“The claimants’ case in summary is that in the course of 2011 Mr Cerchione and Mr D’Avanzo, acting in concert with the other defendants, designed and implemented a dishonest scheme to reorganise the Blue Skye Fund and its assets. The purpose and effect of the scheme was to diminish or eliminate the claimants’ rights and interests in the investment property and underlying Italian assets, to take the control and benefit of the assets for themselves, and to enable them and their associated entities to extract fees and other value from the assets without reference to or oversight from the claimants.”
“Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case.”
“Article 4 General rule 1. Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur. 2. However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply. 3. Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.”
“The place where the damage occurred (within the meaning of the first part of the jurisdictional rule in the Bier case) is not the place where a claimant simply suffers financial loss. It is necessary to see where the event giving rise to the damage produced its 'initial', 'direct', 'immediate' or 'physical' harmful effect. For example, in the Bier case, the direct loss was the application of saline waste to the nursery. In the Dumez France case (see §13 of the Judgment) the initial or direct damage was the withdrawal of support to the subsidiary. The harm to the plaintiffs in the Dumez France case was 'merely the indirect consequence of the financial losses initially suffered by their subsidiaries'. In the Marinari case it was the initial or direct act of interference with the notes.”
“should be understood as an ‘escape clause’ from Article 4(1) and (2), where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with another country.”
“It seems clear to me that I cannot decide this question without a full understanding of the facts. At the moment, I would regard it as likely that Cyprus law is the same as English law, and, in any event, am safe in adopting the presumption (which I could not adopt in relation to Kazakh law because I am told, as was Teare J, that there is no law of conspiracy in Kazakh law) that Cyprus law is the same as English law so far as the common law of conspiracy is concerned (see Dicey, Morris & Collins The Conflict of Laws (14th Ed) 9-025 and supplement), but even without the alternative candidacy of Cyprus law, I would regard it as a serious issue to be tried as to whether English law is the proper law of the tortious acts alleged.”
“For my part I consider that the judge was wise to conclude that he could not reach even a provisional view as to the likely proper law of the tort without a full understanding of the facts. In concluding that there is a serious issue to be tried whether English law, or perhaps some other system of common law derived therefrom such as that of Cyprus, is the governing law, he did not I think err in his assessment. An assessment at this stage which ruled out the serious prospect of English law or some other common law derivation therefrom ultimately being shown to be the proper law of the obligations would, I think, have been over-confident. ”
“As a UK limited partnership with the general partner registered in Guernsey, it is ‘regulated upstairs and downstairs’”
“In misappropriation cases, it seems appropriate to locate damage at the place where an asset (tangible or intangible) is taken from the claimant’s control.”
“...there is no logical reason why [the rule against reflective loss] should not apply to a shareholder in his capacity as a creditor of the company expecting repayment of his debt. Indeed, it is hard to see why the rule should not apply to a claim brought by a creditor (or indeed, an employee) of the company concerned, even if he is not a shareholder. While it is unnecessary to decide the point, as [the creditor] was a shareholder in [the debtor], it is hard to see any logical or commercial reason why the rule against reflective loss should apply to a claim brought by a creditor or employee, who happens to be a shareholder, of the company, if it does not equally apply to an otherwise identical claim by another creditor or employee, who is not a shareholder in the company.”
“or by way of payment by Stepstone”
“I can see nothing in the judgment of Neuberger LJ in Gardner (at paras 67-75) which mandates, or even suggests, the conclusion that a claim by a secured creditor attracts the rule against reflective loss. For reasons already given, it seems to me that there are fundamental distinctions between the position of an unsecured creditor and a secured creditor. No duty is owed by the receiver to the unsecured creditor and the unsecured creditor has no primary entitlement to the claimed loss. The unsecured creditor's prejudice arises only through the depletion of the assets of the company not, as in the present case, where the secured creditor has the primary entitlement to obtain and retain all damages awarded for the breaches of duty.”
“3 Assignment 3.1 The assignment contained in this clause 3: (a) is given to the Security Trustee as trustee for the Finance Parties; (b) secures the payment and discharge of the Secured Obligations; and (c) is given with full title guarantee. 3.2 The Assignor assigns absolutely all of the Rights which it now has and all of the Rights which it obtains at any time in the future in the Assigned Property and in any Rights accruing to, derived from or otherwise connected with them (including proceeds, insurances, guarantees and Security).”
