Jersey Unreported Judgments

Trust - appeal against judgment of the Royal Court dated 25th November 2016 dismissing the Appellant's application to discharge interim injunctions and ex-parte orders and appeal against Respondent's summons seeking to strike out the Notice of Appeal.

[2017]JCA028

Court of Appeal

21 February 2017

Advocate N. M. C. Santos-Costa for the Appellant/First Defendant.

Advocate S. M. Baker for the Respondent.

judgment OF THE COURT

the president:

1.        By summons dated 21 December 2016 the present respondent sought, among other matters, an order that a Notice of Appeal on behalf of the present appellant, dated 9 December 2016, be struck out and the Appellant be debarred from prosecuting that appeal.  That appeal was being made, with leave from a single judge of the Court of Appeal, against a refusal of the Royal Court to strike out interim injunctions contained in a Supplemental Order of Justice presented by the present respondent and signed by the Bailiff (Bailhache) on 4 August 2016.  The application on the summons was heard by this court on 26 January as part of the ordinary sitting of the Court of Appeal. 

The Background

2.        The present application made by summons, and the Appeal to which it refers, are part of complex and lengthy proceedings relating to a family trust, those proceedings being currently before the Royal Court (the "main action"). 

3.        In the main action the plaintiffs (one of the two daughters of the present appellant together with the two infant children of that daughter) seek to enforce their rights as beneficiaries under the family trust, to reconstitute the trust fund of that trust in the hands of new trustees and to set aside certain transfers.  Those against whom that action is brought include the present appellant, another individual and the present respondent, all of whom are said to have been, and said to remain, the trustees of the family trust.  There are other defendants and there are other proceedings in other jurisdictions. 

4.        Until May 2015, the present parties, together with the second defendant and certain other defendants were all represented by one firm of advocates, and a composite answer had been filed on behalf of the first to fourth defendants.  After May 2015 the present respondent and one of the other defendants decided that they should be separately represented and made appropriate arrangements.  Having obtained separate advice the third defendant was granted leave to amend in order to rely upon different answers and in order to bring a third party claim against the present appellant upon the basis of rights of indemnity from the present appellant which were said to arise under certain trust documentation.  The position adopted by the present respondent is that, in the event of the plaintiffs being successful in the main action, the present parties would be jointly and severally liable, along with the second defendant, for substantial amounts in order to have the trust fund reconstituted. 

5.        Over one year later, the present respondent lodged a Supplemental Order of Justice seeking an injunction to freeze assets beneficially owned by the present appellant or over which she has control, coupled with a disclosure order to support the freezing injunction.  The present respondent argued that such orders were necessary in order to provide protection in connection with the third party claim in the main action. 

6.        An interim injunction was granted by the Bailiff ex parte on 4 August 2016 and on 22 August 2016 the present appellant applied to have the injunction and disclosure order discharged in their entirety.  The application was heard on 2 September and rejected by the Royal Court in a judgment of 25 November 2016: Crociani-v-Crociani [2016] JRC 220B. 

7.        At the hearing on 25 November the present appellant sought leave to appeal but that was refused, with time for compliance with the disclosure order being extended to 2 December 2016. 

8.        The present appellant duly filed an application to this court for leave to appeal on 28 November, and a stay of the disclosure order was granted pending the hearing of the application which was fixed for 7 December. 

9.        After hearing argument Birt JA, sitting as a single judge of the Court of Appeal, concluded that it would be right to grant leave to appeal because a question of general principle fell to be decided for the first time and because there was an important question of law upon which further argument and a decision of the Court of Appeal would be to the public advantage in respect of the nature of the injunctive relief sought in the present case and the test which should be applied when considering whether to grant such an injunction: Crociani-v-BNP Paribas Jersey Trust Corp Limited [2016] JCA 231. 

