Hedge fund Pharo sues landlord over ‘intolerable’ building works noise
Macro specialist brings lawsuit against UAE-backed landlord over disturbance at London headquarters
Hedge fund Pharo has sued a United Arab Emirates-backed landlord over claims that building works caused “intolerable disturbance” at its London headquarters.
Macro specialist Pharo, which manages $8.3bn, has brought a lawsuit against the freehold owner of the building in Knightsbridge, complaining that “excessive noise and vibration” disrupted trading operations and client meetings.
The hedge fund, which bets on assets such as bonds and currencies, pays more than £500,000 a year in rent for the site opposite department store Harrods, according to papers filed at Central London County Court.
Both parties declined to comment.
The two sides had reached an agreement in principle to settle the case but had not signed it, a person familiar with the case said on Friday.
Pharo, headed by former Merrill Lynch trader Guillaume Fonkenell, has brought the action against Knightsbridge Commercial Estates, the British Virgin Islands-incorporated owner of the freehold.
Companies House records list the “private department of the President of the UAE” as a beneficial owner of Knightsbridge Commercial Estates.
In court papers, lawyers representing Pharo said the works had “substantially and materially” disrupted communication between portfolio managers, traders and outside firms, as well as investor meetings.
“Employees are required to speak by telephone and via virtual platforms with accuracy and clarity, in particular to avoid potential costly errors in executing trades,” the claimant said.
“Excessive” dust had triggered fire alarms, while problems with air conditioning and ventilation had caused “extreme” fluctuations in temperature, Pharo said in the legal complaint. One morning last July, the temperature in a large meeting room had reached 28C by 8am, Pharo claimed.
Knightsbridge Commercial Estates said in court papers that it had sought to ensure that the works did “as little nuisance, damage or inconvenience” as reasonably practicable.
“It has not been reasonably practicable to prevent all noisy works taking place during business hours, but the defendant has sought to minimise them as far as reasonably practicable”, the defendant said.
Some of the works, such as replacing lifts and air conditioning, were required to fulfil its obligations as the landlord, lawyers representing the defendant added.
The works at Pharo’s offices took place throughout last year and the bulk of them had been completed by last summer, according to a person familiar with the matter.
Even so, Pharo, which has 70 London-based employees, had signed a lease to move its staff to a 22,000-square foot office on Victoria Street, close to Green Park and Buckingham Palace, the person added.
The macro fund added in the court documents that “significant noisy work and highly disruptive disruptive operations have repeatedly taken place”.
Lawyers for Pharo, which bets on economic indicators including inflation and interest rates and has a particular focus on emerging markets, added in court papers that it had video recordings as evidence.
There had been “numerous occasions where excessive noise levels, caused by drilling, banging, and jackhammering have been experienced and disrupted the claimants’ business”, the claimant added.
Pharo’s macro fund was up 17.5 per cent last year, while its Africa fund was up 28.2 per cent, according to a person familiar with the figures.