Case Update: Ian Archer v (1) Nubuke Investments LLP (2) [2014] EWHC 3425

This case concerned a challenge by a departing Designated Member in an LLP of the valuation of his interest. Questions arose in respect of the extent to which there were implied terms in the relevant agreements giving rise to an obligation on the LLP (and the continuing Members) to cooperate with and provide information to potential third party purchases of the relevant interest and whether a failure to do so amounted to a breach of contractual provisions on Members to show utmost good faith.

Mr Archer held a 20% interest in Nubuke Investments LLP. Further to a disagreement with regard to his departure from the LLP he was removed and expelled by resolution of the other Members.

This process triggered transfer provisions in the LLP agreement, which were subject to pre-emption rights. The relevant clause provided that the value of the Member's interest would be either a sum matching a bona fide offer for the interest by an unconnected third party, or an amount determined by the auditors.

The business of the LLP had suffered due to developments in the world markets in 2008 - 2009 and the LLP was loss-making. Having considered the financial position of the LLP, the...