Blame it on the judge: BCCI looks set to drag on and on
17 October 2005
11 November 2013
17 December 2013
11 November 2013
4 April 2014
7 January 2014
It has been a long haul for all concerned. Now, 14 years on from the collapse of the Bank of Credit and Comm-erce International (BCCI) in 1991, and 12 years from the launch of the liquidators' claim against the Bank of England, the end of the trial is still at least a year away.
Against the background of the Woolf reforms and the general decline in active litigation, it is an extraordinary situation. Three Rivers District Council & Ors v The Governor & Company of the Bank of England is certainly one of the longest-running cases ever to have hit the English courts. Only the tangled affair of Kuwait Airways Corporation v Iraqi Airways Company, which was launched in 1991 and is still ongoing, appears to beat it.
BCCI has been in court for nearly two years now, having opened in January 2004 before Mr Justice Tomlinson. For much of the time it has been out of the public eye, but last week it emerged that Deloitte had made three attempts at settling. The most recent was before the Bank of England's key witness, Peter Cooke, took to the stand. All settlement negotiations were rebuffed by the bank, which said in a statement: "We have always made it clear that there would be no deal and no negotiations."
So the case continues. But the news that a settlement had been considered, against the background of the recent agreement in the three year-long Equitable Life case, prompted a fresh round of speculation as to how BCCI has lasted this long - and whether it should have lasted this long. Two connected actions, the liquidators' claims against the Bank of America and the Bank of India, have already ended, the former in a settlement and the latter in a June 2005 ruling for Deloitte. Should the blame for the length of the Bank of England case be laid at the door of Tomlinson J or that of the parties?
"As an observer, one can't help compare the speed with which that trial has proceeded with the seeming efficiency of the Equitable trial," says Colin Passmore, head of litigation at Simmons & Simmons.
BCCI was initially held up by a strike-out application by the Bank of England four years after the claim's launch. In 1997 Mr Justice Clarke upheld the application, a decision with which the Court of Appeal agreed in 1998. It took another two years for BCCI's appeal to reach the House of Lords, where Lords Steyn, Hope of Craighead, Hutton, Hobhouse of Woodborough and Millett decided that the claim that the bank was liable for misfeasance in public office must be tried before a court. The Lords, however, did throw out other parts of the case.
Preliminary skirmishes over a vital question of legal privilege kicked off in 2002, when Tomlinson J handed down a decision finding that documents prepared by bank employees for solicitors Freshfields Bruckhaus Deringer were privileged. In March 2004, the Court of Appeal controversially disagreed and the appeal to the Lords was expedited. A decision came in July 2004, with judgment in November, in favour of the bank.
Meanwhile, in January 2004, Essex Court Chambers head Gordon Pollock QC began what would be a 79-day opening statement for Deloitte. The length of the opener caused surprise at the time, particularly because Tomlinson J had helped write the guidebook calling for "very short" openers. But Pollock's record was then broken by the Bank of England's lead counsel Nicholas Stadlen QC of Fountain Court, who was on his feet for 119 days.
"In the days of case management post-Woolf," Simmons' Passmore says, "you have to ask: why were the openings so long?"
The answer, think some, is that Tomlinson J lost control of the case when he allowed Pollock to speak for as long as he did. Much of the opening could have been made in written submissions instead of orally, says one silk, guessing that Pollock's reputation as an aggressive advocate may have dissuaded Tomlinson J from ordering an end to the opener. Nobody blames Stadlen for responding at such length, pointing out that he was bound to offer a defence to each claim the liquidators made.
At this stage of the trial, it is difficult to say what precedent its length will have set for the future. The bank has said it does not plan to call any further witnesses once Cooke has retired from the stand; in an echo of Ernst & Young's (E&Y) Equitable tactics, it appears to believe that it is necessary to call only a few of those who gave witness statements. E&Y prompted a round of head-scratching just a few months ago when it, too, announced that it would not call five defence witnesses.
In BCCI, Deloitte could ask Tomlinson J for an order that the bank's witnesses must be called, thus prolonging the case into 2007. In any event, it now seems unlikely that judgment will be handed down before the 2006 summer vacation. A small consolation may be that the closing statements are understood to be limited to 10 days per side; a small number for this case, but still long by current standards.
Howard Kennedy partner Chris Gooding, engaged for the last 14 years on the Kuwait Airways case, points out that both claims were brought prior to the Woolf reforms, when it was quite normal for cases to receive trial dates several years into the future. "The system is considerably better than it was at the beginning of these cases," Gooding believes.
But the system, which was recently criticised by former IP judge Sir Hugh Laddie in The Lawyer (10 October), clearly has its flaws if one of those responsible for writing the guide to case management cannot control two QCs. Equitable's result may have suggested that settlement was the latest rage - BCCI indicates quite the opposite.
BCCI: The Statistics
12 years since the claim was launched
79 days for the claimants' opening statement
119 days for the Bank of England's opening statement
Six barristers for each side
£75m in legal fees for the bank's counsel and solicitors Freshfields
£37m in legal fees for Deloitte's counsel and solicitors Lovells
£3m brief fee for Gordon Pollock QC
£850m claimed by the liquidators in this action
£5.5bn returned to BCCI creditors in total
Collapse of BCCI
Misfeasance claim against the Bank of England launched by Deloitte, the liquidators of BCCI
Mr Justice Clarke strikes out the claim
Court of Appeal dismisses BCCI's appeal
House of Lords rules that the issue of misfeasance in public office must be heard at trial
Mr Justice Tomlinson hands down his privilege judgment in Three Rivers District Council v Bank of England, finding for the bank
JANUARY: Gordon Pollock QC gets to his feet to begin his opening statement
MARCH: Court of Appeal upholds liquidators' appeal in Three Rivers
JULY: Pollock sits down after a record 79-day opening speech; House of Lords finds for the bank in Three Rivers
MARCH: Nicholas Stadlen QC sits down after opening statement lasting 119 days
OCTOBER: It emerges that Deloitte has made three attempts at settling the claim with the bank, all of which have been rejected