Stax Claimants v Bank of Nova Scotia Channel Islands Ltd & Ors

A further CMC was held on 23 January 2007.

The major issues for decision are

I have decided that a number of cases are to be selected. Notwithstanding Mr Yell’s submissions about the extent of the evidence which would be adduced even if a small number of cases were selected, I am not willing to contemplate hearing 45 cases together or even immediately sequentially even if the Additional Claims are all stayed. Following the helpful submissions from all parties I have made a selection of cases. There is no “right” answer to this selection issue. There are arguments in favour of selecting, or rather not selecting, each and every case. What I have attempted to achieve is a selection of cases which fall into most, if not all, of the categories which have been discussed in argument. Although Mr Yell presented a rather different categorisation at the most recent hearing from that which was discussed in November last year, it is fair to point out that the original skeleton argument produced by his leader, Mr Bueno QC, and himself for the July 2006 hearing did flag up (at paragraph 25) precisely the time divisions which he now says should form a basis for selection. In any case, it does not seem to me to make much, if any difference, whether one starts with Mr Herbert’s four-fold categorisation (no contact, indirect contact, not much reliance, reliance) and then subdivide those categories by reference to other criteria (such as periods of time) or whether one starts with a categorisation based on periods of time and then subdivides the resulting categories by reference to Mr Herbert’s criteria.

The selected cases will be the following:

This is slightly more in number than I had originally envisaged (although less than Master Winegarten envisaged). It does include two married couples although I recognise that, in the case of the Clemmetsens at least, the positions of husband and wife may be rather different. This selection thus covers the following different situations:

Were it not for the problems which the Claimants are experiencing in relation to their ATE cover, I would think it appropriate to adopt the selected cases as lead cases and to stay all the others. However, to take that course would, I think, expose the claimants in the lead cases to a risk in relation to their insurance cover. Mr Herbert has suggested that I could make an order, even if a lead case approach is taken, apportioning, between all the actions including the ones which had been stayed, the costs which would be common to all actions if they were to proceed together. I am not sure that I can do that; but even if I can, I consider that there is a real risk that the insurers would not accept that as effective to bring the apportioned costs within the cover afforded by each policy. Mr Herbert complains that the Claimants have not complied with what I required in my judgment of November, namely to explain in evidence why the lead case approach would not be satisfactory. I consider that the combination of the evidence which was put in and the submissions made by Mr Yell is enough. I should repeat that, for the reasons which I gave last time round, I do not think that it would be consonant with the overriding objective to take the line that the Claimants’ difficulties in relation to their insurance are solely their own problem and no concern of the Defendants or the Additional Parties.

Accordingly, some other way has to be found (unless and until the insurance position is resolved in a way which allows the lead claim approach to be adopted) to allow these proceedings to continue in a way which (a) protects, so far as possible, the Claimants in relation to their insurance and (b) obviates the need for the Defendants to prepare for 45 separate actions. I made some preliminary suggestions is that respect in paragraph 25 of my earlier judgment. None of the parties has attempted to develop those proposals (nor, politely, suggested that they were misconceived) although Mr Herbert has identified an internal inconsistency in them – on the one hand I suggested that the Claimants should prepare for trial as if all claims were to be heard on the date fixed for the trial yet on the other hand I envisaged final preparation for the non-selected cases to be completed only after trial of and judgment in the selected cases.

Clearly my suggestion needed and needs refinement and I am grateful to Mr Herbert for identifying the defect which he has. But I think it was clear what I was, and am, trying to achieve which is this: first, that the Claimants and the Defendants should be able to prepare for a trial of the selected cases without needing to prepare the other cases for trial; and secondly, that all the work which is done in preparation for the selected cases and which would be relevant to other cases were they all being fully prepared together should be regarded precisely as work common to all cases so that the costs of it can be apportioned appropriately. It seems to me that if I stay the non-selected cases, it becomes difficult to say that the work is common in that sense: at least it leaves an obvious argument for the insurers to take. I accept, however, having heard further argument that I do not need to go as far as I did in paragraph 25.e. in saying that findings of fact would have to be binding on all of the Claimants and not only the Claimants in the selected actions.

