Ruscoe v Epic Trust Limited - [2024] NZHC 165

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 165

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

BETWEEN

DAVID IAN RUSCOE AND MALCOLM RUSSELL MOORE AS LIQUIDATORS OF

CRYPTOPIA LIMITED (in liquidation) First Plaintiffs

AND

CRYPTOPIA LIMITED (in liquidation) Second Plaintiff

AND

EPIC TRUST LIMITED

First Defendant

AND

THOMAS VICTOR HENRY RONALD CATTERMOLE

Second Defendant

AND

MARTIN BRAINE

Third Defendant

AND

PERSONS UNKNOWN

Fourth Defendant

Date: On the papers

Counsel:

S A Barker and B E Marriner for the Plaintiffs

Judgment:

13 February 2024

JUDGMENT OF PALMER J

Solicitors
Buddle Findlay, Wellington

RUSCOE v EPIC TRUST LIMITED [2024] NZHC 165 [13 February 2024]

What happened?

[1] The plaintiffs are the liquidators of Cryptopia Ltd (in liquidation) (Cryptopia), a cryptocurrency exchange company. The liquidation has given rise to a variety of legal proceedings.1 Most recently, the first defendant (Epic Trust), applied unsuccessfully to join proceedings where the liquidators sought directions about the distribution of the cryptocurrency assets of Cryptopia.2 Epic Trust is owned by Mr Victor Cattermole, the second defendant. Mr Cattermole appears to control Cogito, a metaverse for which Epic Trust is the trustee company. Mr Martin Braine appears to be an in-house lawyer for Cogito. Other persons unknown, who have control over, or responsibility for the actions of Cogito, are named as the fourth defendant(s).

[2] In 2019, one of the liquidators, Mr Ruscoe, filed an affidavit in earlier High Court proceedings relating to the liquidation. Attached to the affidavit were two spreadsheets which contained commercially sensitive and confidential information, including usernames and email addresses for account holders, the number of cryptocurrencies held by each account holder, a valuation of each cryptocurrency holding, and other account information. The information in the spreadsheets was not publicly accessible.

[3] In April 2021, apparently due to an error of the High Court Registry in Christchurch, Mr Cattermole obtained that information. On 21 October 2020, the Court ordered Mr Cattermole to delete or return the spreadsheets. On 14 July 2021, the Court made orders by consent holding Mr Cattermole in contempt for not providing specified information and devices for review. It recorded his undertakings that he did not have any copies of the spreadsheets in his power, possession or control and that, if he did, he would notify the liquidators.

[4] In December 2023, the liquidators say they became aware that, in 2020, Mr Cattermole had sent parts of the confidential information to another person by email. From October 2023 to January 2023, the liquidators have provided evidence that Epic

1 See, for example Ruscoe v Cryptopia Ltd (in liq) [2020] NZHC 728, [2020] 2 NZLR 809; and
Ruscoe v Houchens [2023] NZHC 2490.
2 Epic Trust Ltd v Ruscoe [2024] NZHC 21.

Trust sent a variety of emails to Cryptopia account holders with the subject line including “Cryptopia”, titled “Cryptopia Communication”, and signed by T Cattermole or Martin…

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 165
Case: [2024] NZHC 165
Decision Date: 13 February 2024

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Ruscoe v Epic Trust Limited involves the liquidators of Cryptopia Ltd, a cryptocurrency exchange company in liquidation, suing Epic Trust Limited, Thomas Victor Henry Ronald Cattermole, Martin Braine, and unknown parties for breach of confidence, trademark infringement, and misleading and deceptive conduct under the Fair Trading Act 1986. The liquidators allege that Epic Trust and its associated individuals misused confidential information from Cryptopia's database, including account holders' personal information and cryptocurrency holdings, and used the trademark "Cryptopia" without authorization. The dispute centres around the unauthorised dissemination of this sensitive information and the potential harm to Cryptopia's account holders and the integrity of the liquidation process.

The court was tasked with determining whether to grant an interim injunction to prevent the defendants from using or disclosing the confidential information and the "Cryptopia" trademark until the substantive claims were decided. The key legal issues included whether there was a serious question to be tried on the merits of the claims, the balance of convenience, the adequacy of damages as a remedy, and whether granting the injunction was in the interests of justice. The court examined the evidence provided by the liquidators, including affidavits and witness statements, to assess the potential harm of unauthorised disclosure and the likelihood of success on the merits.

The court found that there was a serious question to be tried regarding the breach of confidence and trademark infringement claims. The evidence suggested that the confidential information was misused and that the defendants had sent communications to Cryptopia account holders using the trademark, causing confusion among account holders. The balance of convenience favoured the liquidators, as widespread dissemination of the confidential information could irreparably harm the liquidation process and the account holders. Damages were considered inadequate to compensate for the potential loss, especially given the large number of account holders affected. The court concluded that granting the interim injunction was consistent with the interests of justice, considering the potential impact on the account holders and the previous court orders protecting the confidential information.

The court granted the interim injunction, prohibiting the defendants from using or disclosing the confidential information and the "Cryptopia" trademark until the substantive claims were decided. The court also granted ancillary orders for service of the first defendant, disclosure of the identity and contact details of the third and fourth defendants, and confidentiality orders regarding the affidavit filed by Mr. Ruscoe. The court reserved the right for any party to apply to vary or set aside the interim injunction on three working days’ notice.

Orders