The Supreme Court has cleared the way for a full trial of a negligence claim brought by Defender Limited over investment losses linked to Bernie Madoff’s fraud. The appeal concerned whether a settlement with the trustee in bankruptcy of Madoff’s financial entities prevented Defender from pursuing the remaining defendants.
In a judgment delivered on 3 July 2020, Mr Justice Charleton said he agreed with Mr Justice O’Donnell’s judgment on the outcome. He said the case would now have a full trial rather than a preliminary issue. The source does not set out the precise formal order made on the appeal.
Charleton said the trial judge had been wrong to treat the criminal nature of Madoff’s conduct as automatically displacing possible civil liability by other parties. The Civil Liability Act 1961 concerns the sharing and equitable apportionment of fault where more than one person contributed to a wrong, or where a plaintiff contributed to it, he said. Whether any wrong or negligence occurred remains for determination at trial.
The claim concerns funds invested through Dublin in Madoff’s New York brokerage. Charleton described the case as involving allegations that those responsible for holding or monitoring the funds may have failed to perform their duties. He referred to a settlement with the trustee in bankruptcy covering 75% of the losses and said the claim potentially concerned recovery of up to the remaining 25% if negligence by the “watcher” were established. Those figures describe the judgment’s account of the case; they are not a finding of liability or a damages award.
Charleton also commented on how the trial should be managed. He said the issues should be focused on the parties’ legal obligations, the standards required of them, and what warning signs—if any—were present in the Madoff operations. He noted that court rules give trial judges powers to define issues, limit time, control evidence and restrict expert testimony. These comments address management of the future trial, not its outcome.
The judgment identifies Defender as the plaintiff and appellant, HSBC France as defendant, and Reliance Management (BVI) Limited, Reliance International Research LLC, Fineman Limited and David Whitehead as third parties. It does not decide whether any of them is liable.