Jersey Unreported Judgments

Appeal against costs order made on 13th May, 2014.

[2014]JCA235

Court of Appeal

(Unknown)

28 November 2014

Before     :		Jonathan Crow, Q.C., President; Sir David Calvert-Smith, Q.C., and Robert Logan-Martin, Q.C.
Between	I (the mother)		Appellant
And	J (the father)		Respondent

Advocate A. T. H. English for the Appellant.

The Respondent appeared on his own behalf.

Advocate M. H. D. Taylor for the Law Society.

Advocate B. J. Corbett acted as Amicus Curiae.

judgment

crow ja:-

Introduction

1.        This is the judgment of the Court. 

2.        On the 16^th June, 2014, the Appellant was given leave to appeal against a costs order ("the costs order") made on the 13^th May, 2014, by Commissioner Clyde-Smith, by which he ordered the Respondent to pay the Appellants' costs of certain proceedings in the court below, limited to the sum of £30,000.  The Appellant is asking this Court to order the Respondent to pay the full amount of her costs, which are estimated in the sum of £146,148.60.  The Respondent has not cross-appealed.  He says that he would prefer no costs order to have been made against him, but he accepts that his aim in this Court must in practice be limited simply to resisting the appeal. 

3.        In addition to hearing from the Appellant's Advocate and from the Respondent in person, the Law Society was also convened, and we are grateful for the assistance they provided.  We also invited the appointment of an amicus to assist in presenting the counter-arguments to the appeal, bearing in mind their complexity and wider significance, and the fact that the Respondent is appearing in person.  We have been greatly assisted by the amicus and we are grateful for her assistance. 

4.        For the reasons set out below, the appeal is dismissed.  We would like at the outset to express our admiration for the clear, comprehensive and fair judgment of the learned Commissioner. 

The proceedings below

5.        The Appellant ("the mother") and the Respondent ("the father") lived together for about 20 years.  They have two daughters now aged 17 and 11 who were referred to in the court below as Alice ("A") and Maisie ("B"), (these are not their real names but pseudonyms).  They never married.  The relationship ended in March 2010. 

6.        Following the breakdown of the relationship, the mother applied for financial provision in relation to Maisie (the younger daughter) who lived with her.  The father applied for a residence order in respect of Alice (the elder daughter), and a shared residence order in respect of Maisie.  The proceedings were long and contentious.  They culminated in four judgments given by the Commissioner sitting with Jurats, two on the 5^th August, 2013, and two on the 13^th May, 2014. 

7.        The first judgment, I-v-J (Family) [2013] JRC 156, dealt with the mother's application for financial provision.  The father was ordered to make periodical payments of £752 per month until Maisie's 16^th birthday, and to make a lump sum payment of £5,000 to pay for a holiday or holidays for Maisie.  Directions were given for any subsequent hearing if the mother pursued an application for security. 

8.        The second judgment, J-v-I (Family) [2013] JRC 157, dealt with the father's application for residence orders.  Those were refused.  The court invited submissions on whether the father should be prevented from making further applications in relation to Alice, and gave directions for the determination of that issue. 

9.        The third judgment, I-v-J (Family) [2014] JRC 109, dealt with the question whether to order security over the father's property for the periodical payments.  The court refused to do so, on the grounds that it would exacerbate the already strained relations between the parties.  

10.      The fourth judgment, J-v-I (Family) [2014] JRC 110, dealt with the question whether to make an order under Article 66(8) of the Children (Jersey) Law 2002 ("the 2002 Law") restraining the father from making further applications in respect of residence, shared residence or contact in relation to Maisie without the leave of the court.  An order was made for a period of 3 years to give Maisie respite from involvement in the disputes between her parents and thereby to protect her welfare. 

The costs judgment

11.      The mother made an application for indemnity costs in respect both of her financial provision application and also the father's residence application.  The father resisted that application, saying that no order for costs should be made, but that if there was a costs order the mother should be required to make a contribution to his costs. 

