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England and Wales High Court (King's Bench Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (King's Bench Division) Decisions >> Pacini & Anor v Dow Jones & Company Inc [2024] EWHC 2714 (KB) (29 October 2024) URL: http://www.bailii.org/ew/cases/EWHC/KB/2024/2714.html Cite as: [2024] EWHC 2714 (KB) |
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KING'S BENCH DIVISION
MEDIA & COMMUNICATIONS LIST
Strand, London, WC2A 2LL |
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B e f o r e :
(sitting as a Deputy Judge of the King's Bench Division)
____________________
| (1) JOSEPH PACINI (2) CARSTEN GEYER |
Claimant |
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| - and - |
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| DOW JONES & COMPANY INC. |
Defendant |
____________________
Catrin Evans KC and Ben Gallop (instructed by Pinsent Masons LLP) for the Defendant
Hearing dates: 15 October 2024
____________________
Crown Copyright ©
Richard Spearman KC
INTRODUCTION
THE CLAIMANTS
THE CLAIM
THE STRIKE-OUT APPLICATION
THE ARTICLES
DID XIE ZHIKUN'S NEARLY $1 BILLION GO MISSING? A PRIVATE-EQUITY MYSTERY
[1] Chinese investor says he backed XIO Group big-time; it says he didn't, and now he has filed suit
[2] When Chinese billionaire Xie Zhikun toured Europe in the summer of 2015, his hosts took him to the Aston Martin factory in the English Midlands, to the women's tennis final at Wimbledon and to dinner at London's Connaught Hotel, where he was presented with a portrait of himself painted in tea, according to people who helped organize the visit.
[3] Mr Xie and his chaperones on the trip, executives at London private-equity firm XIO Group, stopped in on companies the firm was buying, according to current and former employees of XIO and an agenda of the trip reviewed by The Wall Street Journal, as well as visiting investment prospects like the sports-car maker they code-named "Project Bond" after its most famous client, the fictional British spy James Bond.
[4] Now, that seemingly friendly relationship is in tatters. The billionaire says it was his money—nearly $1 billion—that seeded XIO and allowed it to buy its first two companies. But XIO wasn't returning his phone calls, he says. In court papers filed in the Cayman Islands, where companies at the center of the dispute are incorporated, Mr Xie is accusing XIO executives of a conspiracy to defraud him out of his cash.
[5] XIO says it doesn't have Mr Xie's money and never did. An XIO spokesman didn't respond to questions about whether any entity affiliated with Mr Xie has been an investor and XIO has denied his allegations.
[6] Mr Xie is one of the rising number of wealthy Chinese making overseas investments even as Beijing imposes tighter capital controls. He is spreading across the world billions of dollars of the fortune he made in forestry and finance, according to company filings and people familiar with the matter. XIO, founded in Hong Kong in 2014, has a brief history in private equity but made a splash last year when it bought California-based automotive-research firm J.D. Power for $1.1 billion.
[7] 'Xie Zhikun is not an investor with XIO and never has been' —XIO Chief Executive Joseph Pacini
[8] In legal filings and documents reviewed by the Journal, Mr Xie says he invested a substantial sum in XIO in 2014—and he wants it back.
[9] XIO Chief Executive Joseph Pacini said in an email that "Xie Zhikun is not an investor with XIO and never has been," and denied his allegations. He declined to discuss the European tour. He said other investors—not Mr Xie—provided $3.2 billion to the firm in 2014.
[10] Mr Xie, 56, couldn't be reached for comment. A Beijing-based spokesman for his company, Zhongzhi Enterprise Group, declined to comment. A spokeswoman for Mr Xie's legal representatives in the Cayman Islands at law firm Maples and Calder declined to comment.
[11] The tussle erupted in December. A representative of Mr Xie sent two letters, which the Journal has reviewed, to XIO's office in the Shard skyscraper in London. One letter says that in 2014 Mr Xie provided 5.8 billion yuan— $940 million at the time—to help set up XIO and to fund the acquisitions of two medium-size companies. The letter demands answers about what happened to what it described as Mr Xie's "very significant" investment following six months of "unanswered requests for information and documents." The second letter asks further questions about what happened to Mr Xie's money.
[12] Apparently unsatisfied, Mr. Xie in February sued in a Cayman Islands court, accusing XIO Chairwoman Athene Li and CEO Mr Pacini of receiving "secret profits" from the alleged fraud.
[13] Ms Li declined to comment.
[14] Mr Xie, an imposing figure well over 6 feet tall, is known in China for his wealth and philanthropic support for the arts and sciences. His pop-star wife, Mao Amin, regularly sings at shows and on state television, but Mr Xie keeps a lower profile. In 1995 he founded Beijing-based Zhongzhi, whose website states that it has 1 trillion yuan ($145 billion) of assets. Mr Xie's investments range widely and include electric vehicles and trusts that lend money, according to company filings.
[15] Along with J.D. Power, XIO owns German and Israeli assets, according to its website. XIO brought in U.S. investment firm BlackRock Inc. to invest alongside it for the J.D. Power deal, according to people familiar with the transaction. BlackRock declined to comment. In December, XIO said it agreed to buy Meitav Dash, a publicly traded Israeli fund company that manages about $33 billion.
[16] XIO was founded in Hong Kong in 2014 by Ms Li, a Chinese executive, Mr Pacini, an American former BlackRock executive, and two other partners. Ms Li is based in China and Mr. Pacini in London.
[17] Mr Pacini moved to Asia in 2007 with J.P. Morgan Chase & Co. and joined BlackRock there in 2012 before setting up his own firm with Ms Li. He said working at J.P. Morgan and BlackRock brought him into contact with the chairmen of big Asian companies eager to invest in new places.
[18] "These organizations are massively flush with cash," Mr Pacini said in an interview in September. "They are very hungry for stable investments."
[19] Mr Xie says in a court filing in the Cayman Islands that in April 2014 he entrusted Ms Li and Mr Pacini to handle his investments in XIO and Dorsey Ventures Ltd., a Cayman corporation.
[20] According to another filing from Mr Xie in the same court, Ms Li is the legal owner of Dorsey, and he and Ms Li have a "share entrustment agreement" that specifies that he is the actual owner. Such agreements are commonly used by wealthy people who want to put money into shell companies without being identified in corporate records. The filing demands that Dorsey make no transfer of shares or payment of dividends without "the order of Xie Zhikun." The letters Mr Xie sent to XIO in December also mention Dorsey, saying Ms Li was supposed to manage its daily operations as well as "deal with the investments of XIO."
[21] XIO made its first acquisitions in 2015 when it paid more than $300 million, according to people familiar with the deal, for Compo Expert, a German fertilizer company, and $510 million for Lumenis, an Israeli medical-laser company.
[22] That summer, XIO chaperoned Mr Xie on the tour of Europe and Israel by private jet, according to people familiar with the visit. The trip's agenda refers to Mr Xie as an "LP," which is private-equity parlance for an investor in a fund. XIO staff also accompanied Mr Xie on shopping trips to stores including Harrods in London, where he spent thousands of dollars, the people say.
[23] During the visit, Mr Xie was described as "Chairman of XIO Fund Advisory Board" in an email reviewed by the Journal that XIO co-founder Carsten Geyer sent to arrange a meeting with a banker. Mr Geyer declined to comment.
HOW J.D. POWER WAS ACQUIRED BY A CHINESE COMPANY SHROUDED IN MYSTERY
[1] Hong Kong's XIO Group, which acquired the U.S. auto-rating firm in 2016, is now embroiled in a dispute about the source of XIO's funding
[2] A plan for the sale of the car-rating business J.D. Power was a month old when the seller, New York-based information giant S&P Global Inc., grew uneasy. It wasn't quite sure to whom it had agreed to sell the company.
