Weavering Macro Fixed Income Fund Ltd ((in Liquidation)) v PNC Global Investment Servicing (Europe) Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Charleton
• Judgment Date: 26 January 2012
• Neutral Citation: [2012] IEHC 25
• Court: High Court
• Date: 26 January 2012

[2012] IEHC 25

The High Court

Record No: 6385P/2009

Weavering Macro Fixed Income Fund Ltd (in liquidation) v PNC Global Investment Servicing (Europe) Ltd

Commercial

Between:-

Weavering Macro Fixed Income Fund Limited (In Liquidation)

Plaintiff

-and-

PNC Global Investment Servicing (Europe) Limited

Defendant

ORANGE COMMUNICATIONS v DIRECTOR OF TELECOMMUNICATIONS REGULATION & METEOR MOBILE COMMUNICATIONS LTD (NO 2) 2000 4 IR 159

RSC O.63A

RSC O.63A r5

RSC O.63A r6

PJ CARROLL & CO LTD v MIN FOR HEALTH (NO 2) 2005 3 IR 457

CORK PLASTICS MANUFACTURING v INEOS COMPOUND UK LTD & ORS UNREP CLARKE 7.3.2008 2008/8/1638 2008 IEHC 93

MILLAR v PEEPLES 1995 NI 6

MCCANN v DESMOND 2010 4 IR 554

RSC O.63A r6(i)(B)(ix)

CPR O.35.4(UK)

IGOTE LTD v BADSEY LTD 2001 4 IR 511

CAMERATA PROPERTY INC v CREDIT SUISSE SECURITIES (EUROPE) LTD UNREP SMITH 9.3.2011 2011 EWHC 479 (COMM)

ICDL GCC FOUNDATION LTD FZ-LLC & ORS v EUROPEAN COMPUTER DRIVING LICENSE FOUNDATION LTD UNREP CLARKE 4.8.2011 2011 IEHC 343

BULA LTD & ORS v CROWLEY UNREP BARR 29.4.1997 1998/12/4046

PRACTICE & PROCEDURE

Modular hearing

Time and expense of litigation - Court resources - Case management rules - Function of courts in administering trials - Inherent jurisdiction of court - Public interest - Test for modular hearing - Claim against income fund manager pursuant to administration agreement - Whether issues readily capable of determination in isolation - Whether clear saving in time and costs identified - Prejudice - Whether tactical device - Expert witnesses - Abuse of process - Orange Communications v Director of Telecommunicatiosn Regulation [2000] 4 IR 159; PJ Carroll and Co Ltd v Minister for Health (No 2) [2005] 3 IR 457; Cork Plastics (Manufacturing) v Ineos Compound UK Ltd [2008[ IEHC 93, (Unrep, Clarke J, 7/3/2008); Millar v Peeples [1995] NI 6; McCann v Desmond [2010] 4 IR 554; Igote Ltd v Badsey Ltd [2001] 4 IR 511; Camerata Property Inc v Credit Suisse Securities (Europe) Ltd [2011[ EWHC 479; ICDL GCC Foundation v European Computer Driving Licence Foundation Ltd [2011] IEHC 353 (Unrep Clarke J, 4/8/2011) and Bula Ltd v Crowley (Unrep, Barr J, 29/4/1997) considered - Rules of the Superior Courts 1986 (SI 15/1986), O 63A, rr 5 and 6 - Modular hearing of certain issues ordered (2009/6385P - Charleton J - 26/1/2012) [2012] IEHC 25

Weavering Macro Fixed Income Fund Ltd v PNC Global Investment Servicing (Europe) Ltd

Facts: The plaintiff investment company was incorporated in the Cayman Islands and was listed on the Irish stock exchange. The defendant company administered the processing of subscriptions for shares and the plaintiff claimed that the defendant had miscalculated the net asset value of the fund, had failed to inform the directors of Weavering of the identity of the interest rate swap counterparty and had failed to inform the directors of Weavering of an increasingly perilous investment risk relating to the interest rate swaps. The defendant sought a modular hearing to shorten a complex trial and reduce expenses. A modular hearing was sought on 1-12 grounds- namely, inter alia, the date of the cause of action arising, when the cause of action arose for the purposes of the administration agreement, the findings of the Cayman judgement and attribution, whether the plaintiff was vicariously liable, whether the acts/ omissions of the plaintiff had disentitled them to relief, whether the plaintiff could maintain certain misfeasance or bad faith claims and whether claims to damages could be maintained? The Court considered the duty of the defendant under the administration agreement, the misconduct of the plaintiff, the legal principle requiring the alteration of the duties, the entire relationship, the loss experienced and the limitation clauses.

