Three Rivers District Council and Others v Governor and Company of the Bank of England (No. 12)
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE TOMLINSON,Mr Justice Tomlinson |
| Judgment Date | 12 April 2006 |
| Neutral Citation | [2006] EWHC 816 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 1993 Folio 1309 |
| Date | 12 April 2006 |
[2006] EWHC 816 (Comm)
Mr Justice Tomlinson
Case No: 1993 Folio 1309
THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
The Claimants were not represented
Nicholas Stadlen QC, Mark Phillips QC, Bankim Thanki QC, Ben Valentin, Henry King and Tom Smith (instructed by Freshfields Bruckhaus Deringer) for the Defendant
Hearing dates: 30 and 31 January 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
Introduction On 2 November 2005, Day 256 of the trial, the English liquidators of Bank of Credit and Commerce International SA, "BCCI SA," the Claimants in this action, to whom I shall refer as "the liquidators," finally abandoned their attempt to prove that in its supervisory regulation of the activities of BCCI SA in the United Kingdom between 1980 and 1991 the Bank of England, "the Bank," acted in a knowingly unlawful and in important respects wholly dishonest manner.
Over the course of twelve years of litigation the Bank, through its officers, was accused by the liquidators of an immense catalogue of outrageous behaviour. In addition to acting deliberately contrary to their statutory obligations, in a manner which they knew would probably cause loss to depositors in BCCI SA, or recklessly, knowing that there was a serious risk of such consequences, officials of the Bank were also accused of dishonestly misleading a number of persons and institutions, including even Parliament itself.
The liquidators accused officials of the Bank of dishonestly misleading their own Governors, which expression includes Deputy Governors of the Bank of England, of dishonestly misleading other overseas banking supervisors and of dishonestly misleading the independent Board of Banking Supervision which was a product of the 1987 Banking Act intended to provide some independent review of their actions. Next, officials of the Bank were accused of dishonestly misleading HM Treasury and of dishonestly misleading Parliament by means of providing ministers, including the Chancellor of Exchequer, with misleading briefings to which to speak in the House of Commons. Officials of the Bank were accused of dishonestly misleading the Treasury Select Committee.
In July 1991, after the Bank had revoked BCCI SA's banking licence, there was announced by the Prime Minister to the House of Commons the appointment of Lord Justice Bingham to conduct an independent inquiry into the supervision of BCCI under the Banking Acts. Bingham LJ is now Lord Bingham of Cornhill, the Senior Law Lord. Officials of the Bank who gave evidence before Bingham LJ were accused by the liquidators of giving dishonest answers to his questions.
Finally, the two officials of the Bank who gave oral evidence before me, Mr Brian Quinn and Mr Peter Cooke, were accused of giving dishonest answers in the witness box. It was made clear that any other official of the Bank, with the exception of the Governors or Deputy Governors, who gave evidence in accordance with his or her written statements submitted to the court would likewise be accused of dishonesty.
The accusations of dishonesty did not stop there. Officials of the Bank were alleged by the liquidators to have created, on a vast scale, documents which dishonestly misrepresented the position or their contemporary understanding of it so as to create a false and misleading paper trail to cover their tracks. The ever-changing personnel of the Banking Supervision Division and its predecessor the Banking and Money Markets Supervision Section were alleged to have carried out this feat from about the middle of 1978 right through until the demise of BCCI in 1991.
By the time that the liquidators' case had closed after first Mr Gordon Pollock QC and then Lord Neill of Bladen QC had addressed me on their behalf, at least 42 of the Bank's officials stood accused of dishonesty, a substantial uplift on the 22 identified in the liquidators' statements of case as having been dishonest. As Mr Nicholas Stadlen QC for the Bank has observed, keeping a tally of those whose names were to be added to the roll of dishonour became during the trial something of a parlour game. That notwithstanding, I do not overlook the distress which must have been caused to those who found themselves publicly accused of dishonesty in this manner, and particularly the distress caused to the families of those who were so accused after their death. Mr Pollock had already conceded before the trial began that the basis for alleging dishonesty against quite a few of the initial 22 officials was slender. It must have been apparent that the more names were added to this list the more implausible the allegations became.
