.	In fact, the Crux Business Plan contemplated that “80% of assets … will accede to the appointment of Crux” and the Crux Financial Plan referred to a “percentage of transfer to Crux Asset Management” of 75%. Whether or not these documents were prepared on the basis of erring on the side of caution, these wordings suggest that there was a live appreciation or concern that, whatever mechanism was adopted to effect a transfer of management of the ESSF, a significant diminution in the assets under management might occur. I was not impressed by Mr Reid’s evidence in cross-examination that, regardless of the words used, what was in mind at the time was market volatility. The choice of words was important, not least because presentation to the FCA was involved. 
162.	Mr Pease’s case is that approximately 20% of shares in the ESSF were redeemed in the period prior to completion of the Scheme of Arrangement, and that these redemptions are explicable solely on the grounds of the uncertainty and other difficulties engendered by the Scheme of Arrangement. However, Mr Bowers’ evidence, which I accept, is that a Scheme of Arrangement might typically result in redemptions of the order of 2-3%. 
163.	In light of that evidence, and having regard to all the other considerations discussed above, I do not consider that Mr Pease has made out this aspect of his case. In particular, the evidence concerning Investors 1-5 which has been put forward to provide concrete illustrations of the essential tenet of this part of Mr Pease’s case does not, in my view, establish a case of cause and effect as between the adoption of the Scheme of Arrangement on the one hand and the withdrawal of investments on the other, to say nothing of the fact that (a) this evidence tells one little about the extent to which withdrawals were attributable to what is, on my findings, the material period of delay of 4 months between February 2015 and June 2015, and (b) this evidence shows that it is unsafe to look at withdrawals up to June 2015 alone when assessing this aspect of Mr Pease’s claim, because some withdrawals were or may have been re-invested later on.
The valuation of Crux
164.	The next step in Mr Pease’s calculation of his claim for damages based on depletion of assets under management in the ESSF is to say that the appropriate way of valuing a business like Crux is as a percentage of the assets under management. According to this argument, Henderson is worth about 3% of the assets under its management, and the same percentage is applicable in the case of Crux. On Mr Pease’s case, the value of assets that were under management in the ESSF fell by £274,315,732 between 14 October 2014 and 8 June 2015, and this was solely due to the adoption of the Scheme of Arrangement. The loss in value of Crux occasioned by Henderson’s breach of Clause 3.6.1 is therefore 3% of £274,315,732, that is to say £8,299,472.
165.	Even if I had been persuaded that Mr Pease had made out that the assets under management in the ESSF had been depleted by £274,315,732 (or any other figure that could be determined either exactly or to an acceptable level of approximation) due to the adoption of the Scheme of Arrangement, and even if it is assumed that it is correct to say that Henderson is worth about 3% of the assets under its management, I would not accept that this is an appropriate way of valuing Crux, for two principal reasons.
166.	First, I do not consider that a relatively small and new venture such as Crux with a limited number of funds under management can reliably be valued in the same way as a large established business such as Henderson with a far wider range of funds under management. A number of reasons for this were debated in the evidence, but it is sufficient to mention only one, namely the importance of Mr Pease as a key man. I consider that it is clear that the value of Crux would be wholly different if Mr Pease left, and, thus, that any valuation is highly dependent on whether Mr Pease is tied in to the business, and for how long. Mr Reid’s evidence that Crux had been taking steps to diminish its reliance on Mr Pease only served to underline the point; and, in any event, it seems clear that at whatever date for assessing the diminution in the value of Crux is material for purposes of the present case those steps would not have taken effect.
167.	Second, Mr Pease’s own evidence did not support this approach. Although he also said that it would be “very difficult to persuade someone to buy us at this stage”, Mr Pease ventured to suggest that Crux might be worth £20m. In fact, Crux has over £2bn under management. Thus, it would be worth about £60m applying a method of valuation of 3% of assets under management. Mr Pease agreed in cross-examination that “it would be very difficult to value Crux and get it sold to an independent person at that figure”.   
