Lonestar Communications Corporation LLC v Daniel Kaye
| Jurisdiction | England & Wales |
| Judge | Peter MacDonald Eggers |
| Judgment Date | 15 July 2020 |
| Neutral Citation | [2020] EWHC 1890 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2018-000648 |
| Date | 15 July 2020 |
[2020] EWHC 1890 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Peter MacDonald Eggers QC
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Case No: CL-2018-000648
Mr Tony Singla (instructed by Freshfields Bruckhaus Deringer LLP) for the Claimant
Ms Sonia Tolaney QC and Mr Tim Goldfarb (instructed by Clifford Chance LLP) for the Third Defendant
Mr Neil Kitchener QC and Mr Andrew Lodder (instructed by Norton Rose Fulbright LLP) for the Fifth Defendant
The First, Second and Fourth Defendants were not represented
Hearing dates: 9, 10 and 19 June 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.
Peter MacDonald Eggers QC
Introduction
Over three days, the Court administered a case management conference which led to the making of directions for trial in this action. The greater part of the hearing was concerned with disclosure under the Pilot Scheme for Disclosure in the Business and Property Courts, regulated by CPR Practice Direction 51U — Disclosure Pilot for the Business and Property Courts (“CPR PD 51U”). This judgment is concerned with a number of issues which arose in connection with disclosure under CPR PD 51U.
In UTB LLC v Sheffield United Ltd [2019] EWHC 914 (Ch); [2019] 3 All ER 698, at paragraph 75, the Chancellor said the Pilot Scheme for Disclosure was not a re-serving of CPR Part 31, exemplified by standard disclosure (equivalent to Model D Extended Disclosure under CPR PD 51U), dressed in another garnish. Rather, the Pilot Scheme represents a “ culture change” to the management of disclosure in the Business and Property Courts. The Pilot Scheme for Disclosure acts on a recognition that the exponential increase of the creation, storage and dissemination of information and documents and the development of diverse forms of instantaneous communications give rise to real practical difficulties in undertaking an exhaustive disclosure exercise. This means that in many cases a “ leave no stone unturned” approach to disclosure is no longer appropriate, having regard to the overriding objective concerns of reasonableness and proportionality ( Digicel (St Lucia) Ltd v Cable & Wireless plc [2008] EWHC 2522 (Ch); [2009] 2 All ER 1094, paragraph 46; cf. Smailes v McNally [2014] EWCA Civ 1299, paragraph 42).
Factual background
The Claimant (“Lonestar”) is a telecommunications company providing cellular communication and internet services to its customers in Liberia. It alleges that it was the victim of a large number of distributed denial of service (“DDOS”) cyber-attacks between around October 2015 and around February 2017 (“the Alleged DDOS Attacks”). A DDOS attack is a form of cyber-attack in which the perpetrator, often using a network of private computers infected with malicious software known as a “botnet”, floods a targeted web server or network with superfluous requests so that the system in question becomes overloaded and temporarily unavailable, with the result that legitimate requests cannot be fulfilled and the services provided by the host of the relevant server or network are disrupted.
Lonestar alleges that the Alleged DDOS Attacks were deliberately perpetrated by the First Defendant (“Mr Kaye”) so as to injure and/or cause loss to Lonestar and that, in carrying out the Alleged DDOS Attacks on Lonestar, Mr Kaye was acting at the instigation of the Second Defendant (“Mr Marziano”) and/or pursuant to a combination entered into and/or understanding reached between Mr Kaye, Mr Marziano, and the Fourth Defendant (“Mr Polani”).
At all times material to Lonestar's Claim, Lonestar alleges that Mr Marziano was a director and/or the Chief Executive Officer and/or a senior employee of the Third Defendant (“Cellcom”) and/or the Fifth Defendant (“Orange Liberia”), and that Mr Polani was employed by Cellcom and/or Orange Liberia as an ISP (Internet Service Provider) Business Unit Manager. Cellcom had owned what is now Orange Liberia but sold it to the Orange Group on 5th April 2016.
Cellcom admits that Mr Marziano was its employee and was given the title of “Group CEO” from November 2013 to January 2019 as a courtesy to reflect his time at the Cellcom group, but denies that he was otherwise a director, senior employee or chief executive officer of Cellcom or otherwise its directing mind and will. Cellcom also denies that Mr Polani was its employee at any time, alleging that he was employed by Orange Liberia until at least 5th April 2016.