I will accordingly direct that the trial in all of the actions shall be listed for the date fixed in January 2008 but that I will hear the selected cases first. The parties should focus their preparation from now on the selected cases but keep a careful record of the work done which is common to all cases (or if not to all then to cases including non-selected cases) in order to effect an apportionment of the cost of such work between them. I will also make a direction that the trial of the non-selected cases shall take place in accordance with a timetable to be laid down following judgment in the selected cases or further order in the meantime and I indicate now that such timetable will be such as is reasonable in all the circumstances to enable the parties properly to prepare their cases. I do not propose to stay the non-selected cases.

I do, however, think that it is right to stay the Additional Claims in the non-selected actions and will make a direction to that effect. As to the Additional Claims in the selected actions, I have found the position very difficult to resolve. There are seemingly compelling reasons both for staying and not staying those Claims, a situation which I have to resolve by deciding that one set of reasons is not what it seems and is, in fact, not compelling. On the one hand, the Defendants are entitled to know whether they can claim an indemnity or contribution from an Additional Party as soon as their own liability (if any) to the relevant Claimants is established. Further, it is desirable to deal with the Additional Claim at the same time as the main action to avoid duplication of time and effort and to avoid inconsistent findings of fact. On the other hand, there is a perceived unfairness to those of the Additional Parties which are dragged into a long trial the cost of attending and of defending their positions which may be out of proportion to their individual exposure to liability. It is unfair, it is said, that they should carry the weight of defending third party claims effectively for the benefit of all of the Additional Parties. As I have said before, it is not clear that that is a particularly strong point since, if all 45 claims proceeded, each Additional Party would have to incur the expense of his defence (at an even longer trial). Further, Mr Herbert submits that the selected cases (at least the ones he proposed) would bring in a wide spectrum of IFAs so that there should not even be a perception of unfairness. However, the fact is that the actions between the relevant Claimants and the Defendants are part of a much broader picture. Whilst the litigation may be proportionate between them the position, vis a vis the relevant Additional Parties is different; theyshould, it is said, be able to await the outcome of the main action and be obliged to incur expense only once it is clear that the Defendants themselves are liable.

On balance, I remain of the view which I tentatively formed at the last CMC which was that the Additional Claims, even in the selected actions, should be stayed. For my part, I am sceptical about the risk of inconsistent findings. The likelihood is that much, if not all, of the evidence relevant to the issues between the Defendants and the Additional Parties will emerge in the course of the relevant main actions and those findings will be persuasive, or at least of assistance, in enabling compromises to be reached with them just as it is hoped and expected that the decisions in the selected cases will enable the other cases to be compromised (which is, after all, precisely the rationale for having selected cases in the first place). I am also concerned that, if the Additional Claims in the selected cases are allowed to go forward, the risk of losing the trial date might become real. Given how long ago the events in question took place, and given the age of many of the Claimants, it is vital that the date is not lost. Accordingly, I will stay all of the Additional Claims save to the limited extent mentioned later in relation to pleadings. Further, it is right that an Additional Party who considers the claim against him to be misconceived should be allowed to apply to strike out or seek reverse summary judgment notwithstanding the stay; I will accordingly except such applications from the scope of the stay.

I exclude from this stay the Additional Claim in the action brought by Allan Parker. The Additional Parties in that action are alone in wishing the Additional Claims against them to proceed. I see no reason why they should not be permitted to have the case against them resolved as soon as possible if that is what they wish. To allow that Additional Claim to proceed is consistent with the Defendants’ wishes. It will not unduly lengthen the trial. I do not consider that the Claimants can complain about allowing it to proceed.

As to strike out and summary judgment generally, it has been suggested - indeed I may have suggested it myself – that there should be a cut-off date for the making of such applications. In the light of the order for stay, I do not think that that is appropriate; and, in any case, circumstances may change and what seems a risky application today may seem to be a strong one tomorrow. However, I do ask that any application is made sooner rather than later. If an application is made after the next few weeks, I may well consider that the resources of the Defendants should not be diverted from trial preparation and that the application should be stood over until the trial of the selected cases has concluded.

Pleadings should be completed in the selected actions. In the light of the fact that I am not staying the other actions, but have simply qualified the amount of preparation which needs to be done, I think that it would be sensible to complete the pleadings in all cases. In relation to the selected actions, this is to be done by 30 March 2007. There is no urgency in the other actions and I will allow until 30 June (with permission for the Claimants to seek a different date at the next CMC). So far as concerns the amended Additional Claims in the selected actions, the drafts should be completed and formal application made to amend. If amendment is opposed in any particular case, I will need to consider whether the application should proceed or whether it should be put off until after trial of the selected actions. I can, however, see the advantage of everyone knowing what the Defendants’ case against each and every Additional Party in the selected actions actually is. The Defendants should also continue with getting their claims against Knightsbridge and Capulet properly pleaded in the selected actions. If no defences are received, the Defendants should not be prevented by any stay from obtaining such default relief as they are entitled to.

