Jersey Unreported Judgments

Injunctions - application for security of costs by the defendants.

[2015]JRC172

Royal Court

(Samedi)

20 August 2015

Before     :		Advocate Matthew John Thompson, Master of the Royal Court
Between	Shane Michael Holmes		Plaintiff
And	Harry James Lingard		First Defendant
And	HJL Holdings Limited		Second Defendant
And	Angel Fish Limited		Third Defendant

Mr S. M. Holmes by written submissions only.

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

CONTENTS OF THE JUDGMENT

		Paras
1.	Introduction	1
2.	Mr Holmes' claims	2-6
3.	Other proceedings	7-11
4.	Procedural developments	12-19
5.	The Law	20-31
6.	The parties' contentions	32-55
7.	Decision	56-77

judgment

the master:

Introduction

1.        This judgment represents my decision in relation to an application for security for costs brought by the defendants against the plaintiff ("Mr Holmes"). 

Mr Holmes' claims

2.        In his order of justice Mr Holmes alleged that he and the first defendant ("Mr Lingard") had entered an agreement in June 2011 to develop Hotel La Tour which was owned by the third defendant Angel Fish Limited ("Angel Fish"), a subsidiary of the second defendant HJL Holdings Limited ("HJL"), which was in turn beneficially owned by Mr Lingard.  As part of that alleged agreement Mr Holmes asserted that HJL was to make available what Mr Holmes described as "Side Funding" to enable certain project works to be undertaken on the hotel site.  This funding would be secured over a separate development Mr Holmes was undertaking through his company Home Farm Developments Limited ("Home Farm"). 

3.        The order of justice alleges that Mr Lingard breached and repudiated this agreement in the autumn of 2012.  The allegations included complaints that Mr Lingard made representations to induce Investec Bank to foreclose a loan facility made to Home Farm and to various estate agents "with the deliberate intent to scupper the Home Farm purchase offers" (paragraph 43). 

4.        As a result of these breaches Mr Holmes claims the following:-

(i)        the sum of £190,000 in respect of the direct costs and expenses incurred by Mr Holmes in the development;

(ii)       the sum of £900,000 being the uplift in value of Hotel La Tour brought about by Mr Holmes as a consequence of his involvement in the development; and

(iii)      the sum of £686,000 being losses in expected sales values in the units being separately developed by Home Farm. 

5.        The order of justice also contained injunctions which were signed by W. J. Bailhache, Deputy Bailiff, (as he then was) on 17^th March, 2014.  On 27^th May, 2015, these injunctions were discharged by order of the Royal Court with reasons to follow.  Those reasons have been handed down since the hearing of this matter and I refer to them, where relevant. 

6.        On 20^th April, 2014, the defendants filed an answer, (amended on 27^th March, 2015,) which answer included a counterclaim for repayment of certain unsecured loans said to be made to Mr Holmes between February and August 2012.  A brief reply to the counterclaim was filed on 21^st May, 2014. 

Other proceedings

7.        There have also been other proceedings between Mr Holmes, Home Farm and the defendants relating to the sale of two units at Home Farm.  These proceedings are referred to in the judgment of Commissioner Clyde-Smith, dated 29^th October, 2014, and reported at Home Farm Dev-v-HJL Holdings and Lingard [2014] JRC 209 ('the October 2014 judgment'). 

8.        In the October 2014 judgment, Home Farm and Mr Holmes sought to appeal certain costs orders of the Judicial Greffier dated 6^th February, 2014, in the sum of £2,971.70.  The judgment dealt with a further request for an adjournment made by Mr Holmes on medical grounds.  His request for an adjournment was refused and the medical evidence was described as being "woefully inadequate".  Mr Holmes was required to pay the costs of his application on an indemnity basis. 

9.        The indemnity costs were subsequently assessed by the Assistant Judicial Greffier as set out in a letter dated 12^th March, 2015, in the sum of £8,306.86. 

10.      Mr Holmes a few months later sought to set aside the October 2014 judgment and the indemnity costs order which application was to be heard on 26^th June, 2015.  In an affidavit filed in relation to the application before me Mr Holmes contended that "summary judgment was taken at the hearing of 15^th October, 2014, in the absence of representation" because legal aid was withdrawn on 9^th October, 2014. 

11.      However, the hearing on 26^th June, 2015, did not proceed as the appeal was withdrawn by consent.  I was informed of this settlement only after the oral hearing had taken place in relation to the present application.  The terms of the settlement provided for the costs previously assessed to be paid out of certain monies held in an escrow account maintained by Hanson Renouf.  As a result of this settlement, I invited both parties to provide to me short written submissions on the effect of this settlement on the application for security for costs and the submissions previously made. 

Procedural developments

12.      It is also appropriate that I refer to the pleadings and certain events leading to the present hearing and various orders I made prior to the hearing. 

13.      The defendants' summons for security for costs against Mr Holmes was issued on 11^th May, 2015, returnable before me on 4^th June, 2015, following a normal date fix. 

14.      Following email correspondence received from Mr Holmes after the date fix, by an email 12^th May, 2015, to Mr Holmes and Advocate Taylor, I directed that the security for costs hearing should take place on 4^th June, 2015.  Mr Holmes wanted to delay the hearing because of the defendants' application to discharge the injunctions which was coming before the Royal Court on 27^th May, 2015.  I noted that Mr Holmes, by the time of my email, had received a bundle and a supporting affidavit filed by the defendants i.e. some three weeks before the hearing date of 4^th June, 2015.  I refused his request in light of the fact that he had received the information relied upon by the defendants and because there was over a week between the hearing before the Royal Court on 27^th May, 2015, and the security for costs application on 4^th June, 2015.  I further indicated I did not need to see skeleton arguments filed by Mr Holmes before close of business on Tuesday, 2^nd June, 2015. 

15.      However, on 4^th June, 2015, Mr Holmes applied for an adjournment of the security for costs application because he was not ready.  Effectively he threw himself on the mercy of the Court.  I therefore granted the adjournment requested and adjourned the security for costs application to Monday, 15^th June, 2015, subject to requiring Mr Holmes to file his affidavit and skeleton arguments by certain dates.  These deadlines were met. 

