30 April 2001
18 November 2013
15 August 2014
22 November 2013
25 July 2014
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25 April 2014
What a shambles. Last month the Thyssen trial - the most expensive in legal history - collapsed when the judge resigned after not securing a better pay package. Since then, the whole thing has descended into bitter recriminations. Such angst, together with the sad death of defendant counsel 52 year-old Trevor Philipson QC (who himself had replaced Nicholas Patten QC) may lead one to wonder if the whole Thyssen litigation is jinxed.
At the moment the knives are out, as those close to the action wrangle about the conduct of the trial. Did certain lawyers - and in particular Michael Crystal QC - hijack the running of the case? Or was it entirely mishandled by the judge?
First, some history. The principal plaintiff is Baron Hans Heinrich Thyssen-Bornemisza, and the main defendant is Georg Heinrich, the Baron's eldest son. The roots of the case go back 18 years, when Georg and his father were close and the Baron was going through his fourth divorce.
On 18 April 1983, father and son flew to Bermuda to set up a continuity trust as an ownership vehicle for the family empire. The purpose of the trust was threefold: to protect the Baron from any potential financial claims during his fourth divorce; to ensure that his businesses remained stable after the Baron's death; and, ironically, to avoid any future legal dispute between heirs regarding the fortune. The next irony is that the corporate defendants are paying their legal fees through the continuity trust itself. Put another way, the Swiss tycoon is paying for his oppositions' defence.
The family is one of the wealthiest in Europe, being head of the Thyssen-Bornemisza Group, a holdings company with international interests worth $2bn (£1.4bn). The Baron is seeking either to have the continuity trust set aside and to regain control of the Thyssen-Bornemisza group, or compensation from Georg for, as Crystal says, "disregarding his responsibilities to the Baron in relation to the setting-up of the continuity trust". The compensation figure is $282m (£196.2m).
The co-plaintiff in the trial is Carmen "Tita" Cervera, a former Miss Spain and the fifth woman to wed the Baron. Should the litigation outlive the Baron, not an altogether unlikely prospect, she will ensure the continuation of the litigation. If this happens, and the court finds for the plaintiffs, the Baroness would be left in control of the revised family trust.
But after almost two years of trial and two years of legal wrangles prior to that, came the devastating blow - that a new judge and new QC must be found. Sources close to the trial have expressed their unhappiness at the behaviour of Mr Justice Denis Mitchell, and he was asked to recuse himself by the defendants just days before he stepped down.
Other lawyers reserve their venom for Crystal himself. Put it down to jealousy (Crystal is thought to have made huge sums of money from the case), or simple dislike (his abrasive temperament has not always won him friends), but in some quarters there appears to be a certain relish in his current situation.
Attempting to unravel all this is hardly straightforward. The tales of events are so vastly different, one might even think that the same trial is being heard in two different courtrooms.
As expected, the criticism of Crystal is being vigorously dismissed by the plaintiffs' team. A spokesman says: "On the basis of Alan Boyle's [lead counsel for the first defendants] opening to date, it looks like he would actually have been far longer than Crystal."
"Not true!" objects a source in the defendants' camp. "We would have finished within a couple of months."
The case was bedevilled by difficulties from the start. Back in January 1997 a writ was issued by two plaintiffs, the Baron and LRT Trustee (PVT) Limited. The legal wrangling that followed relating to submission of evidence was to be expected in a case worth $1.2bn (£834.7m). Mr Justice Richard Ground advocated all these preliminary hearings, but he left the case in August 1998 and it was not until the following January that Judge Mitchell first sat on the case.
The trial was scheduled to begin in February 1999 but applications on both sides delayed the start date by eight months. In October, Crystal opened proceedings, and from here two very different versions of the story exist. The defence claims that while Crystal filibustered for months, it experienced "agony" and was not given leave to interrupt or intervene in any way. Norton Rose partner Anthony Dutton, acting for the defence, attributes this to "bad trial management", which he says the plaintiffs took full advantage of to hog the floor.
He says: "There is no getting away from the fact that the plaintiffs are in the driving seat regarding the progress made in the opening and the decision to seek leave to amend orders. Their actions resulted in delay."
A spokesman for the plaintiffs rejects this analysis outright, saying that Crystal only addressed the court for a restrained 66 days - a reasonable amount of time for the complexity of the case. Any delays, it is claimed, were caused by an unsuccessful strike out action, and amendments and re-amendments to the pleadings and disclosure.
"It's complete nonsense to blame the defence for delays," says Dutton. "Crystal began in May. The only interruption was to the extent that we made a strike-out application, which took about three or four weeks. The cause of any subsequent delays was the plaintiffs' decision to seek leave to amend pleadings. It's an extraordinary waste of time to take ages to open and then seek leave to amend pleadings without the other parties even speaking. One would have expected pleadings to be in order. Either a case is as stated or it is something else entirely."
The plaintiffs also raised new allegations of fraud, all of which required appropriate response from the defendants who also, therefore, amended their pleadings.
