Jersey Unreported Judgments

Damages - application for leave to appeal out of time by the second plaintiff.

[2016]JRC024

Royal Court

(Samedi)

26 January 2016

Before     :		Sir Michael Birt, Commissioner, sitting alone
Between	Mayhew Limited		First Plaintiff
	Shane Holmes		Second Plaintiff
And	Bois Bois		First Defendant
	Daniel Young		Second Defendant

Advocate O. A. Blakeley for the Second Plaintiff.

Advocate A. D. Hoy for the Defendants.

judgment

the commissioner:

1.        This is an application by the second plaintiff for leave to appeal out of time (and if leave is granted, an appeal) against certain aspects of a decision of the Master dated 1^st June, 2015, whereby he permitted the plaintiffs' claim to continue notwithstanding a failure to comply with the requirements of RCR 6/26(1), which requires a plaintiff to issue a summons for directions within one month of the expiry of the time for pleadings. 

2.        That is because, although he permitted the claim to continue, the Master ordered the plaintiffs to pay the costs of the hearing before him on an indemnity basis (to be summarily assessed by him) and further ordered that if such costs were not paid within 28 days of their assessment, the defendants were to be at liberty to apply to have the claim struck out.  The second plaintiff appeals against those two orders. 

3.        The defendants' costs were subsequently summarily assessed by the Master in the sum of £9,742.  The relevant Act is dated 5^th August, 2015. 

Background

4.        In view of the limited nature of the appeal, I can summarise the background very briefly.   

5.        The order of justice was prepared by the second plaintiff (Mr Holmes) and is not particularly easy to follow.  However it appears to allege that in November 2010 Mr Holmes instructed Bois Bois (and in particular the second respondent) in connection with the proposed purchase of a property known as Trident Nurseries, St Saviour ("the Property").  It appears from the answer filed by the defendants that the transaction may actually have involved the purchase of the shares in the first plaintiff ("Mayhew") as owner of the Property rather than purchase of the Property itself but that distinction is not relevant for today's purposes.  The order of justice alleges that, as a result of the negligence of the defendants in carrying out their various searches, Mr Holmes could not carry out the development which was envisaged at the time of the purchase because a substantial portion of the Property was restricted to agricultural use.  He therefore claims damages.  The defendants deny any negligence or that any loss has been caused by their actions.  

6.        The order of justice was served on 10^th May, 2013.  The defendants filed an answer on 13^th June.  No reply was filed and the time for filing a reply expired on 4^th July, 2013.  The plaintiffs should therefore have issued a summons for directions under Rule 6/26(1) by 4^th August, 2013.  They did not do so. No further steps in the proceedings occurred until 16^th February, 2015, when the Master issued one of his regular circulars listing cases which were liable to be dismissed under Rule 6/26(13), which provides that the Court may of its own motion dismiss an action after giving at least 28 days' notice if two months have elapsed from the time limited for filing pleadings and no summons for directions has been issued. 

7.        The plaintiffs applied to be allowed to continue the proceedings notwithstanding their failure to issue a summons for directions and the defendants issued a summons seeking indemnity costs should the Master dismiss the plaintiffs' claim.  These were the matters which came before the Master and which he decided on 1^st June, 2015.  I should add that it appears that Mayhew has been dissolved and clearly it will have to be reinstated if it is to continue as a party. 

The Master's judgment

8.        The Master reminded himself of the correct approach on such applications. In particular, he referred to paragraphs 26 - 29 of his judgment in Hong Kong Foods Limited v Gibbons [2014] JRC 187 where he said:-

"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."

9.        I agree that this is a correct statement of the applicable principles.  

10.      The Master then went on to find that although there had been a delay by the plaintiffs from September 2013 to February 2015 (when the Master's circular was issued), i.e. 17 months, he considered that 5 months of this period was excusable either on the basis of waiting for the sale of the Property so as to crystallise the loss or because of delays in getting advice on legal aid.  The Master also pointed out that the defendants had been singularly unhelpful in pleading in their answer the point that the plaintiffs should not have sued BoisBois (which is merely a business name) and should have sued the individual partners, but then declining to inform the plaintiffs of the names of the partners at the relevant time.  In passing I should note that I entirely endorse the Master's criticism of this refusal on the part of the defendants.  They should have supplied the names immediately. 

11.      Having considered the matter carefully, he held that there had been a period of 12 months' delay which was not excusable.  He then reviewed the merits of the claim and rejected the defendants' submission that the claim was hopeless and bound to fail. He considered that it was arguable.  

12.      Finally he turned to consider the balance of justice.  He reminded himself in particular of the observations of the Deputy Bailiff in Vieira v Kordas [2014] JRC 042 and the need to have regard to a plaintiff's right of access to a court under Article 6 of the European Convention on Human Rights.  He concluded as follows at paragraph 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 12 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 the costs are paid and the plaintiffs are successful at trial, the amount of interest payable on any damages awarded shall be reduced by 12 months to reflect the inordinate and inexcusable delay."

He then went on to give directions in relation to amendment of the pleadings. 

