Jersey Unreported Judgments

[2003]JRC003

royal court

(Samedi Division)

 

9^th January 2003 

 

 

 

 

 

Appeal under Rule 15/2 of the Royal Court Rules, 1992, as amended from the interlocutory order made by the Master of the Royal Court on the 30^th September, 2002, whereby:

(1)   the Defendants' application for specific discovery was dismissed save to the extent that the Plaintiffs accede thereto as detailed in the affidavit of Francis John Callaghan sworn on 6^th September, 2002; and

(2)   the Defendants were ordered to pay to the Plaintiffs' the costs of the application [for specific discovery] on the standard basis.

 

 

Advocate N.J. Chapman for the Defendants.

Advocate A.J.D. Winchester for the Plaintiffs.

 

 

judgment

 

the deputy bailiff:

1.        The application before us this morning is an appeal by the defendants against a decision of the Master given on 30^th September 2002 when he refused specific discovery against the plaintiffs.  The appeal was due to be heard on 12^th November but was adjourned until today because of Advocate Winchester's illness.

2.        There is a complex background but we can summarise it briefly as follows.  In 1979 Takilla Limited, the first plaintiff, purchased a property known as Eulah, Mont Cochon, St. Helier from Ernest Farley and Sons Limited.  It apparently intended to develop Eulah as a (1)(1)K residence.  Ernest Farley retained the adjoining land and built a block of flats on that land which overlooked Takilla's property, thereby, it is said, leading to a diminution in its value.

3.        Takilla brought an action ("the first action") against Ernest Farley alleging breach of a restrictive covenant contained in the deed of sale.  This action was dismissed by the Court of Appeal on 11^th May 1989 on the grounds that the block of flats had not been built in breach of the terms of the covenant. 

4.        A second action was commenced immediately afterwards by Takilla against Ernest Farley alleging misrepresentation on the part of Ernest Farley as vendor at the time of the sale concerning the nature of the block of flats that was to be built.  This second action was struck out by the Court of Appeal in February 1992 as an abuse of process on the grounds that such matters should have been raised in the first action. 

5.        In June 1992 the plaintiffs then instituted an action ("the third action") against their previous legal advisors, namely Mr Andrew Green and Messrs Fiott and Huelin, alleging negligence in connection with the purchase of the property and in the way in which the litigation in the first two actions had been handled.  The defendants acted for all three plaintiffs in the third action.  From May 1995 onwards, the second and third plaintiffs were granted a legal aid certificate.  On 9^th November 1998 the third action was struck out for want of prosecution. 

6.        Accordingly, on 10^th February 1999 the present proceedings were started.  In effect, the plaintiffs contend that the third action was dismissed because of the professional negligence of the defendants as their legal advisors in the third action.  They claim the sums which they say they would have recovered in the third action against Mr Green and Messrs Fiott and Huelin. Alternatively they claim for the loss of the chance of succeeding in that action. 

7.        The defendants deny that they were negligent.  They claim that any loss was caused or contributed to by the negligence of the plaintiffs, or, alternatively, the plaintiffs consented to the acts and omissions of which they now complain.  Alternatively, the defendants state that they ceased working for the plaintiffs because of non-payment of outstanding legal fees.  Furthermore they contend that the third action would have failed in any event; so the plaintiffs have suffered no loss.  Finally, they counterclaim for outstanding legal fees in relation to the third action of just over £14,500 together with additional fees which have not yet been formally quantified. 

8.        The action was set down for hearing on 4^th July, 2001 and the usual orders for discovery were made.  An affidavit of discovery was filed on behalf of the plaintiffs at the beginning of December, 2001.  On 18^th June, 2002 the defendants issued a summons seeking specific discovery of the documents listed in the summons which is before us. 

9.        We must consider, first, the general approach in such applications.  The law relating to applications for specific discovery following general discovery was authoritatively dealt with by the Court of Appeal in Victor Hanby Associates -v- Oliver [1990] JLR 337.  The key passage is contained in the judgment of Chadwick JA at page 350 when he said as follows:

"A party seeking further discovery after an affidavit has been made following under r.6/16(1), must persuade the court that, despite the affidavit, his opponent has not complied with the order.  It seems to us that it must be necessary, in these circumstances, for the party seeking further discovery to show, by evidence on oath, not only a prima facie case that his opponent has, or has had, documents which have not been disclosed, but also that those documents must be relevant to matters in issue in the action.  The court must be satisfied that the documents will contain information which may enable the party applying for discovery to advance his case, damage that of his opponent, or lead to a train of enquiry which may have either of those consequences.  It is not enough to show only that the documents may be relevant in the sense described.  A court faced with evidence which establishes no more than that the documents may or may not be relevant would not be entitled to disregard the oath of the party who, having (ex hypothesi) seen and examined the documents with the assistance of his advocate, has sworn, in effect, that they are not relevant.

