Jersey Unreported Judgments

Debt - application by the defendant for additional security for costs.

[2014]JRC241

Royal Court

(Samedi)

4 December 2014

Mr S. Holmes appeared for the First and Second Plaintiffs and in person.

Advocate M. H. D. Taylor for the Defendant.

CONTENTS OF THE JUDGMENT

judgment

the master:

Introduction

1.        This judgment represents my detailed reasons for refusing the defendant's application for additional security for costs. 

Background

2.        This application arises out of my judgments in this action reported at Home Farm Developments-v-Le Sueur [2014] JRC 079 ("the March Judgment") and Home Farm Developments and Others-v-Le Sueur [2014] JRC 131 ("the June judgment").  By the March judgment I struck out the entirety of the plaintiffs' claims against the defendant.  The plaintiffs are appealing the March judgment.  The material factual background is set out at paragraphs 5-27 of the March Judgment. 

3.        By the June judgment I ordered the plaintiffs to provide security for costs of £15,000.  I firstly determined I had jurisdiction to make such an order (see paragraphs 6-13).  I secondly determined that I could order security for costs against an individual plaintiff resident in Jersey (see paragraphs 14-20).  I then exercised my discretion to decide whether I should require the plaintiffs to provide security.  I firstly ruled that the first and second plaintiffs as companies should be required to provide security (see paragraph 30-39).  Finally, I ruled that the third plaintiff could be required to provide security.  At paragraph 39 I stated as follows:-

"Taking into account the lack of financial information about the first and second plaintiffs which is in possession of the third plaintiff, the lack of any financial information about the third plaintiff, the lack of any real property in the Island in the name of the third plaintiff, the ignoring of the costs order already made, the fact that the plaintiffs' claim has already been struck out as vexatious and an abuse of process, and the weakness of the third plaintiff's claim, these factors in my view taken together are sufficiently unusual circumstances to require in this case  the third plaintiff in the interests of justice to provide security for costs."

4.        As to the amount of security, I ordered the plaintiff to provide £15,000 by way of security for costs.  £5,000 of this was for the application that led to the March judgment and £10,000 in respect of the costs of the appeal against the March judgment including the application for security for costs which led to the June judgment.  I also ordered the plaintiffs to pay the defendant's costs on the standard basis, such costs to be taxed if not agreed, of both the March judgment and the June judgment.  The June judgment has not been appealed. 

Developments since the June judgment

5.        The amount ordered to be paid by way of security has been paid into court.  No agreement has been reached on the costs of the March or June judgments.  The defendant has submitted a bill of costs for the June judgment for taxation.  The amount claimed is £8,565.75. 

6.        On 18^th August, 2014, Mr Holmes filed an affidavit of 40 pages with lengthy exhibits on behalf of the plaintiffs'.  This affidavit was filed the day before the appeal against the March judgment was due to be heard. 

7.        On 19^th August, 2014, the appeal was adjourned to enable the plaintiffs to obtain legal advice or apply for legal aid.  While Advocate Taylor informed me that he was willing to proceed on 19^th August, 2014, he also explained that he had reserved his position that an adjournment of that hearing might be necessary if issues were raised by the Court arising out of the affidavit filed by Mr Holmes on 18^th August.  It therefore appears that Mr Holmes's affidavit may have been a contributory factor in the Court ordering an adjournment; however this is not entirely clear.  

8.        What is clear is that when the matter was adjourned the plaintiffs were ordered to pay wasted costs of £1,500, which costs have been paid.  This sum is in addition to the sum of £15,000 I ordered to be provided by way of security which sum has also been paid. 

9.        On 19^th August, 2014, the defendant also sought an increase for security of costs for the appeal.  The Royal Court made no order, without prejudice to the defendant's right to apply to refer an application to me for consideration. 

The nature of the application

10.      Mr Holmes, as part of his submissions, raised the argument that the Royal Court had already determined the matter and could not do so again absent a material change of circumstances which had not occurred.  He relied on the decision of Republic of Brazil v Durant [2012] JCA 025 in support of this submission. 

11.      The factual background to the Brazil case concerned whether or not the Royal Court could grant leave for evidence to be adduced by video link, having previously dismissed a similar application.  Paragraphs 18 to 20 provide as follows:-

"In our opinion, the appropriate test in this jurisdiction, by reference to which the Royal Court exercising its jurisdiction in matters of case management is entitled to entertain a further application on a matter which it has already determined and refused or dismissed, is that there has been a material change of circumstances or that the court, whether innocently or otherwise, has been misled as to the correct factual position, or that the grounds upon which the application is made are materially different from those already considered. 

In the present case the grounds were identical at each application: the relevant witnesses either refused or were not prepared to travel.  All that had altered was that the solicitors had made further significant attempts to persuade the witnesses to travel and to understand their reasoning.  Those further efforts on the part of the solicitors did not, in our opinion, constitute either altered grounds or a material change of circumstances. 

We therefore grant this application for leave to appeal; and it follows that the appeal against the decision to allow this evidence to be given by video-link must be allowed as it was not open to the Royal Court to revisit its earlier decision."

12.      Advocate Taylor contended in response that the present circumstances are very different to the Brazil case and that it would be wrong in the present case for security to be left as it is.  A party must be allowed to apply for more security where circumstances have changed.  The change in circumstances relied upon were that the fact that the appeal was no longer proceeding in August as had been contemplated in June and secondly an affidavit which went beyond the pleaded case had been filed which the  defendant might have to respond to. 