16.      As Mr Holmes was not ready for the adjournment and he was throwing himself on the mercy of the Court, I also ordered him to pay the defendants' costs of the adjournment application on an indemnity basis, which costs I summarily assessed in the sum of £500. 

17.      Paragraph 6 of the act of court dated 4^th June, 2015, also stated as follows:-

"the said costs shall be paid to Messrs. Bedell Cristin by 5.00 p.m. Friday, 12th June, 2015, failing which the Plaintiff shall be debarred from make oral submissions at the hearing of the Defendants' summons for security for costs on 15th June, 2015."

18.      Although Mr Holmes filed his affidavit and skeleton arguments within the deadlines specified, he did not make the payment of £500 as directed by paragraph 6.  Accordingly, he was not permitted to make oral submissions.  In fact he did not attend the hearing on 15^th June, 2015, although I indicated that he could do so to observe the submissions made by the defendants, even though he could not address the Court. 

19.      As was noted at paragraph 7 of the act of court of 4^th June, 2015, although Mr Holmes was debarred from appearing to make submissions, I still had regard to his affidavit and skeleton argument filed.  I was also addressed by Advocate Taylor on the merits of the application for around three hours.  At the conclusion of the application, judgment was reserved. 

The Law

20.      In Home Farm Developments Limited & Another v Le Sueur [2014] JRC 131, an application where Mr Holmes was the third plaintiff, I ruled that I could make an order for security for costs against an individual resident plaintiff.  At paragraph 20 I stated:-

"However, it is a jurisdiction that should be rarely exercised and which would require some special or unusual circumstances.  The mere fact of impecuniosity is not enough.  Something else taking the case out of the ordinary and into the arena of special or unusual circumstances is required."

21.      On the facts of that case I ordered Mr Holmes to provide security for costs in the sum of £15,000.  My reasons were for doing so were recorded at paragraph 39 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."

22.      I also note that, in a further application for security for costs, reported at [2014] JRC 241, following on from the decision reported at [2014] JRC 131, I refused to order further security for costs to be provided by Mr Holmes, because, while a change of circumstances had occurred, I was not satisfied that the change was so special or unusual to justify increasing the amount I originally had ordered to be provided. 

23.      The sum of £15,000 was provided by Mr Holmes.  I refer to how this occurred this later in this judgment. 

24.      In his skeleton argument Mr Holmes referred me to Al-Koronky & Anor v Time-Life entertainment Group Limited & Anor [2006] EWCA Civ 1123 a decision of the English Court of Appeal dated 28^th July, 2006.  He relied on paragraphs 25, 26, 27, 30 and 31 of the judgment in support of his contention that he had provided a satisfactory affidavit which demonstrated that he could not afford to meet a security order and any such order would unfairly stifle his claim.  Advocate Taylor referred me to paragraphs 28 and 29 of Al-Koronky.  I therefore set out paragraphs 25 to 31 in full as follows:-

"25     A third principle, in our judgment, is that the court must not order security in a sum which it knows the claimant cannot afford.  We will develop this below.  For the defendants, Adrienne Page QC does not deny but seeks to qualify the principle.  She submits that a claimant who chooses to litigate extravagantly (as she submits these claimants are doing) cannot complain if the security ordered is unaffordably high.  In support she cites what Mance LJ (as he then was) said in Nasser v United Bank of Kuwait, ante, §60:

"The new arrangements for funding litigation certainly appear capable of throwing up possible imbalance, in so far as they permit contingency fee arrangements with uplifts potentially recoverable from losing defendants but enable claimants to pursue litigation without insuring or securing the defendants' fees ..."

26       We will come later to the relevance of conditional fee agreements (CFAs), but we do not consider that this passage has any bearing on the amount to be secured.  The way to deal with extravagant litigation is by the use of the court's case management powers, including the striking out of unnecessary or unsustainable pleadings, the capping of costs and the restriction of disclosure and evidence.  Deliberately to require an unaffordable amount of security as a separate way of disciplining a wayward claimant is to transform security for costs into a means of striking out a claim without any of the ordinary safeguards.  In our judgment the principle of affordability, if we may call it that, is not qualified in the way Ms Page proposes. 

27       This said, it is both clear on authority and requisite in principle that a claimant resident abroad who wants to ensure that any security he is required to put up is within his means must be full and candid in setting out what his means are. True, as Park J noted in Brimko Holdings v Eastman Kodak Co. [2004] EWHC 1343 (Ch), §12:

"... the court should not press too far the proposition that the burden [of showing that an order in more than a certain sum will stifle the claim] rests on the claimant. It should be recalled that when the claimant has to establish that third parties do not exist from whom security can reasonably [be] expected and obtained, that is to place on the claimant the burden of proving a negative."

But this does not relieve the court of the need to scrutinise as much as it is told with a critical eye and to note unexplained gaps in the information which the claimant volunteers or in the documentary support for it. Unless the court were prepared to draw adverse inferences from such lacunae, a claimant would have only to deny that he can find the sum asked in order to avoid an order.

28       It follows that the court, once satisfied that the case is one in which the claimant ought to put up security for the defendant's costs before continuing with his action, is going to find itself in one of two situations. Either it will be satisfied that it probably has a full account of the resources available to the claimant, in which case it can calculate with reasonable confidence how much the claimant can afford to put up; or it will not be satisfied that it has a full account, and so cannot make the calculation. Does it follow in the latter situation that the court must go straight to the amount sought by the defendant and, having pruned it of anything which appears excessive or disproportionate, fix that as the security? Or is there a middle way - for example to set an amount which represents the court's best estimate of what the claimant, despite having been insufficiently candid, can afford?

29       In our judgment there is such a power, but it resides in the court's discretion rather than in legal principle. In the second situation we have postulated, the requirements of the law have been exhausted: what remains is to set a suitable sum. This classically is where discretion fills the space left by judgment: the court has a choice of courses, none of which it can be criticised for taking provided it makes its election on a proper factual basis uninfluenced by extraneous considerations.