168.	In these circumstances, and particularly as neither side has sought to adduce expert evidence, I do not consider that it is necessary to consider Henderson’s case that the proper way of valuing Crux is on a discounted cash flow basis, or what valuation of Crux that method of valuation would produce at whatever date is material for the purposes of this aspect of Mr Pease’s claim for damages. Even if he had established a multiplicand of £274,315,732 (or some other reasonably ascertainable figure) he has not established the only multiplier that he has put forward, of 3%, and I am unable to extract from the evidence that he has adduced or any of the arguments that have been advanced on his behalf some other multiplier that I could fairly apply in place of 3%.
169.	Nor, in my view, is it necessary to resolve a number of other arguments which were raised by Mr Oudkerk, although I am not to be taken as saying that there is nothing in these points. They included a complaint that, having eschewed any intention of relying on expert evidence, on proper analysis some of the elements of claim contained in Mr Pease’s Schedule of Loss were based on matters of expert opinion; that Mr Reid had strayed into areas of expert opinion when giving his evidence; and that Mr Reid had not demonstrated that he had the expertise (or, as Mr Leiper might argue, the practical knowledge and experience) which, judging by his evidence, he claimed to have. In this regard, Mr Oudkerk relied upon Mr Reid’s inability to give an informed answer to the level of multiplier that might be used when carrying out an EBITDA basis of valuation, and upon what he said were inaccuracies in the Schedule of Loss for which he suggested that Mr Reid was probably responsible. With regard to this last matter, while it is fair to say that the correction to the Schedule of Loss which reduced Mr Pease’s overall claim from £47m to £31.5m was brought about purely because of an error as to the proper currency that was used for part of the calculation, it is also fair to say that the fact that this error resulted in a substantial change in the valuation multiplier that was used in the original Schedule of Loss was not picked up at the time and does not appear to have caused Mr Reid concern when that original Schedule was being prepared. 
The loss of new investors 
170.	In my opinion, many of the above points apply mutatis mutandis to Mr Pease’s claim based on loss of the opportunity to actively market the ESSF, and thus bring in new investors and increase the size of assets under management in the ESSF. Mr Pease’s case under this head contains the following principal elements:
(1)	During 2015, the average market growth in the number of shares of comparable share classes of 5 funds comparable to the ESSF was 78%. 
(2)	Between 14 October 2014 and 8 June 2015 (the first day on which Mr Pease began managing the underlying assets in the ESSF through Crux) – a period of 236 days as opposed to a full year of 365 days - the average growth was 236/365 x 78% = 50.43%. 
(3)	On 14 October 2014, the ESSF had around 759,291,252 shares. Had the ESSF grown at the average rate of the comparable share classes of the comparable funds during the period from 14 October 2014 to 8 June 2015, it would have acquired an additional 382,910,578 shares. 
(4)	The value of the assets which did not come under the ESSF’s management, but which Mr Pease would have had the opportunity of bringing under that management but for the Scheme of Arrangement, is the average weighted value of that number of shares: £651,943,550.
(5)	On the basis that the value of the business of Crux is 3% of the assets under its management, the loss in value to Crux in respect of the shares which Crux thus lost the opportunity to sell is 3% of £651,943,550, that is to say £19,558,307.
(6)	Mr Pease accepts that the claim in respect of these “lost shares” is a claim for loss of a chance. He invites the Court to assess that chance at no less than 75%.
171.	On my findings, the relevant period for purposes of this claim for loss of a chance is not that asserted by Mr Pease but only the period of approximately 120 days between early February 2015 and early June 2015. I am not sure that it is right to take the growth over a longer period and then average it so that it is treated as having taken place to a lesser and directly proportionate extent over a shorter period. For example, Mr Little’s evidence was that there was a strong appetite for investment in funds in the same sector as the ESSF in the first six months of 2015 cannot be taken to mean that there was an equally strong appetite in the last quarter of 2014 or in the last six months of 2015. I am therefore not persuaded of the validity (and fairness to Henderson) of simply scaling down the above figures so that they apply to a period of 120 days instead of one of 236 days. In any event, for reasons explained above, I do not accept it is right to calculate the value of Crux on the basis that it equals 3% of the assets under its management.
