Jersey Unreported Judgments

Striking out - application by plaintiffs to continue proceedings against Bois Bois and Young.

[2015]JRC118

Royal Court

(Samedi)

1 June 2015

Before     :		Advocate Matthew John Thompson, Master of the Royal Court
Between	Mayhew Limited		First Plaintiff
And	Shane Michael Holmes		Second Plaintiff
And	Bois Bois		First Defendant
And	Daniel Young		Second Defendant

Mr S. M. Holmes appeared in person and for the First Plaintiff.

Advocate A. D. Hoy for the First and Second Defendants.

Contents of the judgment

		Paras
1.	Introduction	1
2.	Factual background	2
3.	History of proceedings	3-6
4.	Submissions	7-19
5.	Decision	20-38

judgment

the master:

Introduction

1.        This judgment represents my decision in relation to an application by the plaintiffs to continue proceedings commenced against Bois Bois following the proceedings being listed for possible strike out under Royal Court Rule 6/26(13). 

Factual Background

2.        The proceedings relate to a purchase of 10.3 verges of land known as Trident Nurseries, St Saviour ("Trident Nurseries").  In or about November 2010 the law firm, Bois Bois, were retained by Mr Holmes in respect of the purchase of Trident Nurseries.  A pre-contract with the seller was executed on 22^nd February, 2011, with the contract being passed before the Royal Court on 17^th June, 2011.  As part of the purchase the second plaintiff borrowed £1,250,000 from a third party secured on Trident Nurseries. 

The history of proceedings

3.        The order of justice was approved by W J Bailhache as Deputy Bailiff on 26^th February, 2013, and served on 10^th May, 2013.  An answer was filed on 13^th June, 2013.  No reply has been filed.  However, in the Royal Court Rules 2004, as amended, ("the Rules"), the time for filing a reply expired on 4^th July, 2013.  Therefore by reference to Rule 6/26 a summons for directions should have been fixed for hearing no later than 15^th September, 2013. 

4.        The Master's circular, which included the present proceedings, was distributed on 16^th February, 2015.  Under Rule 6/26(13), if two months have elapsed from the time for filing pleadings and no summons for directions has been issued, the court, after giving 28 days' written notice, may order that the action be dismissed.  In this case by 4^th September, 2013, two months had elapsed with no summons for directions being issued.  No further steps in the proceedings have occurred since the answer was filed. 

Legal Test

5.        The test as to how the court exercises the powers vested in it by Rule 6/26 is well known and was considered in Lescroel v Le Vesconte [2007] JLR 273, Irish Nationwide Building Society v Volaw and Others [2012] JRC 035 and Hong Kong Foods Limited v Robert Alan Gibbons & Others [2014] JRC 187.  In the latter case at paragraphs 26 to 29 I summarised the legal principles as follows:-

"26.    There is no real disagreement between the parties of the relevant legal principles on a strike out application for breach of the Rules which briefly are as follows:-

(i) The power to strike out is contained in Rule 6/26(13) of the Rules which permits the court of its own motion to dismiss an action after giving 28 days' notice in writing to all the parties;

(ii) On considering whether an action can be dismissed the court considers the following by reference to Lescroel v Le Vesconte [2007] JLR 273:-

(a)       Apart from the failure to issue a summons for directions, has the plaintiff prosecuted its case with at least reasonable diligence;

(b)       Is the failure to apply to issue for a summons for directions within the time frame contemplated, excusable;

(c)       Has the plaintiff satisfied the Master/Court that the balance of justice indicates that the action should be allowed to continue?

27.      Ultimately, the court in Lescroel also noted that the Master had a discretion.  In B v MR [2007] JLR N 48, the Royal Court stated "the decision to dismiss an action without considering the merits should be taken on the basis of all the circumstances.  The three questions should not therefore be considered sequentially with the court only considering the next question if the plaintiff succeeded on the previous one".

