Midtown Acquisitions LP v Essar Global Fund Ltd

• Jurisdiction: Cayman Islands
• Court: Grand Court (Cayman Islands)
• Judge: Ingrid Mangatal
• Judgment Date: 27 November 2017
• Docket Number: CAUSE No. 159 of 2016 (IMJ)
• Date: 27 November 2017

Between

Midtown Acquisitions LP

Plaintiff

and

Essar Global Fund Limited

Defendant

Before:

The Hon. Justice Ingrid Mangatal

CAUSE No. 159 of 2016 (IMJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

HEADNOTE

Summary Judgment application in relation to foreign judgment — application to re-open and provide new evidence — Defendant putting forward defence, in particular fraud, in varying ways in different jurisdictions — Court's power to change its decision after judgment handed down but order not yet sealed .

Appearances:

Mr. J Eldridge and Mr. P Smith of Maples and Calder for the Plaintiff

Mr. U Payne and Mr. P Murphy of Ogier on behalf of the Defendant

IN CHAMBERS

Introduction

1 This is the application of the Plaintiff, Midtown Acquisitions, L.P. (“Midtown”), to reopen its summary judgment application made by summons dated 26 October 2016 and to introduce additional evidence, including the Fifth and Sixth Affidavits of Benjamin Finestone, sworn respectively on 4 May 2017 and 23 June 2017. The application is opposed by the Defendant Essar Global Fund Limited (“EGFL”).

2 The summary judgment application came on for hearing before me on 10 January 2017, and my written judgment (“the Judgment”) was delivered on 2 May 2017. I refused the summary judgment application. The order that follows from the Judgment has not yet been sealed, and Midtown's Counsel, Mr. Eldridge, submits that accordingly, the Court has jurisdiction to re-open the application, which Midtown seeks on the basis of material developments following the delivery of the Judgment.

Background

3 Midtown sought summary judgment to enforce the judgment of the New York Supreme Court in the amount of US$171,769,169.00 dated 25 August 2016 (“New York Judgment”).

4 At paragraphs 58 and 59 of the Judgment, I gave the essence of my reasons for refusing the summary judgment application, as follows:

“58. In my judgment, EGFL does have a real prospect of succeeding on a defence that the Confession Judgment was obtained by ‘fraud, misrepresentation or other misconduct’ as construed under New York law, enforcement of the Confession Judgment would be contrary to public policy or that the Confession Judgment was obtained in breach of the principles of natural justice. I do not wish to go into this in great detail, but some of my reasons for so holding are that, although the Affirmation in support of the Confession Judgment referred to certain terms of a Term Sheet, the Term Sheet was not attached or disclosed to the New York Court. Also, EGFL assert that the affirmation is based on a default under the guaranty that predated the Term Sheet after the parties had entered into, and EGFL had performed, under the Term Sheet, and which settled and compromised the pre-existing default under the guaranty.

59. Further EGFL claim that both the Confession of Judgment and the Affirmation in Support of the Entry of Judgment were filed without any advance or other notification to it.”

5 As I pointed out at paragraphs 45 and 46 of the Judgment, at the hearing Counsel had alerted me to the fact that there were applications pending in New York to vacate the judgment. However, I had not at that time been informed that there were other applications pending in the High Court of England and Wales (“English High Court”) and in the Dubai International Financial Centre Court (“DIFC Court”) seeking recognition and enforcement of the New York Judgment. I was made aware of those proceedings simply by being sent the judgments of those Courts by Counsel for Midtown, sometime after I had reserved judgment. There was not at that time any attempt to introduce further evidence. It appears to me that Counsel for Midtown did not then appreciate the difference between putting before the Court new material in the form of evidence, as opposed to making available to the Court decisions of Courts in other Jurisdictions.

6 After I handed down the Judgment, Midtown requested a hearing to address the appropriate orders to be made consequent on the Judgment which determined that Midtown's summary judgment application should be refused on the basis that there were issues to be tried. A hearing was scheduled for 8 May 2017. However, at the hearing, Mr. Payne, Counsel for EGFL, sought an adjournment in order to respond to Finestone 5 and this was granted.

7 Midtown subsequently filed its application to re-open the summary judgment application, on 23 June 2017 and this is now the application to be addressed by this Court. In addition to Finestone 5 and 6, Midtown has now filed Finestone 7–10 (inclusive), sworn respectively, on 14 July, 15 August, 16 August, and 18 August 2017.

