Phaestos Ltd & Anor v Ho

I am not going to repeat the remarks I have made at earlier hearings, but I will very briefly summarise the background. The relationship between the Claimants and the Defendants broke down completely at the end of 2008. There was a longstanding employment relationship between the Claimants and the Defendant employees. They had been retained since about 1994. The reasons for that and the justification for that on either side is primarily what this litigation is about. In broad terms the hedge fund Claimants seek substantial damages from the Defendants for breach of their employment contracts much of which revolve around their involvement with the computer systems used by the Claimants in their investment business; damages are also claimed for breach of confidence and the alleged misuse of confidential information. The damages claimed could well approach £100,000,000.

The Claimants commenced proceedings against Dr Ho in November 2009 and much of what they continue to claim was identified then, not all of it by any means, but large parts of it. Damages were claimed, albeit not then particularised. There has been a long history of various claims being started, with the Defendants initially instituting proceedings in the employment tribunal in this country; CIF commenced proceedings against CIF in Cyprus, those being later stayed. Proceedings against Dr Ho were commenced here in 2009 by a number of the Claimants and proceedings were started against Dr Gover in April 2011. Before those proceedings were consolidated and Consolidated Particulars of Claim were prepared by the Claimants and served in June 2011 to be responded to in August 2011 by a consolidated Defence and Counterclaim.

Quantum was almost entirely unparticularised. Paragraph 34 of the Consolidated Particulars of Claim simply pleaded that the Claimants had suffered loss and damage to be assessed in consequence of the various breaches set out earlier in the pleading. Some causation case is pleaded at various parts of that pleading. Thus, for instance, in relation to Dr Ho, following the breaches pleaded in Paragraph 25 there is a paragraph commencing:

"As a result of Mr Ho's breaches of the common duties and the PH duties set out above ..."

There then follow in his case some ten sub-paragraphs which give some explanation of what flowed from the breaches but, in fact, little or nothing is set out in relation to quantum, what sums are being claimed or how those alleged losses or damage flow from the breaches that are put.

Similar matters are pleaded against Mr Gover following the breaches pleaded in Paragraph 27 against him. There is a similar paragraph, Paragraph 28, about some of the causal consequences of the breaches that have been alleged, in that case some seven sub-paragraphs.

In August 2011 the Defendants served a very substantial request for further information. In October 2011 the Claimants' solicitors indicated, no doubt in good faith and because it was true, that they were working on the answers to the requests for further information. They had not been provided by the time that Ramsey J held a CMC dealing with a number of matters in December and he made an order that the claimants provide their response by 3 February 2012.

That was not complied with by the Claimants; it was later that, on 17 February, I made a final order that the Claimants' response to the Defendants' Request for Further Information was to be filed and served no later than 4 pm on 2 March 2012. I made it clear, so far as I recall, in the ruling which I made, that it was particularly important that Particulars be provided in relation to quantum, because, at the moment, the trial is certainly concerned with liability and quantum; and that it was important to determine whether or not there was to be a split between liability and quantum, as the Claimants were suggesting there should be, that the Defendants at least knew what the case being made against them was. That is such a fundamental tenet of our litigation system and the right to a fair trial that it almost did not need to be said. It was clear that the Claimants' counsel and solicitors wholly understood what I was saying.

On 2 March 2012, in nominal compliance with that order, a response to the Request for Further Information was provided. I have already ruled that in relation to quantum this response was not and did not begin to be acceptable or to comply. What I understand a proper response should have been to the request was either to provide the further information that was requested or to show good reason why the request for further information was not justified.

On the last, occasion or it may have been the one before last, I heard what the parties had to say and, in particular, the Claimants were saying that they needed some more time to deal with particularising the quantum. Mr Ciumei asked for 30 March. I decided that 27 March would be the appropriate date. I was almost persuaded at that stage to make an unless order but I decided that the Claimants should be given one last chance to produce proper and effective answers to the requests and, in particular, stating what loss they have incurred or will incur and how it has been caused by the breaches alleged against the Defendants.

So I made that order, a final order, but, although it will not appear on the face of the order, I made it clear that that was a final, final order. There would be no more final orders, unless some unforeseeable or supervening event beyond the control of the Claimants occurred, and what would follow would be an “unless” order if the particulars were not provided.

Today Mr Ciumei asks for, in effect, an extension of time to that order. The drafting of the order for, I think and I hope, only logistic reasons, has not been finalised, but whether it has been finalised or not as between counsel, the order has still been made. Mr Ciumei puts forward two more matters to seek an extension to 5 April, which is the first day of the Easter vacation. He seeks an extension of the time, but only so far as a final order is concerned. He is not prepared and he is not instructed to agree to it being an “unless” order.

I remind myself that the trial is fixed for January 2013. The fixing of the trial date is the subject of an application for permission to appeal, but that has not yet been dealt with by the single judge, I understand, and it may take some time before it comes before the Court of Appeal, if it does at all.

There is a very real problem in deferring the issue of the provision of particularisation of the quantum by the Claimants and that is the very serious upset that that will or may cause to the management by both parties, and by the Court, of the trial process.

I have already ruled, in yet another ruling in this case, on an application by the Claimants for there to be a split between liability and quantum. I felt unable, for the reasons which I gave, to allow the application unless and until there had been proper particularisation of what the quantum claim was; then the Court can then get a much greater feel for whether this is an appropriate case to split liability and quantum.

