Trials and errors
27 February 2012 | Updated: 27 February 2012 10:19 am | By Katy Dowell
24 April 2013
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26 September 2013
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10 July 2013
The top cases of 2011 were a mixed bag, with some seeing success, some thrown out of court and others rumbling on into 2012.
The Lawyer’s picks of the leading cases of 2011 were notable for their complexity and armies of legal teams. Such was the size of some of the cases that six are continuing in 2012 as lawyers continue to pursue their adversaries or look to recover costs from the losing side.
The largest case in terms of legal advisers in 2011 was JSC BTA Bank v Ablyazov & Ors. It drew in more than 50 lawyers, including 22 partners, and 32 barristers and eight silks.
The £1.5bn ongoing dispute focuses on allegations of fraud by the former chair of Kazakhstan-headquartered JSC BTA Bank (BTA), Mukhtar Ablyazov. At the start of the year Ablyazov was represented by a team of five Stephenson Harwood partners including Roland Foord, Alan Bercow, Louis Flannery, Stuart Firth and Richard Gwynne. The case is believed to have earned the firm upwards of £20m, yet the client was restless.
In September, ahead of some feisty preliminary court hearings, Ablyazov dramatically switched from Stephenson Harwood to Addleshaw Goddard, instructing head of litigation Richard Leedham to assemble a team. The High Court was informed of the switch in September and, since then, Addleshaws has appeared in
court on Ablyazov’s behalf.
In December BTA, which is being represented by a Hogan Lovells team, asked the High Court to jail Ablyazov, who was granted asylum in the UK in July, for being in contempt of court. The claimants argue that he embezzled more than $5bn (£3bn) and has complicated proceedings by failing to disclose ownership of more than 600 shell companies.
Earlier in the year (30 June), the tycoon’s brother-in-law Syrym Shalabayev was jailed in his absence for 18 months for assisting Ablyazov in hiding his vast assets in defiance of High Court orders. With Shalabayev’s whereabouts still unknown, in September Mr Justice Henderson ordered his lawyers at Clyde & Co, led by partner Julian Connerty, to disclose his contact details (The Lawyer, 12 September 2011).
In October the parties continued to fight over the disclosure documentation and whether it was subject to legal professional privilege. Clydes claimed privilege could be applied to 221 documents – known as the ‘221 schedule’.
Henderson J’s judgment, which came in November, made it clear he did not approve
of the shift in Clydes’ approach. He remarked that the 221 schedule process was a “process which, in my judgment, reflects little credit on Clyde & Co, and it is hard to avoid the conclusion that an insufficiently rigorous and professional approach was adopted to at least the initial phases of the review”.
The complexity of the BTA case could mean that the main tranches of proceedings, of which there are five strands, are not heard by Mr Justice Teare and Mr Justice Clarke until 2013. This is no doubt good news for Addleshaws’ revenue targets. The firm is
also representing Russian oligarch Boris Berezovsky in his plethora of litigation in
the High Court, a leading case of 2010.
At the same time Leedham is awaiting judgment in Standard Life v ACE European Group, in which he instructed Brick Court Chambers’ George Leggatt QC to lead Simon Salzedo for Standard Life. In that case Standard Life was seeking to recover £100m from its insurers over monies lost through the Standard Life Pension Sterling Fund as a result of the Lehman Brothers collapse.
Reach for the Sky
Judgment is also awaited in the pay-TV trial that pitched British Sky Broadcasting (BSkyB) against the Office of Communications (Ofcom). The complexity of the case
saw BSkyB team up with unlikely ally Virgin Media to fight an Ofcom decision to force the regulated wholesale supply of Sky Sports 1 and Sky Sports 2 to other pay-TV retailers on terms set by the watchdog.
A number of trials are expected to rumble on through 2012 and it will be particularly interesting to see the evolution of the battle embroiling publishers Bloomsbury and
author JK Rowling.
The author and publisher were caught up in a plagiarism case pursued by Paul Allen, trustee of the estate of the late Adrian Jacobs. He first alleged in 2010 that themes from Jacobs’ 1987 book The Adventures of Willy the Wizard were copied in Harry Potter and the Goblet of Fire, published in 2000, and that Rowling therefore had infringed copyright.
