Jersey Unreported Judgments

[2008]JRC214

royal court

(Samedi Division)

12^th December 2008

Advocate N. F. Journeaux for the Second Plaintiff.

Mr Weston as Director of the Defendant.

judgment

the deputy bailiff:

1.        This is a further application by the defendant ("Admatch") for an order that the second plaintiff (Leeds 2007) should provide security for costs.    I announced my decision on 4^th December and now give my reasons.

2.        In a Judgment delivered on 21^st August, 2008, Leeds-v-Admatch [2008] JRC 141 ("the August Judgment") I awarded security for costs for the period to 17^th January, 2008, in the sum of £88,500 and the application now is for security to cover the period from 18^th January, 2008, until the conclusion of the trial, which has now been fixed for 5^th May, 2009.

3.        The August Judgment sets out the background to this matter and I do not intend to repeat it.  Furthermore that Judgment dealt with a number of legal issues which have not been re-argued, the parties accepting that I should proceed on the basis of the rulings in that Judgment.  The August Judgment also lays down a general method which I adopted in calculating the amount of security for costs.  Having held that Admatch should be treated as a litigant in person, I held that its 'actual pecuniary loss', (RCR 12/6(2)(a)(i)) for the purposes of the application for security, should be calculated at the rate of £170 per hour for time spent by Mr or Mrs Weston save to the extent that they worked more than 40 hours in any week, in which event their time was to be charged at £50 per hour.  I then discounted the resulting figure by 20% for the reasons set out in paragraph 49 of that Judgment.  To the resulting sum was added the disbursements which had been incurred.  I indicated that, should Admatch bring an application for further security for the period from 18^th January, 2008, until completion of the trial, I would be likely to apply the same principles. 

Discussion

4.        As last time, Admatch has produced a schedule of time spent by Mr and Mrs Weston on this litigation.  It has also estimated the time which will be spent between now and completion of the trial.  I propose to take the various heads of claim in turn. 

(i)      The rate of charge

5.        Mr Weston submitted that, whereas I had allowed £170 per hour in the August Judgment, I should now increase that sum to £180 as from 1^st June, 2008, in order to match the increase to the scale of fees allowed to lawyers upon a taxation of costs.  I have considered that point, but the basis of the award of £170 was that it was intended to be a reasonable estimate of the 'actual pecuniary loss' to Admatch and therefore the sum which Admatch could recover upon a taxation.  I do not see that a change in the rates which Advocates can recover upon taxation has any direct relevance to the loss suffered by Admatch.  Accordingly I propose to continue to use the rate of £170. 

(ii)     Anticipated future time

6.        At page 46 of the schedule prepared by Admatch (divider 8 of Admatch's bundle), one finds various heads of anticipated future work on interlocutory matters.  I invited Mr Journeaux to comment on each of them in turn.  He accepted, properly in my view, that the estimates put forward for the first, second, sixth, ninth and tenth of the listed items were reasonable; thus, for example the estimate of 6 hours for preparing and dealing with the second security for costs application (being this one) was reasonable. 

7.        The third, fourth and fifth items on the list refer to the time to be spent on the possible appeal to the Court of Appeal by Leeds 2007 against the August Judgment.  It seems to me that that is a matter for the Court of Appeal.  I do not consider that I have jurisdiction to take such time into account when considering what I should properly award by way of security for the costs of the action before the Royal Court.  In relation to the seventh item ('consider plaintiff's amended reply') and the eighth item ('further discovery matters') Mr Journeaux submitted that the time estimate of 10 hours for each of these was excessive.  I am persuaded by his submission and propose to allow 5 hours for each of them.   Allowing £170 for each of the hours which I have allowed in the foregoing passages, I calculate the amount in respect of these items of future interlocutory matters at £8,500.

8.        The schedule allows 6 days of Mr Weston's time and 4 days of Mrs Weston's time (in each case for 7 hours per day) for the preparation for trial and 4 days for each of them for the trial itself (again at 7 hours per day).  Mr Journeaux accepts that these estimates are reasonable and I agree with him.  Allowing these at £170 per hour produces a further sum of £21,420. 

