Susquehanna International Group Ltd v Execuzen Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Allen
• Judgment Date: 12 September 2022
• Neutral Citation: [2022] IECA 209
• Court: Court of Appeal (Ireland)
• Docket Number: Appeal Number: 2021/262

Between

Susquehanna International Group Limited

Plaintiff

and

Execuzen Limited, Daniel Whitfield, Elena Sueppel

and

Natalie Melnick

Defendants

and

Citadel LLC

and

Daniel Needham

Third Parties

[2022] IECA 209

Barniville P.

Noonan J.

Allen J.

Appeal Number: 2021/262

THE COURT OF APPEAL

CIVIL

Third party notice – Delay – Proportionality – Third-parties seeking to set aside the third party notices – Whether it would be disproportionate to set aside the third party notices

Facts: The plaintiff, Susquehanna International Group Ltd, sought to restrain the use or disclosure of confidential information said to have been wrongfully obtained. The plaintiff sought to have the defendants, Execuzen Ltd, Mr Whitfield, Ms Sueppel and Ms Melnick, either furnish the confidential information to the plaintiff or provide satisfactory evidence of its destruction. An order was sought restraining the defendants from soliciting any person who is or was employed or engaged by the plaintiff. An order was also sought compelling the defendants to furnish the names, addresses and contact information of all persons to whom information in relation to the business of the plaintiff had been provided. Damages were sought against the defendants for inducing a breach of contract; for intentional interference with the plaintiff’s economic interests; and for breach of confidence. An account of all profits made by the first defendant arising from the use of the confidential information was also sought. A claim was advanced for some 47 million euro. It was said that the fact that a very large claim was being advanced, for the first time, against the defendants as though they were jointly and severally liable with Citadel LLC and Mr Needham made it necessary to ensure that the latter were joined to the proceedings as third parties so that any issue in relation to the causation of loss and the apportionment as between the parties could be addressed to completion. The application for leave to issue the third party notices was issued three years after the time limited by the Rules of the Superior Courts for the delivery of the defendants’ defence and about two and a half years after the defence was delivered. The third party notices were issued and served about six months later. An application was made to the High Court pursuant to Order 16, rule 8(3) of the Rules of the Superior Courts to set aside the third party notices on the grounds of delay. The High Court (Simons J) found that while, subjectively, there had been unreasonable delay on the part of the defendants, objectively, and seen in the context of the progress of the action, the delay was not unreasonable and that in all the circumstances it would be disproportionate to set aside the third party notices. The third parties appealed to the Court of Appeal against the order made by the High Court refusing their motions to set aside the third party notices. The core issue on the appeal was whether, and if so the extent to which, account can be taken of the policy of the Civil Liability Act 1961 that all issues arising out of an event are disposed of in the same set of proceedings in deciding whether the defendants have met the statutory requirement that the third party notices should have been served as soon as was reasonably possible.

Held by Simons J that the defendants’ delay between the time when they should have obtained the Grant Thornton report and the service of the third party notices greatly exceeded anything that might have been expected. Simons J held that, absent any explanation, the delay was unreasonable; it followed that the third party notices were not served as soon as reasonably possible. Simons J held that the third parties were entitled to orders setting aside the third party procedure and the two appeals should be allowed.

Simons J held that, provisionally, it seemed to him that the appellants having been entirely successful on their appeals were entitled to the costs of the appeal as well as their costs in the High Court.

Appeals allowed.

NO REDACTION NEEDED

JUDGMENT of Mr. Justice Allen delivered on the 12 ^th day of September, 2022

Introduction

1 . These are appeals by the third parties, Citadel LLC (“Citadel”) and Daniel Needham “Mr. Needham”) against an order made by the High Court (Simons J.) refusing their motions to set aside third party notices on the grounds that they did not comply with the requirements of s. 27(1)(b) of the Civil Liability Act, 1961 and O. 16, r. 1(3) of the Rules of the Superior Courts.