“Article 4 Law applicable 1. Save as otherwise provided in this Regulation, the law applicable to insolvency proceedings and their effects shall be that of the Member State within the territory of which such proceedings are opened, hereafter referred to as the "State of the opening of proceedings". 2. The law of the State of the opening of proceedings shall determine the conditions for the opening of those proceedings, their conduct and their closure. It shall determine in particular… (f) the effects of the insolvency proceedings on proceedings brought by individual creditors, with the exception of lawsuits pending;…”
“Article 15 Effects of insolvency proceedings on lawsuits pending The effects of insolvency proceedings on a lawsuit pending concerning an asset or a right of which the debtor has been divested shall be governed solely by the law of the Member State in which that lawsuit is pending.”
"255. …This exception to the application of the law governing the insolvency proceedings has a twofold explanation: the fact that, as no enforcement action is involved, the principle of collective action inherent in the insolvency proceedings is not impaired; and the close link with the procedural laws of each State resulting from the fact that the lawsuit is already in course. Further explanation. The difference between subjecting individual enforcements to the lex fori concursus and subjecting ordinary processes to the lex fori processus is sufficiently explained if we consider the different consequences of each on the insolvent debtor's estate. In the first case, the creditor satisfies his interest directly. In the second case, he obtains a decision on the merits which does no more than allow him to join the body of creditors with an established claim. 256. The use of the term "solely" is aimed at preventing the cumulative application of different national laws. The meaning of this provision is to refer all questions concerning the possible effect of the opening of insolvency proceedings on lawsuits to the procedural law of the State where litigation is pending (or lex fori processus). This law will decide whether the proceedings are to be suspended or may continue subject to any procedural modification necessary in order to reflect the loss or the restriction of the powers of disposal and administration of the debtor, and the intervention of the liquidator in his place, which all Member States must recognise under Article 16."
“It is possible that the introduction of entirely new causes of action or parties is to be recognised as the bringing of entirely new proceedings, so that the timing of seisin (the article 30 question) has to be looked at from that point of view, as occurs for the purposes of article 27. Even so, it is not clear to me that in this connection article 27 and article 28 work in the same way: for article 27 is worded in terms of the bringing of actions with the same parties and the same cause of action ("Where proceedings…are brought in the courts…") whereas article 28 is worded in terms of the pendency of related actions ("Where related actions are pending in the courts…") (emphasis added). That emphasises that the article 28 question is asked with relation to pending actions, and not, as the article 27 question is asked, with relation to the bringing of actions. In any event, the judge is in my respectful judgment mistaken to think that any amendment is analogous to the bringing of new causes of action or the addition or substitution of new parties. ”
“If the court were persuaded that the new claim had the same objet and the same cause as the original claim, it may conclude that it was in fact and in law pending as from the issue of the original claim form.”
“On or about7 December 2011 , as evidenced by a written acknowledgment of that date, the Blue Skye Fund transferred all its assets to Stepstone by way of satisfaction of a request by Stepstone to withdraw from the Blue Skye Fund.”
“The purposes of the scheme were inter alia to put the Italian Assets beyond the reach and/or out of the ownership of the Blue Skye Fund, Stepstone, Cypress Way, ZBS and/or Fortress VRF I in the event that they might assert a claim against Blue Skye (Lux) or any of its former subsidiaries to control or dispose of those assets. Alternatively, the purposes were to prejudice the interests of those parties in relation to such a claim.”
“Further or alternatively, the Claimants will contend, insofar as necessary, that, for the purpose of section 423, the rights or abilities of the Claimants to recover the proceeds of the Italian Assets from the Blue Skye Fund (via action against Stepstone) and BenLomond (via Stepstone and the Blue Skye Fund) are claims by the Claimants against the Blue Skye Fund for the purpose of section 423 and that the purpose of the transactions was to put the Italian Assets beyond the reach or control of the Claimants in anticipation of those claims or to prejudice the Claimants’ interests in respect of the claims.”
“Section 423(5) defines a victim of a transaction as a person "who is, or is capable of being, prejudiced by it". In choosing the term "victim" and this definition, it is I think clear that it was intended to be a wider category than simply creditors. The words used are ordinary English words with no technical meaning and the correct approach in any given case is to ask whether, on the facts of the case, the claimant is a person who is, or is capable of being, prejudiced by the transaction.”
