The High Court declined to halt two investor proceedings over losses linked to Bernard Madoff’s investment business. Instead, it set out a plan to link related cases for joint management and prepare key proceedings for a sequenced trial.
In a judgment delivered on 16 October 2009, Mr Justice Clarke considered applications by HSBC Institutional Trust Services (Ireland) Limited (HTIE) to stay proceedings brought by Kalix Fund Limited and Unione di Banche Italiane (UBI Banca) until HTIE’s separate case with Thema International Fund plc was determined.
The claims arise from the collapse of Bernard L. Madoff Investment Securities LLC (BLMIS). The investors and Thema allege that HTIE failed to carry out adequate checks when appointing BLMIS as sub-custodian of Thema Fund assets, and failed to monitor it properly. The judgment records those as allegations; it did not decide whether HTIE was liable.
Justice Clarke said the cases involved overlapping issues but also claims specific to individual investors. He considered it premature to determine how much the Thema case would resolve, since that would depend on its outcome and on issues that had yet to be clarified. He also said that stopping investor cases from progressing could cause delay and require them to be restarted later.
The court’s proposed approach was to link proceedings alleging wrongdoing by Thema or HTIE and manage them together under one judge. Justice Clarke said he was minded to consider admitting qualifying cases to the Commercial List, including some that might not qualify on their own. He directed no general barrier to the orderly progress of linked cases, while cautioning against unnecessary duplication in pleadings, witness statements, expert reports and written submissions.
The Kalix and UBI Banca cases, together with proceedings brought by Thema and Alternative Advantage plc (AA), were to be prepared for trial. Common issues could be heard together, while investor-specific issues could be dealt with separately. The court left the order of issues for a later decision, after the parties had clarified the cases through pre-trial steps. Other investor proceedings were to progress only where needed to avoid duplication and ensure timely resolution.
The judgment did not set the final sequence or issue specific directions for each case. Justice Clarke proposed a further hearing after the parties had reviewed the decision. The source does not record the outcome of that later hearing.