This promises to be a bumper season in the courts, so here’s our selection of the bust-ups to watch
Credit crunch litigation will arrive at London’s High Court with a bang this year, with some of the most valuable spats at long last reaching fruition. If 2012 revolved around private client-related disputes, then 2013 is likely to bring a flurry of big-ticket commercial litigation, with no sign of the onslaught slowing in 2014.
The High Court justices will hear, among other things, details of the board bust-up at Liverpool FC; how Deloitte advised the Phoenix Four in the end-days of MG Rover; and the relationship between Bernie Madoff’s US and UK operations.
Barclays will face the first major Libor mis-selling case in October, in a challenge brought by Graisley Properties. This case, if successful, could prove more damaging than the PPI scandal.
Hedge fund Harbinger Capital Partners could trigger a windfall for former Northern Rock shareholders if it overturns a decision not to award compensation to some 16,000 people.
Still, the private client battles continue to break through. The country’s wealthiest man, Lakshmi Mittal, is facing a multimillion-pound dispute from former associate Manmohan Varma, while F1 tycoon Bernie Ecclestone will answer fraud and corruption allegations.
This will also be the year professional advisers will find themselves in the dock. Freshfields Bruckhaus Deringer and legacy Herbert Smith will defend a £140m claim from London Underground over advice provided by the firms to the company on its 2003 public-private partnership deal with collapsed transport company Metronet.
Collyer Bristow will answer claims it deceived Glasgow Rangers FC when it advised businessman Craig Whyte on his doomed takeover of the club.
As The Lawyer went to press the instructions continued to roll in, with elite sets reporting their busiest year to date. Major teams are being mustered for mammoth battles. Top-flight silks have already been booked for trials listed for 2014. The institutions and advisers at the heart of the financial meltdown are about to be put to the test.
This year will see several bank misselling cases in court. Until now these matters have tended to settle as banks shied away from costly litigation to focus on their own problems. Banks have also been reluctant to pursue cases against those they rely on for financing.
But as UK plc heaves itself out of recession, those battered by the financial instruments used to inflate the pre-2008 credit bubble are looking to recoup their losses.
The City has been rocked by a series of mis-selling scandals but as yet only a few have been under court scrutiny. That is about to change. The rise of high-value financial litigation means it will be a stellar year for banking litigators. Gray’s Inn set 3 Verulam Buildings has barristers listed in 14 cases, with silk Adrian Beltrami QC instructed by both RBS and Barclays.
Beltrami will face Brick Court’s Tim Lord QC in the Libor test case, a David and Goliath battle set for October. The retail banks are watching closely, as are their legal advisers. Litigation boutique Cooke Young & Keidan partner Phillip Young has instructed Lord for the battle.
Mr Justice Flaux rejected Barclays’ bid to have the case thrown out in October. He said attempts to dismiss the claim’s Libor aspects could be described as “shadow boxing” and were “doomed to fail”.
Lord told the court that disclosure so far was just the tip of the iceberg. “Barclays seeks to serve up its own version of the facts – a sanitised version,” he added.
Flaux J agreed and, in allowing the fight to continue, laid the way for senior Barclays management figures to be called to the stand.
The bank was fined £290m last June for trying to manipulate the world’s benchmark borrowing rate. Other banks will want to see this case disposed of quickly rather than risk a wave of high-value claims.
Lord is taking on another 3VB heavyweight when he faces off with Ewan McQuater QC in May in yet another case against Barclays. The €150m (£122m) fight concerns a deal done by the bank in Sweden. The barrister is instructed by RPC partners Tom Hibbert and Andrew McGregor for CF Partners (UK), which alleges the bank used confidential information supplied by it to help it acquire Swedish company Tricorona.
CF Partners had expressed an interested in acquiring Tricorona and had gone to the bank to help finance the deal. Barclays, it is claimed, then used that information to make its own move.
Tricorona is named as a joined defendant.