9.        I have considered whether there should be any discount from these figures along the lines of the 20% reduction applied in the August Judgment.  I do not think there should.  The discount was applied to historic time spent by Mr and Mrs Weston and was applied to reflect the concern that they may have spent more time than was reasonable and would be likely to be recovered upon taxation.  The figure also allowed for the fact that, on some aspects, Admatch had been ordered to pay the costs of Leeds 2007.  In relation to future items, none of these considerations apply.  I consider that the estimate of hours (amended as above) is reasonable and there is therefore no reason to discount or reduce those hours further. 

(iii)     Disbursements

10.      Admatch has received an invoice from Barfields, a firm of accountants in Leeds, for £32,684 (to the nearest pound) in respect of work which they have undertaken in respect of this litigation.  Mr Journeaux submits that there appears to be an element of duplication between the work undertaken by the accountants and the work undertaken by Mr Weston and that certain items appear to be excessive in any event.  Mr Weston replied that there had been close liaison between himself and Barfields and accordingly it was not surprising that the same items appeared, because they were the opposite ends of the same work (e.g. discussions on the telephone between Mr Weston in Jersey and a member of Barfields in Leeds).  It will be for the taxing officer in due course to decide whether the account of Barfields is allowable in full or should be reduced but I do not think that the points made by Mr Journeaux are sufficient to cause me to reduce it at this stage, when I am simply concerned with security for costs.  Accordingly, I consider that I should proceed on the basis that the full amount will be allowable. 

11.      Adding these figures together produces the following:-

(iv)    Time spent since 18^th, January 2008

12.      The schedule shows that, between them, Mr and Mrs Weston have spent some 973 hours on this case from 18^th January, to 26^th November, 2008, inclusive.  Mr Weston accepts that, of these, 38 hours (to the nearest hour) have fallen outside the limit of 40 hours per week and can therefore only be charged at £50 per hour in accordance with the August Judgment (para 48).  Allowing £170 per hour for the remaining 935 hours, one arrives at a total of £160,850.  Mr Weston submits that the Court should apply the same discount as last time, namely 20%, in order to allow for possible reductions and uncertainties.  This would give a figure of £128,680.  When this is added to the sum of £66,988 referred to at para 11 above, the total comes to £195,668. 

13.      Mr Journeaux, on the other hand, whilst not disputing that Mr and Mrs Weston have spent the hours recorded in the schedule, submits that this time is grossly excessive.  His primary submission is that the Court take a broad brush approach and simply award a further £88,500 by way of security for costs so as to match the sum awarded in the August Judgment.  Alternatively, if the Court wishes to adopt the same approach as last time, it should increase the discount to at least 50% so as to bring the hours down to something more reasonable and which would be closer to what might be recovered upon taxation.  By way of comparison he disclosed in his skeleton argument that his firm had billed for 441 hours in respect of the period since 18^th January.  A 50% discount in the time spent by Mr and Mrs Weston would result in a figure of £80,425.  When added to the sum of £66,988 referred to in para 11, this would give a total of £147,413. 

14.      I cannot accept Mr Journeaux's primary submission that I should simply take a figure of £88,500.  Given that I have already held that future costs and disbursements are likely to amount to some £66,988, this would leave only £21,512 (which equates to some 126 hours) to cover all the work by Mr and Mrs Weston done between 18^th January and 26^th November.  I see no reason to believe that, if they are successful at trial, Admatch would be confined to recovering for only just over 25% of the time spent by the lawyers for Leeds 2007 in the same period. 

