Jersey Unreported Judgments

[2011]JRC071

royal court

(Samedi Division)

1^st April 2011

Advocate A. D. Robinson for the Plaintiff.

Advocate N.F. Journeaux for the Defendant.

judgment

the bailiff:

1.        Following delivery of the judgment in this matter, I was asked to rule on the question of costs.

2.        Advocate Robinson applied for an order for costs on the standard basis in favour of the plaintiff on the basis that the plaintiff had been successful, the application of the defendant for an injunction restraining use of the relevant document having been refused.

3.        Advocate Journeaux, on the other hand, argued that there were two main issues in the case.  The first was the question of whether document 135 was privileged; the second was whether, if so, the defendant was entitled to an injunction restraining its use.  On the first issue the plaintiff had been unsuccessful; it had only succeeded on the second issue.  Advocate Journeaux calculated that the first issue had taken up more time than the second issue and submitted therefore that an appropriate costs order reflecting this should be made.

The principles

4.        The principles upon which orders for costs are made in this jurisdiction are well settled and find their most convenient expression in the judgment of Page, Commissioner in Watkins v Egglishaw [2002] JLR 1.  The starting point remains the judgment of Nourse LJ in In re Elgindata Limited (No 2) [1992] 1 WLR 1207 at 1213:-

"The principles are these.  (i) costs are in the discretion of the court.  (ii) They should follow the event, except when it appears to the court that in the circumstance of the case some other order should be made.  (iii) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs. (iv) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or part of the unsuccessful party's costs."

As Page, Commissioner made clear, practice has moved on since the date of Elgindata and it is no longer necessary for a party to have acted unreasonably to be deprived of his costs on a particular issue on which he has failed.  The court should be ready to make separate orders reflecting the outcome of different issues.  On this aspect he cited in support the observations of Lord Woolf MR in AEI Redifussion Music Limited v Phonographic Performance Limited [1999] 1 WLR 1507 at 1522 where Lord Woolf emphasised that too robust an application of the 'follow the event principle' encourages litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points they take.  If you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your effort to do so.

5.        A further principle is that it is desirable to avoid making complicated costs orders which are likely to result in complex and expensive taxation hearings.  It is preferable to adopt a broad and reasonably robust approach. 

6.        Advocate Journeaux submitted that more of the judgment dealt with the privilege issue than with the injunction issue, that three of the affidavits filed by the defendant dealt exclusively with and were only necessary in relation to the claim to privilege, that more of the defendant's skeleton argument dealt with the issue of privilege than with the issue of the injunction and that the plaintiff's skeleton was essentially evenly split between the issues.  Overall, he submitted, the privilege issue was responsible for between one half and two thirds of the total costs.  He argued therefore that the fair order should be that the defendant should be ordered to pay the plaintiff between one third and one half of the plaintiff's costs on the standard basis and the plaintiff should be ordered to pay between two thirds and one half of the defendant's costs on a standard basis.  Alternatively there should be no order for costs.

7.        Advocate Robinson, on the other hand, argued that the question of whether document 135 was privileged was an inextricable part of the defendant's case, where the burden of proof lay upon the defendant.  It was asking too much to expect the plaintiff to have conceded this issue when it was fairly finely balanced and where it was in integral part of the defendant's claim, which had after all failed, albeit that the court had agreed that the document was privileged.  He therefore maintained his submission that the plaintiff was entitled to all of its costs.

8.        In my judgment, this is not a case where the plaintiff acted unreasonably in arguing that document 135 was not privileged.  There was a respectable argument to be made on behalf of the plaintiff on this issue albeit that the court found against the plaintiff.  Furthermore the issue was fairly closely linked with the question of whether an obvious mistake had been made. In the circumstances I do not consider that this is a case where the plaintiff should be ordered to pay any of the defendant's costs on the issue where the plaintiff lost.

9.        The question then arises as to whether the plaintiff should be deprived of a percentage of its costs to reflect the fact that it lost on this first issue.  In my judgment, having regard to the importance of encouraging parties not to take unnecessary points, some deduction should be made.  However I do not consider it should be nearly as much as Advocate Journeaux submitted.  In my judgment it was necessary for the defendant to adduce evidence as to the circumstances in which document 135 was produced in order to establish the grounds for holding that the document was indeed privileged.  This was not some obvious document like a counsel's opinion.  Accordingly all the preparatory work in obtaining affidavits was necessarily incurred and I do not consider that it was incumbent upon the plaintiff to concede the issue of privilege prior to the defendant producing its evidence and all its legal arguments in support.  Thus it is only the time spent thereafter in final preparation and time in court on this issue which should be disallowed.  As mentioned at paragraph 6, it is not desirable to make costs orders which require complex and expensive taxation hearings. Taking a broad approach and doing the best I can to be fair to both parties in this respect, I consider that a deduction of 20% would be appropriate. I therefore make an order that the defendant pay 80% of the plaintiff's costs on the standard basis.

Authorities

Watkins v Egglishaw [2002] JLR 1.

Re Elgindata Limited (No 2) [1992] 1 WLR 1207.

AEI Redifussion Music Limited v Phonographic Performance Limited [1999] 1 WLR 1507.