30       We agree with the submission of Mr Shaw for the claimants that article 6 of the European Convention on Human Rights has a bearing on this issue, by virtue of s.3(1) of the Human Rights Act 1998 which requires both primary and subordinate legislation to be read and given effect, so far as possible, compatibly with the Convention rights. In Tolstoy Miloslavsky v United Kingdom (1995) 20 EHRR 442, §59, the European Court of Human Rights held, what it has since reiterated, that while the state has power to regulate access to its courts, it must not do so in ways which "restrict or reduce the access left to the individual in such a way or to such an extent that the very essence of the right is impaired". The court also insisted on "a reasonable relationship of proportionality between the means employed and the aim sought to be achieved". The domestic obligation to read CPR 25.13 conformably with the law of the Convention is met, we believe, by the approach taken in this judgment and, in particular, by the principle that the court may not fix security in what it knows to be an unaffordable amount.

31       It is in the context of what we have said so far that, in our respectful view, the judgment of Peter Gibson LJ in Keary Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534 , 539-40, and that of Potter LJ in Kufaan Publishing Ltd v Al-Warrak Publishing Ltd (1 March 2002, unreported) , should be read. There is a clear difference between incurring a substantial risk, in the overall interests of justice, that a claimant will not be able to raise the sum required as security, and setting a sum in the knowledge that he cannot do so. The latter is tantamount to striking out his claim and requires the same process and justification as any other strike-out. The former is the striking, within the Convention paradigm, of a balance of the kind described in the two judgments we have mentioned."

25.      It should be remembered in relation to Al-Koronky, that this was a claim for security for costs against a plaintiff who resided out of the jurisdiction.  As in Jersey, the defendant seeking security therefore had to establish any difficulty of enforcement in Sudan (see Nasser v United Bank of Kuwait, ante [2001] EWCA Civ 556).  In Café de Lecq v R. A. Rossborough (Insurance Brokers) Limited [2011] JLR 31 at paragraph 20, the ability to require non-resident plaintiffs to provide security for costs also is to be assessed an individual basis; this followed the decision of the Court of Appeal in Leeds United Association Football Club Limited v The Phone-In-Trading-Post (t/a Admatch) [2009] JLR 186 which itself followed Nasser.  The overall approach taken Al-Koronky therefore is now followed in this jurisdiction. 

26.      Where Al-Koronky is of assistance is in defining the approach that should be taken to a assessing an affidavit of financial circumstances provided by a plaintiff.  The duty of the Court is to scrutinise such an affidavit with a "critical eye" and note any unexplained gaps in the information provided. 

27.      The observations in Al-Koronky also seem to suggest at paragraph 28 that the issue of whether or not an affidavit represents a full account only arises once the Court is satisfied that a plaintiff ought to put up security. 

28.      However, I was also referred by Mr Holmes in his skeleton and Advocate Taylor to the case of Olatawura v Abiloye [2002] EWCA Civ 998 another decision of the English Court of Appeal.  That judgment firstly noted at paragraph 22 as follows:-

"22     Before ordering security for costs in any case (i e whether or not within CPR Pt 25 ) the court should be alert and sensitive to the risk that by making such an order it may be denying the party concerned the right of access to the court. Whether or not the person concerned has (or can raise) the money will always be a prime consideration, not least since article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms became incorporated into domestic law. Paradoxically, of course, the more difficult it appears to be for the person concerned to raise the money, the more obvious becomes the need for an order for security to protect the other party against the risk of incurring irrecoverable costs. The court will have to resolve that conundrum as best it may."

29.      Paragraphs 24 and 25 of the Olatawura decision continue as follows:-

"24     Now, it is clear, the Court has an altogether wider discretion to ensure that justice can be done in any particular case. Obviously relevant considerations, besides the ability of the person concerned to pay, will be (a) his conduct of the proceedings (including in particular his compliance or otherwise with any applicable rule, practice direction or protocol), and (b) the apparent strength of his case (be it claim or defence). And these considerations, of course, are expressly reflected in the new rules governing the court's power to order payment into court: rule 3.1(5) dealing expressly with compliance, rule 24 with the probabilities or otherwise of success.

25       That, however, is by no means to say that the court should ordinarily penalise breaches of the rules and the like by making orders for payment into court under rule 3.1(5). Quite the contrary. The one case drawn to our attention in which this question has been considered-Buckley J's judgment in Mealey Horgan plc v Horgan The Times, 6 July 1999, to which reference is made in paragraph 3.1.5 of Civil Procedure, Spring 2002, vol 1-held that it would be inappropriate to order a defendant to give security as a penalty for failure to serve witness statements in time when that had prejudiced neither the trial nor the claimant. Buckley J suggested, however, that such an order might be appropriate if

"there is a history of repeated breach of timetables or of court orders or if there is something in the conduct of the party which gives rise to suspicion that they may not be bona fide and the court thinks the other side should have some financial security or protection."

That seems to me to point the way admirably: a party only becomes amenable to an adverse order for security under rule 3.1(5) (or perhaps 3.1(2)(m)) once he can be seen either to be regularly flouting proper court procedures (which must inevitably inflate the costs of the proceedings) or otherwise to be demonstrating a want of good faith-good faith for this purpose consisting of a will to litigate a genuine claim or defence as economically and expeditiously as reasonably possible in accordance with the overriding objective."