We should add that, even where a prima facie case of possession and relevance is made out, an order for specific discovery should not follow as a matter of course.  The court will still need to ask itself the question whether an order for specific discovery is necessary for disposing fairly of the cause or matter."

The test, therefore, is different to that which applies on initial discovery.

10.      The summons seeks specific discovery of nine categories of documents.  In fact, by the date of the hearing before the Master the plaintiffs had agreed to give further discovery in certain areas.  The Master agreed that the plaintiffs should give specific discovery as set out in Mr Callaghan's affidavit, but we have to say that the scope of that order is not entirely clear, having regard to the contents of the affidavit and we therefore propose to consider each class of documents in turn.

11.      Before doing so we would make this comment:  this is ultimately a claim about whether Mr Green and Messrs Fiott and Huelin were negligent, or alternatively about the chances of their being held to be negligent, when acting in the purchase of the property and in their conduct of the initial litigation.  There is then the question of the loss that has been suffered by any of the plaintiffs. 

12.      On the face of it, if Takilla is put back in the position in which it would have been but for the negligence, if proved, of Mr Green or Fiott and Huelin, there would not appear to be any additional loss suffered by Mr or Mrs Callaghan, although it is right to say we do not have the full picture.  We should add that Mrs Callaghan has died since the events in question. 

13.      Ultimately, it does not seem to us that the case is that complicated.  It has been going on for far too long and it should be brought to trial as soon as possible.  Our approach, certainly, is that we should only order discovery in this case where we are satisfied that it is necessary to dispose fairly of the matter and we have in mind the final comment from the judgment of Chadwick JA to which we have referred. 

14.      We should also say this:  having referred to Hanby, the Master stated that a considerable number of the requests were in the most general terms and sought the disclosure of unspecified and almost unlimited documents of various descriptions from 1979 to date.  He said that, on that basis alone, the application failed the Hanby test.  He did not consider the nine categories of documents individually.  In that, we think that he fell into error and adopted too general an approach.  In our judgment one must consider each of the nine requests separately in the light of the principles laid down in Hanby and that is what we propose to do.

15.      The first category sought is as follows.

"(i) statements of any account whether in the plaintiffs own names, or in the name of Mrs Maureen Callaghan, or any of the plaintiffs, or in the names of any nominee of any of the foregoing, or in which any of the plaintiffs or Mrs Maureen Callaghan have, or have had, an interest, or a right to draw upon and held at any bank, building society or any other financial institution between the dates 1979 to 1998." 

16.      There is no doubt that these documents have, at one stage, existed.  They clearly have been in the possession of the plaintiffs in the past.  The question is whether they are relevant to the proceedings.  The defendants say that they are for a number of reasons:

(i)        They will establish whether Mr Callaghan made the loans pleaded in the amended Order of Justice and further and better particulars - in particular, see paragraph 11(v), 12(v) and (ix) of the amended Order of Justice and the schedule of loans attached to the answer to the request for further and better particulars. 

(ii)       They would establish whether Takilla made the payments referred to in paragraph 12(viii) of the amended Order of Justice as expanded in paragraphs 35-38 of the plaintiffs answer to the request for further and better particulars. 

(iii)      The source of any funds is relevant to establish whether Takilla is the alter-ego of Mr Callaghan.

(iv)      The statements of Takilla would show whether or not Takilla was in a financial position to repay Mr Callaghan as is pleaded by him. 

(v)       The statements of Mr and Mrs Callaghan are relevant to the counterclaim because they go to the question of whether the fees charged were reasonable, having regard to Mr and Mrs Callaghan's financial position.

(vi)      The statements of Mr and Mrs Callaghan are relevant in order to show their resources and this might show that they were in fact able to pay the defendants' fees when invoiced.  If they were, this would justify the defendants in ceasing to work for the plaintiffs.

17.      Mr Callaghan alleges in the order of justice that Takilla was not in a financial to repay his loans.  It seems to us clear beyond doubt, therefore, that documents relating to the financial position of Takilla are relevant to whether that allegation is correct or not.  We therefore order discovery of all bank statements of Takilla.

18.      As to Mr Callaghan's bank statements, he alleges that he has provided certain loans in the passages in the pleadings to which we have referred.  These are specific transactions upon which he relies.  It seems to us, again, clear beyond doubt, that documents relating to those specific transactions are clearly relevant to these proceedings.  We therefore order discovery of the bank statements which relate to those pleaded transactions. 