Until and unless that happens the court is in very real difficulty. The parties will continue to prepare on the basis that liability and quantum will be dealt with; it is important that the particulars are provided and they are provided promptly. I have already identified the reason that the Defendants are entitled to know on what basis many, many millions of pounds are being claimed against them. That must be something they are entitled to know and sooner rather than later.

The other way that it impacts upon the management of the trial process is that it will affect disclosure. Until the Claimants identify what their quantum case is, there will be much greater uncertainty and less focus, frankly, on the disclosure process, particularly in relation to quantum. It should not be the case that the Claimants necessarily have to disclose each and every document relating to money had and received by them or the IKOS Group. It should necessarily be focused on the quantum that they are actually claiming for or relating to that quantum at the very least. Therefore it is a very important part of trial preparation which can be very costly unless the parties focus on the real issues. It is very important that the Claimants articulate their quantum case.

The other problem is that the later these particulars are provided, the later everything else such as, disclosure, the provision of expert reports and the like will be. I am sure that the Claimants are not deliberately working towards this end, but one might be forgiven for thinking, unkindly I am sure, that there may be a process going on by which the trial date gets adjourned in any event, irrespective of what the Court of Appeal may do. That would not be an acceptable approach or outcome, although I am not suggesting that is the tactic or strategy being adopted by the claimants. But it is very important that the Court maintains control of these proceedings.

Two reasons are advanced to extend the date which has already been fixed by the court for the provision of these particulars on a final order basis by 27 March. The first is, and this is certainly the first time I have heard it, Mr Ciumei says that his clients are soon to dispense with the services of their current well known solicitors. He is not able or prepared to tell me why, except he gives one reason: Messrs Herbert Smith are the proposed new solicitors and they are acting for Ms Ambrosiadou, as I understand it, in what are not wholly unrelated proceedings (albeit between different parties) which I am told are due to be heard in the Chancery Division, I think in or about mid-March 2012. They are handling those proceedings, which are proceedings by Ms Ambrosiadou's husband or former husband, Mr Coward; those proceedings may slightly overlap with these proceedings. It is thought, he says, that that is a much more rationalised way of proceeding, with the same solicitors acting for both although, doubtless, there would have to be two different teams working on the case.

Again, I very much hope that this is not, and I do not find of course that it is, a tactic again to seek to have this action delayed, because it will inevitably be the case that, if new solicitors are instructed at this stage by the Claimants, understandably, they, or the team at Herbert Smith who will be dealing with this, will need a significant amount of time to become acquainted with the case and then to put themselves in a position that they can properly conduct the case on behalf of the Claimants. Again, that is very likely to impact upon the progress of compliance with the court orders.

I have not been told that this change has been brought on by any dissatisfaction with the Claimants' solicitors, who, I hasten to say, certainly from my observations, seem to have done a perfectly proper and professional job, at least so far as I have been involved in this case. So it does appear, for the reasons given by Mr Ciumei, that this is an entirely voluntary change of solicitors. It is not essential, but it is thought to provide some rationalisation.

I have no doubt that the Claimants and those within the Claimant companies will know that there will be a very, very real risk that the progress of this litigation will be delayed and disrupted by a change of solicitors at this stage, which is already two and a half years into the proceedings, certainly so far as Dr Ho is concerned, and rather less so far as Dr Gover is concerned. But the Claimants must know that, if this is their intention or motivation, which I know not, they cannot seek to secure indulgence from the Court when, for entirely voluntary reasons and with their eyes open, they decide, at a relatively late stage in litigation, to change solicitors. That is not a good reason, in my view.

The next reason advanced by Mr Ciumei for the Claimants is that the provision of particulars, in particular in relation to causation, is a difficult matter in effect for his clients and those advising them to get their mind around. He says and doubtless this is correct, that there are substantial computer systems within the Claimants and those companies related to the claimants and to seek to link any losses and particular breaches he has indicated will be difficult in at least some respects.

I understand that that may be a difficulty, but what the Claimants have to do is to identify what its case is. If it is unable to link the loss to the breaches, but if there is a way, by inference or otherwise, sufficiently to link it on a legal and causal basis, then that will and will have to be their pleaded case. The Court is not expecting to have blood extracted from a stone, but what the particulars have to show, in sufficient detail, is what the case actually is. They have had six months since the request to provide that information; it will be almost seven months by the end of this month. The trial is due in nine months time. This is something which simply cannot be left on a partial “back burner”.

The Claimants were effectively warned by the Court in mid-February 2012 that this further information relating to quantum had to be provided and it has not yet been. Again, I have said that this is not acceptable. For the reasons I have indicated, I am not prepared to change the order I have already made from 27 March 2012.

The Claimants just simply, in the vernacular, must get their act together. If they do not, they will increasingly run the risk that the Defendants will seek from this Court further and even more extreme sanctions.

There is another reason, I hasten to say, why I would be very reluctant to grant an extension of time from 27 March to the beginning of the vacation and it is this: that if a final order was extended until 5 April, which is the first day of the Easter vacation,, the reality is that it would be impossible due to the vacation to bring any application for an “unless” order on before 17 or 18 April. That would provide another two weeks of time and probably, because the Court would not be able or willing, on 17 or 18 April, to make an unless order which did not give the Claimants a few more days to comply, they would thus have bought, by their approach, an extension of the best part of a further month. Again, although Mr Ciumei disavowed this proposed timing as a motive or tactic, that timing is not acceptable. So this application, which has not been the subject matter of a written but an oral application, is dismissed.