​The defendant applicants succeeded in their application for the stay of civil proceedings in the Commercial Court, until the parallel criminal trial brought by the Serious Fraud Office in the Crown Court had concluded.

In the case of PCP Capital Partners and others v Barclays Bank PLC [2017] EWHC 2897 (Comm), the defendant applicants succeeded in their application for the stay of civil proceedings in the Commercial Court, until the parallel criminal trial brought by the Serious Fraud Office (SFO) in the Crown Court had concluded.

Background

The Defendant in the civil proceedings requested a stay of the Commercial Court trial in order to allow the Crown Court trial to take place first. A co-defendant in those Crown Court proceedings also applied for a stay. The applications were supported by the SFO. The Claimants in the civil proceedings opposed the applications.

The two sets of proceedings arise out of the same underlying facts, namely the capital raisings undertaken by Barclays during the financial crisis in 2008. Part of the hearing had to be held in private due to the highly confidential and sensitive nature of certain matters that overlap between the civil and criminal proceedings, meaning we are unable to discuss the facts in detail in this article.

The Commercial Court trial was due to commence in January 2018 with an estimated length of eight weeks. The Crown Court trial is due to commence in January 2019, with an estimate of 12 to 16 weeks. The Commercial Court had taken its decision to list the civil trial so as to occur first, at a time before a charging decision was made by the SFO (which occurred in June 2017).

The Civil Court’s jurisdiction to grant a stay

The court has discretion to stay civil proceedings until related criminal proceedings have been determined, if justice requires it (Jefferson Limited v Bhetcha [1979] 1 WLR 898). For further discussion on the requirements for a stay, please refer to this article.

The Defendant submitted that the test should be considered in three stages as follows:

  1. The court must be satisfied there is a sufficient overlap between the issues raised in the civil and criminal proceedings (Re DPR Futures [1989] 1 WLR 778).
  2. Where such an overlap does exist, the court must consider whether there is a real risk of serious prejudice which may lead to injustice in relation to the criminal and/or civil proceedings (R v Panel on Takeover and Mergers, ex p Fayed [1992] BCC 524). Proceedings should not be stayed if safeguards can be imposed which provide sufficient protection against the risk of injustice (Re DPR Futures).
  3. The court has to balance justice as between the parties (Jefferson).

The court firstly needed to satisfy itself that there is a sufficient overlap between the civil and criminal proceedings in terms of the issues to be determined (Re DPR Futures [1989] 1 WLR 778). The Judge found that there was a “very significant” overlap between the two sets of proceedings, noting that:

“Both trials will traverse in detail events and statements at a time of great consequence for all institutions and individuals involved. Both trials will examine the reasons for and the purpose of statements and actions, where made or undertaken. Both trials will examine responsibilities for what was or was not said or done, and levels of information and states of mind.”

Further, the Claimants had submitted that the Judge should analyse the overlap at a more granular level (specifically, in terms of an overlap not just in issues but also in witnesses). Knowles J disagreed and commented that in his judgment on this particular application: “it is the wood rather than the trees that matters more, together with the importance of giving margin for the reality of the eventual compass of evidence”.

Real risk of jury contamination or witness contamination

These two distinct, albeit related, risks formed the basis of the applications to stay the civil proceedings.

The Judge acknowledged that the Commercial Court trial (and resulting judgment) would likely attract heavy reporting, given the connection between this case and the financial crisis, the serious allegations made and the high value of the sums claimed. Although jurors would no doubt be directed to leave press reports out of consideration, Knowles J found that there was a “real risk” that the jury’s already complex task would be made more difficult still by publicity surrounding an earlier Commercial Court trial, the outcome of that trial as contained in a judgment, and that the current application allowed consideration of how to manage that risk before it arose.

The Judge also took account of witness contamination issues arising: a civil trial that takes place before a criminal trial risks adding materially to the accounts that the defendants and witnesses have given or may give.

Safeguards

The applicants submitted that safeguards would not provide sufficient protection against the risk of injustice. The Judge considered the safeguards were insufficient to meet the risks posed, but did not deal with this explicitly in his judgment.

Generally, a court will be reluctant to order a stay of proceedings if alternative safeguards can be imposed to mitigate against the risk of concurrent criminal proceedings. Some examples include:

  • orders restricting reporting of proceedings
  • orders restricting access to documents
  • orders that the Civil Court will sit in private, and
  • orders embargoing the civil judgment until the conclusion of the criminal proceedings.

The court’s balancing exercise

The court only reaches this stage where real risk of serious prejudice which may lead to injustice exists, and safeguards are insufficient to provide protection against that risk.

Knowles J emphasised he would take the approach that “best serves the interests of justice”, and acknowledged that “delay is not lightly to be contemplated”. He applied the overriding objective in the Civil Procedure Rules and the Criminal Procedure Rules.

The Judge ruled that the opportunity should be given to the SFO to complete the trial in the Crown Court (starting in January 2019), and that the start of the trial in the Commercial Court should be postponed to the beginning of October 2019. In doing so he took into account the impact of such a stay on the Claimants and concluded that this adjournment would provide the Claimants with a trial and judgment within a reasonable time, even if not as early as they had expected.

The Claimants sought permission to appeal this decision, however the Court of Appeal rejected permission for an appeal on the basis that the judge had not erred in law, had taken account of relevant factors, had given his reasons, and that - as a valid case management decision - his adjournment of the civil trial should not be the subject of an appeal.

Takeaway points

In practice, the bar to obtaining a stay of proceedings is very high. To use the “related criminal proceedings” test, there must be a sufficient overlap between the issues in the criminal prosecution and the civil litigation. This will depend on the specific facts of the application. In an appropriate case, courts will exercise their case management powers.

It is also often possible to conduct most, if not all, pre-trial steps in parallel. In the case discussed above, the majority of pre-trial steps had already been taken (eg pleadings, disclosure, witness evidence). The court ruled that any other of such steps should continue to take place according to the previously ordered timetable, even though the trial itself should be adjourned. However, different considerations arise where the civil process approaches trial, such that concerns over witness contamination and jury contamination may justify an adjournment in appropriate cases.