12.      In his judgment on the 13^th May, 2014, I-v-J and J-v-I (Family) [2014] JRC 111 ("the costs judgment"), the Commissioner noted that the mother was legally aided and that she had incurred fees at 100% of the Legal Aid rate (to which she had been assessed) of just over £146,000, an amount which would equate at private client rates to just over £231,500.  Those costs could be apportioned as to approximately 68% to the financial provision proceedings and as to 32% to the residence proceedings.  The father had been largely unrepresented until the mother's application had been referred to the Royal Court, after which the fees of his advocate had been capped by agreement at a figure just over £22,500. 

13.      At paragraphs 7 - 15 of the costs judgment, the Commissioner cited a string of Jersey and English case-law, from which the following propositions may be derived:-

(i)        The Royal Court has a wide power to award costs pursuant to Article 2 of the Civil Procedure (Jersey) Law 1956.  

(ii)       Overall, costs awards should be based on two main considerations - the merits of the case (as adjudicated upon by the court) and the conduct of the parties in the litigation (as appraised by the court). 

(iii)      In making any costs order, the court's objective is to do justice between the parties. 

(iv)      In many cases, that objective would be fulfilled by making an award of costs in favour of the winning party, where a winner was readily apparent - although deductions can be made if the overall winner fails in relation to some claims.  

(v)       Nevertheless, the general (not universal) practice is to make no order for costs in children's cases. 

(vi)      There are three reasons why this practice has developed. 

(a)       Orders for costs between the parties to any family proceedings would be likely to diminish the funds available to meet the needs of the family, although it was by no means inappropriate for costs orders to be made in ancillary relief proceedings. 

(b)       It would normally be in the best interests of the children that parties who have a reasonable case to put forward are not at risk of being penalised by an award of costs if they are unsuccessful. 

(c)       An adverse costs order might add insult to the injury of having lost in the debate as to what should happen to the child in the future and thus be likely to exacerbate rather than to calm down existing tensions, and for that reason would not be in the best interests of the child. 

(vii)     It is both unnecessary and undesirable to try defining exhaustively the circumstances in which a court might exceptionally make a costs order in a case involving the custody and care of children, but the principal example would be where one of the parties had acted unreasonably in the conduct of the proceedings. 

(viii)    In such cases, unreasonable conduct in the proceedings might, but would not necessarily, justify a costs order. 

(ix)      Other than in family proceedings, the means of the parties are not relevant. 

14.      Having identified the relevant legal principles, the Commissioner proceeded to apply them to the facts of this case.  In summary:-

(i)        He decided that there was no question of making a costs order against the mother, because her conduct of the litigation did not justify it (paragraphs 16 - 17).  Although the mother obtained significantly less by way of financial provision than she had sought, this had to be set against the father's failure to comply with his disclosure obligations which had fuelled suspicion.  

(ii)       By contrast, the Commissioner noted (paragraphs 18 - 20) that the father's application for shared residence had been unreasonable and at least in part tactical, and as a result the Commissioner had restricted any further such applications for 3 years.  He noted that the position was exacerbated by the father quite improperly involving both children in the fight.  He also noted again (paragraphs 21 - 24) the significance of the father's failure to comply with his disclosure obligations.  This justified a costs order against the father. 

(iii)      The Commissioner considered that the father's ability to meet any costs order was relevant because any payment would diminish the funds available to meet the needs of the family (paragraph 25).  Although the father had substantial assets which had not been disclosed, the Commissioner considered them to be illiquid and he held that no costs order should be made that required the father to sell his real property (paragraphs 26 - 27).  In doing so, the Commissioner drew a distinction between his finding that such assets exist and the separate question whether they should have to be sold to meet a costs order. 

(iv)      The Commissioner took into account the fact that the enforcement of a substantial costs order against the father would exacerbate existing tensions and, instead of bringing the litigation to an end, the fighting between the parties would continue through the whole process of enforcement (paragraph 28). 

(v)       The Commissioner also took into account the fact that, although the mother has a legal liability to her lawyers, Viberts, for about £146,000, and although she has an annual income of only £19,200, she is by agreement paying only £50 per month, and the Legal Aid Guidelines provide that normally no client will be asked to pay by instalments for more than 3 years (paragraphs 29 - 30).  He concluded that the reality must be that the greater part of Viberts' fees are irrecoverable against the mother. 