“In my judgment there is nothing in section 423 which mandates this result. I have already observed that it is a feature of sections 423 to 425 that they are drafted in wide terms, and this is another example of their inbuilt elasticity. It is correct that normally the court would consider that it was not proportionate to hear an application unless it could be shown at that date that there was a person who could benefit by a positive finding under section 423. But there are bound to be cases where that cannot be shown, perhaps because the person who seems to have been prejudiced has to establish his claim in foreign proceedings, or because there are creditors whose claims have not yet matured into present debts….There is as it seems to me a deliberate avoidance of the term "victim" in section 423(1) and (3), which set out the conditions which have to be satisfied before the court can make an order under section 425. On the contrary, all that has to be shown is that the person is making or may at some time make a claim (see section 423(3)(a) and (b)).”
“In the present context, in determining whether a relevant purpose is made out under s. 423(3) it would not matter whether Mr Simpson acted in order to protect his assets from possible claims by Mars or from possible claims by 4Eng. It would be sufficient for 4Eng to establish that he acted for either or both purposes, since it is not a requirement of s. 423(3) that the victim claiming relief in relation to a transaction was the very creditor whose claims the transferor was seeking to defeat – it is sufficient that the transferor acted with the purpose of defrauding any person who had made or might make a claim against him (see the reference in general terms in s. 423(3) to "a person who is making, or may at some time make, a claim against [the transferor]" and Sands v Clitheroe[2006] BPIR 1000 ).”
“I particularly note from the foregoing that Sir Donald Nicholls [in Re Paramount Airways] regarded no one factor as decisive. Each case will turn on its own facts with the weight to be given to connecting factors or their absence dependent on their real significance having regard to the overall situation. In Jyske Bank (Gibraltar) Limited v Spjeldnaes[1999] 2 BCLC 101 Evans-Lombe J, whose experience in this field is very considerable, exercised the jurisdiction even though as he expressly recognised there were present none of the sort of connections with England which the Vice Chancellor had set out.”
“(1) Unless the court orders otherwise, a claimant who discontinues is liable for the costs which a defendant against whom the claimant discontinues incurred on or before the date on which notice of discontinuance was served on the defendant. (2) If proceedings are only partly discontinued – (a) the claimant is liable under paragraph (1) for costs relating only to the part of the proceedings which he is discontinuing; and (b) unless the court orders otherwise, the costs which the claimant is liable to pay must not be assessed until the conclusion of the rest of the proceedings.”
“5. In most cases, in order to show good reason, the Claimant will need first to show a change of circumstances since the claim was made. This will demonstrate at least that there is something more than a simple re-evaluation. See Far Out at [3]. But even if circumstances have changed since the commencement of the claim, if they result from the very fact of the claim, for example the Defendant has run out of money because he has spent it all on defending it, the Claimant cannot invoke that. It may be different where the Defendant has rendered the Claimant’s claim worthless because of something he has done on his own initiative, for example embarking on some other unsuccessful proceedings which led to his own bankruptcy. See Walker [39] commenting upon the decision in Everton v World Professional Billiards and Snooker Association (13 December 2001 ). Equally, if the chances of success had reduced in the Claimant’seyes because of what the Defendant produces on disclosure or because of some argument raised in the Defence, it would be very unlikely that this would assist the Claimant on costs if he then discontinues. That is because such changing circumstances are part and parcel of litigation. 6. In truth it is difficult to see how any change of circumstance could amount to good reason unless it is connected with some conduct on the part of the Defendant which deserves to sound in costs against him. Thus [11] of Maini refers to active misconduct. And at p541 of RTZ Potter LJ refers by way of example to the case of a Defendant who perversely encourages a plaintiff into action by concealing the existence of a defence although reasonably invited prior to proceedings to make disclosure.Another example is the unnecessarily aggressive approach and totally unreasonable and unjustified stance taken by the Defendant in relation to negotiations before discontinuance, as found by Lightman J in [53] of RBG. Or the failings by the Defendant accountant in his professional obligations to the liquidator in Doshi. It is to be noted that in the last two cases the result was a percentage reduction in the Defendants’recoverable costs, not an order that they pay any part of the Claimant’s. 7. And even if there has been some conduct by a Defendant which has caused a change of circumstances this should not have an adverse impact against him if, having regard to all the circumstances it does not amount to a good reason to disapply the presumption; so a change of circumstances is simply the beginning of the enquiry, not the end of it.”