[3] "I wanted to raise a point with you that is causing our team here some concern," S&P Global executive Jason Gibson wrote on May 19, 2016, to the purchaser, a firm called XIO Group that had been set up in Hong Kong and was planning to do the deal through an offshore private-equity fund. Mr Gibson emailed that he hadn't received information he expected about who owned XIO and where it was getting the money for the purchase.
[4] The sale went through. XIO acquired J.D. Power four months later for $1.1 billion. The deal left a U.S. company famed for enhancing transparency—shining a light on the automotive and other industries—owned by a private company that was soon embroiled in a largely hidden dispute in China over its funding.
[5] Most XIO employees knew little about where its funding came from. Some advisers to XIO received differing accounts.
[6] The J.D. Power deal was completed amid a wave of overseas acquisitions by cash-rich, privately owned Chinese companies. Some of them have unclear ownership structures that bankers and lawyers say can be a source of confusion. XIO provided full details of its investors to everyone involved in the U.S. regulatory approval process for J.D. Power, a spokesman for XIO said.
[7] Purchases of foreign assets by Chinese companies exploded in 2016 to a record $217 billion. Though China's government has sought to rein these in, the buying continues, at a slower pace.
[8] XIO was among the new buyers Western bankers and lawyers started hearing about. A year after it was founded in Hong Kong, XIO opened its headquarters office in London's Shard skyscraper in 2015. A Shanghai-based fund company called Shanghai Li Hong Investment Center invested hundreds of millions of dollars from mainland China in one of XIO's acquisitions, according to a public document at China's Ministry of Commerce. XIO controls Shanghai Li Hong, the XIO spokesman said.
[9] XIO quickly developed the capacity to do billion-dollar deals. Yet its executives and a billionaire Chinese tycoon are fighting over its assets in lawsuits in two jurisdictions, with details hidden from public view.
[10] "Beneficial ownership of companies is difficult to understand in China," said Bruno Raschle, vice chairman of Zurich-based private-equity firm Schroder Adveq. "You never know who is really behind a company—an individual or the government—or sometimes the government using individuals or making use of individuals."
[11] Chinese acquirers around which ownership questions have swirled include the conglomerate HNA Group Co. The Swiss Takeover Board found in November that when HNA bought a Swiss airline-catering firm called Gategroup in 2016, HNA failed to disclose that two of its owners held their stakes on behalf of HNA's co-founders. HNA said it respected the Swiss board's authority.
[12] "Many companies in China mistakenly believe that extreme secrecy is a form of discretion," said Abel Halpern, a former partner of U.S. private-equity firm TPG who is setting up a business to advise Chinese companies investing outside China.
[13] "Such activity can put a black mark on Chinese capital as an asset class," Mr. Halpern said. "If people believe Chinese capital is tainted by deliberately opaque structures, then such capital is viewed with suspicion and mistrust."
[14] In China, tracing ownership of companies can be complicated by a practice called guanxi, the cultivation of relationships and unwritten favors. This can come into play when wealthy Chinese purchase international assets as a way to move money overseas without their government's knowledge, said lawyers and bankers familiar with the practice.
[15] Because of the risk that acquisitive companies with unclear ownership could be conduits for money laundering and tax evasion, the U.K. in 2016 published an open register of companies' beneficial ownership. European Union countries agreed in December to create public registries listing such information. Three bills in the U.S. Congress would require companies to disclose their beneficial owners.
[16] Nine of 10 senior executives said it was important to know the ultimate owner of companies they do business with, in a 2016 survey of 2,800 executives in 62 countries by EY (formerly Ernst & Young).
[17] "If legitimate companies like J.D. Power are being bought up or interacting with anonymous companies, it opens the door to increased liabilities about which we have no idea," said Gary Kalman, executive director of the Financial Accountability & Corporate Transparency Coalition, a Washington-based nonprofit that campaigns against corruption.
[18] Goldman Sachs Group Inc. won't advise XIO because of concerns about how it is funding deals, according to a person familiar with Goldman's decision-making.
[19] The spokesman for XIO said it works with "the most reputable global investment banks" and hasn't asked Goldman to advise on an acquisition.
[20] It is common practice for private-equity firms not to publicly disclose their investors, the spokesman said. "Honoring nondisclosure agreements and client confidentiality is a basic tenet in following international standards accepted by leading global alternative investment firms," he said.
[21] Addressing criticisms made of anonymous companies, the XIO spokesman added: "Private equity funds have made an incontestable contribution to the global economy."
[22] When XIO sought to buy J.D. Power in early 2016, it had competition from better-known companies. XIO faced pressure to convince owner S&P Global that XIO was a credible bidder for the auto-research company, according to people involved in the acquisition process.
[23] XIO Chairwoman Athene Li and Chief Executive Joseph Pacini enlisted Thomas Borer, a well-connected former Swiss diplomat. To vouch for XIO to S&P Global, Mr. Borer introduced XIO to John Negroponte, who had worked for S&P Global when it was called McGraw-Hill and later was U.S. director of national intelligence under President George W. Bush. Mr Borer, Mr Negroponte and S&P Global declined to comment.
[24] In April 2016 S&P Global announced it had agreed to sell J.D. Power to XIO, "a global alternative investments firm."
[25] XIO would make the purchase using a fund based in the Cayman Islands, which doesn't require firms to publicly disclose their investors. It was during the following month that S&P Global's Mr. Gibson asked XIO for its ownership and funding details as the seller prepared to seek U.S. government approval for the deal, according to emails reviewed by The Wall Street Journal.
[26] An XIO executive responded that Mr. Gibson should have received the information from XIO's legal adviser, Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Gibson wrote back that he had received an email from Skadden, but "the part they did not share are the missing financials and ownership pieces."
[27] "We will not hold up the filing on this matter, but as it's a joint filing we would expect to be able to review," he wrote.
[28] That email was forwarded within XIO to its general counsel. She emailed colleagues she was "not sure why MG has not shared these with the team but will chase up now." MG is Michael Gisser, then head of Skadden's Asian operations and an adviser to the XIO founders.
[29] Mr. Gisser said he is retired from Skadden and declined to comment, as did Skadden.
[30] XIO wouldn't comment on the correspondence. "In the context of the acquisition of J.D. Power, all of the parties (including law firms, advisers and government agencies) who were part of the U.S. regulatory approval process were provided full details of XIO Group's diversified institutional investor base," the XIO spokesman said.
[31] A spokesman for S&P Global wouldn't discuss Mr. Gibson's email. S&P Global is "comfortable that the level of due diligence that we performed in connection with our sale of J.D. Power to XIO Group was appropriate," said spokesman David Guarino.
[32] In June 2016, as XIO was working on getting U.S. government approval for the deal, its general counsel resigned. She left in part because she didn't believe she had sufficient information about XIO's investors to do her job properly, according to former employees, some of whom were employed at XIO at the time.
[33] XIO's spokesman said the general counsel left to pursue a master's degree in business administration and continued to support XIO. The former counsel now works at a U.S. private equity firm.
[34] An XIO executive working on the J.D. Power deal departed not long after. The two were among at least 14 investment professionals who have left XIO since the firm started in 2014, according to the professionals and to websites including LinkedIn.
[35] The spokesman for XIO called its staff turnover "lower than average."
[36] Within XIO, only its four founding partners know who the investors are, and no other current or former employees have any knowledge about them, the spokesman said. He said XIO is "legally bound by Cayman confidentiality law" not to disclose its investors without their permission. He added this is normal for private-equity funds based on the Caribbean island, where "many private equity vehicles are domiciled."
[37] Nine of the former XIO employees who left said they were skeptical that XIO had a fund containing money from many separate institutions, which is what they said they were led to believe when they joined. The former employees, at least three of whom worked on the J.D. Power deal, said XIO was more secretive about its investors than other firms where they have worked.