A source for Crystal's team hits back by saying that Crystal was prevented from concluding in May due to the defendants' action to strike out. During this application, defendant counsel Patten called the Baron's witness statement a "highly stylised document" and said that the whole case was misconceived.
However, this application was never heard. Judge Mitchell felt that it should have been offered earlier in the trial - a full two years earlier in fact. Dutton protested that the "grounds for the strike-out did not exist until after the pleadings were heard" and therefore could not have begun any earlier than they did, but these arguments were clearly not considered meritorious by the judge. At this point, now June 2000, the plaintiffs asked for leave to amend their pleadings.
Having at least addressed the court once, Patten was made a judge and left the case in September 2000. A few weeks later, Trevor Philipson QC at Fountain Court flew in to replace him.
The defendants continue to insist that poor management delayed the trial. But the plaintiffs' team points out that on opening for Georg, Boyle stated that he felt the need for "a little more extra time simply to make sure that everything is in final order before I actually start." More delay therefore ensued. But despite this, a spokesman for the defendants insists that an English judge would "never have allowed the trial to go on as it did" and would have been much more strict.
A spokesman for the plaintiffs objects: "It is not trial management that's needed. The delays have been caused by a misconstrued strike-out action by the defendants that was as week as their excess demands for discovery that have yielded no benefit."
There is also the fact that the plaintiffs were scheduled to appear before the Bermudian Court of Appeal in November, following Judge Mitchell's refusal to give leave to amend, but they withdrew in the same month they were to appear.
By now, legal costs had reached at least $65m (£45.2m) and were continuing to rise at a rate of $500,000 (£347,800) per week - with costs being pushed up partly by the extortionate price of living on the island. Serle Court's senior clerk Terry Buck says: "Everyone is finding it a problem. Everything is imported so prices are high."
And the participants are feeling a touch stir-crazy. Jeremy Kosky, senior assistant at Clifford Chance, who is acting for the Baron's son Georg, jokes: "When Jeremy Sandelson asked me to get involved he said it was a 'career case'. I thought that meant it would springboard my career, not take it up."
Finally, on 16 January 2001, 15 months after the trial began, the plaintiffs' opening came to an end.
Then came the worst blow for the trial. On day 106 Judge Mitchell stepped down. At this point Bermudian attorney for the plaintiffs, Geoffrey Bell, went to see the governor in person. The plaintiffs deny that any demands for compensation were made. Instead, Bell highlighted the enormous costs that would be lost as a result of Judge Mitchell's decision - estimated to be $15m (£10.4m).
Judge Mitchell was appointed by Chief Justice Austin Ward as a puisne judge under a three-year contract, the terms of which Judge Mitchell was later to call "misleading".
In his resignation address to the court, the judge blamed the stress of the case and concern about his "employment position" for his decision to step down. Not only was he appalled at being misled by his contract, he also questioned why a judge on a short-term contract was put on a case "with an obvious potential to be long-term".
But sources in the case explain the resignation in more sinister terms. Having voiced his concerns to the Bermudian authorities, Judge Mitchell identified the solution as either replacing him or enticing him to stay. Interestingly, although Judge Mitchell called the amount of money wasted in the case "obscene", he says that the authorities should have "constructed a package that would have been attractive enough to persuade him to stay and finish the case".
Cynicism was sparked when the judge proposed a package himself. The details of these terms were reported to be: the return of tax he had already paid; the value of accumulated leave; a $1,500 (£1,000) daily fee, to increase with inflation should the case go beyond April 2002; and a fee of $100,000 (£69,600) if the case finished before 31 December 2001.
A senior source in the defendants' team says that had these terms been accepted, Judge Mitchell would have had a financial interest in the case and therefore a conflict of interest. Unsurprisingly, Governor Thorold Masefield declined to renew the contract and the defendants asked the judge to step down.
So the search for a new judge is underway. Tim Gurney, deputy governor of Bermuda, says: "We are looking for a judge who can handle the case, we are not seeking out one particular style. The governor recognises the importance of moving quickly and identifying the right person for the job."
Even if a new judge is found immediately it is likely to take months for the appointee to familiarise himself with the almost 122,000 documents which have so far been submitted during the litigation, and the 600 pages of transcripts accumulated each week of the trial.
Nevertheless, Gurney remains optimistic. "Bermuda will maintain a good reputation. We need to get this into perspective. It's very sad that Judge Mitchell couldn't continue because the case affected his health, but this must happen from time to time." He does concede, however, that it was unfortunate this occurred "in the middle of the largest civil case ever".
Gurney is also unconcerned about the prospect of claims for compensation. "We do have a certain sense of sympathy," he says. "Time and money have been used and they have no result to show for it. But, excuse me for using an extreme expression, 'shit happens'. What if the judge had a heart attack? He has fallen ill. If the plaintiffs and/or defendants issue a writ we will deal with it. That's life."
It is unlikely that the trial proper will start before January 2002. And as Thyssen-Bornemisza continues to battle it out with Thyssen-Bornemisza, the cynicism of the participants - in the same way as the legal costs - seems to be reaching an all-time high. The most expensive civil trial ever may yet turn into the biggest farce. n