Jersey Unreported Judgments

Judicial review - costs judgment

[2015]JRC238

Royal Court

(Samedi)

20 November 2015

Before     :		J. A. Clyde-Smith, Esq., Commissioner, sitting alone.
Between	Meinl Bank Aktiengesellschaft Peter Weinzieri Stephan Visy Georg Josef Kucian Karel Romer Heinrich Schwagler Julius Lindberg Meinl		Applicants
And	H M Attorney General		First Respondent
And	The Jersey Financial Services Commission		Second Respondent

Advocate JS. C. Thomas for the Applicants.

Advocate B. H. Lacey for the Second Respondent.

judgment

the commissioner:

1.        The Jersey Financial Services Commission ("the Commission") seeks its costs on the indemnity basis from the applicants in relation to their application for a Judicial Review of the decision of the Attorney General to issue a notice to the Commission under Investigation of Fraud (Jersey) Law 1991 and of the Commission to produce to the Attorney General material relating to an investigation carried out by inspectors appointed by it under the Companies (Jersey) Law 1991. 

2.        Pursuant to Rule 16/2(4) of the Royal Court Rules 2004, I had directed that the application for leave be listed for an oral hearing, with notice being given to the Attorney General and to the Commission.  The 15^th  October, 2015, was fixed for that hearing. 

3.        The Commission had served upon it:-

(i)        The grounds to apply for a Judicial Review.

(ii)       The skeleton argument of the applicants.

(iii)      Numerous detailed affidavits sworn and filed in support.

4.        In advance of the oral hearing, the applicants' legal advisers proposed and there was agreed a timetable for the filing of written submissions and on Monday, 12^th October, 2015, Advocate Lacey, for the Commission, filed detailed submissions and an affidavit sworn by Mr Barry Faudemer, the Commission's Director of Enforcement.  On Tuesday, 13^th October, 2015, Advocate Lacey wrote to Advocate Thomas, acting for the applicants, on a "without prejudice save as to costs" basis, urging the applicants to reflect and as soon as possible withdraw their application, because on any analysis of the law and the facts it was misconceived and hopeless. 

5.        At 9:03am on the day of the oral hearing, Advocate Thomas gave notice to Advocate Lacey that the applicants would not be pursuing their application for leave as against the Commission and the application was withdrawn at the commencement of the hearing with costs left over. 

6.        Of the six grounds of appeal, only one related to the Commission and was in these terms:-

"Ground 5: The Commission's decision to comply with the notice on 13th March 2015 without first ensuring that the Applicants were given the opportunity to make representations was procedurally unfair and irrational".

7.        On 9^th September, 2013, Lord Goldsmith, acting for the applicants, had written to Mr Faudemer expressing concerns about the actions of the Austrian prosecutor and asking for an opportunity to make representations before the Commission made any decision to provide documentation to the Austrian authorities.  In his response, Mr Faudemer said he would share a copy of Lord Goldsmith's letter and his response with the Attorney General.  Mr Faudemer made it clear that he was not in a position to provide an undertaking to notify Lord Goldsmith of any request received by the Attorney General which may result in production orders being served upon the Commission.  Any request from the Austrian prosecutor for access to the report of the inspectors made directly to the Commission would be referred, he said, to the Attorney General. 

8.        On 26^th November, 2013, Mr Faudemer was contacted by a Mr Kilkenny, who we understand to be a public relations representative of the applicants, stating that he believed a letter of request was about to be sent or may already have been sent by the Austrian State Prosecutor to the Attorney General.  He referred to Lord Goldsmith's letter and re-stated the wish of the applicants to be allowed to make representations to those concerned once the request itself had arrived.  Mr Faudemer obtained the permission of Mr Kilkenny to forward the attachments to his e-mail to the Attorney General.  There was nothing to prevent the applicants making representations directly to the Attorney General which they appear not to have done. 