[38] XIO staff appeared on one occasion to give differing accounts of who funds its deals. When a Moody's Investors Service credit officer met with XIO staff after the deal announcement to discuss debt ratings for J.D. Power, he was told XIO's investors were Chinese, according to the Moody's officer, Edmond DeForest.
[39] A Deloitte accountant got a different response weeks later when he referred to XIO's "China resident investors" in an email to XIO that was reviewed by the Journal. "There may be a misconception. The investors into the XIO fund are not primarily Chinese," XIO partner Carsten Geyer replied.
[40] The Deloitte accountant, Anthony Passalaqua, declined to comment.
[41] As the summer of 2016 progressed, XIO contacted financial firms to ask if they would also invest in J.D. Power. On Aug. 8, XIO's Mr Pacini emailed British pension fund Hermes Investment Management about a "co-Investment opportunity with J.D. Power," saying investors could make as much as 2.9 times their money through a resale within three years. Hermes was interested but decided not to invest, in part because it couldn't get comfortable with the lack of information it received about XIO, a person familiar with the talks said.
[42] BlackRock Inc., the world's largest asset manager and a former employer of XIO CEO Mr Pacini, did invest with XIO, people familiar with the acquisition said. So did Beijing-based China Life Insurance Group, according to an investment manager at the insurer.
[43] The deal for J.D. Power gained approval by the Committee on Foreign Investment in the United States. XIO said the agency's review finished in 30 days. The committee declined to comment.
[44] XIO completed the acquisition on Sept. 7, 2016, but mystery over its funding didn't end.
[45] China Goes Global. Takeovers by Chinese companies outside China were still strong in 2017 even though they fell from a record they year before. [Followed by two charts entitled "Value of overseas deals" and "Number of deals"]
[46] A New York investment banker who had advised XIO on the acquisition met later that year with a Chinese businesswoman named Carol Xie, who shocked the banker by saying her father's investment group had bought J.D. Power—a notion the banker hadn't heard before— according to a person familiar with the meeting. Her father is Xie Zhikun, a prominent Beijing tycoon.
[47] Within months, Mr Xie was in full warfare with XIO. As the Journal reported in March 2017, Mr Xie insisted he had given the firm almost $1 billion to do deals. XIO said he had not, and demanded he stop telling people he was affiliated with the firm.
[48] In a message reviewed by the Journal, XIO's Ms Li wrote to her lawyers saying Mr Xie had repeatedly tried "illegally" to sell a company XIO owned. The company was Lumenis Ltd, a medical-equipment maker XIO bought in 2015. Mr Xie has asserted that his money funded the acquisition.
[49] A representative of Mr Xie wrote to XIO on Dec. 30, 2016, demanding an explanation of how XIO's investments were performing and how the J.D. Power deal was funded. "We have never received the level of information which we should have," said the letter, which the Journal reviewed. "This is a very unsatisfactory situation and not one that we can allow to continue."
[50] In February 2017, Mr. Xie sued in a Cayman Islands court, accusing XIO's Ms Li and Mr Pacini of agreeing to take his money and then receiving "secret profits" in an alleged fraud. He also sued Ms Li in Hong Kong.
[51] A spokesman for Mr Xie declined to comment, as did a lawyer for Ms Xie.
[52] At a meeting in 2017, which was not attended by Mr Xie, Ms Li likened Mr. Xie's contention that he had entrusted money to XIO to a man unexpectedly claiming paternity of a child, said a person who was present.
[53] XIO has said it raised a $3.2 billion investment fund in 2014 with a diversified group of investors it didn't name that included fund managers and insurance companies, including some from Asia.
[54] XIO says Mr Xie isn't one of its investors and never was.
[55] After buying J.D. Power, XIO hired new executives for the California-based company and expanded its operations with the purchase of National Appraisal Guides Inc., a U.S. publisher of vehicle pricing data. XIO is "tremendously proud of the success of J.D. Power and its premier position of 'voice of the consumer,' " the XIO spokesman said.
[56] In July, XIO had J.D. Power borrow $180 million more, in part to fund the acquisition. This made J.D. Power's debt "very high," Moody's said. In July it downgraded J.D. Power's credit deeper into non-investment-grade territory, to B3 from B2.
[57] Another purpose of the borrowing was to enable J.D. Power to pay dividends of about $100 million, according to Moody's. XIO declined to name the investors who would receive these dividends.
THE PRE-ACTION CORRESPONDENCE
THE PROCEEDINGS
"(11) The First Article contains personal data and Criminal Offences Data of which Mr Pacini is the data subject as follows:
That there were reasonable grounds to suspect that Mr Pacini was party to a conspiracy to defraud Xie Zhikun of nearly $1billion, and had received 'secret profits' as a result.
(12) The First Article contains personal data and Criminal Offences Data of which Mr Geyer is the data subject as follows:
That there were reasonable grounds to suspect that Mr Geyer was party to a conspiracy to defraud Xie Zhikun of nearly $1billion.
(13) The Second Article contains personal data of which each of the Claimants is the data subject as follows:
That there were reasonable grounds to suspect that each Claimant had deliberately failed to provide proper disclosure of the true identity of investors in JD Power to the vendor and the US authorities and had concealed the fact that XIO was an investment vehicle for Xie Zhikun;
(14) The Second Article contains personal data of which Mr Geyer is the data subject as follows:
That Mr Geyer falsely informed a Deloitte accountant that the investors into the XIO entity purchasing JD power were not primarily Chinese."
"(1) The Claimants were not party to any conspiracy to defraud Xie Zhikun and Mr Pacini did not make any "secret profit" from any such conspiracy.
(2) There were no reasonable grounds to suspect that the Claimants were party to any conspiracy to defraud Xie Zhikun or that Mr Pacini had made any secret profit.
(3) The allegations of wrongdoing made against the Claimants by Xie Zhikun were made in various legal proceedings – all of which were, by a settlement deed dated 4 August 2020, discontinued. There was no admission or finding of liability for conspiracy to defraud on the part of the Claimants.
(4) The Claimants had not failed to provide proper disclosure of the true identity of investors in J D Power to the vendor or to the US Authorities.
(5) The Claimants had made full disclosure to the Committee on Foreign Investment in the United States, including providing a list of all XIO's partners and investors and potential investors.
(6) XIO was not an investment vehicle for Xie Zhikun;
(7) The investors into the XIO entity which was purchasing J D Power were not from mainland China were not affiliated with the Chinese government and they were not introduced by or affiliated with Xie Zhikun."
"(1) In breach of Article 5(1)(a), the Defendant has failed to process the Personal Data lawfully or fairly. In this respect the Claimants will rely in particular on the following facts and matters:
(a) The First Article refers to allegations of a serious nature and includes Criminal Offences Data.
(b) The First Article relates to allegations which never resulted in a criminal charge or arrest.
(c) The Second Article makes serious and damaging allegations of impropriety against the Claimants including, in particular of suspected failure to provide proper disclosure to the Committee on Foreign Investment in the United States.
(d) The Articles are both defamatory of each of the Claimants.
(2) In breach of Article 5(1)(d), the Defendant failed to ensure that the
Personal Data was accurate or to erase or rectify inaccuracies in the Personal Data without delay after becoming aware of them. Paragraph 16 above is repeated. The true factual position has been known to the Defendant since (at the latest) its receipt of the PAP Letter.
(3) In breach of Article 5(1)(d), the Personal Data was kept in a form which permitted identification of the Claimants for longer than was necessary for the purposes for which the Personal Data was processed. Insofar as the First Article was reporting on legal proceedings brought by Xie Zhikun in the Grand Court of the Cayman Islands (Cause No FSD 25 of 2017), it was no longer necessary to process the Personal Data in the First Article after those proceedings were discontinued on 27 November 2020.
(4) In breach of Article 10, the Defendant published the Criminal Offences Data in the Article without justification under any of the conditions in Parts 1 to 3 of Schedule 1 to the DPA 2018.
