Torchlight Gp Ltd v Millinium Asset Services Pty Ltd and Eight Others

• Jurisdiction: Cayman Islands
• Judge: (Kawaley, J.)
• Judgment Date: 17 January 2018
• Date: 17 January 2018
• Court: Grand Court (Cayman Islands)

Grand Court, Financial Services Division (Cayman Islands)

(Kawaley, J.)

TORCHLIGHT GP LIMITED

and

MILLINIUM ASSET SERVICES PTY LIMITED and EIGHT OTHERS

T. Lowe, Q.C., J. Verbiesen and A. Brown for the fifth to ninth defendants;

J. Wardell, Q.C., A. Mold, B. Hobden, E. Bodden and J. McErlean for the plaintiff.

Cases cited:

(1)Aldi Stores Ltd. v. WSP Group plc, [2007] EWCA Civ 1260; [2008] 1 W.L.R. 748; [2008] C.P. Rep. 10; [2008] B.L.R. 1, referred to.

(2)Att. Gen. v. Butterworth, [1963] 1 Q.B. 969, [1962] 3 All E.R. 326; (1962), L.R. 3 R.P. 327, considered.

(3)Braga v. Equity Trust Co. (Cayman) Ltd., 2011 (1) CILR 402, followed.

(4)Crest Homes plc v. Marks, [1987] A.C. 829; [1987] 2 All E.R. 1074, followed.

(5)Digicel (St. Lucia) Ltd. v. Cable & Wireless plc, [2010] EWHC 774 (Ch), not followed.

(6)Harman v. Home Secy., [1983] 1 A.C. 280; sub nom. Home Office v. Harman, [1982] 1 All E.R. 532, followed.

(7)Hutchinson Ltd. v. Cititrust (Cayman) Ltd., 1998 CILR 43, referred to.

(8)IG Index Ltd. v. Cloete, [2014] EWCA Civ 1128; [2015] I.C.R. 254, [2014] C.P. Rep. 44, considered.

(9)Miller v. Scorey, [1996] 1 W.L.R. 1122; [1996] 3 All E.R. 18, considered.

(10)Nilon Ltd. v. Royal Westminster Invs. SA, [2015] UKPC 2; [2015] 3 All E.R. 372; [2015] 2 BCLC 1; [2015] BCC 521, followed.

(11)OBG Ltd. v. Allan, [2007] UKHL 21; [2008] A.C. 1; [2007] 2 W.L.R. 920; [2007] 4 All E.R. 545; [2007] Bus. L.R. 1600; [2007] BPIR 746; [2007] IRLR 608, followed.

(12)Shaw v. Shaw (1871), 164 E.R. 1097; 2 Sw. & Tr. 517, referred to.

(13)Standard Charter Bank v. Pakistan Natl. Shipping Corp., [2002] UKHL 43; [2003] 1 A.C. 959; [2002] 3 W.L.R. 1547; [2003] 1 All E.R. 173; [2002] BCC 846; [2003] 1 BCLC 244; [2002] C.L.C. 1330; [2003] 1 Lloyd’s Rep. 227, followed.

(14)Sybron Corp. v. Barclays Bank plc, [1985] Ch. 299; [1984] 3 W.L.R. 1055; (1984), 81 L.S. Gaz. 1598, followed.

(15)Wagner v. Gill, [2014] NZCA 336; [2015] 3 NZLR 157, referred to.

Legislation construed:

Grand Court Rules 1995 (Revised), O.3, r.5: The relevant terms of this rule are set out at para. 77.

O.11, r.1(1):

“(1) Provided that the writ does not contain any claim mentioned in Order 75, rule 1(3) service of a writ out of the jurisdiction is permissible with the leave of the Court if in the action begun by the writ—

. . .

(c)the claim is brought against a person duly served within or out of the jurisdiction and a person out of the jurisdiction is a necessary or proper party thereto;

(d)the claim is brought to enforce, rescind, dissolve, annul or otherwise affect a contract, or to recover damages or obtain other relief in respect of the breach of a contract, being (in either case) a contract which—

  (i)was made within the jurisdiction; or

  (ii)  was made by or through an agent trading or residing within the jurisdiction on behalf of a principal trading or residing out of the jurisdiction; or

  (iii)  is by its terms, or by implication, governed by the law of the Islands; or

  (iv)  contains a term to the effect that the Court shall have jurisdiction to hear and determine any action in respect of the contract;

(e)the claim is brought in respect of a breach committed within the jurisdiction of a contract made within or out of the jurisdiction, and irrespective of the fact, if such be the case, that the breach was preceded or accompanied by a breach committed out of the jurisdiction that rendered impossible the performance of so much of the contract as ought to have been performed within the jurisdiction;

(f)the claim is founded on a tort, fraud or breach of duty whether statutory at law or in equity and the damage was sustained, or resulted from an act committed, within the jurisdiction;

(ff)the claim is brought against a person who is or was a director, officer or member of a company registered within the jurisdiction or who is or was a partner of a partnership, whether general or limited, which is governed by the laws of the Islands and the subject matter of the claim relates in any way to such company or partnership or to the status, rights or duties of such director, officer, member or partner in relation thereto . . .”