13.      Mr Holmes now seeks to appeal against that part of the decision summarised at (i) - (iii) in the preceding paragraph, namely that the plaintiffs should pay the costs of the application before Master on an indemnity basis, that such should be paid within 28 days and that if not paid, the defendants would be at liberty to apply to have the claim struck out.  

Leave to appeal out of time

14.      As the Master's judgment (and associated Act) was given on 1^st June, any appeal had to be filed by 11^th June.  Mr Holmes' summons to appeal is dated 7^th July.  Since then Advocate Blakeley has been appointed on legal aid to represent him and he filed an amended notice of appeal on 6^th August.  

15.      The defendants object to leave to appeal out of time being granted.  They submit that no proper explanation for the failure to appeal within time has been given. 

16.      The legal test for deciding whether to grant an extension of time for an appeal was conveniently summarised by McNeill JA in Syvret v Treasurer of the States [2014] JCA 185 at paragraph 13 in the following terms:-

"In deciding whether or not to grant an extension of time within which an appeal may be lodged, this Court must consider (a) the extent of the delay, (b) any explanation for it, (c) the prospects of success, and (d) the risk of prejudice: see Crichton v Parker-Smith [2008] JCA 039 at paragraph 19; following B v N [2002] JLR N-29.  In cases where the delay in serving a Notice of Appeal is short and there is an acceptable excuse, an extension of time will not be refused on the basis of merits unless the prospective appeal appears to be hopeless: Palata Investments Limited v Burt & Sinfield Limited [1985] 1 WLR 942; Pitmans v Jersey Evening Post and Another [2013] JCA 149."

17.      As to the reason for the failure to appeal in time, I have been referred to various exchanges of email.  Mr Holmes represented himself and Mayhew before the Master.  Following the decision of 1^st June, Voisins on behalf of the defendants submitted a bill of costs for summary assessment by the Master on 12^th June.  On 17^th June, the Master emailed Mr Holmes giving him until 30^th June to comment on the bill of costs.  Mr Holmes replied by email on 18^th June seeking confirmation that the time for appealing would run from the date the summary assessment of costs was issued.  The Master replied on 19^th June informing him that time for appealing started to run from the date when the final version of the judgment was released to the parties, not from the date of completion of assessment of costs. 

18.      Three days later, on 22^nd June, Mr Holmes sent to the defendants by email a summons together with a notice of appeal against the Master's decision.  However, he did not, as required by Rule 20/2, file a copy with the Greffier.  I was informed by Advocate Blakeley that that occurred on 30^th June.  The summons under the hand of the Judicial Secretary fixing a date for the hearing of the appeal is dated 7^th July. 

19.      On the basis of the apparent misunderstanding by Mr Holmes as to the date from which time for appealing ran, the comparatively short extent of the delay (11 days in giving notice of appeal to the defendants and 19 days in filing the same with the Greffier), my view of the prospects of success (as appears below) and the lack of prejudice to the defendants (other than the usual one of having to face an appeal when they might otherwise have expected not to because of the expiry of the time for appealing), I conclude that the right course is to grant leave to appeal out of time. 

Test on appeal

20.      The test on appeal from the Master is well established, namely that the Court considers the matter afresh and reaches its own conclusion whilst of course taking due note of the decision of the Master and the reasons for his decision. 

21.      It seems to me that the appeal falls to be considered under three heads:-

(i)        The decision to award costs against the plaintiffs.

(ii)       The award of such costs on the indemnity rather than the standard basis.

(iii)      The decision to order such costs to be paid within 28 days of assessment failing which the defendants would be able to apply to have the claim stuck out. 

I shall consider each of these in turn. 

(i) Award of costs

(a) The submissions

22.      Advocate Blakeley's submission on this aspect is simple.  He refers to the general approach (as exemplified in Watkins and Connell v Egglishaw [2002] JLR 1) that costs should be awarded in favour of a winner where a winner can be readily identified. 

23.      He submitted that in this case a winner could be identified.  Although the matter came before the Master at the instigation of the Court by reason of the issue of the Master's circular, the defendants joined in and argued strongly that the claim should be struck out by reason of the plaintiffs' failure to comply with Rule 6/26(1).  In particular, the defendants argued strongly that the plaintiffs' claim was hopeless and doomed to failure and that the evidence required for trial was oral rather than documentary so that, by reason of the lapse of time, it was not possible to have a fair trial.  Both of these aspects were specifically rejected by the Master as was the overall suggestion that the claim should be dismissed.  The defendants had therefore lost; yet they were awarded their costs on the indemnity basis.  This could not be correct. 