(vi)      In conclusion, the Commissioner said that he had considered making an uncapped costs order against the father, subject to a proviso that it be not enforced without the court's leave, but he did not consider that to be a satisfactory solution (paragraph 31).  In the event, he made an order against the father limited (in the interests of Alice (A) and Maisie (B)) to £30,000 (paragraph 32). 

The test on appeal

15.      The award of costs in the court below involved an exercise by the Commissioner of a discretionary power.  There was no dispute between the parties as to the threshold test for an appeal in this kind of case.  The applicable principles have recently been summarised in Flynn v Reid [2012] (2) JLR 226 and United Capital Corp Ltd v Bender [2006] JLR 269.  In short, an appellant must show that:-

(i)        the judge below misdirected himself with regard to the principles in accordance with which his discretion should be exercised; or

(ii)       the judge took into account matters which he ought not to have taken into account, or failed to take into account matters that he should; or

(iii)      the decision was plainly wrong, in the sense that no reasonable judge properly directed could reasonably have reached the same decision;  or

(iv)      there has been a change of circumstance since the lower court's decision which would have justified a different decision.   

16.      It was also urged upon us (by reference to Abdel Rahman v Chase Bank (CI) Trust Co Ltd [1984] JJ 127, and paragraph 26.99 of the Civil Procedure Study Guide 2013) that there is also a fifth ground for reversing the exercise of a judge's discretion, namely if the order made results in injustice on some other ground.  Whilst accepting this point in principle, we would urge great caution in its application in practice.  It is of the very essence of a discretionary power (i) that its exercise is intended to achieve justice and (ii) that in any given case different judges might entirely reasonably come to different decisions.  It is also axiomatic that an appellate court cannot interfere with a lower court's discretion simply because the appellate judges might themselves (in order to achieve what they considered to be a just outcome) have exercised their discretion differently if they had been hearing the case at first instance.  Accordingly, if the threshold test for overturning the exercise of a discretionary judgment is simply expressed as being justified where injustice would result from the order below, there is a real risk that appellate courts would start interfering with discretionary judgments simply because they would themselves have exercised the discretion differently.  That would be heresy.  Accordingly, we would suggest that the fifth ground that has been suggested to us should be treated with caution, and should not be allowed to dilute the threshold test that has conventionally been applied. 

17.      We would also observe that this court specifically recognised in paragraph15 of Flynn v Reid the need for particular restraint in any appeal against a costs order, given that the court below will have tried the case and will have become familiar with its progress, its details and its nuances. 

The issues

18.      Following service of a Supplementary Notice of Appeal, the following issues fall to be determined in this case:-

(i)        Was the Commissioner right in treating this case as falling within the 'matrimonial field' (as that expression was used in Flynn v Reid) thereby justifying him in taking the parties' means into account and capping the costs order?  

(ii)       Was the Commissioner entitled to take into account the fact that the mother was legally aided in deciding to cap the costs order?

(iii)      Was the Commissioner entitled to regard Viberts' costs as being irrecoverable against the mother?

(iv)      If so, was that finding unlawful as being contrary to the European Convention on Human Rights 2000 ("ECHR")?

(v)       Was the Commissioner entitled to take into account the fact that the Bâtonnier could in effect cap the mother's costs as against Viberts?

(vi)      Did the Commissioner wrongly ignore the fact that the mother remains legally liable to Viberts for approximately £116,000?

(vii)     Did the Commissioner wrongly ignore the likely effect on the mother of capping the costs order as he did?

(viii)    Did the Commissioner wrongly draw a distinction between the existence of the father's assets and the question whether a costs order should be made requiring any illiquid assets to be realised?

(ix)      Did the Commissioner wrongly extend the approach taken in children's cases (namely, that in general no order for costs should be made) by applying it also to the mother's application for financial provision?

(x)       Did the Commissioner wrongly fail to take into account the wider impact his decision would have in discouraging litigants who appear against legally aided parties from approaching litigation with economy and restraint?

19.      The Supplementary Notice of Appeal also raised an allegation that the Commissioner had made "several errors of fact" and then failed to correct them (paragraph 10 and paragraph 11) but this allegation was never particularised in writing and was not pursued in oral argument.  In the circumstances, we do not need to address it. 

Ground 1: is this case within the 'matrimonial field'?

