Claim for DAG lawyers SoA legal costs

We feel it is appropriate to make a statement on the claim for approximately £346,000 of legal costs incurred by DAG’s lawyers in resisting the SoA that is referred to in the recent CoI minutes, to clarify some apparent misunderstandings on this issue.

DAG has done, and continues to do, its best to ensure that depositors and bondholders are treated fairly, justly and lawfully. In the case of the SoA, DAG was entirely successful, but our lawyers incurred massive legal costs.

We apologise if this re-covers old ground for many readers, but some points seem to bear repeating. In that context, we draw your attention to the following:

1. DAG made an application to the court for its legal costs incurred in resisting the SoA to be paid by IOMT and for our bank’s costs similarly to be paid by IOMT. Curiously the bank (our liquidators) did not wish to recover its costs from the IOMT and the IOMT opposed DAG’s application that it pay DAG’s costs, and the result was that the court made an order that the bank itself pay DAG’s costs notwithstanding that IOMT had previously stated they would ‘cover all associated costs of the SoA’. It should be noted that the costs order did not, quite inexplicably, cover the costs of the hearing of DAG’s successful application which gave rise to the costs order itself, and that hearing required the attendance of DAG’s Counsel and generated further considerable (unrecoverable) costs.

2. The amount of DAG’s costs to be paid has yet to be agreed between the parties or determined by the court and may be less than £346k. At most it represents about 0.035% of the sum owed to KSFIOM’s creditors and is far less than the fees being run up by the JL’s and their advisors. It represents most of the fees of Edwin Coe, DAG’s London legal advisors, local Manx counsel, and DAG’s QC, Dominic Chambers. If the costs have to be determined by the court, because they cannot be agreed, the process is likely to take a further 6 months.

3. All of the funds recovered will be used to settle the lawyers' bills. Amounts paid by DAG to date will be applied towards costs incurred in connection with this matter, which the court did not award to DAG. It is extremely unlikely there will be any surplus. The assumption that the lawyers have already been fully paid is incorrect.

4. Contributions to the fighting fund did not reach anything like the figure of £346k and thus were never going to be sufficient to cover even the recoverable portion of DAG's SoA-related legal fees, let alone DAG’s other legal costs and other costs

5. It should be made clear that not all DAG's legal expenses have been related to the SOA (e.g. – and this list is not exhaustive - there have been issues investigated surrounding the assignment (or otherwise) of depositors’ rights under the EPS and DCS arrangements, an analysis of the position of Derbyshire BS depositors and of course the PG situation, which has been pre-funded by DAG).

6. From June 2010, the DAG/DST made a new appeal for donations from those who wish to continue the political fight. As stated previously when any new actions or activities are initiated they will be funded separately and uniquely

7. It is extremely unlikely that at the end of 2 years there will be any money in the DAG.