Global Partners Fund Limited v Babcock & Brown Limited

Corporations Act 2001 (Cth) Limited Partnerships Act 1907 LEGISLATION CITED : Uniform Civil Procedure Rules 2005 (NSW) Civil Procedure Act 2005 (NSW) Corporations Regulations 2001 (Cth) Companies Act 1961 (Qld)

Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 Vagrand Pty Ltd (in liq) v Fielding (1993) 10 ACSR 373 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Webster v Lampard (1993) 177 CLR 598 Agar v Hyde (2000) 201 CLR 552 Wickstead v Browne (1992) 30 NSWLR 1 Strong v Simpson (Supreme Court of New South Wales, McLelland J, 31 July 1992, unreported) Ucak v Avante Developments Pty Ltd [2007] NSWSC 367 National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514 Trendtex Trading Corp v Credit Suisse [1982] AC 679 Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] I Lloyd's Rep 87 Huddart Parker Ltd v The Ship "Mill Hill" (1950) 81 CLR 502 Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 CASES CITED : FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association Ltd (1997) 41 NSWLR 117; (1997) 41 NSWLR 559 Akai Pty Ltd v People's Insurance Company Ltd (1996) 188 CLR 413 Incitec Ltd v Alkimos Shipping Corporation [2005] FCA 191 Owners of cargo on vessel Eleftheria v Owners of Ship Eleftheria [1969] 2 All ER 641 Compagnie des Messageries Maritimes v Wilson (1954) 94 CLR 577 Recyclers of Australia Pty Limited v Hettinga Equipment Inc (2000) 100 FCR 420 Fiona Trust & Holding Corporation v Privalov [2008] 1 Lloyd's Rep 254 Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 Donohue v Armco Inc [2002] 1 Lloyd's Rep 425 Winnetka Trading Corporation v Julius Baer International [2008] EWHC 3146 (Ch) Morgan Stanley & Co International PLC v China Haisheng Juice Holdings Co Ltd [2009] EWHC 2409 (Comm) Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] 1 Lloyd's Rep 767 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 Puttick v Tenon Limited (2008) 238 CLR 265 Bella Products Pty Ltd v Creative Designs International Ltd (2009) 258 ALR 538 Ogilvie-Grant v East Liquidator of Gordon Grant and Grant Pty Ltd (1983) 7 ACLR 669 Meehan v Stockmans Australia Cafe Holdings Pty Ltd (1996) 22 ACSR 123

Global Partners Fund Limited - Plaintiff Babcock & Brown Limited (In Liquidation) - First Defendant PARTIES : Babcock & Brown International Pty Limited - Second Defendant Babcock & Brown LP - Third Defendant BBGP Managing General Partner Limited - Fourth Defendant

T.G.R. Parker SC with N.J. Owens [Plaintiff] COUNSEL : P.M. Wood - [First Defendant] A.S. Bell SC with C.A. Moore and A. Rao - [Second, Third & Fourth Defendants]

Clayton Utz [ Plaintiff] SOLICITORS : Blake Dawson [First Defendant] Freehills [Second, Third & Fourth Defendants]

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

2010/26129 GLOBAL PARTNERS FUND LIMITED -V- BABCOCK & BROWN LIMITED (IN LIQUIDATION) JUDGMENT

1 HIS HONOUR: By Summons and accompanying Commercial List Statement sued out of this Court on 29 January 2010 the plaintiff initiated proceedings against the second, third and fourth defendants. The Summons claims orders for an account or equitable compensation, damages and, as against the fourth defendant, declarations. 2 Although the plaintiff has cited the first defendant, it is in liquidation. By s 500(2) of the Corporations Act 2001 (Cth) proceedings were not to be commenced against it except by leave. The plaintiff neither applied for, nor obtained, such leave before suing out the process. 3 Before the Court are three motions: a a motion by the plaintiff for leave to proceed against the first defendant; b a motion by the second defendant for orders that the Summons as against it be set aside, that the Court decline to exercise jurisdiction, that the Court stay the proceedings, that the Court dismiss the proceedings and that the Summons be struck out; c a motion by the third and fourth defendants for orders that the Summons as against them be set aside, that the service of the Summons on them be set aside, that the Court declare that it has no jurisdiction over them in respect of the subject matter of the proceedings, that the Court decline to exercise jurisdiction and that the Court stay the proceedings.

THE PARTIES 4 The plaintiff was incorporated in the Cayman Islands on 7 September 2009. 5 The first defendant is an Australian company. It is the ultimate holding company of a group which includes each defendant and some 1500 other corporations and entities ("the Group"). The Group is variously referred to as BB, B&B and Babcock & Brown. The first defendant was placed into liquidation on 24 August 2009 by a resolution of its creditors.

6 The second defendant is an Australian company. It is a direct subsidiary of the first defendant. It has been described as the main operating and asset owning company of the Group. 7 The third defendant is a limited partnership constituted under the laws of the State of Delaware, USA. The partners in the third defendant are two direct subsidiaries of the second defendant. 8 The fourth defendant is a United Kingdom corporation. It is an indirect subsidiary of the first defendant. Two entities are interposed between it and the first defendant. FACTUAL BACKGROUND

9 In September 2004 the first defendant raised capital by way of an initial public offer of its shares ("IPO"). Its shares were then listed on the Australian Stock Exchange. 10 The IPO was by way of a prospectus dated 9 September 2004. The prospectus disclosed details of the first defendant's board of directors as well as an "Executive Committee". It stated that the Group's global activities would be managed by the Executive Committee consisting of executive directors and a number of named executives, whose biographies were included. It stated that the Executive Committee would provide strategic direction for the Group's activities, have delegated authority to deploy capital and have oversight of Group operations and administration. The executive directors named included Mr James Babcock and Mr Philip Green. Members of the Executive Committee included Mr Michael Maxwell, Mr Robert Topfer and Mr Richard Umbrecht. 11 The prospectus described Mr Topfer as coordinating the Group's Corporate Principal Investment and Funds Management activities worldwide. Mr Umbrecht was described as managing the US Special Products team and coordinating the Group's Special Products activities worldwide. 12 The first defendant's annual report for the year ended 31 December 2006 described Mr Green as the chief executive and stated that he was based in the Sydney office. It described Mr Topfer as Global Head Corporate Finance. Formation of the Partnership 13 On 17 May 2005, there was constituted a limited partnership named Babcock & Brown Capital Partners "to carry on the business of an investor and in particular, of identifying, negotiating, making, monitoring and realising investments and to carry out all functions and acts in accordance therewith" ("the Partnership"). The Partnership was established by a Limited Partnership Agreement made on 17 May 2005 and amended on 1 July 2005 ("the Partnership Agreement"). The parties to the Partnership Agreement were the fourth defendant which became the Managing General Partner of the Partnership, and two other Babcock & Brown entities, one a Scottish limited partnership and the other a Cayman Islands corporation, which became Limited Partners. The Partnership was (and remains) registered as a limited partnership in England under the Limited Partnerships Act 1907 of that country. 14 The Partnership Agreement anticipated "Commitments" being made to the Partnership by investors who would become Limited Partners by signing a Deed of Adherence, and then be treated as parties to the Partnership Agreement. 15 The name of the Partnership was subsequently changed to Babcock & Brown Global Partners and then to its present name, Global Partners Fund LP. The Partnership business and the Fund which was created from Commitments have from time to time both been referred to as "the Fund". 16 The Partnership Agreement is a substantial document. The terms relevant to the matters now under consideration are set forth in the Schedule "A" to this judgment.

The Private Placement Memorandum 17 The Partnership Agreement refers to a Private Placement Memorandum ("PPM") dated 10 January 2005 as amended and supplemented from time to time. No document dated 10 January 2005 was in evidence, but the plaintiff tendered, without objection, a PPM dated 5 July 2005. Submissions proceeded on the assumption that that document is a supplementation of the one referred to in the Partnership Agreement. The PPM was issued in the United Kingdom by an entity called Babcock & Brown Investment Management Limited ("BBI PL"). BBI PL entered into an "Advisory Agreement" with the fourth defendant. 18 The PPM defines "Babcock & Brown" to mean "BBI PL" and its 100 per cent owned operating subsidiaries. However, it also refers to "Babcock & Brown" as having decided to undertake the IPO and having raised $550 million on the Australian Stock Exchange. This is clearly a reference to the first defendant rather than to BBI PL or any subsidiary. 19 The PPM makes a series of statements including the following: The Fund Babcock & Brown ("B&B" of the "Group") aims to establish a €240 million principal investment fund, Babcock & Brown Capital Partners, (the "Fund") or the "Partnership"). The fund follows on the success of Babcock & Brown's principal investment activity since 1999 (see Historical Track Record, page 21) and aims to achieve attractive risk-adjusted returns by investing in and restructuring capital assets and capital-asset based businesses globally, leveraging Babcock & Brown's global network of relationships and geographical presence. The Fund will be managed independently of Babcock & Brown's advisory business and investment/divestment decisions will be based on considerations of investment return and portfolio diversification. Babcock & Brown believes this is an exciting investment opportunity due to the Group's focused sector expertise, its sophisticated structuring and financing aptitude and strong deal generating capability. Babcock & Brown targets investment opportunities for the Fund capable of generating overall net IRR in excess of 25% with low correlation to the quoted equity markets and substantially in categories of assets not otherwise readily accessible by the Fund's Investors. The Fund is being formed to invest exclusively in deals originated and structured by Babcock & Brown on a global basis. The Fund will have the contractual right to select and participate in attractive equity opportunities that Babcock & Brown is seeking to syndicate to third party investors. In many cases, Babcock & Brown intends to invest its proprietary capital into transactions alongside the Fund, and Babcock & Brown's commitment of €41.5 million to the Fund demonstrates the alignment of its interests with those of the Fund's investors. Over the course of the Investment Period, the Fund Investment Committee will aim to construct a well-diversified portfolio of investment by sector and geography. Deal Origination Babcock & Brown has a significant high-quality deal origination capability based on its market reputation, relationship networks and the efforts of over 300 experienced professionals located in 19 offices throughout the world. For the year ended 31 December 2003, Babcock & Brown executed over 200 transactions with a value of over US$18 billion, of which it made a capital commitment in approximately one quarter of these transactions. Many of these transactions were sourced "off-market" and structured by Babcock & Brown to provide attractive entry prices and other favourable investment terms, which are key elements of a value-focused investment program. The Group has a history of constantly seeking to apply new, creative solutions to maintain a strong investment pipeline as the investment environment changes. A major competitive advantage of the Fund over other private principal investment vehicles lies in its having a first option over investment opportunities generated out of Babcock & Brown's global 'principal investment' deal stream. 20 The PPM includes a section entitled "Investment Process & Approval Procedure" which contains a diagrammatic representation of a four-stage investment approval process. The PPM describes this process as involving a number of different teams variously described as the Transaction Team, the Fund Team, the Fund Investment Committee and the Fund Advisory Board. First there is a preliminary review by a Transaction Team which presents positive recommendations to the Business Area Head with a suggested plan of action. The Business Area Head and his team then decide whether to commit additional time and resources to undertake the next stage of the transaction. Where the Business Area Head decides to pursue the transaction an initial paper is circulated to "Babcock & Brown's Executives" who then decide whether the transaction will be committed and or syndicated. If it will be syndicated the Fund Team works with Business Area Heads to analyse the opportunity. The investment opportunity is reviewed by the Fund Team who then presents its finding to the Fund Investment Committee. The final stage is a summary of the final terms of the deal which is signed off by the Fund Investment Committee. 21 According to the PPM: · the Fund Investment Committee comprises "four executives from Babcock & Brown; Jim Babcock, Phil Green, Edward Hanson and Mike Maxwell; as well as an independent member, George Magan". Mr Hanson was a director of Babcock & Brown Investment Management Limited, having specialised in corporate finance, based in London and predominantly focused on the European Property business and Funds Management business. · Business Area Heads are heads of a "Babcock & Brown Business Area" and act as supervisors for each transaction to be considered for investment by the fund. Business Area Heads work closely with members of the Fund Team. The Business Area Heads included Mr Topfer who was once more described as coordinating the Group's Corporate Principal Investment and Funds Management activities worldwide. · the Fund Team operates out of "Babcock & Brown's UK office and has responsibility for organising the deal stream that will arise from B&B's global activities and presenting those that meet the fund's criteria and guidelines to the Fund Investment Committee"; · the Fund Advisory Board has primary responsibility for fund governments; compliance with the investment mandate; and conflict of interest resolution. The Fund Advisory Board will have visibility of the funds investment decision making process and be required to approve any transactions referred to it by the Fund Investment Committee; · once an investment has been made by the Fund, "primary responsibility for the operational management of the investment will reside with the Business Area Head and the appropriate Deal Team".

22 In about the middle of 2007 the Partnership invested some €52 million (US$72 million) in the acquisition of an indirect equity stake in a company called Coinmach Service Corporation ("Coinmach") incorporated in Delaware. Coinmach held interests in entities which carried on business providing laundry equipment and services to multi-family housing properties in the USA. There does not seem to be any doubt that the investment (to which I will refer as "the Coinmach acquisition") has proved to be unsuccessful. The Partnership has apparently lost most if not all the money it invested. 23 In its Commercial List Statement the plaintiff avers that:

a In the period leading up to June 2007 officers and employees of the first, second and third defendants ("the BB Coinmach Deal Team") negotiated the Coinmach transaction. The BB Coinmach Deal Team was subject to the control and supervision of a committee of senior executives of the first defendant or the second defendant ("the BB Executive Committee") through being allocated to one or more business areas under the control and supervision of a Business Area Head who was a member of the BB Executive Committee, and by also being made subject to the overall control and supervision of the group of companies of which the first defendant is the ultimate holding company; b The acquisition and continued operation of Coinmach was to be financed by a combination of existing bank debt of Coinmach and its subsidiary entities being rolled over, US$400 million being provided by a bank financier with a view to syndication as unsecured notes and US$336 million being provided as equity by entities within or associated with the BB Group (including the Partnership); c On completion the third defendant was to receive from the equity investors a success fee of 1.5 per cent of Coinmach's enterprise value. The fee was then expected to be approximately US$21 million; d The BB Coinmach Deal Team, with the approval of the Investment Committee, negotiated and entered into an agreement dated 10 June 2007 whereby a consortium was formed between the Partnership and certain other BB Group entities, interests associated with senior management of Coinmach and one or more entities within the Royal Bank of Scotland ("RBS") group to undertake the Coinmach acquisition, with RBS providing finance; e Pursuant to the consortium agreement, a company named Spin Holdco Inc was incorporated in Delaware, USA as the holding company through which the members of the Coinmach acquisition consortium would acquire Coinmach, and a further company called Spin Acquisition Co Inc was incorporated in Delaware, USA, as a wholly owned subsidiary of Spin Holdco; f By agreement dated 14 June 2007 between Spin Holdco, Spin Acquisition Co and Coinmach, it was agreed that Coinmach would be merged into Spin Acquisition Co and Spin Holdco would thereby acquire 100 per cent ownership of Coinmach. It was a term of this agreement that if Spin Holdco did not complete the transaction, it was required to pay to Coinmach a cancellation fee of US$17 million; g After June 2007, there was a prolonged and severe deterioration in credit and equity markets worldwide; h In or about November 2007, RBS decided in the light of that deterioration that it did not wish to proceed with the Coinmach acquisition and proposed to the BB Coinmach Deal Team that the transaction not be completed, on the basis that RBS would pay the whole of the cancellation fee ("the RBS proposal"); i The BB Coinmach Deal Team rejected this proposal and instead negotiated with RBS and Coinmach a proposal whereby the Coinmach acquisition would proceed on terms that Coinmach and third defendant would cover the expenses incurred by RBS in any subsequent syndication, the third defendant would reimburse RBS 50 per cent of any losses suffered by RBS in syndicating its equity stake and these obligations would be supported by funds to be put in escrow on completion by Coinmach (from the acquisition price) and by third defendant (from its success fee); j On 20 November 2007, the Coinmach acquisition was completed. The Partnership invested US$70 million. Removal of the Fourth Defendant as Managing General Partner

24 Mr Edward Hanson, a resident of London, joined the Group in 1997. Over some years he held a number of different positions within the Group. 25 From about August 2007 the Group apparently began to experience financial difficulties. In August 2008 Mr Green stepped down as chief executive officer of the Group and ceased his role on the Fund Investment Committee. Mr Michael Larkin became chief executive officer. 26 At about this time it appears that the day-to-day management of the Partnership investments fell to Mr Hanson together with Messrs Alexander Stahel (who apparently currently resides in Germany) and Thomas Drastik (who apparently currently resides in Switzerland). 27 On 9 February 2009 Mr Hanson wrote on behalf of the fourth defendant to the third defendant concerning amongst others, the Coinmach Transaction. He asserted, amongst others, that the fourth defendant had not been informed of the RBS proposal that the Coinmach Transaction not proceed and that RBS pay the $17.5 million cancellation fee, and that this meant that the Investment Committee was not given the opportunity to review, in the light of the changed economic conditions, the decision to invest in Coinmach. The letter asserted that if the decision had been reviewed and reversed, the Partnership would not have invested and would not have lost substantially all of the $70 million it had invested. 28 In its Commercial List Statement the plaintiff avers further that: a From the time of the RBS Proposal, each of the first defendant, the second defendant and the third defendant had an interest or interests in the proposed investment by the Partnership in the Coinmach acquisition going ahead which conflicted or potentially conflicted with the interests of the Partnership; b At no stage prior to the completion of the Coinmach acquisition was the conflict which had arisen from the RBS Proposal referred to the Advisory Board, nor was the Partnership's fully informed consent to the Coinmach acquisition being completed, despite the existence of that conflict, sought or obtained; c Each of the following circumstances was material to the proposed investment by the Partnership in the Coinmach acquisition: i. the preparedness of RBS to pay the whole of the cancellation fee rather than proceed with the Coinmach acquisition; ii. the preparedness of Coinmach to agree to terms less favourable to it than those initially negotiated in order to permit the Coinmach acquisition to proceed; and iii. the preparedness of the third defendant to agree to reduce or risk the reduction of its success fee in order to permit the Coinmach acquisition to proceed. d The BB Coinmach Deal Team did not reject the RBS Proposal and proceed with the Partnership's investment in the Coinmach acquisition on the revised terms because it had formed a genuine belief that that was in the best interests of the Partnership; and e In November 2007 the state of the relevant debt and equity markets and the financial position of Coinmach was such that the best interests of the Partnership required the acceptance of the RBS proposal rather than proceeding with an investment in the Coinmach acquisition on the revised terms; by reason of its investment in the Coinmach acquisition, the Partnership suffered substantial loss. 29 On 29 September 2009 Limited Partners of the Partnership requisitioned a meeting to remove the fourth defendant as the Managing General Partner pursuant to cl 14.4.2 of the Partnership Agreement.