20.      In Flynn v Reid this court said (at paragraph 39) that cost capping may be appropriate in 'matrimonial cases', particularly where the parties are legally aided, because in such cases an allocation of costs can affect the balance the court seeks to achieve between the parties.  It also said (paragraph 40) that although the merits of the case and the conduct of the parties were the two major considerations in deciding the appropriate costs order, they are not the only considerations: it recognised that the court could, for example, decline to make a costs order which might aggravate the relationship between the parties, and that in the 'matrimonial field' the means of the parties could be relevant. 

21.      It is entirely clear from these passages that the court's remarks were not limited to proceedings relating to the custody and care of children.  Proceedings in which the court is making financial provision between a separated couple are every bit as much concerned with the need to strike the right balance between them as are proceedings relating exclusively to the custody and care of their children.  Similarly, a costs order made in the context of financial provision proceedings is every bit as likely to aggravate the relationship between estranged parents as a costs order in custody proceedings.  For these reasons, the expression 'matrimonial proceedings' and cognate expressions used in Flynn v Reid should be interpreted as including proceedings for financial provision.  Accordingly, the Commissioner was not wrong when he took into account the parties' means, the fact that the mother is legally aided and the likely impact of any costs order on the relationship between the parties.  

22.      For the avoidance of doubt, we would also add this.  In Flynn v Reid this court overturned a decision on costs that had been made in a dispute between an unmarried couple, commenting (at paragraphs 22 - 23) that the Deputy Bailiff in that case had been wrong to treat it as a 'quasi-matrimonial' case.  In doing so, the court was not drawing a distinction between costs orders in family disputes between married couples and costs orders in family disputes between unmarried couples.  Rather, it was drawing a distinction between family disputes (which that case was not) and other kinds of dispute (for example, disputes over property ownership arising some 6 year after the relevant relationship had ended, as in that case).  There is no justification for treating questions of costs arising in family cases differently depending on whether the couple were or were not married.  For that reason, when this court said (as it did in paragraph 39 of Flynn v Reid) that the capping of costs orders may be appropriate in 'matrimonial cases', it was not referring to disputes only between married couples: rather, it was referring to family disputes (irrespective of whether the couple were or were not married).  Similarly, when the court said (as it did in §40) that the means of the parties could be relevant in the 'matrimonial field' it should be understood as meaning that the parties' means are capable of being taken into account in a family dispute involving an unmarried couple. 

Ground 2: taking into account Legal Aid

23.      It follows from our decision in relation to Ground 1, that Ground 2 must also fail.  The court in paragraph 39 of Flynn v Reid expressly recognised that Legal Aid could be taken into account. 

Ground 3: the recoverability of Viberts' costs

24.      Ground 3 is expressed in the Supplementary Notice of Appeal (paragraph 4) as if the Commissioner has ruled as a matter of law that Viberts cannot recover any costs from the mother.  He did not.  He expressly recognised (paragraph 30) that "the mother is liable in law for 100% of the fees of Viberts".  However, he also exercised his discretion in light of the reality that the greater part of those fees would in practice be irrecoverable.  In our judgment he was right on the first point (the mother's liability in law), and in the exercise of his discretion he was fully entitled to take into account the second point (the reality of the position in practice). 

Ground 4: breach of the ECHR

25.      It is fair to record that the overwhelming majority of court time was occupied by Advocate English's submissions on Ground 4.  His argument was that the Commissioner's ruling involved a violation of Article 4(2) of the ECHR.   Reliance was placed in this regard on Van der Mussele v Belgium (App. No. 8919/80), on an Advice given by James Dingemans QC (as he then was) dated the 29^th May, 2003, and on an Opinion of Advocate Gordon Dawes dated the 14^th January, 2007. 