24.      He accepted that the hearing only became necessary because of the plaintiffs' failure to comply with Rule 6/26(1) but it was not necessary for the defendants to participate.  Where the Court issued a circular and a plaintiff applied for a case to be allowed to continue, a defendant had a number of options.  He could choose not to appear and leave it to the Court to resolve the matter with the plaintiff.  Secondly, he could appear but rest on the wisdom of the Court.  Thirdly, he could appear and make submissions limited to the issues of delay, prejudice etc.  Finally, he could participate and mount a full bloodied attack, including arguing that the case was hopeless and doomed to failure.  The Court's decision as to costs should depend upon which of these courses a defendant followed.  In relation to the fourth alternative, it would not be right to award costs in such a case.  If a defendant applies in the ordinary way on his own initiative to strike out a claim under Rule 6/13 on the ground, for example, that it discloses no reasonable cause of action or is an abuse of process, he can expect to have an award of costs made against him if he loses.  It could not be right to allow a defendant in effect to have a free ride as to costs if he chooses not to initiate such an application but to wait until the Court issues a circular because of a plaintiff's failure to comply with Rule 6/26(1) and then effectively make such an application under cover of the Rule 6/26(13) hearing. 

25.      Although Advocate Blakeley's argument seemed to be suggesting that the plaintiffs should have been awarded their costs against the defendant, he accepted on questioning by the Court that, given that the hearing only became necessary because of the plaintiffs' failure to comply with the Rules, no order as to costs was the best that he could realistically ask for. 

26.      Advocate Blakeley also referred to the observation in Eckman v Sidem International Limited [2009] JRC 233, where at para 63, the Court pointed out that it was open to a defendant to issue a summons for directions under Rule 16/26(2) where a plaintiff failed to do so and that it was not always appropriate for a defendant to let sleeping dogs lie.  This was another reason, said Advocate Blakeley, why it was inappropriate to award the defendants their costs in this case.  They had not issued a summons for directions or warned the plaintiffs that failure to do so could lead to a summons for dismissal being issued. 

27.      Advocate Hoy, on the other hand, submitted that there was ample authority for the proposition that, where the Court decided not to dismiss proceedings for failure to comply with Rule 6/26(1), it was appropriate to make a costs order as a sanction against the plaintiff for his failure to comply with the Rules.  It was not therefore the ordinary case of a court exercising its discretion in relation to costs.  Furthermore, there was authority for the Court to award indemnity costs in such cases to bring home to a plaintiff that the costs had been incurred because of his failure.  The Master was therefore fully entitled to make the order which he did. 

(b) Discussion

28.      Advocate Hoy is correct in saying that the Court has on several occasions indicated that, where it declines to dismiss proceedings following a plaintiff's failure to issue a summons for directions in time, the Court may nevertheless order the plaintiff to pay the costs of the relevant hearing.  I would refer to the following (emphasis added in each case):-

(i)        At paragraph 19 of the judgment in Vieira v Kordas, William Bailhache, Deputy Bailiff said:-

"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".

That was a case of an application to strike out under Rule 6/13 rather than Rule 6/26 but we agree with the Master that the observations are equally applicable to hearings under Rule 6/26. 

(ii)       In B v M-R [2007] JRC 139, having referred to the well-known three questions to be considered as set out in Lescroel v Le Vesconte [2007] JRC 091, the Court in a judgment which I delivered said this:-

"26... In our judgment the three questions are simply an attempt to provide some guidance as to the matters which should be considered on such an application.  For example, if the plaintiff is only in default by one month when the matter comes before the Court, we think it highly unlikely that the Court would dismiss the action even if satisfied that there was no excuse for the failure to issue a summons.  The remedy of dismissal would simply be disproportionate for the breach involved.  An award of costs against the plaintiff (or his advocates) coupled with the giving of directions to progress the matter would in many cases be a much fairer outcome."

(iii)      In the Hong Kong Foods case Master Thompson, having reached the view that the plaintiffs had just persuaded him that the action should be allowed to continue, said this at paras 46-47:- 

"46.    Although I have allowed the plaintiffs (only just) to be able to continue to pursue their claim because of the amount at stake, because a trial can still take place which will not be unfair and because of the failings of both parties to pursue their claim and counterclaim, I do consider that some form of penalty should be imposed on the plaintiffs for not pursuing their claim for at least 17 months.  Ordinarily, the costs of the application to continue are payable on an indemnity basis as a sanction for a plaintiff failing to abide by an express provision of the Rules and the court's clear statements in terms of progressing actions to trial once proceedings have been commenced. 

47.      In this case in the exercise of discretion vested in me, I consider the fair order to make is that the plaintiffs should pay the defendants' costs of and occasioned by this application on the standard basis, such cost to be taxed, if not agreed.  This is because the plaintiffs should be penalised for a breach of the rules.  I have not ordered indemnity costs because of the failure by the defendants to pursue their counterclaim without justification.  I consider this failure on the part of the defendants means that it would be unfair for the defendants to benefit from a costs order on an indemnity basis."

(iv)      In Eckman v Sidem International Limited [2009] JRC 233, where the Court overturned the Master and allowed the claim to continue over the objections of the defendant, Clyde-Smith,  Commissioner said this at paras 64 and 65:-

"64.    Where the balance of justice comes down against dismissal, it is important that sanctions should apply to plaintiffs who are in breach of this rule for the reasons made clear in Lescroel.

65.      We accepted therefore the plaintiff's invitation to apply the following sanctions, namely:-

(i) We ordered the plaintiff to pay the second defendant's costs of the hearing before the Master on an indemnity basis.    

(ii)  We disallowed the plaintiff interest on his claim for the period of the delay.  ....".