30.      I regard these as helpful observations.  Ultimately, in reaching a decision whether not to order security for costs, whether in the circumstances considered in Café de Lecq or whether in applying the exceptional circumstance test applicable to residential individuals, I consider I am entitled to take into account, in exercising the discretion vested in me, the extent to which a plaintiff has provided a full account of his assets or whether there are unexplained gaps.  I consider that the lack of any account goes not just to the amount of any security but is also a factor that may be taken into account in deciding whether or not to order security to be provided.  This because a lack of candour may well increase the need for an order for security to protect a defendant.  I also regard it as artificial to separate out information about a plaintiff's means and criticisms of any such evidence from an analysis of any other factors which can be taken into account in deciding whether or not to order security for costs.  As noted in paragraph 25 of Olatawura, I can take into account repeated breaches of timetables or Court orders, and I am entitled to take into account something in the conduct of a party which gives rise to a suspicion whether they are acting bona fide and the Court thinks the other side should have some financial security or protection.  I consider that, in deciding whether or not to order security, this extract also justifies having regard to any lack of candour in an affidavit of financial circumstances on a case by case basis.  I stress in reaching this conclusion that the test to order security for costs against a resident individual remains a high one and requires exceptional circumstances to be established. 

31.      Finally, I refer to paragraph 40 of Café de Lecq.  Although security for costs against a resident individual will only be ordered in exceptional circumstances, the purpose of ordering such security is no different from where security is ordered against companies or, non-residential individual.  The purpose of ordering security as it was put at paragraph 40 of Café de Lecq is "to give effect to the underlying principle referred to in Keary that the interests of justice are served if the unsuccessful litigant pays the costs of the successful litigant or the bulk of them."

The Parties' contentions

32.      In addition to the legal arguments deployed by Mr Holmes referred to in the previous section of this judgment, Mr Holmes contended, by reference to his affidavit sworn in opposition to the defendant's application, filed on 9^th June, 2015, and sworn on 11^th June, 2015, that he could not afford to meet any security order and such order would unfairly stifle his claim.  I address later in this judgment Mr Holmes' evidence of his financial position. 

33.      Mr Holmes further contended that his present want of means had been brought about by the conduct of Mr Lingard.  At paragraph 17 of his affidavit Mr Holmes deposed that it was "the conduct of Mr Lingard for the period in and around September 2012 (the outbreak of the dispute) through to October 2013, that in my view has inflicted the most damage on my assets and in turn, my present want of means."  These specific elements of Mr Lingard's conduct that Mr Holmes complained about are set out in paragraph 24 of affidavit and in summary are as follows:-

(i)        That Mr Lingard would not provide an itemised redemption statement for repayment of his alleged secured loans in respect of Unit 2 and Unit 5 of the Home Farm Development. 

(ii)       Mr Lingard refused to lift secured charges for the sale of Unit 5 despite his knowledge that 100% of the sale proceeds would be delivered to the entity with a benefit of the first hypothec over Unit 5. 

(iii)      Mr Lingard made unsubstantiated demands for repayment. 

(iv)      Mr Lingard interfered with the sale of Unit 5.  Mr Holmes relied on affidavit from Mrs Geraldine O'Brien in support of this assertion. 

(v)       Mr Lingard's wider ulterior motive was to instigate a foreclosure or bankruptcy on Home Farm to take Units 2 and 5 at a distressed undervalue. 

(vi)      The consequence of Mr Lingard's actions led to sales at an undervalue of Units 2 and 5. 

34.      Advocate Taylor, in accepting that he was required to show exceptional circumstances by reference to Home Farm v Le Sueur referred to above, relied on the following matters. 

35.      Firstly, he relied on Mr Holmes' conduct referred to in the judgment of Commissioner Clyde-Smith on 29^th October, 2014, reported at [2014] JRC 209.  Advocate Taylor contended that this was Mr Holmes dragging out payment of the costs of £2971.70 that he was ordered to pay on 6^th February, 2014.  He referred me to Mr Holmes failure to appear without justification on 29^th October, 2014, as the Royal Court found, and then seeking to further challenge the decision of 29^th October, 2014, by way of a purported appeal some eight months after the decision, which application failed to address the inadequacies of medical evidence provided on 29^th October, 2015.  This approach was systematic of Mr Holmes' attitude of not paying costs which indicated an abusive approach to litigation. 

36.      I observe that this appeal was withdrawn, albeit after the hearing before me, with the result that both the costs order of 6^th February, 2014, and the indemnity costs ordered as a result of the October 2014 judgment will now be paid.  These costs will be met out of an escrow account in the name of Hanson Renouf representing the balance of the sale proceeds of Unit 2 Home Farm.  These funds which were held in an escrow account, pursuant to arrangements made between the then legal advisers acting for the parties.  The total amount held in the escrow account was £23,447.14. 

37.      Now the injunction has been discharged and previous costs orders will be met, Advocate Taylor contends that the balance held in the escrow account in the sum of £12,000 will be used to meet any costs order made in his clients' favour as a result of the injunction being discharged.  He contends it is highly likely that such a costs order will be made, possibly on the indemnity basis.  Even if made on the standard basis, his clients' costs will exceed the sum of £12,000. 

38.      Mr Holmes' approach to litigation, according to Advocate Taylor, was further illustrated by Mr Holmes' conduct in the litigation involving Mr Holmes and Mr Le Sueur.  Although the security ordered was provided, the basis of the decision at paragraph 39 of the judgment, set out above, is a further example of Mr Holmes' approach.  Advocate Taylor also relied on my decision to strike out the claim brought by Home Farm and Mr Holmes referred to in the security for costs application and reported at [2014] JRC 079, upheld by the Royal Court in its decision reported at [2015] JRC 110.  Despite the clear judgement of the Royal Court, Mr Holmes was seeking to challenge the Royal Court's decision before the Court of Appeal.  Both my judgement and the Royal Court judgment found that the claim by Home Farm and Mr Holmes against Mr Le Sueur was scandalous, vexatious and an abuse of process. 

39.      Advocate Taylor furthered relied on Mr Holmes' failure to pay the indemnity costs of £500.00.  In his judgment this was not an illustration that Mr Holmes could not pay, but rather was evidence that he would not pay.  Mr Holmes indicated that he offered payment of this sum out of the escrow account referred to above which was refused. 

