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Three Rivers District Council v The Governor & Company of the Bank of England (12 April 2006)

In the BCCI v Bank of England trial the 'opening speeches' by Mr Gordon Pollock QC (for the Claimants) lasted for 86 days and by Mr Nicholas Stadlen QC (for the defendant) 119 days.

These oral openings were supplemented by written submissions which in the defendant's case numbered more than 4,500 pages.

The trial judge was assigned to the case on 30 October 2001. The first 'case management conference' took place in November 2001 and lasted three days. Between then and February 2003 there were a total of 17 such case management conferences. The Particulars of Claim was 1,135 pages and the Defence no less than 2,250 pages.

The Bank disclosed some 6,000 files of documents, and served some 5,600 pages of witness statements. The trial bundle comprised of 192 lever arch files, of which 94 are chronologically ordered. The defendant filed a further 195 documents during the submission filling at least 14 more lever arch files.

The trial was finally abandoned by the liquidators on 2 November 2005, Day 256 of the trial and over 12 years of litigation. The claimants' legal costs apparent came to 38 million pound.

Extracts from the judgment of Mr. Justice Tomlinson

The cast referred to below:

“One alleged motive is that the Bank did not wish to have to refuse a licence to BCCI SA. It is suggested that, had the Bank attempted to satisfy itself about the relevant criteria without any entitlement to rely upon the satisfaction of the Luxembourg authorities as in certain respects determinative, it would have been unable to do so, but that it was unwilling to rock the international supervisory boat in the manner which a refusal would involve. It was suggested that this would involve an affront to a fellow member of the international supervisory club, Luxembourg.”

“As part of a campaign of this sort I have no doubt that the urge to make available to the Press selective extracts from documents was irresistible, as they could be deployed in a manner which apparently showed the Bank in a bad light. I make no criticism of those who published such extracts as they were given. As an exercise in objectivity however, this can be seen with the hindsight acquired from experience of the trial as a cynical and grotesque operation.”

“...towards the end of November or at the beginning of December 2004, after I had been listening for many weeks to Mr Stadlen's opening submissions in answer to the liquidators' claim, I became so concerned about the case that I decided both to consult and to warn the Lord Chief Justice about it. I told the Lord Chief Justice, then Lord Woolf, that the case was a farce.”

“I warned the Lord Chief Justice that I feared that the case had the capacity to damage the reputation of our legal system.”

“The appropriate conclusion in this case is not difficult to reach. In truth, it is difficult to think of a case in which the entitlement to indemnity costs could more clearly be made out...”

“I infer that the liquidators did not seek such sanction and that their absence was tactical, calculated to make it the more difficult for me to express views critical of their conduct of the action.”

“The liquidators made their allegations from the vantage point afforded by hindsight but without acknowledging that that was where they stood.”

“Thus, in the 12 years between the first Statement of Claim and Day 153 of the trial, the Claimants' post-licensing claim evolved from (1) failing to revoke knowing the criteria were not fulfilled to (2) failing to revoke knowing every day for 11 years that the discretion could not lawfully be exercised against revocation to (3) revocation not being the only legal option open to the Bank, and (4) as a cause of action being on the back burner through the 1980s and unrealistic post-April 1990 when the Bank was in rescue mode; to (5) failure to do consolidated supervision of the Group every day for 11 years, to (6) failure to embark on a voyage of discovery notwithstanding that it was accepted that the College was a lawful example of a voyage of discovery.”

“MR STADLEN [leading counsel for the defendant]: I was going to say there Your Lordship has it from the horse's mouth. The trouble is we have three horses, and that is not meant disrespectfully. It is simply meant to indicate that in this case your Lordship hears submissions from three leading counsel and, as we have seen, on points of vital importance your Lordship is told different things by different counsel on different occasions.”

“MISS MONTGOMERY: My Lord, it is a question of policy. Your Lordship, and indeed Mr Stadlen, has said many things with which we profoundly disagree over the course of his very long opening of his case. We took the view, as we explained to your Lordship at the beginning, that it was not helpful, indeed it would smack of the Punch and Judy, for us to get up at every point and say, “No, we do not agree with that, no, we do not agree with this”, and in those circumstances what we propose to so is at some appropriate moment deal with it in full by way of reply, because frankly it is very difficult to know where to start. Certainly we have taken the view that it is impossible to deal with many of Mr Stadlen's points by way of a truncated dialogue with your Lordship which is interleaved into his submissions.”

