Jersey Unreported Judgments

Trust - costs judgment.

[2013]JRC250

Royal Court

(Samedi)

10 December 2013

Before     :

J. A. Clyde-Smith, Esq., Commissioner, sitting alone.

 

Advocate A. D. Robinson for the Plaintiffs.

Advocate R. J. MacRae for the Defendants.

judgment

the commissioner:

1.        The plaintiffs seek their costs on the indemnity basis arising out of the defendants' unsuccessful forum challenge.  That challenge has given rise to the following:-

(i)        The defendants' application for directions for their forum challenge and for the deferring of the filing of their answer until after that challenge (which was refused) leading to my judgment of 19^th April, 2013, (JRC 080). 

(ii)       The defendants' application for leave to appeal my decision of 19^th April, 2013, (in part) which was refused for the reasons given orally on 14^th May, 2013. 

(iii)      The plaintiffs' application for an interim stay of the Mauritius proceedings pending the forum challenge, which was granted for the reasons set out in the Court's judgment of 15^th May, 2013, (JRC 090). 

(iv)      The substantive hearing of the defendants' forum challenge, which was refused for the reasons set out in the Court's judgment of 2^nd October, 2013, (JRC 194A).  I adopt the definitions used in that judgment.  

2.        Leave to appeal the interim stay of the Mauritius proceedings was granted by Nigel Pleming QC, sitting as a single judge of the Court of Appeal on 23^rd May, 2013, and the defendants are applying to the Court of Appeal for leave to appeal the decision on forum.  Both matters will be dealt with before the Court of Appeal in late January 2014. 

3.        In general terms, the defendants accept that an order for standard costs should be made, but in the light of further evidence that will be filed before the Court of Appeal in relation to the interim stay they submit that I should await the outcome of the appeals in January 2014. 

4.        I take the view that I should proceed to make orders in relation to all the costs that have been incurred before this Court arising out of the forum challenge on the basis of the decisions this Court has made on the information and evidence then before it, so that the Court of Appeal can know what orders have been made in relation to costs and if the appeals are successful in whole or in part it can then review the costs orders made by this Court as it deems appropriate. 

5.        The real issue before me is whether costs should be awarded to the plaintiffs on the indemnity basis.  I have had the benefit of detailed skeleton arguments and oral submissions and wish no disrespect to counsel if I do not respond to all of the many points covered by those submissions in this judgment. 

6.        The principles to be applied in relation to indemnity costs are well established and were helpfully summarised by Bailhache, Deputy Bailiff in Dalemont Limited v Senatorov [2013] JRC 209 at paragraphs 9 and 10:-

"9.      There was no dispute before me as to the principles which should govern an award of indemnity costs.  They are well settled.  In Leeds United FC Limited v Weston [2012] JCA 088, there is a useful review of the leading cases by Jones JA at paragraphs 4-7.  In summary the position is:-

(i)        The Court has a wide discretion as to when it makes an award of indemnity costs.

(ii)       In considering the question, the Court will consider whether there has been some culpability, abuse of process such as deceit, underhanded or unreasonable behaviour, abuse of court procedures, or the submission of voluminous and unnecessary evidence.  This is sometimes referred to as a 'special or unusual feature' to justify the award of indemnity costs.

(iii)      It is not necessary that the actions of the paying party should be malicious or vexatious, although obviously if they are, the Court is more likely to fund a culpability which merits an award of indemnity costs.

(iv)      It is, in reality, a question of what would be fair and reasonable in all the circumstances.

10.      For my part, I adopt the question as put by Beloff JA in C v P-S [2010] JLR 645 when he said:

'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?'"

