Catalyst Capital Group Comments on West Face Statements

TORONTO--()--The Catalyst Capital Group Inc. ("Catalyst"), Canada's second-largest independent private equity firm, today commented on recent statements by West Face Capital Inc. regarding ongoing litigation related to its acquisition of WIND Mobile Corp and the short attack at Callidus Capital Corporation:

“We can understand the increasing pressure that West Face has experienced due to its questionable and potentially unlawful actions around its acquisition of WIND and activities regarding Callidus Capital that has resulted in numerous inquiries from current and prospective investors, service providers and industry participants.

“In regards to our litigation against West Face and other parties, there are very few firms out there that take the role of fiduciary as seriously as we do. Our commitment to LPs and to the minority shareholders in Callidus Capital is the primary consideration in all decisions we make.

“It is exactly because of this culture at Catalyst, as compared to how others behave, that we have chosen to be incredibly tough and demanding when our rights are trampled or counterparties act unethically. Because ultimately, it is our LPs and investors that are impacted.

“It should be highly concerning to numerous stakeholders that West Face has determined to litigate through the public at large, in full knowledge of an upcoming jury trial regarding the WIND acquisition, and the fact that the Brandon Moyse/West Face decision is being appealed. The appeal is on the basis of a denial of procedural fairness, errors of law in determining the spoliation claim and errors of fact and mixed fact and law in determining the claims for spoliation and the misuse of Catalyst’s confidential information. The award by Justice Newbould on a substantial indemnity basis ignores finding by Justice Lederer, among other things, and is a continuation of the basis for our appeal.

“Catalyst has put its faith in the judiciary and expect that our claims and appeals will be heard fairly and that judgment will expose the truth of West Face’s actions, character and values.”

Note to Editors: Detailed summary regarding Catalyst Capital’s notice of appeal from the trial decision of Justice Frank Newbould of the Ontario Superior Court of Justice - Commercial List dated August 18, 2016 in Court File No. CV-14-507120.

Errors of Fact and Procedural Unfairness:

  • In his review of the evidence and determination of disputed facts relating to Catalyst’s claim that Brandon Moyse and West Face Capital Inc. misused its confidential information, the trial judge made several palpable and overriding errors of fact. Catalyst is aware of over 30 errors of fact as demonstrated by the stark difference between the trial judge's ruling as compared to the actual record. The mishandling or willful ignorance of these facts directly influenced the determination that West Face and Moyse were not liable for misuse of confidential information.
  • Catalyst also believes that the trial judge applied an inconsistent standard in his evaluation of the witnesses. For example, Catalyst highlights that there were numerous and glaring inconsistencies by defendants’ oral evidence that directly contradicted contemporaneous documentary evidence.
  • For example:
    • The trial judge erred in finding that West Face “took seriously” the issue of confidentiality when the documentary and oral evidence demonstrates that in March and April 2014, Tom Dea knowingly and repeatedly distributed Catalyst’s confidential information to his partners and reviewed that information to determine if it was “helpful” to West Face; and
    • The trial judge erred in finding that Wind was the only telecom investment West Face was working on in spring 2014 when West Face’s witnesses admitted and documentary evidence demonstrated it was also considering an investment in Mobilicity.
  • While the opposite standard was applied to the Plaintiffs. For example, Newton Glassman’s, Catalyst’s Managing Partner, unique experience with the only similar case to be litigated in North America and his legal background were summarily dismissed, when the undisputed fact is that Mr. Glassman was significantly involved in the successful outcome of the similar case before the U.S. Supreme Court, and also graduated from law school.
  • Catalyst believes that this inconsistent standard led to procedural unfairness and on this basis alone a new trial is required.

Error of Law in Determining the Spoliation Issue

  • It is undisputed that Moyse consented to an order that required him to preserve the contents of his personal computer and that Moyse then employed a military-grade document deletion software the night before his personal computer was scheduled to be forensically imaged.
  • Catalyst believes that the motion judge erred in law in relation to his findings on the issue of spoliation of evidence by [Brandon] Moyse. The trial judge erred in law by ignoring the historical evidentiary standard requiring defendants to prove that they had not destroyed the evidence in question, which Moyse and West Face failed to do, but rather put the task on Catalyst to produce a particular piece of evidence that is by definition impossible to prove - and by Moyse’s own admission was destroyed. This was a precedent setting error of law.
  • The consequences for this issue go beyond the dispute between these parties – the trial judge created a new, improper and impossible standard to meet that rewards defendants for destroying evidence and will make it easier in future cases for defendants to destroy relevant evidence with impunity.

About Catalyst:

The Catalyst Capital Group Inc., a private equity investment firm with more than $6 billion in assets under management founded in 2002, is a leader in operationally focused turnaround investing. The firm's mandate is to manufacture risk adjusted returns, in keeping with its philosophy of "we buy what we can build." Catalyst's Guiding Principles of investment excellence through operational involvement, superior analytics, attention to detail, intellectual curiosity, team and reputation are key to the firm's success. The Catalyst team collectively possesses more than 110 years of extensive experience in restructuring, credit markets and merchant and investment banking in Canada, the United States, Latin America and Europe.

Contacts

Media:
Gagnier Communications
Dan Gagnier, 646-273-9391
dg@gagnierfc.com

Contacts

Media:
Gagnier Communications
Dan Gagnier, 646-273-9391
dg@gagnierfc.com