26.      In the course of his oral submissions, Advocate English's argument appeared to mutate into a challenge against the operation of the Legal Aid regime generally.  Even in its expanded and amended form, the Supplementary Notice of Appeal does not contain any such challenge.  Furthermore, the Appellant has not adduced any sufficient evidence as to the operation of the regime in practice, and it would be impossible for any court to rule on its compatibility with the ECHR in ignorance of all the relevant facts: as it was, various important details about the way the regime operates in practice were mentioned to us from the Bar on an anecdotal level for the first time in the course of oral argument, and it became increasingly apparent as the hearing progressed that the court did not have anything like the necessary evidential material before it.  Moreover, irrespective of whether s. 6(1) of the Human Rights (Jersey) Law 2000 is strictly engaged, we would hesitate long and hard before attempting any definitive ruling on a point of such wide-ranging public importance without appropriate notice being given to the Attorney General.  For these reasons, we refuse to treat this appeal as an effective challenge to the Legal Aid regime of Jersey, and we will proceed on the basis that the regime is Convention compliant. 

27.      In our judgment, there is no basis at all for suggesting that the costs order in this case involves any violation of Article 4(2) for a multitude of reasons, of which we will express only a few.  The first problem with the argument is that it is far from clear who the alleged victim of any such alleged violation is said to be, given that the obligations flowing from the issue of a Legal Aid certificate are personal to the individual advocate to whom it is addressed, and do not impose any obligations on Viberts as a firm.  Secondly, the costs order did not itself require any work to be done, and as such it is difficult conceptually to fit it within Article 4(2) at all.  Thirdly, in so far as Viberts are unable to recover a proportion of their fees from the mother, that result flows from the operation of the regime (which we must regard as Convention compliant) and not from the Commissioner's costs order.  Fourthly, as the decision in Van der Mussele clearly demonstrates, an important question under Article 4(2) is whether the complainant has had to suffer a disproportionate burden: to the extent that the practical effect of the costs order is that Viberts are unable to recover the full amount of their costs, that is an outcome which results from a balancing exercise between the various competing interests, and we can see no basis for suggesting that this decision, in the particular circumstances of this case, taking into account the various factors identified by the Commissioner, was in any way disproportionate.  Viberts will receive £30,000 in addition to the administration fee that they apparently receive from the firm to which the mother's original Legal Aid certificate was issued, so they are not having to work for free. 

Ground 5: the power of the Bâtonnier

28.      The next complaint is that the Commissioner erred in taking into account the fact that the Bâtonnier could in effect cap the mother's costs as against Viberts.  We are not certain whether this is a fair description of the basis on which the Commissioner took his decision, but in any event he had to exercise his discretion based on the facts as known to him, and Advocate English was unable to suggest that anything said in paragraphs 29 - 30 of the costs judgment was wrong either in law or in fact. 

Ground 6: disregarding the mother's legal liability to Viberts

29.      The next complaint is that the Commissioner wrongly disregarded the fact that the mother remained liable in law to Viberts for the balance of their fees in the sum of about £116,000.  However there is nothing in this complaint, because the Commissioner took exactly this point expressly into account in the opening words of paragraph 30 of his costs judgment. 

Ground 7: ignoring the impact on the mother

30.      The next question is whether the Commissioner wrongly ignored the likely effect on the mother of capping the costs order.  In our judgment, he did not.  In paragraph 28 of the costs judgment he expressly considered the likely effect of making an uncapped costs order on both parties, and he concluded that it would serve only to perpetuate the fight between the parties.  In our judgment he was entirely justified in concluding that that consideration outweighed any self-evident disappointment the mother might feel as a result of not being awarded her costs in full.  We would in any event add that there must be a serious question whether that disappointment is in reality felt more keenly by Viberts than by the mother (who, for the reasons given by the Commissioner, is unlikely to benefit in practice from any enhanced costs order against the father). 

31.      Furthermore, we consider that there is some force in the father's complaint now that this appeal evidences a reluctance on the part of the mother (or those advising her) to give up the fight.  Moreover, we can also sympathise with the submission made on behalf of the father that this appeal can, in practical terms, serve only to benefit the mother's lawyers rather than her personally, and we very much hope that those who either take or advise on the question whether further proceedings or further applications in existing proceedings are necessary should be guided by the overriding need to bring the dispute to an end, rather than finding further ways of perpetuating it. 

Ground 8: the existence of assets, and enforcement of costs against them

32.      The next complaint is that the Commissioner wrongly drew a distinction between the existence of the father's assets and the question whether a costs order should be made requiring any illiquid assets to be realised.  In our judgment this complaint is misconceived.  There is self-evidently a difference between the two issues, and the Commissioner was not only justified but also obliged to differentiate between them, as he did in paragraph 27 of his costs judgment. 