“MR JUSTICE TOMLINSON: I can quite understand the desire not to interrupt Mr Stadlen, but if I say from the bench that I will be corrected if I am wrong, that this has effectively been abandoned, and it is plain, then, that I am putting some supplementary questions so as to understand what is left, one would have expected someone to put me out of my misery.”

“As far as I recall Lord Neill [one of Claimants' leading counsel] never said in terms that he could not support Mr Pollock's approach, but it is plain from the totality of his exceptionally careful and measured submissions on this part of the case that he made no attempt to support that approach and indeed made submissions which demonstrated very clearly why Mr Pollock's approach could not be spelled out of their Lordships' speeches when read as a whole.”

“The untackled problem was of course that the allegations which were being made were inconsistent and contradictory, both with themselves and with the pleaded allegations…It will be a feature to be borne in mind by the Costs Judge. Nothing in the Claimants' case was ever abandoned, and indeed on the one occasion when something apparently was abandoned it was then sought to reinstate it. Any suggestion that the Defendants incurred costs on an unreasonable scale will need to be tested against the background of litigation apparently conducted by the liquidators and their legal advisers by reference to standards which I did not recognise.”

“I regarded as unhelpful this unusual approach of the Claimants' Counsel. I can only think that it was inspired by a desire not to abandon any point, however bad, in an effort to keep the show on the road for long enough to be able to cross examine the Bank’s witnesses.”

“We were put under considerable pressure by your Lordship to get a move on...If your Lordship had wanted us to do it on a much longer basis, taking every single one of these points at length, perfectly prepared to do it, that is why I said at the end: we are not abandoning anything, I am adopting everything that is in our pleadings...Now, if I am wrong to do that I am perfectly happy to go back and start some of it again.” (Pollock QC)

“As to when elucidation would be forthcoming Mr Pollock cautioned me 'my advice is for no one to hold their breath'.”

“The effect of what Mr Pollock said was that the answers to my questions one and two were now changed from “yes” to “no.” There emerged what in the lingua franca of the case came to be known as the voyage of discovery allegation. The concept of consolidated supervision was now described as “something of a red herring” in the case. In place of the allegation that the Bank had been under a duty to carry out consolidated supervision of the Group rather it was said the Bank was under a duty to embark upon a factual investigation which might or might not lead to consolidated supervision and which might but which would not necessarily have led to revocation of the licence.”

“Mr Stadlen described this as playing fast and loose with the court. During the trial I attempted to eschew such language since it seemed to me not best calculated to the preservation of harmonious relations between Counsel and the court such as is necessary if a long trial is to be manageable. It was quite sufficient to be getting on with that the relations between the two principal leading Counsel were not as one might have hoped. However it has to be said that Mr Stadlen’s characterisation of what was going on was entirely fair.”

“Although the Liquidators also provided a considerable volume of disclosure, the Bank quickly took the view that this was very largely useless – both in terms of its relevance to the case and the impenetrably poor way in which it had been listed and disclosed...Indeed, one of our assistants memorably looked into one box of disclosure to find that it only contained a broken chair leg. rdquo; (extract from a letter from the defendant solicitors dated 17 November 2005)

“Mr Pollock was only infrequently rude to me and I ignored it. Not everything said by Mr Pollock is intended to be taken seriously and sometimes his offensive remarks are the product of a well-intentioned but ill-judged attempt to lighten the mood.”

“Mr Pollock's sustained rudeness to his opponent was of an altogether different order. It was behaviour not in the usual tradition of the Bar and it was inappropriate and distracting. I should have done more to attempt to control it, although I doubt if I should have been any more successful than evidently were Mr Pollock's colleagues whom on at any rate one occasion I invited to attempt to exercise some restraining influence. Whether this is a ground upon which an award of indemnity costs should be considered I do not need to decide. ”