172.	In addition, just as it is unsafe to look at withdrawals up to June 2015 alone when assessing Mr Pease’s claim for loss of investors (because some withdrawals were or may have been re-invested later on), this claim for loss of a chance is complicated by the consideration that the chance in question was not necessarily lost for good, and may only have been delayed. Crux has built up the value of the funds transferred from the ESSF to about £2 billion. It is possible that these funds would have increased to an even higher value but for the loss of the opportunity to attract additional investment during the period of delay attributable to the Scheme of Arrangement. However, it is also possible that even if this loss of opportunity did indeed cause the funds in the ESSF to be depleted at the date of transfer, then all or some of the opportunities that were lost at that time have since been (or will in future be) made good. On the materials before me, I cannot determine these matters. If Mr Pease was now awarded damages on the footing of a loss of opportunity that has since been made up, he would be over compensated.
173.	Because I consider that Mr Pease’s claim under this heading faces these fundamental difficulties in any event, I am loathe to extend this judgment exploring the many additional points that were made by both sides, for example as to whether or not it was appropriate to choose the five funds that were chosen as comparators to the ESSF for purposes of compiling Mr Pease’s Schedule of Loss. That is particularly so as, in my view, this type of debate is typically the province of expert evidence, whereas the evidence before me does not include any independent expert evidence, but only the evidence of witnesses (principally, Mr Reid and Mr Formica) who are allied with the parties. I consider that the evidence on this aspect of the case is quite evenly balanced. 
174.	At the end of the day, the implication of Mr Pease’s methodology and data (that over 236 days the average growth of appropriate comparator funds during the relevant period was 50.43%) is that in the period of about 120 days during which I have held that the transfer of management was delayed in breach of Clause 3.6.1, he (and Crux) might well have been able to grow the material investments by about 25%. Standing back and looking at matters in the round, I am not persuaded on the balance of probabilities that this case is made out. Nor am I persuaded that the loss of the relevant chance should be assessed at no less than 75%. The assessment of that percentage in a case like the present is relatively complicated, and ultimately involves (among other things) the resolution of a raft of issues concerning the cogency and reliability of the evidence of  (in particular) Mr Reid and Mr Formica, which I have not thought it necessary to carry out. I consider it more likely than not that Mr Pease would have had greater prospects of increasing the investments in the ESSF between the beginning of February 2015 and the beginning of June 2015 if Henderson had complied with Clause 3.6.1 than in the events which happened, but I do not feel able, in a manner that is fair to both sides, to reach a firm finding as to what order of difference might have resulted.
The loss of management fees
175.	Mr Pease’s claim for the fees he would have earned during the period of delay attributable to Henderson’s breach of Clause 3.6.1 is calculated on the basis of Henderson’s average annual management fee (net of rebates and commissions), and amounts to £3,773,171. This claim is based on the period from 14 October 2014 to 8 June 2015, and it includes fees that Mr Pease claims that he would have been able to charge on the shares which (on his case) were redeemed during that period due to the Scheme of Arrangement and on shares which (on his case) were lost to the ESSF during that period. In light of my findings above, that measure of damage cannot be sustained. 
176.	Even if that (or some other) sum could be claimed, the direct loser of those fees would be Crux, and Mr Pease would only have a claim if and to the extent that he sustained damage as a result of loss of value of his indirect shareholding in Crux. In that regard, what would be relevant would be not so much the fees lost by Crux as (a) the profits lost by Crux as a result of the loss of those fees and (b) the diminution in value of that shareholding occasioned by that loss of profits. I do not consider that the materials before me enable me to form an assessment of either of these matters: what, if any, profits Crux would have made if it had earned these fees does not form any part of Mr Pease’s case; he has adduced no evidence as to what, if any, greater dividends he would have received if those profits had been made; and the damage that he sustained by reason of the adverse effect, if any, on the value of his shares has not been made out, not least because that loss has never crystallised and indeed he still holds those shares.