2 . The application for leave to issue the third party notices was issued three years after the time limited by the Rules of the Superior Courts for the delivery of the defendants' defence and about two and a half years after the defence was delivered. The third party notices were issued and served about six months later. The High Court judge found that while, subjectively, there had been unreasonable delay on the part of the defendants, objectively, and seen in the context of the progress of the action, the delay was not unreasonable and that in all the circumstances it would be disproportionate to set aside the third party notices.

3 . The core issue on the appeal is whether, and if so the extent to which, account can be taken of the policy of the Civil Liability Act, 1961 that all issues arising out of an event are disposed of in the same set of proceedings in deciding whether the defendants have met the statutory requirement that the third party notices should have been served as soon as was reasonably possible.

The action

4 . The plaintiff, Susquehanna International Group Limited (“SIG”), is a private company limited by shares incorporated under the laws of Ireland which carries on the business of a global investment and trading firm. Part of its business is trading in financial instruments known as exchange traded funds.

5 . The first defendant (“Execuzen”) is a company incorporated under the laws of England and Wales and carries on the business of a consultancy firm. The second, third and fourth defendants are the principals of Execuzen. There is a sharp conflict between the parties to the proceedings as to the nature of Execuzen's business. The defendants are adamant that it is a bona fide recruitment consultant. SIG's case is that it is engaged in industrial espionage.

6 . The first third party (“Citadel”) is a company incorporated under the laws of England and Wales and is also in the business of investment and trading.

7 . The second third party (“Mr. Needham”) is a trader who was employed by SIG for about ten years until 2016 when he left to take up employment with Citadel. He has since left Citadel's employment.

8 . By this action, which was commenced by plenary summons issued on 19 ^th November, 2015, SIG claimed against Execuzen an order compelling the delivery of all documents which contain or refer to any confidential information relating to SIG, its counterparties and/or customers in the possession or control of Execuzen; an order restraining Execuzen from soliciting any person employed by SIG and who, by means of such employment, is or is likely to be in possession of confidential information belonging or relating to SIG; and an order restraining Execuzen from disclosing any information obtained by it from SIG's employees concerning its counterparties, customers or business operations. As against each of the defendants, SIG claimed damages for inducement of breach of contract, intentional interference with its economic interests and breach of confidence. As against Execuzen, SIG also claimed an account of all profits made from the use of SIG's confidential information.

9 . On 23 ^rd December, 2015 an appearance was entered by on behalf of the defendants for the purpose of contesting jurisdiction but in the event, there was no challenge to jurisdiction.

10 . On 29 ^th July, 2016 SIG delivered its statement of claim. The essence of the claim, as the trial judge put it, is that the defendants interviewed employees of SIG, on the pretext of seeking to recruit – or place – them, but in truth in order to elicit confidential and proprietary information. SIG's claim is that the defendants induced the employees to disclose information in relation to its business, reporting structures, and proprietary software, which it later disclosed to Citadel. It is claimed that the defendants and Citadel were aware that the information was confidential and could not lawfully be disclosed by the employees.

11 . SIG claims that Citadel determined to establish a business in Dublin, staffed by SIG's employees, carrying on the same business using SIG's confidential and proprietary information and practices, and later did so. It is claimed that the defendants, acting on behalf of Citadel, unlawfully coordinated a “group leave” whereby SIG's key employees on its exchange traded funds desk left on the same day or very close together, thereby causing maximum damage to SIG's business.

12 . SIG claims that one of the services offered by Execuzen is to assist clients who wish to target the businesses of competitors and that it gathers information on the competitor by interviewing employees of the target and eliciting information – including proprietary and confidential information – about the personnel, business, and structures of the target; and, in the event that its client wishes to exploit the information and recruit employees of the target, coordinates the hiring process, including by inducing employees to assist with the recruitment in breach of their contracts of employment.

13 . Having rather tentatively pleaded what is alleged to be Execuzen's business model, the statement of claim goes on to claim that on a date unknown but prior to September, 2015 Citadel or one of its affiliates retained Execuzen to provide such services in relation to the business of SIG and that in or...