19.      As to all the other bank statements of Mr Callaghan and those of Mrs Callaghan or on which they have signing power, we consider that this application is far too wide.  The only relevance relied upon is in respect of the last two matters which we have mentioned, namely whether the fees charged were reasonable and whether the defendants were entitled to stop acting for the plaintiffs.

20.      The question of reasonableness of fees falls into two categories in a case like this.  First, there is the normal question of whether the time spent has been excessive and whether the rate charged was reasonable.  Those are ultimately matters for the Court.  But in the case of a legally aided client there is a separate issue, namely, even assuming that the first aspect is made out, how much would it be reasonable for the client to pay, having regard to his means?  Indeed, that is what is said on the legal aid certificate, where it is said that the advocate is entitled to charge a reasonable fee for his services depending upon the client's financial resources. 

21.      It further says that, in the event of any dispute, the matter is to be referred for adjudication by the Bâtonnier.  It is the Bâtonnier who administers the legal aid system, not the Court.  It is for the Bâtonnier to decide whether fees put forward by a firm to a legally aided client are reasonable, having regard to the financial position of the client.  We are told that, in this case, the Bâtonnier has refused so to adjudicate.  If that is the right we consider that the Bâtonnier was mistaken.  It is his duty to adjudicate upon the fees which are reasonable for a legally aided client to pay, having regard to the means of that client.  That is not a task for the Court.

22.      Accordingly, we do not see that the overall financial position of Mr Callaghan and Mrs Callaghan is relevant to the issues before the Court and we therefore do not make an order for discovery of their bank accounts, other than the Limited discovery in respect of Mr Callaghan's bank accounts to which we have already referred.

23.      The second category of documents sought is as follows:

"(ii) all documents and in particular all files, ledgers, records, memoranda, correspondence, attendance notes and loan applications forms relating to the provision of finance to all or any of the plaintiffs or Mrs Maureen Callaghan between January 1979 and the date hereof". 

24.      The defendants say that this information is relevant in order to establish the true financial resources of Mr and Mrs Callaghan.  For the same reason we have given in relation to the first category we do not consider that it is necessary, in order fairly to dispose of this matter, for the overall financial position of Mr and Mrs Callaghan to be ascertained and we do not see, therefore, that the documents should be disclosed.  However, there is evidence before us that Takilla has given certain guarantees that would affect the financial position of Takilla and, for the reason which we have given previously, the financial position of Takilla is material. Accordingly, we order discovery of any guarantees issued by Takilla.  To that extent only we grant the application in relation to the second category of the documents. 

25.      The third category sought is as follows:

"(iii) documents relating to the second plaintiff's (Mr Callaghan) property ventures in the United Kingdom and which the second plaintiff alleges that Mr Green would have seen or had knowledge of."

26.      This is said to be relevant because it is pleaded by the plaintiffs that Mr Green was told of Mr Callaghan's previous property dealing activities in the United Kingdom and knew, therefore, that Takilla intended to buy, develop and sell on the property in this case, rather than keep it.  Advocate Winchester has undertaken to supply to the defendants a list of the companies involved in Mr Callaghan's property ventures together with brief details of the nature of those developments.  In the light of that, we do not consider that the fair disposal of this case requires production of documents relating to many different transactions which really have nothing to do with this case whatsoever.  We therefore refuse to order discovery of this category.

27.      The fourth category is as follows:

"(iv) any curriculum vitae or professional qualifications of the second plaintiff."

That application has been withdrawn in the light of the information provided in Mr Callaghan's affidavit concerning his qualifications. 

28.      The fifth category is as follows:

"(v) all plans (except no.326/12), whether formally submitted or otherwise, and any planning applications relating to the property Eulah from January 1979 to the date hereof."

29.      The defendants say that these plans are relevant in order to test the allegation on the part of the plaintiffs that the plaintiffs intended to develop and sell on the property as a (1)(1)K residence.  Clearly these plans have existed and therefore that part of the Hanby test is met.  In our judgment, such plans can only be relevant for a limited period.  Circumstances change and applications made many years later cannot conceivably be of any relevance concerning the intention of the plaintiffs at the time that the property was purchased in 1979.  In our judgement, taking a broad view, we order that all plans prepared up to 30^th June 1984 should be disclosed but not thereafter. 