(v)       In Irish Nationwide Building Society v Volaw Corporate Trustee Limited [2012] JRC 035, a different order was made.  In that case the defendants issued a summons pursuant to Rule 6/26(2) to dismiss the claim on the ground that the plaintiff had delayed some six months in issuing a summons for directions, although it had done so just prior to the issue of the defendants' summons.  It is clear that the court took a dim view of the defendants' action.  It stated at paragraph 29 of the judgment "in our view, the issuing of the summons was opportunistic and has substantially delayed the action."  The Master had refused to dismiss the action and the Royal Court upheld his decision.  The Master had however made an order that the defendants pay only 50% of the plaintiff's costs in connection with the summons and the Royal Court said of that decision at para 31:-

"This is not to detract from the importance of Rule 6/26(1).  In this case, the plaintiff was penalised by the defendant being ordered to pay only 50% of the plaintiff's costs in successfully defending the summons, so as to reflect, as the Master said, what was a significant breach of the Rules which should not have been allowed to take place.  In other cases further sanctions may be appropriate and ultimately dismissal may be proportionate."

29.      Advocate Blakeley submits that the observations in these cases should not be followed.  The award of costs is not a penalty or sanction.  It is compensation for the fact that the winning party has incurred costs because the other side has not conceded the matter.  It is always open to a party to concede points to his opponent and therefore avoid his opponent incurring costs on those points.  If a party does not concede but instead argues the point and subsequently loses, he causes the costs of a battle which otherwise could have been avoided.  The approach indicated by the Master in Hong Kong Foods is, submits Advocate Blakeley, likely to encourage defendants to let sleeping dogs lie rather than assisting proactively to drive the litigation forward. 

30.      In my judgment, it is important to recall why Rule 6/26(1) is there.  In the past, litigation tended to proceed at a leisurely pace as dictated by the lawyers for the parties.  The Court had no means of controlling the progress of cases.  Indeed they often appeared to fall into a black hole because the Court had no means of being aware of progress (or lack of it), only to reappear sometime later when one or other of the parties decided to take some step in the proceedings.  Such an approach is no longer acceptable as outlined so convincingly by Bailhache, Bailiff in De Freitas v Citadel Trust Limited [2005] JRC 035C at para 25. 

31.      Rule 6/26(1) was introduced in order to ensure that cases could no longer fall into a black hole and that judicial control could be exercised over progress.  Thus, on a summons for directions, the Master can give case management directions to ensure the timely progress of the matter to trial.  This includes ordering the parties to attend before the Bailiff's Judicial Secretary within a specified period in order to fix a date for trial, thereby giving the parties a deadline to which they must all work.  As stated at paragraph 23 of B v M-R, the sanction in Rule 6/26(13) of dismissing the action for non-compliance with Rule 6/26(1) is undoubtedly something of a nuclear option but it was intended to ensure compliance by plaintiffs.  It reflects the importance which the Court attaches to the need for a summons for directions so that appropriate judicial control of the proceedings can be maintained. 

32.      If a hearing under Rule 6/26(13) is required, it is because a plaintiff has failed to comply with this important requirement.  It is entirely the plaintiff's fault that any hearing is required.  In such circumstances, the Master is likely to be assisted by the presence of the defendant to put forward any reasonable arguments as to whether the sanction of dismissal is required or whether some lesser measure is appropriate. 

33.      In those circumstances, it is in my judgment entirely appropriate that the starting point for the Master is that, if he decides not to dismiss the action, he may nevertheless order the plaintiff to pay the costs incurred by the defendant in appearing before the Master.  This is because it is reasonable for the defendant to attend and because such hearing has been caused entirely through the failure of the plaintiff to comply with the important requirement of the Rules to issue a summons for directions. 

34.      However, a starting point must not become a rule.  The Master must always have regard to the particular circumstances of the case.  In particular, the Master should have regard to the nature of the arguments put forward by a defendant.  The mere fact that the defendant has argued unsuccessfully for dismissal (because for example the Master has decided that it would be disproportionate to dismiss the case) does not mean that the plaintiff should not be ordered to pay the costs.  However, if a defendant behaves in an unreasonable manner or puts forward unreasonable arguments, it is likely to be appropriate for the Master to make a somewhat different order.  To take a simple example, if a plaintiff is only one month late in issuing his summons for directions but the defendant argues forcefully and at great length that the claim should nevertheless be dismissed, it is unlikely to be appropriate to order the plaintiff to pay all the costs. 

35.      In short, I agree with the observations in the cases referred to at paragraph 25 that, even where a defendant argues unsuccessfully that a claim should be dismissed for failure to issue a summons for directions, it will often be appropriate nevertheless to order that the plaintiff pays all the costs.  This is because of the importance which the Court attaches to the need for a summons directions and because the need for a hearing has arisen solely because of a plaintiff's failure to comply with this requirement under the rules.  Nevertheless, the hearing of a summons under Rule 6/26(13) does not give a defendant free rein to mount any arguments he likes without risk of any cost consequences.  Ultimately it is a matter for the judgment of the Master (and the Court on appeal) having regard to the circumstances of the case. 

