Torchlight GP Ltd v Millinium Asset Services Pty Ltd

• Jurisdiction: Cayman Islands
• Judge: Kawaley
• Judgment Date: 27 October 2020
• Court: Grand Court (Cayman Islands)
• Docket Number: CAUSE NO. FSD 114 OF 2016 (IKJ)

Torchlight GP Limited

Plaintiff

and

(1) Millinium Asset Services Pty Limited

(2) Millinium Capital Managers Limited

(3) Thomas James Wallace

(4) Gregory Philippe Marshall

Defendants

Before:

The Hon. Justice Kawaley

CAUSE NO. FSD 114 OF 2016 (IKJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

HEADNOTE

Application by plaintiff to strike-out portions of Defence on issue estoppel and/or abuse of process—legal effect of judgment delivered in public interest after parties had reached settlement of related proceedings-application by defendants to strike-out portions of Statement of Claim based on points of law and pleading complaints after close of pleadings-principles governing exercise of discretion to strike-out-foreign defendants making and withdrawing jurisdictional challenge-whether subsequent strike-out application debarred by res judicata or as an abuse of process

Appearances:

Mr John Wardell QC of counsel and Mr Andrew Mold QC of counsel, Mr Ben Hobden, Mr Erik Bodden and Mr Jordan McErlean of Conyers Dill & Pearman on behalf of the Plaintiff

Mr Roger Stewart QC of counsel and Mr David Herbert of counsel and Mr Christopher Levers and Mr Luke Burgess-Shannon of Mourant Ozannes on behalf of the 1 ^st to 3 ^rd Defendants (“D1–3”/“MAS Parties”)

IN OPEN COURT

RULING

INTRODUCTORY

1 The Plaintiff is the General Partner of Torchlight Fund LP (“the Cayman Partnership”). It was the respondent in winding-up proceedings commenced against it in this Court on or about June 18, 2015 in Cause No. FSD 103 of 2015 (RMJ) (the “Petition Proceedings”). Those proceedings were commenced on June 18, 2015. The co-petitioners in the Petition Proceedings were the former 5 ^th Defendant herein, Accident Compensation Corporation of New Zealand (“ACC”), the former 7 ^th Defendant herein, Crown Asset Management Limited (“CAML”) and Aurora Funds Management Limited (“Aurora”).

2 The present proceedings were commenced against the 1 ^st to 7 ^th Defendants on July 26, 2016. D1–3 were all served abroad (pursuant to the Order of McMillan J dated September 15, 2016. On October 25, 2017, they withdrew a Summons seeking to set aside service on them, implicitly accepting that there was a serious issue to be tried on the merits of the claims asserted against them by the Plaintiff in the original Statement of Claim. On, November 1, 2017 the Amended Writ and Statement of Claim was filed (the “ASOC”). The amendments primarily related to the addition of Gary Traveller and Sharon Burleigh as 8 ^th and 9 ^th Defendants to the present action. The 5 ^th to 7 ^th Defendants made a jurisdictional challenge to the said McMillan J September 16, 2016 Order which I rejected on January 17, 2018 1.

3 The Petition proceedings came to a somewhat unusual end. The substantive hearing of the Petition lasted for 41 days, commencing in February 2017 and concluding on December 1, 2017 before McMillan J. Less than a week before the draft Judgment was circulated to the parties for editorial comments, the parties notified the Court that a settlement had been reached. By a Consent Order dated July 11, 2018, the Petition was withdrawn with no Order as to costs. The Judge circulated the draft of a judgment running to 366 pages to the parties on July 16, 2018. The magnum opus itself was formally delivered two months later: In Re Torchlight Fund LP, FSD 103/2015 (RMJ), Judgment dated September 25, 2018 (unreported) (the “Petition Judgment”). At the beginning of the Petition Judgment, McMillan J explained why he had proceeded to deliver it despite a settlement having been reached:

“ 2. On 10 July 2018, at a time when the Court had essentially completed but not circulated its Judgment in these proceedings to the Parties, the Court was informed that a confidential settlement had been reached between the Parties. As a result, the Court was invited, and agreed, to withdraw the Petition with no order as to costs. In such circumstances, the Court has an independent discretion to decide whether to deliver its Judgment or not. Having carefully considered the views of the parties and the relevant authorities such as the Court of Appeal's judgment in Barclays Bank v Nylon Capital LLP [2012] ALL ER (Comm) 912, the Court determined that there were two specific reasons that weighed in favour of this Judgment being published. First, Mr. George Kerr and Mr. Russell Naylor have been heavily criticised by the Petitioners in the course of these proceedings and their professional standing has been consistently impugned. Not only are Mr. Kerr and Mr. Naylor entitled to know that they have been exonerated but the public is entitled to know it as well. This is a matter of human rights as much as it is a matter of commercial law, and in this context public access to justice is paramount. Secondly, there has arisen a number of issues of law which in the opinion of the Court are of general significance both to the legal profession and to the public at large. Accordingly, there is a strong public interest that these rulings of the Court be made public and the Court has therefore determined in its discretion to issue this Judgment.”

