Jersey Unreported Judgments

Costs - boundary dispute.

[2016]JCA222

Court of Appeal

30 November 2016

Advocates D. J. Benest and J. N. Heywood for the Appellant.

Advocates C. Hall and R. A. Falle for the Respondent.

judgment

collas ja:

1.        This is the decision of the Court.

Introduction

2.        In a judgment dated 5 October 2016, unreported Fogarty-v-St Martin's Cottage Limited [2016] JCA 180, we dismissed the Appellant's appeal and allowed the Respondent's cross-appeal against the Royal Court's substantive judgment reported at Fogarty-v-St Martin's Cottage Limited [2015] (1) JLR 356.  The facts are set out in our earlier judgment.  The Royal Court's costs decision was delivered by the Bailiff in a separate unreported judgment, Fogarty-v-St Martin's Cottage Limited [2016] JRC 073.  Our substantive judgment did not address the costs issues but invited the parties to make written submissions in light of the outcome of the substantive appeal.  We have received written contentions on costs from each of the parties together with their written response to each other's contentions. 

3.        We have before us two rival applications.  On the basis that costs follow the event and that it won the appeal, the Respondent seeks an order to recover all of its costs and disbursements both in the Royal Court (excluding a costs order in favour of the Appellant made by the Master) and in the Court of Appeal on an indemnity basis, or failing that, on the standard basis.  On the other hand, the Appellant contends that there should be no interference with the Royal Court's costs order and that in the Court of Appeal each party should bear its own costs.  Or, alternatively, those costs should be significantly reduced to take account both of the limited success achieved, as she describes it, and also the Respondent's conduct of the appeal in which it adopted a scatter-gun, disproportionate and oppressive approach. 

The Royal Court's Costs Order

4.        The Royal Court's costs order, delivered in a written judgment of the Bailiff ordered the Respondent to pay 40% of the Appellant's costs on the standard basis and a further 20% of the Appellant's costs on an indemnity basis.  His order reflected two overriding factors: first, to reflect the overall fairness of the result, 40% of her costs were disallowed; and secondly, the Respondent had unreasonably and wrongfully pleaded allegations of fraud which the Bailiff reflected by awarding her 20% of the costs on the indemnity basis. 

The Law in relation to Costs

5.        The Court of Appeal's jurisdiction in respect of the costs of an appeal derives from Section 16 of The Court of Appeal (Jersey) Law 1961:

"(a)     The costs of and incidental to all proceedings in the Court of Appeal under this Part shall be in the discretion of the Court, and the Court shall have full power to determine by whom and to what extent the costs are to be paid."

6.        Section 13(1)(c)(ii) of the 1961 Law stipulates that leave is required from the first instance court to appeal an order "as to costs only which by law are left to its discretion".  The Bailiff has not granted leave in the present case and consequently the Appellant submits that we should not interfere with his costs decision.  We reject that submission.  Where there is a substantive appeal to the Court of Appeal, the costs order becomes part of that appeal.  The requirement for leave from the trial judge is to prevent ongoing satellite litigation when the main case is over (Benest v Syvret [2012] JRC 079A; and Hobson v Minster of Planning [2014] JRC 078).  

7.        The Court of Appeal will never interfere with the trial judge's costs decision unless there is cause to do so on one of the grounds identified in Flynn v Reid (C.A.) [2012] (2) JLR 226:

(i)        the judge misdirected himself with regard to the principles in accordance with which his discretion was to be exercised;

(ii)       the judge in exercising his discretion has taken into account matters which he ought not to have done, or has failed to take into account matters which he ought to have done;

(iii)      the decision is plainly wrong; and

(iv)      there has been a change of circumstance since the Royal Court's decision which would have justified a different decision. 

8.        Although Flynn was a costs only appeal (with leave of the then Deputy Bailiff), the principles set out in the judgment are equally applicable in a case such as the present where the costs appeal is part of a substantive appeal.  Our decision to allow the Respondent's cross-appeal amounts to a "change of circumstance" which requires us to consider afresh the Royal Court costs. 

The Present Case - Costs in the Court of Appeal

9.        Taking first the appeal costs, the starting point is that costs follow the event.  The Respondent has emerged as the clear winner in respect of both its appeal and the cross-appeal.  Notwithstanding the Respondent's successes, the Appellant asserts that there should be no order as to costs for the following reasons: (a) the costs incurred in arguing the issue involved in the Appellant's appeal (destination) were not significant as the issue had been argued in the Royal Court; (b) on the day of the appeal hearing, the Respondent discontinued the grounds of appeal in which it was seeking a compulsory transfer of land from the Appellant to the Respondent, after the Appellant had incurred costs in preparing to meet those grounds; and (c) the Court must do justice as between the parties and in doing so must take into account (i) that the Appellant will have to suffer the encroachments on her land and the use of her land by the Respondent to maintain the encroachments, (ii) that the Respondent had maintained in its Notice of Appeal allegations of deceit and dishonesty which the Royal Court had dismissed, (iii) the Respondent came to the problem as the result of negligence on the part of its lawyer when acting in the purchase and the Respondent's costs are funded by the lawyer's insurer. 

10.      In Flynn v Reid, the Court of Appeal adopted the decision of Judge L.J. in Ford v G.K.R. Construction Ltd [2000] 1 W.L.R. 1400 in which he held that in the exercise of its discretion to award costs a court's overriding objective is to do justice between the parties and, in doing so, it must have regard to all the circumstances including factors such as the party's conduct of the proceedings and, if it be the case, that a defendant has to a greater or lesser extent brought the action on his own head by his earlier conduct. 

