THE SOCIETY OF LLOYD'S v SIR WILLIAM OTHO JAFFRAY & ORS (2000)

QBD Commercial Court (Colman J) 25/1/2000 : * Costs sharing order 26/1/2000

INSURANCE - CONTRACT - COMMERCIAL - CIVIL PROCEDURE

LLOYD'S NAMES : ALLEGATIONS OF FRAUD : UNITED NAMES ORGANISATION : UNO : CONTRACTUAL REGIME : NON-UNO NAMES : COSTS SHARING ORDER : INDIVIDUAL CONTRIBUTIONS : ASSESSMENT : APPORTIONMENT : GROUP LITIGATION : PAST COSTS : ADDITIONAL LAWYERS INSTRUCTED : CAP ON COSTS : CALCULATION OF CONTRIBUTIONS : PAYMENT : WITHDRAWAL

Cost sharing order in respect of costs of United Names Organisation's lawyers amongst Lloyd's Names in the Lloyd's fraud litigation.

Application by The United Names Organisation ('UNO') for an order that claimants in the Lloyd's fraud litigation (reported at Society of Lloyd's v Sir William Otho Jaffray (1999) LTL 18/6/99) who were not members of UNO should pay a proportion of the costs and disbursements of the lead claimants' solicitors, More Fisher Brown, even though that firm was not the solicitor on the record for those non-members. Names fell into two categories: (i) members of UNO (represented by More Fisher Brown); and (ii) those who had registered in accordance with the order of Cresswell J, who would play a restricted part in proceedings. Legally-aided applicants would be represented by Grower Freeman & Goldberg. The number in category (ii) could change up to 21 February 2000 which was only seven days before the projected start of the trial.

HELD: (1) The principle to be achieved was that each Name should contribute some pre-determined amount to the costs and disbursements sustained in the general prosecution of the proceedings, and that that amount should be no more than the Name could reasonably afford, and must have some regard to apportionment. (2) A Name who was now to come in and register and take the benefit of the conduct of the proceedings by the lead solicitors and counsel instructed by them, ought to make some contribution to the highly expensive process of putting together the claim or counterclaim. This was so even if they had separate legal representation with a limited input by way of final submissions. (3) An order to accomplish this would require an investigation after 21 February 2000 when the final number registered would be known, by reference to objective criteria as to how much it would be appropriate that any given Name should contribute to the common fund. That contribution would be expected to be paid before any damages were recovered, so that what a Name could afford would have to depend on disposable income and disposable assets. (4) It was suggested that by adding, say, one year's disposable income to total disposable assets it would be possible to place the Name in one of three bands for an upfront contribution. If this were done by the investigating Master before trial, if any of the Names felt that they were unable to contribute they would have liberty to apply or to extract themselves from the litigation. (5) Those Names who might pay less than their rateable contribution because of the way in which the percentage of costs was worked out should only have to contribute at the end of the day if they had succeeded in recovering damages from Lloyd's which enabled them to fund the amount of their contribution, having regard to the ceilings which had been calculated by reference to their affidavit of means. (6) If the Names were to lose, the ceilings would govern and, if and in so far as those ceilings were not already exhausted, then the Names would have to pay the balance. (7) This was a completely novel concept in group litigation but the judge was satisfied that orders of this kind would be within the jurisdiction of the court. However, the detail would have to be worked out in consultation with the legal representatives involved in the case. (8) Past costs could only be the costs of the Jaffray litigation and no other. (9) Names who were not members of UNO and who chose to instruct additional lawyers would not be entitled to any reduction in the contribution which they made to the overall costs fund. (10) Nothing in relation to this new regime interfered at all with the contractual basis of those who had joined UNO.

* Costs-sharing order of Colman J dated 26/1/2000

The general purpose of the order was that each party who participated as a claimant or counterclaimant on the Register but who was not a member of UNO or a former member of UNO should make an equitable contribution to the costs of pursuing the claims and counterclaims incurred and to be incurred by UNO and that such contribution should be made available to pay for UNO's legal representatives as early as practicable without causing undue financial hardship to any participant or preventing those wishing to participate from doing so with the benefit of independent legal advice. The order covered the following matters: (i) calculation of contribution of participants; (ii) payment of cost contribution into court and withdrawal from participation; (iii) obligations of confidentiality; (iv) effect of payment of damages or settlement on contribution; (v) determination of final amount of UNO costs; and (vi) related matters.

Mr M Freeman of Grower Freeman & Goldberg and Mr J Edwards of More Fisher Brown for the United Names Organisation. Mr T Weitzman instructed by Donne Mileham Haddock (Brighton) for Mr Holman. Mr M Cummins instructed by Magrath & Co for Mr J Troostwyk. Mr S Housman instructed by Freshfields for the Society of Lloyd's. The following appeared as litigants in person: Sir William Jaffray, Mr R M Carter (and for Mr K Adams), Mr S Butler, Mr J A Evans and Mr A C Harrison.

LTL 31/3/2000 : (2000) CLC 725

Judgment Official

Document No. AC8600708

For related proceedings see Soc of Lloyd's v Sir William Otho Jaffrey & Ors : Sir William Otho Jaffrey & Ors (Counterclaim) (2000)