28.      It is also clear that the remedy of dismissal must not be disproportionate to the breach involved (see B v MR [2007] JRC 139 at paragraph 26 and Irish Nationwide v The Volaw Corporate Trustee Limited & Ors [2012] JRC 035 at paragraph 27). 

29.      In Vieira v Kordas [2014] JRC 042 although considering a strike out under Rule 6/13 of the Rules, which is a slightly less stringent test, W. J. Bailhache, Deputy Bailiff at paragraph 19 stated as follows:-

"We come now to the question as to what sanction should be applied in the light of the first two findings.  Having regard to the Article 6 Convention rights of the parties, we note and accept the proposition that we should not apply the most severe sanction of striking out the plaintiff's claim if there are other sanctions which could be applied which would enable justice to be done between the parties.  Illustrations of the type of sanctions - costs orders, orders that no interest be due on any sum awarded and so on - are canvassed in some of the other cases.  On the other hand, if the court were to be of the view that it is now no longer possible to have a fair trial of the action, then there would undoubtedly be prejudice to the defendant, and it would not be right to allow the action to proceed." 

I consider it is correct to take the same approach in exercising the discretion vested in me where a beach of Rule 6/26 has occurred."

6.        I adopt the same approach in this case.  I observe in particular that both in Irish Nationwide and Vieira v Kordas, the Royal Court appears to have modified or softened its approach slightly in terms of whether a case should be struck out, even if there is inordinate and inexcusable delay, to enable justice to be done between the parties.  This more recent approach is because the Royal Court has had regard to Article 6 of the European Convention of Human Rights 2000 and the right to a fair trial. 

Submissions

7.        Mr Holmes firstly accepted that delay had occurred but contended there were excusable reasons for some of the delay.  He also contended that to strike out the claim would be unjust. 

8.        In relation to periods of delay, he explained firstly that, after an answer was filed, he did not take any further steps because he was waiting for Trident Nurseries to be sold in order to crystallise his loss.  The sale took place in September 2013.  Mr Holmes contended that until Trident Nurseries was sold he did not know whether or not he was going to suffer a loss or what that loss might be.  

9.        The losses now claimed are firstly the sums pleaded at paragraphs 6.2(a) to (i) of his order of justice, being costs the plaintiffs claim they would not have spent but for the legal advice of the defendants.  Secondly, the claim includes a loss representing the difference between the purchase price paid by the plaintiffs and the net proceeds following the sale of Trident Nurseries.  This claim was for the sum of £510,000, as referred to at paragraph 10 of the second plaintiff's skeleton argument.  Although paragraph 6.3 of the order of justice contains a different figure, Mr Holmes was clear that his claim was for £510,000 plus his wasted expenditure.  Thirdly, he claimed the profit the transaction should have made.  I consider this third head later in this judgement. 

10.      Mr Holmes also explained that, in July and August 2013  there had been correspondence with Voisins, acting for the defendants, who had indicated that the name of the first defendant was incorrect because it was simply a trade name and what was required were the names of the partners of Bois Bois during the period of retainer.  Mr Holmes complained that these names had never been provided.  He referred to this issue because it would be wrong to say that Mr Holmes was taking no steps following the answer being filed. 

11.      Mr Homes further contended that between April 2014 and January 2015 he was trying to obtain advice on legal aid.  He accepted that he started putting together an application for legal aid and the advice he was seeking in April 2014 which was finalised in May 2014.  In June 2014, Viberts were appointed by the acting Batonnier to provide legal advice under the legal aid scheme to Mr Holmes.  However, Mr Holmes did not receive legal advice from Viberts until November 2014.  This advice suggested that the plaintiffs might have a claim against the defendants, subject to further investigation.  