36.      Although some of the cases have referred to an award of costs against a plaintiff in such circumstances as a sanction - and I agree this is a convenient form of shorthand - I do not accept Advocate Blakeley's argument that an award of costs against a plaintiff who has successfully fought off a suggestion by a defendant that his claim be dismissed under Rule 6/26(13) is contrary to the compensatory nature of costs orders.  The fact remains that the hearing has become necessary only because of the plaintiff's default.  Assuming that the defendant has acted reasonably in his participation in that hearing, the defendant's costs have been incurred because of the plaintiff's default.  In these circumstances it is entirely just and proportionate to compensate the defendant for the costs which he has incurred as a consequence of the plaintiff's failure to abide by the Rules. 

37.      I should comment briefly on a further aspect raised by Advocate Blakeley.  He referred to the dictum of Clyde-Smith, Commissioner in Eckman at paras 60-63 to the effect that, given the ability of a defendant himself to issue a summons for directions under Rule 6/26(2) and the modern emphasis on the duty of all parties to progress to trial in accordance with an agreed or ordered timetable at a reasonable level of cost and within a reasonably short time (as established in Re Esteem Settlement [2000] JLR N41), it is not always appropriate for a defendant to let sleeping dogs lie, in the sense of sitting back and waiting for the plaintiff to take any steps in the litigation.  However, this observation was made in the context of whether or not to allow the action to continue (see para 63 of the Commissioner's judgment).  It is noteworthy that even though the Court in Eckman overturned the Master and allowed the claim to continue and despite the fact that the defendant had not taken any action in the case such as issuing as a summons for directions himself, the Court nevertheless ordered the plaintiff to pay the defendant's costs before the Master on the indemnity basis. 

38.      In my judgment, the dictum in Eckman is not to be taken as suggesting that a defendant should not be awarded his costs of a hearing under Rule 6/26(13) merely because he has not himself issued a summons for directions under Rule 6/26(2), provided that he has otherwise acted reasonably.  Furthermore, the dictum in Eckman has to be read in the light of the observations of William Bailhache, Deputy Bailiff in Vieira at paras 22-30.  Although given in the context of an application under Rule 6/13 rather than 6/26, it is clear that the Deputy Bailiff was addressing the observations in Eckman and in my judgment his comments are equally applicable to hearings under Rule 6/26(13).  All of paragraphs 22-30 repay reading but I would quote in particular the following extracts:-

"28.... This was not a case brought by the first defendant.  He was not entering any counterclaim.  It would be wholly unreasonable to expect him to incur costs in order to take forward a claim which the plaintiff had brought.  It was not the first defendant's case, and it was not his obligation to take any such steps.  The defendant's obligation in these circumstances was not to take steps which would delay the trial of the action.  He did not take any such steps, and he was not and is not responsible for the delay in getting this action to trial."  

...

30.  So here are have a statement from the Court of Appeal that one must be cautious about taking the CPR as providing anything more than valuable guidance.  To the extent that the CPR reverses the responsibility for taking forward a case to trial, we do not find that valuable.  It is the plaintiff's case, and the plaintiff is obliged to take the necessary steps to bring it forward.  As part of case management, the court may well direct the parties to take steps which do in fact bring the case forward to trial and, depending upon whether there is a counterclaim or perhaps upon the factual nature of the case, it may well be incumbent on a defendant to issue a summons for directions.  It is particularly likely to be so if, as a result of the defendant's interlocutory activity both parties have invested heavily in the litigation process.  Furthermore, it is the obligation of the defendant to comply with any such case management directions timeously and to comply with the timetables which are set down in the Royal Court Rules.  A defendant is obliged not to waste the time of the parties and the court in procedural games.  Other than these features, however, it is the plaintiff's case and it is not the responsibility of the defendant, particularly in the early stages, to take it forward to trial as quickly as possible perhaps exposing himself to irrecoverable costs as a result." [emphasis added] 

For my own part, I respectfully agree with the observations of the Deputy Bailiff in Vieira.  Accordingly I do not (save in unusual circumstances) see a defendant's failure to issue a summons for directions under Rule 6/26(2) as a relevant factor counting against the making of a costs order in favour of the defendant at a hearing under Rule 6/26(13). 

39.      Turning to apply these principles to the facts of this case, I consider it was entirely reasonable for the defendants to appear before the Master and argue for the dismissal of the claim following the issuing of the Master's circular.  The delay was not inconsiderable (17 months of which the Master, after hearing from Mr Holmes, found that five months was excusable) and the plaintiffs had taken no other steps in the proceedings.  Accordingly the starting point is that it was entirely reasonable to order the plaintiffs to pay all the costs of the hearing before the Master even though they had ultimately been successful in persuading him that the action should be allowed to continue. 

