Three cases involving members of Essex Court Chambers are featured in The Lawyer’s Top 10 Appeals with proceedings set to be heard in court during 2022. The list includes cases with the most significant sums in dispute as well as disputes involving high profile parties or issues. The cases involving members of Essex Court Chambers are as follows:
Marcus A. Wide and Hugh Dickson (joint liquidators of Stanford International Bank) v HSBC Bank
The liquidators of Stanford International Bank plc (“SIB”), the vehicle used by Robert Allen Stanford for one of the largest and most prolonged Ponzi schemes in history, brought two claims against HSBC. SIB’s case is that it was defrauded by its owner, Mr Stanford. HSBC had operated certain of SIB’s bank accounts until freezing them in February 2009. The liquidators’ first claim was that HSBC negligently failed to spot signs that SIB was being run as a Ponzi scheme (the Quincecare claim). The second claim was that HSBC dishonestly assisted Mr Stanford’s breaches of his fiduciary duty to the company.
HSBC applied to strike out both claims. It succeeded in the High Court as regards the dishonest assistance claim but SIB’s Quincecare claim survived. Both parties appealed to the Court of Appeal, which dismissed SIB’s appeal (upholding the decision to strike out the dishonest assistance claim) and granted HSBC’s appeal in respect of the Quincecare claim (striking it out as well). The result is that only £2.4m of a £118.5m claim remains. The joint liquidators are appealing to the Supreme Court on the strike-out of the Quincecare claim only.
The ground of HSBC’s application to strike out the Quincecare claim was that, as the payments out of the HSBC accounts went to (a) accounts in SIB’s name held with another bank and (b) SIB’s creditors, SIB had not sustained a loss by reason of the payments. It was either transferring money to accounts it held with another bank or paying its creditors and thereby reducing its indebtedness pound for pound. The Court of Appeal agreed, saying that, “SIB itself did not lose anything as a result of the payment of £116.1m to discharge creditors and to another account in its own name. Its net asset position at the end of the period was the same as at the beginning”.
- Listed in the Supreme Court on 19 January 2022.
- For the respondent, HSBC, Fountain Court Chambers’ Patricia Robertson QC, Louise Hutton QC and Fountain Court Chambers’ Christopher Langley, instructed by Eversheds Sutherland partner David Flack.
Skatteforvaltningen (the Danish Customs and Tax Administration) v Solo Capital Partners LLP (in Special Administration) and ors
Described as “litigation on a massive scale” (Mr Justice Andrew Baker) with almost 100 defendants listed alongside more than 20 separate legal teams. Underpinning the matter is an alleged £1.5bn fraud, relating to fraudulent applications to claim refunds of dividend withholding tax. The case is believed to be the first in any jurisdiction in which the courts have considered how the “Revenue Rule” principle expressed in Dicey Rule 3 applies to civil claims where a foreign State seeks to recoup payment for tax refunds which it argues were not properly due.
The case concerns claims brought by the Kingdom of Denmark through the Danish national tax authority (“SKAT”) for the recovery of over £1.5 billion against 114 individual and corporate defendants. SKAT claimed to have been induced by fraudulent misrepresentations, between 2012 and 2015, to pay out c. DKK 12.5 billion in dividend withholding tax (“WHT”) refunds, in circumstances where, it claimed, such refunds were not in fact due. It pursued civil claims in England alongside proceedings in a range of other jurisdictions.
The High Court ordered a trial of a preliminary issue to determine whether Denmark’s claims were inadmissible by reason of Rule 3 of Dicey, Morris and Collins on The Conflict of Laws, often known as the Revenue Rule. Following a four-day trial in March 2021, in its judgment of 27 April 2021 the Court conducted a detailed review of the history and scope of Rule 3, and held that:
- The basis for the Rule is that the English courts will not entertain claims by foreign States which amount to an extra-territorial assertion of the State’s sovereign powers. The critical issue is whether, in bringing a claim, a claimant is doing an act which is of a sovereign character or which is done by virtue of sovereign authority; and whether the claim involves the exercise or assertion of a sovereign right. If so, then the courts will not determine or enforce the claim.
- In applying Rule 3, the courts must consider the substance of the claims, not simply their form. This requires the Court to look past the causes of action pleaded and to identify the underlying right which the claimant seeks to vindicate, to determine whether the litigation amounts in substance to an exercise of sovereign power.
The Court dismissed Denmark’s claims at first instance ( EWHC 974 (Comm)) and the case is now listed to be heard for 3 days in January 2022 before the Court of Appeal.
- Listed in the Court of Appeal from 25 January 2022 for three days
- For the respondent, Sanjay Shah, Paul Davies QC with Gatehouse’s Nigel Jones QC, Blackstone Chambers Kieron Beal QC, Gatehouse’s Laurence Page, Furnival’s Lisa Freeman instructed by Chris Walters of Meaby & Co.
- For the respondent, Alison Macdonald QC and Luke Tattersall with 3VB’s Tom De Vecchi and Sophia Dzwig, instructed by Richard Twomey and Joshua Fineman of DWF.
Argentum Exploration Ltd v The Silver and all persons claiming to be interested in the Rights of Silver- THE TILAWA
In 1942, the South African Mint purchased a large quantity of silver from the Bombay Mint. One consignment, comprising 2,364 silver bars, was shipped on the SS Tilawa, a UK registered merchant vessel, which was carrying both cargo and passengers. The vessel was sunk by two Japanese torpedoes in the Indian Ocean. 281 passengers and crew lost their lives.
In 2017, Argentum Exploration salvaged 2,364 silver bars from the wreck of the SS TILAWA. Argentum declared the silver bars, the value of which is estimated at around $43m, to the UK Receiver of Wreck pursuant to the UK Merchant Shipping Act 1995.
The Republic of South Africa claimed ownership of the silver bars and Argentum commenced an action in rem against the silver, seeking a declaration that it was the owner of the silver or, in the alternative, salvage. South Africa claimed immunity pursuant to section 10(4)(a) of the State Immunity Act 1978 and issued an application notice seeking an order that the company’s action be struck out or stayed on the grounds of State immunity.
Section 10(4)(a) provides that a State is not immune as respect “an action in rem against a cargo belonging to that State if both the cargo and the ship carrying it were, at the time when the cause of action arose, in use or intended for use for commercial purposes.”
It was common ground that the cause of action arose in 2017, however the Judge held that, in determining whether the vessel and cargo were “in use or intended for use for commercial purposes” in 2017, it was appropriate to have regard to their status in 1942. Applying this approach, the Court held that:
- When a cargo is sold under an fob contract and shipped on board pursuant to a contract of carriage contained in or evidenced by a bill of lading, it is used for commercial purposes;
- In order for the character or status of the cargo in 1942 to have changed by 2017, there must have been some decision by the State to change it and there was no such decision on the facts of the case;
- Accordingly, the cargo was still in use for commercial purposes in 2017 and the exception to State immunity in s.10(4)(a) was not engaged.
- Listed in the Court of Appeal from 15-17 March 2022.
- For the appellant, the Silver and all persons claiming to be interested in the Rights of Silver, Christopher Smith QC and Jessica Wells, Holman Fenwick Willan partner Andrew Chamberlain.
See the full list of Appeals here.