Mr Pease’s claims as shareholder
177.	In Christensen v Scott [1996] 1 NZLR 273 Thomas J said at 280: 
	“… a member has no right to sue directly in respect of a breach of duty owed to the company or in respect of a tort committed against the company … But this is not necessarily to exclude a claim brought by a party, who may also be a member, to whom a separate duty is owed and who suffers a personal loss as a result of the breach of that duty … The loss arises not from a breach of the duty owed to the company but from a breach of duty owed to the individuals. The individual is simply suing to vindicate his own right or redress a wrong done to him or her giving rise to a personal loss.”
178.	That decision was cited with approval by Hobhouse LJ in Gerber Garment Technology Inc v Lectra Systems Ltd [1997] RPC 443, who said  at 475:
	“… provided that the plaintiff can establish a personal cause of action and can prove a personal loss caused by the defendant’s actionable wrong, then the fact that the loss is felt by the plaintiff in the form of the loss of the value of the plaintiff's shares in a company is no answer to the plaintiff’s claim.”
179.	In Johnson v Gore Wood [2002] 2 AC 1, Lord Bingham said at 35-36:
	“Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholder's shareholding where that merely reflects the loss suffered by the company. A claim will not lie by a shareholder to make good a loss which would be made good if the company's assets were replenished through action against the party responsible for the loss, even if the company, acting through its constitutional organs, has declined or failed to make good that loss… Where a company suffers loss but has no cause of action to sue to recover the loss, the shareholder in the company may sue in respect of it (if the shareholder has a cause of action to do so), even though the loss is a diminution in the value of a shareholding… On the one hand the court must respect the principle of company autonomy, ensure that the company's creditors are not prejudiced by the action of individual shareholders and ensure that a party does not recover compensation for a loss which another party has suffered. On the other, the court must be astute to ensure that the party who has in fact suffered loss is not arbitrarily denied fair compensation.”
180.	Lord Millett said at 62-63:
	“… although a share is an identifiable piece of property which belongs to the shareholder and has an ascertainable value, it also represents a proportionate part of the company’s net assets, and if these are depleted the diminution in its assets will be reflected in the diminution in the value of the shares … Where the company suffers loss as a result of a wrong to the shareholder but has no cause of action in respect of its loss, the shareholder can sue and recover damages for his own loss, whether of a capital or income nature, measured by the diminution in the value of his shareholding. He must, of course, show that he has an independent cause of action of his own and that he has suffered personal loss caused by the defendant's actionable wrong. Since the company itself has no cause of action in respect of its loss, its assets are not depleted by the recovery of damages by the shareholder.”
181.	Mr Leiper submitted that in the present case:
(1)	Mr Pease has a personal cause of action against Henderson for breach of the Contract. 
(2)	Neither Crux nor PeaseCo have any rights under the Contract. They were not parties to it, and they each have no prospect of acquiring rights under it through the Contracts (Rights of Third Parties) Act 1999 by virtue of Clause 20, which excludes the effect of that legislation. 
(3)	Neither Mr Pease nor Crux has any cause of action in tort against Henderson in respect of the transfer of the ESSF. 
(4)	Accordingly, Mr Pease has a cause of action against Henderson in respect of its breach of Clause 3.6.1 which is exclusive and personal to him, and in respect of which neither Crux nor PeaseCo has any cause of action. 
(5)	Mr Pease’s claim therefore does not engage the reflective loss principle. The fact that his loss is indirect, and suffered in the form of the reduced value of his shareholding in PeaseCo, is immaterial. It is still a personal loss which, on his case, is attributable to Henderson’s breach of the Contract. 
(6)	The role of PeaseCo presents no difficulty to the Court in terms of quantifying Mr Pease’s loss. PeaseCo’s holdings consist of cash, Crux shares and shares in units managed by Crux. The value of PeaseCo, and the dividends it is able to pay, go up and down in direct proportion to the value of Crux shares held by it. If Crux shares are worth £1 per share, and PeaseCo owns 100 shares, then PeaseCo owns shares worth £100. If the value of Crux shares reduces to 50p, then the value of the shares owned by PeaseCo is similarly reduced by half. 