9.        When it came to the attention of the applicants that the Attorney General had issued a notice under the Investigation of Fraud (Jersey) Law 1991 dated 25^th February, 2015, which had been complied with by the Commission, they inferred that contrary to what they described as their legitimate expectation, the Commission had failed to raise their concerns with the Attorney General.  A breach of that expectation, Advocate Thomas argued, could form the basis of Judicial Review. 

10.      On considering the skeleton argument filed by Advocate Lacey and the affidavit sworn by Mr Faudemer, it became clear to the applicants that the Commission had indeed passed on their concerns to the Attorney General as it had indicated it would, so that in Advocate Thomas' words, the inference the applicants relied upon was incorrect, and on any view, fatal to their application, which was then withdrawn. 

11.      The application was, in any event, flawed in my view, essentially because the Commission were under compulsion of law to comply with the notice issued by the Attorney General under sanction of criminal penalty.  In complying with the notice, the Commission was not carrying out a statutory function or performing a statutory duty; it was simply responding to a notice under compulsion of law.  There was no decision or action to review. 

12.      The approach of the Court to costs in oral hearings for leave for Judicial Review was helpfully considered by the Court in Larson v Comptroller of Taxes [2015] JRC 001 in which it adopted the principles set out in the English Court of Appeal decision in R (on the application of Mount Cook Land Ltd) v Mount Eden Land Ltd and Westminster City Council [2004] CP Rep 12, despite the differences in the procedures in the two jurisdictions. 

13.      The underlying policy of the Court is not to discourage would-be claimants from seeking relief from actual or threatened transgressions of the law by public bodies by way of Judicial Review for the fear of the penalty in costs if they do not get beyond the permission stage.  Accordingly, as Sir Michael Birt, then Bailiff said at paragraph 29:-

"In my judgment, the policy considerations which underlie both the old and new practice in England in relation to oral hearings for leave - the position in England is of course now different in relation to the costs of filing an acknowledgement of service - are much the same as in Jersey.  I find them persuasive.  Accordingly, I hold that the general approach should be that a putative respondent should not be awarded his costs in relation to such a hearing unless the judge hearing the application considers in his discretion that there are grounds for departing from this normal practice.  I would prefer to put it this way rather than referring to 'exceptional circumstances' as the use of such an expression immediately invites dispute as to whether the circumstances are sufficiently different or unusual to become 'exceptional'.  As Auld LJ emphasised in the passage referred to above, the matter is ultimately one for the discretion of the judge but having regard to the general approach."

14.      In Larson, the Court found it was a hopeless application and doomed to failure.  It awarded the Comptroller of Taxes his costs on the standard basis; the Comptroller had not sought costs on the indemnity basis. 

15.      The non-exhaustive list of circumstances detailed in the Mount Cook case are:-

"5.      Exceptional circumstances may consist in the presence of one or more of the features in the following non-exhausting list:-

(a)       the hopelessness of the claim;

(b)       the persistence in it by the claimant after having been alerted to facts and/or the law demonstrating its hopelessness;

(c)       the extent to which the court considers that the claimant, in the pursuit of his application, has sought to abuse the process of judicial review for collateral ends - a relevant consideration as to costs at the permission stage, as well as when considering discretionary refusal of relief at the stage of substantive hearing, if there is one; and

(d)       whether, as a result of the deployment of full argument and documentary evidence by both sides at the hearing of a contested application, the unsuccessful claimant has had, in effect, the advantage of an early substantive hearing of the claim.

6.        A relevant factor for a court when considering the exercise of its discretion on the grounds of exceptional circumstances, may be the extent to which the unsuccessful claimant has substantial resources which it has used to pursue the unfounded claim and which are available to meet an order for costs."

16.      Advocate Lacey submitted that the Commission was not a private litigant with financial resources with which to do as it pleases.  It is a statutory body bound to manage its financial resources carefully and responsibly and is accountable to do so.  In this regard, it is required in the context of an application to apply for Judicial Review, to obtain costs orders on the appropriate basis whenever it is fair and reasonable to do so. 