12.      On 6^th January, 2015, the second plaintiff emailed legal aid seeking an opinion on his claim against the defendants.  A further legal aid certificate was issued to Viberts.  However by January 2015, there were issues about whether Viberts were in a position of conflict due to unpaid fees.  By the time this conflict was resolved, the action had appeared on the Master's circular of 16^th February, 2015.  Accordingly, Viberts wrote to legal aid seeking confirmation that they were not required to provide an opinion until the appearance of the matter on the court circular had been dealt with.  I was informed that legal aid responded, agreeing that Viberts were not required to give any legal advice, until the plaintiffs had dealt with the case appearing on the court circular.  

13.       In respect of the time it had taken to obtain legal advice, Mr Holmes fairly accepted that some part of the delay was not justifiable because he did not start looking for advice and legal aid until April 2014.  However, he contended that, while the matter was with Viberts or with legal aid, the period of delay was not his fault and therefore the delay should be excused for these periods i.e. from June 2014 onwards. 

14.      He also referred me to correspondence, after the case appeared on the Master's circular, where he tried to speak to Voisins who were acting for the defendants but without success.  I did not regard correspondence after the case had appeared on the circular as relevant to the exercise of discretion I had to carry out. 

15.      Finally, Mr Holmes contended it would be unfair for the proceedings to be dismissed when there was an arguable claim. 

16.      Advocate Hoy's main submission for the defendants was that the claim was hopeless and bound to fail.  This was because what had led to the plaintiffs' difficulties was that the plaintiffs' ability to develop part of the Trident Nurseries' site was restricted, due to the effect of a land control permit applicable to Trident Nurseries and dated 13^th March, 2007.  Although planning permission had been granted in May 2010 to develop part of the site, the remaining part of some 8 verges still had to be occupied or used by someone who was engaged in work of an agricultural nature.  The 2007 permit therefore excluded the land being used by owners of any property built for equine use or the planting of trees.  

17.      Why this mattered was because Advocate Hoy contended that the complaint of the plaintiffs, as set out at paragraph 1.3 of the order of justice, was that Bois Bois would procure that the land control restrictions would be varied so that the area of the site not for development could be used for "informal grass areas, cut grass paths, the planting of trees, equine or similar informal recreation".  The plaintiffs' claim, according to Advocate Hoy, was therefore hopeless and bound to fail.  No claim could ever succeed on the basis that the defendants had or could ever have guaranteed that a restriction imposed by land control would be varied. 

18.      Alternatively, Advocate Hoy contended that no steps in the proceedings had been taken since June 2013.  The period of delay to be justified was therefore twenty-one months which was clearly a period of time which justified a case being struck out, as had occurred in other decisions.  In relation to the objections taken to Bois Bois being sued as distinct from the names of the individual partners, it was not for the defendants to put right the plaintiffs' mistake.  In relation to taking legal advice, this was not a step in the action.  The evidence required for a trial was oral rather than documentary and so a fair trial could not take place given the passage of time since the events complained of (which took place in 2011). 

19.      In respect of loss, if he was wrong in his other submissions, he contended the loss of profit could not be claimed as distinct from losses occasioned by the plaintiffs entering into the transaction. 

Decision

Delay

20.      I start firstly by considering what period of delay has occurred.  By reference to the chronology set out above, a summons for directions should have been issued within one month of expiry of the time limit for filing a reply i.e. by 4^th August, 2013.  Any such summons should have been heard by 15^th September, 2013.  In my view therefore it is only periods after this latter date that should be taken into account in determining what period of delay has occurred.  Before 15^th September, 2013, any summons for directions would not have placed the plaintiffs in breach of the Rules.  Accordingly, the period of delay I will have regard to, is seventeen months i.e. from 15^th September, 2013, until 16^th February, 2015, when I issued the Master's Circular. 

Inordinate delay

21.      I also am of the view that this delay is inordinate because, had there been no delay of seventeen months, then the action should by now have reached a trial.  This is an action that, while not a simple claim, is not at the same level of complexity compared to some of the claims that come before the Royal Court.  Had it been progressed with proper speed, then it should have been concluded by the end of 2014.  This is consistent with the sort of timeframes the Royal Court seeks to adhere to, as far as resources allow.  This is why a delay of seventeen months is inordinate. 

