Lone Star RE Management Company II Ltd and Ors v Ward
| Jurisdiction | Bermuda |
| Judgment Date | 12 January 2023 |
| Court | Supreme Court (Bermuda) |
| Docket Number | Commercial Jurisdiction 2022 No 19 |
[2023] Bda LR 1
Commercial Jurisdiction 2022 No 19
In The Supreme Court of Bermuda
Breach of terms in partnership agreements — Confidentiality — Discovery application
The following cases were referred to in the judgment:
Credit Suisse Life (Bermuda) Ltd v Ivanishvili and ors [2020] Bda LR 62
Athene Holdings Ltd v Siddiqui and ors [2021] Bda LR 58
BDW Trading Ltd v Fitzpatrick and ors [2015] EWHC 3490
Millar v Harper (1888) 38 Ch D 110
Luen Tat Band Manufacturer Ltd v Stephen Liu Yiu Keun [2020] HKCFI 2610
Speyside Estate and Trust Co Ltd v Wraymond Freeman (Blenders) Ltd (in liq) [1950] 1 Ch 96
Mr R Williams and Ms A Caines for the Plaintiffs
Mr D Williams for the Defendant
JUDGMENT of Hargun CJ
1. These proceedings were commenced by the Plaintiffs by Generally Endorsed Writ of Summons dated 27 January 2022 claiming injunctive relief and/or permanent injunction and/or damages by reason of the Defendant's (1) breach of the express terms of confidentiality contained in the Amended and Restated Limited Partnership Agreements between the Plaintiffs and the Defendant dated 1 October 2010, 1 November 2013, and 1 May 2015; (2) breach of duty of confidence owed to the Plaintiffs in respect of all confidential information of the Plaintiffs; (3) breach of the implied term of good faith and fidelity to the Plaintiffs; and (4) breach of this implied term as to the duty not to misuse any information confidential to the Plaintiffs.
2. By an ex parte Order dated 28 January 2022 the Court ordered that unless given prior written permission by the Plaintiffs or permitted to do so by a further order of the Court, the Defendant must not use, copy, disseminate, sell or otherwise disclose to any third party any Confidential Information (as defined in paragraph 1.2 of the Order) acquired directly or indirectly by the Defendant. The Court also ordered that the Defendant must preserve and must not otherwise alter or dispose of the Confidential Information in its possession without the express permission of the Plaintiffs.
3. On 28 November 2022 the Court heard an application on behalf of the Plaintiffs seeking an order pursuant to RSC Order 24 rule 3 and/or rule 7 that the Defendant provide discovery by list within 21 days stating whether any document falling within the following categories of documents is, or has at any time been, in his possession, custody or power, and if not then when he parted with it and what has become of it:
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(a) All documents containing Confidential Information (as defined in the Order dated 28 January 2022).
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(b) All correspondence by which Defendant disclosed Confidential Information to any third party, private or governmental.
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(c) All non-privileged correspondence in which Defendant discussed or referred to the Confidential Information, or otherwise relating to the Confidential Information.
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(d) All non-privileged documentation of meetings or phone calls in which Defendant disclosed Confidential Information to any third party, private or governmental.
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(e) All documents (whether or not containing confidential information) belonging to the Plaintiffs.
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(f) All documents received by the Defendant in his capacity as an employee of Hudson Americas, LLC (“Hudson”), Lone Star U.S. Acquisitions, LLC, and Lone Star North America Acquisitions (NY), LLC, or in his capacity as a limited partner and which remain in his possession, custody or power.
4. The Court also notes that the there are three additional applications pending, namely, an application by the Plaintiffs requesting further and better particulars of the Defence; an application by the Defendant requesting further and better particulars of the Statement of Claim; and an application by the Defendant that the Statement of Claim be struck out and/or summarily dismissed principally on the ground that the claims asserted by the Plaintiffs against the Defendant disclose no reasonable cause of action. It is agreed by Counsel that the applications for further and better particulars should await the outcome of the present discovery application.
5. The background to these proceedings is set out in the first affidavit of Rebecca Williams Smith, the Senior Managing Director of Lone Star Global Acquisitions, LLC, dated 27 January 2022. Ms Williams Smith states that the Plaintiffs, incorporated in Bermuda, are the general partners of their respective Bermuda Limited partnerships, and together they and their affiliated entities and individuals are engaged in private equity investments (together the “LS Group”). Lone Star was founded by Mr John Grayken in 1995. Lone Star has organised over twenty funds (“the Funds”) with aggregate capital commitments totalling over $85 billion. The Funds' capital largely comes from sophisticated institutional investors, such as corporate and public pension funds, sovereign wealth funds, university endowments, foundations, and high net worth individuals.
6. Lone Star Global Acquisitions, Ltd, (“LSGA”) is another Bermuda exempted company registered as an investment adviser with the United States Securities and Exchange Commission and has been engaged to provide investment services to the Funds.
7. In addition to the investment services provided by LSGA and its subsidiaries, the Funds have also engaged Hudson to provide complimentary investment services, such as due diligence, analysis, and asset management, along with ancillary administrative services such as legal, compliance, accounting, cash management, tax, information systems, human resources, and operating company oversight. Hudson is engaged through a services agreement with each Fund and is paid a fee for these services.
8. The Defendant's professional relationship with Lone Star and Hudson began in 2010, during which time he had numerous roles and acted in a variety of capacities, both as an employee of one or more Hudson and Lone Star entities, and as a limited partner of the Plaintiffs.
9. The Defendant began his employment as Senior Vice President of Underwriting, Real Estate- Americas for a Hudson predecessor entity. As...
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