A major pensions civil trial involving fraud allegations and dubbed a “mini Maxwell” by lawyers, started in the High Court last week.
Due to last up to 10 weeks, it has already cost around
£5 million in lawyers' fees with another £2 million in trial costs expected on top of that.
The lawyer-intensive trial centres on litigation by seven pension holders alleging breach of contract against private company Melton Medes Group, its owner, a variety of subsidiary companies, including wholly-owned pensions trust Melton Medes Pension Trustees, and two directors – James Edward Philpotts and the group owner, Natha Ram Puri.
The pension holders are also suing two pension trust companies in the Imperial Group.
Around 500 pensioners in total could be affected by the outcome of the trial.
An action by the Securities and Investments Board (SIB) is being run simultaneously in the same courtroom, because of the overlap of evidence and defendants.
Melton Medes acquired two companies from Imperial in 1986, together with their respective pension trusts. Imperial allegedly promised the transferring pension holders that their pension schemes would be unaffected.
However, the pension holders claim that Melton Medes took cash from the funds, starting with a £5 million unsecured loan, allegedly to fund its subsidiaries. Pension holders claim the company in fact used the cash to finance a stake-building exercise in the companies.
Melton Medes says it returned assets to the funds in the form of shares.
However, the SIB and the pension holders dispute the company's timing of the return of the assets and their amount, claiming forgery of company minutes.
The SIB's action relates to this, alleging breach of regulatory obligations and breach of its responsibilities as an IMRO member.
Dibb Lupton Broomhead is acting for court-appointed trustees Robson Rhodes, which represents the pensioners.
DJ Freeman, acting for Melton Medes Group and the two directors, says its clients reject all the allegations.
Osborne Clarke, on behalf of the Imperial trust companies, says its clients reject all the allegations and the firm has lodged contribution notices to distance themselves from all the other defendants.
Denton Hall is acting for the SIB.
Sean Hand of Hand & Co is acting for the pension holders in their successful Court of Appeal application for a protective cost order – the first ever on a pensions case – which Melton Medes intends to appeal to the House of Lords.
An early settlement was a strong possibility, sources indicated last week.