Delivering the first ruling on the matter in October 2010, Mr Justice Kitchin said the claim could proceed, although success was “improbable”. By April 2011, Kitchin J had clearly had enough and ordered the claimants to put up £1.6m as security for costs or face having the claim thrown out of court. According to Reynolds Porter Chamberlain (RPC) partner David Hooper, who was instructed for the defendants, this was a novel approach by the court.
“The regime for getting security for costs is limited,” he says. “It’s usually reserved for when a party is bankrupt or based outside the EU. Having it here was quite useful.”
In fact, it rendered the claim invalid and left the defendants pondering how such an allegedly vexatious claim could take up High Court time.
That is the question RPC (instructed for Bloomsbury) and Schillings partner Gideon Benaim (for JK Rowling) will be attempting to get answered this year, when the defendants plan to go for indemnified costs.
It is understood that Allen, who was represented by DMH Stallard, had the backing of third-party funders who had attempted to bankroll a similar case against JK Rowling through the New York courts, only for the case to be thrown out.
“It seems to be a pretty foolish way of proceeding,” another source says. “They tried being a nuisance litigant, launching as many cases as they could to see whether they’d be paid off. It would be mad to pay people off like this – the claim was ridiculous.”
Instead, the defendants are attempting to force the claimant to reveal who had funded the case so they can proceed with the costs hearing.
Funding also became an issue in the Seroxat Group Litigation Order (GLO). More than 500 claimants joined the GLO against pharmaceutical giant GlaxoSmithKline UK, alleging to have suffered withdrawal effects when reducing, discontinuing or attempting to discontinue use of the antidepressant Seroxat. It was alleged that such suffering amounted to personal injury.
According to a lawyer close to the case, the claimant numbers have fallen dramatically as a result of the withdrawal of legal aid. This was made particularly contentious because the firm used to represent the claimants, Cardiff’s Hugh James, revised downwards the considered success of the case, forming the basis for the withdrawal of state funding.
It is understood that 125 claimants will continue to pursue the action but that they will be looking for a new law firm to represent them. Meanwhile, a group of the remaining claimants are appealing the Legal Services Commission’s decision to cancel the legal aid.
There have also been delays in the case hearings for Société Générale v Württembergische Versicherung AG & Ors due to wranglings over disclosure and evidence, and Imperial Tobacco’s judicial review bid against the Secretary of State for Health and the Attorney General because the legislation has been altered by the Government.
A source says: “Because the Government has decided to amend the regulations that are part of the regime that’s subject to judicial review, the hearing date has been adjourned and now the case is fixed for February. This is still an important case involving complex EU and ECHR [European Convention on Human Rights] arguments.”
Such is the importance of the case that it has involved: lawyers from Hogan Lovells, with partner Paul Dacam acting for British American Tobacco; Ashurst partner Ed Sparrow for Imperial Tobacco; Clifford Chance partner Luke Tolaini for Philip Morris; and Freshfields Bruckhaus Deringer partners William Robinson and Tom Snelling for Gallaher.
A separate case brought by Imperial Tobacco and several tobacco retailers against the Office of Fair Trading (OFT) challenging price-fixing fines was a resounding success for the claimants in 2011. This case, which was heard by the Competition Appeal Tribunal, was expected to run for upto 12 weeks but was cut down early as the OFT’s case collapsed.
According to sources, the due diligence on its single witness in the matter, Ms Bayley, was lacking and its case management haphazard. Burges Salmon head of competition Laura Claydon, who represented The Co-operative Group, adds: “There needs to be much tougher scrutiny internally, and at an early stage, of the evidence the OFT seeks to rely
on during its administrative phase, especially witness evidence.”
The collapse of the defence was also the fate of (1) British Arab Commercial Bank; (2) Arab Banking Corporation; (3) ABC Islamic Bank; (4) Calyon; (5) HSBC v Ahmad Hamad Algosaibi Brothers (AHAB) & Ors. These five actions were part of the worldwide litigation surrounding the alleged colossal fraud perpetrated by Maan Al Sanea, the Saudi Arabian billionaire owner of the Saad Group, against the AHAB partnership.
In June it was announced that AHAB would not defend the $250m claim after deciding that the judge would likely find that the company had not done enough to prevent the fraud that it alleges lay behind the loans.
“It could be found in this case that if the Algosaibis knew there was [improper use
of loans] they should have taken more aggressive steps to detect and prevent the massive forged lending scheme,” said Baach Robinson & Lewis partner Eric Lewis, who was coordinating the defence, at the time.