40.      Turning to the merits, Advocate Taylor contended that the first part of Mr Holmes' claim against the defendants was hopeless and bound to fail.  This was because this claim was based on the parties having entered into an agreement dated June 2011, a copy of which was annexed to Mr Holmes' order of justice.  However, in an affidavit filed by Advocate Daniel Young dated 24^th February, 2015, Advocate Young exhibited to his affidavit a series of slightly different heads of terms some of which had manuscript comments on.  Advocate Young also deposed that he had drafted an agreement circulated for discussion on 1^st August, 2011, and which contained various gaps where agreement was required.  Advocate Young therefore deposed that to be best of his knowledge no agreement was ever entered into. 

41.      The agreement relied upon by Mr Holmes, at paragraph 6(a), made reference to planning permission dated 1^st September, 2011.  Advocate Taylor therefore argued that if the agreement had been entered into in June 2011, as alleged by Mr Holmes, it was difficult to understand how it could have referred to planning permission issued some three months later. 

42.      Advocate Taylor further referred me to a letter written by Mr Holmes dated 6^th December, 2011, putting forward proposals for providing consultancy project management and contracting services for the development of the Hotel La Tour site.  Such an approach was said not to be consistent with a part exchange/profit share agreement for the development of the hotel alleged to have been reached some five months earlier. 

43.      I was also referred to an email dated 2^nd October, 2011, exhibited to Mr Lingard's affidavit sworn on 25^th February, 2015, in support of the application to discharge the injunction obtained by Mr Holmes.  That email indicated that the parties were in negotiation and specifically stated that all documents were to be approved by Messrs Bois Bois.  Again this was inconsistent with an agreement reached in June 2011. 

44.      Advocate Taylor further relied on an email from Mr Holmes to Mr Lingard dated 24^th November, 2011, containing a fee proposal which was also inconsistent with the June agreement as pleaded by Mr Holmes. 

45.      Annexed at page 169 to Mr Lingard's affidavit was exhibited an equity statement produced by Mr Holmes dated 24^th October, 2012, which recorded that the fees for consultancy and directors instead of a profit share should be £70,000.  This was again inconsistent with the claim in the order of justice for £190,000. 

46.      All these matters lead to the injunctions being discharged, with the Court refusing to re-impose the same because it was not seriously arguable that an agreement had been entered into in June 2011. 

47.      In respect of sales of units at Home Farm, which it is alleged that Mr Lingard interfered with, Advocate Taylor relied firstly on the point that this was a claim vested in Home Farm and not Mr Holmes.  He had not applied to strike out this part of the claim because the defendants had taken the view that any such decision would be appealed and therefore it was better just to proceed to trial and have the matter resolved. 

48.      Furthermore, Unit 1 was sold in June 2012 i.e. before any dispute on the plaintiff's own case had arisen.  The complaints about misrepresentation, referred to at paragraphs 42 and 43 of the order of justice, only occurred in or around October 2012. 

49.      In relation to the sale of Unit 5, Mrs O'Brien's evidence did not help because at paragraph 11 she deposed that the buyers "withdraw their offer on Unit 5 because of concerns that Home Farm was in financial difficulty, and would be unable to honour any guarantee and warrantee for their new build works".  On Mr Holmes' own evidence therefore there was no evidence that the buyers withdrew on the basis of anything Mr Lingard had stated.  No evidence was adduced by Mr Holmes in respect of the sale of Unit 2 and the order of justice did not contain any particulars of the circumstances in which any misrepresentations were made.  

50.      Advocate Taylor also produced advertisements from Thompson's Estate Agents showing Unit 5 being offered for sale at a price of £650,000 and Unit 2 for £675,000.  This could only have been authorised by Mr Holmes.  While his claim is based on the difference in value between CBRE valuations (pages 33-35 of exhibit SK1) of £917,550 for Unit 2 and £794,500 for Unit 5, it could only have been Mr Holmes who authorised the advertisements through Thompsons at the prices referred to above.  The claim was therefore overstated. 

51.      Advocate Taylor further relied on the discharge of the injunction.  To discharge and not impose the injunction was a serious matter and costs consequences were likely to follow.  The discharge of the injunction further pointed to reasons why exceptional circumstances existed. 

52.      He further relied on delay.  While proceedings were commenced in 2014, after the filing of a reply, no further steps had been taken in the proceedings.  Other than the arguments about costs leading to the October 2014 judgment, the plaintiff had not taken steps to drive matters forward and had offered no justification for his failure to do so. 

53.      In relation to the adequacy of Mr Holmes' affidavit and his financial position, Advocate Taylor relied on the following:-

(i)        Firstly, he criticized Mr Holmes for failing to deal with properties in which he may have had an interest.  At paragraph 28 of Mr Holmes's affidavit he referred to his former residence Property A, which at paragraph 32 he explains was sold in December 2013, which he alleges was at an undervalue.  At paragraph 34 following the sale of Property A Mr Holmes deposed that he no longer owned any property on the Island.  However in his affidavit he exhibited at page 1 a letter from the Acting Bâtonnier dated 26^th June, 2014, was addressed Mr Holmes at Property B.  From the Public Registry, it appears that this property is where Mr Holmes' parents reside and is owned by his mother.  Mr. Holmes failed to explain this position and whether he has any interest in Property B or why he was using this property as an address. 

(ii)       Secondly, at times Mr Holmes corresponded from an address we shall call Property C.  This was not explained. 

(iii)      Thirdly, Mr Holmes' address by reference to his affidavit is c/o Property D.  No explanation was offered as to whether this was his property or to explain his ability to live in this property. 

(iv)      At page 56 of exhibit SH1 is an extract from an account in the name of Mr Holmes at Bank A.  On 19^th and 20^th December, 2013, Mr Holmes transferred the sum of £3333.00 to an estate agents; on 20^th December, 2013, he transferred £20,000 to the same agent and on 24^th December, 2013, a further £10,000.  At paragraph 36(i) of his affidavit he explained that these payments were for up front rentals.  No explanation was provided as to what property was being rented and why up front rental was being paid.  Mr Holmes did explain at paragraph 36(v) of his affidavit the sum of £20,089.06 was the return of up front rental referred at paragraph 36(i) following his cancellation of the lease.  However, no explanation was provided by Mr Holmes in respect of this lease, how long it was intended to be for, or why it was cancelled. 