(5) In breach of Article 17, the Defendant has failed to give effect to the Claimants' exercise of their rights of erasure (by way of the PAP Letter) by removing the Articles from WSJ.com. The Claimants rely on the following:
(a) Even if (contrary to the Claimants' primary case) the Defendant's initial decisions to publish each of the Articles was justified, their continued publication is no longer justified once the Defendant had received the PAP Letter.
(b) Further and in the alternative, by the PAP Letter, the Claimants objected to the processing of the Personal Data in the Articles. There were no overriding legitimate grounds for continuing the processing.
(6) In breach of Article 21 the Defendant has failed to give effect to the Claimants' exercise of their right to object to the processing involved in the publication of the Articles as set out in the PAP Letter. There are no compelling legitimate grounds for the continuing publication of the Articles.
(7) If and insofar as the Defendant contends that the processing of the Claimants' personal data in the Articles is for "special purpose of journalism" set out in paragraph 26 of Schedule 2 to the DPA 2018, and without prejudice to the burden of proof (which lies on the Defendant) the Defendant is not entitled to rely on any exemption from the listed UK GDPR provisions in that it is not reasonable for the Defendant to believe that:
(a) Application of the listed UK GDPR provisions would be incompatible with the purposes of journalism;
(b) The continuing processing of the Personal Data by publication is in the public interest. In particular, it is not reasonable to believe that the continuing processing of inaccurate and/or out of date personal data is in the public interest.
If and insofar as the Defendant had such reasonable beliefs when (it) published each of the Articles, it could no longer hold such beliefs once it became clear that the Personal Data was (sic) inaccurate and out of date."
"(20) By reason of the Defendant's wrongful processing of the Personal Data as pleaded above, the Claimants have suffered damage to their reputations, and have been caused anxiety, humiliation and distress for which the Defendant is liable to pay compensation to the Claimant'.
(21) In support of their claims for compensation under s168 of the DPA 2018 the Claimants will rely on the following:
(1) The loss of control of and autonomy over the Personal Data occasioned by the publication of the Articles.
(2) the fact that the Defendant has continued to publish and maintain the Articles despite being put on notice of the Claimants' objections in the PAP Letter.
(3) The fact that the Articles have been repeatedly mentioned by prospective investors in XIO and SGT as requiring further due diligence and therefore being an obstacle to investment. This has caused additional work and distress for the Claimants."
THE ISSUES TO BE TRIED
(1) The meaning of any personal data within the Articles complained of in the claim of which the Claimants are data subjects (the "First Issue").
(2) Whether any such data is criminal offence data within the meaning of Article 10 (the "Second Issue").
"The meaning of any personal data within the Articles complained of in the claim of which the Claimants are data subjects.
1. In respect of the First Article (as defined in Paragraph 3 of the Amended Particulars of Claim):
a. The First Claimant's personal data bear the meaning that the First Claimant was
one of the executives who had been accused by Mr Xie, in contested legal proceedings in the Cayman Islands, of receiving "secret profits" in an alleged
conspiracy to defraud, an allegation denied by the First Claimant, who said Mr Xie
is not and has never been an investor in XIO.
b. The Second Claimant's personal data bear the meaning that the Second Claimant,
to arrange a meeting with a banker, sent an email that described Mr Xie as
"Chairman of XIO Fund Advisory Board".
2. In respect of the Second Article (as defined in Paragraph 4 of the Amended Particulars of Claim):
a. The First Claimant's personal data bear the meanings that (i) he was part of an
effort to enlist Thomas Borer, a well-connected former Swiss diplomat, to assist
XIO in persuading S&P Global that XIO was a credible bidder for J.D. Power;
(ii) on behalf of XIO the First Claimant contacted a financial firm, Hermes, to ask if
it would also invest in J.D Power; and (iii) the First Claimant had been one of those
accused by Mr Xie, in legal proceedings in the Cayman Islands, of receiving
"secret profits" in an alleged fraud, while XIO said Mr Xie is not and has never been
an investor in XIO.
b. The Second Claimant's personal data bear the meaning that he replied to a Deloitte
accountant, who had referred to XIO's "China resident investors", by stating that
"There may be a misconception. The investors into the XIO fund are not primarily
Chinese", which appeared to contrast with a Moody's Investors Service credit
officer saying he had been told by XIO staff weeks previously that XIO's investors
were Chinese.
Whether any such data is criminal offence data within the meaning of Article 10 UK GDPR.
The Defendant's case is that the data is not criminal offence data. This contention will be developed in submissions prior to the preliminary trial on meaning."
THE FORMULATION OF THE FIRST ISSUE
"I cannot help feeling that in a context such as the present where the claimant sues in respect of media publications he should be expected to specify the meaning(s) he attributes to particular words or phrase[s], and which he says is inaccurate. A claimant should also give particulars of inaccuracy. Those are well-established requirements of a statement of case in a defamation or malicious falsehood claim, which are surely appropriate in this context for the same reasons."
"In a libel action, where truth is in issue, the court will first determine the single natural and ordinary meaning which the words complained of would convey to the ordinary reasonable reader. It is that which the defendant must then prove to be true. A claim for libel cannot be founded on a headline or other matter, read in isolation from the related text; the court must identify the single meaning of a publication by reference to the response of the ordinary reader to the entire publication".
"There is a further dimension to this. The law of defamation contains a rule (the "repetition rule") which recognises that an accurate report of what a third party has said about a person may convey an inferential defamatory meaning which is false. The ordinary meaning of the statement "The prosecutor alleged that the defendant had defrauded the revenue" is that the claimant is guilty of fraud. That could turn out to be untrue. The same is true of the statement: "The jury found him guilty of fraud". The policy of defamation law is to hold the publisher responsible for the inferential meaning, whilst protecting those who report accurately on court proceedings, and on certain other kinds of proceeding or statement such as parliamentary proceedings, even if the report conveys a false or inaccurate inferential meaning. The protection is absolute or qualified, according to the context. Some accurate reports are privileged "subject to explanation or contradiction". The interpretative provisions of DPA Schedule 1, Part II contain some apparently relevant provisions for qualified exemption from the strict requirements of accuracy. They state, at para 7:
'The fourth principle is not to be regarded as being contravened by reason of any inaccuracy in personal data which accurately record information obtained by the data controller from the data subject or a third party in a case where (a) having regard to the purpose or purposes for which the data were obtained and further processed, the data controller has taken reasonable steps to ensure the accuracy of the data, and (b) if the data subject has notified the data controller of the data subject's view that the data are inaccurate, the data indicate that fact.'"
"… It would be wrong to treat the two branches of the law as coterminous, as they not only have different origins but also serve different purposes. It is possible to give more weight to literal accuracy in the context of data protection law, with its broader aims and its wider and more flexible range of remedies. It is appropriate, however, to bear in mind domestic principles in order to ensure, as far as possible, that the law has the coherence to which Lord Sumption JSC referred in Khuja's case [2019] AC 161."
"I concluded that the right approach was to look at the articles and book extracts as a whole, and interpret any element of them by reference to the meaning that the ordinary reader would take from that element, read in its full context. My reasons were set out in detail at [80-84]. It is unnecessary to set them out here. In summary I concluded, and it remains my view, that support for this approach can be found in aspects of the DPA itself, the work of the Article 29 Working Party, domestic authority on the application of the DPA and its predecessor (the Act of 1984), and the logic and common sense to be found in the law of meaning in defamation."
"Speaking to a trusted compatriot in mid-September 2016, a top level Russian government official commented on the history and current state of relations between President PUTIN and the Alpha Group of businesses led by oligarchs Mikhail FRIDMAN, Petr AVEN and German KHAN. The Russian government figure reported that although they had had their ups and downs, the leading figures in Alpha currently were on very good terms with PUTIN. Significant favours continued to be done in both directions, primarily political ones for PUTIN and business/legal ones for Alpha."