Excusability

22.      In relation to whether this period of inordinate delay is excusable, I accept, in principle, that it is appropriate to wait to progress a claim by seeing how much is at stake.  I therefore understand why Mr Holmes did not immediately issue a summons for directions when he did not know what losses he might be claiming.  However, in such circumstances, the right course of action for a plaintiff is to look to agree a stay of proceedings with a defendant, so that a defendant is informed of what is happening.  Failing agreement, a plaintiff can apply to the court for a stay.  Agreeing a stay for a period to allow losses to be quantified is the sort of application where the court might well grant a stay for a defined period, since it may well be in the interest of both parties to a dispute to know what is at stake. 

23.      The criticism Mr Holmes faces is that he did not communicate with the defendants why he had not issued a summons for directions.  The sale of Trident Nurseries had also taken place by September 2013.  Shortly after this sale, the plaintiffs were therefore in a position to quantify loss and issue a summons for directions.  Although such a summons might have been outside the period by which a summons for directions should have been issued, it is highly unlikely that a short period of delay would have led to the matter being struck out.  

24.      Where Mr Holmes did communicate with the defendants was in relation to their contention that he had sued the wrong entity by suing Bois Bois which was a trade name.  This was pleaded at paragraph 5 of the answer.  I am not sympathetic to the defendants' stance on this point.  It would have been straightforward for the defendants, through their advisers, to have informed Mr Holmes of the correct names of the partners during the period of engagement and for the order of justice to have been amended by consent.  The point pleaded was purely technical as it was quite clear whom the plaintiffs had retained.  It was not helpful to require Mr Holmes to find information which was clearly known to the defendants and their advisers when he sought this information by correspondence which took place in August 2013.  If therefore I am wrong on the period of delay relevant to the present application, I would have in any event excused the period of delay up to September 2013 because of the failure of the defendants' advisers to respond with details of the names of the partners of Bois Bois. 

25.      In relation to seeking advice on legal aid, Mr Holmes is a litigant in person.  Given the risks to any litigant where claims fail at trial, I can understand why Mr Holmes wanted to take legal advice, having commenced proceedings, and why he was seeking legal aid to obtain such advice.  However, Mr Holmes delayed in doing so and again did not keep the defendants informed of the steps he was taken or seek to agree any form of stay to enable him to obtain legal aid.  Against these criticisms, the period it took for initial advice to be given was outside Mr Holmes' control.  The response of the legal aid office that no advice need be given while the case was on the Master's circular also did not assist progress.  It might have been helpful to Mr Holmes in the context of this application to have received advice on his prospects in relation to the present claim.  This is clearly relevant to the balance of justice part of the test. 

26.      Balancing these matters, I have reached the conclusion that five months of the delay is excusable.  In arriving at this figure, I do not accept that I should excuse Mr Holmes for the time it took him to apply for legal aid and seek advice because he did not keep the defendants informed.  Likewise the period I would have expected it should have taken for advice to have been received is between one and two months.  For the same reason I do not therefore excuse a further two months.  However, taking some seven months to provide advice and then having further communications and with legal aid means that the remainder of the period of delay was not the fault of Mr Holmes, even if he should have kept the defendants informed.  I have therefore excused five months of this seven month delay. 

27.      This means that there is a period of delay of twelve months which is both inordinate and inexcusable.  I deal with the effect of this later in this judgement. 

Is the claim bound to fail?

28.      I next consider whether or not the claim is hopeless because, if it is, then I should not allow a hopeless claim to continue where there has been inordinate and inexcusable delay.  However, I do not consider that the claim is hopeless and bound to fail.  This is because, in my view, the essence of the plaintiffs' claim is a claim in negligence.  Paragraphs 4.1 to 4.4 of the order of justice contain these allegations and provide as follows:-

"4.1 The First and Second Defendants breached the Agreement, in that they failed or neglected in their duty to complete the execution of the security and undertake the customary title investigations to ensure the Site had clean marketable title, and could be used, occupied and developed for residential purposes in accordance with the Development Project.