15.      In my judgment the correct approach is that adopted in the August Judgment.  I should take the time spent by Mr and Mrs Weston and then apply a discount with a view to seeking to achieve a figure which is a reasonable estimate of the time which Admatch could reasonably be expected to recover upon a taxation and to make allowances for time in respect of which costs orders have been made against Admatch.  I do not consider that I should simply take the same discount as last time, as suggested by Mr Weston.  I must take the figures which he has produced in respect of this particular period and give careful consideration to them.  For example, in the August Judgment, the hours spent by Carey Olsen were approximately 69% of the hours spent by Mr and Mrs Weston whereas on the present occasion, the 441 hours spent by Carey Olsen is approximately 45% of the 973 hours spent by Mr and Mrs Weston.  I accept that there is no direct comparison because the figures used in the August Judgment for Mr and Mrs Weston and Carey Olsen respectively did not cover exactly the same time period.  Nevertheless, the fact remains that, on this occasion, Mr and Mrs Weston are claiming for over twice the number of hours for which Carey Olsen have billed in respect of the same period.

16.      In his skeleton argument Mr Journeaux has given a number of examples of where he submits that the time spent by Mr and Mrs Weston has been grossly excessive.  I do not think it necessary to rehearse these in the judgment given that this is ultimately a matter of discretion, but I consider that there is force in many of the points which Mr Journeaux makes.  Furthermore, he points to three matters since 18^th January, 2008, in which costs orders have been made against Admatch in respect of particular applications, yet the time spent on such matters is included in the schedule.  He also points out that Admatch was only awarded 75% of its costs in respect of the security for costs hearing before the Master in February 2008, whereas 100% of the time is included in the schedule. 

17.      Mr Weston accepts that he is a thorough individual who takes great care over matters and that he may as a result spend more time on matters than would others.  He also submits that Admatch has had to carry out certain matters during the relevant period which have not had to be carried out on behalf of Leeds 2007, such as giving discovery and preparing the important but complex flow chart of how the funds moved between various entities involved in the transactions giving rise to this claim.  But the fact remains that, if successful, Admatch will not necessarily be able to recover for all the time spent by Mr and Mrs Weston; it will only be able to recover for such time as has been reasonably spent by them as assessed by the taxing master.  I think it highly unlikely that, on a taxation, Admatch would be able to recover for all the time it has recorded, which is more than twice that spent by the lawyers for the other side.  Doing the best I can and taking a broad view, I consider that a reduction of one third in the hours claimed by Admatch would be appropriate.  In my judgment this still makes adequate allowance for the points made by Mr Weston and the fact that, as he pointed out, a lay individual is likely to take more time than a lawyer to deal with matters, particularly where these relate to research into the law and procedure which may be well known or quickly assimilated by a lawyer.  Mr Weston, on the other hand, has to read every case which is referred to, often for the first time.  Two thirds of the figure of  £160,850 (referred to in para 12) comes to £107,233.  To this must then be added the sum for future costs and disbursements totalling £66,988 giving a total of £174,221.  Allowing for the fact that Admatch has made no provision for disbursements between now and the conclusion of the trial, I consider that this should be rounded up to the sum of £175,000.

18.      When added to the figure of £88,500 previously ordered by way of security, the total sum ordered is substantial and exceeds the claim of some £190,400.  I have stood back to consider whether the order is proportionate.  Each party blames the other for the extraordinary costs which have been run up.  Mr Weston says that Carey Olsen are forever issuing summonses on interlocutory matters, pursuing collateral issues and insisting that everything be put in writing so that extra expense is incurred.  He submits that those behind Leeds 2007 have a strategy to try and force him to concede defeat by swamping him with demands which he struggles to meet as a litigant in person and conducting the litigation in a manner which means that Admatch runs the risk of an enormous order for costs against it should it be unsuccessful at trial.  Conversely, Mr Journeaux argues that Mr Weston makes everything unnecessarily complicated and convoluted and causes everyone to spend much time on unnecessary matters. 

19.      It is not possible for me to decide whether one or other of the parties is responsible for the present situation.  I have to accept that both sides have run up enormous costs and many hours of time as a result of all the interlocutory jousting.  There is therefore a substantial possibility that, following the conclusion of the trial, the unsuccessful party will have to pay a much larger costs order than would have been the case if the litigation had been conducted in a more conventional manner.  I have already held, for the reasons mentioned in the August Judgment, that I consider this to be an appropriate case in which Leeds 2007 should have to provide security for costs and those costs should be assessed by reference to what Admatch might reasonably recover in the event of it being successful.   Because of the way in which this litigation is being conducted, that figure comes out at the sum described earlier.  On the particular facts of this case, I do not consider that it should be reduced simply because some might think that both sides were spending more hours on this litigation than might normally be the case. 

