Jersey Unreported Judgments

[2010]JCA225

COURT OF APPEAL

15^th December 2010

Cross Appeal

Advocate A. Clarke for the Appellant.

Advocate A. D. Robinson for the Respondent.

Costs Judgment.

JUDGMENT

THE president:

1.        This is the judgment of the Court.

2.        On 18^th November 2010 this Court handed down its judgment dismissing the appeal and allowing the cross-appeal.  The Respondent (P-S)(referred to as "the wife" in these proceedings, although long divorced) seeks an award of costs on an indemnity basis covering the entire period of the appeal, from 23^rd July 2009 to date. The Appellant (C)(referred to as "the husband") accepts that he must pay the costs of the unsuccessful appeal, but resists the indemnity basis claim, and also argues that he should not have to pay the costs of the cross-appeal because "the genesis of the cross appeal .. was the error or oversight of the Royal Court".

3.        There are therefore 2 costs issues to resolve:-

(i)        Whether the wife should be awarded the costs, not only of the appeal, but also of the cross-appeal?

(ii)       Whether the costs awarded should be assessed on the standard or indemnity basis?

4.        In relation to the first issue, the husband relies on Watkins v Egglishaw [2002] JLR 1 (where guidelines were set by Commissioner Page) and submits that it would not be just to penalise the husband in costs in relation to the cross-appeal not because the responsibility lay with the Royal Court in failing to address the issue of interest on the increased lump-sum award, but also the husband did not actively argue that increased interest payment should not be paid.

5.        In paragraph 61 of our November 2010 judgment we noted that Advocate Clarke (for the husband) "accepted that if the judgment of the Royal Court was upheld by this Court, then he could not resist the wife's application for interest". In his Skeleton Argument, dated 24^th July 2010, Advocate Clarke made no submissions on the cross-appeal.  But does it follow that because of this non-opposition and late concession at the hearing, the wife should carry the costs burden?  We do not consider such a result to be just.  If the husband wanted to protect himself against a costs award in relation to the cross-appeal he could have made it abundantly clear in correspondence as soon as, or shortly after, the point was first raised that he accepted and agreed that the cross-appeal should succeed and that the wife need not expend any legal costs in related to this issue.  This is consistent with the passage from the judgment of Judge LJ in Ford v GKR Construction Ltd (Practice Note) [2000] 1 WLR 1397, referred to in paragraph 8 of Watkins v Egglishaw:-

"Civil litigation is now developing into a system designed to enable the parties to know where they stand in reality at the earliest possible stage, and at the lowest practicable cost, so that they make informed decisions about their prospects and the sensible conduct of their cases."

The absence of "active argument against" and a concession at the hearing does not relieve the husband of the responsibly for these costs, and we order that the husband should pay the wife the costs of the appeal and cross appeal.

6.        We turn now to the assessment basis of those costs - standard or indemnity.  But before doing so, we conclude that whatever the decision is in relation to the costs of the appeal, the costs of the cross-appeal should be on the standard basis.

7.        The principles, or guidelines, to be considered when deciding whether or not to award costs on an indemnity basis are not in this case the subject of dispute (save for one matter), although the parties rely on different case-law, Dixon v Jefferson Seal Limited [1998] JLR 47 a decision of the Court of Appeal for the wife, and Pell Frischmann Engineering Ltd v. Bow Valley Energy Ltd [2007] JLR 479, a more recent decision of the Royal Court, for the husband.  The Royal Court in Pell Frischmann did not purport to depart from the approach in Dixon, but helpfully updated the position in light of recent case law from the English appellate courts - see paragraphs 25 and 27:-

"25.  At the risk of oversimplifying matters, the result of these English authorities may be said to be this: that the circumstances in which an award of indemnity costs may, as a matter of discretion, be ordered are less restrictive than they used to be; there must, ex hypothesi, still be something to take the case out of the ordinary, but the range of potentially relevant considerations, as described by Millett, J. (later Lord Millett) in Macmillan Inc. v. Bishopsgate Inv. Trust, is considerable and need not involve any finding of a lack of moral probity; the test, in a word, is unreasonableness; the purpose of such an award is to achieve a fairer result for the party in whose favour it is made than would be the case if he were only able to recover costs on the standard basis; in the end, it is a question of what would be fair and reasonable in all the circumstances.

27  In this jurisdiction, the Court of Appeal in Jefferson Seal (in 1998) was plainly minded to follow the practice of the English courts as reflected in the cases referred to by Collins, J.A.; and, while Jersey has not adopted anything equivalent to the English Civil Procedure Rules which feature strongly in the post-1998 cases, I can think of no reason why the general approach adopted in those cases should not be followed in the Royal Court and every reason why it should be."

