Pensions court battle reignites
10 November 1994
The massive hunt for £400 million in Maxwell pensions assets has renewed in the High Court with two separate cases involving claims of up to u88 million being run in the same court room.
The cases are MGN Pension Trustees Ltd's (MGNPT) u60 million action against Bank of America and Credit Suisse and the liquidator of Bishopsgate Investment Management (BIM) Robson Rhodes' u28 million action against Credit Suisse.
The trial is a major piece of litigation in the Maxwell pensions theft saga and the first to reach court for either BIM or MGNPT. But it is also expected to be a landmark for banking law.
Margaret Cole, the Stephenson Harwood partner leading the BIM legal team, says: "It will be an important legal decision in its own right because it will set standards for the test of knowledge and notice for making banks liable as constructive trustees."
Jonathan Leslie, partner at Travers Smith Braithwaite leading the MGNPT team agrees, saying it will "clarify the law of when bankers are liable for receiving monies in breach of trust".
Both actions are the result of several years of investigations. They will be "an important step in the recovery of missing pension assets", says Leslie.
The trial involves solicitors and senior counsel in four teams, representing all parties. The plaintiffs' lawyers are working together to minimise duplication of effort with speeches and examination of witnesses.
Cole says this approach was chosen because "there are overlapping facts and legal issues in the two separate actions. We concluded there would be saving in time and money for them to be tried together".
The background is that MGNPT proceedings were issued in June 1992. After that, BIM receivers Robson Rhodes started their own proceedings with similar allegations against Credit Suisse. The court then agreed to make an order for the cases to be run together.
Counsel for BIM are Philip Heslop QC, John Brisby, Christopher Harrison and Andrew Fletcher, all of 4 Stone Buildings.
The task of Stephenson Harwood and BIM liquidators Robson Rhodes is to recover nearly u300 million lost to the Common Investment Fund (CIF), a pensions pool controlled by BIM.
Their actions to date started in September 1993 against Lehman Brothers International (Europe) Ltd and Shearson Lehman Brothers Holdings plc for more than u100 million in CIF assets.
Lehmans agreed to hand over u30 million in shares. An action for the remaining u70 million is listed for 25 April 1995.
More recently, they began actions in France against Banque Nationale de Paris, Euris SA and Headington Holdings Ltd (in administration) for the recovery of u33 million.
Meanwhile, the MGN Pension Trustees case is the second in its search for assets lost by the Mirror Group Pension Scheme.
Travers Smith Braithwaite litigation partners Jonathan Leslie and Alistair Graham head the legal team.
Counsel for MGNPT are Michael Crystal QC and Stephen Atherton of 3-4 South Square and Geoffrey Vos QC of 3 Stone Buildings.
Clifford Chance acts for Credit Suisse, with a team lead by partner Ashley Booker. Counsel for Credit Suisse are Gabriel Moss QC, William Trower and David Alexander, all from 3-4 South Square.
Rowe & Maw are solicitors to Bank of America, with a team led by Edmund Soutter. Bank of America's counsel are Raymond Kidwell QC of 2 Crown Office Row and Richard Jones from 3 Paper Buildings.
In the MGNPT action, credit has been given against the amount claimed for the u25 million already paid in settlement by Bank of America.
Although Bank of America remains notionally in the action, its main involvement is to attempt to recover, by way of contribution from Credit Suisse, sums they have paid to MGN Pension Trustees Ltd.
Credit Suisse also claims a contribution from Bank of America for any liability for which they may be held due to the trustees.
MGN Pension Trustees Ltd claims its assets were held by Bank of America as custodian in 1991 and were taken as collateral for a loan of around u50 million advanced by Credit
Suisse to the Robert Maxwell Group.
Bank of America's payment to MGN Pension Trustees Ltd was without admission of any liability.
BIM and MGNPT are expected to allege that Credit Suisse knew, or had they taken proper steps to enquire into what were highly suspicious circumstances, would not have known that the funds they were taking as collateral were pension fund assets and not the assets of Robert Maxwell Group.
Credit Suisse denies any liability either to BIM or MGNPT, says Clifford Chance partner Ashley Booker.
Travers Smith Braithwaite launched a previous u50 million action against Invesco MIM Management Ltd, Capel-Cure Myers Capital Management Ltd and Lehman Brothers International Ltd. That settled in January 1994 for u33.5 million, around the time of the Bank of America settlement.