Background – collapse of the "Mega Trials"

In the aftermath of the collapse of the BCCI and Equitable Life litigation, the Commercial Court was subjected to unprecedented criticism. Both cases brought public attention to bear on the court’s procedures. The BCCI case collapsed after the Claimants abandoned their 13 year litigation on the 256th day of trial (excluding the 63 days taken up by interim hearings). The defendant’s costs alone were estimated to be approximately £80 million. Tomlinson J who heard the trial made the following observation in his judgment on costs following the discontinuance of the 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 Lord Chief Justice and I discussed whether there were any measures which might be taken either by me or by both of us together in order to persuade the liquidators of the folly of their enterprise. I take full responsibility for the conclusion, which was essentially mine anyway, that there was nothing which could usefully be done…"1

The Governor of the Bank of England added to the weight of criticism at that year’s Lord Mayor’s Banquet: "A system that is powerless to prevent a case so hopelessly misconceived continuing for thirteen years requires examination."2 Other commentators have referred to the case as a "colossal wreck".3

Long Trials Working Party

In the wake of such public attention, the Commercial Court Long Trials Working Party under the chairmanship of Atkins J was set up. The Working Party was given an extensive remit to "consider all aspects concerning the management of heavy and complex cases in the Commercial Court." It was made up of members of the judiciary, barristers, solicitors and other users of the Commercial Court. It met eight times in 2007 and published its 81 page report on 6 December 20074.

The Working Party’s proposals and recommendations were adopted by the Commercial Court User’s Committee and are currently being put into practice for a trial period between 1 February 2008 and November 2008.5 Litigants should therefore be aware of the key changes, aims and objectives as these may very well apply to their case.

The Key Recommendations

The overarching point to emphasise at the outset is that despite the widespread criticism of the failed "mega trials", the report does not recommend any truly fundamental changes to the procedures of the Commercial Court. The way in which litigation is conducted procedurally before the Court will remain largely the same.

The report does usher in a number of proposed reforms to how cases are conducted with the aim of ensuring that case management and litigation generally is conducted more efficiently. It makes a number of key recommendations covering the whole of the litigation process (including pre-action), and we have included a summary of these (all of which ought to form part of the current pilot scheme in the Commercial Court) with this newsletter. Very broadly, three main themes emerge:

  • Getting rid of "bad" claims without trial.
  • Getting the parties to really focus on the issues and streamline the case.
  • Costs – using costs orders as a case management tool and dealing with the assessment of costs at the end of the litigation.

The Working Party expressly concluded that the Civil Procedure Rules contained sufficient powers to enable its proposals to be implemented – it does however envisage that the Commercial Court judges will make greater use of their case management powers, including in situations where pro-active judicial intervention that might hitherto have come as a surprise. Furthermore, the Working Party strongly rejected radical proposals for change, including charging a daily court rate for use of the Court which had been considered by the Ministry of Justice.6

Looking at the three main themes in turn:

Getting rid of "bad" claims

We would be surprised if many of our readers have experienced a Commercial Court judge politely asking the Defendants at a case management conference if they had "thought about" applying to have the claim against them struck out. Any such comment from the bench would immediately set off alarms bells, but such an enquiry by the judge is one of the matters specifically referred to by the Working Party. The report encourages the use of the court’s powers to dispose of issues at an early stage, although the test for applications for summary judgment or striking out under the CPR remains unaltered.

Interestingly, the report talks about costs "not following the event" in appropriate cases where, say, a strike-out application has been made but was unsuccessful. Ordinarily, the party whose case survived the attack would expect to recover the costs of the application from the losing party. Not so in some cases, says the Working Party. Where an application was merited (it had some prospects of success), but eventually failed, the costs might become costs in the case to be allocated at the end of the claim when the ultimate winner is known.