30 On 21 October 2009 at a meeting in London (which followed a number of earlier meetings) a resolution was passed by the stipulated majority of Limited Partners requiring that the fourth defendant cease acting as the Managing General Partner.

31 Lawyers representing the fourth defendant (and other members of the Group) and lawyers representing the plaintiff were present at the meeting. The minutes of the meeting indicate that allegations of misconduct by the fourth defendant were to be made. A solicitor from the fourth defendant's English lawyers (Freshfields) was recorded as saying that a resolution removing the fourth defendant for wilful misconduct should be supported by evidence. The response from a solicitor from the plaintiff's English lawyers (Slaughter & May) was that sufficient information had already been provided and that the fourth defendant was entitled to sue for its outstanding fees if it wished. 32 The fourth defendant claims (and was then claiming) that it is entitled to some €7.4 million for outstanding management fees and €9.3 million for compensation for termination of its appointment as Managing General Partner. 33 The plaintiff was appointed Managing General Partner of the Partnership. The plaintiff and the fourth defendant disagree on the date that the fourth defendant was removed. That date is relevant to determining the fourth defendant's entitlements under the terms of the Partnership Agreement. They have reached an accommodation under which the plaintiff accepts appointment from 18 December 2009 and the fourth defendant agrees that if the plaintiff had not as a matter of law already been appointed, any termination compensation is to be calculated as if the fourth defendant's removal took place in 2010. 34 Some time between 18 September 2009 and 20 November 2009 the board of directors of the fourth defendant, against the background of the allegations being made about its conduct, transferred approximately €11.2 million of the Partnership's funds to a client account at Slaughter & May.

The Privilege Proceedings 35 Freshfields were instructed to prepare for the handover of responsibility as Managing General Partner from the fourth defendant to the plaintiff to ensure that the Group's confidential information was protected and to investigate the allegations in relation to Coinmach. 36 According to an affidavit by a senior associate of the firm, documents hosted on the Group's electronic systems in London were copied onto the solicitors' servers in London for review. The documents transferred appeared to contain information concerning legal advice in relation to contemplated claims against members of the Group. The documents apparently included legal advice given by Slaughter & May and the plaintiff's Australian solicitors, Clayton Utz. 37 Freshfields have taken the position that the fourth defendant and other members of the Group are not precluded from access to any of the documents by legal professional privilege available to any client of Slaughter & May. The second defendant, the fourth defendant and three other Group entities have commenced proceedings in the Chancery Division of the High Court of Justice in England seeking a declaration that none of them "is precluded by any legal professional privilege available to any client of Slaughter & May from inspecting any part of the data recorded on the Babcock & Brown Group servers". I will refer to these proceedings as "the Privilege Proceedings".

38 The Privilege Proceedings were listed for directions on 11 December 2009 and then on 18 December 2009. They are contested. They were listed for two days' hearing "to float in the window from 26 to 30 March 2010". Two of the days in the window were on the weekend. I do not know what relevantly transpired during that period.

The Debt Proceedings 39 On 23 December 2009, Freshfields "on behalf of the Babcock & Brown Group" in accordance with Civil Procedure Rules which apply in England, wrote the plaintiff a pre-action letter ("the pre-action letter") foreshadowing the institution of proceedings by the fourth defendant to recover the amounts it says are due to it under the Partnership Agreement. The pre-action letter requested a written acknowledgement within 14 days and a full response within 30 days (excluding Bank Holidays in the UK). 40 The pre-action letter conveyed that the fourth defendant was prepared to transfer the assets of the Partnership to the plaintiff on the condition that it agreed that the fourth defendant retains its rights and interests over the transferred assets, or in the alternative that the plaintiff gave an undertaking to preserve assets worth a minimum of €7 million to meet the fourth defendant's claims for management fees and compensation insofar as those claims are not met from the Fund. 41 The pre-action letter stated that Freshfields' instructions were absent a satisfactory response to issue proceedings and that the timing of such proceedings depended on the plaintiff's response. It stated that if the plaintiff met the fourth defendant's requirements with respect to undertakings in relation to transfer of assets it may be that the proposed proceedings could be deferred until resolution of the Privilege Proceedings.

42 The plaintiff responded by letter dated 30 December 2009. Amongst others it said that it was in the process of appointing English counsel. It indicated a willingness to provide certain undertakings in relation to preservation of Partnership assets and said that its needs for funds to meet Partnership costs and expenses was limiting the scope of the advice that was available to it. 43 On 25 January 2010 Slaughter & May wrote to Freshfields expressing an expectation that a full response to the pre-action letter would be provided by the end of that week. 44 Slaughter & May on behalf of the plaintiff responded to the pre-action letter by letter dated 29 January 2010. The position was taken that since the fourth defendant was no longer the Managing General Partner of the Partnership (having been succeeded by the plaintiff) Slaughter & May were fully entitled to receive instructions from the plaintiff on behalf of the Partnership. The letter referred to cl 17.4 of the Partnership Agreement and the Coinmach Transaction. The 9 February 2009 letter (from Mr Hanson) was extensively quoted. Slaughter & May stated that the facts recounted in that letter disclosed a prima facie case of wilful misconduct, deliberate or reckless disregard of fiduciary duties and gross negligence on the part of directors and employees of Babcock & Brown companies, including Babcock & Brown Limited (the first defendant), Babcock & Brown International Pty Ltd (the second defendant) and Babcock & Brown (the third defendant) for which the fourth defendant was liable. 45 The plaintiff's complaint was summarised as follows: Put shortly, in circumstances in which the deterioration in Coinmach's business prospects between June and November, and the likely outcome of any investment in it, was such as to cause the Royal Bank of Scotland to offer to pay $17.5 million to cancel it, it was grossly negligent to expose the Partnership to needless risk, when it could have pulled out of the transaction at little or not cost. Further, it was a clear breach of fiduciary duty to do so without informing either BBMGP's (the fourth defendant) management team (Messrs Hanson, Stahel and Drastik) or the independent member of the Investment Committee, Mr. Magan, of the RBS offer.

46 Slaughter & May stated that the RBS offer gave rise to a clear conflict of interest in that whilst the Partnership would be exposed to loss in respect of the whole of its investment "Babcock & Brown was entitled to a fee of $21 million which would substantially cover any loss which could be suffered by the Babcock & Brown Group from the transaction". 47 The letter stated that the defendants were jointly and severally liable to the Partnership for damages which are likely to be of the order of €52 million and that the Partnership was entitled to set off that claim in extinction of any management or termination fees otherwise payable to the fourth defendant and that in any event no fee was payable because the fourth defendant was removed for reasons falling within cl 14.4.2 of the Partnership Agreement. 48 The letter stated that the plaintiff had taken the view that the real issue is the issue as to the misconduct of Freshfields' clients and that the plaintiff had issued proceedings in Australia "claiming damage against all the members of the group mentioned above". It enclosed a copy of process sued out of this Court on 29 January 2010. The letter stated that it should be made clear that whilst it summarised the Partnership case against members of the Babcock & Brown Group arising from the Coinmach Transaction, there were a number of other transactions which may give rise to claims and that neither Slaughter & May nor Clayton Utz had investigated these in sufficient detail to enable them to be pleaded at present. 49 On 1 February 2010 (three days after the plaintiff commenced proceedings in this Court) the second, third and fourth defendants as claimants, commenced proceedings in the Commercial Court of the Queens Bench Division in the High Court of Justice in England (the "Commercial Court") against "the Partnership" and the plaintiff as defendants. The relief claimed by the second, third and fourth defendants includes: a a declaration that the fourth defendant's appointment as General Managing Partner of the Partnership was terminated by no later than 27 November 2009; b declarations and orders that the fourth defendant is entitled to be paid management fees and compensation fees for termination; c declarations that the fourth defendant is entitled to indemnities under cl 17.2 of the Partnership Agreement; and d a declaration that they and each of them: i. did not breach any duties owed to the plaintiff and the Partnership (or either of them) in relation to the Coinmach Transaction; ii. have no liability to the plaintiff and the Partnership or either of them (in relation to the Coinmach Transaction), either by reason of cl 17.1 of the Partnership Agreement or otherwise.

50 I shall refer to these proceedings as the "debt proceedings" and to the last-mentioned declarations as the "negative declarations". 51 On 4 February 2010 the second, third and fourth defendants applied to the Commercial Court for orders that the plaintiff not pursue or take any further steps in pursuit of the proceedings in this Court, that the Partnership or the plaintiff not commence, pursue, procure or assist in the commencement of or pursuit of any further proceedings relating to any disputes arising out of or in connection with the Partnership Agreement or the PPM in any court or tribunal other than the High Court of England and Wales and that the plaintiff terminate without prejudice or otherwise discontinue these proceedings as against the second, third and fourth defendants. I shall refer to that application as the "anti-suit injunction". 52 A half-day hearing of the anti-suit injunction was scheduled to take place on Thursday 18 March 2010. The Hearing of the Motions 53 When I fixed the motions for hearing to commence on 15 March 2010 my expectation was that they would be heard in two days and that it would be possible for me to give judgment before the hearing of the anti-suit injunction. I had in mind the following passage of the High Court's judgment in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 565 (following upon Lord Templeman's observations in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460), concerning applications to set aside service effected outside the jurisdiction pursuant to leave and applications to stay proceedings: As regards both kinds of application and subject to one qualification, we respectfully agree with the substance of the advice contained in the speech of Lord Templeman in Spiliada, namely, that the primary judge should "be allowed to study the evidence and refresh" his or her memory of the relevant law "in the quiet [of his or her Chambers] without expense to the parties"; that he or she should not be burdened by unhelpful reference to other decisions on other facts; and "that submissions will be measured in hours and not days". The qualification is that we think that, in the ordinary case, counsel should be able to furnish the primary judge with any necessary assistance by a short, written (preferably agreed) summary identification of relevant connecting factors and by oral submissions measured in minutes rather than hours. There may well be circumstances in which the primary judge may conclude that it is desirable to give detailed reasons balancing the particular weight to be given to the presence or absence of particular connecting factors and explaining why the local forum is or is not a clearly inappropriate one. Ordinarily, however, it will be unnecessary for the primary judge to do more than briefly indicate that, having examined the material in evidence and having taken account of the competing written and oral submissions, he or she is of the view that the proceedings should or should not be stayed on forum non conveniens (i.e "clearly inappropriate forum") grounds. 54 To say the least, my expectations were optimistic. The issues raised by the parties ranged far beyond forum non conveniens. As between the second, third and fourth defendants on the one hand and the plaintiff on the other, every complaint and criticism of the other arguably open (and sometimes not) was sought to be ventilated.

55 By Wednesday 17 March 2010 (the third day) it was clear that the hearing would not finish that day and would most likely occupy the entirety of the next day. I accordingly took up, in particular with counsel for the second, third and fourth defendants, what was proposed with respect to the pending anti-suit injunction hearing. Counsel's initial position was that his clients intended to persist with it as scheduled. It seemed to me, however, that to do so at a time when the second, third and fourth defendants were moving motions in this Court which, if successful might render the anti-suit injunction either wholly or partly otiose, raised the spectre of an abuse of process. It also entailed the irony that the second, third and fourth defendants were complaining in this Court that the proceedings should properly occur in England whilst they themselves were moving motions which overlapped with their own anti-suit injunction application. 56 The result was that the parties sensibly executed consent orders in the Commercial Court adjourning the anti-suit injunction application to a date not before seven days after the handing down of this judgment. 57 At the close of submissions I requested both sides to provide the Court with a list of factors relevant to the question of whether this jurisdiction is a clearly inappropriate forum for the proceedings. The lists provided went beyond what was contemplated and sought to articulate (or perhaps rearticulate) arguments. The plaintiff sought leave to be heard further. On 25 March 2010 I heard further oral argument which took up most of the afternoon. All in all the hearing of the motions took nearly 4 ½ days. The Principal Proceedings in this List 58 Proceedings in this List (which is one of a number of Specialist Lists in the Equity Division) are commenced by Summons and Commercial List Statement, rather than by Statement of Claim. 59 The Summons claims the following relief: 1. As against the first, second, third and fourth defendants:

a. an order for account or equitable compensation; b. damages; c. interest. 2. Declarations that: a. the fourth defendant has no entitlement under the Limited Partnership Agreement dated 1 July 2005 to compensation for its removal as Managing General Partner of the Partnership; b any entitlement the fourth defendant may have to any management fee (including any entitlement the fourth defendant may have, contrary to (a), to compensation for its removal as Managing Partner) out of the assets of the Partnership is to be set off against the sum awarded against the fourth defendant under 1 above. 60 A plaintiff is required in Pt C of its Commercial List Statement to plead its contentions and to avoid formality in doing so.

61 For ease of understanding I earlier summarised the plaintiff's description of the Coinmach acquisition and the circumstances surrounding it. 62 However, as will appear below, each of the defendants made a sustained attack on the plaintiff's pleaded claim. The attacks ranged from a contention that no reasonable cause of action is disclosed to pleading points.

63 It is therefore appropriate to provide the entire text of Pt C of the plaintiff's Commercial List Statement. It appears as Schedule "B" to this judgment.

THE MOTIONS The motion for leave 64 The plaintiff seeks leave pursuant to s 500(2) of the Corporations Act (Cth) to commence and continue these proceedings against the first defendant, together with the usual order that it not be at liberty to enforce any judgment against the first defendant without leave of the Court.

The second defendant's motion 65 The second defendant seeks orders: Pursuant to the Uniform Civil Procedure Rules ("UCPR") Pt 12 r 12.11:

1. setting aside the Summons filed on behalf of the Plaintiff on 29 January 2010 in these proceedings;
2. declining to exercise jurisdiction in these proceedings;
3. staying these proceedings.

Further or in the alternative, pursuant to sections 67 and/or 90 of the Civil Procedure Act 2005 (NSW) and/or UCPR Pt 13 r 13.4 and/or Pt 36 r 36.1 UCPR orders: 4. staying these proceedings; 5. dismissing these proceedings.

Further or in the alternative, pursuant to UCPR Pt 14 r 14.28 an order: 6. that the claims made against the second defendant in the Summons be struck out.

Further or in the alternative, pursuant to its inherent jurisdiction, orders: 7. declining to exercise jurisdiction in these proceedings; 8. staying these proceedings; 9. that the claims made against the second defendant in the Summons be struck out. The third and fourth defendants' motion 66 The third and fourth defendants seek orders: Pursuant to UCPR Pt 11 r 11.7 and Pt 12 r 12.11: 1 setting aside the Summons filed on behalf of the plaintiff on 29 January 2010 in these proceedings; 2 setting aside the service of the Summons on the third defendant and fourth defendant; 3 declaring that this Court has no jurisdiction over the third defendant and fourth defendant in respect of the subject matter of these proceedings; 4 declining to exercise jurisdiction in these proceedings; 5 staying these proceedings.

APPROACH TO CONSIDERATION 67 One of the requirements resting upon a party seeking leave to proceed against a company in liquidation is that it must establish that the claim has a solid foundation and gives rise to a serious dispute: Vagrand Pty Ltd (in liq) v Fielding (1993) 10 ACSR 373 at 380. The first defendant resists the grant of leave on the basis (amongst others) that the plaintiff's claim fails that test. 68 The second defendant is an Australian company on whom service took place in regular fashion within this jurisdiction. It has no challenge to the efficacy of service. Its primary position is that the proceedings should be dismissed (or that the plaintiff's pleading be struck out without leave to amend) because the plaintiff has failed to disclose a reasonable cause of action against it. Its secondary position is that the Court should stay the proceedings against it or decline to exercise jurisdiction on forum non conveniens or abuse of process grounds.

69 The third and fourth defendants are foreign. The only basis upon which the plaintiff asserts an entitlement to serve them outside Australia is that the proceedings were properly commenced against persons served in New South Wales and the third and fourth defendants are properly joined. They have not entered an appearance in the proceedings. They accordingly proceed only for orders relating to service and jurisdiction. Their primary position is that service upon them was not authorised because the proceedings were not properly commenced against the first and second defendants. It follows, they say, that they were not susceptible to be joined. They both contend that the Court should decline to exercise jurisdiction or stay the proceedings. The fourth defendant relies on the independent effect of the governing law and exclusive jurisdiction clause (cl 18.11) in the Partnership Agreement. Finally, both say that the Court should stay the proceedings against them or decline to exercise jurisdiction on forum non conveniens or abuse of process grounds. 70 Common to each defendants' position is a challenge to the plaintiff's pleaded claim. The outcome of those challenges potentially affects all other contentions. I will therefore firstly deal with those challenges. THE APPLICATIONS FOR DISMISSAL AND STRIKING OUT The Relevant Uniform Civil Procedure Rules 71 Part 13 r 13.4 UCPR is in the following terms: 13.4 Frivolous and vexatious proceedings (1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings: (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. (2) The court may receive evidence on the hearing of an application for an order under subrule (1). 72 Part 14 r 14.1 UCPR is in the following terms: 14.1 Application This Part applies to proceedings commenced by statement of claim and to proceedings in which a statement of claim has been filed. 73 Part 14 r 14.28(1) UCPR is in the following terms: 14.28 Circumstances in which court may strike out pleadings (1) The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading: (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or (c) is otherwise an abuse of the process of the court.