(v)       Advocate Taylor also indicated that Mr Holmes had not explained what had happened to the surplus sale proceeds made on the sale of Property E.  By reference to page 27 of exhibit SH1, the sum of £161,970.85 was transferred to Bank B.  It was not clear whether this was to a personal account in the name of Mr Holmes, or in respect of the discharge of some other indebtedness to Bank B.  No explanation has been forthcoming as to what happened to this money. 

(vi)      Also in respect of the completion statement of Property E, out of the proceeds of sale, £362,858.25 was paid to Bois Bois in respect of Property F in December 2010.  No explanation was contained in the affidavit as to why Bois Bois were paid this sum, what it related to and what became of it.  I observe that it is matter of public record that Mr Holmes acquired Property F in December 2010 for £355,000 which property he sold in June 2011 for £356,000.  On 2^nd February, 2011, the sum of £412,500 was borrowed by Mr Holmes from Company A secured against Property F.  The registration of this charge was cancelled on 30^th June, 2011, which leads to the inference that the borrowing was repaid.  As Property F was acquired out of cash paid to Bois Bois, the Court observes that no explanation was given as to what happened to the sum of £412,500 borrowed in February 2011, how this sum came to be repaid and whether it was repaid out of the proceeds of sale of Property F or from another source. 

(vii)     In respect of a financial statement produced in respect of Property E by Mr Holmes exhibited at page 25 OF SH1, the balance due in respect of the sale of Property E was said to be £524829.10.  This appears roughly equated to the payment in respect of Property F and the sums sent to Bank B but neither of these matters were explained or what has become to them.  It is right to observe that Mr Holmes did have a facility with Bank B exhibited at pages 48 to 53 of SG1 at a rate of 2% per quarter and Property A was not sold until December 2013.  It may be the payment to Bank B therefore represents interest on the facility, but no evidence was produced to explain the position. 

(viii)    In relation to the account records produced by Mr Holmes of an account at bank A at pages 73 to 95 of exhibit SH1, Advocate Taylor was critical that these accounts are only from December 2013 to September 2014.  They do not explain the basis upon which Mr Holmes has been living since then. 

(ix)      In respect of this account Advocate Taylor drew my attention to the following:-

(a)       A payment £1,000 was made to Miss G on 18^th December, 2013, and a further payment of £2,000 was made to Miss G on 23^rd December, 2013.  These payments are not explained. 

(b)       A payment was made to School 1 for school fees on 23^rd December, 2013, for £3,495.75.  It was not clear whether this represented past or future school fees or how school fees since then are now being met.  The position was unexplained. 

(c)       The payment of £3,333.33 to H on 19^th December, 2013, was not explained. 

(d)       The transfer of £13,333.33 on 24^th December, 2013, was not explained.  It was not clear who this transfer was to or the reasons why the payment was being made. 

(e)       On 30^th December, 2013, by standing order, £1,144.20 was paid to J.  Again this was not explained and neither was a similar payment made to J on 30^th January, 2014. 

(f)        On 7^th January, 2015, £3,500.00 was paid to K.  This payment was not explained. 

(g)       On pages 61 and 62 the sums of £2,000 were paid to Mr and Mrs O on 14^th and 17^th January, 2014.  These payments are not explained. 

(h)       On page 62 £2,000 was paid to a Mr L.  This is also not explained. 

(i)        Two further payments were made to Miss G of £4,000 and £1,000 on 28^th April, 2014.  Again the rationale for these payments is not explained. 

(j)        On or around 28^th May, 2014, Mr Holmes' bank account was credited with a payment of £10,000.  This appeared to be a private loan from M.  Looking at the address of the letter of 11^th May, 2015, it is from Property N.  M based on the information in the Public Registry appears to be a relative of Mr Holmes, and appears to own Property N but again this not explained. 

(k)       On 10^th July, 2014, (page 83 of SH1) £15,000 was paid to the Judicial Greffe.  This appeared to be to meet the security for costs orders I made in the action brought by Home Farm against Mr Le Sueur.  The source of these funds appears to have been the monies returned by way of rent on 27^th June, 2014, referred to above. 

(l)        The credit of £3,689.34 (page 84 of SH1) headed described as a refund in advance was not explained. 

(m)     The credits of £1500 on 2^nd September, 2014, and £1,924.04 on 16^th September, 2014, at page 92 of SH1 are also unexplained.  These unexplained credits according to Advocate Taylor meant that Mr Holmes can borrow money and appears to have access to funds. 

54.      In respect of what was revealed by the bank statements, ultimately, according to Advocate Taylor, they left a lot of questions unanswered and certainly did not explain Mr Holmes' current financial position.   

55.      In conclusion Advocate Taylor contended that it was the combination of all the circumstances he relied on that amounted to exceptional circumstances to justify security for costs being ordered. 

Decision

56.      In reaching my decision, I have had regard to the fact that some special or unusual circumstances are required to justify an order for security for costs against an individual resident plaintiff, and that such a jurisdiction should be rarely exercised.  The mere impecuniosity of an individual is not enough. 

57.      Turning first to the merits of the claims brought by Mr Holmes, I agree that these are weak.  As Commissioner Clyde-Smith noted in the judgment discharging the injunction handed down on 29^th June, 2015, at paragraph 28, there does not appear to be a serious issue to be tried in respect Mr Holmes' reliance on an agreement entered into in June 2011. 

58.      However, the remedy for this reliance would appear to be an application to strike out the relevant parts of the order of justice.  Yet the defendants have elected not to do so.  Instead, they have elected to proceed to trial and seek for security for costs as a result.  This was addressed at paragraph 26 of the Al-Koronky judgment where the English Court of Appeal stated as follows:-

"The way to deal with extravagant litigation is by the use of the court's case management powers, including the striking out of unnecessary or unsustainable pleadings..."

The Court continued:-

"Deliberately to require an unaffordable amount of security as a separate way of disciplining a wayward claimant is to transform security for costs into a means of striking out a claim without any of the ordinary safeguards."

