Salim Moosa & Ors v Karim Issa Mawji
[2024] EWHC 335 (Ch)
Loreley Financing (Jersey) No. 30 Limited v Credit Suisse Securities (Europe) Limited & Ors.
28 February 2023
[2023] EWHC 548 (Comm)
High Court
A company sued another for fraud. The sued company wanted access to documents held by a third party. The judge said they didn't prove they had a right to those documents, so they couldn't get them. However, they were allowed some other documents for a specific reason.
Key Facts
- •Loreley Financing (Jersey) No. 30 Limited (L30) lost a $100 million investment in a synthetic CDO transaction and claims fraudulent misrepresentation against Credit Suisse (CS).
- •The claim alleges two layers of fraud: misconduct in CS's securitization of RMBS (RMBS Misconduct) and fraudulent representations to L30 in selling the Notes (CDO Fraud).
- •CS settled with the US Department of Justice (DOJ) in 2017, admitting misconduct in RMBS securitization.
- •L30's claims are prima facie time-barred, relying on statutory extensions under the Limitation Act 1980.
- •CS applied for disclosure of KfW documents (KfW is a secured creditor involved in L30's litigation) which were accessible to KfW employees who also acted as L30's day-to-day contacts.
- •Redactions in documents provided by L30 were only removed after a Court of Appeal decision, revealing L30's early knowledge of potential claims.
Legal Principles
Control over third-party documents requires a degree of stringency; a legally enforceable right or a standing practical arrangement for access is needed, not merely a close relationship.
Ardila Investments v ENRC [2015] EWHC 3761, Various Airfinance Leasing Companies v Saudi Arabian Airlines [2022] 1 WLR 1027, Berkeley Square Holdings v Lancer Property Asset Management [2021] EWHC 849 (Ch)
Disclosure against a third party is exceptional and requires specific and compelling evidence of control.
Ardila Investments v ENRC [2015] EWHC 3761, Various Airfinance Leasing Companies v Saudi Arabian Airlines [2022] 1 WLR 1027
Control can be predicated on an agency relationship, but the scope of the agency is key; access to documents must be in the capacity as an agent with the authority of the party seeking disclosure.
North Shore Ventures Ltd v Anstead Holdings Inc [2012] EWCA Civ 11, Berkeley Square Holdings Ltd v Lancer Property Asset Management Ltd [2021] EWHC 849 (Ch)
Applications to vary the disclosure regime require a high hurdle of necessity, focusing on key issues and the building blocks of the disclosure regime.
None explicitly stated, but inferred from the judge's reasoning.
Outcomes
CS's application for disclosure of KfW documents was refused.
The evidence did not demonstrate the requisite control over the KfW documents. The relationship between KfW employees and L30 was as employees of KfW, not agents of L30 for access to all KfW documents.
Disclosure was ordered for a shorter period relating to reliance on the misrepresentation.
Reliance is a key issue and this is the only way to test specific evidence about meeting preparation, which can't be achieved through board minutes.
Disclosure ordered for two agreements to which L30 is a party, subject to the subjective privilege regime.
These matters were raised by claimant witnesses as potentially responsive to the application.
CS's application to vary the disclosure regime to include additional invoices was refused.
The invoices were not considered necessary to address key issues of limitation and reliance; their relevance was deemed low, and the high hurdle for varying disclosure was not met.