Collyer Bristow has settled a £50m professional negligence claim against it just days before the dispute was to be heard at the Court of Appeal (CoA).
The High Court last year threw out the claims against the firm pursued by 555 investors, alleging conspiracy, dishonest assistance, and negligence against the firm and two former partners, John Bailey and Jonathan Roper (18 May 2012).
Enyo Law partner Michael Green instructed 4 New Square’s John Powell QC to lead the case. The firm brought in two heavyweight silks to defend the claims, with DAC Beachcroft partner Julian Miller instructing 4 New Square’s Justin Fenwick QC and Ben Hubble QC.
The dispute centred on allegations that the firm was in breach of financial services regulation when it advised on products that were promoted as tax efficient investment schemes relating to technology products – the Innovator Schemes. The majority of the tax relief claimed was disallowed by HMRC and extensive class action litigation ensued.
In the High Court ruling, Mr Justice Hamblen said that despite documentation relating to the Innovator schemes giving control to the investors, the schemes were not operated in this way and therefore constituted collective investment schemes (CIS) under the Financial Services and Markets Act (FSMA). Consequently, the Innovator schemes had been unauthorised CISs from the outset.
The case was due to be heard by the CoA after the appellate court agreed in December that the case could proceed (10 December 2012).
In their judgment Lord Justices Longmore and Lloyd concluded: “This will be an extremely burdensome appeal which will need two chancery [judges] and one commercial [judge].”
The judgment did not stipulate on what grounds the appeal was allowed, but lawyers familiar with the case said it would most likely have been related to breach of trust and breach of fiduciary duty.
The ruling left the firm facing two professional negligence claims in 2013, with the administrators of Rangers Football Club threatening a £25m case against it relating to the firm’s involvement with the club (17 April 2012).
At the same time Collyer Bristow was in dispute with its insurance brokers, Lockton International, over its insurers would indemnify claims against it. The firm, seven current partners and a former partner launched proceedings against Lockton in 2011, arguing that it had been negligent in the placing of its insurance for the years the Innovator One claim concerns (3 October 2011). That case has also been settled.
Details of the settlement with the Innovator One claimants remain confidential.
In a statement the firm said: “The partners of Collyer Bristow are pleased to confirm the conclusion of the long-running Innovator case. The claim has now been resolved on confidential terms. Related issues with former insurers and insurance brokers have also been amicably resolved.”
The case was originally started by Michael Green while he was still a partner at Addleshaw Goddard. The firm had attracted third party funding to bankroll the claims, with £5m worth of funding from Allianz ProzessFinanz and after-the-event insurance covered by QBE and Brit Insurance. Calunius Capital and The Judge brokered the deal (1 December 2008). Allianz ProzessFinanz has since withdrawn from the European and UK market (28 November 2011).
The High Court line up
Enyo Law partner Michael Green instructed Four New Square’s John Powell QC to lead Graham Chapman, Shail Patel and Can Yeginsu of the same set.
Beachcroft partner Julian Miller instructed Four New Square’s Justin Fenwick QC and Ben Hubble QC to lead Brendan McGurk of Monckton Chambers.
Byrne & Partners partner Nicola Boulton instructed Four New Square’s Sue Carr QC to lead Timothy Chelmick also of Four New Square for John Bailey.
Segens Blount Petre partner Jane Golledge instructed Nigel Meares of 11 Stone Buildings.