Commercial Court strikes out conspiracy claim against QC

26/04/21

King v Stiefel arose from a fraudulent misrepresentation trial in 2017 before Marcus Smith J in relation to the acquisition of the King family’s security systems business by Primekings. On the 10th day of trial, shortly before the close of their case and immediately after their principal witnesses had been cross-examined, the Kings discontinued the claim, made a fulsome apology to the defendants in open court and agreed to pay indemnity costs. “From these basic facts”, as Cockerill J put it, “has sprung a multiplicity of litigation which must inevitably put any observer with a taste for nineteenth century fiction in mind of the infamous Jarndyce case.”

One of the claims that has ‘sprung’ from the collapse of the fraud trial is the present action, a claim by the Kings against all of the legal representatives who acted for other side at the trial (ie Primekings, the successful defendants) including all of the partners at the solicitors firm instructed (along with one partner who was not involved) and the leading counsel who cross-examined the Kings’ witnesses at the fraud trial. (The Kings also sued their own legal team (including leading and junior counsel) in a separate action).

The claim against Primekings and their lawyers was framed as an unlawful act conspiracy relying on a theory that through a combination of excessive costs budgets, robust submissions by leading counsel, and a ‘threatening’ mediation statement, the Kings' own lawyers had been so intimidated as to force the Kings to discontinue their claim, when in truth the Kings would have succeeded.

Unsurprisingly after a six day hearing, Cockerill J struck out the entire claim and granted reverse summary judgment on the basis that it was “structurally fatally flawed, abusive and lacking in pleadable substance.”

The judgment covers a great deal of ground but several points of interest arise from it:

• It was an abuse (and infringed CPR 38.7) to seek to relitigate a claim that had been discontinued.
• The claim based on leading counsel’s submissions in court also failed by reason the general immunity that applies to anything said in Court which was not affected by Jones v Kaney and Hall v Simons.
• It was also an abuse to mount a claim based on dishonestly inflated costs bills where those bills had been assessed by a Costs Judge where the same allegations had been withdrawn in the costs proceedings.
• A suggestion in a mediation statement that the adverse consequences of losing a case would be traumatic was not ‘unambiguous impropriety” within the Unilever exceptions.
• The judgment also contains helpful guidance to practitioners on how a statement of case should be crafted, explaining where the dividing line between facts and evidence is to be drawn.

In relation to the inferences of dishonesty the judgment was scathing: “Anything unhelpful to the Kings is immediately seen as suspect on the basis of previous suspicions…. In the Kings’ eyes there are no mistakes, only conspiracies.... Thus the desire to allege fraud/dishonesty/conspiracy becomes a kind of philosopher’s stone which transforms innocent errors into dishonest conspiracies - from which in turn the main conspiracy can itself be inferred.”

Cockerill J concluded:

“What the cases do not say is that one can jumble together a vast array of different, apparently trivial or marginally suspicious facts relating to different matters and turn them into a valid pleading of fraud… the desire to allege fraud/dishonesty/conspiracy becomes a kind of philosopher’s stone which transforms innocent errors into dishonest conspiracies - from which in turn the main conspiracy can itself be inferred.”

The judgment is here.