Win some, lose some
The outcomes of these cases constitute a mixed bag. There were only six judgments, while a further four matters settled on the court steps.
The size and complexity of the AHAB case forced it to withdraw its defence, and when it came under judicial scrutiny the OFT’s justifications for fining tobacco companies just did not stack up.
Many of the matters will rumble on through 2012 as lawyers attempt to track down costs or seek to take cases to the next level. It all bodes well for the Ministry of Justice’s plan to ensure London remains the world’s leading litigation centre,
with dispute resolution lawyers reaping the benefits.
3(1) Morrisons; (2) Imperial Tobacco; (3) Cooperative Group; (4) Safeway; (5) Asda; (6) Shell v Office of Fair Trading. Ruled in favour of claimants
3Alstom Transport v Eurostar International & Siemens. Claim dismissed
3R (on the application of British Bankers Association) v Financial Services Authority & Financial Ombudsman Service. Judicial review rejected
3‘Building Schools for the Future’ (five separate claims to be consolidated and listed together). Part-win
3Trebor Bassett Holdings & The Cadbury UK Partnership v ADT Fire and Security plc. Part-win
3The Royal Bank of Scotland v Hicks & Gillett & Ors. Ruled in favour of claimant
3Paul Gregory Allen v (1) Bloomsbury Publishing plc & (2) Joanne Kathleen Murray (aka JK Rowling)
3Imperial Tobacco, British American Tobacco, Philip Morris Ltd & Gallaher Ltd v Secretary of State for Health & The Attorney General
3Sandra Bailey & Ors v GlaxoSmithKline UK
3Société Générale v Württembergische Versicherung AG & Ors
3Innovator One plc; Tech Investors v Roper
3JSC BTA Bank v Ablyazov & Ors
3(1) STV Central Ltd (2) STV North Ltd v (1) ITV Network
3Centrica (British Gas) v Accenture
3British Airways v Unite The Union
3(1) Crédit Agricole Corporate and Investment Bank v IKB Deutsche Industriebank AG; (2) Calyon v IKB Deutsche Industriebank AG; (3) Financial Guaranty Insurance Company & FGIC UK Ltd v IKB Deutsche Industriebank AG
3(1) British Arab Commercial Bank; (2) Arab Banking Corporation; (3) ABC Islamic Bank;
(4) Calyon; (5) HSBC v Ahmad Hamad Algosaibi Brothers (AHAB) & ors
3(1) British Sky Broadcasting & Ors v Ofcom & Ors
3Standard Life v ACE European Group
The year ahead
Showing an up-to-date knowledge of the litigation grinding its way through the higher courts has got to be in the tick-box of interview/application preparation for any lawyer-in-waiting. So with that in mind we look forward to the cases that will definitely be on the lips during the rest of 2012.
These cases, which are spread throughout 2012, have been selected based on the contribution they are expected to make to the development of the law as well as the high-profile they will have. For a complete rundown of these cases and others
see The Lawyer, 2 January.
Christine Davies v AIB Group (UK)
This case is important in defining the limits of a successful plea of undue influence against lenders, especially where wives act as surety for their husbands’ debts.
Christine Davies contends that she was unduly influenced by her late husband in respect of the provision of security in favour of the bank.
An important legal issue is the effect of the independent solicitor’s advice that Davies received in respect of at least one transaction. Can the bank maintain that such advice negated the possibility of notice of undue influence to the bank on other transactions?
Nokia v Samsung & Ors
In December 2009, Nokia, the world’s largest handset maker, launched claims in the UK and US against a range of LCD manufacturers over price-fixing. This came ahead of fines totalling hundreds of millions of euros imposed on the defendants by Europe’s antitrust watchdog.
Nokia is seeking unspecified damages for price-fixing alleged to have been carried out over a 10-year period between 1996 and 2006 by the defendants, and as a result of which Nokia paid too much for LCD display screens.
Michael Cherney v
Breach of contract
Michael Cherney launched his claim against Oleg Deripaska, a Russian billionaire who owns the huge Russian aluminium company Rusal, in November 2006.
Cherney claims Deripaska holds 20 per cent of the Rusal shares on behalf of Cherney and is suing for damages for breach of Deripaska’s agreement to dispose of the shares and to account to Cherney for the proceeds. The claims are based on a written agreement between the two businessmen signed in a London hotel room in March 2001. Deripaska denies that Cherney owns shares and said in an affidavit that his relationship with Cherney was one of a businessman being extorted by a crime boss.