(7)	There is no policy reason, nor any basis in authority, for denying Mr Pease relief in this claim because of the arrangement involving shareholdings in PeaseCo. 
(8)	However, Mr Pease’s recoverable losses are limited to the diminution in the value of shares which he owns. Accordingly, although his Schedule of Loss sets out calculations which reflect the entirety of the loss felt by Crux, his claim is limited to the recovery of that loss which is borne by him in the form of his shareholding. Mr Pease’s claim is thus for 52.75% of the overall reduction in the value of Crux.
182.	Mr Oudkerk submitted that:
(1)	This basis for claiming loss gives rise to unanswered issues such as: when do the alleged losses crystallise; how has there been a loss if the shares have never been sold; and what account must be taken of the period following the end of the alleged delay? Mr Oudkerk suggested that the reason why such questions arise is because this is the wrong basis for valuing the loss in circumstances where Crux continues to trade. In support of that proposition, he relied on the judgment of Flaux J in MMP Gmbh v Antal International Network Limited [2011] EWHC 1120 (Comm) at [5]-[9] and [81]-[92], which includes the following passages:
	“The measure of damages in a case of breach of contract is the amount required to place the claimant in the position that it would have been in if the contract had not been broken. In the present case, the breach of contract which I have found was committed by Antal London had the effect of depriving MMP of the franchise, but did not have the effect of closing its business down or of causing Mr Bosshard to sell the business. The company has continued to trade as a recruitment consultancy, albeit without the franchise. In such circumstances, as a matter of first principle, placing the company in the position it would have been in if the contract had not been broken requires the Court to assess whether the net income of the company without the franchise has been and will be less than what the net income would have been had the Franchise Agreement continued for the rest of its duration. In other words, in shorthand, the measure of damages is the loss of profits suffered as a consequence of the breach. 
	…
	If the effect of the breach of contract had been to put the company out of business then since, by definition, there are no future profits (or losses) against which to compare the profits (or losses) which the company would have made had the breach not occurred, then it is not possible for the Court to assess damages on the basis of loss of profits in the normal way. It seems to me that it is only in such situations that the Court will fall back on what Mr Clarke in his closing submissions described as a "proxy for... loss of profits" of seeking to value the company as at the date of the breach, both because it is that value of which the claimant has been deprived by the breach and because it is only by such valuation that the Court can arrive at a "proxy" for the loss of profits. However where it is possible to assess the loss of profits in the normal way, that should be the measure of damages.
	…
	…both cases [i.e. decision of the Court of Appeal in Crehan v Inntrepreneur Pub Co CPC [2004] EWCA Civ 637 and the decision of HH Judge Raymond Jack QC (as he then was) in UYB v British Railways Board (1999) (unreported)] recognise that until the date when the business ceased it would be appropriate to award loss of profits and to that extent it seems to me that they are recognising implicitly that, except where the business has ceased as a consequence of the breach, loss of profits is the appropriate measure of damages. 
	Certainly nothing in either case supports the proposition, upon which MMP's approach in the present case depends, that where, despite the breach, the business continues, a valuation of the business as if it were being sold as at the date of breach is the appropriate measure of damages. In my judgment MMP's approach is open to two fundamental objections. First, an assessment of damages on the basis of a valuation of the company as at the date of breach is essentially, as in Crehan, a hypothesis upon a hypothesis, the hypothetical value of the company as at 20 June 2008 on the hypothesis that it had ceased doing business on that date. 
	Second, that approach fails to take account of the fact that despite the breach, the company is continuing to do business and thus has the potential to be profitable in the future during the period when but for the breach the franchise would have continued and thus fails to give credit against any damages for the profits which the company will make in any event. In contrast, a claim based on the assessment of what loss of profits was caused by the breach would take proper account of the likely profits the company will make despite the breach. In a very real sense, Mr Clarke's attempt in his closing submissions to suggest that the Court should assume that the company would make no profits at all in the future without the franchise recognised the need to assess damages for an on-going business by reference to the profits actually lost.” 