17.      There had been no letter before the commencement of the proceedings and in her view, costs should be ordered on the indemnity basis, firstly because the application, in so far as the Commission was concerned, was hopeless and secondly, because the applicants are well resourced and legally advised. 

18.      Advocate Thomas submitted that I should not depart from the normal position.  On the basis of the information available to the applicants, the application, based upon an inference, was not hopeless.  As soon as they became aware of the communications between Mr Faudemer and the Attorney General, they gave notice of their intention to withdraw and therefore did not persist in a hopeless application. 

Decision

19.      In my opinion, the Commission, having been given notice of the application for leave and having served upon it the skeleton argument, authorities and documentation, was perfectly entitled and indeed under a duty, to prepare a skeleton argument, authorities and evidence in order to extricate itself at the earliest opportunity from becoming embroiled in what had all the appearances of being costly and potential complex litigation involving the Attorney General. 

20.      In providing the Attorney General with documentation, the Commission was acting under compulsion of law and there was, therefore, no decision or action that was susceptible to Judicial Review.  It had done all it had indicated it would do in relation to passing on to the Attorney General the concerns of the applicants and on the face of a notice under the Investigation of Fraud (Jersey) Law 1991, had no ability to ensure the applicants were given an opportunity to make representations. 

21.      So I conclude that the application as against the Commission was fundamentally flawed and therefore hopeless, and it is right that the Commission should be protected from the unnecessary costs it has been forced to incur.  Furthermore, it was an application made by experienced well-resourced applicants with the benefit of legal advice. 

22.      There was nothing to prevent the applicants from approaching the Commission to obtain an understanding of the factual and statutory background to the Commission's compliance but instead it simply launched the application, based merely upon an inference that the Commission may not have passed on their concerns to the Attorney General and in any event, in circumstances where the Commission was acting under compulsion of law. 

23.      I accept that in Larson the Comptroller only sought and was awarded costs on the standard basis but in my judgment, having considered the guidance given by the Court of Appeal in Leeds United FC v Weston [2012] JCA 088 and C v P-S [2010] JLR 645, the conduct of the applicants takes this case out of the norm justifying costs on the indemnity basis. 

24.      I therefore order the applicants jointly and severally to pay the costs of the Commission of and incidental to the application for permission for Judicial Review (including the costs hearing and this notwithstanding the point raised below) on the indemnity basis.  

Mr Faudemer's affidavit

25.      A further issue was raised by Advocate Lacey and that related to the affidavit sworn by Mr Faudemer, which was referred to in the hearing following the withdrawal of the Commission.  The Commission do not consider that this affidavit should now form any part of the documentation before the Royal Court for the purpose of the continuing proceedings.  She asked that the Court direct that the applicants are not entitled to disclose or make use of it in the Jersey or any other proceedings.  It is not clear cut, she said, whether the usual implied undertaking that documents provided under discovery obligations in one set of proceedings cannot be used for collateral purposes, applies to Mr Faudemer's affidavit. 

26.      Advocate Thomas points out that Advocate Lacey had not cited any supporting authority.  The applicants are in possession of Mr Faudemer's affidavit, quite properly, and are entitled to rely upon it.  It was remarkable, he said, that the Commission sought to deprive the Court of relevant evidence, which might otherwise assist it in the proceedings. 

27.      In the absence of any authority, it is my view that notwithstanding the withdrawal of the application as against the Commission, Mr Faudemer's affidavit has been filed in these proceedings and is on the record.  It can, therefore, be referred to in these ongoing proceedings and I therefore decline that part of Advocate Lacey's application.  I will order, however, that it cannot be used in any other proceedings whether in Jersey or elsewhere without the leave of the Court. 

Authorities

Investigation of Fraud (Jersey) Law 1991.

Companies (Jersey) Law 1991.

Royal Court Rules 2004.

Larson v Comptroller of Taxes [2015] JRC 001.

R (on the application of Mount Cook Land Ltd) v Mount Eden Land Ltd and Westminster City Council [2004] CP Rep 12.

Leeds United FC v Weston [2012] JCA 088.

C v P-S [2010] JLR 645.