Harvey River Estate Pty Ltd, Four Little Girls Pty and Others Applicants v 1. Peter Clarence Foster 2. Arabella Louise Foster 3. Banksia Holdings Ltd 4. The Partnership of Anne Patricia Larter, Alan Jones, Miralese Pty Ltd and Leigh Johnson Trading as ‘Stc Sports Trading Club’ Respondents Cayman National Bank Discovery Respondent
| Jurisdiction | Cayman Islands |
| Judge | The Hon. Justice Ingrid Mangatal |
| Judgment Date | 09 June 2016 |
| Judgment citation (vLex) | [2016] CIGC J0609-1 |
| Docket Number | CAUSE NO FSD 175 of 2015(IMJ) |
| Court | Grand Court (Cayman Islands) |
| Date | 09 June 2016 |
and
The Hon. Justice Ingrid Mangatal
Injunctive relief as protective measure in aid of foreign proceedings — Section 11A of the Grand Court Law (2015 Revision) — Proprietary claim — Mareva Relief—Application for Variation of Injunction
On the 2 November 2015, Smellie CJ made an interim injunction order, amongst others, by which it was ordered as follows:
‘…….
1. LEAVE TO SERVE OUT That the Applicants have leave to serve the ex-parte Summons and this order out of the jurisdiction on the First, Second and Fourth Respondents in accordance with Order 11 of the Grand Court Rules (2015)
2. DISPOSAL OF ASSETS
(1) The Respondents must not remove from the Cayman Islands or in any way dispose of or deal with or diminish the value of any of the assets specified in Schedule 3 to this Order which are in the Cayman Islands up to the value of US$8,195,775.29.
(2) If the total unencumbered value of the assets specified in Schedule 3 to this Order exceeds US$8,195,775.29, the Respondent may remove any of those assets from the Cayman Islands or may dispose of or may deal with them so long as the total unencumbered value of the assets specified in Schedule 3 and still in the Cayman Islands remains above US$8,195,775.29.
3. DISCLOSURE OF INFORMATION
Each Respondent must provide the Applicants' attorneys with the following information within 7 days from the date this order is served on it:
(1) Full details of the location of any assets held, either directly or indirectly, by the First, Second, Third or Fourth Respondents which were invested by the Applicants and/or any other individuals in the Sports Trading club and the STC Sports Trading Club Partnership in the Cayman Islands or otherwise.
4. USE OF INFORMATION
To the extent that the Applicants obtain any information as a result of this Order such information may be used by the applicants in the proceedings it has issued against the Respondents and others in Australia and includes for the avoidance of doubt any enforcement action in relation to those proceedings.’
This Order was granted ex parte and the Injunction was to remain in force until the return date. On the 27 November 2015 the Applicants filed a summons for continuation of the Injunction until further order of the Court, and the return date set was 27 January 2016. On the 15 January 2016 the Third Respondent filed a summons seeking a variation of the Injunction Order. This also came on for hearing before the Chief Justice on 27 January 2016.
On the 27 January 2016, by consent of the Applicants and the Second and Third Respondent it was ordered (a) that both summonses be adjourned for a date to be fixed, not before 10 February 2016, and (b) that the Injunction remain in force until further order of the Court.
The Applicants' Summons sets out the present application for the following:
‘for an Order that the Injunction Prohibiting Disposal of Assets in the Cayman Islands made on 2nd November 2015 continue in force until further order of the Court’
The Summons by the Third Respondent sets out the application for the following:
‘..that the Order herein made on 2 November 2015 (‘the Order’) may be varied by inserting the following paragraph after paragraph 2 of the Order: Exceptions to this Order
This Order does not prevent the Third Respondent from paying out of the accounts held by the Third Respondent at Cayman National Bank, being the accounts of the Third Respondent referred to in Schedule 3 to this Order (‘the Banksia Accounts’), the following sums in respect of legal advice and representation:
(1) To HSM Chambers, the Second and Third Respondent's Cayman Island attorneys, the legal fees incurred by the Second and Third Respondents, or either of them, as parties to this action up to and including the 27 January 2016 less the sum of US$9,965.00 paid by the Second Respondent's mother on account of such fees;
(2) To HSM Chambers, such further reasonable sums incurred by the Second and Third Respondents, or either of them, as parties to this action;
(3) To Jeff Horsey, solicitor, of Upper Coomera, Queensland, Australia, such further reasonable sums incurred by the Second and Third Respondents, or either of them, or by Bella Development Limited or East Ocean Capital Limited as parties to an action proceeding in the Supreme Court of New South Wales, Equity Division, Case No. 20115/332497;
Provided that, in respect of the sums referred to in sub-paragraphs ( 2) and (3) above, no withdrawal from any of the Banksia Accounts shall be made unless and until the Third Respondent's Cayman Islands attorneys shall have given 14 days' notice in writing to the Applicants' Cayman Islands attorneys specifying the sum to be withdrawn, the account from which such sum is to be withdrawn and full details of the relevant fees comprised within such sum and if the Applicant's Cayman Island attorneys shall within such period of 14 days serve notice in writing on the Third Respondents' Cayman Islands attorneys, objecting to the proposed withdrawal and stating the grounds of such objection, the withdrawal shall not be made without further order of the Court’
The matter was reassigned to me by the Chief Justice on or about 26 February 2016, and both summonses came on for hearing on the 28 April 2016.