7.        Mr Robinson referred me to this passage of the judgment of Jones JA in Leeds v Admatch [2011] JCA 110, a case concerned with the award of indemnity costs in an unsuccessful application for leave to appeal:-

"Having decided to award the plaintiffs' costs of and incidental to that application against Mr Weston, the question for us in determining the matter of indemnity costs is whether there was anything about Mr Weston's conduct in making and presenting the application for leave to appeal that could be said to have been a special or unusual feature of the case, sufficient to justify an award of indemnity costs against him.  Of the matters relied on by the plaintiffs, some pre-date and others post-date the application for leave to appeal with which we are concerned.  We have regard to them, however, because we accept that the conduct throughout a litigation of a person against whom an award for indemnity costs is being sought may be relevant to inform the court as to the character of his conduct in a particular chapter of the proceedings."

He submitted therefore that I should have regard to the whole of the defendants' conduct in these proceedings and in the period leading up to it. 

8.        Mr Robinson also referred me to the Court of Appeal decision in Dixon v Jefferson Seal Limited [1998] JLR 47 where, in what was described as a volte face, the appellants withdrew their appeal shortly before the hearing was due to take place "for commercial reasons", an explanation which the Court of Appeal found unsatisfactory concluding that the appellants had used the process as a means of bringing about an advantageous settlement of the judgments obtained by the respondents, which was both unreasonable and an abuse of the process of the Court justifying indemnity costs.  Reference was made in that case to Mance J's description of the conduct in Cepheus Shipping Corp v Guardian Royal Exchange [1995] 1 Lloyds REP involving at the least a "highly opportunist and tactically motivated approach to litigation which was unreasonable, and which this Court should strongly discourage".  This, he said, aptly described the conduct of the defendants in this case, which had two aims firstly to sap the will and resources of the plaintiffs and secondly to bog down the Jersey proceedings, which as a consequence had not progressed beyond the filing of an answer after almost a year. 

9.        Mr Robinson made detailed criticisms of the conduct of the defendants but the central criticisms are that:-

(i)        In pre-action correspondence, the defendants, he said, positively accepted Jersey as the appropriate forum and encouraged the plaintiffs to sue them in Jersey - in my view this overstates the position somewhat. 

(ii)       Having accepted the jurisdiction of the Court by accepting service through Mourant Ozannes who were then acting, they then sought an extension of time for the filing of an answer because their then London counsel was unavailable during February 2013 and to which the plaintiffs consented. 

(iii)      The defendants then changed the entirety of their legal team and in a volte face their strategy by challenging the forum of the Jersey Court. 

(iv)      By a process of secret manoeuvring, they then applied to the Mauritius court for declarations as to the validity of the very matters which were the subject of the proceedings in this jurisdiction - I would not describe the defendants' conduct in quite this way. 

(v)       The defendants then drove the Mauritius proceedings forward in a manner which this Court found was oppressive and an abuse of its process, forcing the plaintiffs to apply for an order staying the Mauritius proceedings in order to hold the ring. 

(vi)      At the forum challenge hearing, the plaintiffs, he said, won resoundingly, the Court not only rejecting the technical arguments based on the exclusive jurisdiction clause but holding that it would in any event have exercised its discretion to override any such exclusive jurisdiction clause - it is correct that the defendants did not succeed in their application. 

10.      Mr Robinson was particularly critical of the role of the two professional trustees.  BNP was the Jersey based institutional trustee that administered the Grand Trust for most of the material period and could, he said, have had no good reason for challenging the jurisdiction of its own Court.  Appleby Mauritius had not made a Beddoes application authorising it to institute the Mauritius proceedings (against some of its own beneficiaries) and apply in Jersey for a stay and rather than taking a neutral stance over the substantive allegations against the other defendants arising out of actions taken at a time when it had no involvement, sided with them without having taken independent advice.  This, he said, was extraordinary, bearing in mind that the plaintiffs were bringing a claim for the reconstitution of the trust fund of which it was purportedly now sole trustee. 

11.      In his skeleton argument, Mr MacRae described the Mauritius proceedings as a non-contentious application for directions.  This has to be wrong.  Whilst they had been brought in the form of an application for declarations (not directions) as to the validity of the acts of the defendants, those declarations (if made) would strike at the heart of the plaintiffs' causes of action.  It was accepted by both experts as to Mauritian law that in the event of these claims moving to Mauritius, those proceedings would have to be converted into hostile proceedings in the usual way.  In my view, the Mauritian proceedings are unquestionably hostile in nature. 

