And the Matter of Torchlight Fund LP
| Jurisdiction | Cayman Islands |
| Judge | Mr. Justice Robin McMillan |
| Judgment Date | 09 November 2017 |
| Date | 09 November 2017 |
| Docket Number | CASE NO. FSD 103 OF 2015 (RMJ) |
| Court | Grand Court (Cayman Islands) |
The Hon. Mr. Justice Robin McMillan
CASE NO. FSD 103 OF 2015 (RMJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
IN CHAMBERS
Power of the Court to decide the order in which issues are resolved-Appropriateness and convenience of deciding similar issues at same time-Court's duty to ensure the normal advancement of proceedings
Mr. Thomas Lowe Q.C. and Ms. Hilary Stonefrost Instructed by Ms. Jessica Williams and Ms. Gemma Lardner of Harneys Westwood & Riegels for the Petitioners
Mr. John Wardell Q.C. instructed by Mr. Ben Hobden and Mr. Erik Bodden of Conyers Dill & Pearman for Torchlight Fund L.P. and the General Partner
On 21 August 2015 Clifford J granted an interim injunction in this matter following an ex parte hearing also dated 21 August 2015.
The Applicants were Aurora Funds Management Ltd (“Aurora”), a Petitioner, and Millinium Asset Services Pty Ltd. (“MAS”)
In relevant part the Order of Clifford J states:
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“1. Until the determination of the Applicants' Summons or further order of this Honourable Court, the Respondent be restrained, whether directly or indirectly, whether by itself, its directors, its officers, its agents or any of them howsoever, from:
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(a) enforcing, relying on or acting upon the notice of default dated 13 August 2015 sent by the Respondent to the First Applicant;
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(b) considering, treating or deeming the First Applicant to be a ‘Defaulting Party’ under clause 10.1 of the limited partnership agreement of the Torchlight Fund L.P. (the Fund) dated 7 November 2012 (as amended) (the LPA);
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(c) causing or procuring the sale, transfer or disposition of, or otherwise dealing with, all or any part of the First Applicant's limited partnership interest in the Fund;
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(d) causing or procuring the convening or holding of any meeting of the limited partners of the Fund that excludes the First Applicant or at which the First Applicant is not entitled to vote or be represented; and/or
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(e) exercising or purporting to exercise any rights, powers or remedies under clauses 10.2 to 10.8 (inclusive) of the LPA.
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2. The Summons be listed for further hearing on a date to be fixed.
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3. The Respondent may apply to the Court at any time to vary or discharge this Order but before doing so must first inform the Applicants' attorneys in writing on not less than three clear working days' notice.
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4. There be liberty to apply generally.”
It should also be noted that the relevant Summons which led to this Order had also sought the following relief:
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“1. A declaration that Aurora Funds Management Ltd is not a defaulting limited partner of Torchlight Fund L.P. (the Partnership) under the terms of the Limited Partnership Agreement of the Partnership dated 7 November 2012 by reason of it having disclosed certain information to Millinium Asset Services Pty Ltd.
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2. A declaration that a notice of default issued by Torchlight GP Limited to Aurora Funds Management Ltd dated 13 August 2015 (the Notice of Default) is void and of no force and effect.”
The declarations sought have not yet been addressed or decided upon by this Court.
Notwithstanding the terms of Clifford J's Order, in particular paragraph 2 of that Order, no subsequent arrangements were made by Aurora for an inter parties hearing to take place.
It is also clear from an Attendance Note provided by Harneys on behalf of Aurora and MAS that the Applicants anticipated that Clifford J would be providing directions to the parties for the hearing of the notice of default aspect of the Summons (see page 12).
It was in those circumstances that the learned Judge then stated:
“At the moment you want for the injunction to hold the ring”.
However, directions in relation to the hearing of the declarations applications were never sought.
The issue currently before the Court arises from a further Summons by Torchlight GP Limited (“the General Partner”) as General Partner of Torchlight Fund L.P. (“the Partnership”). It is dated 11 August 2017.
This Summons seeks the following Orders:
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“1. That the summons issued by Aurora Funds Management Limited (“Aurora”) and Millinium Asset Management Pty Ltd (“MAS”) dated 19 August 2015 be dismissed;
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2. That the interim injunction made in these proceedings and dated 21 August 2015 be discharged;
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3. That the Default Notice issued by the General Partner on 13 August 2015 in respect of Aurora be deemed valid;
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4. That Aurora and MAS do pay the costs of the General Partner on such basis as the Courts thinks just;
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5. Such other or further orders as the Court deems fit.”