4.2 The First and Second Defendants breached the Agreement, in that they misrepresented the title of the Site.  Despite 4.1, they confirmed or certified to the Mrs Leith and the Second Plaintiff their undertaking that, inter alia, the Site could be purchased for use, occupation and development for residential purposes in accordance with the Agreement and the Development Project.

4.3 As a result of 4.2, the First and Second Defendants lead the Second Plaintiff to understand that they had fulfilled their duty to, inter alia, procure the title necessary for the Development Project.

4.4 As a result of 4.1, the First and Second Defendants failed or neglected in their duty to bring to the notice of the second Plaintiff the existence and purport of, inter alia the Robertson Report, the Existing LC Consent and the Full Conditions that conflict with the Agreement, the Outline Permission and the Development Project."

29.      I do not construe the plaintiffs' allegations as a claim that Bois Bois would somehow procure a variation of the land control restrictions to meet Mr Holmes' objectives.  I regard paragraph 1.3 of the order of justice, referred to above, as doing no more than setting out the plaintiffs' commercial objectives in relation to Trident Nurseries, with the defendants being intended to act as legal advisers in relation to any onward sale by the first plaintiff, as well as acting on the contract to purchase the site.  To the extent that paragraph 1.3 indicates otherwise then it should be amended to remove any potential misunderstanding. 

30.      I also do not construe paragraph 4.5 of the amended order of justice as containing an allegation that the defendants failed to procure a change to the land control applicable to Trident Nurseries.  Paragraph 4.5 provides as follows:-

"4.5 As result of 4.1 and 4.4, the First and Second Defendant failed or neglected in their duty to make use of the processes know to them under the Agriculture Land (Control of Sales & Leases) (Jersey) Law 1974, and complete and submit the customary Land Transaction Form in conjunction with Advocate Bisson for the Vendor, to apply for issuance of a new land control consent that would accord with the Agreement, the Outline Planning Permission and the expectation the Development Project."

31.      I read paragraph 4.5 of the order of justice as an allegation that the first and second defendants failed to make enquiries.  Mr Holmes, in submission, accepted that this was what was intended.  To the extent that paragraph 4.5 may be said to go further than a failure by the defendants to make enquires about the land control applicable to the site and to advise the plaintiffs accordingly, paragraph 4.5 should be also be amended.  This is subject to whether or not the claim should continue, which I address below. 

The losses claimed

32.      However, it is also right to consider the nature of the losses claimed by the plaintiff's.  The essence of the allegations made by the plaintiffs is that, if they had been advised correctly, they would not have entered into the transaction.  The losses claimed at paragraphs 6.2 and 6.3 of the order of justice other than lost time (which is not recoverable) and the difference in value between the purchase price paid by the first plaintiff for Trident Nurseries and the net sale proceeds quantified in the course of argument at £510,000 by Mr Holmes are heads of loss that are potentially recoverable. 

33.      Paragraph 6.4 of the plaintiffs' claim is as follows:-

"To consequential damages in relation to loss of ordinary property business profits - that should have otherwise been ordinarily earned against the commercial investment capital and security the Plaintiffs have locked in to the purchase of the Site for 612 days to date - in the net sum of £1,150,000.00."

34.      In the course of argument, as noted above, Mr Holmes clarified that he was claiming the profit he would have made, had he had been correctly advised.  This is not what paragraph 6.4 says.  It is also a submission which is inconsistent with a claim that Mr Holmes would not have entered into the transaction, had he been correctly advised.  His claim therefore appears to both claim the monies he would not have spent or lost, had he had been correctly advised, and the profit he would have made had there been no problems with land control restrictions.  These two positions are inconsistent and so paragraph 6.4 cannot stand as drafted. 

