In a review of the top cases of 2012, The Lawyer reported the first cross-border jurisdictional prosecution of insider dealing by the FSA, against Blue Index directors James Sanders and James Swallow. Matthew Ryder QC of Matrix Chambers was instructed by Corker Binning partner Gemma Tombs for Swallow.
Cases in point
Russian oligarchs, price-fixing, TV trademarks and insider dealing are keeping the courts busy in a post-crunch litigation boom. Katy Dowell provides an update on 2012’s top disputes
The start of the legal year will bring with it some of the most anticipated and fiercely fought cases of the year. Hot on the heels of one damning judgment, Russian oligarch Boris Berezovsky will return for round two of his billion-dollar battle, while another wealthy individual Michael Cherney will resume his legal fight with Russian oligarch rival Oleg Deripaska.
Away from feuding billionaires, the Supreme Court will consider whether accountants who offer legal advice can enjoy the same legal professional privilege as lawyers in Prudential v Special Commissioner of Income Tax, which will be heard over three days in November. It will also examine the VAT obligations on loyalty card schemes and determine how pension liabilities should be construed for the now-defunct Nortel and Lehman Brothers.
These were cases were listed as ones to watch by The Lawyer in January – the disputes that will define 2012 (2 January 2012).
Of the leading 20 cases, five are still to be heard by the court, two are ongoing, three are awaiting judgment, four have settled and six have received judgment.
Without doubt, the most eagerly anticipated ruling of the year was handed down at the end of last month (31 August) by Mrs Justice Gloster. The $5bn fight between Berezovsky and Chelsea FC owner Roman Abramovich was one of the largest cases in the High Court of the last decade.
For four months of 2011, Berezovsky and his advisers from Addleshaw Goddard, partners John Kelleher and Mark Hastings, alonsgide One Essex Court’s Laurence Rabinowitz QC, attended court to argue that Abramovich had intimidated him into selling shares in Russian oil company Sibneft at a fraction of their value. He also claimed that Abramovich was holding a 50 per cent share of Russian aluminium company RusAl on behalf of him and the late Arkadi ‘Badri’ Patarkatsishvili.
Gloster J’s ruling was damning in its conclusion, throwing out all of Berezovsky’s claims. The case was almost entirely based on witness evidence provided by him, and under cross examination by Jonathan Sumption QC – formerly of Brick Court and instructed for Abramovich – it emerged that some claimant witnesses stood to gain financially if the case went in his direction. Skadden Arps Slate Meagher & Flom partners Paul Mitchard QC and Karyl Nairn instructed Sumption for Abramovich.
In an executive summary, judgment Gloster J stated: “At times the evidence which he [Berezovsky] gave was deliberately dishonest; sometimes he was clearly making his evidence up as he went along in response to the perceived difficulty in answering the questions in a manner consistent with his case. At other times, I gained the impression that he was not necessarily being deliberately dishonest, but had deluded himself into believing his own version of events.”
Nevertheless, as The Lawyer went to press, Berezovsky was gearing up for the second tranche of his proceedings in the chancery court, with Brick Court’s Mark Hapgood QC replacing Rabinowitz as his counsel.
Hapgood will face three heavyweight silks when he argues that a significant proportion of assets and funds worth between $2bn (£1.3bn) and $3bn (£1.9bn) held by the Patarkatsishvili estate as well as assets held by Russian metal magnate Vasily Anisimov, are in fact part-owned by Berezovsky.
Patarkatsishvili’s lawyer, former Hogan Lovells partner Graham Huntley who quit in March to launch his own boutique Signature Litigation, instructed Fountain Court’s Michael Brindle QC. Ali Malek QC and Sonia Tolaney QC of 3 Verulam Buildings will be instructed by Freshfields Bruckhaus Deringer partner Ian Terry for Anisimov. The third defendant, investment company Salford, is represented by Macfarlanes partner Iain Mackie and Brick Court’s Alan Maclean QC.
RusAl is the subject of the ongoing dispute between Cherney and Deripaska.
Cherney claims Deripaska holds 20 per cent of the RusAl shares on his behalf and is suing for damages for breach of Deripaska’s agreement to dispose of the shares and to account to Cherney for the proceeds. Once again the final judgment is likely to turn on witness evidence.
In that dispute Brick Court’s Mark Howard QC, Essex Court’s David Foxton have been instructed by Dechert partner Andrew Hearn for Cherney. They face Blackstone’s Tom Beazley QC, Brick Court’s Danny Jowell QC, and One Essex Court’s Alan Choo Choy QC instructed by Quinn Emanuel Urquhart & Sullivan partner Sue Prevezer QC for Deripaska.
Another trial that is likely to capture the attention of the profession began in March and is still ongoing: Nokia v Samsung.
Nokia launched its claims in December 2009, alleging that a range of LCD manufacturers, including Samsung, should pay it compensation after they fixed the price of LCD screens between 1996 and 2006.
In March Mr Justice Sales dismissed attempts by Samsung, represented by Brick Court’s James Flynn QC, and Hitachi, represented by Nicholas Green QC also of Brick Court, to have the suit dismissed. Flynn was instructed by Covington & Burling partner Roger Enock while Green was drafted in by Allen & Overy partner Philip Mansfield. The defendants said that because Nokia had issued its claim ahead of the EC fine, it had failed to follow correct procedure in its case.
The claimants are now trying to appeal that point to the Court of Appeal (CoA). In the meantime, the case is due back in court this week for further interlocutory hearings before full trial next year.
Settling cases is an effective means of keeping embarrassing secrets out of the public eye, as News Group Newspapers (NGN) can attest to.