59.      These observations summarise what Advocate Taylor was trying to do by his criticisms of the claim based on the June 2011 agreement as a ground to justify security for costs.  Insofar as any claims brought by Mr Holmes are capable of being struck out, then that is the route the defendants should adopt.  It is not therefore appropriate to rely on the fact that a cause of action might be struck out to require security for costs. 

60.      The second aspect of Mr Holmes' claim that is said to be weak relates to what misrepresentations were made, by Mr Lingard.  The evidence produced in relation to this issue concerns the affidavit of Mrs O'Brien.  However, for the reasons advanced by Advocate Taylor, at paragraph 11 of her affidavit, as set out above, the reasons the potential purchasers did not proceed related to the financial uncertainties surrounding Home Farm and not because of any actions on the part of Mr Lingard.  For this claim to succeed other evidence would need to be adduced and the allegations particularised to show that Mr Lingard made misrepresentations as alleged and that purchasers pulled out as a result of such misrepresentations.  The rest of Mrs O'Brien's evidence merely shows that Mr Lingard called her.  At present there are no particulars or no allegations that he called purchasers or acted in such a way to prevent sales taking place.  Ultimately this will be a matter for trial but I agree there is a lack of detail or evidence in support of this part of Mr Holmes' claim. 

61.      The other aspect of the claim that appears to be weak concerns what losses were suffered.  I agree with Advocate Taylor that no losses can be said to have been suffered in relation to the sale of Unit 1, due to Mr Lingard's conduct because this sale occurred some three months before any breakdown of the relationship which is the basis of Mr Holmes' claim.  There are also problems with the losses in respect of the sales in relation to Units 2 and 5 because the prices at which these were offered for sale was significantly below the CBRE valuations relied on by Mr Holmes.  It can only be Mr Holmes who authorised the properties to be marketed at these prices.  There is no suggestion in the pleadings that the marketing of these properties at lower prices was due to the conduct of Mr Lingard.  The losses therefore in respect of Unit 1 do not appear to be recoverable and any losses in respect of Units 2 and 5, assuming liability is established, based on the materials provided to me, appear to be difficult to sustain at the levels claimed in light of the fact that it was Mr Holmes who had chosen offer these properties for sale at lower prices, than the CBRE valuations.  While this may lead to some loss, it does not appear to be as great as the loss claimed in the order of justice.  It is in that regard that the amounts claimed seem to be weak. 

62.      In relation to Mr Holmes' financial position more generally, compared to the Le Sueur case more information has been provided about his financial position.  In respect of the Home Farm Development it appears that this ended up making a loss (see page 25 of exhibit SH1 of Mr Holmes' affidavit sworn on 11^th June, 2015).  Mr Holmes also sold Property A for a price close to the borrowing from Bank B and any surplus has since been spent.  However, Advocate Taylor was critical of the lack of information as to the payment to Bois Bois in respect of PropertyF and what this related to.  Based on information publically available, Mr Holmes either had the benefit of the proceeds of sale of Property F in 2011, which was a cash purchase, or had the benefit of borrowings from Company A.  His affidavit does not explain what happened to these monies.   

63.      It is also around this time that Mr Holmes started to have some involvement with Mr Lingard in respect of Hotel La Tour.  I refer to some involvement because I agree with the observations of Commissioner Clyde-Smith at paragraph 27 of the judgment discharging the injunctions dated 29^th June, 2015, that there appear to have been some dealings between Mr Holmes and Mr Lingard, albeit not on the basis of the June 2011 agreement. 

64.      It was also in June 2011 that Mr Holmes acquired Trident Nurseries (see Mayhew & Holmes Limited v Bois Bois [2015] JRC 118).  It may therefore be that any monies in respect of Property F ended up either in Hotel La Tour in some way or in the Trident Nurseries project.  This project too was unsuccessful.  However, this is as far as I can go because beyond making the statement that he no longer has any real property, Mr Homes has not explained what happened in respect of these transactions or any monies he may have invested in them. 

65.      No explanations have been offered about the payment of £161,970.85 to Bank B for Mr Holmes paid on 15^th December, 2010.  It maybe that this payment related to borrowings from Bank B secured over Property A but the position is not clear. 

66.      There are also unexplained financial payments as set out in Advocate Taylor's submissions, which I have recorded above. 

67.      What I conclude in relation to Mr Holmes' financial position, is that I have not received the full story.  I have also not been told anything about his financial position since the end of September 2014.  While Mr Holmes has explained that his whole time is spent conducting litigation, no information has been provided about how he is living from day to day.  He has not indicated whether he is on income support or provided any up to date bank accounts.  I am therefore left in the position of there being unexplained gaps.  While this is relevant to the quantum of any security ordered, the lack of full information I consider is also a factor I can take into account in deciding whether or not to order security at all.  This is why the extent to which the lack of information about a plaintiff's means is a matter of discretion.  The lack of any information, in particular when taken with other factors as occurred in Le Sueur, or supplying information that is known to be untrue points towards security being ordered.  Providing some information but which is not complete is not on the same scale but still can be taken into account in deciding whether or not to order security. 

68.      In relation to the factors relied upon by Advocate Taylor concerning Mr Holmes' approach to litigation, Advocate Taylor firstly relied on the fact that the injunction was discharged.  However, in my judgment care needs to be taken here.  This is because costs consequences are likely to follow the discharge of an injunction.  It is not uncommon for indemnity costs to be imposed as a consequence of an injunction having been found to be wrongly granted, in particular either for seeking an injunction where notice should have been given, or where material non-disclosure has occurred.  I observe that in Goldtron v Most Investment Limited & Ors [2002] JLR 424, referred to in the Commissioner's decision to discharge the injunction, that indemnity costs were ordered.  Care needs to be taken that an additional penalty of ordering security for costs is not imposed, which might overlap with any penalty imposed by the Royal Court in costs. 

