Richards J slates Herbert Smith's 'lackadaisical' approach to disclosure
14 March 2012 | By Katy Dowell
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Mr Justice Richards has accused Herbert Smith of taking a “lackadaisical” approach to a disclosure exercise in a case in which the firm has been instructed by Irish businessman Paddy McKillen.
McKillan has instructed partner John Whiteoak in a legal fight with the Barclay brothers for control of the five-star Maybourne Hotel Group in London. The group owns Claridges, the Connaught and The Berkeley hotels.
Weil Gotshal & Manges partner Matthew Shankland has instructed One Essex Court’s Tony Grabiner QC for Sir David and Sir Frederick Barclay.
The case was due to come to court this week, but has been adjourned to allow extra time for disclosure. This came after a hearing last month in which the defendants asked the court to issue an order for further disclosure on McKillen’s financial background.
At issue is whether McKillen had the means to buy the shares that he is in dispute with the Barclays brothers over.
According to Richards J’s order, Herbert Smith’s client had failed to disclose the attempts he made to raise the equity to buy the disputed shareholding.
According to a letter sent by Herbert Smith on 15 February: “Our client’s position is not that he held sufficient available financial resources to purchase the shares at the relevant time without financing. […] We have located one text message which records around the time in question Mr McKillen received an unsolicited approach from someone who offered to provide funding […].”
Later that week, the judgment states, a witness statement was put forward by McKillen’s financial advisor Liam Cunningham that revealed that in fact there had been “discussions and negotiations” with seven possible funding parties.
The judgment stated: “It is thus clear that the information provided in the solicitor’s letter of 15 February was substantially inaccurate. I find this highly regrettable, particularly given that I allowed several days for a considered response on the issue.”
In court Richards J told Serle Court’s Phillip Marshall QC, instructed for McKillen: “Let me tell you, I am not quite sure that your side has fully recognised the significance of that letter that Herbert Smith sent following my direction.
“I do not know what went wrong there, but that was a serious step, as I hope I indicated in my judgment. This is disclosure which should have been done weeks ago.”
He continued: “There is a sort of lackadaisical view in relation to this category.”
It is not the fist time Herbert Smith has been told off by a judge over disclosure.
Earlier this month the High Court ordered Herbert Smith client West African Gas Pipeline Company (WAPCo) to pay a £135,000 wasted costs order after an e-disclosure exercise spiralled out of control (7 March 2012).
For the claimant/petitioner Patrick McKillen: Serle Court’s Philip Marshall QC to lead 4 Stone Buildings’ Richard Hill and Gregory Denton-Cox also of 4 Stone Buildings instructed by Herbert Smith partner John Whiteoak.
For the respondent Derek Quinlan: One Essex Court’s Stephen Auld QC and Michael d’Arcy instructed by Quinn Emanuel Urquhart & Sullivan partner Richard East.
For the respondents Misland (Cyprus) Investments Ltd; Ellerman Corporation Ltd; B Overseas Ltd and Maybourne Finance Ltd: One Essex Court’s Sa’ad Hossain instructed by Weil Gotshal & Manges partner Matthew Shankland.
For the respondents Richard Faber, Michael Seal and Rigel Mowatt: Erskine Chambers’ Edward Davies instructed by Ashurst partner Ed Sparrow.
For the defendants Sir David and Sir Frederick Barclay: One Essex Court’s Tony Grabiner QC to lead Edmund Nourse of the same set instructed by Weil Gotshal & Manges partner Matthew Shankland.
For the defendants Barclays Bank: Fountain Court’s Andrew Mitchell QC instructed by Berwin Leighton Paisner partner David Hughes.
For non party Siobhan Quinlan: One Essex Court’s Michael Fealy instructed by SJ Berwin partner Rachel Couter.