The Stax Claimants v Bank of Novia Scotia Channel Islands Ltd and Others
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE WARREN,Mr Justice Warren |
| Judgment Date | 24 October 2007 |
| Neutral Citation | [2006] EWHC 3043 (Ch),[2007] EWHC 1569 (Ch),[2007] EWHC 143 (Ch),[2007] EWHC 1153 (Ch),[2007] EWHC 2438 (Ch) |
| Docket Number | Case No: Case No: HC05C00362 & ORS,Case No: HC05C00362 & ORS,HCO5CO1569 |
| Court | Chancery Division |
| Date | 24 October 2007 |
[2006] EWHC 3043 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Warren
Case No: HC05C00362 & ORS
Nicholas Yell instructed by Carter—Ruck appeared for the Claimants
Mark Herbert QC instructed by Stephenson Harwood appeared for the Defendants
Simon Buckhaven instructed by Timothy Kench & Co appeared for Additional Parties
Stephen Lloyd instructed by Bray Walker for an Additional Party
John Meredith Hardy instructed by Coole & Haddock appeared for an Additional Party
Simon Adamyk instructed by Fishburns appeared for Additional Parties
Mark Simpson instructed by Plexus Law appeared for an Additional Party
Matthew Hardwick instructed by Beachcroft LLP appeared for Additional Parties
Adam Tolley instructed by Squire & Co appeared for an Additional Party
Sadhanshu Swaroop instructed by MacFarlanes appeared for an Additional Party
Simon Goldstone instructed by CMS Cameron McKenna appeared for an Additional Party
Hearing date: 21st November 2006
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
On 21 November 2006, a CMC was held. Two principal issues were raised first, the Claimants' requests for further disclosure and secondly, whether there should be a selection of lead cases and, if so, which they should be.
The Claimants had issued one application for disclosure covering aspects which my previous order did not. The Defendants had not had time properly to consider the application in order to respond to it. The Claimants also said that there had been inadequate compliance with the previous order; but no formal application had been made and the Defendants were unclear precisely what it was alleged they had failed to do. In any event, there was, as it turned out, inadequate time to give any consideration to the issues of disclosure. Accordingly, disclosure is to be dealt with on another occasion on a date to be fixed.
At the CMC in July of this year, the common view of the Claimants and the Defendants appeared to be that the selection of half a dozen lead cases would be sensible, although that was not the view of all of the Additional Parties. It appeared to me at that time that the selection of lead cases would be appropriate. It appeared then that the selection of this number of cases ought to enable a sufficient range of factual scenarios to be dealt with as would, in practice, give the remaining Claimants and the Defendants a very good idea of the outcome of their own cases to enable settlements to be reached. The lead case approach had also been the approach adopted by Master Weingarten at an earlier stage, although he had envisaged a larger number of lead cases being selected.
It was not appropriate, at the July hearing, actually to select any lead cases. The Claimants considered that it would not be possible to do so until disclosure had been given at least to the extent that I ordered disclosure on that occasion.
The selection of lead cases is complicated by the contribution claims by the Defendants against the Additional Parties. With one exception, none of the Additional Parties wishes the case in which it/he/she is involved to be a lead case and each produces reasons why others should be selected as lead cases. This is not a surprising attitude since none wishes to have to incur the expense of preparing and attending a full trial. In this context, it is said by many of the Additional Parties that the lead case approach is unfair to those involved in the selected lead cases: in reality, it will be nothing short of a lottery, they say, whether one case rather than another is selected as a lead case and it is thus a lottery as to which of the Additional Parties is to bear the burden of trial. There are two suggested ways of avoiding this unfairness.
a. First, there should not be lead cases at all, but the claims of all the Claimants should be prepared and be listed together, although, as a matter of trial management, it would not be expected that all Claimants and all Additional Parties would need to attend all of the trial. Further, the trial Judge may, as a matter of trial management, decide to select a small number of cases to deal with first.
b. Secondly, all of the claims by the Defendants against the Additional Parties should be stayed pending the outcome of the claims (whether or not a selection of lead cases is made) by the Claimants against the Defendants.