The feud between the two is typical of the type of dispute the Government wants to attract to London – significant both in terms of ramifications and legal costs.
Rubin & Lan v Eurofinance SA; New Cap Reinsurance Corporation Ltd & Anor v AE Grant & Ors
Jurisdiction in enforcement
In Rubin, the Court of Appeal (CoA) recognised both US Chapter 11 bankruptcy proceedings and the enforcement of US clawback proceedings. It found that foreign court actions to recover money from debtors could be recognised and enforced under the UNCITRAL Model Law on Cross-Border Insolvency.
In the New Cap case, the CoA required England-based defendants to pay back amounts held to be preferences under Australian law to the Australian liquidator.
The case is of importance to English defendants, who are now required to mount substantive defences to this class of claim in any jurisdiction throughout the world, and is central to the extent of judicial cooperation in cross-border insolvencies.
Barclays Private Clients
International v (1) Savills
Private Finance; (2) Montague Lambert; (3) Stocker & Roberts Partnership; (4) OC313414 (Saracens Solicitors) & Ors
With cases of financial fraud increasing yearly, and with mortgage scams at the heart of that, claims against the professional advisers embroiled in the frauds will undoubtedly increase. In this case, Barclays Private Clients International and Barclays Bank are suing mortgage brokers, valuers, solicitors and guarantors over an alleged mortgage fraud the bank claims cost it £12.7m.
Barclays is pursuing Savills Private Finance and Stocker & Roberts Partnership for fraud, while it has launched a professional negligence claim related to several mortgages against Montague Lambert and the firm of solicitors formerly known as Saracens LLP, granted between September 2006 and April 2007.
(1) A&E Television Networks; (2) AETN UK v Discovery Communications Europe
This claim for trademark infringement is being brought by A&E Television Networks, the broadcaster of television channel History, against Discovery Communications Europe, the broadcaster behind Discovery History.
A&E claims trademark infringement based on registered trademarks for The History Channel and History with an ‘H’ symbol.
Discovery disputes that there is any confusion or damage arising from its use of the name Discovery History and relies on its use of the word ‘History’ in a descriptive sense. Discovery is also counterclaiming for invalidity of A&E’s trademarks.
Mr Justice Mann’s judgment in April 2011 allowing A&E’s application for permission to conduct a survey to prove confusion was novel and provided new guidance as to when a party should challenge the proposed form of survey and methodology.
Even judges go on holiday!
Boris Berezovsky v Hine & Ors
Self-exiled Russian oligarch Boris Berezovsky has created a legal market of his own with his multibillion-dollar disputes over Russian assets. This case encompasses three tranches of Chancery proceedings that have been case-managed together. The claims have been split into two phases, with the first, which is expected to last between three and six months, currently listed to begin in October.
The dispute is focused on allegations by Berezovsky that significant proportions of assets and funds worth between $2bn (£1.27bn) and $3bn held by the Estate of Badri Patarkatsishvili, or a large number of offshore trusts and funds set up by Patarkatsishvili, formerly Georgia’s richest man, as well as assets held by Russian oligarch Vasily Anisimov, are in fact beneficially part-owned by Berezovsky.
R (Prudential plc) v Special
Commissioner of Income Tax
Legal professional privilege
At the heart of this case is whether accountants offering legal advice should enjoy the same legal professional privilege as lawyers. If the case goes in favour of Prudential it could have implications for accountancy firms wanting to evolve into Alternative Business Structures under the Legal Services Act.
HMRC wants Prudential to release documents believed to contain information relevant to Prudential’s tax liability. Prudential argued that the documents are privileged information.
The Court of Appeal rejected arguments submitted by Blackstone’s David Pannick QC for Prudential that privilege is a judge-made rule and therefore it was down to the court to determine that it should apply. The court said that was for the Government to decide.
Daejan Investments Ltd v Benson
Landlord and tenant
Service charges are a classic cause of landlord and tenant disputes and the Court of Appeal judgment in this case was one of the most important of 2011.
Despite the landlord spending more than £400,000 on works to a mixed-use building, the landlord’s failure to comply fully with the statutory procedures for consulting with tenants limited the service charge recovery to only £250 per leaseholder.
This is the kind of case that produces thousands of worried phonecalls to lawyers when clients realise the implications.