12.      Whether or not the professional trustees are acting correctly in their conduct of the proceedings in both Mauritius and Jersey, is a matter for which they may have to account in due course but for now they have taken a firm position in these proceedings and in my view for the purposes of this application for costs, I should regard them as ordinary defendants to be treated no differently from the other two defendants.  

13.      I am conscious that this is a bitter family dispute and that there has been a history of past litigation; indeed there was reference at the hearing to on-going litigation in other jurisdictions.  I believe I should be cautious about judging the general conduct of the defendants this early in the Jersey proceedings, save in the clearest case.  The Court will be in a much better position to judge general conduct at the end of the proceedings when all the evidence has been heard and tested. 

14.      Winning resoundingly, as Mr Robinson described the forum judgment, is not a ground (on its own) for awarding indemnity costs; otherwise, as Mr MacRae said, such orders would follow automatically where for example summary judgment is obtained or an action is struck out.  It would not be fair, in any event, to describe the defendants' application in relation to the forum as hopeless.  The exclusive jurisdiction clause is drawn up in apparently wide terms and, on its face, it provided the defendants with the foundation for the making of their application, albeit that it was unsuccessful. 

15.      It is true that there was a change of tack by the defendants, but to change tack is not inherently abusive of the Court process and is not unusual in litigation of this kind in my view.  It was made relatively early in the proceedings before an answer had been filed and I cannot characterise it as an abuse of the Court process.  As the Court said at paragraph 51 of its judgment of 15^th May, 2013, it understood why the Mauritius proceedings had been brought, namely to demonstrate that the defendants were serious about seeking justice and litigating the issues between the parties there.  What the Court found to be oppressive and an abuse was the on-going prosecution of the Mauritius proceedings pending the forum challenge forcing Cristiana to argue before the Mauritius courts the very issues that the defendants had earlier asked her to argue before this Court (see paragraph 43 of the judgment). 

16.      Mr Robinson invited me to draw certain conclusions from the change of the legal team of the defendants as to the legal advice they had received on the issue of jurisdiction but their legal advice is privileged.  I have no idea what advice they received and it would be wrong, in my view, for me to speculate as to what that advice may have been. 

17.      I have considered all of the points raised by Mr Robinson, but I agree with Mr MacRae that in the context of what the Court of Appeal described as "hard-fought litigation" this forum application cannot be described as "out of the norm" justifying an award of indemnity costs. 

18.      I therefore award the plaintiffs their costs on the standard basis of and incidental to the forum challenge to include each of the hearings summarised in paragraph 1 above.  As the plaintiffs have been unsuccessful in their claim for indemnity costs and in the light of the defendants' acceptance that they should pay standard costs, I award the defendants their costs on the standard basis of and incidental to this costs hearing. 

19.      Mr Robinson seeks an interim payment in respect of the plaintiffs' costs based on Bedell Cristin's ordinary charge-out rates which amount with disbursements (including for the preparation of this cost hearing) to £634,412. 

20.      The Deputy Bailiff said in Dalemont at paragraph 26, the making of an interim order is not in Jersey the usual practice and there is no presumption that such an order will be made with the burden falling on the paying party to show cause why it should not. 

21.      I accept this but this application forms a discrete issue within the Jersey proceedings which has generated very substantial costs no doubt on both sides and I can see no reason why in principle an interim order should not be made at this interlocutory stage in respect of that discrete issue on the basis of the principle (as per Centre Trustees CI Limited v Van Rooyen [2009] JRC 133 at paragraph 7) that in fairness to a successful party there is no good reason to keep it out of a sum which it is likely to recover on a conservative basis in any event. 