I would add a third possible solution which is for the Additional Parties to enter into a cost-sharing agreement (or to have one imposed). However, for reasons which I will come to, this is not a realistic solution.
I am told that several of the IFAs are considering bringing strike out/summary judgment applications against the Defendants. That needs to be taken account of in the selection of lead cases since, it is said by some of the Additional Parties, that there is no point selecting their cases as lead cases at this stage only to find that those cases no longer have an IFA involved.
There is one other factor to be taken into account in deciding whether to proceed with lead cases which was not appreciated until very recently and certainly not at the time of the July hearing. It relates to the funding of the Claimants' claims. Many, if not all, of the Claimants lack the means to pursue their claims against the Defendants. Indeed, the risk for a single Claimant in pursuing his or her claim in isolation might be seen as disproportionate to the potential recovery which would result even if the prospect of success was regarded as strong. Accordingly, the Claimants' advisers had always seen all of the claims proceeding together but so that, if lead cases were selected, all of the Claimants would contribute to the costs incurred by the Claimants in those lead cases.
To cover the risk of losing, each of the Claimants has taken out After the Event insurance ("ATE"). Mr Yell, who appears for the Claimants, says that each Claimant has taken out ATE cover for £100,000; it was anticipated that the total of this cover (some £4.5 million, there being some 45 Claimants) would be available even if lead cases were selected so as to cover the risk of a costs order against them. The insurers take the view, however, that that is not what the policies provide and assert, as I understand it, that each Claimant can claim only in respect of the costs of his own action. Top-up insurance is, according to Mr Yell, available but only at huge expenses, the premium for each extra £1 of cover being close to £1. I have not been provided with any further explanation about the top-up cover but assume that it is, unlike the existing ATE cover, to be available in relation to selected lead cases.
The insurers have not given their consent to provide the policies to the Defendants which are thus not in a position to judge for themselves whether the policy provisions do have the effect which Mr Yell has explained. Mr Yell did, however, obtain the consent of the insurers to provide me with a copy of the form of the policy and one was handed up for me to look at after the hearing. On reflection, I decline to look at it. If it is to have any influence on my decision, then the Defendants should be entitled to see it. If it not to have any influence on my decision, there is no point in my looking at it. If the Claimants wish me to take it into account, then they must obtain the insurers' consent to show it to the Defendants.
Although it was the view of the Claimants, the Defendants and myself in July that the selection of lead cases was the correct approach to case management of this litigation, the Claimants now question whether that approach is a good idea. It is important to get this right: the fact that everyone thought it was a good idea in July does not mean that a re-think should not take place before a final decision is made. The Claimants' change of view arises not just because of the difficulties which arise in relation to their ATE insurance if lead cases are selected, but also for these suggested reasons:
a. The court cannot conduct the trial with blinkers on ie through the prism of the lead cases chosen.
b. Amongst other issues that the court will have to determine is whether the Stax Scheme was a fraudulent scam and what the state of mind of BNS was.
c. The Defendants say that if they did owe a duty of care to the Claimants, they were in breach of that duty for the reasons put forward in their claims against the Additional Parties. This they say will inevitably involve looking at the entirety of the evidence and the necessity to call witnesses who will give relevant evidence about BNS's involvement in the Stax Scheme and its state of knowledge about it. Those witnesses will not be limited to those involved in the lead cases.
The Claimants' position is that it is not possible to determine the issue whether lead cases should be selected, let alone determine which should actually be selected, until their disclosure applications have been dealt with and until such disclosure as is ordered is provided. There is also an outstanding request for further information which, for one reason and another, has not yet been answered but which Mr Herbert, for the Defendants, says will be answered by the end of this month. Mr Yell suggests deferring consideration of whether there should be lead cases (and, if so, actual selection) until a later CMC when full disclosure has...
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