8 EGFL has filed the second affidavit of Mr Meister, sworn 6 July 2017.

Mitltown's application

Developments in the New York proceedings

9 Midtown considers that one of the most important developments is that, on 18 May 2017, the New York Court dismissed EGFL's motions effectively on procedural grounds: that Court found that the 5015 Motion was not the correct procedure to set aside a judgment said to have been wrongfully obtained; and in any event it was not supported by admissible evidence. The 317/3218 Motion was denied because it was “duplicative”. The Defendant has not commenced a “plenary” action, and has instead embarked on an appeal of the dismissal of the 5015 and 317/3218 Motions.

10 The New York Court, the duty Judge of the Appellate Division of the Supreme Court of the State of New York, and the Appellate Division of the Supreme Court of the State of New York have each denied EGFL's applications for a stay pending appeal.

11 On 11 August 2017, the New York Court ordered EGFL to produce certain documents that will facilitate the enforcement of the New York Judgment.

EGFL's Different Stances in Different Jurisdictions

12 Whilst EGFL pursued the public policy defence before this Court, it did not do so before the English High Court. Nor did EGFL pursue this defence before the DIFC Court.

13 Whilst EGFL pursued its natural justice defence before this Court, it has not done so on appeal in either England or Dubai.

14 Whilst, in relation to the defence of fraud, EGFL maintained an allegation of conscious and deliberate deception before this Court, it appears not to have done so before the English and Dubai Courts.

15 Midtown has also sought to have evidence of its enforcement efforts in BVI, Delaware, and Mauritius put before the Court. However, to my mind, that is not relevant for this issue now before me.

16 At paragraph 37 of its written skeleton argument, Midtown submits that the fact that the case has been advanced differently in these different jurisdictions is concerning. Further, that this only came to light after the January hearing and is new evidence that this Court can properly take into account.

17 The submission continues by claiming that this Court was updated as to those developments while it reserved judgment but, in the event, declined to grant summary judgment. I must confess I find this latter submission strange. To my mind simply sending to this Court judgments of other Courts, without seeking to adduce any new evidence, did not update this Court on anything except what the Judges in those different Courts had ruled. That those Courts made the rulings they did based upon the evidence and arguments advanced before them I had no doubt. That is precisely why, at paragraph 63 of my earlier Judgment, I made the point that I had to make my ruling on the law and facts and cases as presented to me. Judgments of other Courts are not evidence, and nor do the contents of Judgments become evidence in a case before another Judge, as far as I know.

18 Perhaps Midtown's Attorneys should have filed their application to re-open the hearing before I had ruled, rather than simply forwarding on to me decisions in other Courts in respect of applications of which I had not even been made aware at the hearing before me. As far as I knew at the hearing before me, the only proceedings of concern were those taking place in New York.

19 Be that as it may, Midtown also submits that even if the Court is not minded to reconsider the decision to grant summary judgment, the different way in which the defence has been advanced is highly relevant to this Court's exercise of its wide discretion to impose conditions, because it demonstrates that the defence is plainly “shadowy”. Furthermore, the Court had already expressed concerned about the fact that by EGFL's own admission it has failed to make any other payments — see paragraph 60 of the Judgment. When all of these factors are taken together, it was submitted that there are ample reasons for imposing a condition on leave to defend, requiring that EGFL make a payment into Court of US$99 .9 million, the amount indisputably owed at the time of the hearing.

EGFI's Submissions

20 It would appear that the parties agree upon the principles upon which the Court may exercise its discretion to receive new evidence after judgment has been given but before an order has been drawn up. They also agree upon the principles of law regarding the discretion that a Judge has to change a decision before the Order is drawn up. I discuss the relevant law below.

21 EGFL submits that the evidence which Midtown wishes to have admitted would probably not have an important effect on the result of the case, but if the Court determines otherwise, it would in any event not be sufficient to allow Midtown's application for summary judgment to succeed.

22 Mr. Payne referred to paragraphs 58 and 59 of my Judgment, and said at paragraph 15 of his submissions:

“15. The Factual Determinations were the basis for the Legal Determinations which led the Court to conclude that EGFL does have a real prospect of successfully defending the Plaintiff's claim.”

23 It was submitted that the additional...