4 D1–3 issued a Summons for Directions herein on July 3, 2019. D1–3 filed an Amended Defence on September 3, 2019. The Plaintiff filed a Reply to the Defence of the First to Third Defendants on September 24, 2019. Paragraph 58 of the Reply averred as follows:

“ 58. The contents of Appendix I are liable to be struck out on the basis that the allegations contained therein: seek to go behind findings in the Petition Judgment; are irrelevant to the present claims, and are embarrassing for their lack of particularity or scandalous …”

5 On September 30, 2019, the Plaintiff issued a Summons (the “Plaintiff's Strike-out Summons”) which sought relief principally as follows:

“ 1. That parts of the First to Third Defendants Amended Defence be struck out in accordance with the enclosed schedule.”

6 These two Summonses were initially listed for hearing on November 5, 2019 when directions were given in relation to the Plaintiff's Summons and the Summons proposed to be issued by D1–3. D1–3 subsequently issued a Summons under GCR Order 24 rule 10 on December 23, 2019 seeking production of the agreement evidencing the settlement of the Petition Proceedings (“Production Summons”/“Settlement Agreement”). At the beginning of the hearing on January 21, 2020, the Plaintiff's counsel indicated that they did not object to an Order in terms of paragraph 1 of the Production Summons. D1–3 sought the costs of their Summons and I directed that the costs of the Production Summons should be dealt with as part of the costs of the Plaintiff's Strike-out Summons. D1–3 also issued their own strike-out Summons on November 15, 2019 (“D1–3's Strike-out Summons”).

7 The relief sought under D1–3's Strike-out Summons was described in the supporting Skeleton Argument as follows:

“ 1.1. To strike out the Conspiracy Proceedings in their entirety as against the 2nd Defendant, Millinium Capital Managers Limited (“MCM”) pursuant to GCR O.18, r.19(1)(a) as disclosing no reasonable cause of action; and

1.2. Further or alternatively, to strike-out as against each of the MAS Parties the following parts of the Amended Statement of Claim:

1.2.1. The claim for breach of contract;

1.2.2. The claim in the tort of unlawful interference; and

1.2.3. The claim for procuring and/or inducing a breach of confidence.”

8 Judgment was reserved on January 24, 2020 in relation to the Plaintiff's and D1–3's respective Strike-out Summonses.

OVERVIEW OF PLEADINGS

The Amended Statement of Claim (“ASOC”)

9 The Indorsement of Claim on the Amended Writ summarises the Plaintiff's claims as being for the following relief:

“ 1. That it be compensated by way of damages for its causes of action relating to:

• a. unlawful means conspiracy;

• b. breach contract and/or breach of confidence;

• c. procuring or inducing a breach of contract and/or breach of confidence;

• d. unlawful interference.”

10 The pleading is not a threadbare one; it runs to 69 pages. The ASOC avers that the Plaintiff sues on its own behalf and on behalf of the Cayman Partnership (Paragraph 1). D1 (“MAS”) is said to be a subsidiary of D2 (“Millinium”); both are Australian companies. It is alleged that at all material times D1–2 acted by D3 (“Mr Wallace”), whose knowledge and intentions are to be imputed to each company. MAS is said to have been a competitor of the Cayman Partnership competing in relation to a company in which both MAS and the Cayman Partnership had interests, the Lantern Hotel Group (“Lantern”) (paragraph 3). The main allegations, as against D1–3, include the following:

• (a) the Defendants conspired together to replace the Plaintiff as General Partner with MAS and to further D1–2's competing strategy in relation to Lantern (paragraph 9). The acts of conspiracy relied upon are particularised (paragraph 10);

• (b) it is explained that the conspiracy allegations are relied upon as a defence to the Petition (paragraph 11);

• (c) the factual basis of the case against D1–2 in relation to Lantern, allegedly using confidential information received from the Cayman Partnership in furtherance of their competing strategy is set out (paragraphs 50–60);

• (d) specific acts of Mr Wallace are described (paragraph 64);

• (e) the conducting of a media campaign against the Cayman Partnership using its confidential information is described (paragraphs 66–67A);

• (f) pressure said to have been put on the Cayman Partnership's auditors is set out (paragraphs 68–70, 89);

• (g) averments are made in relation to the attempt to take over the Cayman Partnership (paragraphs 71–78);

• (h) attempts to apply pressure on the Plaintiff are also pleaded (paragraphs 81–82, 85–87);

• (i) further competitive conduct in relation to Lantern is also set out (paragraph 88); and

• (j) the...