(2)	Mr Pease is barred by the principle against reflective loss from claiming the loss suffered by Crux.
(3)	In any event, Mr Pease has neither pleaded nor proved that PeaseCo’s losses are the same as Crux’s losses and/or that his losses are the same as PeaseCo’s losses. Mr Oudkerk relied on the judgment of HHJ Pelling QC in Energenics Holdings Pte Ltd v Ronendra Nath Hazarika [2014] EWHC 1845 (Ch) at [60]-[71] for the propositions that (a) a parent cannot assume that it has suffered pound-for-pound the same loss as a subsidiary and (b) in all cases it is incumbent on the claimant to plead and prove that the loss of a shareholder was equal to the loss suffered by a company where the company cannot itself recover that loss. In the present case, disclosure of filings made at Companies House was provided after Mr Pease’s case had closed and on the final evening before the close of Henderson’s case. The disclosure confirmed what Mr Pease had said in cross-examination about PeaseCo consisting of “Crux – some Crux funds, and some cash.” However, this merely serves to further highlight that it is impossible to assess the impact of any loss suffered in relation to the ESSF on Mr Pease’s shares in PeaseCo. There is no pleaded case and no evidence to support the proposition that any losses relating to the ESSF translate on a pound-for-pound basis into an equivalent impact on Crux’s shares or PeaseCo’s shares. 
183.	Mr Leiper countered the first of these submissions by arguing that the present case is distinguishable from the MMP. Mr Pease’s claim is that a company in which he has an interest has been permanently deprived of revenue-generating assets, and there is no ready market in which he might go to replace those assets. He says that the shares redeemed in the ESSF prior to the completion of the Scheme of Arrangement, and the new shares which were lost to the ESSF during the Scheme of Arrangement, will not be replaced because the investments which those shares would have represented have been invested elsewhere. There is no reason in principle, or on the authorities, why the approach that applies in a case in which a business ceases to operate altogether ought to be limited to cases of that nature. The difficulty in establishing profits is no less pronounced in the case where a profit generating asset is lost to a business than it is in a case where the business ceases to trade altogether. In both cases the Court is faced with the difficulty of establishing the profits that would have been generated on the basis of a hypothesis that the entity generating the revenue (be it the asset, on the one hand, or the company, on the other) continued to exist. It is perfectly proper in either case to take the value of the revenue-generating asset as a proxy for the profits that will be lost to the party deprived of it. That was recognised, albeit in different circumstances, by Lord Evershed MR in Cullinane v British ‘Rema’ Manufacturing Co Ltd [1954] 1 QB 292 (CA) at 303-304.  
184.	In my judgment, although this point troubled me from the beginning of the trial, Mr Leiper is right to say that Mr Pease’s claim does not engage the reflective loss principle, and that the fact that his loss is indirect, and suffered in the form of the reduced value of his shareholding in PeaseCo, does not bar that claim. 
185.	However, I consider that Mr Oudkerk’s other points are correct. 
186.	In my opinion, the passages from the judgment of Flaux J in MMP Gmbh v Antal International Network Limited [2011] EWHC 1120 (Comm) that I have cited above apply to the present case. The fact that, on Mr Pease’s case, Crux has suffered a permanent deprivation of a source (or sources) of revenue is not a reason for saying that the measure of damages for Crux is other than the loss of profits that Crux has suffered. That in turn can form the subject of a claim by Mr Pease, in circumstances where (a) Crux has no cause of action in respect of the loss, and (b) Mr Pease has suffered a loss that can be measured by the diminution in value of his (indirect) shareholding. However, the basis of that claim by Mr Pease is one of loss of profits and not one of loss of value of Crux (or Mr Pease’s indirect shareholding in Crux) at the date of the breach. The contrary approach, urged upon me by Mr Leiper, runs into the fundamental objections identified by Flaux J, which apply as much in this case as they did in MMP.
