Lonestar Communications Corporation LLC v Daniel Kaye
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 28 February 2023 |
| Neutral Citation | [2023] EWHC 421 (Comm) |
| Docket Number | Case No: CL-2018-000648 |
| Court | Queen's Bench Division (Commercial Court) |
[2023] EWHC 421 (Comm)
Mr Justice Foxton
Case No: CL-2018-000648
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Tony Singla KC, Sophie Shaw and Mohammud Jaamae Hafeez-Baig (instructed by Freshfields Bruckhaus Deringer LLP) for the Claimant
Neil Kitchener KC and Andrew Lodder (instructed by Norton Rose Fulbright LLP) for the Fifth Defendant
Hearing dates: 7, 08, 12, 13, 14, 15, 16, 19, 20 and 21 December 2022; 16 and 17 January 2023:
Further written submissions received: 27 January 2023
Draft Judgment Circulated: 17 February 2023
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE Mr Justice Foxton
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Tuesday 28 February 2023 at 14:00.
The Honourable
A INTRODUCTION
Between October 2015 and February 2017, the Claimant ( Lonestar) – which provides cellular communication and internet services in Liberia – was the victim of a campaign of cyber-attacks ( the DDOS Attacks). Lonestar alleges that the DDOS Attacks were orchestrated by the First Defendant ( Mr Kaye) with financial and technical support from the Second Defendant ( Mr Marziano) and the Fourth Defendant ( Mr Polani).
The key issues at trial are:
i) whether Mr Kaye, Mr Marziano and/or Mr Polani (collectively the Individual Defendants) are liable in tort to Lonestar for the DDOS Attacks;
ii) if and to the extent that they are, whether the Third Defendant ( Cellcom BVI) and/or the Fifth Defendant ( Orange Liberia) are vicariously or otherwise liable for their actions; and
iii) what damages Lonestar is entitled to recover against anyone who is liable (both compensatory and, if available and appropriate, exemplary).
None of the Individual Defendants has participated in the trial at any stage. Cellcom BVI initially participated, but withdrew in early January 2022, saying that this was the result of financial difficulties. That has left Lonestar and Orange Liberia as the active participants at the hearing, with the principal areas of debate between those parties being:
i) whether, on the basis of largely uncontested facts, the Individual Defendants and Orange Liberia are liable under the applicable principles of Liberian law;
ii) if so, what loss Lonestar has suffered, and whether in addition to compensatory damages the court should also make an award of exemplary damages (and, if so, in what amount).
B THE PARTIES
Lonestar is a well-established telecommunications company operating in Liberia and forms part of the MTN Group, the largest mobile network operator in Africa.
Orange Liberia is now a company in the Orange Group. Until April 2016, when it was acquired by the Orange Group, it was owned by Cellcom BVI and known as Cellcom Liberia.
Mr Kaye provided hacking for hire services. In 2018, he was convicted by a Cologne court of offences involving cyber-attacks on Deutsche Telekom. He has also been convicted of orchestrating the campaign of hacking against Lonestar, and on 11 January 2019 he was sentenced by HHJ Milne KC at Blackfriars Crown Court to 32 months' imprisonment for that offence, following a guilty plea.
Mr Marziano was Chief Executive Officer of Cellcom Liberia from 2009 to 2013 and again from 2014. He also became Group Chief Executive Officer of Cellcom BVI in November 2013. From April 2016 to January 2017, he continued in office as the CEO of what was now Orange Liberia. His salary in respect of the latter role was paid by Cellcom BVI, who billed it back to Orange Liberia from April 2016.
Mr Ran Polani was employed by Cellcom BVI from October 2010, and worked from April 2016 to September 2017 as a mid-level manager in Orange Liberia's Internet Services Provider Business Unit. His salary was also paid by Cellcom BVI, who billed it back to Orange Liberia from April 2016.
As I have stated, the Individual Defendants have not participated in the trial at any stage.
Cellcom BVI was represented by solicitors and counsel for much of the pre-trial phase of these proceedings, and served factual evidence and expert evidence on Liberian law. However, on 13 December 2021, Cellcom BVI's solicitors informed the court that they would be applying to come off the record (which they did the following day), and that Cellcom BVI would henceforth be represented by one of its directors.
