Jefferies International Ltd v Cantor Fitzgerald & Company
| Jurisdiction | England & Wales |
| Judge | Master Cook |
| Judgment Date | 02 June 2020 |
| Neutral Citation | [2020] EWHC 1381 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: QB-2019-000187 |
| Date | 02 June 2020 |
[2020] EWHC 1381 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Master Cook
Case No: QB-2019-000187
Daniel Oudkerk QC and James Sheehan (instructed by Herbert Smith Freehills LLP) for the Claimants
Andrew Stafford QC (instructed by Kobre & Kim (UK) LLP) for the First to Third Defendants
Diya Sen Gupta QC (instructed by Doyle Clayton) for the Fourth to Sixth Defendants
Hearing date: 28 April 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is the hearing of applications made by the First to Third Defendants and the Fourth to Sixth Defendants issued on 19 and 21 February 2019 respectively to challenge the jurisdiction of the court to hear this action, alternatively to stay the action on case management grounds.
The First to Third Claimants [together Jefferies] and the First to Third Defendants [together Cantor] carry on business in the financial services industry internationally, including investment banking and capital markets business and in particular in the international power and renewables sector. The First Defendant is a general partnership organised under the laws of New York. The Second Defendant is an unlimited company registered in England and regulated by the Financial Conduct Authority. The Third Defendant is a limited liability company incorporated in Hong Kong.
The Fourth to Sixth Defendants are former employees of Jefferies who resigned and took up employment with Cantor in circumstances which give rise to this action and are each domiciled in the jurisdiction of this court.
This action arises out of what has become known as a team move. Jefferies' case is that on 20 November 2017 twenty-six of its employees each resigned in materially identical terms, almost all of the resignations took place at 11.00 am London time notwithstanding that this was outside the normal working hours of those who worked in New York and Hong Kong, each of the employees in each jurisdiction instructed the same solicitors and each now works for Cantor.
Jefferies asserts that Cantor has directed each of the twenty-six employees to refuse to honour repayment obligations in respect of certain “Replacement Awards” and “Bonuses” which were triggered by their resignations and subsequent employment by Cantor.
It is Jefferies' case that the resignations and subsequent non-payment of monies due to it were directed and co-ordinated by Cantor. In particular Jefferies relies upon the following matters:
i) Shortly before the en masse resignations the head of Jefferies' power and renewables group, Mr Chandra (who also resigned), had arranged for a London based employee, Ms Beament, to collect the mobile telephone numbers of employees and asked that they be available to speak to him on Sunday 19 November 2017 (i.e. the day before the resignations).
ii) Mr Chandra had also met with the Sixth Defendant (again English domiciled) together with Ms Beament at the Pepys pub in London on 13 November 2017, see paragraph 15.7(a) particulars of claim.
iii) The sixth defendant appears to have been centrally involved in the co-ordination, providing details of the repayment structure for Jefferies' associate bonus scheme (i.e. the repayment obligations forming the subject matter of this dispute). These details were emailed from London to Mr Chandra head the of power and renewables group on 14 November 2017 and Jefferies infers they were passed to Cantor, see paragraph 15.7(b) particulars of claim.
On 17 January 2019 Jefferies sought and obtained an order from Master Thornett granting permission to serve the claim form, particulars of claim and any other document in the proceedings on the First Defendant in New York and on the Third Defendant in Hong Kong. The application was supported by the first witness statement of Jonathan Ions dated 11 December 2018. Mr Ions' statement set out the grounds on which Master Thornett relied to make his order. The grounds were that Jefferies believed it had a good arguable case that the claims against the First and Third Defendants fell within the jurisdictional gateways in CPR 6B PD para. 3.1(3) and (9)(a).