187.	In addition, while it is right to say that if Crux shares are worth £1 per share, and PeaseCo owns 100 shares, then PeaseCo owns shares worth £100, and that if the value of Crux shares is halved, then so also is the value of those shares owned by PeaseCo, it does not follow that a reduction in the value of shares in Crux produces a pound-for-pound reduction in the value of shares in PeaseCo. The latter proposition would only hold true, in my judgment, if PeaseCo’s sole asset consisted of shares in Crux. In the present case, however, PeaseCo owns a portfolio of assets. If the shares in Crux fall in value by £1, the effect on the value of shares in PeaseCo may or may not be a fall of £1. I consider that Mr Pease needed to plead and prove that his losses as shareholder were the same as the losses that he alleges were suffered by Crux, which he has not done. 
188.	For these reasons, I would reject Mr Pease’s claims as shareholder in PeaseCo even if, contrary to my rulings above, those claims do not fail in any event on the evidence.
Henderson’s claim under Clause 3.6.2 
189.	The list of issues agreed between the parties identifies the following issues in respect of Henderson’s Part 20 Claim:
(1)	If the Scheme of Arrangement was an effective exercise of Mr Pease’s rights under Clause 3.6.1 or if Mr Pease is estopped from denying this, what level of fees is Henderson due under Clause 3.6.2 (as a debt or by way of damages)? 
(2)	Can any such sums due to Henderson be set-off against any sums due to Mr Pease on his claim? 
190.	In substance, to set the context, where Mr Pease (or any entity which he set up or joined) replaced any Henderson Group Company as manager of the ESSF in the circumstances set out in Clause 3.6.1, Clause 3.6.2 required Mr Pease to procure payment to Henderson of 50% of the “Management Fees After Deductions” received in relation to the management of the ESSF in the 12 months following such replacement.
191.	The formulation of the first of these issues indicates that it stands or falls with the resolution of other points which I have already decided above. This was borne out by the parties’ submissions on this issue.  
192.	Mr Leiper’s submissions in respect of the first of these issues were a model of brevity:
(1)	Henderson’s Counterclaim depends on it establishing that there was a replacement of the relevant Henderson Group Company as manager of the ESSF. 
(2)	As there was no such replacement, the Counterclaim fails. 
(3)	Henderson’s attempt to refashion its Counterclaim on the basis of an unpleaded variation to Clause 3.6.1 and Clause 3.6.2 is impermissible and flawed in any event for the reasons already given.
193.	Mr Oudkerk submitted that the parties agreed the mechanism for the exercise of Mr Pease’s right under Clause 3.6.1, and on 5 June 2015, upon the completion of the Scheme of Arrangement, Crux replaced HGIL as the manager of the ESSF and Fund Partners replaced HIFL as the ACD. Accordingly, Mr Pease is obliged to pay Henderson 50% of the “Management Fees After Deductions” for the year from 6 June 2015 to 5 June 2016. 
194.	Mr Oudkerk further submitted that prior to 5 October 2015 there was no dispute about Mr Pease’s obligation in this regard. Throughout the negotiations about which mechanism to use to transfer the ESSF, and the implementation of the Scheme of Arrangement, Mr Pease accepted this obligation. This was consistent with the common understanding that the Scheme of Arrangement was a valid exercise of Mr Pease’s right under Clause 3.6.1, and that the agreement to implement that right would be accompanied by the concomitant obligation for Mr Pease to pay Henderson 50% of the “Management Fees After Deductions” for (in the events which happened) the year from 6 June 2015 to 5 June 2016. Mr Formica and Mr Bowers both gave evidence that there was no dispute that Mr Pease had an obligation to pay these sums, and indeed Mr Pease or his representatives expressly recognised this obligation, for example in the Crux Business Plan, and in emails and letters from Mr Reid and Mr Ferguson to Henderson dated 5, 11,12, 15 and 20 May 2015, and 24 June 2015 (by which Mr Ferguson wrote to Henderson setting out his view on how to calculate the fees under Clause 3.6.2 and concluding that until 8 June 2016 it would not be possible to calculate the amounts owed to Henderson under Clause 3.6.2). In all this time, it was not suggested that the Scheme of Arrangement had not been implemented in exercise of Mr Pease’s rights under Clause 3.6.1, or that he had no obligation to pay the fees due under Clause 3.6.2. 
