By David Young-
International firm, Dechert, has agreed to make a payment of £20 million in interim costs to the Eurasian Natural Resources Corporation (ERNC) – a public, Kazakhstan/Central African-focused, multinational leading diversified natural resources company headquartered in London. Its activities includes integrated mining, processing, energy, logistics and marketing
They agreed to make the payment on account of costs, by September 1 latest.
In a High Court Hearing on Wednesday, Mr Justice Waksman found that Gerrard, a former Metropolitan Police officer, was ‘negligent and for the most part reckless’ in unnecessarily expanding his investigation into the mining giant’s operations in Kazakhstan and the Democratic Republic of Congo.
Mr Gerrard, formerly a member of Dechert’s senior management body (the so-called “Policy Committee”), emerged as a thoroughly dishonest, opportunistic and exploitative individual. He is revealed as a “volatile” and unsavoury character who “could and did use words like ‘fuckers’” (including to describe his own clients), and was even capable of describing himself as being “in rape mode” (§409) as he sought to maximise billings on the ENRC matter.
The former partner, who retired at the end of 2020, was also found to be negligent in relation to his failure to record his advice in writing, giving incorrect advice about ENRC’s potential criminal liability and failing to determine the scope of the SFO’s concerns about the then-FTSE 100 company.
It comes after an original High Court finding in May that Dechert, its former white-collar crime head Gerrard, and the Serious Fraud Office had committed acts of wrongdoing in their dealings with ENRC as a client The case brought the curtains down on proceedings which lasted a decade.
Leak
Mr Gerrard leaked privileged material to the press and gave ENRC advice that was “completely exaggerated” and no more than “scaremongering” , in an attempt to procure more lucrative work for Dechert. Despite knowing full well that he could not possibly have been acting properly, the SFO’s former Director, Richard Alderman, and former Interim Director, Mark Thompson, repeatedly engaged in “conspiratorial whispers” (§573) with Mr Gerrard, encouraging ENRC’s own lawyer to provide “intelligence” behind ENRC’s back.
In a hearing on Wednesday at the U.K. High Court of Justice, ENRC’s representative Nathan Pillow QC stated that Dechert has agreed to pay the amount by 1 September 2022.
Some elements of the claim for misfeasance in public office were established, they were ‘not sufficient to make out the tort itself’.
The High Court case established that the former police officer, Mr Gerrard, “lied continuously” (§433), and two SFO officers including Mr Thompson were equally prepared to give dishonest evidence, in an effort to avoid the truth coming to light.
Dechert and the SFO rejected multiple invitations by ENRC to resolve the claims without the need for litigation. The SFO was previously ordered to pay ENRC £1.6 million in costs following its unsuccessful privilege challenge. ENRC will now be seeking costs orders against both Dechert and the SFO.
Dechert’s management has consistently maintained that ENRC’s allegations were a work of “fiction, not to say fantasy”, and the SFO Director, Lisa Osofsky, argued that the claims were “hopeless” and “should never have been pleaded”. In reality, ENRC was the victim of the most serious wrongdoing, including “gross and deliberate breach of duty” on the part of the defendants. The unlawful conduct of the SFO, Dechert and Mr Gerrard has caused ENRC immense reputational and financial damage over the course of the past decade.
A further trial is expected in due course to determine issues of causation and quantification of loss and any contribution claims between Dechert, Gerrard and the SFO.
ENRC is seeking indemnity costs from Dechert and Gerrard on the basis of the parties’ ‘aggressive resistance, unreasonable and uncooperative conduct and, most seriously, dishonesty’.
Nathan Pillow QC, for ENRC, told the court that Dechert and Gerrard’s defence was ‘based on lies from start to finish’.
Serious Professional Misconduct
‘Mr Gerrard and therefore Dechert, vicariously and through his knowledge, knew that ENRC’s case was essentially true and that he had committed some of the most serious professional misconduct an officer of this court could commit,’ he said.
Pillow said Dechert has ‘belatedly parted company with Mr Gerrard’, but added: ‘It does not disguise the fact that until June … they were standing shoulder to shoulder.’
He argued in written submissions that Dechert and Gerrard’s conduct is ‘further aggravated by the fact that [they] are solicitors and so are to be held to a more demanding standard of conduct than an ordinary litigant’.
Dechert accepts that liability for costs as between it and Gerrard ‘should be on a joint and several liability basis’, but argues the court should not order indemnity costs as it would deny the firm ‘the opportunity to examine the proportionality of the costs claimed by ENRC’.
Andrew Onslow QC, for Dechert, said ENRC’s total costs for its claim against Dechert and Gerrard ‘could well be in the region of £50m’, which he compared to the approximately £26m quantum of the claim and Dechert and Gerrard’s previously-forecast costs of £37.5m.
‘It is immediately obvious that ENRC’s likely level of costs vastly exceeds any potential recovery in damages,’ he said in his skeleton argument. ‘Yet an award of indemnity costs will deny Dechert any scrutiny of the proportionality of the totality of costs claimed.’
Michal Hain, for Gerrard, also said that indemnity costs are inappropriate, arguing that ‘the underlying breaches of duty that gave rise to the proceedings in the first place … are irrelevant’ as opposed to the conduct of the litigation itself
The ENRC first sought £21.5 million prior to agreement, and stated in its skeleton argument on Wednesday, that the ENRC “will not seek any further interim payment from Dechert or Gerrard in respect of costs… incurred up to the consequentials order, pending assessment of those costs.
A spokesperson for ENRC referred The Eye.Com to its statement about its efforts to settle the case out of court.
It read: “We repeatedly urged both Dechert and the SFO to examine the evidence, and to draw the obvious conclusions. At every turn, we were rebuffed, and both Dechert’s and the SFO’s leadership chose, at great expense, to defend the indefensible. As much as ENRC welcomes today’s judgment, it is also profoundly concerned by the very serious implications for other Dechert clients and other subjects of SFO investigations