The relevant law is section 11A of the Grand Court Law (2015 Revision)(‘the Grand Court Law’), which places on a statutory footing the jurisdiction of this Court to grant interim relief in aid of foreign proceedings.
The Applicants are 132 investors who invested (or loaned) money to an entity known as the “Sports Trading Club” which operated in Australia.
At the time when the Injunction was granted on 2 November 2015, the proceedings that were intended to be brought in Australia had not yet commenced. However, they have since been brought. On 12 November 2015, the Applicants (and other investors in the Sports Trading Club), commenced substantive proceedings in the Supreme Court of New South Wales against a number of defendants, including the First, Second, and Third Respondent. Broadly, that claim is for the following: breach of contract, restitution, misleading and deceptive conduct in contravention of certain Australian statutes, the torts of deceit, conversion and conspiracy and claims arising out of the existence of a constructive trust.
At the ex parte hearing, the application was supported by the affidavit of Kevin Sorgiovanni, sole director and shareholder of the first-named applicant Harvey River Estate Pty Ltd, sworn 29 October 2015, and that of Kenneth Gamble, sworn 30 October 2015. Mr. Gamble is a private investigator, and Executive Director of Gamble Investigations International, based in Sydney, Australia.
For this hearing, Mr. Gamble has also sworn another three affidavits, and before me are affidavits of Arabella Foster (2), of Michael Ryan (2) (a former associate of the First Respondent Peter Foster), of Norman Covich (a friend of Mr. Ryan's), and of William Duffy, Attorney for Sportstraders Limited.
The Applicants' underlying claim is set out in detail in the skeleton argument for the 2 November hearing, as well as in Mr. Gamble's First Affidavit.
The Sports Trading Club invited membership to the club through a document named ‘Associate Membership Proposal’ (the ‘STC Prospectus’) through what is described as a ‘Loan and Profit Share Agreement’, although in reality the loans appeared to be treated and referred to by the club and the Applicants interchangeably as investments and loans.
The scheme as described by the Applicants is as follows:
-
1.1 Members could loan (invest) a minimum of AU$50,000 and a maximum of AU$250,000 to the Sports Trading Club Partnership;
-
1.2 The period of the loan/investment was between one and three years;
-
1.3 STC Australia would (it said) invest the money in the ‘lucrative sports trading industry’ (essentially sports betting) and members would earn 50% of the profits made on the trades;
-
1.4 Members could follow the trades on the Club's website and would receive alerts;
-
1.5 Profits could be withdrawn monthly based on a formula.
Mr. Lowe Q.C., who appears for the Applicants, submits that the Club appears to have been an elaborate scam promoted through a sales and marketing campaign in Australia. Reference was made to the ‘pitch document’ and to an advertisement, which offered the opportunity to‘change your life in 44 seconds. Earn $5000 per week’.
On the basis of the representations made in the STC Prospectus and the pitch document, the Applicants ‘loaned’ sums above AU$50,000 to STC Australia, being approximately AU$9,176,000 in total. Each of the Applicants signed a Loan and Profit Share Agreement.
Following an Australian news story about the Sports Trading Club (and Mr. Foster) on 30 October 2014, the General Manager of STC Australia, Anne Larter, sent an email to all investors offering them the opportunity to terminate their accounts and receive a refund. The Applicants all requested a refund (albeit some did so after a deadline purportedly put in place by STC Australia had expired).
The Applicants say that other than payments of principal, none of which were paid in full, totaling AU$180,147.55 to 16 of the 132 Applicants, no payments whatsoever (whether by...
To continue reading
Request your trial