195.	In these circumstances, Mr Oudkerk submitted that Mr Pease’s attempt to avoid this obligation is unattractive. To the extent that Mr Pease is arguing that he can avoid liability because there is no reference to this obligation in the letter of 29 September 2014: (a) the letter records “the steps that [Mr Pease and Henderson] will… take to facilitate the implementation of a scheme of arrangement”; (b) the consideration for Mr Pease implementing his right to take the fund was that he would pay net management fees for the next 12 months; (c) there is overwhelming evidence that this was common ground throughout; and (d) there was no need to record that Mr Pease would be paying management fees given his position that he would pay and the material provisions. No one suggested that Clause 3.6.2 had not been triggered since everyone understood that the parties had agreed the mechanism for the exercise of the Clause 3.6.1 right on the basis that Mr Pease would pay the consideration of the management fees under Clause 3.6.2. To suggest that Mr Pease would simply have been given a £1bn fund is absurd.
196.	Mr Oudkerk argued the case on the basis that the principal point arising under Henderson’s Part 20 Claim is whether the transfer by Scheme of Arrangement was an effective exercise of Mr Pease’s rights under Clause 3.6.1. If Mr Pease fails on that part of his case, it follows that Henderson must succeed on this issue. There is no doubt that if Mr Pease is in breach of contract then Henderson has suffered loss and damage.
197.	Finally, Mr Oudkerk submitted that if the Court finds that “Management Fees after Deductions” are due to Henderson, then based upon Mr Pease’s disclosure dated 6 December 2017, in the relevant 12 months the Management Fees were £9,192,830 and the AMC rebates, commission and costs were £1,246,579. Henderson is thus entitled to 50% of £7,946,251, that is to say £3,973,126, together with interest of £95,752.52 calculated at a rate of 1.5% per annum down to 15 January 2018 and continuing.
198.	My earlier holdings that the Scheme of Arrangement was not an effective exercise of Mr Pease’s rights under Clause 3.6.1 and that Mr Pease is not estopped from denying this are dispositive of the first of the issues agreed between the parties in respect of Henderson’s claim under Clause 3.6.1. Mr Oudkerk’s submissions concerning the history of the correspondence and to the effect that, in light of that history, Mr Pease’s stance is unattractive, do not, in my judgment, take matters further as a matter of law. Nor is it right to suggest that the consequence of rejecting Mr Oudkerk’s submissions is that Mr Pease has been “given” a £1bn fund. On the contrary, Henderson owed Mr Pease an obligation under Clause 3.6.1 to permit him to replace the relevant Henderson Group Company as manager of the ESSF with which it did not comply, and the fact that the Scheme of Arrangement enabled Mr Pease ultimately to manage the funds of investors who transferred to the CESSF was less than it bargained to deliver to him.
199.	Accordingly, Henderson’s Part 20 Claim must be dismissed. 
200.	In these circumstances, the further issues as to the level of fees that Henderson is due under Clause 3.6.2, and whether any sums that are due to Henderson can be set-off against any sums due to Mr Pease on his claim, do not arise.
Conclusion
201.	For these reasons: 
(1)	Mr Pease’s claim for management fees under Clause 3.7.1 succeeds.
(2)	I award Mr Pease only nominal damages for Henderson’s breach of Clause 3.6.1.
(3)	Henderson’s claim for breach of Clause 3.6.2 is dismissed.
202.	I ask Counsel to agree an order which reflects this determination of Mr Pease’s claims and Henderson’s cross-claim. I will hear submissions on any points which remain in dispute as to the form of the order, and on any other issues such as costs and permission to appeal, either when judgment is handed down, or at some other convenient date.