8.        Although the Court of Appeal later overturned the learned Commissioner's application of those principles to the facts of that case, the court did not dissent from the paragraphs set out above. The Commissioner's summary is entirely consistent with the English case-law, such as Excelsior Commercial & Industrial Holdings Limited v. Salisbury Hammer Aspden & Johnson (a firm) and another [2002] EWCA Civ 879, where the Court of Appeal in England and Wales Lord Woolf LCJ at [32] "there is an infinite variety of situations which can come before the courts and which justify the making of an indemnity order", and from a dissenting speech in Fourie v Le Roux [2007] UKHL 1, [2007] 1 WLR 320, Lord Hope at [10] - "But, as the judgments that were given in [Reid Minty v Taylor [2002] 1 WLR 2800] show, the award of costs on [an indemnity] basis will not be justified unless the conduct of the paying party can be said in some respect to have been unreasonable: see per May LJ, para 32, per Kay LJ, para 37."

9.        See also the decision of this court in Marett v Marett and O'Brien [2008] JLR 384:-

"73-ƒA court may make an indemnity costs order only where there has been some culpability, some abuse of process such as deceit, underhanded or unreasonable behaviour, abuse of court procedures, or the submission of voluminous and unnecessary evidence. There are many examples in decided cases of the application of these broad principles (see Dixon v. Jefferson Seal Ltd. [1998 JLR at 52-53]; Maçon v. Quérée (née Colligny) [2001 JLR 187]; and Jones (née Ludlow) v. Jones (No. 2) [1985-86 JLR 40], noting the reference to "some special or unusual feature" to justify the award of indemnity costs). There are also examples of cases where the court has made an indemnity costs order, even in the absence of culpability or abuse of process, such as Reid Minty v. Taylor, relying on the court's general discretion, in England and Wales, under the CPR, r.44.3."

10.      The main difference between the parties on the principles/guidelines to be applied is that the husband refers to and relies upon the recent practice direction (RC 09/02) which came into force on the first of February 2009:-

"In accordance with Rule 12/5 of the Royal Court Rules 2004, on a taxation of costs on the indemnity basis all costs shall be allowed except insofar as they are of an unreasonable amount or unreasonably incurred with any doubts been resolved in favour of the receiving party".

11.      The husband, relying on the change brought about by the Practice Direction, refers to the Pell Frischmann decision and submits that "the concept of an indemnity Costs Order now is so Draconian in its nature that the same should only be considered by the Court where the actions or intentions of the paying party are malicious or vexatious".  We do not accept that it is appropriate to impose such a restrictive approach on the discretion of the court to make an award of costs on the indemnity basis. The question will always be - is there something in the conduct of the action by one of the parties or the circumstances of the case which takes the case out of the norm in a way which justifies an order for indemnity costs, recognising that there will usually be some degree of unreasonableness. We do not consider that there is a need for the claiming party to show a lack of moral lack of probity or conduct deserving of moral condemnation, or malicious or vexatious conduct.

12.      We therefore approach the costs contentions on the understanding that in order for an indemnity award to be made there must be something to take the case out of the ordinary, and a degree of unreasonableness (of which abuse of process is but an example), but recognising that there is an "infinite variety" of circumstances where it may be right and proper for the court to make such an award.

13.      The wife submits that that she should be entitled to indemnity costs on 2 broad grounds:-

(i)        That the increase in the lump sum of £800,000 should be eroded as little as possible on account of costs, and that this would meet in the justice of the case;

(ii)       The conduct of the husband has been such that he should be penalised by an award of indemnity costs, referring in particular to the bringing of a Notice of Appeal the grounds of which were all without merit and which have added significantly to her costs, the fact that she has suffered further unnecessary stress and "it would appear manifestly unfair that she should be penalised in the circumstances by being left out of pocket".

14.      In response, the husband argues that he has not acted unreasonably in bringing the appeal and that his actions have not been such as to "take it out of the ordinary". The husband's case can be summarised by here referring to paragraph 18 of his submissions on costs:-

"It is submitted that the Appeal was conducted appropriately and reasonably by the Appellant. All documentation and Notices were filed in accordance with the Directions and Rules of Court throughout. The Appellant filed both a Supplemental Notice of Appeal and a detailed Skeleton Argument to ensure that the Respondent was fully aware (at the earliest opportunity) of the full nature of the Grounds of Appeal that [she] faced."

