Ruscoe v Epic Trust Limited

[2024] NZHC 1546

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-58

[2024] NZHC 1546

UNDER

the Trade Marks Act 2002, Fair Trading Act 1986, and breach of confidence

BETWEEN

DAVID IAN RUSCOE AND MALCOLM RUSSELL MOORE OF GRANT THORNTON NEW ZEALAND

LIMITED as liquidators of CRYPTOPIA LIMITED (IN LIQUIDATION)

First Plaintiffs

CRYPTOPIA LIMITED (IN LIQUIDATION)

Second Plaintiff

AND

EPIC TRUST LIMITED

First Defendant

THOMAS VICTOR HENRY RONALD CATTERMOLE

Second Defendant

MARTIN BRAINE

Third Defendant

PERSONS UNKNOWN

Fourth Defendant

Hearing:	15 April 2024 [Further memoranda 19 April 2024, 11 June 2024]
Counsel:	S A Barker and B E Marriner for Plaintiffs B Henry for First Defendant
Judgment:	13 June 2024

JUDGMENT OF ISAC J

[Ancillary orders and amended interim orders]

RUSCOE AND RUSSELL MOORE OF GRANT THORNTON NEW ZEALAND LIMITED as liquidators of CRYPTOPIA LIMITED (IN LIQUIDATION) v CRYPTOPIA LIMITED (IN LIQUIDATION) [2024] NZHC 1546 [13 June 2024]

Introduction

[1]                 Following a hearing on 15 April 2024, I issued a judgment on 24 May 2024 granting the plaintiffs, the liquidators of Cryptopia Ltd, interim injunctions preventing the defendants from using Cryptopia’s confidential information.1

[2]                 However, on 19 April 2024 the plaintiffs had filed a memorandum seeking several amendments to the interim orders sought in the application for an interim injunction, and sought ancillary orders in support. The memorandum was overlooked and in my 24 May 2024 judgment I granted the interim orders in a form that largely reflected those set out in the plaintiffs’ original application.2 I did not address ancillary orders. I reserved leave to the plaintiffs to modify the terms of the orders.3

[3]                 On 11 June 2024, the plaintiffs filed a further memorandum requesting the Court make the orders set out in the draft interlocutory orders and draft amended interim orders filed on 19 April 2024.4

[4]                 There are two questions this judgment addresses. The first is whether the interim orders set out in my judgment should be modified to reflect the amendments sought by the plaintiffs on 19 April 2024. The second is whether the ancillary orders requested by the plaintiffs should be granted.

The amended interim orders sought by plaintiffs

[5]                 The plaintiffs’ memorandum of 19 April 2024 proposed an amendment of the interim orders to require that the first and second defendant disclose, by way of affidavit, the identity, whereabouts and contact details of the third defendant, and any other legal persons in control of decision making for the fourth defendant. This reflects

1      See Ruscoe v Epic Trust [2024] NZHC 1336 at [4]–[12] for an overview of the background to the proceeding.

2      See Ruscoe v Epic Trust above n 1 at [38] for the orders made.

3 At [39].

4      In the 11 June 2024 memorandum the plaintiffs requested that the Court makes the orders [3(b)], [3(c)] and [3(d)] of the draft interlocutory orders and [3(b)] of the draft amended interim orders, referring to the draft orders filed on 19 April 2024.

the difficulty the plaintiffs have encountered trying to ascertain the identities of the third and fourth defendants.5

The ancillary orders sought by plaintiffs

[6]                 The plaintiffs also requested a number of ancillary orders. The first was an order requiring the first to fourth defendants to disclose on affidavit details of the confidential information and who it had been given to. The order would require the affidavits to be provided within 10 working days.

[7]                 The second was an order to require the second defendant, Mr Cattermole, to procure Classic Focus Limited, the Cogito Metaverse, the Principality of Cogito and any other entities under his control to comply with the orders. The purpose of this order is to prevent the second defendant from claiming he has complied with the injunction while procuring or encouraging others to breach the order and use Cryptopia’s confidential information. This ancillary order is necessary to ensure the injunction is not frustrated.

