The High Court has ordered a preliminary modular hearing in a case where the liquidators of Weavering Macro Fixed Income Fund Limited are pursuing a claim of about €360 million against its former fund administrator.
The Cayman Islands-incorporated investment fund had engaged PNC Global Investment Servicing (Europe) Limited under a 2003 administration agreement. Weavering claims the administrator miscalculated the fund’s net asset value, failed to identify the counterparty to large interest-rate swap transactions and failed to warn its directors about escalating investment risk.
The judgment records allegations that supposedly profitable interest-rate swaps with a related company rose in stated value from about US$1.5 million in April 2005 to more than US$630 million by January 2009, while no corresponding payments were made to Weavering. The court stressed that those allegations and other disputed facts were not being decided on this motion.
The substantive action was expected to take 64 trial days. PNC’s own costs were estimated at €5.6 million. It therefore sought a modular hearing — effectively a separate preliminary trial of issues which might narrow or determine substantial parts of the later case.
Mr Justice Charleton agreed that eight issues could be dealt with in advance. They included whether the administration agreement confined claims to a 12-month period, when causes of action arose, whether factual findings from earlier Cayman Islands proceedings could be reopened, what standard of misconduct PNC had to meet before liability arose, and whether consequential or indirect losses were contractually excluded.
The judge refused, however, to decide causation in the preliminary module. Whether misconduct by Weavering’s own directors caused the claimed losses was described as the central factual dispute and had to remain for the main trial.
The ruling did not decide PNC’s liability or the amount of any recoverable damages. It determined only how the complex litigation should be structured before trial.