40.      However, it is clear that, rather than confining themselves to the usual Lescroel arguments relating to delay, the excusability of any delay, prejudice and the balance of justice generally, the defendants launched a frontal attack to the effect that the claim was hopeless and doomed to failure.  Indeed, the Master described it as Advocate Hoy's main argument (para 16 of his judgment).  In my judgment, this went beyond what it is reasonable to expect in a hearing under Rule 6/26(13).  While the strength of a case may well be the subject of passing submissions under the heading of balance of justice (i.e. the third question listed in Lescroel), there is a difference between that and mounting a detailed submission that a claim is hopeless and doomed to failure.  If that is a defendant's position, he should issue a summons under Rule 6/13 to strike out the claim on one of the grounds there set out or under the inherent jurisdiction of the Court.  Any such application would be made at the defendant's risk as to costs. It is in my judgment not reasonable for a defendant to take no such step but then to seek to achieve the same objective via the back door by means of a hearing under Rule 6/26(13) without being at risk as to costs. 

41.      In my judgment, the Master failed to have regard to this aspect.  However, even though the defendants raised an argument which was, in the context of this particular hearing, unreasonable, their presence at the hearing remained reasonable and the other arguments which they raised were also reasonable (being conventional Lescroel arguments) even if unsuccessful.  It remains the case that the hearing only became necessary because of the plaintiffs' failure to issue the summons for directions in accordance with Rule 6/26(1).  Accordingly, it seems to me that the right course is still to make an order for costs against the plaintiffs but to discount this to reflect the unreasonable conduct of the defendants in effectively seeking unsuccessfully to strike out the claim on the merits rather than on the normal grounds on a hearing under Rule 6/26(13).  Taking a broad view I think that the fairest course is to award the defendants 50% of their costs before the Master rather than 100% as awarded by the Master. 

(ii) Indemnity costs

42.      It is clear from the observations of the Court in Hong Kong Foods and Eckman that indemnity costs are often awarded to defendants in hearings under Rule 6/26(13).  In Eckman, Commissioner Clyde-Smith drew attention at paragraph 66 to the observation of Lord Woolf in Buguzzi v Rank Leisure Plc [1999] 4 All ER 934 at 941:-

"To that table can be added (in relation to a default such as that which has occurred in this case) the new power of the court to order money to be paid into court.  The ability of the court to make an indemnity order for costs is an important power.  Under the old rules there was little or no difference between an indemnity order and a standard order for costs.  Under the new rules there is a significant difference.  For a court to order certain parts of the cost to be paid on an indemnity basis and to be paid forthwith is a valuable sanction since a solicitor has to explain to his client why he has to be put into funds to pay costs on that basis forthwith.  This is particularly valuable in bringing home to the solicitor and the party the consequences of default.  It is more effective if the costs are assessed summarily than by a detailed assessment."

43.      Once again, it is important to emphasise that there can be no rule.  Costs are par excellence something which is in the discretion of the Court and awards should always be made having regard to the justice of the particular case.  Nevertheless, there seems to me to be good reason for costs often to be awarded on the indemnity rather than the standard basis where a plaintiff has failed to issue a summons for directions in time but has been allowed to continue with his action.  Firstly, as Lord Woolf indicated, it should assist in bringing home to litigants and to their advocates the importance which the Court attaches to the prompt issuing of a summons for directions.  Secondly, as already stated, a hearing under Rule 6/26(13) is only required because of a failure by the plaintiff (or his advocates) to comply with this important requirement of the Rules.  In these circumstances, it is hard to see why a defendant should be left out of pocket by having to bear the difference between standard and indemnity costs. 

44.      I see no reason why indemnity costs should not be ordered in this case.  The delay was not insignificant and the defendants have been put to expense.  I have made a deduction to reflect the unreasonable argument which they put forward but that does not detract from the desirability, in order to bring home the importance of the Rule, of reimbursing them for that aspect of the summons where they conducted themselves reasonably.  The Master based his decision to award indemnity costs on the failure of 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 (by reference to sale of the Property) and because they were seeking advice and representation on legal aid.  I must confess that I am not sure that I see a failure to keep the other side informed as being the appropriate ground for indemnity costs.  The gravamen of what occurred is that the plaintiff failed to issue a summons in accordance with the requirement of Rule 6/26(1) and it is that, together with the other surrounding circumstances, which justifies indemnity costs rather than a failure to keep the defendants informed of steps which, on the Master's finding, only explained a small proportion of the delay. 

45.      However, on an appeal from the Master, the Court exercises its own discretion and, for the reasons I have given, I consider that costs should be ordered on the indemnity basis. 

(iii) Immediate payment of costs and application to strike out

46.      As already stated, the Master ordered that the costs (subsequently assessed at £9,742) should be paid within 28 days of assessment failing which the defendants would be at liberty to apply to have the claim struck out. 

47.      Advocate Blakeley submitted that this order infringed the rights of Mr Holmes under Article 6 ECHR.  He referred to Ford v Labrador [2003] 1 WLR 2082, a decision of the Privy Council on appeal from Gibraltar.  In that case the plaintiff had been ordered to pay the taxed costs of an unsuccessful appeal to the Court of Appeal for Gibraltar.  The solicitors for the defendant subsequently sent their bill of costs to the plaintiff stating that if they did not receive payment within 21 days they would apply for the bill to be taxed by the Registrar.  They also said that they would inform the plaintiff in due course of the date of any taxation hearing, when she should appear and argue her case.  The plaintiff replied stating that she considered their costs were excessive and sent a copy of that letter to the Registrar.  Despite this, it appears that the Registrar subsequently allowed the costs in full without the plaintiff being notified of any taxation hearing.  Shortly afterwards the court ordered that the plaintiff would not be allowed to proceed with her claim until she had paid the sum of £8,682. 