22.      The plaintiffs seek 50% of their untaxed costs, namely £317,206.  I am conscious that these matters will be before the Court of Appeal in under two months and my order as to costs may be reversed if the appeal is successful with the plaintiffs being ordered to repay any sums received.  For this reason, and because of the difficulties Mr MacRae said the defendants would have in recovering funds from the plaintiffs in the Dominican Republic, which he described as a lawless jurisdiction, he sought an order that any payments should be made into Court, pending the outcome of the appeal. 

23.      However, if my order is reversed, and the plaintiffs fail to repay any sums received by way of an interim payment, if so ordered by the Court of Appeal, then the defendants would be in a very strong position, in my view, to seek a stay of the Jersey proceedings until they do.  In the light of the apparently very substantial sums that appear to be involved in the proceedings, I regard it as being unlikely that the plaintiffs would refuse to comply with any such order.  The purpose of an interim order is to enable the successful party to receive the sum it is likely to recover on a conservative basis and I am therefore going to order the defendants to make an interim payment within 28 days (or such other period as counsel may urge upon me). 

24.      As to the quantum of the interim payment, as I have ordered costs on the standard basis and following Marange v La Generale Des Carrieres [2013] JRC 119A, I invite Mr Robinson to resubmit the summary of the plaintiffs' costs in the same format but with the time of the fee earners set out at the taxation rates applying factors A and B but excluding their time on this costs application.  Subject to any points that may arise it would be my intention to order the defendants to pay one half of that amount within 28 days. 

Postscript

25.      At the hearing when this judgment was handed down, Advocate Robinson had produced, as invited, a one page summary of the timer of the fee earners in Bedell Cristin applying the Factor A and Factor B rates.  In the interests of proportionality and to assist the Court, he had applied a 50% Factor B uplift, whilst reserving the right to apply a different uplift as part of the detailed Bill of Costs.  The summary also listed the disbursements, the major part of which related to the fees of English and Mauritius counsel. 

26.      Advocate MacRae submitted that this summary was simply inadequate for any meaningful response to be made by the defendants as the paying party.  He argued that the plaintiffs should comply with Practice Direction 09/03 "Taxation of Costs in Civil proceedings by Summary Assessment in Interlocutory Proceedings" and the formalities laid down therein.  I rejected that approach in that as made clear in Marange at paragraph 44, the Court should avoid a detailed review of the costs of the receiving party, adopting a "rough and ready" approach to the costs in order to arrive at a figure that the receiving party "will almost certainly collect".  The information provided to the Court in Marange (see paragraph 48) was consistent with the information provided by Advocate Robinson. 

27.      I note from "Costs on Costs 2012" by Michael J Cook, which Advocate MacRae had referred me to, that the approach adopted here to interim payments is no different to the approach of the English courts; indeed Marange drew heavily on English case law.  There is no suggestion, for example, that in England the courts apply the formalities involved in a "Summary Assessment" under CPR Rule 44.7.  I also note that in Dalemont (at paragraph 30) counsel for the paying party made a similar complaint namely that the receiving party had produced insufficient detail of its costs to allow counsel for the paying party to comment constructively, but notwithstanding an interim payment was ordered applying the above principles. 

28.      Applying the taxation rates had the effect of reducing the total costs claimed by the plaintiffs from £634,412 to £490,732.48 and in ordering an interim payment of half that amount (which was the order I made), I was satisfied on a rough and ready basis that this was a sum which the plaintiffs would almost certainly receive on taxation. 

Authorities

Crociani-v-Crociani [2013] JRC 080.

Crociani-v-Crociani [2013] JRC 090.

Crociani-v-Crociani [2013] JRC 194A.

Dalemont Limited v Senatorov [2013] JRC 209.

Leeds v Admatch [2011] JCA 110.

Dixon v Jefferson Seal Limited [1998] JLR 47.

Costs on Costs 2012, Michael J Cook.

Cepheus Shipping Corp v Guardian Royal Exchange [1995] 1 Lloyds REP.

Centre Trustees CI Limited v Van Rooyen [2009] JRC 133.

Marange v La Generale Des Carrieres [2013] JRC 119A.