The Legal Principles 74 Part 13 r 13.4 UCPR gives the Court a discretionary power to dismiss proceedings where the plaintiff's case is so hopeless that it cannot possibly succeed. A party will not be denied a contested merits hearing unless the absence of a cause of action is clearly demonstrated. If it is demonstrated that there is a real question to be tried the Court should not determine the matter summarily. Summary dismissal brings the proceedings to end at an interlocutory stage. The test is a demanding one and exceptional caution is required: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129; Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; Webster v Lampard (1993) 177 CLR 598; Agar v Hyde (2000) 201 CLR 552. 75 However, the necessity for determination of a difficult question of law is not an insuperable barrier to the grant of summary judgment. The Court may decide such questions if it forms the view that it is appropriate to do so even though extensive legal argument may be necessary to demonstrate the hopelessness of the claim: General Steel Industries Inc v Commissioner for Railways (NSW) at 129; Wickstead v Browne (1992) 30 NSWLR 1. 76 An order to dismiss proceedings is not appropriate where the pleadings are merely ill-expressed or capable of amendment so as to disclose a triable issue. This is particularly so in a specialist list such as this List in relation to complex litigation where frequent amendment is a regular feature: Strong v Simpson (Supreme Court of New South Wales, McLelland J, 31 July 1992, unreported). 77 Part 14 UCPR applies only to proceedings commenced by Statement of Claim. Although these proceedings were by Summons the Court has, as a necessary incident of its jurisdiction, the power to control its own proceedings and procedure in the same way as if the proceedings were conducted on pleadings in the strict sense. The Practice Note which applies to this List requires a plaintiff to set out its contentions in summary form. The contentions should avoid formality, but must nevertheless comply with the fundamental requirement of disclosing a reasonable cause of action. The principle that the Court has as an incident of its jurisdiction the power to, and will, strike out a pleading which discloses no reasonable cause of action or defence, or which has a tendency to cause prejudice, embarrassment or delay in the proceedings or which otherwise is an abuse of the process of the Court, applies to a Commercial List Statement in this List with no less force albeit Pt 14 UCPR does not strictly apply: Ucak v Avante Developments Pty Ltd [2007] NSWSC 367. As with summary dismissal, the power to strike out pleadings because they disclose no reasonable cause of action should only be exercised in a plain and obvious case.

The Challenges to the Plaintiff's Claim as Pleaded 78 The first defendant puts that the Commercial List Statement fails to plead any discernible basis upon which it could be held liable for the conduct of individuals and committees identified. It puts that it was a non-operating holding company. It puts that none of the individuals named as members of the BB Coinmach Deal Team, the BB Executive Committee or as a Business Head is alleged to have been (nor as a matter of fact was) an officer or employee of the first defendant. 79 The second, third and fourth defendants put that the Commercial List Statement should be dismissed or struck out because: a. the plaintiff has no standing to bring the proceedings for the relief claimed; b. it discloses no reasonable cause of action in relation to claims of breach of fiduciary duty; c. it discloses no reasonable cause of action in relation to claims of breach of duty of care; d. it discloses no reasonable cause of action in relation to what is essentially a vicarious liability claim; and e. it contains unparticularised allegations of fraud. 80 The first defendant adopted the position of the second, third and fourth defendants. The Plaintiff's Standing

81 Paragraph C48 of the Commercial List Statement avers as follows: The plaintiff brings these proceedings as Managing General Partner of the Investment Partnership pursuant to the Limited Partnership Agreement and, to the extent necessary, as representative of the Investor Partners pursuant to rule 7.4 of the Uniform Civil Procedure Rules 2005 (NSW). 82 The plaintiff did not seek to uphold standing on the basis of Pt 7 r 7.4 UCPR. That rule concerns representative proceedings. 83 Apart from pleading in par C34 that the fourth defendant was removed as Managing General Partner and that the plaintiff was elected as the new Managing General Partner, the plaintiff does not plead any facts or circumstances which establish its standing to bring these proceedings for loss not suffered by it. Its claim is liable to be struck out for this reason alone. 84 However, in oral and written argument the plaintiff elucidated how it says it has standing. (The question may not in strict legal terms be one of standing. The parties however, referred to the plaintiff's claimed entitlement to sue for damages suffered by the Partnership as standing and I shall use the same nomenclature.) What it says can be distilled into the following propositions: a the claims it brings (or more accurately the choses of action which seeks to motivate) are "partnership assets"; b on reconstitution of the partnership under cl 14.3 of the Partnership Agreement (upon removal of the fourth defendant as Managing General Partner and appointment of the plaintiff as Managing General Partner) the partnership assets of the "old" partnership passed to the "new" partnership; c the claims therefore passed to the new partnership, of which the plaintiff is the Managing General Partner; d insofar as those claims are equitable choses of action which may be assigned without formality they have already passed. Insofar as the fourth defendant either alone or together with the old partners has a right to enforce "the legal cause of action" (presumably the tort claim) that right is held by the plaintiff on trust for the new partnership and the plaintiff is entitled to enforce it having joined the fourth defendant to the proceedings; e under cl 5.3.1 (h) of the Partnership Agreement the plaintiff has full power and authority on behalf of the Partnership to commence, conduct, settle or defend litigation that pertains to the Partnership or to any of the partnership's assets. 85 In my view the plaintiff's assertion of standing has fundamental difficulties. 86 It brings claims in equity for breach of fiduciary duties and at law for breach of a duty of care. 87 Both according to the laws of this country and of the United Kingdom, a partnership has no separate personality from the partners or members of the firm. The English position was established by the evidence of Ewan McKendrick, a Professor of Law and a Pro-Vice Chancellor in the University of Oxford, called by the second, third and fourth defendants. The duties alleged to have been breached could accordingly only have been owed to the partners individually. They cannot be owed to a partnership. It follows that claims arising from the breach of such duties cannot, as the plaintiff suggests, be partnership property.

88 This is starkly the case with respect to the fourth defendant. It was at all material times, and remains by virtue of cl 14.4.3 of the Partnership Agreement, a partner. It cannot have claims against itself, nor can it have any interest in a claim against itself. Such claims manifestly cannot be partnership property. 89 Clause 5.3.1(h) of the Partnership Agreement does not assist the plaintiff. That provision confers power and authority "on behalf of the Partnership" to commence or conduct litigation that pertains to the Partnership or the Partnership assets. The claims sought to be brought here are not on behalf of the Partnership (meaning all of the partners). At the lowest they are not brought on behalf of the fourth defendant. They could not, because they include claims against it. 90 The plaintiff's proposition that on its accession to the role of Managing General Partner the claims (or choses in action) passed to it, is in effect a submission that an assignment occurred. There are a number of difficulties with this proposition. 91 Firstly, the Partnership Agreement itself does not legislate for any such assignment. Clause 14.3 provides for the continuation of the Partnership by its reconstitution and the continuation of its business. It neither seeks to achieve, nor could it achieve, an assignment of rights such as those under consideration. 92 Secondly, the rights in question are bare rights of action. They are either not assignable at all, or if they are, they are only assignable where the assignee has a commercial interest in enforcing the cause of action for its own benefit: National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514 at 539; Trendtex Trading Corp v Credit Suisse [1982] AC 679. The plaintiff does not now have (and has never had) any commercial interest in those claims which would receive ancillary support from such an assignment: National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd at 540. 93 It follows that the plaintiff has no standing to make the claims it makes.

94 The plaintiff has not established a solid foundation for its claim against the first defendant. Leave to proceed against the first defendant must therefore be refused. 95 It was not suggested that there might be further facts which could be relied upon to establish a claim which the plaintiff, as opposed to the Limited Partners at the relevant time or times, could bring. This is accordingly a case where summary dismissal is appropriate. 96 The proceedings against the second defendant must be dismissed and the Summons against the third and fourth defendants must be set aside. 97 Although these conclusions render it unnecessary to consider other aspects of the motions, I propose nevertheless to consider whether, on the hypothesis that the plaintiff had established standing to bring these proceedings, I would set aside service on the third and fourth defendants, decline to exercise jurisdiction or stay the proceedings.

Attribution of Liability to the First Defendant 98 The first defendant makes two distinct challenges to the plaintiff's pleaded case. Firstly, it puts that the pleading provides no foundation for attributing to it liability for the acts and omissions of other individuals and entities. Secondly, it puts that the plaintiff's case is hopeless because it is clear beyond any doubt that the first defendant was only a holding, and not an operating, company and therefore could not have engaged in any conduct which resulted in liability on its part. 99 For the following reasons, both of these submissions are unsustainable. 100 As to the pleading point, par C5 of the Commercial List Statement alleges that the global activities of the Group were managed by a committee of senior executives who were employees of the first or second defendants and that the activities of each of the entities within the Group were managed by Business Area Heads who were members of the Executive Committee and were subject to the overall control of the chief executive of the Group. Paragraph C17 alleges that officers and employees of the first defendant negotiated the Coinmach acquisition. The particulars to par C17 identify members of the BB Coinmach Deal Team, but do not do so exhaustively. Paragraph C36 asserts that the first defendant was acting through the BB Coinmach Deal Team, as does par C38. This is sufficient assertion that the acts alleged were those of the first defendant whether on the basis of agency strictly speaking or otherwise. Enough is pleaded of the first defendant's participation to raise a triable issue. 101 As to the non-operating company point, a substantial body of material before the Court, even at this preliminary stage, sufficiently discloses a triable issue that the global activities of the Group did not have regard to the individual identity of the numerous corporations within the Group. Various boards and committees appear to have straddled different corporations and designated individuals appear to have coordinated Group activities on behalf of numerous entities worldwide. It might in the end even be said that this was used as an investment selling point. One example of the blurring of corporate personalities is the definition in the PPM of Babcock & Brown as the second defendant and its wholly owned operating subsidiaries while other some references to Babcock & Brown in the document clearly comprehend the first defendant. Albeit that the first defendant was a holding company rather than an operating one, the proposition that it did not lead a monastic existence so far as Group activities were concerned is hardly one which at this early stage can be described as hopeless. Factual issues which cannot be resolved at this preliminary stage are involved. 102 I would therefore not uphold the first defendant's submission that the plaintiff has not sufficiently identified a basis for the attribution to it of liability for breach of fiduciary duty or in tort, or that the plaintiff's case in those respects is hopeless. Breach of Fiduciary Duty or Liability in Tort of the Second, Third and Fourth Defendants 103 The second, third and fourth defendants put that the Commercial List Statement does not identify, let alone plead, the basis upon which the first, second and third defendants were in a fiduciary relationship with the Partnership. They put that there is no allegation that the BB Coinmach Deal Team was their agent. They put that the only apparent basis pleaded for the existence of a fiduciary duty is that certain officers or employees were members of a team to which was delegated the completion of the Coinmach Transaction. They also complain that the Commercial List Statement pleads a failure to disclose information to "the proper organ of the investment partnership" without identifying who or what that organ is. 104 Paragraph C36 of the Commercial List Statement pleads as follows: In acting (through the BB Coinmach Deal Team) on behalf of the Investment Partnership to effect the Investment Partnership's investment in the Coinmach Acquisition, each of BB Ltd, BB International and BBUS LP owed fiduciary obligations to the Investment Partnership: (a) not to permit itself to be placed in a position where its interests or the interests of other entities within the BB Group conflicted or potentially conflicted with the interests of the Investment Partnership unless there was fully informed consent to it so acting; (b) to disclose to the proper organ of the Investment Partnership all information in its possession which was material to the proposed investment by the Investment Partnership in the Coinmach Acquisition; and (c) to exercise its functions on behalf of the Investment Partnership in a manner which it genuinely considered was in the best interests of the Investment Partnership. 105 Paragraph C37 of the Commercial List Statement pleads as follows: Each of BB Ltd, BB International and BBUS LP breached those obligations, in that: (a) each of BB Ltd, BB International and BBUS LP (through the BB Coinmach Deal Team and the BB Executive Committee) was responsible for effecting the Investment Partnership's investment in the Coinmach Acquisition and failed to obtain fully informed consent from the Investment Partnership to the conflict referred to in paragraph C27 above, thereby breaching the fiduciary obligation referred in paragraph C36(a) above; (b) each of BB Ltd, BB International and BBUS LP knew or was on notice (through the BB Coinmach Deal Team and the BB Executive Committee) of the Pre-Completion Circumstances prior to the completion of the Coinmach Acquisition on 20 November 2007 and failed to disclose those Pre-Completion Circumstances to the proper organ of the Investment Partnership, thereby breaching the fiduciary obligation referred to in paragraph C36(b) above; and (c) each of BB Ltd, BB International and BBUS LP was responsible (through the BB Coinmach Deal Team and the BB Executive Committee) for rejecting the RBS Proposal and effecting the Coinmach Acquisition on the revised terms referred to in paragraph C25 above where it had not formed a genuine belief that such actions were in the best interests of the Investment Partnership, thereby breaching the fiduciary obligation referred to in paragraph C36(c) above. 106 Paragraph C38 of the Commercial List Statement pleads as follows: Further, in acting (through the BB Coinmach Deal Team) on behalf of the Investment Partnership to effect the Investment Partnership's investment in the Coinmach Acquisition, each of BB Ltd, BB International and BBUS LP owed to the Investment Partnership and the Managing General Partner fiduciary obligations and obligations in tort to exercise reasonable care in so acting. 107 Paragraph C39 of the Commercial List Statement pleads as follows: Each of BB Ltd, BB International and BBUS LP breached those obligations, in that each of BB Ltd, BB International and BBUS LP knew or ought to have known (through the BB Coinmach Deal Team and the BB Executive Committee) that the best interests of the Investment Partnership required the acceptance of the RBS Proposal rather than effecting the Coinmach Acquisition on the revised terms referred to in paragraph C25 above.

108 I consider that the pleading makes it sufficiently clear both in relation to the asserted breach of fiduciary duty and the asserted breach of a duty of care that the actions of the BB Coinmach Deal Team (whoever they might have been) are alleged to have been the actions of the second, third and fourth defendants, whether on the basis of agency strictly speaking or otherwise. Paragraphs C36 and C38 plead the asserted fiduciary obligations and duty of care, and paragraphs C37 and C39 their breach. 109 It is to be remembered that the categories of fiduciary relationships are not closed. In Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 at 96-7 Mason J made it clear that the critical feature of fiduciary relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The pleading sufficiently identifies the circumstances from which such a duty is asserted to have arisen. It also sufficiently identifies the alleged breach of that duty. The same can be said of the pleading of a duty of care and its breach. 110 Additionally, it would be inappropriate summarily to dismiss or strike out the claim for breach of duty of care (or for that matter the claim for breach of fiduciary duty) because as the High Court remarked in Agar v Hyde at 578: The result is that frequently the conventional form of pleading in an action of negligence will not reveal the alleged duty with sufficient clarity for a court considering an application for summary termination of the proceeding to be sure that all of the possible nuances of the plaintiff's case are revealed by the pleading. Further, and no less importantly, any finding about duty of care will often depend upon the evidence which is given at trial. Questions of reliance or knowledge of risk are two obvious examples of the kinds of question in which the evidence given at trial may take on considerable importance in determining whether a defendant owed the plaintiff a duty of care. Other Pleading Complaints 111 A series of other complaints are levelled at the pleading against the fourth defendant. It is put that the nature and extent of the asserted fiduciary obligations are not identified, that there is no identification of the proper organ of the Partnership to which disclosure was to be made, that there is no pleaded factual basis for some of the allegations, that (save for par C41(b) and par C41(c)) it is not pleaded that the BB Coinmach Deal Team was the fourth defendant's agent for relevant purposes and that where as agency is pleaded the pleading fails to disclose what is meant by the words "through the agency of" the various entities or the BB Coinmach Deal Team. It is put that par C44 is embarrassing because it does not explain how "somebody else's interest in the Success Fee" gives rise to a conflict of interest on the part of the fourth defendant or otherwise is a conflict of interest arising in the management of the Partnership. It is put that to the extent to which there is reliance by the plaintiff on vicarious liability for tort claims, or purported reliance on vicarious liability for fiduciary claims, there is no pleading that the underlying individuals owed or breached any duty. It is put that there is no pleading of the facts necessary to impose a vicarious liability on any of the defendants for any breach of duty.

112 I do not consider that any of these complaints is of substance. Whether or not it is ultimately made out at a final hearing, the Commercial List Statement discloses, in intelligible albeit informal terms the fundamental gravamen of each of the plaintiff's complaints against the second, third and fourth defendants. At the heart of them is the blurring of individual companies within the Group to which I have earlier referred. The plaintiff identifies in each case the origin of the asserted duty, the extent of the duty and its breach. The reference to the proper organ of the Partnership may well involve questions of fact and would, if the proceedings were to have continued, properly have been the subject of additional particularisation. 113 In my view as against each of the defendants the Commercial List Statement sufficiently pleads fiduciary duties, a duty of care and breach of those duties. 114 So far as vicarious liability for tort and breach of fiduciary duty is concerned, the plaintiff did not seek to uphold the pleading on the basis that claims of that nature have been pleaded. It is accordingly not necessary to deal further with this challenge.

Fraud 115 The defendants put that par C45 of the Commercial List Statement is embarrassing because it contains an unparticularised allegation of fraud and other serious misconduct. This submission is unsustainable. Paragraph C45 avers no more than that the breaches earlier identified in the pleading fall within the meaning of the words "fraud, gross negligence, wilful misconduct, bad faith or reckless disregard of its obligations and duties as general partner of the Partnership". This averment does not reach higher than the earlier allegations of breach. Conclusion 116 It follows that if the plaintiff had established standing I would not have dismissed the proceedings, struck out the Commercial List Statement, set aside service or declined to exercise jurisdiction on the basis that it fails to disclose a cause of action or that it is embarrassing.