Held by Charleton J. that the Court would order a modular hearing on issues 1, 2, 3, 4, 9, 10, 11 and 12. It was essential that preparation begin for the hearing and the relevant witness statements be exchanged in advance of any directions at hearing that may be necessary.

Reporter: E.F.

1 Judgment of Mr. Justice Charleton delivered on the 26th day of January 2012

2 The defendant seeks a modular hearing in advance of the main trial of certain key issues. The relief is sought in the expectation that the advance disposal of aspects of the claim will shorten the trial and reduce expense. This case is predicted at full trial to run for 64 days and security for costs has already been conceded in favour of the defendants by the plaintiff company. Those costs are currently estimated at €5.6 million for the defendant's side alone. It is not for this court on the current motion to adjudicate on the proposed sums. The test of what costs are bearable will, no doubt, reflect the economy within which professional fees are proposed to be charged.

3 No estimate has been given as to the extent to which a saving in time at trial, in pretrial discovery and in expense may be achieved by a modular trial order. In other similar motions, such an estimate was not required. It may be that in similarly long cases parties can reach agreement that a particular issue might be tried on agreed facts or, alternatively, the trial judge on the motion may be confronted with a situation where parties are so in conflict as to be unable to agree anything of impact to the resolution of their dispute. Estimates on affidavit may be helpful to a motion of this kind, but there is no precedent requiring affidavit evidence to that effect and this Court does not intend to establish same. These are not required. The appraisal of the correctness of a modular trial order is not balanced on an adversarial dispute: rather, splitting up a trial so that a modular hearing on particular issues precedes the main hearing requires the application of the good sense of the judge. It is a matter of experienced assessment on reading the relevant papers and hearing submissions.

4 The issues sought to be tried in advance are to be seen in the context of the background facts of the case. The Court is not now judging contested testimony nor is it ruling on legal issues beyond what is necessary for the disposal of this motion. Any apparent comment by the Court on what is alleged by either side is not declaratory of fact. Any comment as to the apparent state of the law, at this stage, can be no more than a statement of what may be argued should the relief sought on the motion be granted.

5 A modular hearing is sought on the following issues:-

6 1) Is the plaintiffs claim in the proceedings limited to (A) any alleged causes of action and/or claims which arose within 12 months of the date of issue of the proceedings on 30 ^th June 2009 or (B) any alleged causes of action and/or claims which arose within 12 months of the date of service of the proceedings on 5 ^th July 2010?

7 2) When did the causes of action relied upon by the plaintiff in these proceedings occur for the purposes of clause 14(D) of the administration agreement?

8 3) Are the acts and/or omissions of the directors of the plaintiff company as determined by the findings in the Cayman judgment and/or as contended for and/or accepted by the plaintiff in the Cayman proceedings attributable to and binding in these proceedings and can the plaintiff herein otherwise seek to litigate any findings in these proceedings?

9 4) Is the plaintiff vicariously liable in respect of the acts and/or omissions of the directors of the plaintiff company referred to in issue (3)?

10 8) Did the acts and/or omissions of the directors of the plaintiff determined and/or admitted and/or accepted by the plaintiff in the Cayman proceedings cause the loss and damage claims against the defendant in the proceedings or otherwise were such as to disentitle the plaintiff to maintain these proceedings?

11 9) Can the plaintiff maintain any claim other than a claim for wilful misfeasance, bad faith, gross negligence or reckless disregard of duties against the defendant in the proceedings, whether pursuant to a claim based upon the administration agreement or otherwise?

12 10) If the answer to issue nine is "no", which (if any) of the plaintiff's claims in the proceedings can be maintained against the defendant?

13 11) Is the plaintiff's claim for damages involving in whole or in part a claim for consequential, special or indirect loss or damages?

14 12) If the answer to issue 11 is "yes", is the defendant liable for such consequential, special or indirect loss or damage?

15 It is necessary to examine these issues in their specific context.

Background

16 The plaintiff company, Weavering Macro Fixed Income Fund Limited ("Weavering") was incorporated in 2003 in the Cayman Islands and its shares are listed on the Irish stock exchange. It is an investment company which purchases complex financial instruments on behalf of a range of investors. Voting rights in the plaintiff company are divided into 100 voting shares. There are also four million redeemable shares which can be purchased in the ordinary way as a share investment but which do not carry voting rights within the company. Certain of the money market instruments used to effect investment by the plaintiff are notoriously impenetrable. The investment manager for the plaintiff company is another company which bears a similar name, namely Weavering Capital (UK) Limited, which is incorporated in England and carries on business from an office in London. The instruments purchased included fixed income assets held in bonds. Also among the range of transactions invested in by the plaintiff company Weavering, on the apparent advice or direction of its London counterpart, were interest rate swaps. The counterparty to the swaps was another very similarly named company called Weavering Capital Fund...