"Applying that approach, I find that Memorandum 112 did contain the information in claimants' proposition (a) [i.e. "That significant favours are done by President Putin for the Claimants and for President Putin by the Claimants"]. The claimants are plainly identifiable from Memorandum 112; they are named. Any ordinary reasonable reader of the Memorandum would understand the statements about the giving and receipt of "significant favours" as referring not only to Alfa Group but also to the three individual claimants. That would be the result of reading the whole document, which an ordinary reader would do; but in order to explain this conclusion, it is not necessary to look beyond the immediate context of the words in numbered paragraph 1. The two immediately preceding sentences identify the claimants by name as leaders of the Alfa Group, and assert that they are on "very good terms" with Putin. The reader of the sentence that follows would naturally take its reference to favours being done "in both directions" as a statement that Putin does favours for the claimants, and they for him. The mention of Alfa at the end of the third sentence would be read as synonymous with the claimants. In my judgment, further, the information is personal data within the meaning of DPA s1."
"So far as the data protection element of this claim is concerned, the parties agreed that I should be guided by the indications in NT1 v Google LLC [2018] EWHC 799 (QB) at paragraphs 80-87. Where the issue is accuracy, that should be assessed in the light of the natural and ordinary meaning of the material complained of, drawing on the principles developed in the defamation context. The aim is to describe faithfully the information held. The two legal regimes are distinct but unjustifiable incoherence should be avoided. A less impressionistic and more full and literal, or granular, description of personal data may be justified where the regulatory regime of data protection is concerned, since it has to deal with more issues than public reputation or an impression created by a single viewing".
"[The Claimant] is Indian. He has twice been recorded taking part in political demonstrations in the UK, acting the roles of, respectively, a Baloch nationalist and a citizen of Pakistan. He and others were hired to do that by the Indian government. This is an example of rent-a-crowd tactics by the Indian government constituting thoroughly reprehensible, anti- Pakistan, political conduct on its part."
"Consistently with my findings on meaning, I think a more accurate description of the personal data content of this item would be as follows.
1. The person shown in the video is identifiable as Mr Shah.
2. He is an Indian citizen, or of Indian heritage.
3. In November 2018 he took part in a political demonstration outside a restaurant in Wembley on the occasion of a dinner at which the Chief Justice of Pakistan was speaking. The purpose of the dinner was fundraising for an Indus dam project. The purpose of the demonstration was to object to that project. Mr Shah identified himself publicly with that purpose.
4. On that occasion he acted the part of a Pakistani citizen.
5. He, along with others, was hired and paid to do that by the Indian government as part of its rent-a-crowd tactics.
6. In April 2018 he took part in a political demonstration outside the Houses of Parliament on the occasion of the visit of the Indian Prime Minister. The purpose of the demonstration was to enlist UK and Indian government support for a Pakistan regional issue. Mr Shah identified himself publicly with that purpose.
7. On that occasion, he acted the part of a Baloch nationalist.
8. He, along with others, was again hired and paid to do that by the Indian government as part of its rent-a crowd tactics."
THE PARTIES' SUBMISSIONS ON THE FIRST ISSUE
"The following key principles can be distilled from the authorities: ….
i) The governing principle is reasonableness.
ii) The intention of the publisher is irrelevant.
iii) The hypothetical reasonable reader is not naïve but he is not unduly suspicious. He can read between the lines. He can read in an implication more readily than a lawyer and may indulge in a certain amount of loose thinking but he must be treated as being a man who is not avid for scandal and someone who does not, and should not, select one bad meaning where other non-defamatory meanings are available. A reader who always adopts a bad meaning where a less serious or non-defamatory meaning is available is not reasonable: s/he is avid for scandal. But always to adopt the less derogatory meaning would also be unreasonable: it would be naïve.
iv) Over-elaborate analysis should be avoided and the court should certainly not take a too literal approach to the task.
v) Consequently, a judge providing written reasons for conclusions on meaning should not fall into the trap of conducting too detailed an analysis of the various passages relied on by the respective parties.
vi) Any meaning that emerges as the produce of some strained, or forced, or utterly unreasonable interpretation should be rejected.
vii) It follows that it is not enough to say that by some person or another the words might be understood in a defamatory sense.
viii) The publication must be read as a whole, and any 'bane and antidote' taken together. Sometimes, the context will clothe the words in a more serious defamatory meaning (for example the classic 'rogues' gallery' case). In other cases, the context will weaken (even extinguish altogether) the defamatory meaning that the words would bear if they were read in isolation (e.g. bane and antidote cases).
ix) In order to determine the natural and ordinary meaning of the statement of which the claimant complains, it is necessary to take into account the context in which it appeared and the mode of publication.
x) No evidence, beyond [the] publication complained of, is admissible in determining the natural and ordinary meaning.
xi) The hypothetical reader is taken to be representative of those who would read the publication in question. The court can take judicial notice of facts which are common knowledge, but should beware of reliance on impressionistic assessments of the characteristics of a publication's readership.
xii) Judges should have regard to the impression the article has made upon them themselves in considering what impact it would have made on the hypothetical reasonable reader.
xiii) In determining the single meaning, the court is free to choose the correct meaning; it is not bound by the meanings advanced by the parties (save that it cannot find a meaning that is more injurious than the claimant's pleaded meaning)."
"The sting of a libel may be capable of meaning [1] that a claimant has in fact committed some serious act, such as murder. Alternatively it may be suggested that [2] the words mean that there are reasonable grounds to suspect that he/she has committed such an act. A third possibility is that [3] they may mean that there are grounds for investigating whether he/she has been responsible for such an act."
"The so-called "repetition rule" is a principle "deeply embedded" in the law of defamation (per Hirst LJ in Shah v Standard Chartered Bank [1999] QB 241, 261G). It has two, quite distinct, applications. First, it is a rule relevant to the determination of the single meaning that a statement bears. Second, it serves to limit the evidence that is admissible to prove the truth of a defamatory imputation."
"… the repetition rule reflects a fundamental canon of legal policy in the law of defamation dating back nearly 170 years, that words must be interpreted, and the imputations they contain justified, by reference to the underlying allegations of fact and not merely reliance upon some second-hand report or assertion of them".
"When the authorities speak of rejecting submissions that words repeating the allegations of others bear a lower meaning than the original publication that is a rejection of the premise that the statement is less defamatory (or not defamatory at all) simply because it is a report of what someone else has said. That kind of reasoning is what the repetition rule prohibits when applied to meaning. The meaning to be attached to the repetition of the allegation has still to be judged, applying the rules of interpretation I have set out above, looking at the publication as a whole."
(1) The repetition rule presents a potential difficulty in the context of reporting certain third party sourced information such as court proceedings. If required to justify reports of legal proceedings as true, a defendant would have to prove not that an allegation was made in the proceedings but that the allegation itself was true. This would render the reporting of legal proceedings in which allegations that are reputationally damaging are made all but impossible.
(2) The rule, left unchecked, would in this way interfere with the constitutional principle of open justice. See Lord Diplock in Attorney-General v Leveller Magazine Limited [1979] AC 440, at 450: "As respects the publication to a wider public of fair and accurate reports of proceedings that have taken place in court the principle requires that nothing should be done to discourage this".
(3) The right to publish information about legal proceedings, and the public's right to be told what happens in public court proceedings is also protected in the Article 10 jurisprudence of the European Court of Human Rights (see, for example, Bedat v Switzerland (2016) 63 EHRR 15, at [51]).
(4) The law of defamation has accommodated these competing policy interests, since at least 1796, by treating as privileged fair reports of legal proceedings (see Curry v Walter (1796) 126 ER 1046). That common law protection was first put on a statutory footing by s3 of the Law of Libel Amendment Act 1888, the precursor to the modern law of qualified reporting privilege which is found in ss14-15 and Sch 1 of the Defamation Act 1996. In particular, para 2 of Sch 1 provides such protection for reports of proceedings in public "before a court anywhere in the world".