13.      In my judgment, I accept that a party can always apply for additional security.  Indeed, it is often the practice to ask for security for costs up to a certain event and then to revert to the court if necessary to ask for security for subsequent events.  The position here however is slightly different in that what is being sought for is more security for the same event, namely an appeal against the March judgment.  In such circumstances, I agree with Mr Holmes that the reasoning in Republic of Brazil v Durant applies and that what has to be shown is a material change of circumstances. 

14.      However I am satisfied that such a change of circumstances exists firstly because the appeal has now been adjourned, and secondly because an extensive affidavit has now been filed which it is necessary for Advocate Taylor to consider and which may have to be responded to.  I therefore accept that Advocate Taylor has made out a case to apply for additional security in respect of the same event. 

Quantum

15.      I now turn to consider the amount of security sought, bearing in mind that I previously ordered the plaintiffs' to provide £10,000 by way of security in respect of the plaintiffs' appeal, which sum has been provided. 

16.      When I ordered this sum to be paid, it was intended to be both for the costs of the June judgment and the costs of any appeal.  The appeal is still listed for a day. 

17.      Advocate Taylor now complains that most of the costs provided by way of security have been taken up in relation to the costs incurred in respect of the June judgment.  As the amount claimed totalled £8,565.75, the amount left is insufficient to reflect the work already carried out and the work that needs to be carried out for the appeal to be determined.  He provided a schedule to me showing that the total value of work he carried out was in excess of £16,000. 

18.      In considering these figures, firstly I was of the view that the amount claimed for costs in respect of the June judgment is going to be reduced on taxation.  Indeed, to be fair to Advocate Taylor, he also accepted this was the position.  I therefore formed the view that the amount recoverable on taxation would be in the region of £6,000.  In fact subsequent to my decision, the costs of the June judgment have been taxed in the amount of £5,565.10.  The effect of my assessment that £6,000 would be awarded on a taxation is that when I made my decision I concluded that there still remained £5,500 for the costs of the appeal.  I arrived at this figure by taking the sums of £10,000 ordered as security for the appeal and the wasted costs of £1,500 and then deducting the estimated taxation figure of £6,000.  

19.      The work that therefore remains for Advocate Taylor is to prepare for the final hearing and consider whether the defendant wishes to file an affidavit in response.  Advocate Taylor indicated at present, but subject to further instructions, his client was minded to produce a short affidavit in reply.  He also relied on the fact that all the time he had recorded for this matter had a value of over £16,000 on the standard basis.  This figure in my judgment is however too high.  Firstly, it is calculated on the basis of a mark-up of 50% for the degree of care required for this claim, whereas I consider this is a claim at the lower end of the scale where a rate of 35% is more appropriate.  Mr Thérin, when taxing the bill of costs of the June judgment, independently reached the same view.  Secondly, some of the time recorded would be reduced on taxation.  Thirdly, some of the time claimed is for time spent in relation to the present application and re-fixing dates because the earlier dates were adjourned due to medical certificates provided by Mr Holmes rather than what work was needed to bring the appeal to a conclusion. 

20.      I was also informed that some of the work for the adjourned hearing of 19^th August, 2014, had not been recovered in the sum of £2,000.  Deducting this sum from the figure of £5,500 that I consider is available still leaves another £3,500 to prepare for the next hearing.  At a recoverable charge out rate of £300 per hour which reflects a mark-up of around 35%, there is another 12 hours of work that can be covered by the security provided.  However, in my judgment I consider that around 20 hours' work is required to complete preparation and appear at the appeal i.e. a figure of £6,000.  On this basis another £2,500 is required by way of security. 

21.      Against that, the plaintiffs' appeal is developing compared with how matters were put to me.  Whether the plaintiffs will succeed on an appeal is a matter for the Royal Court and I make no further observations in relation to the plaintiffs' evidence beyond the fact that the nature of the relationship between the third plaintiff and the defendant may be more complicated than was reflected in the material I was asked to consider.  

Decision

22.      In reaching my decision, while I have discretion to order additional security for costs, I have reminded myself that it is only appropriate to order security for costs against a resident plaintiff in exceptional circumstances.  This is important because the reality is that if any additional security were to be ordered, it would have to be paid by the third plaintiff or someone on his behalf.  In my judgment, while the request for additional security followed a change of circumstances, the change was not so special or unusual to justify increasing the amount I originally ordered to be provided.  There are no new reasons for ordering security beyond those set out at paragraph 39 of my June judgment cited above.  Indeed, it is right to observe that as much has been spent in seeking additional security as any costs that may have to be incurred in respect of the hearing of the plaintiffs' appeal not covered by the security already ordered.  I therefore consider the request for additional security not to have been proportionate to the additional sums that were incurred to apply for such security.  I took this into account in exercising the discretion vested in me.  The defendant's application was therefore refused. 

The costs of the application

23.      In light of my decision, I ordered that the defendant should bear its own costs.  As far as the plaintiffs' application for costs was concerned, I ordered plaintiffs' costs in the cause.  Whether the plaintiffs will recover their costs of resisting the application ultimately depends on the outcome of their appeal.  I considered that this order best reflected the justice of the application. 

Authorities

Home Farm Developments-v-Le Sueur [2014] JRC 079.

Home Farm Developments and Others-v-Le Sueur [2014] JRC 131.

Republic of Brazil v Durant [2012] JCA 025.