Whether further disclosure should be given at this stage is another matter. Absent any application, there will be no obligation to give disclosure and the parties may consider, in the light of the directions which I have just indicated, that such disclosure would be inappropriate.

Having stayed the Additional Claims in all actions (save Allan Parker) the identity of the selected claims and their number are probably not so critical. If either the Claimants or the Defendants consider that my selection fails to include a case which will cover a point of importance which it is desirable for selected cases to cover, I will consider adding one or perhaps even two further selected cases but I hope that this will not prove necessary. The parties should let me know one way or the other as soon as possible and in any event by close of business on 31 January 2007.

I hope that these directions are adequate to protect the Claimants’ ATE cover.

The Claimants are concerned that there is a risk that the costs of the strike out/summary judgment/amendment applications as between the Defendants and the Additional Parties might be thrown onto them if they were to lose the main actions. Mr Yell invites me to make an order now which would make clear that that could not happen. Whilst I appreciate Mr Yell’s concerns, it would not be right for me to make a pre-emptive order of that sort. It seems to me that whether or not such an order is appropriate may depend on the particular grounds of the application being made and that I should not pre-judge the fair costs outcome. What I am prepared to do, however, is to make the order which he seeks in relation to the costs incurred by the Defendants in relation to the application already made by Mr Pampiglione (including the costs payable by them pursuant to my order against them on that application).

Mr Herbert seeks a direction that the Claimants quantify their loss. They have in fact done so to some extent, but there are considerable gaps in the quantification. The Claimants for their part say they have done the best they can but they await further information from the Defendants before being able to complete the exercise. The Defendants say that the Claimants already have files enabling them to compile figures, but the Claimants respond that there is other material which they need. It is of course the case that the Claimants must quantify their claim but they can do so only when they have the relevant material, some of which they say is still in the hands of the Defendants undisclosed. I am afraid I do not have the material at present on which to resolve this dispute. I really do think it is something which two large and responsible firms of solicitors should be able to resolve. If they are unable to do so, I will deal with the matter at the next CMC, in which case I would like the material on which I am to rely to be clearly identified (further evidence being filed if necessary) and supported by a clear skeleton argument.

In the context of quantification, Mr Herbert also seeks an order that the Claimants identify and value the benefits which they have received. I am not sure that the Defendants are entitled to all of this information. They are no doubt entitled to know, so far as a Claimant can tell them, what cash passed out of the relevant Claimant’s pension scheme and what was received into the Stax Scheme. However, that is largely information which the Defendants would already know. Further, the Defendants may be entitled to information about how the money actually received out of the Stax Scheme has been dealt with in order to see what benefit (eg investment return) has been made. The first indication I had that Mr Herbert wanted this information was in his final submissions. I do not propose to make any order at this stage. Again, if there remains an area of dispute over what the Defendants are and are not entitled to, I will resolve it at the next CMC but in that respect I repeat the last sentence of the preceding paragraph of this judgment.

In the light of the directions which I am proposing to make, it is inappropriate for any of the Additional Parties, other than Allan Parker, to give costs estimates to trial, but they should, if they have not already done so, provide details of their costs to date. The Claimants and the Defendants should be able to identify more accurately their anticipated costs to and including trial now that they know the scope of the action. Mr Herbert and Mr Yell are discussing the precise scope and timing of the provision of this estimate.

Mr Herbert applied, in a single sentence in the course of his final submissions, for disclosure of unredacted copies of the ATE policies. This application was not argued and Mr Yell had no opportunity to reply. It can be dealt with at the next CMC.

I direct that witness statements be exchanged on or before 28 June 2007. Trial bundles should be prepared on or before 31 August 2007. I would ask the solicitors to propose, at the next CMC, appropriate dates for agreeing an index to the bundles and the form of the bundles.

I think that the proposal from one of the Additional Parties for the provision of Transcripts may have been overtaken by the directions which I am making. But if that is wrong, an application can be made at the next CMC.

There is a hearing fixed for the outstanding disclosure applications at the end of February. That occasion can be used, if time permits, to deal with matters which I have said can await the next CMC; I propose in any case, when handing down this Judgment, to fix a date for a further CMC in case it should be needed.