35.      To the extent that the plaintiffs are claiming that the defendants knew of some other opportunity available to Mr Holmes, which he could have invested in, and he is claiming a loss of opportunity based on such an investment, paragraph 6.4 at present does not identify what that opportunity was or that it was known to the defendants.  Such a claim would require to be pleaded for paragraph 6.4 to survive. 

The balance of justice

36.      In relation what sanction should be imposed for the inordinate and inexcusable delay of twelve months that I have found has occurred, I return to the observations of W. J. Bailhache, Deputy Bailiff, as he then was, in Vieira v Kordas, cited in Hong Kong Foods.  In summary, the remedy of striking out a claim should not be applied if there are other appropriate sanctions which would enable justice to be done between parties. 

37.      In this case there is a substantial claim based on a failure to advise which in my judgment is arguable.  I also consider that much of the dealings between the plaintiffs and the defendants will be reflected in documents on the defendants' file.  To the extent that the defendants have not maintained file notes or other written records of conversations with the plaintiff, when such notes ordinarily should be maintained by a professional adviser, I do not consider it fair for the defendants to rely on any absence of written records to justify the action being struck out.  While I accept that oral evidence may play a part in relation to what was said in various conversations, as well as in assessing Mr Holmes' own expertise in agricultural restrictions, I do not agree that this is a case which solely or largely depends on oral evidence.  This action may well also depend in part on expert evidence as to whether the defendants fell below the standards expected of a legal adviser to a commercial property transaction. 

38.      I have therefore reached the view that it would be inappropriate and unfair to deprive the plaintiffs of one final opportunity of pursuing their claims at trial, so long as there is no further inordinate and inexcusable delay.  This is subject to the following which are appropriate sanctions for the inexcusable delay of twelve months that has occurred:-

(i)        The plaintiffs must pay the costs of and occasioned by this application on an indemnity basis within 28 days of assessment; the costs will be summarily assessed by me. 

(ii)       Costs are awarded on an indemnity basis because of the failure by the plaintiffs to keep the defendants informed that they were not taking any steps in the proceedings pending analysis of what losses they had suffered and that they were seeking advice and representation on legal aid. 

(iii)      If the costs, once assessed, are not paid within the 28 day period I have allowed, then the defendants are at liberty to apply to have the claim struck out. 

(iv)      If costs are paid and the plaintiffs are successful at trial, the amount of interest payable on any damages awarded shall be reduced by twelve months to reflect the inordinate and inexcusable delay. 

(v)       Subject to paying the costs referred to above, the plaintiffs shall amend their order of justice to remove any allegations that the defendants should have procured a change of land control restrictions applicable to the site, referred to in paragraphs 1.3 and 4.5 of the order of justice. 

(vi)      The plaintiffs shall not be permitted to claim the losses pleaded at paragraph 6.4 of the order of justice which are struck out but may, within 28 days of paying the defendants' costs pursuant to this decision, apply to amend paragraph 6.4 to claim a specific lost opportunity, including identifying what that opportunity was, why it would have been profitable and that this opportunity was known to the defendants at the time they were advising the plaintiffs.  If no application is made but the costs are paid, then the plaintiffs' losses are limited to those pleaded at paragraphs 6.2 and 6.3 of the order of justice, with paragraph 6.3 now being for the sum of £510,000 as accepted by the plaintiffs as set out above. 

(vii)     The defendants are given permission to file an amended answer in response to any amended order of justice permitted by this decision within 21 days of the amended order of justice being provided and agreed and/or approved by the court. 

Authorities

Royal Court Rules 2004.

Lescroel v Le Vesconte [2007] JLR 273.

Irish Nationwide Building Society v Volaw and Others [2012] JRC 035.

Hong Kong Foods Limited v Robert Alan Gibbons & Others [2014] JRC 187.

Vieira v Kordas [2014] JRC 042.

European Convention of Human Rights 2000.