Orange Liberia denies that Mr Marziano was its director (save for a temporary appointment of convenience for a few hours on 5th April 2016 in connection with the completion of the sale of Orange Liberia to the Orange group). Orange Liberia further denies that Mr Marziano and Mr Polani were ever its employees; it alleges that they were employed by Cellcom and seconded to Orange Liberia at all material times, with Mr Marziano having been appointed by Cellcom to act as Orange Liberia's CEO prior to the sale of Orange Liberia on 5th April 2016 under the Transitional Services Agreement between Cellcom and Orange Liberia dated 5th April 2016.
Lonestar alleges that the knowledge and conduct of Mr Marziano are to be attributed to Cellcom and/or Orange Liberia and that Cellcom and/or Orange Liberia are vicariously liable for the conduct of Mr Marziano and/or Mr Polani. Cellcom denies that there was any connection between his limited role at Cellcom and his alleged tortious conduct sufficient to establish any vicarious liability on the part of Cellcom, and that as Mr Polani was never its employee, there is no basis for Cellcom's alleged vicarious liability for the conduct of Mr Polani.
Orange Liberia is a competitor of Lonestar, and was owned by Cellcom for part of the period during which Lonestar claims that the Alleged DDOS Attacks took place (prior to Cellcom's sale of Orange Liberia to the Orange group on 5th April 2016). Lonestar alleges that Cellcom had a continuing financial interest in the business of Orange Liberia even after it was sold to the Orange group.
Lonestar claims that, as an intended consequence of the Alleged DDOS Attacks, it has suffered loss in the value of its business and/or loss of profits and it claims damages against the Defendants for lawful means conspiracy and/or unlawful means conspiracy and/or unlawful interference with its business. Lonestar also claims damages against the Defendants in respect of the expenses which it has allegedly incurred in resisting the Alleged DDOS Attacks and/or investigating the Defendants' alleged wrongdoing. Lonestar alleges that its loss of profits claim amounts to at least US$30 million.
Further and in any event, Lonestar claims exemplary damages.
Lonestar alleges that the DDOS attacks were planned and implemented in secret, and that its understanding of the Defendants' conduct is limited. Lonestar says that its understanding of Mr Kaye's, Mr Marziano's, and Mr Polani's conduct is based largely on evidence that Lonestar has obtained from certain criminal proceedings in Germany and in the United Kingdom.
Cellcom and Orange Liberia are the only Defendants to have participated in the proceedings. They make no admissions as to the allegations of tortious conduct made by Lonestar against Mr Kaye, Mr Marziano, and Mr Polani, but they deny liability for the alleged conduct of Mr Marziano and Mr Polani on the basis of either attribution (in respect of Mr Marziano) or vicarious liability (in respect of Mr Marziano and/or Mr Polani).
Cellcom and Orange Liberia make no admissions as to Lonestar's case as to causation and loss. Cellcom and Orange Liberia also deny the claim for exemplary damages.
It is common ground as between Lonestar, Cellcom, and Orange Liberia that Lonestar's causes of action, in particular the law governing vicarious liability, are governed by Liberian law, which will be the subject of expert evidence at trial. It is common ground as between Lonestar and Cellcom that the issue of the attribution of Mr Marziano's conduct to Cellcom is governed by the laws of the British Virgin Islands, which the parties have agreed will be deemed to be the same as English law at trial.
Disclosure
Prior to the hearing, the parties followed the procedure for Extended Disclosure under CPR PD 51U in that, after the exchange of the parties' statements of case, Extended Disclosure was requested, and Lonestar as the Claimant formulated a draft List of Issues for Disclosure in accordance with paragraph 7 of CPR PD 51U. By the time of the hearing, the parties were agreed on the List of Issues for Disclosure save in respect of one issue (to which I turn below).
The parties were also agreed that Model C Extended Disclosure was required in respect of each of the Issues for Disclosure.
For this purpose, the parties each prepared a Disclosure Review Document which was the platform for the parties' identification and discussion and, in many cases, agreement of the scope of Model C Extended Disclosure. Paragraph 10.3 of CPR PD 51U requires the parties to engage co-operatively and constructively in this process. Although during the hearing, the parties' submissions were sometimes spirited, I have little doubt that the parties...
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