O.11, r.1(4): The relevant terms of this paragraph are set out at para. 76.

O.24, r.22: The relevant terms of this rule are set out at para. 65.

O.41, r.5: The relevant terms of this rule are set out at para. 81.

Crown Entities Act 2004 (NZ): s.121(2): The relevant terms of this sub-section are set out at para. 95.

s.126: The relevant terms of this section are set out at para. 96.

Civil Procedure — service of process — service out of jurisdiction — may be set aside for abuse of process if obtained in breach of implied undertaking not to use documents or information disclosed in separate proceedings without express permission or leave of court — leave not granted on ex parte application unless evidence of defendant’s informed consent — court may release implied undertaking in special circumstances where no injustice to defendant

The plaintiff brought proceedings against the defendants for unlawful means conspiracy.

The plaintiff was the general partner of a Cayman Islands exempted limited partnership. It was the respondent in winding-up proceedings commenced in June 2015 (“the petition proceedings”). The co-petitioners in those proceedings were the fifth defendant (“ACC”), the seventh defendant (“CAML”) and Aurora Funds Management Ltd. (“Aurora”).

The first defendant (“MAS”) and the second defendant were Australian companies alleged to be directed and controlled by the third defendant (Mr. Wallace). MAS was said to have engaged in a competing strategy with the Cayman partnership in relation to a hotel group. The fourth defendant (Mr. Marshall) was involved in advising a group of the Cayman partnership’s limited partners. It was alleged that Mr. Marshall “harbours personal animus” towards the plaintiff’s chairman. ACC was a New Zealand Crown entity responsible for that country’s accident compensation scheme. Its chief investment officer was the sixth defendant (Mr. Bagnall), who was said to be a directing mind of ACC. ACC and CAMLwere both limited partners of the Cayman partnership. The eighth defendant (Mr. Traveller) and the ninth defendant (Ms. Burleigh) were the chairman and general manager, respectively, of CAML.

The present proceedings were commenced against the first to seventh defendants in July 2016. The plaintiff was granted leave to serve the defendants out of the jurisdiction in two ex parte orders, the first, in September 2016, for service on the first to seventh defendants, and the second, in July 2017, for service on the eighth to ninth defendants. Service was to be acknowledged within 14 days.

In its amended statement of claim, the plaintiff’s primary allegation was an unlawful means conspiracy in which it alleged, inter alia, that ACC and CAML had acted with a common aim to replace it as the general partner of the Cayman partnership so as to achieve an early exit; that they had disclosed confidential information and made false complaints against the plaintiff and commenced the petition proceedings in furtherance of the common aims. The intention to cause harm could be inferred because if the common aims were achieved the Cayman partnership would be prevented from realizing the long-term benefits of its assets and the plaintiff deprived of its fee entitlements. The unlawful means pleaded were breach of contract and/or confidence; procuring or inducing a breach of contract and/or confidence; and unlawful interference. In support of its claims, the plaintiff relied upon the terms of the limited partnership agreement (“the LPA”), which restricted early exit rights for limited partners and stipulated a duty to protect confidentiality of information about the partnership.

The fifth to ninth defendants sought to set aside the first and second ex parte orders on the grounds that (a) the proceedings against them were an abuse of process because (i) they relied upon documents and/or information disclosed in the petition proceedings which were deployed in breach of the plaintiff’s implied undertaking to the court not to use such documents and information for any collateral purpose; and (ii) the proceedings, particularly as regards the individual defendants, had been first threatened while they were actual and/or potential witnesses in the petition proceedings; and (b) the amended statement of claim did not disclose a serious issue to be tried as regards the relevant causes of action, the onus being on the plaintiff to meet this limb of the legal requirements for obtaining leave to serve an overseas party not otherwise subject to the personal or territorial jurisdiction of this court.

The plaintiff’s first ex parte application for leave to serve out was supported by an affidavit sworn by an associate attorney with the plaintiff’s attorneys. (That evidence was subsequently confirmed by one of the plaintiff’s directors whose affidavit was sworn in December 2016.) The deponent explained that the basis for the application was founded on the fact that “as a result of the detailed review of the Petitioners’ disclosure in May 2016, it became clear that the Petitioners do not have a genuine bona fide belief that the General Partner has been guilty of serious misconduct as alleged but have joined forces with a view to achieving a number ofdisparate aims.” The deponent also referred to the “conspiracy letter of claim” which had been sent to the defendants’ attorneys in June 2016. In it, it was asserted that ACC had acted through Mr. Bagnall and that unfounded criticisms had been made and published about the plaintiff’s stewardship of the Cayman partnership, with a view to obtaining an early exit for ACC and CAML. The letter alleged, further, that ACC and CAML had made their files available to MAS in breach of the confidentiality provisions. At the time of the letter, and later at the date of the first ex parte order, Mr. Bagnall was a potential...