Jersey Unreported Judgments

Business - costs judgment in relation to appeal on indemnity basis.

[2015]JRC054A

Royal Court

(Samedi)

11 March 2015

Advocate P. C. Sinel for the Appellant.

Advocate B. H. Lacey for the Respondent.

judgment

the commissioner:

1.        On 23^rd January, 2015, the Court dismissed the appeal of the appellant ("W") against the decision of the Master given on 13^th October, 2014, to decline to make certain orders for disclosure against the respondent ("the Commission") for the reasons set out in its judgment of that date (W-v-Jersey Financial Services Commission [2015] JRC 017).  The Commission now applies for its costs in relation to that appeal on the indemnity basis. 

2.        Advocate Lacey for the Commission submitted by way of general background that the Commission is a public body bound to manage its financial resources responsibly.  In this regard, it is responsible in the context of an administrative appeal to obtain costs orders on the appropriate basis whenever it is reasonable to do so.  The Commission is not a private litigant with vast financial resources with which to do as it pleases. 

3.        During the appeal hearing, Advocate Sinel, for W, informed me that he was in possession of three disks of data that had been received from the joint liquidators of the trust company concerned ("the trust company") which his firm was starting to analyse (paragraph 28 of the judgement).  The Commission was unaware that W had obtained information from the joint liquidators and immediately after the appeal hearing made inquiry of the joint liquidators as to what had been disclosed. 

4.        It transpired that Sinels had written to the joint liquidators on 20^th November, 2014, requesting access to W's email correspondence (sent and received) during his time as a director of the trust company.  That was provided to Sinels on 26^th November, 2014, by way of three disks.  The receipt signed by Sinels confirmed that they contained the "inbox" of W.  The joint liquidators had charged Sinels £150 for this exercise.  The joint liquidators also confirmed that Sinels had been given access to the minutes of the trust company during the period that W was a director.  

5.        Advocate Lacey's recollection of the appeal hearing, not challenged by Advocate Sinel, was that the Court had been informed in the morning submissions that Sinels were struggling to open up the contents of the three disks.  Immediately before the Court rose in the afternoon, at the end of the hearing, it was further informed that Sinels had, since the morning's hearing, managed to open the content of the disks in question, but they had not had the chance to review or assimilate the disks' contents prior to the afternoon's hearing.  The impression given to the Court, she said, was that Sinels had only come into possession of the disks before Christmas when copies were sent to W, who had been ill over Christmas and who, as a result, had been unable to review the disks' contents.  

6.        Advocate Lacey was very critical of Advocate Sinel's conduct in this respect.  Contrary to the impression given to the Court, Sinels had been in possession of the three disks since 24^th November, 2014 - over a month prior to the appeal hearing and were aware of the nature of the contents - namely W's inbox, which would no doubt include numerous documentary attachments.  Bearing in mind that the parties and the Court were concerned with discovery, these disks should have been accessed as a matter of priority.  They contained data which was highly pertinent to the appeal and they potentially rendered the appeal a waste of time.  The Commission and the Court should have been informed of the receipt of these disks prior to the hearing and at the very least, the appeal adjourned whilst the contents were reviewed.  They purported to cover at least one of the substantive discovery orders sought and may have gone to some, if not many, of the other requests.  In all, she said, there had been a lack of candour on the part of Advocate Sinel with the Court as to the true position in relation to these disks. 

7.        An additional complaint made by W in the appeal was that the Commission should have been ordered by the Master to disclose copies of all of the trust company minutes held by it.  The Commission's position was that it had made disclosure of minutes during the course of its investigation, yet no disclosure or mention was made to the Court or to the Commission during the appeal that the joint liquidators had permitted Sinels full access to the trust company minute books throughout the period that W was a director. 

8.        Advocate Lacey went on to argue that W's conduct in relation to the appeal was an abuse of process.  In addition to appealing the decision of the Master, W had issued a further summons before the Master dated 3^rd December, 2014, which somewhat confusingly extended to the more general discovery already declined by the Master and which was the subject of the appeal (paragraph 13 of the judgement).  At a hearing before the Master on 10^th February, 2015, in relation to discovery sought by one of the other appellants, the Master, noting that the joint liquidators had supplied data to W at a very reasonable cost, adjourned the application, with an indication that an approach should be made to the joint liquidators before the discovery summons was proceeded with any further.  The Master apparently also expressly invited Sinels to consider, in advance of hearing W's own further disclosure summons, adopting a similar approach and to take steps to analyse the documentation they had already obtained from the joint liquidators with a view to resolving or, at least restricting W's own very extensive disclosure requests.  Despite this, W proceeded with his summons before the Master on 10^th February, 2015, which was immediately adjourned sine die on the same basis as the co-appellant. 

9.        All of this had put the Commission to extra and unnecessary costs.  It was entirely unreasonable for W to have continued with his appeal before the Royal Court or his summons before the Master and not to take steps to vacate the hearing date.  Those costs had to be met when, all along, there was the plain and obvious route of approaching the joint liquidators and obtaining as much information from the owners and controller of the data as possible.  In the conduct of this administrative appeal to date, the Commission was most concerned that it was faced with an appellant who would deploy significant resources and court processes in order to prolong matters and cause the Commission the wasted time and expense of numerous, parallel and unnecessary interlocutory hearings.  Such conduct, said Advocate Lacey, was not to be condoned or encouraged and in her view most certainly took the case out of the norm justifying indemnity costs. 