69.      Advocate Taylor relies on the injunction proceedings as being illustrative of an approach to litigation.  That approach to litigation was reflected by Mr Holmes' approach to costs as recorded in the October 2014 judgment.  Advocate Taylor argues that the approach to the injunction and the approach to costs are indicative of an approach to litigation which involves unnecessary costs being incurred for a defendant.  The fact that Mr Holmes has now resolved issues referred to in the October 2014 judgment by a payment has only occurred late in the day and at the Court door of a further hearing.  He also referred to not paying £500.  I do not regard this sum as significant in the scheme of what is sought. 

70.      He further links this submission to the delays that have occurred in the present case and the approach taken in the Le Sueur litigation where the claim was found to be vexatious and struck out both by me and by the Royal Court, and that this decision is to be appealed further.  However the security ordered was provided.  Advocate Taylor also referred to the delay recorded in the claim brought by Mr Holmes against Bois Bois which proceedings were also started and not pursued, although they were not struck out (see [2015] JLR 118). 

71.      Looking at all these matters taken together is indicative of an approach to litigation which involves issuing unmeritorious or weak claims, which are not then pursued in line with the Court's expectations, where costs orders are challenged and only dealt with at the eleventh hour, all of which is designed to put pressure on any defendant pursued by Mr Holmes.  Frequently interlocutory orders are also appealed.  When taking into account the incomplete information about Mr Holmes' financial position, Advocate Taylor's clients have real concern for concern that any costs order in their favour at trial will simply not be met.  The escrow account will be exhausted by any costs order made as result of discharging the injunction, whether on a standard basis order or an indemnity basis. 

72.      Against these submissions which have force, it is right to remind myself that there are other options available to the defendant.  Unmeritorious claims can be struck out as I have noted above.  If costs orders made during proceedings are not paid, then a claim can be stayed and ultimately struck out for non-payment.  There are also remedies for delay.  In the present action, although no steps have been taken since Mr Holmes filed a reply, in response to the application for security for costs, Mr Holmes did issue a summons for directions which is indicative of an attitude of looking to progress proceedings.  There are also remedies for dealing with vexatious litigants -see Eves & Anor v Hambros Bank (Jersey) Limited [2000] JLR 221 and [2001] JLR 499 and The Vexatious Litigants (Jersey) Law 2001. Security for costs for appeals to the Court of Appeal can also be ordered. 

73.      I also remind myself that in the Le Sueur case [2014] JRC 131, Mr Holmes deliberately chose not to provide information about the first or second defendants which was under his control, or about his own position, that he did not own any real property in the Island, that he had not paid a costs order already made at that time and that the security for costs was sought in respect of an action already struck out as vexatious and an abuse of process. 

74.      The present claims by contrast are weak but, other than relying on the June 2011 agreement, are not vexatious although there may be difficulties in relation to them both as to liability and quantum.  The outstanding costs orders have been met and there is a willingness on the part of Mr Holmes to pursue matters to trial.  Some information about Mr Holmes' financial position has been forthcoming albeit it is not complete.  There are also remedies in particular a strike out application available to the defendants to address the specific issues complained of in relation to the June 2011 agreement as pleaded in the order of justice. 

75.      In exercising the discretion vested in me, I return to where I started in respect of this section of the judgment.  The jurisdiction is one that should be rarely exercised and requires some special or unusual circumstances.  Ultimately the question comes down to this.  Should a plaintiff who brings a weak claim and who is difficult in the sense of resisting interlocutory applications and appealing decisions made against him, who does not progress actions in accordance with the timetable expected by the Court and who at times delays paying costs orders, be required to put up security for costs in respect of future difficulties a defendant might face.  

76.      I accept that Mr Holmes is a difficult litigant in the sense complained of.  In addition he has not been clear about his financial position, in particular in respect of developments he became involved with.  However, these developments do appear ultimately to have lost money and have not been successful.  This points towards Mr Holmes being impecunious; this is not a basis to order security for costs.  I have therefore reached the conclusion that something more is required than being a difficult opponent with a weak case and one who appears to be impecunious, as best as I can assess it, even if he his evidence about all aspects of his financial position is not complete.  There are many cases where a plaintiff is difficult, does not have a strong case and who is of limited means.  I am not therefore persuaded that these matters amount to special or unusual circumstances even though I do not have a full financial picture.  In my judgment, in exercising the discretion vested in me, I consider that, at present, this action should not be looked at on the same basis as my decision in Le Sueur.  While this is a case that is close to the line of ordering security, as matters stand, I am not persuaded that the case has crossed the line which requires the rare jurisdiction vested in me to be exercised in the defendants' favour.  Accordingly, I refuse the application. 

77.      Had I resolved to order security, I would only have done so up to completion of witness statements and expert evidence and not up to trial.  I would have been concerned that the figure claimed to trial of £50,000 would have stifled the plaintiff's claim.  The overall sum I would have allowed for the tasks up to and including expert evidence based on the information provided by Advocate Taylor would have been £9,000, which represents a reduction of around £4,000 from the amounts claimed.  In light of the fact that Mr Holmes' affidavit was not complete for the reasons set out above, I would not have accepted his contention that ordering payment of security of this sum would have stifled his claim. 

Authorities

Home Farm Dev-v-HJL Holdings and Lingard [2014] JRC 209.

Al-Koronky & Anor v Time-Life entertainment Group Limited & Anor [2006] EWCA Civ 1123.

Leeds United Association Football Club Limited v The Phone-In-Trading-Post (t/a Admatch) [2009] JLR 186.

Eves & Anor v Hambros Bank (Jersey) Limited [2000] JLR 221.

Eves & Anor v Hambros bank (Jersey) Limited [2001] JLR 499.

Goldtron v Most Investment Limited & Ors [2002] JLR 424

Café de Lecq v R. A. Rossborough (Insurance Brokers) Limited [2011] JLR 31.

Home Farm Developments Limited & Another v Le Sueur [2014] JRC 131.

The Vexatious Litigants (Jersey) Law 2001.

Nasser v United Bank of Kuwait, ante [2001] EWCA Civ 556.

Olatawura v Abiloye [2002] EWCA Civ 998.