(5) In NT1 at [84], Warby J suggested that coherence between the law of data protection and defamation could be maintained because the repetition rule was ameliorated in the data context by the "apparently relevant" para 7 of Sch 1 to the DPA 1998.
(6) However, that provision has no direct equivalent in the UK GDPR or the DPA 2018. Further, statutory reporting privilege under the Defamation Act 1996 does not apply directly as a defence to data protection claims.
(7) Coherence in the law can, and indeed must, nonetheless be maintained by application of the flexible approach to meaning identified by Warby J in NT1.
(8) In cases where reporting privilege might arise, the law should reflect the underlying policy of that defence by taking a more literal approach to meaning in the context of data protection claims and disapplying the repetition rule.
"In order to decide whether personal data are accurate, so as to comply with DPP4, it is necessary first to decide what the personal data mean: NT1 v Google LLC [2018] EWHC 799 (QB); [2019] QB 344 per Warby J at [80]-[83]. When assessing meaning, it is necessary to interpret the words in context: NT1 at [83]. Once the meaning has been established, it is then necessary to establish the facts so as to decide whether that meaning is 'incorrect or misleading as to any matter of fact'."
"The record of antecedents that is produced to a criminal court discloses the previous convictions of the data subject. The data is accurate if it accurately records those convictions. If it erroneously records a conviction then the data is inaccurate, even if the data subject committed the offence. If it correctly records a conviction then the data is accurate, even if it can be shown that the data subject did not commit the offence."
"The judge said that to the "ordinary reader" of an OSR, the "Modus Operandi" constitutes a description of what the data subject actually did. I agree that a member of the public, with no knowledge of the purpose of an OSR, or how it comes to be created, might well understand the MO to identify what the data subject actually did. But there was no evidence that the OSRs were published or otherwise communicated to members of the public. If they are kept in accordance with the appellant's policy, and guidance from the College of Policing, then they are only available to those with a proper policing purpose to access them. The "ordinary reader" of an OSR can be taken to be a person with an understanding of how OSRs come to be created and their underlying purpose. The reader knows that they are not a database of convictions or findings, that they simply record the information that has been provided to the police and the actions that the police have taken, and that the underlying allegation may or may not be true."
DISCUSSION OF THE FIRST ISSUE
"But where it is capable of being applied, as it is in the present claim, the rule is productive of injustice. On the judge's unchallenged findings, the meanings which reasonable consumers might put on Asda's health-food packaging include both the damaging and the innocuous. Why should the law not move on to proof of malice in relation to the damaging meaning and (if malice is proved) the consequential damage without artificially pruning the facts so as to presume the very thing – a single meaning - that the judge has found not to be the case?"
"If the single meaning rule does achieve a fair balance in defamation law between the parties' competing interests, that would appear to be the result of luck rather than judgment; and how the measure of such claimed fairness might be assessed may anyway be questionable. The application of the rule can also be said to carry with it the potential for swinging the balance unfairly against one party or the other, resulting in no compensation in cases when fairness might suggest that some should be due, or in over-compensation in others. No doubt it would keep the common law tidy if the single meaning rule were also applied in malicious falsehood claims, particularly because there will be cases in which a claim might be brought either in defamation or malicious falsehood. The common law has, however, never worried about tidiness. It has always been more concerned with meeting the justice of the particular case and developing itself accordingly."
(1) I will determine the single meaning of the data in issue, by considering the Articles as a whole, and interpreting each element of them by reference to the meaning that the hypothetical reasonable reader would take from it, read in its full context.
(2) In carrying out that exercise, I will apply the principles for determining the natural and ordinary meaning of words distilled by Nicklin J in Koutsogiannis.
(3) I will also adopt the approach approved by the Court of Appeal in Tinkler v Ferguson.
(4) I will apply the repetition rule.
(5) Specifically, I will not disapply the repetition rule to any element which purports to be a report of court proceedings, because I am not persuaded that such a disapplication accords with the judgment of Warby J in NT1 or is warranted by the arguments advanced by Ms Evans. In particular, on the premise that the repetition rule applies to publications for the purposes of data protection law, I do not consider that the provisions of para 7 of Sch 1 to the DPA 1998, to which Warby J referred in NT1 at [84], disapplied the repetition rule in that context with regard to the reporting of court proceedings (not least because those provisions contained the requirement that "if the data subject has notified the data controller of the data subject's view that the data are inaccurate, the data indicate that fact"). However, even if they did, if they have not been replicated in subsequent legislation, there is, it seems to me, no sound legal basis on which it can be said that the Court should create the same or similar protection to make up for that which Parliament has apparently chosen to remove.
(6) In applying the approach described above, I will have regard to the guidance provided (i) by Collins Rice J in Shah at [61]: "The aim is to describe faithfully the information held. The two legal regimes are distinct but unjustifiable incoherence should be avoided. A less impressionistic and more full and literal, or granular, description of personal data may be justified where the regulatory regime of data protection is concerned, since it has to deal with more issues than public reputation or an impression created by a single viewing", and (ii) by Nicklin J in Brown at [32]: "When the authorities speak of rejecting submissions that words repeating the allegations of others bear a lower meaning than the original publication that is a rejection of the premise that the statement is less defamatory (or not defamatory at all) simply because it is a report of what someone else has said. That kind of reasoning is what the repetition rule prohibits when applied to meaning. The meaning to be attached to the repetition of the allegation has still to be judged, applying the rules of interpretation I have set out above, looking at the publication as a whole."
DETERMINATION OF THE FIRST ISSUE
[1] Xie Zhikun claims that he invested $940m in XIO Group in 2014, whereas XIO contends that he has never made any investment at all.
[2] The XIO Chief Executive, Joseph Pacini, has said in an email that "Xie Zhikun is not an investor with XIO and never has been", has denied Xie Zhikun's allegations, and has said that other investors, not Xie Zhikun, provided $3.2 billion to the firm in 2014.
[3] Xie Zhikun has commenced a civil claim in the Cayman Islands alleging that XIO executives have conspired to defraud him out of his investment, and that Joseph Pacini (and XIO Chairwoman Athene Li) received secret profits out of the alleged fraud.
[4] In the summer of 2015, during a visit by Xie Zhikun to Europe and Israel on which he was chaperoned by XIO, Carsten Geyer sent an email to arrange a meeting with a banker in which Xie Zhikun was described as "Chairman of XIO Fund Advisory Board".
[1] The source of funding of XIO Group is unclear, and in particular there is a dispute between Xie Zhikun and XIO as to (i) whether (as he contends) he provided almost $1bn to XIO, and this was used to fund XIO's acquisition of JD Power, or (ii) whether (as XIO contends) he did not and he has no affiliation with XIO.
[2] In the context of the JD Power acquisition, XIO Chief Executive Joseph Pacini enlisted Thomas Borer to satisfy S&P Global, the parent company of JD Power, as to whether XIO was a credible bidder for JD Power, and XIO and S&P Global claim respectively that (i) all interested parties were provided with full details of the ownership and funding of XIO and (ii) S&P Global carried out appropriate due diligence.
[3] According to XIO, only its four founding partners know who its investors are, and although a Moody's credit officer was told by XIO staff that its investors were Chinese, Carsten Geyer, a partner in XIO, told a Deloitte accountant that the investors in the XIO fund are not primarily Chinese.
[4] After the acquisition, Xie Zhikun commenced a civil claim in the Cayman Islands, claiming that Joseph Pacini (and XIO Chairwoman Athene Li) agreed to take his money and received secret profits in an alleged fraud.
Mr Pacini
(1) This Article identifies Mr Pacini as the "XiO chief executive" [9] and it is said that he and another named XiO executive was "entrusted" to "handle" Mr Xie's "investments in XiO and Dorsey Ventures Limited" [19]. It is said that Mr Xie made a "very significant investment" (which is said to have been $940 million) [11].