48.      On appeal the Privy Council was, not surprisingly, very critical of the process which had been followed, because the plaintiff had never had an opportunity to query the costs sum.  They concluded that, given this aspect, that she had never been asked whether she had the means to pay that amount, and that she was being prevented from proceeding unless she paid it, the effect of the order was to impair the very essence of her right of access to the court and was therefore a breach of the relevant provisions of the Gibraltar constitution, which were in similar terms to Article 6 ECHR. 

49.      Advocate Blakeley argued that that was the situation here.  When the Master's judgment had been circulated in draft on 18^th May for comment prior to its formal issue, Mr Holmes had replied on 27^th May and had, amongst many other matters, said ".. we fear an indemnity cost order would stifle our claim and we request an opportunity to prove that before judgment is handed down". 

50.      The Master did not accede to this request and issued the judgment in its original form.  However, when circulating the final version, he said in his covering email "In respect of the costs order stifling the claim, this can be dealt with once any costs are amended [this must be a mistake for 'assessed'] and if any application is made to strike out the claim for non-payment of costs." 

51.      Advocate Hoy submits that this accurately reflects the position.  In other words, the plaintiffs' Article 6 rights and the question of whether any claim might be stifled can properly be dealt with should the defendants apply to strike out the claim following any non-payment of their costs. 

52.      In my judgment, there has been no infringement of the plaintiffs' Article 6 rights.  The position here is very different from that in Ford v Labrador where the plaintiff was denied any opportunity to comment on the quantum of costs and the proceedings were then stayed until payment was made.  Her access to the court was therefore prevented unless she paid the costs.  Here, all that has been ordered is that the defendants should be at liberty to apply to strike out the claim for non-payment of costs.  There is no stay on the proceedings until then.  It is at that stage that the plaintiffs would have full opportunity to argue that, notwithstanding their failure to pay the costs, the claim should not be struck out because to do so would stifle their claim and impair the very essence of their right of access to a court. 

53.      It is important to note that, if the plaintiffs do wish to make such a submission in the event of any strike out application, they will have to provide satisfactory evidence to show that they are unable to pay the costs.  The only evidence placed before me was the issue of the Viscount's certificate for exemption from paying any judicial fees.  That would be wholly insufficient.  I was referred to another case involving Mr Holmes, namely Home Farm Development Limited and Others v Le Sueur [2015] JCA 180 where the Deputy Bailiff, sitting as a single judge of the Court of Appeal to consider whether to order security for costs in respect of an appeal brought by Mr Holmes and his companies, strongly criticised the affidavit of means filed by Mr Holmes and said that it was unsatisfactory and did not enable him to conclude that Mr Holmes could not find the sum of some £8,000 requested as security for costs.  If Mr Holmes is to convince the Master in due course that he cannot pay the assessed costs, he will have to provide appropriate evidence to satisfy the Master of that fact. 

54.      In the circumstances, I do not consider that the order of the Master in this respect was erroneous. 

55.      It does however occur to me to suggest that it might be preferable on future occasions to proceed slightly differently.  The difficulty with the present order is that it has been made without reference to the plaintiffs' means.  If on a subsequent strike out application the Master were to decide that he cannot strike out the claim despite non-payment of the assessed costs because to do so would stifle the claim and thereby infringe the plaintiffs' Article 6 rights, the result would be that the Court would in effect be agreeing to non-compliance with its own order that the costs be paid within a specified period.  This would not seem to be a very satisfactory result.  Court orders should be obeyed. 

56.      It seems to me that, if it wishes to impose a deadline for payment and spell out the possible consequences of default, it would be preferable for the Court to consider a plaintiff's ability to pay before deciding on the appropriate form of order.  Two alternative methods of proceeding occur to me although there may of course be others:-

(i)        If provisionally minded to order that costs should be summarily assessed and paid within a certain period - and I agree for the reasons given by Lord Woolf in the passage cited at para 42 above that this will often be an appropriate course of action - the Master could invite submissions on the question of means and potential stifling of a claim before actually making such an order.  There would then usually be no defence to a subsequent strike out application if the costs were not paid and such a procedure would not result in the Court making an order which it is subsequently forced to agree should be ignored. 

(ii)       Alternatively, the Master could simply make an order for payment of costs (summarily assessed if appropriate) but without specifying a period for payment or an ability to apply to strike out in the event of non-payment.  Such costs would then become payable under Rule 12/3(4) and would enable the defendant, if so advised, to apply subsequently for an 'unless' order i.e. an order that the claim be struck out unless the costs are paid within a certain period (see Leeds United Football Club Limited v Admatch, [2011] JLR N1, [2011] JRC 016A, upheld on appeal at [2011] JCA 084 for an example of where this course was followed).  The Master would then consider the Article 6 issues when deciding whether to grant an unless order.  Again, this would hopefully not lead to the Court having to acquiesce subsequently in non-compliance with an order which it had earlier made. 