[8]                 The third ancillary order is to restrict leave to set aside or vary the interlocutory orders to the third and fourth defendants. The first and second defendants would instead first require the Court’s leave to vary or set aside the interlocutory orders. This reflects the fact that while the first and second defendants have had an opportunity to be heard, the third and fourth defendants have not.

Conclusion and orders

[9]                 Given the conclusions and findings in my original judgment, I consider it is appropriate to grant the modified and ancillary orders largely in the terms sought by

5      The plaintiffs’ memorandum of 19 April 2024 recorded that Epic Trust’s counsel expressed concern that granting the orders sought would render the use of the word “Cryptopia” in professional communications concerning these proceedings a contempt of court. A narrowed order was proposed to reflect the concern. I do not consider it is necessary given there can be no real suggestion that professional communications between counsel and solicitors involving the ongoing litigation would amount to a trade mark infringement and, therefore, a contempt of court.

the plaintiffs. I therefore make the following orders, which supersede and replace those set out in the judgment of 24 May 2024:6

(a)That from the date of this judgment until such time as the proceeding is finally determined the first to fourth defendants are prohibited from:

(i)using, relying on, referring to, disseminating, or disclosing the information about Cryptopia's database and cryptocurrency holdings contained in the spreadsheets exhibited to the affidavit of David Ian Ruscoe dated 8 November 2019 in CIV-2019-409-544 (or copies thereof, whether in electronic or hard copy); and

(ii)using the terms “Cryptopia” and “CRYPTOPIA”:

(1)in the headings or sub-headings of any documents or communications created for the purposes of advertising to or communicating with Cryptopia’s account holders, or persons who may be Cryptopia’s account holders; and

(2)in any domain names, usernames, account names, email addresses, subject lines or display names used for the purposes of advertising to or communicating with Cryptopia’s account holders, or persons who may be Cryptopia’s account holders.

(b)Within two working days of service of this order, the first and second defendants must disclose, by way of affidavit:

(i)the identity, whereabouts and contact details of Martin Braine, the in-house lawyer for the Principality of Cogito; and

6      As I understand they have been sought. This has not been an altogether simple exercise because the plaintiffs have filed two documents—“amended interim orders” and “interlocutory orders”— which in parts appear to repeat the same orders but also have material differences.

(ii)the identity and contact details of any legal persons (being natural persons or other legal entities) who are in control of decision-making for the Principality of Cogito or the Cogito Metaverse.

(c)Within 10 working days of this order the first to fourth defendants are required to disclose on affidavit their knowledge of:

(i)what information has been posted to the Cogito Metaverse or Principality of Cogito websites that contains all or any part of the Confidential Information or is based on or derived from the Confidential Information.

(ii)what information has been disclosed to Cryptopia account holders or persons seeking to accept Cogito's settlement offer since 21 October 2020 that contains all or any part of the Confidential Information or is based on or derived from the Confidential Information, and the identities of the persons or entities the information was disclosed to.7

(d)The second defendant is to procure the compliance of all entities, persons and interests under his control to comply with the orders set out at [9(a)].8

7      The plaintiffs also sought a further order requiring: “A list of the email addresses that have been provided to the first to fourth defendants by persons or entities purporting to be Cryptopia account holders in connection with the first to fourth defendants' offer to purchase those account holders' cryptocurrency entitlements.” I am not currently satisfied that it is necessary or appropriate to grant such an order, and decline to do so. However, leave to apply is reserved to the plaintiffs should they wish to pursue it. I would require further submissions directed at the necessity of the order given it affects third party interests.

8      I have varied the wording proposed by the plaintiffs in the “draft interlocutory orders” at [3(c)].

(e)Leave is reserved for the third and fourth defendants to apply to set aside these orders on three working days’ notice.

Isac J

Solicitors:

Buddle Findlay, Wellington for Plaintiffs

Cavell Leach Ltd, Christchurch for First Defendant