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Ruscoe v Epic Trust Limited

Ruscoe v Epic Trust Limited

Case [2024] NZHC 1336 24 May 2024

Breach of Confidence

Misleading and Deceptive Conduct

Trade Mark Infringement

Interlocutory Orders

Injunction

Compensatory Damages

Intellectual Property Law

Civil Litigation & Procedure

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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 1336

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

Counsel:

S Barker and B Marriner for Plaintiffs B Henry for First Defendant

Judgment:

24 May 2024

JUDGMENT OF ISAC J

[Application for interim injunction]

RUSCOE & MOORE & ANOR v EPIC TRUST LTD & ORS [2024] NZHC 1336 [24 May 2024]

Introduction

[1] In this proceeding, the liquidators of Cryptopia Ltd seek interim injunctions until trial preventing the defendants from using Cryptopia’s confidential information. In response, Epic Trust Ltd, the second defendant, seeks rescission of interim without notice orders made by Palmer J on 13 February 2024.1 The second defendant, Mr Victor Cattermole, is the sole shareholder of Epic Trust, a Montenegrin registered company. He filed an opposition to the Liquidators’ application but did not otherwise participate in the hearing, relying on the submissions advanced by his company.

[2] The Liquidators submit that on the evidence it is seriously arguable the named defendants have unlawfully obtained and misused Cryptopia’s confidential and sensitive commercial information to further their own commercial interests. In response, Epic Trust argues that the Liquidators’ proposed claims are so fundamentally flawed that they cannot succeed at trial. It also argues that it has nothing to do with the conduct alleged against Mr Cattermole and others, and an injunction will prevent it from lawfully going about its business.

[3] The principal issues I must determine are whether the Liquidators have made out a serious issue to be tried and whether the balance of convenience favours an interim injunction. Having considered the evidence and the issues, I have concluded that it is appropriate to grant an interim injunction in the terms sought until trial. My reasons follow.

Background

[4] This proceeding is one of several that have arisen from the collapse of the New Zealand based cryptocurrency exchange operated by Cryptopia. A concise

1 On the basis there is no serious issue to be tried and there is no evidence Epic Trust has ever been in possession of the confidential information. Justice Palmer made interim ex parte orders enjoining the respondents on 13 February 2024. His orders were expressed to continue until the plaintiffs’ application for an interlocutory inunction could be determined on notice. He subsequently set the application down for a hearing. Since then, Epic Trust and Mr Cattermole have filed notices of opposition to the Liquidators’ application. Epic Trust has also filed an application to rescind the interim order.

summary of the events leading to Cryptopia’s liquidation is set out in Palmer J’s judgment of 6…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Ruscoe v Epic Trust Limited

Details

AGLC: Ruscoe v Epic Trust Limited [2024] NZHC 1336
Case: [2024] NZHC 1336
Decision Date: 24 May 2024

CaseChat Overview and Summary

In Ruscoe v Epic Trust Limited, the High Court of New Zealand considered an application for interim injunctions by the liquidators of Cryptopia Ltd, a New Zealand-based cryptocurrency exchange, against Epic Trust Limited, Thomas Victor Henry Ronald Cattermole, and others. The liquidators sought to prevent the defendants from using Cryptopia’s confidential information, which had been unlawfully obtained by Mr Cattermole. The principal issues before the Court were whether the liquidators had made out a serious issue to be tried and whether the balance of convenience favoured an interim injunction.

The Court found that there was a serious question to be tried regarding the defendants' use of Cryptopia's confidential information. Evidence suggested that Mr Cattermole had unlawfully obtained and distributed the confidential information to third parties. Furthermore, the defendants, or entities associated with them, had sent emails to Cryptopia account holders using information that could only have been derived from the confidential spreadsheets. These emails appeared to be official communications from Cryptopia, causing confusion among account holders. The Court concluded that it was seriously arguable that the defendants were using Cryptopia's confidential information in breach of confidence and for misleading conduct under the Fair Trading Act 1986.

Regarding the balance of convenience, the Court found that the risk of harm if an interim injunction was not granted was significant. The continued use of the confidential information could increase liquidation costs and lead to the release of account holder information to third parties, potentially putting the liquidation itself at risk. In contrast, the effect of granting an interim injunction on the defendants would be minimal delay. Considering the overall interests of justice, the Court concluded that it was appropriate to grant the injunctions sought by the liquidators.

Accordingly, the Court made orders prohibiting the defendants from using or disclosing the confidential information and the term "Cryptopia" in certain contexts until the proceeding was finally determined. The Court reserved leave to the plaintiffs to seek to modify the terms of these orders.

Orders