15.      In support of her claim that the husband has acted unreasonably, the wife points to previous occasions when the court has made costs orders on an indemnity basis, in particular the order of 22^nd July 2009 when the husband was ordered "to pay the wife's Costs of and incidental to the proceedings, on an indemnity basis, without prejudice to any existing order as to costs from 4 December 2006 to the date of the order". Commissioner Bailhache said this at paragraph 10 of his judgment:-

"I have no hesitation in reaching the conclusion that the proper order is one that the husband should pay the wife's costs on an indemnity basis. I so conclude for two reasons. First, the lengthy proceedings leading to the Court's judgement in June 2009 would never have occurred but for the husband's failure to disclose material information about his assets in 2003. The husband has brought these proceedings upon his own head and he should face the consequences of his actions. Secondly, the conduct of the proceedings since the 2006 judgment has demonstrated a consistent lack of openness and co-operation to such an extent that it may properly be characterised as obstructiveness. As the Court stated in June, we have reached the conclusion that the husband is temperamentally incapable of giving straight and comprehensive answers to questions about his financial interests. Both these reasons would, in my view, independently of each other, justify the making of an indemnity costs order."

16.      In our view, there is some force in the husband's response that it would not be appropriate for this Court to have in mind previous Orders when considering the appropriate costs award for the Appeal. As he points out, he has already been penalised in accordance with the Court's previous sanctions.

17.      Nor do we consider it appropriate to make an indemnity costs order merely on the basis that the increase in the lump sum award "should be eroded as little as possible on account of costs". If that were the correct approach then in the majority of matrimonial proceedings where lump sum awards were made it would follow that the paying party would also have to pay costs on an indemnity basis.

18.      It is necessary, therefore, to look for behaviour or conduct on the part of the husband in the course of the Appeal in order to determine whether there is something here to take this case out of the ordinary so as to lead to a conclusion that the fair and just award in this case is that costs should be assessed on an indemnity basis.

19.      We do not consider that the bringing of the Appeal, and (therefore) the pursuit of various grounds set out in the Grounds of Appeal, or in the Supplementary Notice of Appeal, could be described as unreasonable, in the sense of being frivolous or vexatious, or otherwise an abuse of the appellate process.  We have dismissed all the grounds of appeal, some in stronger terms than others, but it does not follow that they were so misconceived as to attract indemnity costs.  No doubt, as asserted on the wife's behalf, the proceedings have been stressful for her, but it is difficult to disentangle the stress relating to earlier Orders (and their enforcement) from this appeal, and we are unable to see any clear link between the husband's conduct of this appeal and any increased stress level, such as to show that such conduct was unreasonable.  In short, we do not conclude, to adopt the word used in paragraph 40 of the wife's Skeleton Argument, that the husband's conduct in relation to this appeal (and, we emphasise, that is all we are concerned with) has been oppressive.

20.      For all these reasons, the appropriate award is that the husband should pay the wife's costs of and related to this appeal and cross appeal to be taxed, if not agreed, on the standard basis.

21.      In paragraph 41 of her Skeleton Argument, the wife submits that the award of costs should include "(i) the costs and expenses which she has incurred with Bedell Cristin on a full indemnity basis since 23 July 2009 to date"; and "(ii) the costs and expenses which she has incurred with FTI Forensic Accounting, MAQS law firm in Sweden and Counsel since 23 July 2009 to date".  We consider that the award of costs should include the Bedell Cristin costs since 23 July 2009 to the date of this decision, but on a standard basis, including insofar as they relate to the injunction proceedings referred to in paragraphs 22 to 26 of the wife's Skeleton Argument (save as recovered in the costs incidental to the June 2009 Award), and also the costs of the accountants and the Swedish lawyers but only insofar as they relate to the facts and matters referred to in paragraph 26 of that Skeleton Argument, again on a standard basis (and save as elsewhere ordered or recovered).  The wife also claims, in the same paragraph of her Skeleton Argument, the costs of Counsel "since July 2009 to date".  It is unclear whether these claimed costs relate to the matters referred to in paragraph 26 of the Skeleton Argument, or are more general.  For the avoidance of doubt on this issue, we order that the costs of Counsel are to be in the overall award of costs of the appeal on the standard basis, including but not confined to the paragraph 26 matters.

Authorities

Watkins v Egglishaw [2002] JLR 1.

P-S v C [2010] JCA 207.

Ford v GKR Construction Ltd (Practice Note) [2000] 1 WLR 1397.

Dixon v Jefferson Seal Limited [1998] JLR 47.

Pell Frischmann Engineering Ltd v. Bow Valley Energy Ltd [2007] JLR 479.

Excelsior Commercial & Industrial Holdings Limited v. Salisbury Hammer Aspden & Johnson (a firm) and another [2002] EWCA Civ 879.

Fourie v Le Roux [2007] UKHL 1.

Fourie v Le Roux [2007] 1 WLR 320.

Marett v Marett and O'Brien [2008] JLR 384.