THE EXCLUSIVE JURISDICTION CLAUSE 117 Section 67 of the Civil Procedure Act 2005 (NSW) provides as follows: 67 Stay of proceedings Subject to rules of court, the court may at any time and from time to time, by order, stay any proceedings before it, either permanently or until a specified day. 118 Both in the United Kingdom and in this country, where parties to a contract have agreed by an exclusive foreign jurisdiction clause to submit to the exclusive jurisdiction of a foreign court, such a clause does not operate to exclude the forum court's jurisdiction. However, the court will hold the parties to their bargain, and grant a stay of proceedings, unless the party seeking that the proceedings be heard can show that there are strong reasons against doing so. There is a strong bias in favour of granting a stay of proceedings in the event that there has been a submission to the exclusive jurisdiction of a foreign forum. In considering such an application the court should take into consideration all the circumstances of the particular case, but the application is not to be assimilated to cases where a stay is sought on the principle of forum non conveniens, nor is it a matter of mere convenience: see Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] I Lloyd's Rep 87 at 97; Huddart Parker Ltd v The Ship "Mill Hill" (1950) 81 CLR 502 at 508-509; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197; FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association Ltd (1997) 41 NSWLR 117; (1997) 41 NSWLR 559; Akai Pty Ltd v People's Insurance Company Ltd (1996) 188 CLR 413; Incitec Ltd v Alkimos Shipping Corporation [2005] FCA 191; Owners of cargo on vessel Eleftheria v Owners of Ship Eleftheria [1969] 2 All ER 641 at 645; Compagnie des Messageries Maritimes v Wilson (1954) 94 CLR 577 at 582, 585, 589-91.

119 The proper construction of cl 18.11 of the Partnership Agreement is a matter for the proper law of the contract, in this case the law of England: Recyclers of Australia Pty Limited v Hettinga Equipment Inc (2000) 100 FCR 420 at 430-4. 120 Terms such as "arising out of" or "in connection with" in such provisions are given wide operation. In Fiona Trust & Holding Corporation v Privalov [2008] 1 Lloyd's Rep 254 at 256 Lord Hoffmann said: In approaching the question of construction, it is therefore necessary to inquire into the purpose of the arbitration clause. As to this, I think there can be no doubt. The parties have entered into a relationship, an agreement or what is alleged to be an agreement or what appears on its face to be an agreement, which may give rise to disputes. They want those disputes decided by a tribunal which they have chosen, commonly on the grounds of such matters as its neutrality, expertise and privacy, the availability of legal services at the seat of the arbitration and the unobtrusive efficiency of its supervisory law. Particularly in the case of international contracts, they want a quick and efficient adjudication and do not want to take the risks of delay and, in too many cases, partiality, in proceedings before a national jurisdiction. 121 A similar approach has been taken in this country. In Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 at 165, Gleeson CJ said: When the parties to a commercial contract agree, at the time of making the contract, and before any disputes have yet arisen, to refer to arbitration any dispute or difference arising out of the agreement, their agreement should not be construed narrowly. They are unlikely to have intended that different disputes should be resolved before different tribunals, or that the appropriate tribunal should be determined by fine shades of difference in the legal character of individual issues, or by the ingenuity of lawyers in developing points of argument.

122 The fourth defendant submits that the proceedings in this Court have been commenced by the plaintiff in breach of, and contrary to, cl 18.11 of the Partnership Agreement. 123 It puts that on its proper construction, the plaintiff's covenant covers actions and proceedings arising out of or in connection with the Partnership Agreement or the PPM, or the acquisition of Commitments brought not only against parties to the Partnership Agreement, but as against third parties as well. In support of this extended ambit, it relies on Donohue v Armco Inc [2002] 1 Lloyd's Rep 425. The speech of Lord Scott at par 60-61 to the following effect was cited: 60. There is a point of construction of the exclusive jurisdiction clause that it is convenient to deal with at this point. It is accepted that the clause is not restricted to contractual claims. A claim for damages for, for example, fraudulent misrepresentation inducing an agreement containing an exclusive jurisdiction clause in the same form as that with which this case is concerned would, as a matter of ordinary language, be a claim in tort that arose "out of or in connection with" the agreement. If the alleged fraudulent misrepresentation had been made by two individuals jointly, of whom one was and the other was not a party to the agreement, the claim would still be of the same character, although only the party to the agreement would be entitled to the benefit of the exclusive jurisdiction clause. The commencement of the claim against the two alleged tortfeasors elsewhere than in England would represent a breach of the clause. The defendant tortfeasor who was a party to the agreement would, absent strong reasons to the contrary, be entitled to an injunction restraining the continuance of the foreign proceedings. He would be entitled to an injunction restraining the continuance of the proceedings not only against himself but also against his co-defendant. The exclusive jurisdiction clause is expressed to cover " any dispute which may arise out of or in connection with" the agreement. It is not limited to "any claim against" the party to the agreement. To give the clause that limited construction would very substantially reduce the protection afforded by the clause to the party to the agreement. The non-party, if he remained alone as a defendant in the foreign proceedings, would be entitled to claim from his co-tortfeasor a contribution to any damages awarded. He could join the co-tortfeasor, the party entitled to the protection of the exclusive jurisdiction clause, in third party proceedings for that purpose. The position would be no different if the claim were to be commenced in the foreign Court with only the tortfeasor who was not a party to the exclusive jurisdiction clause as a defendant. He would be able, and well advised, to commence third party proceedings against his co-tortfeasor, the party to the exclusive jurisdiction clause. 61. In my opinion, an exclusive jurisdiction clause in the wide terms of that with which this case is concerned is broken if any proceedings within the scope of the clause are commenced in a foreign jurisdiction, whether or not the person entitled to the protection of the clause is joined as defendant to the proceedings. An injunction restraining the continuance of the proceedings would not, of course, be granted unless the party seeking the injunction, being someone entitled to the benefit of the clause, had a sufficient interest in obtaining the injunction. It would, I think, be necessary for him to show that the claim being prosecuted in the foreign jurisdiction was one which, if it succeeded, would involve him in some consequential liability. It would certainly, in my opinion, suffice to show that if the claim succeeded he would incur a liability as a joint tortfeasor to contribute to the damages awarded by the foreign Court.

124 His Lordship's analysis was followed by Norris J in Winnetka Trading Corporation v Julius Baer International [2008] EWHC 3146 (Ch) and by Teare J in Morgan Stanley & Co International PLC v China Haisheng Juice Holdings Co Ltd [2009] EWHC 2409 (Comm). 125 The plaintiff accepts that the fourth defendant's claim for entitlements under the Partnership Agreement arises out of or is in connection with the Partnership Agreement. It puts, however, that neither its own claim for damages nor the second and third defendants' claims reflected in the negative declarations arise out of or are in connection with the Partnership Agreement, the PPM or the acquisition of Commitments. 126 The plaintiff puts that on its proper construction, cl 18.11 does not extend to a suit, action or proceedings other than one between parties to the Partnership Agreement. It puts that there is nothing in the language of the provision to suggest that the parties intended the clause to extend to disputes with non-parties. It puts that cl 18.15 makes it clear that third parties acquire no rights under the Partnership Agreement. It relies on the following observation by Rix J in Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] 1 Lloyd's Rep 767 at 777: [I]t seems to me to be far-fetched to regard 'any disputes' as covering disputes between MLC and any one other than MLC's contract partner under the purchase agreements, namely CS Europe. Clause 5.2 is part of a bilateral agreement between a seller and a buyer, and the disputes to which such an agreement may give rise are prima facie bilateral disputes. Indeed, it is I would have thought axiomatic that, at any rate in the absence of plain language to the contrary, a contract seeks neither to benefit nor to prejudice non-parties: even where such plain language is used, it is black-letter law that the non-party can himself neither take the benefit nor suffer the burden of the contract. 127 The second, third and fourth defendants called Adrian Briggs, a professor of international law in the University of Oxford to give evidence on the construction of cl 18.11 under English law. His opinion is that it would be open to an English Court to interpret cl 18.11 as a promise according to which the parties to the Partnership Agreement promised each other that they would bring proceedings against each other and that they would bring proceedings against any other person sued in respect of the same broad transaction, in England and only in England. 128 In response to the plaintiff's submission that disputes involving third parties were not contemplated, the second, third and fourth defendants put that the proceedings in this Court fall within the provision anyway because the fourth defendant is a party and the fact that the second and third defendants are joined does not take the proceedings out of the ambit of the provision. 129 I have no difficulty in concluding that the proceedings in this Court arise out of or are in connection with the Partnership Agreement or the PPM or the acquisition of Commitments. At the very least and without being exhaustive: a on its own case, the plaintiff purports to sue on the basis that it is the Managing General Partner under the Partnership Agreement; b its claims for breach of duty are in relation to investments made by the Partnership and which the Partnership Agreement contemplates; and c the Summons seeks declarations concerning the operation of the Partnership Agreement. 130 I prefer the second, third and fourth defendants' construction of cl 18.11 as extending to disputes arising out of or in connection with the Partnership Agreement, the PPM or the acquisition of Commitments between any party to the Partnership Agreement and a third party. The provision states that the Courts of England "are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with […]". It does not say that the courts of England are to have exclusive jurisdiction to settle any disputes between them or between the parties. Whether a party would be entitled to a decree for specific performance of the provision where a party to the agreement (not it) and a third party was involved would depend on whether the court considered it had a legitimate interest in doing so, and upon all other considerations relevant to grant of discretionary relief. 131 But whether or not the provision is so construed there can be no doubt that these proceedings (with the fourth defendant as a party) have been commenced by the plaintiff in breach of cl 18.11. That breach is in no way assuaged by the fact that there are other defendants as well. The fourth defendant's position does not involve an attempt to enforce any third party right and accordingly cl 18.15 does not intrude. 132 No good reason was identified why the plaintiff's claims could not properly be determined in the jurisdiction agreed to. In addition the second, third and fourth defendants have given undertakings to prosecute the debt proceedings expeditiously and not to challenge the English Court's jurisdiction in relation to the plaintiff's claims against them. 133 The plaintiff has not identified any good reason why full faith and credit should not be given to cl 18.11 or why the fourth defendant should not be entitled to enforce it. 134 Had the plaintiff established standing I would have ordered a permanent stay of these proceedings against all defendants on the basis of cl 18.11 alone. SETTING ASIDE THE ORIGINATING PROCESS, SETTING ASIDE SERVICE, DECLINING TO EXERCISE JURISDICTION AND STAY

The Relevant Rules 135 Part 6 r 6.1(1) and r 6.1(2)(a) UCPR are in the following terms: 6.1 No step without originating process or notice of appearance

(1) Except by leave of the court, a party may not take any step in proceedings (including any appearance in court) unless the party has filed a statement of claim or summons in the proceedings or has entered an appearance in the proceedings. (2) Subrule (1) does not apply to: (a) a defendant who applies for an order under rule 12.11 (Setting aside originating process etc) 136 Part 11 r 11.2(1) UCPR is in the following terms: 11.2 Cases for service of originating process

(1) Originating process may be served outside Australia in the circumstances referred to in Schedule 6. 137 Schedule 6 par (i) UCPR is in the following terms: Schedule 6 Proceedings in respect of which originating process may be served outside Australia Originating process may be served outside Australia in relation to the following circumstances: (i) if the proceedings are properly commenced against a person served or to be served in New South Wales and the person to be served outside New South Wales is properly joined as a party to the proceedings

138 Part 11 r 11.7 UCPR is in the following terms: 11.7 Setting aside originating process served outside Australia (1) The Supreme Court may make an order of a kind referred to in rule 12.11 (Setting aside originating process etc) on application by a defendant on whom originating process is served outside Australia. (2) Without limiting subrule (1), the Supreme Court may make an order under this rule: (a) on the ground that the service of the originating process is not authorised by these rules, or (b) on the ground that the court is an inappropriate forum for the trial of the proceedings. 139 Part 12 r 12.11(1)(a), (b), (g), (h) and (i) and (2), (3) and (4) UCPR are in the following terms: 12.11 Setting aside originating process etc (1) In any proceedings, the court may make any of the following orders on the application of a defendant: (a) an order setting aside the originating process, (b) an order setting aside the service of the originating process on the defendant, (g) an order declaring that the court has no jurisdiction over the defendant in respect of the subject-matter of the proceedings, (h) an order declining to exercise jurisdiction in the proceedings, (i) an order granting such other relief as the court thinks appropriate. (2) Such an order may not be made unless notice of motion to apply for the order is filed by the defendant within the time limited for the defendant to enter an appearance in the proceedings. (3) Notice of motion under subrule (2): (a) may be filed without entering an appearance, and (b) must bear a note stating the applicant's address for service. (4) The making of an application for an order under subrule (1) does not constitute submission to the jurisdiction of the court.

The Legal Principles 140 UCPR Pt 12 r 12.11 confers a discretion, amongst others, to set aside originating process, set aside service of originating process and to decline to exercise jurisdiction in the proceedings. The discretion is general but is to be exercised in accordance with established principles.

141 Whether a dispute as to legal rights should be litigated in the courts of one country or those of another is a question that permits resolution, if resolution is possible, by one court staying its proceedings in favour of the other or by it granting an anti-suit injunction restraining a person amenable to its jurisdiction from commencing or continuing proceedings in that other country: CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 389-390. 142 A party who has regularly invoked the jurisdiction of a competent court has a prima facie right to insist upon its exercise and to have its claim heard and determined, which right is not likely to be displaced or denied. The jurisdiction to stop the suit of a plaintiff from going on when he has a right of action as against the defendant is one to be exercised with great care or extreme caution and is only available to be exercised where the court whose jurisdiction has been invoked by the plaintiff is so inappropriate for their determination that a continuance of the proceedings in it would be productive of the injustice, oppression and vexation of the defendant: Oceanic Sun Line Special Shipping Co v Fay at 241, 243 and 244 per Deane J. 143 In Agar v Hyde at 575 the High Court said of predecessor rules to UCPR Pt 11 r 11.7 and Pt 12 r 12.11 that: On an application to set aside service, or to have the court decline to exercise jurisdiction, attention might be directed to any of a number of features of the proceeding, the claims made in it, or the parties to it, in aid of the proposition that the court should not exercise jurisdiction. Part 10 r 6A is cast in general terms and it would be wrong to attempt some exhaustive description of the grounds upon which the rule might be invoked. Nevertheless, it may be expected that three common bases for doing so are first, that the claims made are not claims of a kind which are described in Pt 10 r 1A, secondly, that the court is an inappropriate forum for the trial of the proceeding and thirdly, that the claims made have insufficient prospects of success to warrant putting an overseas defendant to the time, expense and trouble of defending the claims.

144 The power to stay proceedings on grounds of forum non conveniens is an aspect of the inherent or implied power which in the absence of some statutory provision to the same effect, every court must have to prevent its own processes being used to bring about injustice: CSR Ltd v Cigna Insurance Australia Ltd at 391. The test which in this country governs a stay of proceedings in favour of proceedings in another country is whether the Australian Court is a "clearly inappropriate forum": Oceanic Sun Line Special Shipping Co v Fay at 247-248; Voth v Manildra Flour Mills Pty Ltd; CSR Ltd v Cigna Insurance Australia Ltd at 390-391; Puttick v Tenon Limited (2008) 238 CLR 265. The question of whether the local court is clearly an inappropriate forum focuses on the inappropriateness of the local court and not on the appropriateness or comparative appropriateness of the foreign forum: Voth v Manildra Flour Mills Pty Ltd at 565. 145 Applying the clearly inappropriate forum test involves considering whether the continuation of proceedings would be oppressive or vexatious. In Oceanic Sun Line Special Shipping Co v Fay at 247 Deane J held that in this context, "oppressive" means "seriously and unfairly burdensome, prejudicial or damaging", and "vexatious" means "productive of serious and unjustified trouble and harassment". 146 In Bella Products Pty Ltd v Creative Designs International Ltd (2009) 258 ALR 538 at 543 [22] Finkelstein J said the following: 21. In TS Production LLC v Drew Pictures Pty Ltd (2008) 172 FCR 433 , both at trial and on appeal, the Federal Court applied the Voth and Oceanic Sun Liner test in respect of an application for a temporary stay of an action pending in an Australian court when there was a similar action pending in a United States court. Regrettably (all the more so because I was on the appellate bench) that approach was wrong. The correct test is that stated in Sterling Pharmaceuticals Pty v The Boots Company (1992) 34 FCR 287, a decision affirmed by the High Court in Henry v Henry (1986) 185 CLR 571 at 590 and CSR Ltd v Signa Insurance Australia Ltd (1997) 189 CLR 345 at 390-398. 22. In Sterling Pharmaceuticals (at 290) Lockhart J said there is a substantial difference between a motion for a permanent stay or dismissal of a proceeding for forum non conveniens and a motion for a temporary stay or an adjournment. He said that when the court was moved for a temporary stay or an adjournment the "clearly inappropriate forum" test was not the applicable test. Lockhart J said that in such a case the court's general power to control its own proceedings enabled it to order a temporary stay "where proceedings are pending in another court and it is desirable that those proceedings should proceed to their conclusion first." He said to reach that decision the following considerations were relevant (at 291): · Which proceeding was commenced first. · Whether the termination of one proceeding is likely to have a material effect on the other. · The public interest. · The undesirability of two courts competing to see which of them determines common facts first. · Consideration of circumstances relating to witnesses. · Whether work done on pleadings, particulars, discovery, interrogatories and preparation might be wasted. · The undesirability of substantial waste of time and effort if it becomes a common practice to bring actions in two courts involving substantially the same issues. · How far advanced the proceedings are in each court. · The law should strive against permitting multiplicity of proceedings in relation to the similar issues. · Generally balancing the advantages and disadvantages to each party.

147 The second, third and fourth defendants put that the proceedings should be permanently stayed or that the Court should decline to exercise jurisdiction on forum non conveniens grounds. In the alternative, they put that the Court exercising its general power to control its own proceedings should temporarily stay these proceedings whilst the debt proceedings were pending and it is desirable that those proceedings should proceed to their conclusion first. They put that these proceedings are, in the circumstances, an abuse of process. 148 Although there were directions for the parties to furnish brief written outlines, neither the plaintiff nor the second, third and fourth defendants provided the type of summary identification of relevant connecting factors contemplated in Voth v Manildra Flour Mills Pty Ltd. 149 As I have earlier mentioned, at the conclusion of submissions I directed those parties to provide a list of factors relevant to whether this is a clearly inappropriate forum.

