Jersey Unreported Judgments

[2008]JRC079

royal court

(Samedi Division)

21^st May 2008

Advocate A. J. Clarke for First Plaintiff.

Advocate J. D. Kelleher for the Second Plaintiff.

Advocate A. P. Begg for the First Defendant.

Advocate T. V. R. Hanson for the joint liquidators.

judgment

the commissioner:

1.        Yesterday I delivered judgment on the question of the appropriate terms as to costs and otherwise on which the plaintiffs should be permitted to discontinue this action. Advocate Begg seeks leave to appeal from that part of the orders made that involves my refusal of his application for a costs order against the Joint Liquidators of SGI personally.

2.        The single ground of his application for leave is that since the main hearing on 12^th March this year the law concerning the circumstances in which a costs order may be made against a non-party to the proceedings has "moved on", as he put it, as a result of the recent decision of the Court of Appeal in England, handed down on 18^th April 2008, in Dolphin Quays Developments Ltd v Mills and Others [2008] EWCA Civ 385 (the text of which was supplied in a form approved by the court for handing down subject to editorial corrections).

3.        The effect of that decision, submits Mr. Begg, is to render invalid the reliance  placed on the earlier Court of Appeal decision of Metalloy Supplies Ltd v M.A. (U.K.) Ltd. [1997] 1 WLR 1613, by counsel in arguing the point in this court and by me in my ensuing judgment, as authority for the proposition that, in the case of a liquidator, at least, the touchstone for making an order for costs against him personally is that there has been impropriety or bad faith of some kind on his part. In Dolphin Quays, says Mr. Begg, the Court of Appeal (Mummery, Lawrence Collins LJJ and Munby J) declined to treat Metalloy as establishing any such test; he points in particular on a passage in which Lawrence Collins LJ, giving the lead judgment, said: "I do not consider that this decision requires that before a costs order can be made against a liquidator or receiver that [sic] there be impropriety (Waller LJ) or unreasonableness (Millett LJ). On the facts Metalloy required impropriety or unreasonableness because it was concerned with the personal liability of a liquidator where the costs would come out of his own pocket" (paragraph 65).

4.        I confess that I do not, with respect, find it altogether easy to weigh the reasoning in Dolphin Quays (which involved proceedings brought by a receiver rather than a liquidator) as supposedly displacing what appears to me to have been the very clear and cogent views expressed by Waller and Millett LJ in Metalloy in circumstances very similar, in some ways, to those of the present case (if that, indeed, is what Dolphin Quays does, which I am not convinced is the case: the particular passage cited above suggests, on one view, that the court there would not have dissented from the need to show impropriety or bad faith of some kind in the present case, where it is sought to recover costs from liquidators personally.) 

5.        But, on any view, even reading Dolphin Quays in the way that Mr. Begg suggests that it should be read and treating impropriety or bad faith as no more than one factor material to the exercise of a court's discretion rather than a necessary pre-condition (paragraph 66), that decision does nothing to undermine the fundamental principle that exceptional circumstances of some kind are required before it is appropriate to make an order for costs against a non-party and that caution is required before doing so. Approaching the question on this basis, I remain wholly unpersuaded that the circumstances of the present case are such as to make it just that there should be a costs order against the Liquidators personally. Certainly I have criticised their conduct in two respects (in one more so than the other). But I regarded that conduct as falling "well short of the threshold of impropriety discussed in Metalloy" (judgment paragraph 76, with emphasis added for present purposes); I found that they could not be held responsible generally for the lack of progress of the action (paragraph 76 again); and, looking at the matter overall, I do not consider that their failings in the two respects mentioned, either individually or in aggregate, could justify the order sought by Mr. Begg or that there is any realistic prospect of an appeal succeeding. The very considerable need for this litigation now to be brought to a close also makes it undesirable that leave to appeal should be given simply on the basis that there has been a further decision of potential relevance and there might be an outside chance that the Court of Appeal could take a different view of the matter.

6.        For these reasons, the application for leave to appeal is refused.

Authorities

Dolphin Quays Developments Ltd v Mills and Others [2008] EWCA Civ 385.

Metalloy Supplies Ltd v M.A. (U.K.) Ltd. [1997] 1 WLR 1613.