(2) The Article goes on to state that Mr Xie alleges that money he invested has disappeared without explanation [11]. The Defendant states that "XiO executives" (Mr Pacini and another executive are named) are accused by Mr Xie in legal/court filings/papers of "a conspiracy to defraud him out of his cash," which is revealed in the same paragraph to be "nearly $1 billion" [4]. The Article goes on to state that Mr Pacini is accused of "receiving secret profits from the alleged fraud" [12].
(3) The Article repeats extremely serious allegations of a large-scale fraud made by Mr Xie against Mr Pacini and it sets out facts relied on in making those allegations. That these allegations are said to have been made in legal or court papers (and in letters reviewed by the Defendant [11]) reinforces the impression that there must be substance in the grounds raised by Mr Xie.
(4) The only conceivable "antidote" contained in the Article is (a) the inclusion of a bare denial from Mr Pacini in respect of Mr Xie's allegations together with a quote from Mr Pacini to the effect that Mr Xie was not an investor [9], and (b) an assertion that XiO has denied Mr Xie's allegations and stated that it never had Mr Xie's money [5]. It is notable that the Article does not report that Mr Xie's claim was discontinued in 2020. Given the gravity of the allegations and detail in which they are covered, the Article wholly fails to neutralise the bane.
(5) Accordingly, with regard to Mr Pacini, this is a straightforward Chase Level 2 case.
Mr Geyer
(1) The Article tells readers that XiO was founded by Ms Li, Mr Pacini and "two other partners" [16]. It subsequently describes Mr Geyer as a "XiO co-founder" [23] and it is clear that he is one of the "partners" referred to.
(2) The Article states that "XiO executives" are accused by Mr Xie of "a conspiracy to defraud him out of his cash", which is revealed in the same paragraph to be "nearly $1 billion" [4]. The reader would understand that, as a co-founder, Mr Geyer is a XiO executive and was, therefore, party to the alleged conspiracy to defraud.
(3) The position is made clear by the last paragraph which states that Mr Geyer sent an email to arrange a meeting with Mr Xie in the context of his visit to the UK, describing him as the Chairman of the XiO Fund Advisory Board [23]. This confirms Mr Xie's claims about his importance to XiO and suggests that XiO's denials of his involvement are untrue.
(4) In short, the Article also bears a Chase Level 2 meaning in relation to Mr Geyer.
Mr Pacini
(1) Claim and counterclaim are identified early on: Mr Xie's in [4] and XIO's in [5]. The claim is one set out "[i]n Court papers filed in the Cayman Islands" in which "Mr Xie is accusing XIO executives of a conspiracy to defraud him out of his cash".
(2) The reader is immediately told that XIO denies this and would understand this to be a report of contested legal proceedings.
(3) Mr Pacini's name appears just eight times in the Article. Four of these mentions are in the context of uncontested biographical details in [16]-[18]. He is also referred to in the pull quote, and in [9], in which he is recorded as saying that Xie Zhikun is not and never has been an investor with XIO. This information is "describe[d] faithfully" in the final part of the Defendant's meaning (the task of the Court per Shah at [61]).
(4) Otherwise, the only reference to Mr Pacini is in [12] which reports that Mr Xie had sued in a Cayman Islands Court accusing "Athene Li and CEO Mr Pacini of receiving "secret profits" from the alleged fraud" and [19] which reports some further detail of his claim. The ordinary reasonable reader would understand this to be a report of the same accusation made in "court papers" summarised higher up in [4].
(5) The meaning of that data, in context, is that Mr Pacini is one of the executives (with Ms Li) who had been accused by Mr Xie, in contested legal proceedings in the Cayman Islands, of receiving "secret profits" in an alleged conspiracy to defraud, an allegation denied by Mr Pacini, who said that Mr Xie is not and has never been an investor in XIO.
(6) Even if the Defendant were wrong in that primary submission, and the "repetition rule" applies, Mr Pacini's meaning is plainly not a reasonable one. Read in context, the Article does not impute "reasonable grounds" for suspicion, as is obvious from the headline and also the standfirst (i.e. [1]).
(7) It does no more, in reporting the proceedings, than set out the claims by Mr Xie and XIO's denials of them. Ordinary reasonable readers of the WSJ in this jurisdiction would understand that civil claims may be brought without merit and that the merits would be determined by the court. XIO's denial is not diluted but given equal prominence and the Article leaves entirely open the possibility that the denial is accurate.
(8) At most, the Article's repetition of Mr Xie's allegation would be understood – in respect of Mr Pacini - at Chase Level 3, i.e. raising questions to be answered.
Mr Geyer
(1) That allegation is plainly not one levelled – in any event – at Mr Geyer. He is referred to only briefly in [23] about an email which he sent to arrange a meeting with a banker.
(2) The Article explains at [4] that the defrauding allegation in the "court papers" is an allegation levelled at "executives". They are clearly identified in [12]. Mr Geyer is not one of them and no reasonable reading of the Article permits that inference. The leap which Mr Geyer's meaning invites could only reflect unreasonable speculation by a reader avid for scandal. It is clear that the defrauding allegation does not contain Mr Geyer's personal data.
(1) I consider that the headline raises a question which the First Article does not profess to answer; and identifies a mystery that the First Article does not claim to resolve. This is reinforced by the text of [1], which simply summarises both sides of the issue.
(2) It is often contended that the thrust of a publication is to set out details of allegations which are not counter-balanced by the inclusion a bare denial, and that such a denial may even suggest that there is, in truth, no answer to the allegations. However, I do not consider that this is how the hypothetical reasonable reader would understand the First Article. In particular: (i) the denials contained in the First Article are not bare denials, but instead contain a measure of detail; (ii) they are set out repeatedly; and (iii) I consider that the hypothetical reasonable reader – who Ms Evans suggested would be "reasonably sophisticated", and who Mr Tomlinson suggested would have "a level of financial knowledge" – would not only (a) take on board the stark nature of the main issue identified in the First Article (i.e. whether Xie Zhikun had invested in XIO at all), and that no likely answer is suggested to this, but also (b) appreciate that there were limits to what XIO Group and its personnel could say in rebuttal of Xie Zhikun's claims without breaching client, and its own financial, confidentiality.
(3) I consider that the hypothetical reasonable reader would understand that the allegations of conspiracy to defraud made "in court papers" against "XIO executives" (see [4]) are the same allegations are as more fully explained in [12] and [19], both of which refer to Ms Li and Mr Pacini alone. I also consider that such a reader would understand that the allegations actually said to have been made in the court proceedings are of "receiving "secret profits" from the alleged fraud" (see [12]).
(4) Accordingly, I consider that such a reader would understand these to be allegations (i) made against Ms Li and Mr Pacini alone and (ii) not of some wider fraudulent conduct by those individuals, but instead of those individuals personally receiving "secret profits". A reader who did not take on board that the accusations said to be made in the "court papers" are limited in this way would be "avid for scandal".
(5) I also consider that, even applying the repetition rule, but considering the Article as a whole, the meaning to be attached to [4], [12] and [19], in context, is "this is what Xie Zhikun is alleging in his Cayman Islands civil claim" and nothing more.
(6) I consider that the hypothetical reasonable reader would understand very clearly that Mr Geyer is not one of the "XIO executives" referred to in [4] of the Article. Mr Tomlinson suggested that the fact that Mr Geyer was mentioned in [23], the final paragraph of the Article, demonstrated the importance that the publisher attached, and that the reader would attach, to his involvement. I consider that the reverse is correct: in my view, the hypothetical reasonable reader would regard this mention of Mr Geyer as a makeweight point, added at the end for that reason. I also consider that such a reader would (i) regard it as extraordinary for there to be any "mystery" as described in the Article if Xie Zhikun had not had any involvement with XIO at all; (ii) understand that the role of "Chairman of the XiO Fund Advisory Board" does not imply that the individual concerned is an investor in XIO, and (iii) not understand this description of Xie Zhikun as undermining XIO's denials set out in the Article.