30.      Mr Chapman in reply said that such plans would also be relevant concerning the question of whether the plaintiffs had mitigated any loss. In particular he referred to paragraph 12(viii) of the amended Order of Justice where it is alleged that specific works were carried out in order to mitigate the position.  We agree that, in the light of the pleadings, the plans for those particular works are relevant and accordingly we also order discovery of plans for the works referred to in paragraph 12(viii)(a) & (b) of the amended Order of Justice.

31.      The next category is as follows:

"(vi) any documentation passing between any of the plaintiffs or Mrs Maureen Callaghan and architects or other professionals relating to works executed upon Eulah between January 1979 and the date hereof and, in particular, documents containing any instructions by any of the plaintiffs or Mrs Maureen Callaghan as to the works that should be carried out or advice by such professionals as to any works upon Eulah."

32.      In our judgment exactly the same principles apply in relation to this category of documents as apply in relation to the previous category.  Accordingly, we order discovery of any correspondence falling within this category up to 30^th June 1984 and any correspondence relating to the developments listed at paragraph 12(viii) of the amended Order of Justice.

33.       We should add that, on this aspect, the plaintiff has asserted he does not have any such correspondence but he admits that it has existed.  It should, therefore, be listed.  This will, of course, identify the relevant architects and enable enquiries to be made of those architects.

34.      The seventh category of documents sought is as follows: 

"(vii) a copy of the housing application form and the grant of consent in respect of the purchase and occupation of Eulah by Takilla Limited."

That was conceded before the Master and was similarly conceded before us today.  We therefore make an order for its discovery.

35.      The eighth category is as follows: 

"(viii) any documentation pertaining to the beneficial ownership of Takilla Limited between 1979 and the date hereof and, without prejudice to the generality of the foregoing, the minutes of the directors' meeting of 8^th February 1990 and any agreement or correspondence between Mr Shearstone and any of the plaintiffs." 

Mr Winchester accepted before the Master and accepts before us that evidence as to the beneficial ownership of Takilla Limited is clearly relevant.  We therefore make an order for discovery in the terms requested.  Such documents clearly exist, although there has been some difficulty in tracking them down, but they are now thought to be with a firm of accountants. 

36.      The ninth category is as follows:

"(ix) the books of account, tax returns and other documentation pertaining to the financial standing of the first plaintiff, Takilla Limited, from January 1979 to the date hereof." 

For the same reasons we have given in relation to the first category, the financial position of Takilla is relevant.  It seems to us, therefore, that these documents are clearly similarly relevant because they go to Takilla's financial position.  They clearly exist or have existed and we therefore make an order for discovery as requested.

37.      The tenth category is as follows:

"(x) all documentation, including correspondence and advertisements, relating to any attempt by any of the plaintiffs, their servants or agents, to sell Eulah, whether by means of share transfer or otherwise from 1979 to the date hereof." 

That application was conceded both before the Master and before us and we make an order accordingly.

38.      Finally, the eleventh category is as follows:

"(xi) the tax returns and any other documentation pertaining to the financial standing of (1) the second plaintiff, Mr Callaghan, and (2) Mrs Maureen Callaghan and, without prejudice to the generality of the foregoing, documents relating to the existence or value of any interest (whether directly or indirectly) in any account, trust, pension scheme, endowment, property, company or in any other asset from January 1979 to the date hereof." 

39.      This is an extraordinarily wide ranging application seeking full details of any document relating to the financial position of Mr Callaghan and the late Mrs Callaghan.  In our judgment it is far too wide.  Furthermore, for the reasons given in relation to the first category, we do not consider that the financial position of Mr Callaghan and Mrs Callaghan is relevant.  Even if we are wrong in this and it is of marginal relevance, we do not think that, applying the last part of the dicta of Chadwick JA, the fair disposal of this case requires discovery of such a wide category of documents.  We therefore refuse this application.

40.      We should that, in relation to the bank statements, there is some issue as to whether they will now be obtainable.  Applying the Hanby test they clearly did exist.  By listing them, the relevant bank could be identified because they were in the possession of the plaintiffs.  Enquiries can then be made of the bank as to whether or not they can be obtained.

41.      Finally, we revert to what we have said earlier.  In our judgment this case cries out for progress.  This matter has been hanging over everyone far too long, given the large number of actions - even this latest action commenced in 1999 and has now therefore been going for nearly four years.  We were informed that a summons for directions has been fixed and is to be heard before the Master following the conclusion of this appeal.  We urge that the summons for directions be heard as soon as possible and we would invite the Master to make stringent directions to ensure that this matter is brought to an early trial.

42.      We therefore allow the appeal to the extent that we have described in this judgment.   

Authorities

Victor Hanby Associates Ltd -v- Oliver [1990] JLR 100.