150 The plaintiff identified the following factors: a Places of incorporation or constitution i. First defendant: Australia. ii. Second defendant: Australia. iii. Third defendant: Delaware. iv. Fourth defendant: Cayman Islands. v. Plaintiff: Cayman Islands. b Principal places of business (at the time of the relevant events and currently) i. First defendant: NSW ii. Second defendant: NSW. iii. Third defendant: California, USA. iv. Partnership, the fourth defendant and the plaintiff: Cayman Islands. c Control and management (currently) i. The first defendant is being wound up by liquidators in Sydney pursuant to orders of the Federal Court of Australia. [This is in fact wrong. The first defendant is being wound up as a result of a resolution of its creditors.] ii. The second defendant and its subsidiaries (including the Third and Fourth Defendants) continue to function as a corporate group, the senior management of which continues to be based in Sydney. iii. The overall management of the Partnership and the plaintiff is based in the Cayman Islands. d Potentially relevant evidence i. Mr Green (former Chief Executive) and Mr Topfer (former Area Head) live in New South Wales. Mr Umbrecht (former Area Head) lives in the USA. Presumably, other former Area Heads and members of the Executive Committee mainly live in Australia or the USA. ii. Ms Talintyre (former senior member of the Deal Team in New York) now lives in Australia. Other former members of the Deal Team live in the USA. iii. Mr Hanson is based in London. Other former members of the Fund Team are based in Europe. Other directors of the fourth defendant at the relevant time are presumably based in the Cayman Islands. iv. Statutory records of each of the defendants are presumably located in its place of incorporation or constitution. Formal records of the Partnership are presumably held in the Cayman Islands. v. Documents of the former senior management of the Group (including the Executive Committee and the Business Area Heads) are presumably held in, or readily accessible from, Sydney. It would appear that due to the overall control of the Group from Sydney, all other documents (including statutory records of the third and fourth defendants) would be accessible from Sydney. e Applicable law i. The equitable claims will be governed by the lex fori, or by the "proper law of the relationship" between the relevant parties (if any) or the law of the place of the defendant's relevant acts or omissions, or by some combination or hybrid of these. The tort claims will be governed by the law of the place of the defendant's relevant acts or omissions. ii. As to the claims against the first, second and third defendants, the "proper law of the relationship", if any, will depend upon a precise characterisation of what the relevant defendant's role in the Coinmach transaction was. This may in turn depend upon precise determination of which individuals' conduct is to be attributed to which defendant. The law of the place of the defendant's relevant acts or omissions would depend upon precise identification of where the relevant defendant's conduct took place (or, in the case of omissions, is deemed to have taken place). Again this may in turn depend upon precise determination of which individuals' conduct is to be attributed to which defendant. At this point these matters are indeterminate. All that can be said is that the most likely law would be New South Wales for the first and second defendants and New York for the third defendant, but for each of them New South Wales, New York or the Cayman Islands (as the seat of management of the Partnership's business) is a possibility. England is also a theoretical possibility but only if one focuses exclusively on Mr Hanson and the Coinmach Deal Team. iii. As to the claims against the fourth defendant, the "proper law of the relationship" would be England but the law of the place of the relevant acts or omissions would be governed by the same considerations as for the first, second and third defendants and the same range of possible outcomes would apply. iv. The construction of the Limited Partnership Agreement is to be determined by the law of England. f Legal proceedings and jurisdiction i. Since April 2009 Clayton Utz has been acting on behalf of the Partnership. Since May 2009 at the latest Clayton Utz has been investigating potential claims against various parties arising out of the Coinmach transaction. ii. Since September 2009, at the latest, Slaughter and May has been acting for the Partnership and the plaintiff, and since December 2009, Freshfields has been acting for the fourth defendant, on the replacement of the fourth defendant as managing general partner, the consequential transfer of assets, and the fourth defendants claim for fees. iii. In December 2009, proceedings were commenced in the Chancery Division by the fourth defendant and four other BB companies, including the second defendant, for declarations as to the non-subsistence of privilege in legal advice provided by Clayton Utz and Slaughter and May to the Partnership prior to the removal of the Fourth Defendant as managing general partner of the Partnership. The proceedings are due to be heard in late March. iv. On 29 January 2010, the present proceedings were commenced. The Court has jurisdiction over the first defendant and the second defendant. If the claims against those entities survive the current challenge jurisdiction will be confirmed over the third and fourth defendants as parties properly joined. v. On 1 February 2010, proceedings were commenced in the Queen's Bench division by the second, third and fourth defendants (the second and third defendants seeking declarations of non-liability only) against the Partnership and the plaintiff. Jurisdiction over the declaration claims by the second and third defendants is contested. Jurisdiction over all of the claims against the plaintiff is also contested. The validity of service on the Partnership is also contested. The first defendant is not a party to the proceedings. 151 The second, third and fourth defendants identified the following factors: a These proceedings have been brought against all defendants in violation of the exclusive jurisdiction clause in cl 18.11 of the Partnership Agreement, and are bound to be stayed. b Alternatively, if by reason of the exclusive jurisdiction clause only the proceedings against the fourth defendant are bound to be stayed, that provides a powerful reason to stay the balance of the proceedings because it means there will be proceedings in England involving the same subject as is sought to be agitated in these proceedings. c There has been no application in Australia to restrain the English proceedings. d The Debt Proceedings were in substance commenced first in time with a pre-action letter sent to GPF on 23 December 2009. e The Debt Proceedings involve a claim by the Fourth Defendant for payment of management and termination fees. The entitlement to fees has been admitted, subject only to a set-off based on allegations relating to the Coinmach transaction that are the subject of these proceedings. That defence is within the scope of the exclusive jurisdiction clause. f There is closely related and overlapping litigation pending in England (the Privilege Proceedings) involving the Partnership and the Second and Fourth Defendants.g The Plaintiff has English lawyers who, in one way or another, have been briefed in relation to these matters. h The Privilege Proceedings have been on foot since early December 2009. Those proceedings involve factual issues concerning the Coinmach transaction, including those contained in Mr Hanson's witness statement, filed in those proceedings. i Directions hearings in the Privilege Proceedings were held on 11 December 2009 and 11 January 2010, when a timetable was set for the conduct of the Privilege Proceedings. j Eleven witness statements have been filed in those proceedings including that of Mr Hanson which directly deals with the Coinmach transaction. k The Privilege Proceedings have been set down for hearing in late March 2010 in London. l Both the Coinmach transaction and the Fourth Defendant's claim for expenses and compensation have been the subject of consideration, debate and correspondence between English lawyers for around 6 months. m Considerable expense has been incurred to date by the Plaintiff and the Second, Third and Fourth Defendants in England. n On the Defendants' side, these costs run to £1.5 million. o English lawyers have been briefed in relation to the dispute for far longer than the Australian lawyers and have a closer familiarity with the underlying dispute. p Slaughter and May already represent and have represented for some time interests of and associated with the Partnership and the Plaintiff in the English proceedings. q The three meetings leading to the removal of BBMGP as managing general partner all occurred in London, at which numerous representatives of English law firms were present. r The Plaintiff and the Third and Fourth Defendants are all foreign entities. s The Plaintiff (if it is the proper plaintiff) has submitted to English jurisdiction and undertaken not to challenge it, or waived any objection to it, under cl 18.11 of the Partnership Agreement. t The NSW proceedings have not been properly commenced as GPF is not a proper plaintiff. u The Second, Third and Fourth Defendants have all submitted to the jurisdiction of the English Courts, and given undertakings not to challenge their jurisdiction in England to adjudicate any cross-claims alleging the matters raised in the NSW proceeding. v Mr Neil Lewis, who is authorised to give instructions on behalf of the Second Defendant, lives in England and is based in London. w Any judgment given by the English Court would be enforceable against the Australian companies in Australia pursuant to the Foreign Judgments Act 1991 (Cth). x Partnership funds are held in a Slaughter and May account. y Relevant documents including the Partnership documents are located in England on the disputed B&B server. z At the relevant times, Messrs Hanson, Drastik and Stahel, the Fund Team, were employees of Babcock & Brown Limited (UK), their employment base was London and their employment contracts were governed by English law. aa The Partnership is a creature of the Limited Partnerships Act 1907 (UK). bb The Partnership Agreement is governed by English Law: clause 18.11. cc The Defences available to the First, Second and Third Defendants under clauses 17.1 and 17.2 of the Partnership Agreement also fall to be determined by English law. dd Any consideration of the benefits conferred by the Partnership Agreement upon the First, Second and Third defendants necessarily involves the application and interpretation of another UK statute: the Contracts (Rights of Third Parties) Act 1999 (UK), which has no equivalent in New South Wales. ee There is no pleading that any conduct has relevantly occurred, or damage has relevantly been suffered, in the jurisdiction of New South Wales (cf sub-paragraphs (d), (e) and (i) of Schedule 6 of the UCPR). ff The majority of potential witnesses (including all of the members of the BBMGP Board who made the decision to make the Coinmach investment) reside in the northern hemisphere. gg Mr Edward Hanson, a former director of BBMGP and head of the Fund Team, and likely to be the central witness, is based in London. hh Any witness or witnesses from RBS is or are likely to be based in England or Scotland. ii The Fund Team operated out of London. jj Mr Dwight Dube and Mr Carlos Farjallah (who, together with Mr Hanson, comprised the BBMGP Board at the relevant time) both reside in the Cayman Islands. kk Two members of the Coinmach Deal Team reside in the northern hemisphere and Mr Umbrecht is US-based. There is no evidence that Ms Talintyre resides in Australia although her name is on the electoral roll.

152 The plaintiff accepts that cl 18.11 covers the Debt Proceedings. Leaving aside my conclusion that the exclusive jurisdiction clause covers the proceedings in this Court in their entirety, the fourth defendant's claim for fees will proceed in the United Kingdom whatever happens. 153 The plaintiff's grounds of resistance to that claim consist substantially, if not entirely, of its complaints of misconduct against the fourth defendant in connection with the Coinmach acquisition. 154 A significant ground of defence which the fourth defendant will raise to the claims against it, is the protection given in cl 17.1 and cl 17.2 of the Partnership Agreement. The other defendants will no doubt claim that they are Indemnified Persons under, and entitled to the protection given by, those provisions. The plaintiff will no doubt put that if they are covered as Indemnified Persons they have no protection because of the quality of their conduct. 155 In their letter of 29 January 2010 in response to the pre-action letter, Slaughter & May on behalf of the plaintiff put that but for the fourth defendant's conduct complained of and the loss arising from it the fourth defendant would be entitled to management fees to the date of its removal and a termination fee under cl 14.4.2 of the Partnership Agreement depending on the date of removal. 156 For the plaintiff to continue to press in this Court claims which arise the very conduct complained of and which is to be relied upon in the Debt Proceedings is vexatious and oppressive. Looking at the controversy as a whole, at the lowest the different proceedings arise out of the same sub stratum of facts. That sub stratum will be the core of the plaintiff's defence in England. This is not altered by the fact that claims of misconduct are levelled at defendants other than the fourth defendant. Nor is it altered by the fact that the proceedings were regularly instituted against the second defendant. (I should say that given that no leave was sought to proceed against the first defendant, it cannot be said that proceedings against it were regularly instituted). The English Court is equally able to deal with the whole controversy marked out by the totality of the litigation in both countries. 157 It is in my view only faintly (if at all) arguable that the substantive law of Australia will play any (let alone a significant) role in the determination of the rights and liabilities of the parties. It is accepted that English law governs the construction and operation of the Partnership Agreement. None of the conduct complained of occurred in this jurisdiction. It is not suggested that any damage was suffered here. 158 In all the circumstances, the proceedings in this Court are productive of serious and unjustified trouble and harassment and are seriously and unfairly burdensome on the second, third and fourth defendants. None of the additional factors identified by the plaintiff as supporting its position displace this. 159 I would permanently stay the proceedings on forum non conveniens grounds and decline to exercise jurisdiction. This Court is a clearly inappropriate forum for these proceedings.

160 Both sides levelled accusations of abuse of process against the other in respect of the proceedings commenced by it. The plaintiff submits that the inclusion of the second and third defendants as plaintiffs in the debt proceedings together with claims for negative declarations (which it submitted were hopeless) is a device intended to force the plaintiff to bring its claims in England by way of a cross claim and therefore an abuse. The plaintiff puts that its proceedings were commenced first. The plaintiff says that the second defendant's prescence as a party in the debt proceedings is only because it sued in this jurisdiction. The second, third and fourth defendants put that in substance the pre-action letter represented the commencement of proceedings and that they were tricked into holding off commencing the debt proceedings by correspondence which emanated from the plaintiff's side. They point to the fact that the plaintiff is itself claiming declarations in negative terms. They put that the plaintiff has cited the first defendant (even though the prospects of recovery are remote) and the second defendant (which has no real role to play), simply as a peg upon which to hang jurisdiction. The plaintiff points out that the pre-action letter itself foreshadowed holding off pending discussions. The second, third and fourth defendants riposte that the plaintiff gave no indication that it was going to sue and that the plaintiff rushed off to court in such a hurry that it did not first seek leave to sue, and acted in breach of the cl 18.11. Both sides contend that their work towards commencement of proceedings started first. The plaintiff puts that the privilege proceedings are of the second, third and fourth defendants' own making and are a questionable device. 161 Both sides are clearly not without resources and have no reluctance in expending them. Each is sophisticated and has access to high level forensic assistance. Each has undoubtedly taken various steps for its own tactical purposes. It is not necessary to make any findings of abuse. However, one aspect warrants comment. There is in each of this List, the Corporations List and the General List in the Equity Division at all times a Duty Judge available to deal with matters that warrant urgent attention. If the proceedings against the first defendant needed to be commenced urgently, the appropriate application should have been brought before they were issued. The inference is open that such leave was not sought because there would have been no forensic justification (apart from starting first) for the urgent grant of leave.

162 The centre of gravity of this dispute is not in this jurisdiction. Although the proceedings in a technical sense were commenced before the debt proceedings, the reality is that the parties had in practical terms joined issue during the pre-action processes in the United Kingdom. Hearings in relation to the privilege proceedings had taken place and the parties' respective legal advisers have been heavily involved for months. 163 Even if I had not concluded that this is a clearly inappropriate forum, generally balancing the respective advantages and disadvantages of the parties would have driven to the clear conclusion that the proceedings should at the very lowest have been temporarily stayed in this jurisdiction to allow the debt proceedings to proceed to their conclusion. THE PLAINTIFF'S MOTION FOR LEAVE TO SUE THE FIRST DEFENDANT IN LIQUIDATION

164 Because I have found that the plaintiff has not established that its case has a solid foundation, it is unnecessary to deal with the remainder of the matters raised by the parties on this motion. Nevertheless, I consider it appropriate to indicate that, even if the plaintiff had established such a solid foundation, I would not have exercised my discretion in its favour on the application, and to set out why. The Corporations Act and Regulations

165 Section 500 of the Corporations Act (Cth) is in the following terms: 500 Execution and civil proceedings (1) Any attachment, sequestration, distress or execution put in force against the property of the company after the passing of the resolution for voluntary winding up is void. (2) After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes. (3) The Court may require any contributory, trustee, receiver, banker, agent, officer or employee of the company to pay, deliver, convey, surrender or transfer forthwith or within such time as the Court directs to the liquidator any money, property or books in his, her or its hands to which the company is prima facie entitled.

166 Section 553(1) of the Corporations Act (Cth) is in the following terms:

553 Debts or claims that are provable in winding up (1) Subject to this Division and Division 8, in every winding up, all debts payable by, and all claims against, the company (present or future, certain or contingent, ascertained or sounding only in damages), being debts or claims the circumstances giving rise to which occurred before the relevant date, are admissible to proof against the company.

167 Section 1321(1)(d) of the Corporations Act (Cth) is in the following terms: 1321 Appeals from decisions of receivers, liquidators etc. (1) A person aggrieved by any act, omission or decision of: (d) a liquidator or provisional liquidator of a company; may appeal to the Court in respect of the act, omission or decision and the Court may confirm, reverse or modify the act or decision, or remedy the omission, as the case may be, and make such orders and give such directions as it thinks fit.

168 Regulation 5.6.39 of the Corporations Regulations 2001 (Cth), made under the Corporations Act (Cth), is in the following terms: Notice to submit particulars of debt or claim (1) A liquidator may from time to time fix a day, not less than 14 days after the day on which notice is given in accordance with subregulation (2), on or before which a creditor may submit particulars of his or her debt or claim. (2) A liquidator must, at least once, give notice in writing of the day fixed under subregulation (1) by advertising the date in a daily newspaper circulating generally in each State or Territory in which the company has its registered office or carries on business. (3) An advertisement mentioned in subregulation (2) must be in accordance with Form 533.

169 It suffices only briefly to set out the presently relevant principles according to which the discretion conferred upon the Court under s 500(2) of the Corporations Act (Cth) is to be exercised: a The purpose of the prohibition against commencing proceedings against a company in liquidation is to avoid a multiplicity of proceedings when the appropriate procedure is to lodge a verified proof of debt with the liquidator. b The onus is on the claimant to demonstrate why leave should be granted. c The plaintiff must satisfy the Court that its claim has a solid foundation and gives rise to a serious dispute (sometimes termed a serious issue to be tried). d Factors relevant to the exercise of the discretion may include but are not limited to: i. the degree of complexity of the legal and factual issues involved; ii. the prospects that a proof of debt will be rejected; and iii. the stage to which the proceedings, if already commenced may have progressed.