Beltrami will be back in court in June for RBS when Torre Asset Funding brings a multimillion-pound misselling claim against the bank. Francis Tregear QC of XXIV Old Buildings is instructed for the claimant by Field Fisher Waterhouse partner Duncan Black. The case concerns a Dunedin portfolio that collapsed in 2008.
Lord has also already appeared in the mammoth Sebastian Holdings v Deutsche Bank dispute. This 12-week battle was listed for October 2012 and as such does not appear in The Lawyer’s top cases list for 2013.At that time Lord was instructed by Travers Smith partners Jonathan Leslie and Andrew King for Sebastian. The firm has now turned to Fountain Court’s David Railton QC (see box).
These battles could have more of an impact on the banking community than any legislation.
Another 3VB stalwart will take on RBS in April when Ali Malek QC teams up with Gregory Mitchell QC, also of 3VB, and 4 Stone Buildings’ Richard Hill QC to do battle with the bank over Liverpool FC.
In October 2010 club owners Tom Hicks and George Gillett attempted to block its £300m sale to New England Sports Ventures (NESV) by reconstituting the board and sacking managing director Christian Purslow and commercial director Ian Ayre.
This was to cause an almighty row, with RBS – as the club’s financier – stepping in to get an injunction forcing Hicks and Gillett to step away from the sale.
$7bn claim against Deutsche Bank
The mammoth battle between Deutsche Bank and Sebastian Holdings, which is owned and run by Norwegian investor Alexander Vik, was originally listed to be heard over 14 weeks from October. It is now listed for April 2013.
This high-profile case, which could be worth billions, will be watched by bankers and investors with interest. Sebastian claims to have suffered losses as a result of breaches of contract by the bank’s prime brokerage department between 2006 and 2008. Deutsche Bank is pursuing Sebastian for $245m (£150m) in unpaid margin calls from the period. Sebastian has filed a “substantial” counterclaim.
The sums involved are eye- watering. Sebastian is counterclaiming $7bn as it says its losses should be measured by reference to a hypothetical trading portfolio.
For the claimant Deutsche Bank
Essex Court’s David Foxton QC and 3 Verulam Buildings’ Sonia Tolaney QC leading Fountain Court’s Henry King, 3 Verulam Buildings’ James MacDonald, instructed by Freshfields partner Andrew Hart and Tom Snelling
For defendant Sebastian Holdings
Fountain Court’s David Railton QC, Brick Court’s Simon Birt, Thomas Plewman, Oliver Jones and Max Schaefer
At the same time the pair went to a Texas court to file a claim against the directors, NESV and RBS, requesting anti-declaratory relief and compensation. They also applied without notice to the Dallas District Court for the same interlocutory relief that had been refused by Floyd J in the English Commercial Court earlier the same day, as well as an injunction to prevent RBS from enforcing any of its security rights under the loan facility. A temporary restraining order (TRO) was awarded. This frustrated the orders granted in London and prevented a sale.
Back in London the defendants were granted an anti-suit injunction, but a few months later the duo were back in court attempting to have Floyd J’s injunction relaxed. They lost.
The dispute is set for a 10-week showdown in front of Mr Justice Smith who, at a pre-trial hearing, stated: “I do not trust [Hicks and Gillett] They have demonstrated […] that if it suits them they will abuse the process.”
Monckton Chambers’ Paul Harris QC and Serle Court’s Phillip Marshall QC have been instructed for Ayre and Purslow as well as Martin Broughton, former chair of the club. Freshfields partner Patrick Swaine has instructed Erskine Chambers’ Richard Snowden QC for the bank.
Also reaching the courts this year are a number of high-profile disputes against advisers. Freshfields, legacy Herbert Smith, Collyer Bristow and Deloitte are all named as defendants in this list.
As well as the Rangers FC dispute, Collyer Bristow will appear in the appeal courts over the Innovator One scheme. Allegations of conspiracy and negligence were dismissed by Mr Justice Hamblen, who presided over the case in May.