Perhaps unsurprisingly given the scale of the Bank's alleged wrongdoing and turpitude the liquidators in December 2002 added to their statements of case a contention that the Bank should, in addition to paying normal damages and interest, be condemned to pay exemplary damages on the basis that its conduct throughout the entire period with which the claim was concerned was "oppressive, arbitrary and unconstitutional" and was conduct "meriting an award of exemplary damages."
Wednesday 2 November 2005 would have been the 21 st day of the cross examination of Mr Peter Cooke, formerly Head of Banking Supervision at the Bank and the person alleged to have orchestrated and to have been at the very centre of the alleged wrongdoing. This wrongdoing however allegedly continued unabated after Mr Cooke's retirement from the Bank in October 1988 in order, apparently, to conceal the earlier wrongdoing for which, on the liquidators' case, he was principally responsible. The critical importance to the liquidators' case of bringing home against Mr Cooke allegations of outright dishonesty no doubt lay behind Mr Pollock's colourful but unfortunate reference on Day 1 of the trial to there being something in the idea of litigation being a blood sport wherein if the liquidators were to be characterised as the unspeakable, as the Bank from time to time did so characterise them, then Mr Cooke was to be characterised as the uneatable. Mr Cooke was in his place in the witness box to face the 21 st day of his cross examination when Mr Pollock stood at 1030 to make the following announcement: —
"MR POLLOCK: My Lord, as your Lordship knows, the liquidators are officers of the court and from time to time seek the guidance and direction of the Chancellor. The liquidators applied to the court for directions. That application came before the Chancellor and was heard over a period of three days. The Chancellor heard the arguments of the liquidators, the Luxembourg liquidators and the English Liquidation Committee. In a reserved judgment given earlier today, he held that it was no longer in the best interests of the creditors for the litigation to continue, and he directed that the action be discontinued……. The proceedings before the Chancellor are private, but he has authorised a statement in these terms, and I can say nothing more….. without running the risk of being in contempt of court."
MR JUSTICE TOMLINSONI see. So the proceedings are at an end, subject to any further applications that may be made?
MR POLLOCK: Yes, I should simply say that any such applications, my Lord, would have to be made in due course, and in proper form, because, of course, of the necessity of ensuring that the Chancellor has an opportunity to give any such directions as he would wish.
MR JUSTICE TOMLINSONRight. Do I follow from that that the formal position is that you will serve notice of discontinuance?
MR POLLOCK: My Lord, we may already have done so. If not, it is being done. I think, as we speak, so I would simply ask your Lordship to rise so that we may clear our stuff away and leave, since we in fact have no more instructions, we are no longer instructed to stay here."
I have probably already said enough to indicate that this was extraordinary litigation which came to an abrupt albeit long overdue conclusion in unusual circumstances. What appears to have occurred, although I was not told, is that on 23 September 2005 the English Liquidation Committee of BCCI, representing its biggest creditors, passed "a strongly worded resolution calling on Deloittes (the liquidators) to discontinue [the action] forthwith" – see a report in The Times Newspaper of 4 November 2005. The liquidators evidently did not comply with that resolution but instead applied to the Chancellor of the High Court, Sir Andrew Morritt, for directions. Mr Pollock told me that the Chancellor heard argument over a period of three days but he was unable to tell me or at any rate did not tell me whether the argument was adversarial and what position was adopted by whom. The fact that the Chancellor concluded that it was no longer in the best interests of the creditors for the litigation to continue and that he directed that it be discontinued speaks for itself. The Chancellor must have concluded that the liquidators had no worthwhile prospect of success. He would have been unlikely lightly to have condemned the liquidators to the payment of the substantial costs involved in a 256 day trial, an order to which effect would inevitably follow discontinuance.
The liquidators did not withdraw their allegations nor proffer any apology. They can be compelled to do neither and they may not wish to do so. However the position in which the Bank and the impugned officials are left is unsatisfactory, as...
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