Mr Justice Norris has handed down a reserved judgment in relation to various consequential matters in the Lloyds/HBOS Group Litigation (the “Consequentials Judgment”), following a hearing in January 2020. This follows Norris J’s judgment of 15 November 2019 (the “Trial Judgment”), in which he dismissed the claims that had been brought by about 5,800 shareholders against Lloyds Banking Group and five of its former directors in relation to Lloyds’ acquisition of Halifax Bank of Scotland (“HBOS”) in 2008.
The background to the Lloyds/HBOS Group Litigation and the Trial Judgment are summarised here.
The Consequentials Judgment contains helpful guidance in relation to various costs issues which arise frequently in large-scale commercial litigation such as the Lloyds/HBOS Group Litigation, and which are likely to arise in relation to group actions in particular.
In relation to costs, Norris J held that the Claimants should pay the Defendants’ cost of and occasioned by the action in an amount to be assessed (but estimated to be in excess of £30 million), and that they should make an interim payment of £17 million on account of such costs. He rejected the Claimants’ submission that the award of costs should be reduced to reflect the fact that the Defendants had not succeeded in relation to every single issue, holding that “[i]t is commonplace that a successful party will not succeed on every aspect of its case”, and that costs should be “determined by reference to the overall success”. On the facts, Norris J held that, given the breadth of the attack that had been mounted by the Claimants, the degree of success which they had ultimately achieved was “small”, and that “even the measure of success achieved by the Claimants was so achieved on a fine balance”.
Norris J also held that, in accordance with terms of the Group Litigation Order, the liability of the Claimants for the Defendants’ costs should be several (and not joint and several), and that there would therefore need to be an inquiry as to the share of the Defendants’ costs for which each of the 5,800 Claimants would be liable. In this regard, Norris J noted that: “It may well be that many of the 5800 Claimants never foresaw this as a real question because they thought that they were litigating risk-free. But most unfortunately that is not the case” and that there was “a (most regrettable) risk that individual Claimants may face a several liability for costs to the extent that it overtops their direct ATE cover”.
The Claimants’ claims had been funded by Therium Finance No.1 IC (“Therium”), a Jersey-based subsidiary of the well-known commercial litigation funder. Norris J held that Therium should be jointly and severally liable with the Claimants for the Defendants’ costs. He rejected Therium’s submission that its liability should be “secondary” to that of the Claimants, and that it should only be liable for the Defendants’ costs in the event that the Defendants are unable to recover their costs from each of the Claimants. The question of whether Therium’s liability should be capped at the level of the funding that it had actually provided (following the decisions in Arkin v Borchard Lines Ltd  1 W.L.R. 3055 and Davey v Money  1 W.L.R. 1751) was adjourned for further consideration.
In addition to dealing with costs, Norris J also dismissed the Claimants’ application for permission to appeal. In so doing, he held (among other things) that the Claimants had no real prospect of overturning his findings that their claims failed as a matter of causation (because Lloyds would have acquired HBOS in any event), and that the Claimants had failed to establish that they had incurred any loss on the facts (or the quantum of any such loss).
The Consequentials Judgment is here.
Helen Davies QC, Tony Singla and Kyle Lawson acted for Lloyds and each of the five Director Defendants, instructed by Herbert Smith Freehills.