A class action brought against two insurance firms could potentially incur the highest ever costs for a case heard before the Manx courts.
Over 1,500 claimants have lodged claims, which total more than £270m, against Utmost International and Friends Provident International.
Due to the number of claimants and possible court time and costs, Deemster Alan Gough said: ‘Undoubtedly this case is going to be one of the most costly ever before the Isle of Man courts, if not the most costly.”
Claims
The claimants allege adviser-brokers received undisclosed secret commissions or commissions that were not fully disclosed as to their magnitude or method of calculation.
Some commissions were allegedly received from third-party funds. The claimants argue these practices breached fiduciary duties and seek rescission of the contracts, equitable compensation and damages.
Many of the investments failed and the claimants have suffered losses. They seek, in the main, rescission of the contracts, equitable compensation and damages.
The claimants say that the companies have been “stonewalling” throughout the litigation process, failing to engage constructively and have delayed key steps in the progress of the case.
The companies deny this.
Management
During the case management hearing, Deemster Gough considered whether to adopt a Group Litigation Order (GLO) or proceed with test claims.
He concluded that a GLO was not appropriate, saying, “I do not think that a GLO is suitable in this case because of the risk of unfairness to the Defendants, especially in relation to the non-test claims.”
Instead, he opted for a test claimant approach, recommending “the selection of a limited number of test claimants and a trial to a finding of liability (or not) with a pre-agreed (or mandated) list of common issues”.
The findings from the test trial would help manage the remaining claims.
The claimants have expressed concerns about the defendants’ engagement in the litigation process, accusing them of delays.
The companies however emphasised the need for individual assessments due to the unique facts of each claim.
Christopher Griffin, head of legal for Utmost, said: “Each of these claims is an individual claim which will need to be determined by reference to the individual circumstances and facts surrounding each claim.”
Deemster Gough did not find this position helpful, saying, “Even the skeleton arguments of the Defendants indicate a recognition that there are some common issues.”
Costs
The ruling also highlighted concerns over the potential legal costs, noting a figure of £11 million.
The Deemster underscored the importance of efficiency when selecting the test cases.
He said: “Undoubtedly this case is going to be one of the most costly ever before the Isle of Man courts, if not the most costly. I have seen mentioned a global figure of £11 million.
“That is a staggering amount for costs and, as is often the case, disclosure promises to be one of the most time-consuming and expensive exercises in the trial process.
“I have an obligation, where possible, to ensure that costs are not unnecessarily incurred, or caused to be incurred, in the prosecution or the defence of claims.”
The Deemster ordered the preparation of a questionnaire to select 20 test claimants and directed the parties to agree on a list of common issues for the test trial. Disputes over these issues will be resolved by the court if necessary.
Further procedural steps, including setting trial dates for the test claims, are expected in the coming months.
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