Earlier this year the publishing group agreed settlement deals with at least 50 claimants who alleged that their phones had been hacked at the request of the News of the World. Olswang was originally instructed for the publishing giant but the company then turned to Linklaters partner Christa Band and 11 South Square’s Michael Silverleaf QC to lead the settlement negotiations.
The claims continue to be filed, however, and the number of lawyers working on these cases has swollen. Currently Bindmans partner Tamsin Allen and Atkins Thomson partner Mark Thomson are leading the case management at the request of Mr Justice Vos, who is overseeing the disputes.
Also hoping to avoid the court spotlight was Barclays Private Clients International, which settled its claim against four professional advisers three days into the trial. The bank claimed the advisers, which included mortgage brokers Savills Private Finance, West End firm Montague Lambert, chartered surveyors Stocker & Roberts Partnership and Saracens Solicitors, were liable for losses it suffered as a result of an alleged mortgage fraud.
While the claims were varied and concerned different properties, it was decided at pre-trial review that they should be managed together.
A source close to the case comments: “It settled on the third day. The timing was interesting. We started on 18 June. We settled a few days later and the following week the Libor story broke. None of the defendants knew that was going to happen. Each settlement was negotiated privately.”
The £100m coverage dispute between the 12 major insurers and Rolls-Royce also settled on day two of the trial. Rolls-Royce was trying to force primary and excess insurers to indemnify claims made against it over a marine propulsion system.
Oil giant Trafigura also settled its costs dispute with Leigh Day & Co, with 7KBW’s Christopher Butcher QC instructed by the firm. The firm claimed £105m in legal fees after it represented 30,000 Ivory Coast residents who, it was alleged, suffered illnesses because of toxic waste dumped by a vessel owned by the company. It was believed to be the biggest costs dispute to be heard by a judge, but it didn’t make it into the court, with both sides seeking a compromise.
It has not all been about making friends, however.
Earlier this year Dresdner Kleinwort was left stunned when Mr Justice Owen said it should pay out bonuses promised to 104 investment bankers prior to its takeover by Commerzbank in 2008. The case pitted Stewarts Law partner Andrew Shaw and Mishcon de Reya partner Mark Levine, both representing the claimants, against Linklaters and Matrix Chambers’ Thomas Linden QC for the bank.
Following the May ruling Owen J ruled in June that the bank should be held liable for £10m in costs billed by the two claimant firms. Ordering the bank to pay 50 per cent of the claimants’ costs, Owen J stated that the bank’s behaviour was “highly reprehensible, and was unreasonable to the high degree that warrants an order for indemnity costs”.
Participants in the Franked Investment Income Group Litigation Order (FIIGLO) case against HM Revenue & Customs must have been hoping that their claim was as straightforward, but that wasn’t to be.
The group appealed a ruling over whether the UK’s double tax relief rules for companies breached EU law. The companies, which held shares in EU companies, claimed compensation for paying more UK corporation tax on dividends from their EU shares than they would have paid on similar dividends from UK shares.
The Supreme Court dismissed two points of appeal, allowed one and referred another to the Court of Justice of the European Union (CJEU). The central question was whether EU law required each member state to make an adequate remedy available or whether it required every remedy recognised in domestic law to be available so that the taxpayer might choose the most advantageous.
Lawyer Leslie Seldon might have been tempted to take his case to the CJEU after the Supreme Court said his firm, Clarkson Wright & Jakes, did have some mandatory reasons to justify retiring him. Blackstone Chambers’ Thomas Croxford was instructed directly for the firm, while Cloisters’ Robin Allen QC was instructed by the Equalities and Human Rights Commission for the partner.This case had major consequences for the retirement policies in partnerships.
The Supreme Court’s decision was met with a sigh of relief across the profession, but Seldon’s fight continues, with the matter referred back to the Employment Tribunal where it will be decided whether the lawyer was discriminated against.
There was also defeat for Christine Davies who claimed she was unduly influenced by her late husband into agreeing sureties for his debts. She said that AIB did not take the right steps to ensure that the loan agreement was properly obtained. Mr Justice Norris rejected the case in July.
In supervisory circles the FSA has been flexing its muscles, leading to a boom in regulatory work. One case that was closely followed by the City, as it was the first cross-jurisdiction prosecution of insider dealing by the FSA, was the prosecution of Blue Index directors James Sanders and James Swallow and Sanders’ wife Miranda.
Sanders, who was sentenced to four years imprisonment and banned as a director for five years, was represented by Irwin Mitchell partner Kevin Robinson, who instructed 2 Hare Court’s Andrew Radcliffe QC. Miranda Sanders, who received a ten-month sentence, was represented by Garden Court Chambers’ Henry Blaxland QC, instructed by Irwin Mitchell partner Robyn Walters. Matrix Chambers’ Matthew Ryder QC was instructed by Corker Binning partner Gemma Tombs for Swallow, who also received a ten-month sentence.
The case was significant as it involved a parallel investigation by the US Securities and Exchange Commission (SEC) and US Department of Justice (DoJ), together with the Federal Bureau of Investigation (FBI).
A series of significant judgments are expected in the next term. The Supreme Court will determine whether foreign court rulings in insolvency matters can be enforced in England and Wales when it rules in New Cap Reinsurance Corp & Rubin & Lan v Eurofinance SA & Anor & AE Grant & Ors.
The chancery court will decide whether Discovery Communications Europea, the broadcaster Discovery History, has infringed the trademark owned by A&E Television Networks, the broadcaster behind television channel History.
Supermarket giant Tesco will learn whether it has been successful in challenging the Office of Fair Trading decision to fine it £10.4m for competition infringement in the dairy markets.
While many might claim that it is feuding Russians who are driving growth in the dispute resolution market, the truth is that the sector is based on litigation that is varied in value and size but always contributing to legal developments.
Author: Katy Dowell