11.      With those general principles in mind, we have considered whether there are grounds for depriving the Respondent of any of its costs of and incidental to the appeal.  We respond in turn to each of the issues raised by the Appellant.  (a) The Respondent successfully resisted the Appellant's appeal and should not be deprived of its costs in doing so merely because the quantum recoverable is unlikely to be great where the work should not have been substantial.  (b) There was no significant issue on the Respondent's cross-appeal on which it lost; the Court of Appeal did not spend any time on the claims for a transfer of land or a court-ordered contract of transfer which were abandoned on the day of the hearing.  More generally, there was nothing about the Respondent's conduct of the appeal proceedings that would justify an order depriving it of its costs.  (c) The fact that the Appellant will have to tolerate the encroachments and any associated maintenance is a consequence of the Court's finding on the application of destination and has nothing to do with the justice of any costs order.  It is correct to say that the Respondent came to the problem when it purchased its property however that is not the type of conduct to be taken into account in a costs award.  Nor is it justification for transferring the costs onto the lawyer who acted for the Respondent in the purchase, even if it were the case that the lawyer was negligent (any question of possible negligence is well outside the scope of this appeal). 

12.      Having considered all the circumstances, we are satisfied that justice between the parties will be achieved by awarding the costs of and incidental to the appeal proceedings to the Respondent. 

The Present Case - Costs in the Royal Court

13.      We turn now to the costs at first instance.  The Bailiff did not have an accurate estimate of the time spent on the different legal issues.  Instead, his approach to the costs application was based on the fairness of the result, of the parties' conduct, and of their conduct of the litigation.  In paragraph 53 he said:

"Subject to the question of overall equity, bearing in mind that the defendant succeeded in relation to the main objective of the plaintiff where she sought to obtain an order for the removal of the encroachments, but failed on everything else, including the defendant's own prayers for relief, I would have concluded on an issue basis alone that the defendant should pay 60% of the plaintiff's costs."

14.      Later, in paragraph 56(v) of the costs judgment he said:

"This case ultimately was about the legal merits of the contentions of opposing lawyers as [to] the law of property.  What is fair and equitable, in relation to costs, must be focussed upon not just the conduct of the parties but also the conduct of the litigation."

15.      Adopting that approach, he concluded it was fair and equitable to award the plaintiff (i.e. the Appellant) 40% of her costs on the standard basis and 20% on the indemnity basis. 

16.      As we have said, an appellate court would normally be reluctant to interfere with the exercise of discretion by the trial judge but our decision to overturn the Royal Court's decision on destination and on the right of access to maintain the encroachments requires us to look afresh at the costs award in that Court.  The starting point is that the Respondent should now be regarded as the clear winner at trial.  

17.      We respect the Bailiff's decision that the costs award should reflect the failed arguments which include dol/dishonesty/fraud, erreur, deception d'outre moitié, lésion, voisinage, droit de jointure and estoppel.  However as they no longer include the Respondent's submissions on destination, the weight to be attached to the failed arguments must now be less.  The failed issues were, in substance, different legal labels to be applied to the same facts and did not generate a significant amount of extra evidence.  It was a complex case in which it was reasonable to pursue additional arguments.  

18.      As we have said the Respondent has emerged as the clear winner but in order to do justice between the parties, we take into account the Bailiff's approach to the unsuccessful arguments insofar as it is appropriate to do so following our decision on the substantive appeal from which destination has emerged successfully.  In our judgement, taking account of all the circumstances, it is fair and just that the Appellant shall pay 60% of the Respondent's costs in the Royal Court.  For the avoidance of doubt, we do not consider that the Respondent ought to pay any of the Appellant's costs in the Royal Court. 

The Present Case - Indemnity Costs

19.      The Respondent seeks its costs on an indemnity basis both at first instance and on appeal.  The guiding principles that govern such an award are reason and justice: Leeds United AFC Limited and another v Admatch [2011] JLR Note 22 (C. A.).  The purpose of indemnity costs is to achieve a fairer result than would be achieved with an order on the standard basis: Pell Frischmann v Bow Valley [2007] JLR 479. 

20.      The Respondent alleges that the Appellant has conducted herself unreasonably, having regard to her obduracy and her persistence in seeking to obtain the demolition of the encroachments.  Whilst we have some sympathy for that view, we note that it was not the view formed by the Bailiff who saw the parties at first instance.  In our view there is nothing in this case that takes it outside the ordinary so as to justify an indemnity costs order. 

Decision

21.      In summary, the Respondent has emerged as the clear winner in both the Royal Court and the Court of Appeal.  However, it pursued a number of arguments in the Royal Court without success which, in the reasoning of the Bailiff should be reflected in the costs order.  Our decision is that the Appellant shall pay 60% of the Respondent's costs and disbursements in the Royal Court (excluding a costs order in favour of the Appellant made by the Master).  The Appellant shall also pay the full costs of the Respondent of and incidental to all proceedings in the Court of Appeal.  Costs in both courts are to be assessed on the standard basis, not the indemnity basis.  The Appellant shall not recover any of her costs from the Respondent save for those recoverable under the order by the Master referred to above. 

Authorities

Fogarty-v-St Martin's Cottage Limited [2016] JCA 180.

Fogarty-v-St Martin's Cottage Limited [2015] (1) JLR 356.

Fogarty-v-St Martin's Cottage Limited [2016] JRC 073.

Court of Appeal (Jersey) Law 1961.

Benest v Syvret [2012] JRC 079A.

Hobson v Minster of Planning [2014] JRC 078.

Flynn v Reid (C.A.) [2012] (2) JLR 226.

Ford v G.K.R. Construction Ltd [2000] 1 W.L.R. 1400.

Leeds United AFC Limited and another v Admatch [2011] JLR Note 22 (C. A.).

Pell Frischmann v Bow Valley [2007] JLR 479.