The High Court has allowed Defender Limited to deliver three additional expert reports in its approximately $333 million claim against HSBC Institutional Trust Services (Ireland) Limited. The Commercial Court’s ruling permits the reports to be served; it does not decide whether they will be admitted as evidence at trial.
Defender alleges that HSBC was negligent and breached its contract in its role as custodian of funds lost through the fraud of its alleged sub-custodian, Bernie L. Madoff Securities LLC. The judgment says the action is expected to take 20 weeks to hear. HSBC disputes Defender’s application for further reports.
Under the timetable approved by the court in November 2017, Defender delivered three expert reports on 2 February 2018. HSBC responded with 11 reports on 22 June. Defender then sought permission to serve reports from three new experts, each directed at a subject covered by HSBC’s reports.
Justice Twomey ruled on 31 July 2018 that Order 39, rule 58 of the Rules of the Superior Courts could not be used at this stage to prevent delivery of the additional reports. He accepted Defender’s argument that the rule concerns admission of evidence, while the application concerned delivery of reports during case directions.
The judge considered the interests of justice and any prejudice to HSBC. He said HSBC had alleged little or no prejudice beyond losing a tactical advantage: it could no longer challenge Defender expert Mr Vinella’s opinion on Depository Trust Company procedures by pointing out that Vinella had not worked there, while HSBC expert Mr Wiener had.
The court permitted a report from Mr Denci on DTC procedures, noting that he had worked at the company. It also allowed a report from Mr Shore, a US law expert, to address HSBC expert Mr Tabb’s evidence on US bankruptcy law. A report from Mr Lundelius was allowed on broker-dealer issues addressed by HSBC expert Mr Rainero, in response to Vinella’s report on whether the assets were held by Madoff’s firm as sub-custodian or broker-dealer.
The judge also relied on Defender’s record of compliance with case management, finding no significant non-compliance to date. The ruling grants liberty to deliver the three reports. The judgment does not determine the underlying claim or the admissibility of the reports at trial.