Vagrand Pty Ltd (in liq) v Fielding ; Ogilvie-Grant v East Liquidator of Gordon Grant and Grant Pty Ltd (1983) 7 ACLR 669; Meehan v Stockmans Australia Cafe Holdings Pty Ltd (1996) 22 ACSR 123. 170 In Ogilvie-Grant v East Liquidator of Gordon Grant and Grant Pty Ltd at 671-2, McPherson J with whom Campbell CJ and Sheahan J agreed said the following of s 230(3) of the Companies Act 1961 (Qld) (which is a provision similar to s 500 of the Corporations Act (Cth)): The precise purpose and function of provisions similar to s 230(3) have seldom been explained. From time to time the suggestion has been made that the prohibition exists in order to effectuate the statutory policy of ensuring that corporate assets are distributed rateably amongst all creditors so that none of them will gain an advantage over others: see eg Re Sydney Formworks Pty Ltd [1965] NSWR 646, 649-50. But in Australia at least it is not often that the institution of proceedings or even the recovery of judgment operates to confer a priority or advantage on a litigating creditor. A more convincing explanation is that, without the relevant restriction, a company in liquidation would be subjected to a multiplicity of actions which would be both expensive and time-consuming, as well in some cases as unnecessary. This explanation has been accepted in a number of Canadian cases and appears also to have been adopted by Street J in Re A J Benjamin Ltd (1969) 90 WN (NSW) 107, 109. It is consistent with this that there should be no automatic prohibition upon proceedings against a company in members' voluntary winding up, where the company is solvent and therefore less likely to be the target of numerous actions.

171 On 13 March 2009 Messrs Simon John Cathro and David John Frank Lombe, partners in the firm Deloitte Touche Tomatsu were appointed administrators of the first defendant. On 24 August 2009 by resolution of creditors they were appointed as joint and several liquidators. 172 According to an affidavit of Mr Cathro dated 4 March 2010: a the first defendant owns 99.81 per cent of the second defendant; b the second defendant continues to trade under the supervision of its board of directors; c the first defendant's assets are intercompany subordinated loans receivable from the second defendant its investment in the shares of the second defendant, cash at bank of approximately $160,000 and a fund located in California of approximately US$7.5 million to which both the first and second defendants lay claim and in respect of which there are proceedings pending in that State; d the first defendant's primary liabilities are liabilities to holders of subordinated notes issued in 2005 and 2006 exceeding $610 million, unpaid fees and expenses of the liquidators which presently exceed the level of the first defendant's cash at bank and any liability which the first defendant may have (which is not admitted) arising out of these proceedings; e at the time of the liquidation of the first defendant, the second defendant had over $3 billion in loans outstanding to its senior banking syndicate; f the repayment of the second defendant's loan to the first defendant is subordinated to the loans from the banking syndicate. 173 Mr Cathro and his co-liquidator are of the opinion that the realisable value of the first defendant's loan to and its shareholding in the second defendant are nil. 174 The liquidators (then administrators) reported to creditors on 12 August 2009. They informed creditors (and have not changed their views since) that their estimated return to ordinary creditors (the holders of the subordinated notes) from a winding up of the first defendant is 1.5 cents per dollar on an optimistic approach (assuming that a liquidator would recover $15 million) and nil on a pessimistic basis assuming no recoveries. 175 Mr Cathro deposes to the fact that having regard to the current financial position of the first defendant (in particular, the fact that there are no funds available for distribution to creditors), the liquidators have not yet invited creditors to lodge proofs of debt in accordance with s 553 of the Corporations Act (Cth), they do not anticipate calling for proofs of debt in the foreseeable future, and in fact may never call for proofs of debt unless they are successful in recovering additional funds for distribution to creditors. 176 The liquidators did not have sufficient funds at the time of their appointment to enable them to conduct liquidator's examinations under the provisions of the Corporations Act (Cth). They accordingly sought contributions of $400 from each creditor (that is, the subordinated note holders) to enable them to seek further information and conduct inquiries into potential causes of action. Creditors have contributed approximately $500,000 and this fund is held separately to the general funds of the first defendant. The liquidators are presently preparing to conduct formal examinations. 177 Mr Cathro says that he is concerned that any involvement in these apparently complicated and complex proceedings would divert the attention of his staff and solicitors from the conduct of the liquidators' examinations and would certainly diminish, and likely exhaust any cash available to the liquidators to meet the necessary expense of the liquidation or to be distributed to creditors. He also expresses concern that the first defendant's participation in these proceedings will be expensive and might ultimately be commercially futile for the plaintiff.

178 On behalf of the liquidator it was submitted that leave should be refused because: a there is no good reason why the claim cannot be dealt with by proof of debt; b the plaintiff has not established a serious issue to be tried; c having regard to the financial position of the liquidation, and that proofs of debt may never be called for, there is no utility in granting leave; and d the liquidators would incur substantial costs in defending the claims and would be distracted from the conduct of the liquidators' examinations. 179 But for the absence of standing I consider that the plaintiff has established that there is a case with a solid foundation to be made against the first defendant on behalf of the Limited Partners at the relevant time or times. 180 There is also little doubt that the liquidators would reject the plaintiff's proof of debt if one was called for and lodged. 181 The current financial position of the first defendant and the liquidators' intended devotion to their examinations are not to my mind persuasive considerations against the grant of leave. The liquidators' position in these respects gives, it seems to me, undue weight to the interests of the note holder creditors. 182 Nevertheless, for the following reasons I would not grant leave in the circumstances that currently prevail. 183 The plaintiff has itself taken the position that the proof of debt procedure is inappropriate. It wishes rather to sue. The liquidators have not called for and may never call for, proofs of debt. Leaving aside the possibility of an appeal under s 1321 of the Corporations Act (Cth) against the liquidators' failure or refusal to call for proofs of debt (which is unlikely given the plaintiff's steadfastness that proceedings are the proper course), proceedings are properly called for if the plaintiff is to establish liability on the part of the first defendant. The factual and legal issues are complex. 184 In the absence of any reason why the proceedings against the first defendant could not be heard in England (and none was suggested), they should properly be brought there. The plaintiff does not need leave to take that course, and proceedings there would ensure that the issues would be dealt with with all relevant parties present. 185 Moreover, the fourth defendant would be entitled to restrain proceedings in this jurisdiction on the basis of cl 18.11 and it may be assumed with some degree of certainty that it would do so. Further, for the same reasons as pertain to the other defendants, this is a clearly inappropriate jurisdiction for such proceedings.

CONCLUSION 186 The plaintiff's motion dated 12 February 2010 is dismissed. 187 The proceedings against the second defendant are dismissed. 188 The Summons against the third and fourth defendants is set aside. 189 I will hear the parties on costs.

SCHEDULE A - CLAUSES IN THE PARTNERSHIP AGREEMENT Introduction (A) The Partnership was constituted by an agreement entered into between B&B Investments No 1 Limited and the Founder Partner on 17 May 2005 under the name "Babcock & Brown Capital Partners" to carry on the business of an investor and, in particular, of identifying, negotiating, making, monitoring and realising investments and to carry out all functions and acts in connection therewith. (B) The Partnership has been registered as a limited partnership in England under the Limited Partnerships Act 1907. Definitions (1) In this Agreement (including the Introduction and Appendix A), unless the context otherwise requires, the following words and expressions have the meanings shown: Accounting Period a period ending on and including an Accounting Date and beginning on the day following the immediately preceding Accounting Date or, in the case of the First Accounting Period, on the date of establishment of the Partnership Acquisition Cost the acquisition cost of an Investment together with any expenses related to such acquisition which are borne by the Partnership in accordance with the terms of this Agreement the Act the Limited Partnerships Act 1907 Advisory Board a committee comprising inter alia representatives of certain investors in the Partnership as described in clause 16 this Agreement this deed of Limited Partnership Agreement, as amended from time to time Associate any body corporate or undertaking which in relation to the person concerned is a holding company, parent undertaking or subsidiary; or a subsidiary of any such holding company or parent undertaking; or any partnership which is a subsidiary undertaking of the person concerned or of any such holding company, provided however that a Portfolio Company shall not be deemed to be an Associate of the Managing General Partner by reason only of an Investment by the Partnership in such Portfolio Company Babcock & Brown Commitment a commitment equal to the lesser of €41.5 million or 16.667% of Total Commitments Babcock & Brown Group Babcock & Brown Limited, an Australian company (ABN53108614955) and each of its Associates from time to time Capital Contribution in relation to a Partner, the amount contributed by such Partner to the capital of the Partnership being equal, in the case of an Investor, to 0.001% of its Commitment Commitment in relation to an Investor, the amount committed by it to the Partnership equal to the aggregate of the amount subscribed by it as an Investor as capital (the Capital Contribution) and the amount agreed to be advanced by it as an Investor as loan (the Loan Commitment) (and whether or not such amount has been advanced in whole or in part and whether or not it has been repaid to the Investor in whole or in part) to the Partnership, comprising a Capital Contribution (subscribed on such Investor becoming a Limited Partner) of 0.001% of such amount and a Loan Commitment of 99.999% of such amount and in relation to the Founder Partner the amount committed by it to the Partnership as capital Deed of Adherence the deed of adherence pursuant to which certain of the Partners are admitted to the Partnership in the form set out in Appendix A or as otherwise determined by the Managing General Partner from time to time Defaulting Investor the meaning given in clause 4.5 Euros or € the currency used within the European Monetary System from time to time which is used as the reference accounting unit of the Partnership as set forth in clause 1.6 Final Closing Date the latest to occur of: (a) the date upon which the last Investor is admitted to the Partnership pursuant to clause 2; and (b) the last date on which an existing Investor increases the amount of its Commitment pursuant to clause 2; Indemnified Individual any natural person who is an officer, director, shareholder, agent, partner or employee of the Managing General Partner or any of its Associates, or a Nominated Director or any duly appointed member of the Advisory Board or the Investment Committee Indemnified Person any of the Managing General Partner, any of its Associates and any Indemnified Individual Interest the interest of a Partner in the Partnership including its Share and its Commitment (if any) and all other rights which it has in the Partnership, including its rights to vote and inspect the books and records of the Partnership Investment(s) an investment or investments acquired by the Partnership (either directly or indirectly) including but not limited to shares, debentures, convertible loan stock, options, warrants or other securities and loans (whether secured or unsecured) made to any body corporate or other entity, interests or participations or commitments in a limited partnership or other collective investment schemes, assets and real property (whether solely or jointly held) Investment Committee the Fund Investment Committee as described in the Private Placement Memorandum Investment Holding Company a body corporate and/or company and/or partnership wholly or partly owned or acquired by the Partnership (or any custodian or nominee) established or acquired for the purpose of carrying out investment, underwriting, bridging and/or syndication transactions. Loans to an Investment Holding Company and amounts invested in its equity securities shall be treated as Investments and amounts received by the Partnership from an Investment Holding Company shall be treated as proceeds of such Investment Investment Policy the investment policy of the Partnership as set out in the section in the Private Placement Memorandum headed "Investment Strategy" as amended or supplemented from time to time Investor Babcock & Brown Investor and any person who becomes a Limited Partner by signing a Deed of Adherence pursuant to clause 2 and any Substitute Investor who acquires rights and assumes obligations in succession to an Investor (for so long as such person or Substitute Investor remains a Limited Partner) Investors' Ordinary Consent the written consent (which may consist of one or more documents each signed by one or more of the Investors) of Investors (excluding Investors who are members of the Babcock & Brown Group) who hold Commitments which in aggregate exceed 50% of Total Commitments (and, for the avoidance of doubt, an Investor shall be entitled to split its Commitment for these purposes so that an Investor may consent in respect of part of its Commitment and withhold consent in respect of the balance), excluding from Total Commitments the Babcock & Brown Commitment Investors' Special Consent the written consent (which may consist of one or more documents each signed by one or more of the Investors) or Investors (excluding Investors who are members of the Babcock & Brown Group) who hold Commitments which in aggregate equal or exceed 75% of Total Commitments (and, for the avoidance of doubt, an Investor shall be entitled to split its Commitment for these purposes so that an Investor may consent in respect of part of its Commitment and withhold consent in respect of the balance), excluding from Total Commitments the Babcock & Brown Commitment Limited Partner the Founder Partner and any person who is admitted to the Partnership as a limited partner by signing a Deed of Adherence and any Substitute Investor who acquires rights and assumes obligations in succession to an Investor (for so long as such person or Substitute Investor remains a limited partner) Loan Commitment in relation to an Investor, the loan agreed to be advanced by it to the Partnership pursuant to clause 4 (whether or not such loan has been advanced to the Partnership or repaid to the Investor, in whole or in part) being equal to 99.999% of such Investor's Commitment Management Fee the amount referred to in clause 9.2 Managing General Partner BBCP MGP (as constituted from time to tome) or its successor for the time being as managing general partner of the Partnership New Investments investments in companies, assets or real property in which the Partnership has not previously invested either directly or indirectly Partner the Managing General Partner and/or any of the Limited Partners, as the context requires Partnership Babcock & Brown Capital Partners being the limited partnership established by an agreement dated 17 May 2005 between B&B Investments No1 Limited and the Founder Partner and the activities and operation of which shall be governed by the terms and conditions of this Agreement Partnership Assets all or any assets of the Partnership Share in relation to a Partner, its financial share in the profits of the Partnership, comprising all or any part of such Partner's entitlement under this Agreement to: (a) its share of the profits, including Capital Gains and Net Income, of the Partnership and the right to repayment of Outstanding Loan (if any); and (b) its share of the Partnership Assets upon the dissolution of the Partnership and, for the purposes of ascertaining that share, to an account as from the date of dissolution; but excluding any entitlement to interfere in the management or administration of the Partnership's business or affairs, or to require any accounts of the Partnership's transactions, or to inspect the Partnership's books 1.2 Purpose The purpose of the Partnership is to carry on the business of an investor and in particular but without limitation to identify, research, negotiate, make and monitor the progress of and sell, realise, exchange or distribute investments which shall include but shall not be limited to the purchase, subscription, acquisition, sale and disposal of shares, debentures, convertible loan stock and other securities in unquoted companies and in certain quoted situations, and the making of loans whether secured or unsecured, with the principal objective of providing Partners with a high overall rate of return by means of both income and capital growth. The Partnership (acting through the Managing General Partner or persons authorised on behalf of the Partnership pursuant to this Agreement) may execute, deliver and perform all contracts and other undertakings and engage in all activities and transactions as may in the opinion of the Managing General Partner be necessary or advisable in order to carry out the foregoing purposes and objectives, subject to and in accordance with the provisions of this Agreement and the Investment Policy. 1.4 Principal place of business The principal place of business of the Partnership shall be at c/o M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, Grand Cayman, or such other place as the Managing General Partner may in its absolute discretion from time to time determine. 5.1 Management Generally The Managing General Partner shall: (a) have exclusive responsibility for the operation of the Partnership and the management and control of its business and affairs and shall take all investment decisions on behalf of the Partnership; (b) have full power and authority, on behalf of the Partnership and with the power to bind the Partnership thereby, to do all other things and acts necessary to carry out the purposes of the Partnership or as are required of it by this Agreement; and (c) do all things and discharge all duties or requirements required of or imposed on a general partner and/or a limited partnership by the Act (whether or not on behalf of the Partnership) and where it is to do so for the Partnership it is hereby expressly authorised and shall have full power and authority to do so accordingly. 5.2 Restriction on the Limited Partners The Limited Partners shall take no part in the operation of the Partnership or the management or control of its business and affairs, and shall have no right or authority to act for the Partnership or to take any part in or in any way to interfere in the conduct or management of the Partnership or to vote on matters relating to the Partnership other than as provided in the Act or as set forth in this Agreement but they shall at all reasonable times, subject to having given reasonable notice, have access to and the right to inspect during normal business hours the books and accounts of the Partnership. For the avoidance of doubt, nothing in this Agreement shall give any of the Limited Partners a right of access to any Portfolio Company. 5.3 Authority and powers of the Managing General Partner 5.3.1 Without prejudice to clause 5.1, the Managing General Partner shall have full power and authority, on behalf of the Partnership and so as to bind the Partnership thereby: (h) to commence, conduct, settle or defend litigation that pertains to the Partnership or to any of the Partnership Assets; (q) to engage employees, independent agents, lawyers, accountants, custodians, paying and collecting agents and financial and other advisers and consultants as it may deem necessary or advisable in relation to the affairs of the Partnership including, without limitation, any Associate of the Managing General Partner (provided that any such engagement of an Associate shall be on arm's length terms) to perform or assist in the performance of all or any of the activities set forth in this clause 5.3; 5.5 Expenses and Fees 5.5.1 The Partnership shall be responsible for: (a) all of the preliminary expenses incurred in relation to or in connection with the establishment of the Partnership not exceeding an amount equal to the lesser of 1% of Total Commitments or €1,200,000 (exclusive of any VAT in either case)) including but not limited to travel, legal, accountancy, printing, postage and other costs of establishment but excluding commissions payable to placement agents, brokers and intermediaries which shall be borne by the Managing General Partner or its Associates; and (b) all expenses incurred in relation to the administration and business of the Partnership including, without limitation, costs of printing and circulating reports and notices, legal fees, administrators', auditors' and valuers' fees, accounting expenses fees and expenses incurred in relation to any custodian or nominee of the Partnership Assets and any members of the Advisory Board, bank charges and costs of annual meetings of Investors, borrowing costs, hedging costs, extraordinary expenses (such as litigation) and any stamp duties and costs arising in respect of holding, monitoring protecting and realising Investments; and (c) all expenses directly incurred by or on behalf of the Managing General Partner in relation to the execution and completion of specific Investments which have been approved by the Investment Committee including expenses directly incurred by or on behalf of the Managing General Partner in relation to potential Investments approved by the Investment Committee which do not proceed to completion and expenses specifically incurred in relation to the holding, monitoring, protecting or realising of Investments; provided that the Partnership shall not be responsible for costs or disbursements in respect of: (i) overheads of the Managing General Partner properly payable by the Managing General Partner from the Management Fee including remuneration and expenses paid to their employees, rent and utilities expenditure; (ii) expenses recovered from companies or other entities in which the Partnership has made (or proposes to make) an Investment; or (iii) any proportion of costs and expenses incurred by (or referable to an investment by) the Babcock & Brown Group in connection with the identifying, evaluating, negotiating, acquiring, holding, monitoring, protecting or realising investments by the Babcock & Brown Group where the Partnership does not coinvest with the Babcock & Brown Group in such a transaction. For the avoidance of doubt, where the Partnership does coinvest in such a transaction the Partnership shall be required to reimburse its pro rata share of the costs and expenses incurred by the Babcock & Brown Group in connection therewith, being the proportion which the amounts invested by the Partnership bear to the total amounts invested in such transaction. 9 Management Fee 9.1 Entitlement to the Management Fee The Managing General Partner shall be entitled to receive in respect of each Accounting Period an amount equal to the Management Fee for that Accounting Period and pro rata in respect of Accounting Periods of more or less than one year. 9.2 Calculation of the Management Fee The Management Fee for each Accounting Period shall be an amount equal to: (a) until the end of the Investment Period the sum of 1.5% per annum of Total Commitments; and (b) thereafter, 1.25% per annum of the Acquisition Cost of Investments held by the Partnership. For this purpose the winding up of any company in which an Investment is held or the permanent write off of an Investment shall be treated as a realisation so that such Investment will no longer be considered to be held by the Partnership, and provided that where an Investment has only been partially realised the appropriate portion of the Acquisition Cost to be taken into account for this clause shall be the portion of the Acquisition Cost of the Investment equal to the proportion of the Investment that has not been realised; in each case calculated by reference to the daily balances thereof during such period and including, in respect of the period prior to the Final Closing Date, the Loan Commitments of Subsequent Investors which shall, for the above purposes, be treated as having arisen as of the First Closing Date. 14.1 Termination For so long as there are at least two Limited Partners the death, bankruptcy, insolvency, dissolution, liquidation or withdrawal of a Limited Partner shall not operate to terminate the Partnership and the estate or trustee in bankruptcy or receiver or liquidator of a deceased, bankrupt, insolvent or dissolved Limited Partner shall not have the right to withdraw the balances on such Limited Partner's partnership accounts or require repayment of such Limited Partner's Outstanding Loan otherwise than in accordance with this Agreement. For so long as there are at least two Limited Partners no Limited Partner shall be entitled to dissolve the Partnership by notice. Subject as provided in clause 14.2, the Partnership shall terminate on the expiry of ten years from the Final Closing Date or shall terminate prior to such date upon the happening of any of the following events without any further action on the part of the Partners: (a) the bankruptcy, insolvency, dissolution, liquidation or removal of the Managing General Partner (other than pursuant to clause 14.4), unless the Partnership is reconstituted pursuant to clause 14.3; or (b) the agreement to terminate the Partnership by the Managing General Partner, the Founder Partner and of the Investors by an Investors' Special Consent; or (c) the removal of the Managing General Partner pursuant to clause 14.4 unless, in any such case, the Partnership is reconstituted pursuant to clause 14.3. 14.3 Continuation of the Partnership If the Partnership would otherwise be terminated pursuant to clause 14.1(a) or (c) the Partnership may be reconstituted and its business continued pursuant, in the case of termination pursuant to clause 14.1(a), to the unanimous written consent of the Limited Partners or, in the case of termination pursuant to clause 14.1(c) pursuant to the written consent of Investors who hold at least 75% of the aggregate amount of Commitments of all Limited Partners (such consent only to be effective if limited partners also hold more than 75% of the aggregate Commitments of all limited partners to the Partnership have signed similar written consents), electing to continue the Partnership and electing a new Managing General Partner, which consent must be obtained within 60 days after all Partners have been notified of the event of termination, whereupon the existing Managing General Partner shall cease to be the Managing General Partner and, subject to the provisions of clause 14.4, shall not be entitled to any compensation whatsoever in respect of the Management Fee provided that the Managing General Partner and Founder Partner have received all payments to which it is entitled under clauses 10, 11.1 and 11.5 up to the date of its ceasing to be the Managing General Partner. 14.4 Removal of the Managing General Partner 14.4.1 After the second anniversary of the Final Closing Date, Investors between them holding at least 75% of the Total Commitments may, by resolution at a meeting convened in accordance with clause 13, remove the Managing General Partner provided that such removal shall also have been approved by an Investors' Special Consent. Subject as provided in clause 14.4.2, such removal of the Managing General Partner shall be without prejudice to the right of the Managing General Partner to compensation for termination of its appointment in the amount of two times the Management Fee in respect of the Accounting Period immediately prior to the Accounting Period in which termination occurs (or, in the case of a termination in any of the first two Accounting Periods, an amount equal to two times the Management Fee for the second Accounting Period (whether paid or not). 14.4.2 The Managing General Partner may be removed in like manner at any time without compensation for termination of its office if such termination is in respect of the Managing General Partner's fraud, gross negligence, wilful misconduct, bad faith or reckless disregard of its obligations and duties as general partner of the Partnership. 14.4.3 On removal the Managing General Partner shall become a Limited Partner with respect to any rights or Interests it may have at such time other than in respect of its entitlement to the Management Fee which shall immediately terminate on the payment of any sums due pursuant to clause 14.4.1. For the avoidance of doubt, on removal of the Managing General Partner, the rights and Interest of the Founder Partner shall be unaffected. 14.4.4 Upon removal of the Managing General Partner, the Partners and any replacement managing general partner shall within two months from the date of such removal, change the name of the Partnership to a name that does not contain the words "Babcock & Brown" or "B&B" or any word resembling or likely to be mistaken or confused with "Babcock & Brown" or "B&B" or as giving rise to any appearance or impression of being associated with the Babcock & Brown Group. 16.1 Membership The Partnership shall have an Advisory Board comprising a Chairman appointed by the Managing General Partner with a maximum of 6 members and at least four representatives of Investors, if such persons are willing to undertake such roles. The Managing General Partner shall also appoint such sector experts as it considers suitable and are willing to act as members of the Advisory Board. The Managing General Partner, in its absolute discretion, shall have power to determine the membership of the Advisory Board from time to time. Members of the Advisory Board may by notice in writing to the Managing General Partner appoint alternates to attend and vote in their place. 16.3 Function 16.3.1 The function of the Advisory Board shall be to be consulted by the Managing General Partner on the governance of the Partnership and compliance with the investment mandate. The Advisory Board will be informed of the level of any transaction or investment banking fees to be charged in respect of any transaction. The Advisory Board will have referred to it certain types of transaction which would fall outside the normal Investment Policy of the Partnership, as set out in clause 16.3.2 below. 16.3.2 The Fund Investment Committee (as defined in the Private Placement Memorandum) will refer to the Advisory Board any proposed investment transaction: (a) where no member of the Babcock & Brown Group is investing directly in the transaction; (b) where the transaction is part of a syndication and a member of the Babcock & Brown Group has already invested in such transaction; (c) where it is proposed that the Partnership will invest an amount in excess of 15% of Total Commitments in the securities of any single Portfolio Company and its Associates; or (d) where the proposed investment has a target gross IRR return of less than 25%. The Managing General Partner will not proceed with any transaction of the types set out above without ensuring that the prior consent of the Advisory Board has been obtained. 16.3.3 The Advisory Board will be consulted by the Managing General Partner on conflicts of interest which arise in the management of the Partnership. The Managing General Partner shall not however be obliged to consult the Advisory Board with respect to conflicts which arise during the ordinary course of business of the Babcock & Brown Group which shall include conflicts which may arise from any of the following matters: (a) the provision of acquisition finance, banking and foreign exchange services to Portfolio Companies by the Babcock & Brown Group on arm's length terms; (b) the competition for investment opportunities with the Partnership by other clients and customers of the Babcock & Brown Group; (c) the provision of corporate and advisory services to Portfolio Companies or to clients of the Babcock & Brown Group entering, or proposing to enter into, corporate finance or other transactions with Portfolio Companies on arm's length terms; (d) the holding, underwriting, syndication, making a market in or otherwise dealing in equity, debt or other finance for Portfolio Companies or their vendors or potential purchasers and the publication of research in connection therewith; (e) the provision of investment management and advisory services to clients, including with respect to investment opportunities similar to or the same as those sought by the Partnership; and (f) the operation, management or provision of advice in respect of investment trusts, funds and other associated activities, or the investment by the Babcock & Brown Group into such activities, where the investment objectives of such vehicles overlap with those of the Partnership. 16.3.4 Where the approval or consent of the Advisory Board is required to the making or disposal of any particular Investment, such approval or consent of the Advisory Board only permits but does not commit the Partnership to making the Investment or allowing the disposal to occur. Any such commitment can only be made pursuant to a decision of the Managing General Partner in accordance with the terms of this Agreement. The members of the Advisory Board shall not take part in the management of the Partnership's business. 16.3.5 The Advisory Board may vote to replace any or all members of the Investment Committee from time to time and if such vote is passed, the Advisory Board may then seek the approval of Investors by an Investors' Special Consent to remove such persons from the Investment Committee following which such person or persons shall immediately cease to be members of the Investment Committee and shall take no further part in the investment decision-making process of the Managing General Partner in respect of the Fund unless otherwise approved by the Advisory Board. Following any such removal the Managing General Partner may appoint any other person as a replacement member of the Investment Committee. 17.1 Exculpation None of the Indemnified Persons shall have any liability for any loss to the Partnership or the Partners arising in connection with the services to be performed hereunder or pursuant hereto, or under or pursuant to any management agreement or other agreement relating to the Partnership or its respect of services as a Nominated Director or member of the Advisory Board or which otherwise arise in relation to the operation, business or activities of the Partnership save in respect of any matter resulting from such Indemnified Person's fraud, wilful misconduct, bad faith or reckless disregard for their obligations and duties in relation to the Partnership or, save in the case of Indemnified Individuals, their gross negligence. 17.2 Indemnity The Partnership agrees to indemnify and hold harmless out of Partnership Assets the Indemnified Persons against any and all liabilities, actions, proceedings, claims, costs, demands, damages and expenses (including legal fees) incurred or threatened arising out of or in connection with or relating to or resulting from the Indemnified Person being or having acted as a general partner or manager in respect of the Partnership or arising in respect of or in connection with any matter or other circumstance relating to or resulting from the exercise of its powers as a general partner or manager or from the provision of services to or in respect of the Partnership or under or pursuant to any management agreement or other agreement relating to the Partnership or in respect of services as a Nominated Director or member of the Advisory Board or which otherwise arise in relation to the operation, business or activities of the Partnership provided however that any Indemnified Person shall not be so indemnified with respect to any matter resulting from their fraud, wilful misconduct, bad faith or reckless disregard for their obligations and duties in relation to the Partnership or, save in the case of Indemnified Individuals, their gross negligence. 17.3 Continuing Effect For the avoidance of doubt, the indemnities under clause 17.2 shall continue in effect notwithstanding that the Indemnified Person shall have ceased to act as general partner or otherwise to provide services to or in respect of the Partnership or to act in any of the capacities described in clause 17.2. 17.4 Agents The Managing General Partner shall not be liable to any Limited Partner or to the Partnership for the negligence, dishonesty or bad faith of any agent (other than an Associate of the Managing General Partner) acting for the Managing General Partner or for the Partnership provided that such agent was selected, engaged, retained and monitored by the Managing General Partner applying reasonable care. 18.1 Exclusivity 18.1.1 Subject as provided in clause 18.1.2, any Associates of the Managing General Partner or adviser of the Partnership or of the Managing General Partner may perform similar functions and duties for others and, without limitation, may act as a general partner or investment adviser in or of other investment funds or engage in any other activity and retain any benefit received for doing so. The Managing General Partner shall not undertake any activities other than those related to the Partnership, its Investments, Portfolio Companies and Investors. 18.1.2 Neither the Managing General Partner, nor any other member of the Babcock & Brown Group shall, without an Investors' Ordinary Consent, close or manage a new pooled equity investment fund for investors having an investment mandate substantially the same as that of the Partnership (a "Successor Fund") prior to:

1. 70% of the Total Commitments being drawdown;
2. the end of the Investment Period; or
3. the termination of the Partnership. whichever shall be soonest, provided that this clause 18.1.2 shall only apply if and for so long as BBCP MGP or one of its Associates remains as general partner of the Partnership. 18.11 Governing Law This Agreement and the rights, obligations and relationships of the parties hereto under this Agreement and in respect of the Private Placement Memorandum shall be governed by and construed in accordance with the laws of England and all the parties irrevocably agree that the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement or the Private Placement Memorandum or the acquisition of Commitments, whether or not governed by the laws of England, and that accordingly any suit, action or proceedings arising out of or in connection with this Agreement or the Private Placement Memorandum or the acquisition of Commitments shall be brought in such courts. The parties hereby waive, to the extent not prohibited by applicable law, and agree not to assert by way of motion, as a defence or otherwise, in any such proceeding, any claim that it is not subject personally to the jurisdiction of such courts, that any such proceeding brought in such courts is improper or that this Agreement or the Private Placement Memorandum, or the subject matter hereof or thereof, may not be enforced in or by such court. 18.12 Agent for service of process 18.12.1 Unless otherwise agreed with the Managing General Partner, each of the Investors not resident in the United Kingdom shall, by signing a Deed of Adherence be treated as having appointed the Managing General Partner, or any person nominated by the Managing General Partner, as its agent for the service of process in the United Kingdom for any matter or dispute arising out of or in connection with this Agreement (other than a matter or dispute to which such Investor and the Managing General Partner are opposing parties), service upon whom shall be deemed completed whether or not forwarded to or received by the relevant appointor. Without prejudice to the foregoing, the Managing General Partner shall, forthwith upon being in receipt of service of process in its capacity as such agent, send a copy of all documents so served on it by courier to the relevant appointor. 18.12.2 Nothing contained in this Agreement shall affect the right to serve process in any other manner permitted by law or the right to bring proceedings in any other jurisdiction for the purposes of the enforcement or execution of any judgement or other settlement in any of the courts. 18.15 Contracts (Rights of Third Parties) Act 1999 Nothing in this Agreement confers any right on any person (other than the parties hereto) pursuant to the UK Contracts (Rights of Third Parties) Act 1999. Appendix A to Limited Partnership Agreement Clause 14 Deed of Adherence This Deed of Adherence and the rights, obligations and relationships of the parties under this Deed of Adherence and the Partnership Agreement and in respect of the Private Placement Memorandum shall be governed by and construed in accordance with the laws of England. Clause 15 Deed of Adherence The Applicant irrevocably agrees that the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Deed of Adherence, the Partnership Agreement, the Private Placement Memorandum, or the acquisition of Commitments whether or not governed by the laws of England, and that accordingly any suit, action or proceedings arising out of or in connection with this Deed of Adherence, the Partnership Agreement, the Private Placement Memorandum, or the acquisition of Commitments shall be brought in such courts. The Applicant hereby waives, to the extent not prohibited by applicable law, and agrees not to assert by way of motion, as a defence or otherwise, in any such proceeding, any claim that the Applicant is not subject personally to the jurisdiction of such courts, that any such proceeding brought in such courts is improper or that this Deed of Adherence, the Partnership Agreement or the Private Placement Memorandum, or the subject matter hereof or thereof, may not be enforced in or by such court.