As for CPR 6B PD para 3.1(3) Jefferies asserted the First and Third Defendants were necessary and proper parties to the claims against the Second and Fourth to Sixth Defendants which fall to be tried in this jurisdiction in any event. In his witness statement Mr Ions put the matter in the following way:
“Jefferies' proposed claims against the First and Third Defendants are very closely bound up together. They arise on the same facts and involve the same issues, and the determination of these claims will depend on one investigation. The Court will need to investigate the circumstances in which the Employees have refused to make repayment to Jefferies, the context of the Team Move, and the truth or falsity of any explanation given by Cantor as to its involvement in those matters. As I indicated above, Jefferies' case is that Cantor and its executives made a concerted global effort to ensure that the Employees did not repay the amounts due to Jefferies in respect of the Bonuses. Moreover, and pending disclosure, it is likely that officers of Cantor who were involved in perpetrating this wrongdoing (including in respect of the Fourth to Sixth Defendants, but also the other Employees) will have been employed by or acting as agents of the First and/or Third Defendants as well as the Second Defendant. For example, Jefferies believes that Sage Kelly, Anshu Jain and Howard Lutnick are each likely to be employed by and/or agents of the First Defendant, and further to have been acting as agents of the Third Defendant at least when recruiting Employees in Hong Kong and inducing those Employees not to make repayments, as well as agents of the Second Defendant in respect of employees in England. In addition, certain of the indemnities granted to the Employees are likely to have been from the First and/or Third Defendants.”
As for CPR 6B PD para. 9(a) Jefferies asserted that as a consequence of Cantor's tortious acts it had suffered damage within the jurisdiction. In his witness statement Mr Ions put the matter as follows:
“As a consequence of Cantor's alleged tortious acts, as set out at paragraph 26 of the Particulars of Claim, Jefferies has sustained damage within the jurisdiction. In particular: (a) the First Claimant has been deprived of sums which would otherwise have been repaid in this jurisdiction by those Employees who owe repayment obligations to the First Claimant (i.e. each of the Fourth to Sixth Defendants), (b) the First Claimant has also sustained damage here, by way of wasted management time in that the time of its employees and officers in the jurisdiction has been substantially diverted in addressing the consequences of Cantor's unlawful conduct, and (c) the First Claimant has expended costs and expenses here in enforcing Jefferies' rights under the repayment agreements. As I indicated above, pending disclosure Jefferies' case is necessarily inferential and it infers that each of the First to Third Defendants has caused the losses suffered by Jefferies in England.”
For the purpose of CPR 6.37(3) Jefferies asserted that England was the proper place to bring the claim. In his witness statement Mr Ions put forward the following matters in support:
“(1) The First Claimant and the Second Defendant are domiciled in England. The Fourth to Sixth Defendants are also domiciled in England.
(2) Jefferies' claims against the Second and Fourth to Sixth Defendants will already be tried here, as I have described above. The English Court has jurisdiction over them as of right (by virtue of Article 2 of the Brussels I Regulation Recast). There is no scope for any stay of these proceedings, as forum non conveniens does not apply to Article 2 jurisdiction ( Owusu v Jackson C-28/102 [2005] 1 QB 801). Therefore, unless the Court hears the claim against all the Cantor Defendants together, there is every prospect of a multiplicity of proceedings against Cantor in relation to the same facts and issues and also a risk of irreconcilable judgments.
(3) In addition, a further Employee (Ranulf Couldrey) has repayment obligations under a contract with the First Claimant which is English law governed and is subject to the jurisdiction of the English courts (pages 204 to 206).
(4) A number of witnesses are located in England (e.g. relevant employees of the First Claimant who will address, amongst other things, the conduct of the Employees employed by the First Claimant, the amounts owed by the relevant Employees to the First Claimant and the steps taken by the First Claimant to recover the sums owed, as well as each of the Fourth to Sixth Defendants). Further, a significant proportion of the relevant documents are already present in this jurisdiction, including documents held by the First Claimant and by the Fourth to Sixth Defendants.
(5) Loss and damage has been, or will be, suffered in this jurisdiction, as I explained above.
(6) It is in the interests of efficient administration and justice to have the claims against the First and Third Defendants tried and determined together in...
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