Judges are generally encouraged to express a view on the merits at early procedural hearings (though those views are unlikely to be final), so that litigants can expect greater "feedback" from the judge on the claim. Early neutral evaluation, a service offered by the Commercial Court, is also highlighted in the report. All this should give litigants a better idea of their prospects of success, and the Working Party hopes that it will weed out bad claims.

In addition to recommending increasing use of measures aimed at early disposition and perhaps more subtly, the Working Party has sought to prevent cases taking on a life of their own with clients losing track of what it is that is being argued on their behalf (as might happen in a particularly complex matter where the lawyers have been given free reign). Statements of truth are now to be "refreshed" shortly before trial, the question thereby put to the clients being: Are you still sure this case is true and well-founded (and, implicitly perhaps, do you really want to go ahead to trial)?

Focus on the real issues

The Working Party has criticised the length and prolixity of Statements of Case as currently seen in the Commercial Court. It has recommended that without permission of the court, no party may file a Statement of Case longer than 25 pages. That is significantly shorter than the pleadings in any number of complex claims. The report states that each party should set out the relevant facts that are sufficient to inform the other side of the case they have to meet. In our experience, rebutting a claim premised on a few factual matters (and leaving a host of other matters going unmentioned) can require a fairly detailed explanation – and the imposition of an artificial limit may therefore become an issue in certain situations. Provided that the court’s permission is given when it really is required, shorter pleadings are no bad thing.

Witness evidence has also been criticised, for being expressed in excessively legal language and arguing the case (so not being in the witness’ own words – unless they were particularly argumentative!).

The report also introduces a new court-approved document aimed at narrowing the issues. The "List of Issues" must be prepared by the Claimants following close of pleadings. The list will be approved by the judge at the first CMC, following what the Working Party envisages to be a proactive review of the issues that really need to be decided to dispose of the claim. The list should, where necessary, also identify the matters to be addressed by expert evidence. Witness and expert evidence, as well as disclosure are to be closely tailored to the List of Issues. Witness statements should address the court-approved issues under separate headings, and be limited to relevant facts. While disclosure on the standard basis continues to be the norm, but the Working Party suggests that in appropriate cases, disclosure requests would need to be framed by reference to the List of Issues.

Costs

The costs of taking a case to trial in the Commercial Court can be considerable – though it must be borne in mind that the amounts at stake frequently exceed legal fees by a multiple. The general rule is that the winning party is entitled to recover a reasonable amount in respect of costs from the opponent. However, converting that entitlement in principle into hard cash can be a time-consuming, costly and frustrating process. A detailed assessment of a bill of costs worth GBP several hundreds of thousands might require lengthy hearings before a costs judge. The Working Party has realised this and suggests that there should be a summary assessment by the judge in all cases where costs are less than £250,000.

Summary assessment of costs was previously limited to one-day hearings only, where costs would ordinarily only be a fraction of the new limit. The Working Party’s expansion of the summary assessment jurisdiction to include much longer hearings is to be commended, provided that judges are willing to be sufficiently robust to make it work in practice.

In our experience, summary assessments tend to work in favour of the party seeking to recover costs, unless the amount claimed is patently unreasonable. There seems nothing objectionable in giving the winner a better chance to recover a good proportion of the outlay there and then.

Footnotes

1. Three Rivers District Council and others v Bank of England [2006] EWHC 816 (Comm), at para. 23.

2. 21 June 2006, available at: http://www.bankofengland.co.uk/publications/speeches/2006/speech278.pdf

3. See in particular, Zuckerman, A., "A Colossal Wreck - The BCCI – Three Rivers Litigation" C.J.Q. 2006, 25(JUL), 287-311.

4. Report and Recommendations of the Commercial Court Long Trials Working Party, 6 December 2007, available at http://www.judiciary.gov.uk/docs/rep_comm_wrkg_party_long_trials.pdf

5. See the statement by the judge in charge of the Commercial Court, Andrew Smith J on 28 January 2008, available at http://www.judiciary.gov.uk/docs/long_trials_statement.pdf

6. Report, paras. 122-123

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.