10.      Advocate Sinel did not file a skeleton argument for the costs hearing.  His firm wrote to the Court shortly prior to the hearing, stating that there was no basis to award costs on the indemnity basis as W's conduct had been reasonable and there was nothing which took the matter outside of the norm.  Whilst acknowledging that W was effectively the losing party in relation to the appeal, no order should be made against W.  I was informed that in another application brought by W before the Master, in which he succeeded against the Commission in having the proceedings stayed until the end of May 2015, W had not been awarded his costs.  The Master had drawn the parties' attention to JFCS v Black [2007] JLR 1 in which Page, Commissioner had declined to make an order against the Commission on the grounds that it was a regulatory authority which had brought proceedings in pursuit of its public duty.  It would be unjust, said Advocate Sinel, for a costs order to be made against W where he had been unsuccessful when he had been declined his costs where he had been successful.  It was a worrying situation, he said, if costs could not go both ways.  The Commission may have been acting in pursuit of its public duty, but equally W was exercising his statutory right of appeal. 

11.      In any event, Advocate Sinel submitted that all of this was attributable to the Commission's unreasonable refusal to give W all of the information that had been requested.  By reference to the notice of appeal, he pointed out that the joint liquidators would not be in possession of the documents generated in relation to the Commission's investigations into the other appellants and individuals and would not necessarily know what documentation had been supplied to the Commission pursuant to the production orders, as that had taken place prior to the appointment of the joint liquidators. 

12.      It was distasteful for Advocate Lacey to criticise his own conduct.  If the Court had been given the further information suggested in relation to the disks, it would have made no difference to the appeal hearing.  As to the suggestion that this was an abuse of process, W was simply exercising his statutory rights. 

Decision

13.      The principles to be applied in considering an award of indemnity costs are set out in C-v-P-S [2010] JLR 645 and Leeds United Football Club v Weston and Levi [2012] JCA 088 more recently summarised by Bailhache, then Deputy Bailiff, in Dalemont Limited v Senatorov and Ors [2013] JRC 209.  As Beloff JA said in C v P-S:-

"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?"

14.      It was not clear from Advocate Sinel's oral submissions and in the absence of a skeleton argument in reply to that of Advocate Lacey, the extent to which he rejected Advocate Lacey's recollection of the appeal hearing and what I had been told.  In subsequent correspondence he has made it clear that he vehemently rejects the suggestion that he in any way failed to make proper disclosure. 

15.      However I do not need to resolve these contentions because even if Advocate Lacey is right that Advocate Sinel had not given me a full explanation in relation to these disks, it would not have made any material difference to the conduct of the appeal or have led to an adjournment.  Centrally to the appeal, W was seeking two things:-

(i)       Discovery of documents generated by the Commission's investigation in relation to the other appellants and individuals which would not have been in the joint liquidators' possession. 

(ii)      Discovery of all the documents held by the Commission pursuant to the production orders so that W could see to what extent the Commission had cherry picked documents in order to suit its case.  Whilst the joint liquidators may have been able to ascertain what the directors had sent to the Commission pursuant to the production orders, the Commission knew precisely what documents it had received. 

16.      W failed in obtaining orders for discovery in relation to this documentation both before the Master and on appeal before this Court, but this documentation was in the possession of the Commission and not the joint liquidators.  W's inbox (or indeed the minutes) would not have been relevant to these central arguments.  Notwithstanding concerns about the lack of information given to me in relation to the three disks, I do not think that there is anything in the conduct of the appeal which takes it out of the norm in a way which justifies an order for indemnity costs. 

17.      As to the allegation of abuse of process, W was entitled to appeal the judgment of the Master, as indeed he has, as I understand it, appealed my own decision, but my involvement has been limited to this appeal and I do not feel I can properly make a finding on the basis of Advocate Lacey's submissions that W's conduct of the substantive proceedings, nearly all of which has been before the Master, constitutes an abuse of process.  

18.      I do, however, think it is fair that a costs order on the standard basis should be made against W.  I appreciate that it is often the case that costs in interlocutory hearings of the kind before the Master will be ordered to be in the cause, but where parties seek to appeal from a decision of the Master then they should do so at their own risk as to costs.  The potential of an adverse costs order brings a necessary discipline to the interlocutory process.  

19.      The case of Black does not assist W.  In that case, the Commission was awarded its costs against the respondents but the Court declined to award Mrs Black her costs against the Commission arising out of her successful strike out application.  In that case, it was held:-

"As the Commission was a regulatory authority and had brought the proceedings in pursuit of its public duty, it would not be treated as an ordinary party with regard to costs and the usual rule that costs follow the event did not necessarily apply. In certain cases, it might be appropriate for costs to be ordered against an unsuccessful public body, even if it had not acted unreasonably or in bad faith, but it would be a matter of discretion for the Court.  The fact that it had been engaged in the proceedings pursuant to its public-interest functions would be a relevant factor for the Court to consider in the exercise of its discretion, but there was no automatic rule that costs would not be ordered against it.  The Court would consider inter alia (i) the financial prejudice to the successful party if it were not awarded its costs, and (ii) the need to encourage public authorities to make and stand by honest, reasonable and apparently sound administrative decisions made in the public interest without fear of exposure to undue financial prejudice if the decision were to be successfully challenged."

20.      I see no injustice in the Commission, as a regulatory authority bringing proceedings in pursuit of its public duty, not being treated as an ordinary party in this way.  The Master, in the exercise of his discretion, and following Black, did not apparently award W his costs against the Commission in the stay application in which he had been successful.  When it comes to the appeal to the Royal Court against the decision of the Master on discovery in which W was the unsuccessful party, it seems to me just that he should pay the costs of the Commission of and incidental to that appeal on the standard basis and I so order.  

Authorities

W-v-Jersey Financial Services Commission [2015] JRC 017.

JFCS v Black [2007] JLR 1.

C-v-P-S [2010] JLR 645.

Leeds United Football Club v Weston and Levi [2012] JCA 088.

Dalemont Limited v Senatorov and Ors [2013] JRC 209.