Ground 9: extending the principle applicable to children's cases

33.      The next complaint is that the Commissioner wrongly extended the approach taken in children's cases (namely, that in general no order for costs should be made) by applying it also to the mother's application for financial provision.  On this point, Advocate English submitted that, by analogy with the decision of the English High Court in KS v ND [2013] 2 FLR 698, the courts in this jurisdiction should not approach cases under Schedule 1 of the 2002 Law with a starting assumption that no order should be made for costs: instead, he submitted that the court should approach the issue of costs in such cases with a clean sheet, and then consider the conduct of the parties and their relative success or failure in the outcome. 

34.      The decision in KS v ND was based on English legislative provisions which have no equivalent in Jersey.  Nevertheless, we were invited to adopt the same approach here by analogy.  The question whether to do so was left open in the judgment of the Royal Court in E v F [2014] JRC 184, and we do not consider it necessary to resolve the point in this case either because in our judgment the mother's submission under this heading leads nowhere.  The Commissioner did not start from any presumption one way or the other as to the appropriate outcome in costs.  Rather, as the summary outlined above demonstrates, he did exactly what Advocate English would wish.  He considered the extent to which each side had succeeded, and he considered their conduct.  In any event, if indeed the Commissioner did in this case start from any predisposition to make no order for costs on either the residence or the financial applications, we consider that he was not wrong to do so on the particular facts, in circumstances where both the issues and the progress of the proceedings were so closely connected. 

Ground 10: failure to take into account the wider impact

35.      The final question is whether the Commissioner wrongly failed to take into account the wider impact his decision would have.  In our judgment this complaint is misconceived.  It is predicated on the basis (paragraph 13 of the Supplementary Notice of Appeal) of an assumption as to the likely behaviour in the future of litigants appearing against legally aided parties "because all litigants in children's proceedings will know that if costs orders are capped as a matter of course, where the other party is legally aided, it will discourage the non-legally aided party from approaching litigation with the same level of economy and restraint, as they otherwise would do" (emphasis added).  The words underlined show that this complaint is based on a false predicate, because the Commissioner did not purport to lay down any general statement of principle that all costs orders in favour of legally aided litigants in all children's cases should necessarily be capped (nor could he).  As is apparent from his meticulous judgment, he took a fact-specific decision on the basis of the particular circumstances of this case. 

Miscellaneous points

36.      Some of the authorities cited in the mother's Contentions and in the oral submissions of Advocate English concern the court's ability to award costs on the indemnity basis.   It follows from the conclusions set out above that the Commissioner was entirely justified in capping the costs liability of the father as he did, and as a result there can be no justification for overturning his decision refusing to award costs against the father on the indemnity basis. 

37.      Finally, we would mention one point of detail.  As the Commissioner observed in paragraph 17 of the costs judgment, non-disclosure by one party is apt to fuel suspicion on the part of the other.  He was talking there about the father's non-disclosure of assets.  However, exactly the same comment could be made about the non-disclosure of the documents evidencing the mother's Legal Aid position.  We do not suggest that any party should be entitled to see the other side's application for Legal Aid, but we do not understand why a party should be coy about disclosing his or her Legal Aid certificate, or certificates, if a reasonable request is made to see them. 

Authorities

I-v-J (Family) [2013] JRC 156.

J-v-I (Family) [2013] JRC 157.

I-v-J (Family) [2014] JRC 109.

J-v-I (Family) [2014] JRC 110.

Children (Jersey) Law 2002.

I-v-J and J-v-I (Family) [2014] JRC 111.

Civil Procedure (Jersey) Law 1956.

Flynn v Reid [2012] (2) JLR 226.

United Capital Corp Ltd v Bender [2006] JLR 269.

Abdel Rahman v Chase Bank (CI) Trust Co Ltd [1984] JJ 127.

Civil Procedure Study Guide 2013.

European Convention on Human Rights 2000.

Van der Mussele v Belgium (App. No. 8919/80).

Human Rights (Jersey) Law 2000.

KS v ND [2013] 2 FLR 698.

E v F [2014] JRC 184.