SCHEDULE B - EXTRACT FROM THE COMMERCIAL LIST STATEMENT

C. Plaintiff's contentions C1. The first defendant is a company incorporated in Australia which at all material times was named Babcock & Brown Limited ("BB Ltd"). C2. At all material times: (a) BB Ltd was the holding company of a group of companies and other entities incorporated or formed in Australia or overseas ("the BB Group"); and (b) BB Ltd's shares were listed on the Australian Stock Exchange. C3. The following further entities were at all material times members of the BB Group: (a) the second defendant Babcock & Brown International Pty Limited ("BB International"), a company incorporated in Australia; (b) the third defendant Babcock & Brown LP ("BBUS LP"), a limited partnership formed under the laws of Delaware, USA, and being, pursuant to those laws, a separate legal entity entitled to hold property and to sue and be sued as such; and (c) Babcock & Brown Investment Management Limited ("BB Investment Management"), a company incorporated in the United Kingdom. C4. At all material times: (a) BB International was the holding company for all of the operational entities within the BB Group and was a majority-owned subsidiary of BB Ltd; and (b) BBUS LP was the principal operating entity for the USA within the BB Group and was an indirectly wholly-owned subsidiary of BB International. C5. At all material times: (a) the global activities of the BB Group were managed by a committee of senior executives who were employees or officers of BB Ltd or BB International (the "BB Executive Committee"); and (b) the activities of each of the entities within the BB Group were managed by the BB Executive Committee through being allocated to one or more "Business Areas" under the control and supervision of a "Business Area Head" who was a member of the BB Executive Committee and by also being made subject to the overall control and supervision of the "Chief Executive" of the BB Group, who was also a member of the BB Executive Committee. The Investment Partnership C6. At all material times, the Limited Partnerships Act 1907 (UK) has provided that: (a) a partnership having certain characteristics ("English Limited Partnership") may be formed in the manner and subject to the conditions provided by the Act; (b) an English Limited Partnership consists of one or more partners called general partners who shall be liable for all debts and obligations of the partnership and one or more persons called limited partners who shall at the time of entering into the partnership contribute a certain amount of capital or property, and who shall not be liable for the debts or obligations of the partnership beyond the amount so contributed; (c) every such partnership must be registered in accordance with the provisions of the Act; and (d) a limited partner shall not take part in the management of the business of the Partnership, and shall not have power to bind the partnership. C7. In and after January 2005, BB Investment Management issued to certain investors a memorandum ("the Private Placement Memorandum"). That Memorandum solicited investment in an English Limited Partnership ("the Investment Partnership") which was to be established with a view to carrying on business as an investor in transactions originated by the BB Group. The Investment Partnership would consist of a general partner who would manage the business of the Partnership ("Managing General Partner") and limited partners who would be the investors ("the Investor Partners"). C8. The following were terms of the Private Placement Memorandum: (a) The Managing General Partner would be a newly created entity owned by the BB Group. (b) The Investment Partnership would make its investments from transactions originated by the BB Group. (c) The Investment Partnership's investment decisions would be made by committee comprising four BB Group executives and an independent chairman ("the Investment Committee"), overseen by an advisory board comprising Investor Partner representatives and independent persons with expertise in investment in the investment sectors in which the Investment Partnership was expected to operate ("the Advisory Board"). (d) There would be a team of employees or executives operating out of the BB Group's UK office ("the Fund Team") which would be responsible for administering the Investment Partnership and for organising the stream of proposed transactions and presenting such of them as met the Investment Partnership's criteria and guidelines for consideration by the Investment Committee. (e) Each proposed transaction would be supervised by the relevant BB Group Business Area Head who would work closely with members of the Fund Team to review and structure transactions appropriate to the Investment Partnership's criteria. (f) The Advisory Board would have primary responsibility for (among other things) governance of the Investment Partnership and conflict of interest resolution. It would be required to approve any proposed investments referred to it by the Investment Committee. The Investment Committee would be required to refer certain types of proposed investment to the Advisory Board. (g) All investments by the Investment Partnership (even if approved by the Advisory Board) would have to be approved by unanimous decision of the Investment Committee. C9. The Investment Partnership was constituted by agreement dated 17 May 2005 between two entities within the BB Group. Its name was initially "Babcock & Brown Capital Partners" and later "Babcock & Brown Global Partners". C10. At all material times, the Investment Partnership has been registered as an English Limited Partnership under the Limited Partnerships Act 1907 (UK). C11. The fourth defendant is a company incorporated in the Cayman Islands the name of which was formerly BBCP Managing General Partner Limited and is now BBGP Managing General Partner Limited ("BBMGP"). At all material times, BBMGP has been a member of the BB Group. C12. The terms constituting the Investment Partnership were amended and restated by agreement dated 1 July 2005 between BBMGP as Managing General Partner and two other entities within the BB Group ("the Limited Partnership Agreement"). C13. The following were terms of the Limited Partnership Agreement: (a) By clause 1.2, the purpose of the Investment Partnership was to carry on the business of investment and in particular to identify, research, negotiate and monitor the progress of investments, and the Investment Partnership might, acting through the Managing General Partner or persons authorised on behalf of the Investment Partnership pursuant to the Limited Partnership Agreement, execute, deliver and perform all contracts and other undertakings and engage in all activities and transactions as might in the opinion of the Managing General Partner be necessary or advisable in order to carry out the purposes and objectives of the Investment Partnership, subject to and in accordance with the provisions of the Limited Partnership Agreement and the investment policy specified in the Private Placement Memorandum ("the Investment Policy"). (b) By clauses 5.1 and 5.3.1, the Managing General Partner had exclusive responsibility for the operation of the Investment Partnership and the management and control of its business and affairs and should take all investment decisions on behalf of the Investment Partnership, including in particular the identification, evaluation and negotiation of investment opportunities and the preparation and approval of investment agreements. (c) By clause 9, the Managing General Partner was entitled to certain management fees. (d) By clause 14, in the event of removal otherwise than for fraud, gross negligence, wilful misconduct, bad faith or reckless disregard of its obligations and duties as general partner, the Managing General Partner was entitled to a payment for compensation for loss of office ("Termination Payment"). (e) By clause 16.3.3, the Advisory Board was to be consulted on conflicts of interest arising in the management of the Investment Partnership. (f) The Investment Partnership was to be conducted in accordance with the Limited Partnership Agreement and the Private Placement Memorandum, save that by clause 18.4.3 the terms of the Limited Partnership Agreement were to prevail in the event of any conflict. C14. In July 2005, the Investment Partnership was closed to further investment, by which time approximately €371.7 million had been subscribed to the Investment Partnership by Investor Partners. C15. From about July 2005 onwards, the Investment Partnership carried on business as an investor with a Fund Team, an Investment Committee, and an Advisory Board as contemplated in the Private Placement Memorandum and the Limited Partnership Agreement. Particulars (a) At all material times Mr Edward Hanson, a BB Group executive based in its London office, had immediate responsibility for the operations of the Fund Team, including the corporate affairs of BBMGP. Those operations were subject to the direction and control of the BB Executive Committee at least through the responsible Business Area Head. From about October 2007, the responsible Business Area Head was Mr Robert Topfer, the BB Group Global Head of Corporate Finance. (b) The Investment Committee initially comprised Mr George Magan (independent chairman), Mr James Babcock (BB Group Executive Chairman), Mr Phillip Green (BB Group Chief Executive), Mr Michael Maxwell (BB Group Global Head of Real Estate) and Mr Hanson. Mr Maxwell subsequently resigned his position as BB Group Global Head of Real Estate but remained a member of the Committee. In about October 2007, Mr Hanson was instructed by Mr Topfer to take the necessary steps to have him appointed to the Committee. (c) The Advisory Board consisted of certain Investor Partner representatives and sectoral investment experts as contemplated by the Private Placement Memorandum and the Limited Partnership Agreement. (d) Further particulars will be provided, if required, after discovery. The Coinmach Acquisition C16. Prior to the events described below, Coinmach Service Corporation ("Coinmach"), a company incorporated in Delaware, USA, was the holding company of a group of entities which carried on the business of providing laundry equipment and services for multi-family housing properties in the USA. C17. In the period leading up to June 2007, certain officers and employees of BB Ltd, BB International or BBUS LP ("the BB Coinmach Deal Team") negotiated a proposal for the acquisition of Coinmach ("the Coinmach Acquisition") on the basis that: (a) 100% of the issued shares of Coinmach would be acquired at US$13.55 per share ("Acquisition Price"); (b) the acquisition and continued operation of Coinmach would be financed by: (i) existing bank debt of Coinmach and its subsidiary entities being rolled over; (ii) US$400 million being provided by a bank financier with a view to syndication as unsecured notes; (iii) US$336 million being provided as equity by entities within or associated with the BB Group (including the Investment Partnership); (c) an agreement to acquire Coinmach would be signed in June 2007 with the purchase to be completed some months later; and (d) on completion BBUS LP would receive from the equity investors a fee ("Success Fee") of 1.5% of Coinmach's enterprise value (then expected to be approximately US$21 million). Particulars The BB Coinmach Deal Team included Berenice Talintyre, Jake Haines, Justin Levi and Sri Ramachandran. The operations of the Team were subject to the control and supervision of the BB Executive Committee, at least through Mr Topfer and Mr Richard Umbrecht, the US Head of Special Products. Further particulars will be provided, if required, after discovery. C18. In early June 2007, the Investment Committee approved a proposal originated by the BB Coinmach Deal Team whereby the Investment Partnership was to invest approximately €52 million (US$70 million) in equity in the Coinmach Acquisition, subject to final merger and funding documentation being satisfactory to the BB Coinmach Deal Team, and delegated the completion of the transaction to the BB Coinmach Deal Team on this basis. C19. Pursuant to this approval, the BB Coinmach Deal Team negotiated and entered into an agreement dated 10 June 2007 ("Consortium Agreement") whereby a consortium was formed between the Investment Partnership and certain other BB Group entities, interests associated with senior management of Coinmach and one or more entities within the Royal Bank of Scotland group ("RBS") (collectively, the "Coinmach Acquisition Consortium") to undertake the Coinmach Acquisition, with RBS providing finance. C20. Pursuant to the Consortium Agreement, a company named Spin Holdco Inc ("Spin Holdco") was incorporated in Delaware, USA as the holding company through which the members of the Coinmach Acquisition Consortium would acquire Coinmach, and a further company called Spin Acquisition Co Inc ("Spin Acquisition Co") was incorporated in Delaware, USA, as a wholly owned subsidiary of Spin Holdco. C21. By agreement dated 14 June 2007 between Spin Holdco, Spin Acquisition Co and Coinmach ("Coinmach Merger Agreement"), it was agreed that Coinmach would be merged into Spin Acquisition Co and Spin Holdco would thereby acquire 100% ownership of Coinmach. C22. It was a term of the Coinmach Merger Agreement that if Spin Holdco did not complete the transaction, it was required to pay to Coinmach a fee of US$17 million ("Cancellation Fee"). Particulars Clauses 6.3(c) and 6.5(e) of the Coinmach Merger Agreement. C23. After June 2007, there was a prolonged and severe deterioration in credit and equity markets worldwide. C24. In or about November 2007, RBS decided in the light of that deterioration that it did not wish to proceed with the Coinmach Acquisition and proposed to the BB Coinmach Deal Team that the Coinmach Merger Agreement not be completed, on the basis that RBS would pay the whole of the Cancellation Fee ("the RBS Proposal"). C25. The BB Coinmach Deal Team rejected the RBS Proposal and instead negotiated with RBS and Coinmach a proposal whereby the Coinmach Acquisition would proceed on terms that: (a) Coinmach and BBUS LP would cover the expenses incurred by RBS in any subsequent syndication; (b) BBUS LP would reimburse RBS 50% of any losses suffered by RBS in syndicating its equity stake; and (c) these obligations would be supported by funds to be put in escrow on completion by Coinmach (from the Acquisition Price) and by BBUS LP (from the Success Fee). C26. On 20 November 2007, the Coinmach Acquisition was completed on those terms. The Investment Partnership invested US$70 million in the Coinmach Acquisition. C27. From the time of the RBS Proposal, each of BB Ltd, BB International and BBUS LP had an interest or interests in the proposed investment by the Investment Partnership in the Coinmach Acquisition going ahead which conflicted or potentially conflicted with the interests of the Investment Partnership. Particulars (a) Without the proposed investment by the Investment Partnership the Coinmach Acquisition would not, or alternatively might not, have been able to go ahead. (b) If the Coinmach Acquisition went ahead, BBUS LP would receive the Success Fee and this would indirectly benefit BB International and BB Ltd as (indirect) parent companies of BBUS LP. (c) If the Coinmach Acquisition went ahead, that would create market confidence in the BB Group, including BB Ltd and BB International, and would support the market value of shares in BB Ltd. (d) The Investment Partnership had no interest in the Success Fee, or in the creation of market confidence in the BB Group; its only interest was in the profitability or otherwise of the proposed investment. (e) Further particulars will be provided, if required, after discovery. C28. At no stage prior to the completion of the Coinmach Acquisition was the conflict which had arisen from the RBS Proposal referred to the Advisory Board, nor was the Investment Partnership's fully informed consent to the Coinmach Acquisition being completed despite the existence of that conflict sought or obtained. C29. Further, each of following circumstances ("the Pre-Completion Circumstances") was material to the proposed investment by the Investment Partnership in the Coinmach Acquisition: (a) the preparedness of RBS to pay the whole of the Cancellation Fee rather than proceed with the Coinmach Acquisition; (b) the preparedness of Coinmach to agree to terms less favourable to it than those initially negotiated in order to permit the Coinmach Acquisition to proceed; and (c) the preparedness of BBUS LP to agree to reduce or risk the reduction of its Success Fee in order to permit the Coinmach Acquisition to proceed. C30. At no stage prior to the completion of the Coinmach Acquisition was any of the Pre-Completion Circumstances disclosed to: (a) any organ of the Investment Partnership which was independent of the BB Coinmach Deal Team; or (b) the Investor Partners. C31. Further, the BB Coinmach Deal Team did not reject the RBS Proposal and proceed with the Investment Partnership's investment in the Coinmach Acquisition on the revised terms set out in paragraph C25 above because it had formed a genuine belief that that was in the best interests of the Investment Partnership. C32. Further, in November 2007 the state of the relevant debt and equity markets and the financial position of Coinmach was such that the best interests of the Investment Partnership required the acceptance of the RBS Proposal rather than proceeding with an investment in the Coinmach Acquisition on the revised terms set out in paragraph C25 above. C33. By reason of its investment in the Coinmach Acquisition, the Investment Partnership has suffered substantial loss. Appointment of new Managing General Partner C34. In or about late 2009: (a) BBMGP was removed as Managing General Partner of the Investment Partnership; and (b) the Investor Partners elected to continue the Investment Partnership and elected the plaintiff (which is a company incorporated in the Cayman Islands) as the new Managing General Partner. C35. BBMGP claims that it is entitled to accrued management fees and to a Termination Payment in consequence of its removal as Managing General Partner of the Investment Partnership. Direct Claim against BB Ltd, BB International and BBUS LP C36. In acting (through the BB Coinmach Deal Team) on behalf of the Investment Partnership to effect the Investment Partnership's investment in the Coinmach Acquisition, each of BB Ltd, BB International and BBUS LP owed fiduciary obligations to the Investment Partnership: (a) not to permit itself to be placed in a position where its interests or the interests of other entities within the BB Group conflicted or potentially conflicted with the interests of the Investment Partnership unless there was fully informed consent to it so acting; (b) to disclose to the proper organ of the Investment Partnership all information in its possession which was material to the proposed investment by the Investment Partnership in the Coinmach Acquisition; and (c) to exercise its functions on behalf of the Investment Partnership in a manner which it genuinely considered was in the best interests of the Investment Partnership. C37. Each of BB Ltd, BB International and BBUS LP breached those obligations, in that: (a) each of BB Ltd, BB International and BBUS LP (through the BB Coinmach Deal Team and the BB Executive Committee) was responsible for effecting the Investment Partnership's investment in the Coinmach Acquisition and failed to obtain fully informed consent from the Investment Partnership to the conflict referred to in paragraph C27 above, thereby breaching the fiduciary obligation referred in paragraph C36(a) above; (b) each of BB Ltd, BB International and BBUS LP knew or was on notice (through the BB Coinmach Deal Team and the BB Executive Committee) of the Pre-Completion Circumstances prior to the completion of the Coinmach Acquisition on 20 November 2007 and failed to disclose those Pre-Completion Circumstances to the proper organ of the Investment Partnership, thereby breaching the fiduciary obligation referred to in paragraph C36(b) above; and (c) each of BB Ltd, BB International and BBUS LP was responsible (through the BB Coinmach Deal Team and the BB Executive Committee) for rejecting the RBS Proposal and effecting the Coinmach Acquisition on the revised terms referred to in paragraph C25 above where it had not formed a genuine belief that such actions were in the best interests of the Investment Partnership, thereby breaching the fiduciary obligation referred to in paragraph C36(c) above. C38. Further, in acting (through the BB Coinmach Deal Team) on behalf of the Investment Partnership to effect the Investment Partnership's investment in the Coinmach Acquisition, each of BB Ltd, BB International and BBUS LP owed to the Investment Partnership and the Managing General Partner fiduciary obligations and obligations in tort to exercise reasonable care in so acting. C39. Each of BB Ltd, BB International and BBUS LP breached those obligations, in that each of BB Ltd, BB International and BBUS LP knew or ought to have known (through the BB Coinmach Deal Team and the BB Executive Committee) that the best interests of the Investment Partnership required the acceptance of the RBS Proposal rather than effecting the Coinmach Acquisition on the revised terms referred to in paragraph C25 above. Claims against BBMGP C40. In acting as Managing General Partner of the Investment Partnership, BBMGP owed fiduciary obligations to the Investment Partnership: (a) not to permit itself to be placed in a position where its interests or the interests of other entities within the BB Group conflicted with the interests of the Investment Partnership unless there was fully informed consent to it so acting; (b) to refer any proposed investment involving any such conflict to the Advisory Board for approval; (c) to disclose to the proper organ of the Investment Partnership all information in its possession which was material to any possible or proposed investment by the Investment Partnership; and (d) to exercise its powers as Managing General Partner in a manner which it genuinely considered to be in the best interests of the Investment Partnership. C41. BBMGP breached those obligations, in that: (a) BBMGP failed to obtain fully informed consent from the Investment Partnership to the conflicts referred to in paragraph C27 above, thereby breaching the fiduciary obligations referred in paragraphs C40(a) and C40(b) above; (b) BBMGP knew or was on notice (through the agency of the BB Coinmach Deal Team and also through the BB Executive Committee) of the Pre-Completion Circumstances prior to the completion of the Coinmach Acquisition on 20 November 2007 and failed to disclose those Pre-Completion Circumstances to the proper organ of the Investment Partnership, thereby breaching the fiduciary obligation referred to in paragraph C40(c) above; and (c) BBMGP (through the agency of the BB Coinmach Deal Team) rejected the RBS Proposal and effected the Coinmach Acquisition on the revised terms referred to in paragraph C25 above where it had not (through the agency of BB Ltd, BB International or BBUS LP or the BB Coinmach Deal Team) formed a genuine belief that such actions were in the best interests of the Investment Partnership, thereby breaching the fiduciary obligation referred to in paragraph C40(d) above. C42. Further, in acting as the Managing General Partner of the Investment Partnership, BBMGP owed to the Investment Partnership fiduciary obligations and obligations in tort to exercise reasonable care in so acting. C43. BBMGP breached those obligations, in that it knew or ought to have known (through the agency of the BB Coinmach Deal Team and also through the BB Executive Committee) that the best interests of the Investment Partnership required the acceptance of the RBS Proposal rather than effecting the Coinmach Acquisition on the revised terms referred to in paragraph C25 above. C44. In failing to refer the proposed investment by the Investment Partnership to the Advisory Board on account of the conflict of interest arising from the Success Fee, BBMGP breached the terms of the Limited Partnership Agreement referred to in paragraph C13 above. C45. Further, the breaches of fiduciary and tortious obligations on the part of BBMGP referred to in paragraphs C41 and C43 above constituted "fraud, gross negligence, wilful misconduct, bad faith or reckless disregard of its obligations as general partner of the [Investment] Partnership" for the purposes of clause 14.4.2 of the Limited Partnership Agreement and, consequently, BBMGP is not entitled to the Termination Payment in consequence of its removal. C46. Any entitlement of BBMGP to accrued management fees, or, alternatively to paragraph C45 above, to a Termination Payment, is to be set off against its liability for breach of the Limited Partnership Agreement or for breach of those obligations. Derivative Claims against BB Ltd, BB International and BBUS LP C47. Each of BB Ltd, BB International and BBUS LP received a benefit from, or participated (through the BB Coinmach Deal Team and the BB Executive Committee) in, the breaches of fiduciary duty by BBMGP referred to in paragraphs C41 and C43 above when it knew or was on notice (through the BB Coinmach Deal Team and the BB Executive Committee) of those breaches. Standing of Plaintiff C48. The plaintiff brings these proceedings as Managing General Partner of the Investment Partnership pursuant to the Limited Partnership Agreement and, to the extent necessary, as representative of the Investor Partners pursuant to rule 7.4 of the Uniform Civil Procedure Rules 2005 (NSW).

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