At the PTR, before me on 20 December 2021, provision was made for Cellcom BVI to apply to the court for permission for Mr Snider to represent it at the trial, and to serve evidence setting out the alleged financial difficulties which were said to have caused it to dispense with legal representation. However, on 7 January 2022, Cellcom BVI informed Lonestar that it would not be pursuing that application, and that it would not be seeking to call factual or expert evidence at the trial. The reasons why Cellcom BVI followed this course, and whether it resulted from financial difficulties or other factors, are in dispute, and the court is not in a position to make any findings about them.
C THE EVIDENCE
C1 Fact Witnesses
C1(1) Lonestar
Lonestar's only factual witness was Mr Karl Toriola, the CEO of MTN Nigeria Communications Ltd, the indirect majority shareholder in Lonestar. In April 2015, he was appointed as a Group Operations Executive, and in December 2015 he became MTN's Vice President for West and Central Africa, remaining in that role until December 2020. Between April 2015 and December 2020, Liberia was one of the markets over which Mr Toriola had oversight, and Lonestar's CEO (Mr Babatunde Osho) reported to him.
It was Mr Toriola's evidence that:
“As part of that oversight, I received documents produced by Lonestar and reporting on Lonestar's performance …. Outside of those structured reporting mechanisms … I was also in frequent communication with Lonestar's CEO, very often on a weekly, if not daily, basis”.
There is no doubt that Mr Toriola is a highly capable and experienced senior telecommunications executive, with good tactical awareness and great fluency of expression. It may be those qualities which led Lonestar to conclude that he should be its only fact witness at trial. However:
i) It became clear in the course of his cross-examination that Mr Toriola's grasp of the basic chronology of the DDOS attacks on Lonestar was poor. His evidence was that the worst effects of the attacks were experienced from October 2015 to January 2016 and March to April 2016, rather than just from mid-July 2016 onwards. While chronologically supportive of Lonestar's quantum calculation, this evidence is completely inconsistent with the contemporaneous documents (as explained below).
ii) I am satisfied that Mr Toriola's evidence as to the quality, frequency and content of information communicated to him about the DDOS Attacks “outside of … structured reporting mechanisms” was the subject of very considerable overstatement, as was his evidence as to how much of his time was taken up with DDOS-related matters, and how large the issue loomed at the time. Thus, he appears to have received only 3 or fewer emails dealing with the DDOS Attacks between October 2015 and July 2016.
iii) I am satisfied that the unreliability of Mr Toriola's evidence in these respects reflected (a) the limited nature of his engagement with the DDOS Attacks contemporaneously, which is scarcely surprising given his senior position and responsibility for operations in a number of West and Central African countries (Liberia accounting for only about 3% of the markets within his sphere of responsibility); and (b) a readiness on his part to tailor his evidence so as to support Lonestar's case.
iv) In these circumstances, it is necessary to approach his evidence with caution. In particular, I am satisfied that the contemporaneous assessments within Lonestar provide a much more reliable basis for assessing the duration and effect of the DDOS Attacks, and their commercial consequences, than Mr Toriola's evidence, and that his own evidence that the contemporary view of management was that the DDOS Attacks were responsible for the greater part in the decline in Lonestar's performance over the period from October 2015 to January 2017 was wrong.
Lonestar's decision to call Mr Toriola, rather than anyone working “in country” at the relevant time, meant that there was no witness before the court who was able to speak with the benefit of experience of working at Lonestar at the relevant time. No satisfactory explanation was offered for this evidential deficiency. In particular it is apparent that a number of the executives who held senior positions with Lonestar at the relevant time still work within the MTN group, including Mr Andrew Bugembe (who was Chief Financial Officer from October 2014 to August 2016) and Mr Kyomukama (Chief Technology and Independent Officer from September 2014 to September 2016). The explanations offered in Appendix A to Lonestar's closing for the absence of these witnesses were not persuasive, and rather served to highlight the importance of the missing evidence. It was said that Mr Bugembe's work was “primarily focussed on finance” and that Mr Kyomukama's evidence would not have added materially to Mr Toriola's given that he was “a former Chief Technical Officer” (which I understand to be a reference to Mr Toriola's role as Deputy Chief Technical Officer of...
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Lonestar Communications Corporation LLC v Daniel Kaye
...March 2023 at 10:00am. Mr Justice Foxton The Honourable 1 This judgment deals with consequential issues arising from my judgment at [2023] EWHC 421 (Comm). Interest 2 In this case, as I explain below, a “Without Prejudice Save as to Costs” offer was made by Orange Liberia in November 2021 ......