In the meantime the hearing of the Petition in Cause No. FSD 103 of 2015 has been proceeding through various stages between 21 February 2017 and the present time and a considerable volume of sworn evidence has been adduced.
As matters stand, final written arguments are due to be exchanged by the opposing parties, followed by Leading Counsels' oral submissions scheduled to commence on 27 November 2017.
It is common ground that MAS does not oppose the discharge of the interim injunction, certainly in the sense that MAS no longer asserts an interest as a potential Petitioner or as a Limited Partner.
At paragraphs 1 and 2 of the Applicants' Skeleton Argument dated 20 August 2015, Mr. Lowe Q.C. made the following submission:
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“1. This is an application by Aurora Funds Management Ltd (Aurora), Petitoner and Millinium Asset Services Pty Ltd (MAS) (together the Applicants) for an order that the Court restrain the Respondent from operating default provisions in the limited partnership agreement establishing the Fund (the LPA) which would deprive Aurora of standing in the proceedings.
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2. The Applicants believe that the bases upon which the General Partner of the Fund, Torchlight GP Limited (the General Partner), proposes to take these steps under the default provisions of the LPA are wholly misconceived. As this would be an issue about the standing of Aurora, the Court clearly could and, in the Applicants' submission, should resolve the legal issues in the course of hearing the petition (see Alipour v Ary [1997] 1 W.L.R. 534).”
Clearly this was an important factor that Clifford J took into account in commenting at paragraph 12 of the Attendance Note that the Applicants “have the protection of the injunction until a further hearing.”
Aurora in fact amplifies this submission at paragraphs 3, 4 and 5 of Aurora's current written submissions dated 17 October 2017 which state as follows:
“3. On 13 August 2015, shortly after the petition to wind up the Partnership was issued (the Petition), the General Partner sent a default notice (the Default Notice) to Aurora, which asserted that Aurora was in breach of the Limited Partnership Agreement (the LPA) on the basis of allegations that Aurora had provided confidential information to Millinium Asset Services Pty Ltd (MAS).
4. The purpose of the Default Notice served so shortly after the Petition was plainly to ensure that Aurora could not be treated as a limited partner and an attempt to stymy the Petition. At the time it was served, it was not motivated by the anger that Mr. Kerr admitted or the costs and trouble that Mr. Wardell prompted him to describe in his evidence in these proceedings, all of which posted-dated the Default Notice. Further, the service of the Default Notice was in circumstances where the General Partner had full knowledge of MAS's purported replacement of Aurora as trustee of the Bear Fund since at least January 2014 (i.e. almost 18 months earlier).
5. Anticipating that this was a manoeuvre to defeat the winding up petition, which relied on conduct predating the Default Notice, Aurora and MAS sought and on 21 August 2015 obtained an order from Clifford J, ex parte, restraining the General Partner from acting on the Default Notice (the Aurora Injunction). Aurora had first sought an undertaking from the General Partner that it would not rely on the Default Notice pending resolution of the Petition, however no such undertaking was forthcoming and no reply whatsoever was received to that letter.”
Aurora makes this further submission at paragraph 10 as follows:
“However this is put procedurally, this application is only the General Partner's Summons to discharge the injunction and not the hearing of a random preliminary issue. Aurora's position is that the General Partner's Summons is an abuse of process: it is simply a device to persuade the Court to hear a preliminary issue a few weeks before closing. It is not an application that could ever have succeeded had the General Partner applied soon after the injunction.”
Putting the matter another way, Aurora contends that it would be wrong in principle for the Court to determine factual issues which are the subject of the General Partner's Summons in a manner somehow divorced from the rest of the trial.
In contrast the General Partner submits at paragraph 3 of the General Partner's written submissions dated 29 September 2017 in these terms:
“3. In summary, the General Partner's position is as follows:
3.1 Now that the factual evidence has closed, it is clear beyond question that the Aurora Default Notice was validly served and there is no basis for preventing the General Partner from relying upon it in accordance with its contractual rights to do so.
3.2 The Interim Aurora Injunction was obtained on the basis of material non-disclosure and misrepresentations by the Applicants. This constitutes a stand-alone reason justifying the immediate discharge of the Interim Aurora Injunction.
3.3 Even if there was a sustainable case...
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