Counsel for a defendant in a civil case concerning the £237m collapse of mini bond issuer London Capital & Finance excused themselves from court on the first hearing day this morning - stating that there was no prospect of their fees being paid.
London Capital & Finance PLC (in administration) and Anor v Thomson and Ors centres on the collapse of London Capital & Finance (LCF) over its ‘misleading’ selling and advertising.
In opening submissions, Stephen Robins KC, for the administrators, said: ‘LCF sold 16,706 bonds to 11,625 members of the public raising a total of over £237m'.
But before opening submissions could begin, Ian Mayes KC, for the first defendant former LCF chief executive Michael Andrew Thomson, stood down. He told the court that ‘despite best efforts’ Thomson, whose property is subject to a freezing order, had been unable to release funds to pay counsel.
Mayes said: ‘Having considered our position under [the] contract and with the benefit of guidance from the Bar Standards Board, we are here as a matter of courtesy and have withdrawn from the case.
‘It is important that we spell out our withdrawal is not caused because we are embarrassed from any instructions by Mr Thomson, we are not. We accepted instructions six weeks ago in quite specific terms of payment for our fees.
‘The payment of legal fees [was] out of the value of the first defendant’s property [which is the] subject of a freezing order. Despite best efforts of instructing solicitors, it has not been possible to turn that into a release of cash for solicitors and legal fees.
‘With regret, we inform [the court] we cannot continue.’
Asked by Mr Justice Miles if counsel would be leaving, Mayes said: ‘With your Lordship’s permission’ before the three barristers packed their bags and filed out of the courtroom.
Defendants Thomson, Simon Hume-Kendall, Elten Barker, Spencer Golding, Paul Careless, Surge Financial Limited, John Russell-Murphy and Robert Sedgwick are alleged to have traded fraudulently. Grosvenor Park Intelligent Investments Limited and Helen Hume-Kendall are alleged to have breached fiduciary duty.
The claimants assert that all the defendants are liable for losses incurred by bondholders.
Money from LCF was used to make payments totalling millions to the defendants, the court was told. Court documents state that the defendants spent the money on properties, investments, luxury travel, private members clubs, jewellery including Rolex and Patek Philippe watches, cars including a Porsche 911 and Rolls Royce Dawn, gold bullion, guns and donations to the Conservative Party.
Hayes said: ‘The only way LCF could ever hope to repay bondholders was by attracting other bondholders. In other words, it was a Ponzi scheme. The borrowing companies were and are unable to repay the loans to LCF, many have gone into administration.’
He told the court that money was ‘funnelled’ from the bondholders to the defendants, adding: ‘Every single borrowing company was connected with the first, second, third and fourth defendants and loans were part of the apparatus to funnelling money from the bondholders to those individuals.
‘Retired people who had invested their life’s savings had to confront the reality that they had lost everything. Disabled people, and incapacitated people, who had no prospect of earning ever again, were saddened and angered by the fact that they had been deceived.’
The trial, which is expected to last 20 weeks, continues.