57.      Although, for the reasons explained, I do not consider that the Master was incorrect in ordering that the costs should be paid within 28 days of assessment failing which the defendants would be at liberty to apply to have the claim stuck out, there is one aspect of the terms of the Act which needs to be addressed.  This was not a point raised by Advocate Blakeley in his skeleton or in his original oral submissions, although he did touch upon it in reply.  He also raised it when this judgment was circulated in draft.  

58.      The issue is this.  Although the Master held that the claim was not hopeless and doomed to failure, he did so find in relation to paragraph 6.4 of the order of justice which alleged a particular head of loss.  He ordered that paragraph 6.4 should be struck out.  However, he gave leave to the plaintiffs to amend to include a new paragraph 6.4 which would plead an alternative head of loss but made this conditional upon payment of the costs within the 28 day period.  Thus paragraph 6 of the Act reads as follows:-

"Subject to paying any costs pursuant to this order, within 28 days of paying any such costs, the Plaintiffs may apply to amend paragraph 6.4 of the order of justice to claim ..."

59.      Advocate Blakeley submitted that the effect of this was that if the plaintiffs did not pay the assessed costs and even if the Master subsequently did not strike out the claim on the basis that to do so would stifle it, the plaintiffs would nevertheless be prevented from amending paragraph 6.4 of the order of justice so as to plead the alternative head of loss.  

60.      Advocate Blakeley's submission seems to me to be well-founded. If the plaintiffs' claim is not struck out following any application to that effect by the defendants consequent upon non-payment of the costs, it seems to me that the plaintiffs should be entitled to apply to amend to plead the losses which they seek to recover.  Accordingly, I also allow the appeal to the limited extent of deleting the words 'subject to paying any costs pursuant to this order, within 28 days of paying any such costs ...' from paragraph 6 of the Act of 1^st June, 2015. 

Conclusion

61.      In summary, I allow this appeal to the extent of:-

(i)        replacing paragraph 2 of the Act of 1^st June (which orders that the costs will be paid by the plaintiffs on an indemnity basis, such costs to be summarily assessed by the Master) with an order that 50% of the costs of the summons before the Master will be paid by the plaintiffs on an indemnity basis, such costs to be summarily assessed by the Master; and

(ii)       deleting the words referred to in paragraph 60 from paragraph 6 of the Act of 1^st June. 

62.      The only other variation of the order which I would make is that, given the time taken for this appeal, the period for payment of the costs will be varied to 28 days from today's date rather than 28 days from the date of summary assessment by the Master. 

Costs

63.      When a draft of this judgment was circulated to the parties, I invited them to make written submissions on the question of costs.  This they have done for which I am grateful.  

64.      Advocate Blakeley submits that the appeal has succeeded and Mr Holmes should therefore be awarded his costs on the standard basis. 

65.      Advocate Hoy argues that the plaintiffs brought this upon themselves not only be their overall conduct in the litigation but also by failing to appeal in time and therefore needing to seek leave to appeal out of time.  As to the question of who had won, whilst it was correct that the appeal had been allowed, this had only been to a limited extent.  Mr Holmes had lost the argument on indemnity costs and also on whether the Master had been correct in ordering payment of costs within 28 days of assessment coupled with an ability to apply to strike out.  

66.      In my judgment, Mr Holmes has been partially successful.  He has succeeded in reducing the award of costs to 50%.  If the matter rested there he would no doubt have received his costs on the standard basis.  However, he chose also to attack the award of indemnity costs and the Master's decision to order the immediate assessment of costs coupled with an ability to strike out.  He lost on both these aspects.  Furthermore, although he was granted leave to appeal out of time, those costs were incurred because he was out of time. 

67.      Taking a broad view, I consider that the fairest outcome is to award Mr Homes 50% of the costs of the appeal on the standard basis. 

Authorities

Hong Kong Foods Limited v Gibbons [2014] JRC 187.

Vieira v Kordas [2014] JRC 042.

Syvret v Treasurer of the States [2014] JCA 185.

Watkins and Connell v Egglishaw [2002] JLR 1.

Eckman v Sidem International Limited [2009] JRC 233.

B v M-R [2007] JRC 139.

Lescroel v Le Vesconte [2007] JRC 091.

Eckman v Sidem International Limited [2009] JRC 233.

Irish Nationwide Building Society v Volaw Corporate Trustee Limited [2012] JRC 035.

De Freitas v Citadel Trust Limited [2005] JRC 035C.

Re Esteem Settlement [2000] JLR N 41.

Buguzzi v Rank Leisure Plc [1999] 4 All ER 934.

Ford v Labrador [2003] 1 WLR 2082.

Home Farm Development Limited and Others v Le Sueur [2015] JCA 180.

Leeds United Football Club Limited v Admatch [2011] JLR N1.

Leeds United Football Club Limited v Admatch [2011] JRC 016A.

Leeds-v-Admatch [2011] JCA 084.