20.      I have also given consideration as to whether the increased sum might in any way stifle Leeds 2007's claim.  No such allegation was put forward by Mr Journeaux and, in the absence of compelling evidence to the contrary, I do not consider that it could be.  In this respect, Mr Weston points to the fact that, on 9^th September, 2008, Mr Richard Taylor swore an Affidavit on behalf of Leeds 2007 in support of an application to stay the first order for security for costs, in the course of which he said that the provision of security would impose a substantial financial burden on Leeds 2007 'as it would on any small business'.  He went on to refer to the fact that the company was forecast to make a profit of approximately £600,000 during its current financial year.  Mr Weston goes on to point out that, despite that affidavit, on 26^th October, 2008, Leeds 2007 announced that it had made a profit of £4.5 million in the 14-month period to June 2008, including an operating profit of some £900,000.  The company's turnover was over £23 million.  In the circumstances I find that there is no risk of the company's claim being stifled by reason of the order for further security which I am now making. 

21.      I turn finally to the question of an 'unless' order.  Mr Weston submits that, in view of Leeds 2007's very poor record of timely compliance with orders of this Court, I should order that the claim should be struck out unless the security is provided by the due date.  He points out that Leeds 2007 was late in paying in the £5,000 ordered by way of security by the Master, that it has failed to file the amended reply within the time scale ordered, that it has failed to exchange witness statements within the stipulated time and that it has also failed to disclose certain documents within the timescale fixed by the Court on 28^th October, 2008.  He also relied upon the fact that he had just discovered that the second plaintiff had changed its name from Leeds United 2007 Limited to Leeds United Football Club Limited as long ago as 6^th June, 2008, but that no one connected with the Jersey proceedings had been informed of this.  As a result these proceedings were still being brought in the name of the second plaintiff as Leeds United 2007 Limited.  More significantly, he said, a new shelf company had been formed in England in February 2008.  This company had changed its name to Leeds City Holdings Limited on 4^th June, 2008, and, two days later, had again changed its name to Leeds United 2007 Limited i.e. the same name as the second plaintiff had until that very day and under which name it is still pursuing the Jersey proceedings.  Mr Weston thought that this was extremely suspicious.  He could think of no valid reason for giving a company incorporated in 2008 the name Leeds United 2007 Limited.  He submitted that it was almost certainly intended by those behind the second plaintiff to cause confusion so that, if Admatch were successful in the Jersey proceedings and subsequently was forced to take proceedings in England in order to recover any costs, it could be met with the response that Leeds United 2007 Limited was a dormant company with no assets. 

22.      Mr Journeaux was not in a position to respond to this suggestion, which had been made very late in the day and accordingly I take no account of it.  An 'unless' order was made in respect of the security ordered by the August Judgment but this was at a time when the trial date was fast approaching.  Since then the trial has been adjourned until May 2009.  In view of the second plaintiff's poor record of timely compliance with orders of this Court, I was at one time minded to make an 'unless' order.  However, such an order is to be regarded as exceptional.  In the circumstances, I think that the appropriate course is to order that the security of £175,000 be lodged with the Court on or before 19^th December.  In view of the substantial nature of the second plaintiff's business, I consider this to be a reasonable period in which to obtain and lodge such funds.  I also wish to make it clear that, should the second plaintiff once again fail to comply in time with an order of this Court, I would be likely to view sympathetically any subsequent application by Admatch for an 'unless' order, to be willing to abridge time so that such an application could be heard in very early course and to give a very short further timescale for compliance.  The second plaintiff would also be at risk as to an order for indemnity costs. 

23.      In summary, I order the second plaintiff to lodge the sum of £175,000 by way of further security for costs, such sum to be lodged with the Court on or before 19^th December, 2008.

Authorities

Leeds -v-Admatch [2008] JRC 141.