Judge says recusal hearing in Madoff case would be ‘waste of court time’
High Court still has to deal with outstanding restitution and constitutional claims
Accused $50 billion Ponzi scheme swindler Bernard Madoff exits federal court on March 10th, 2009, in New York City. Photograph: Mario Tama/Getty Images
A High Court judge has said it would be “a complete waste of court time” to spend up to five days hearing an application aimed at having him cease hearing a case related to the Ponzi scheme run by jailed US fraudster Bernie Madoff.
Mr Justice Michael Twomey has adjourned generally the recusal application from a British Virgin Islands (BVI) registered investment fund, Defender, pending its appeal over his December 4th decision halting its $141 million (€124 million) damages claim against Dublin-registered HSBC Institutional Trust Services Ireland Ltd (HITSI).
In its case against HITSI, Defender claims, among other things, negligence and breach of contract arising from HSBC’s alleged role as a custodian of funds lost as a result of fraud by its alleged sub-custodian, Bernie L Madoff Securities LLC.
On December 4th, Mr Justice Twomey ruled, because Defender had already settled its claim against Madoff for loss of its investment, it could not also pursue its damages claim against HITSI.
While the December 4th decision ended the claim for damages, the court still has to deal with outstanding restitution and constitutional claims. In the course of his decision, the judge said it was difficult to escape the impression that five months of court time was being sought in this case, not because the dispute could not be solved in a much shorter time, but because of the sums at stake and because the parties can afford to pay their own lawyers and therefore use up valuable court resources to resolve essentially a “private dispute”.
Defender has appealed that decision and has separately applied to the judge to recuse himself from further hearing the case.
On Friday, the judge it would be a waste of time to spend three to five days on a recusal application when there was an appeal pending in the Court of Appeal over his damages ruling.
He said, “because it seems of the contents of that judgment of 4th December”, Defender sought his recusal even before the Court of Appeal was determined, or before a possible further appeal to the Supreme Court.
The date when these proceedings return to the High Court is likely to be two or more years in the future, unless the parties get an expedited appeal in the Court of Appeal or a leap frog appeal to the Supreme Court, in which case it is still likely to be many months into the future, he said.
Equally, and this was a relevant point when considering efficient use of court resources, it was possible that, for other reasons, for example if the matter was settled, the case might not come back before the High Court at all.
The court believes it “should make every effort to avoid using scarce publicly funded resources” given the pressures on those resources and when the Republic is at the bottom of the European league table when it comes to the number of judges per capita, he said. He therefore adjourned the recusal application generally. The parties may apply to the court should there be any further developments under the terms of his order.