There is also the potential for the BBC to be called into a court depending on the outcome of Dame Janet Smith’s review of allegations of sexual abuse by Jimmy Savile. One Crown Office Row’s Lizanne Gumbel QC is instructed by Russell Jones & Walker (part of Slater and Gordon) partner Liz Dux to lead the claims, although it is unclear who will be named as a defendant.
NatWest has frozen the late BBC star’s estate in anticipation of claims and has One Crown Office Row’s Paul Rees QC on standby to deal with any litigation.
Freshfields and legacy Herbert Smith have both turned to heavyweights to defend the £140m claim being pursued against them by London Underground. One Essex Court’s Laurence Rabinowitz QC is instructed for Freshfields while Tim Dutton QC of Fountain Court has been called in Herbert Smith. They will face 4 New Square’s Justin Fenwick QC, usually seen on the defendant side rather than claimant.
Dutton is also appearing as prosecutor for the Accountancy & Actuarial Disciplinary Board (AADB) in its case against Deloitte, which has called in fellow 4 New Square heavyweight Sue Carr QC. That fight will decide whether accountants must put the public interest ahead of their clients’ interests. It follows the collapse of MG Rover in 2005, which had debts of £1.3bn. The directors of Phoenix Venture Holdings bought MG Rover for £10 in 2000 and paid themselves £40m.
The AADB case focuses on the relationship between the accountancy giant and Deloitte and concerns they had become too close. Freshfields partner Andrew Hart has been instructed for Deloitte, while RJW (part of Slater & Gordon) partner Rod Fletcher is instructed by the AADB.
Major private client disputes are a feature of 2013, with Mittal, Ecclestone and former Metropolitan Police Service (MPS) commander Ali Dizaei all in court.
Mittal is defending claims from rice importer Varma, who says his former associate failed to pay him commissions when he established a deal between Mittal and a former Nigerian president. An interesting feature of this case is that RPC is conducting it on a conditional fee basis for Varma.
Mittal is defended by 3VB’s Paul Lowenstein QC, who is instructed by Peters & Peters partner Jonathan Tickner.
Flexible billing methods for wealthy individuals are expected to become increasingly common after Lord Justice Jackson’s reforms come into force in April. The Lawyer revealed in October that Addleshaw Goddard had charged oligarch Boris Berezovsky an uplifted hourly rate of £1,000 for the work two partners, Mark Hastings and John Kelleher, did last year. The firm turned to 39 Essex Street’s Jeremy Morgan QC in August 2010 to advise on the structure of a partial conditional fee deal that was agreed to help fund the case. Under a contract drawn up by Morgan the headline partners working on the case received an hourly rate discounted by 50 per cent to £250. This deal covered the commercial and chancery cases, with the hourly rate rising to £500 for the work on the live commercial case and again to £1,000 for the settlement of the chancery case, a source said.
In October a fight that thus far has only been heard in Germany will arrive on British shores, with Ecclestone defending claims of bribery and corruption in the High Court. Gerhard Gribkowsky, then chief risk officer of state-owned BayernLB, was sentenced to eight and a half years after being convicted by a Munich court of taking $44m (£27m) in bribes from Ecclestone and his family trust Bambino Holdings. The bank reckons it lost more than $400m.
Ecclestone maintains he did not pay bribes but insists he handed over the money because Gribkowsky had threatened to take him to UK tax authorities over a bogus deal. Constantin Medien, a media company that had part-ownership of F1, is suing Ecclestone in the UK because, it is alleged, the company was undervalued.
The case puts the spotlight once more on Ecclestone’s business dealings. Herbert Smith Freehills partner Ted Greeno has instructed 4 Stone Buildings’ Robert Miles QC to lead Richard Hill QC. He will face Serle Court’s Philip Marshall QC, instructed by Peters & Peters partner Keith Oliver.
There will also be a slew of pensions-related cases, IT showdowns, and competition battles.
Elite silks are in demand and litigation teams are centre stage. The boom will not last forever but for now, this is a golden age for creating new case law by pushing boundaries.
Additional reporting by Joanne Harris and Sam Chadderton