Both Claimants
(1) This Article identifies Mr Pacini as the Chief Executive of XiO and as being involved in XiO's bid to acquire JD Power from S&P Global, including through contacting financial firms to invest in JD Power [23] and [42]. Mr Geyer is named as a partner at XiO and the Article makes clear that he was aware of the identity of XiO's investors [39]. On this basis, a reader would understand that the information in the Article relates to conduct of each of the Claimants.
(2) The Article makes it clear that the company that sold JD Power to XiO, S&P Global, did not consider that it received proper information from XiO about (a) who owned XiO and (b) the source of the funds it used to purchase JD Power [2]-[3]. It is stated that "S&P Global's Mr Gibson asked XiO for its ownership and funding details as the seller prepared to seek U.S. government approval for the deal…" but did not receive from XiO's legal advisers "the missing financials and ownership pieces" [25]-[26].
(3) A reader would plainly understand that this was improper and that executives and partners were not conducting themselves in a transparent manner. That impression is reinforced by repeated references to XiO's lack of transparency (including in respect of its investors) towards its own employees (including its general counsel) and advisers [5], [32], [46].
(4) The Article repeats an assertion from a banker who advised XiO on the acquisition of JD Power that he had been told (after the acquisition) by Carol Xie, the daughter of Mr Xie, that her father's investment group had bought JD Power. This is stated to have been a "shock" to the banker and "a notion the banker hadn't heard before" [46]. A reader would understand this to mean that senior figures at XiO had concealed the involvement of Mr Xie in the investment in JD Power even from its own advisors and, therefore, notwithstanding the acquisition having been approved, it is likely that they concealed that information from the vendor and/or US authorities.
(5) Only limited antidote is provided. It is said that a XiO spokesman said that "XiO provided full details of its investors to everyone involved in the U.S. regulatory approval process for J.D. Power" [6]. XiO's claim that relevant parties "were provided full details of XiO Group's diversified institutional investor base" [30], immediately follows XiO's unexplained (and therefore suspicious) refusal to comment on the correspondence.
(6) The allegations are serious and are apparently corroborated by third parties. A reader would understand that there are reasonable grounds to suspect that the senior figures at XiO involved in the acquisition of JD Power deliberately failed to provide proper disclosure of the true identity of investors in JD Power to the vendor and the US authorities and had concealed the fact that XiO was an investment vehicle for Mr Xie.
Mr Geyer
(1) The Article makes it clear that XiO's investors are Chinese. This apparent from at least the following: (i) The headline: "How J.D. Power Was Acquired by a Chinese Company Shrouded in Mystery." (ii) The fact that XiO's staff told a Moody's Investors credit officer that XiO's investors were Chinese [38]. (iii) The reference to Mr Xie's group having bought JD Power which is not criticised or questioned [46]. (iv) The Article being replete with references to mysterious, secret or hidden Chinese investment.
(2) In this context, Mr Geyer's statement to a Deloitte accountant that "The investors into the XiO fund are not primarily Chinese" [39] would be understood by a reasonable reader to be a straight falsehood.
(1) Mr Pacini features as part of the narrative of the JD Power deal in [22]-[23] and [41]. His role, as reported, was in enlisting a well-connected former diplomat who was available to vouch for XIO as a credible bidder [23], and in seeking investment from a British pension fund [41].
(2) This is reflected in the Defendant's meaning 2(a)(i) and (ii).
(3) Meaning 2(a)(iii) derives from [50], which is a short report of the Cayman Island proceedings in substantially the same terms as the First Article (as to which the Defendant's submissions on the First Article apply). Notably, Mr Pacini does not contend that the allegation in this context imputes fraud.
(4) There is no other reference in the Article to Mr Pacini, other than the uncontentious biographical detail in [42].
(5) Mr Geyer appears only once in the Article, at [39], as part of a self-contained account of what may have been contrasting statements by XIO employees, on separate occasions, as to the nationality of XIO's investors.
(6) The Article does not allege that either account was wrong, saying only that "staff appeared on one occasion to give differing accounts of who funds its deals".
(7) There is no suggestion whatsoever that Mr Geyer's account was "false", and it would be apparent to the ordinary reasonable reader that the two responses may not have been contradictory at all (given the reference to "resident Chinese"). Mr Geyer's meaning is unreasonable, and the data are accurately described in the Defendant's meaning 2(b).
(8) The Claimants' overarching meaning in APOC [13] is similarly strained. It suffers from the fundamental problem that the imputation reached for (if even arguable) is in reality one aimed at the company and not these individual Claimants. To the extent the Article says anything about failures of transparency, those are failures attributed to XIO. These Claimants are not referred to in those parts of the Article which deal with disclosure of information to the seller of JD Power, nor to the US authorities.
(1) I consider that the hypothetical reasonable reader would clearly understand (a) that the "Chinese Company Shrouded in Mystery" referred to in the headline of the Article as having acquired JD Power is the same "Hong Kong's XIO Group, which acquired the US auto-rating firm in 2016" which is referred to in [1] (i.e. it is XIO, not an investor in XIO), and (b) that the Article is not saying that XIO Group's investors are Chinese, but instead that the source of XIO's funding is unclear.
(2) In reading the debate about that issue that is contained in the Article, I consider that such a reader would attach importance to the statement by an XIO spokesman in [36] that "Within XIO, only its four founding partners know who the investors are", and that it is likely that such a reader would believe the statement of one the partners in XIO, Mr Geyer, at [39] that "The investors in the XIO fund are not primarily Chinese" in preference to apparently "differing accounts" from XIO staff (see [38]). Only a reader "avid for scandal" would read Mr Geyer's statement as a "falsehood".
(3) I consider that the hypothetical reasonable reader would understand the discussion about the ownership and funding of XIO to be raising matters of concern about opacity, without suggesting one way or the other who was right in what [47] calls the "warfare" between Xie Zhikun and XIO. In particular, read in the context of the remainder of the Article, and for that matter even read in isolation, I do not consider that such a reader would understand from [46] that the report that a banker who had advised XIO on the acquisition was "shocked" by Xie Zhikun's daughter putting forward "a notion the banker hadn't heard before" should be taken to indicate that the banker gave credibility to the claim made by the daughter, let alone that the claim should be given credibility. I consider s/he would think "notion" connotes scepticism.
(4) I consider that such a reader following through the narrative contained in the Article about the ownership and funding issues and concerns arising in relation to the acquisition of JD Power would attach importance to what is reported as being the final position that was reached, not only according to XIO (that "all of the parties … who were part of the US regulatory approval process were provided full details of XIO Group's diversified institutional investor base" [30]), but also according to S&P Global ("the level of due diligence that we performed … was appropriate" [31]).
DETERMINATION OF THE SECOND ISSUE
"(1) Processing of personal data relating to criminal convictions and offences or related security measures based on Article 6(1) shall be carried out only under the control of official authority or when the processing is authorised by domestic law providing for appropriate safeguards for the rights and freedoms of data subjects. Any comprehensive register of criminal convictions shall be kept only under the control of official authority.
(2) In the 2018 Act —
(a) section 10 makes provision about when the requirement in paragraph 1 of this Article for authorisation by domestic law is met;
(b) section 11(2) makes provision about the meaning of "personal data relating to criminal convictions and offences or related security measures"."
"In Article 10 of the [UK GDPR] and section 10, references to personal data relating to criminal convictions and offences or related security measures include personal data relating to—
(a) the alleged commission of offences by the data subject, or
(b) proceedings for an offence committed or alleged to have been committed by the data subject or the disposal of such proceedings, including sentencing".
THE PARTIES' SUBMISSIONS
DISCUSSION
CONCLUSION