10.      On the other hand, the learned judge of appeal was not persuaded that a stay pending appeal should be granted in respect of the disclosure order.  After referring to Motorola Credit Corporation v Uzan [2002] EWCA Civ 989 and Raga v van Hoogstraten [2004] 4 All ER 793, Birt JA noted that, in United Capital Corporation v Bender [2006] JRC 045 he had approved the approach set out in van Hoogstraten to the effect that, in a normal case, a stay of the disclosure obligation is likely to be refused notwithstanding a challenge to a freezing order. 

11.      In his detailed judgment, Birt JA observed that the court had to strike a balance between prejudice to a party required to make disclosure unnecessarily if successful on appeal and potential prejudice to an applicant through delay in obtaining disclosure once an appeal had been found to be unsuccessful.  Birt JA considered the various contentions put before him and reached the view that the arguments in favour of rejecting a stay outweighed those in favour of continuance of the stay. 

12.      It was in these circumstances that, the appeal having been set down for the January sitting of the Court of Appeal, the present respondent presented its summons.  The present appellant has not complied with the order of the Royal Court, as confirmed by the single judge of the Court of Appeal, that she should disclose her worldwide assets; but there has yet to be any sanction against her in relation to that failure.  Any sanctions sought by the present respondent have been adjourned until after this court determines the issues currently before it.  

The Hearing before this Court

13.      In the week preceding the January sitting of this court Advocate Santos-Costa, on behalf of the present appellant, intimated that he had been instructed by his client only to file contentions which had already been filed before the single judge and to appear before this court only as a matter of courtesy as far as the appeal was concerned.  His letter to the Greffier also gave a succinct indication of his client's position in respect of the application that the appeal should not be allowed to proceed.  We therefore heard from Advocate Baker in respect of his application and asked Advocate Santos-Costa only to indicate whether there were issues of fact with which he took contention: which there were not. 

Discussion

14.      The position adopted by Advocate Baker was that, as was not disputed, the present appellant is in breach of the disclosure order with no material reason whatsoever being advanced as to why, that order having been maintained, she had continued to be in breach. 

15.      We entirely agree with Advocate Baker that it is important for courts to police the orders which they pronounce and that it is in the interests of justice that orders which have been pronounced are respected and that a failure to respect orders should be visited with sanctions unless there were compelling reasons not to do so.  Whilst, in this matter, there is an understandable general point that the present appellant's success in her appeal would render quite inappropriate an obligation to make disclosure of assets, the fact is that refusal of the stay was made by the Court of Appeal, through Birt JA sitting as a single judge.  Courts cannot permit their orders to be flouted with impunity. 

16.      On the other hand, we recognise that, as stated in authorities put before us by Advocate Baker, courts faced with issues arising from intentional failure to adhere to court orders must think carefully as to the way in which that intentional failure should be reflected where the person subject to the order seeks to have access to court procedures in order to protect their own interests.  Reference was made to Jakobsson v Offshore Nautical Sales Limited [2003 JLR 71] and Hammond Suddards Solicitors v Agrichem International Holdings Limited [2001] EWCA Civ 2065 as well as JSC BTA Bank v Ablyazov [2012] EWCA Civ 369. 

17.      An important point which emerges from those authorities is that the court must bear in mind the implications that, in certain circumstances, the argument in favour of making orders which support the orders already made by relevant courts, might stifle proper appellate procedures: see paragraph 41 in Hammond Suddards.  In the present matter it seems to us ineluctable that to treat the failure to make disclosure as sufficient to disentitle the present appellant to prosecute the appeal proceedings, allows the ancillary matter (the disclosure order) to preclude what might be an otherwise justifiable granting of the appeal with, in consequence, the removal of the freezing injunctions and removal of the disclosure order. 

First Decision

18.      We were not minded to grant the application by the present respondent, because to do so would preclude a potentially viable appeal.  On the other hand, without ourselves making any determination on the issue as to in what circumstances, if any, it may be appropriate to continue a disclosure order notwithstanding an appeal against the related freezing injunction, we were of the view that, the Single Judge having determined that the stay should not continue, the present appellant should not, simply, have taken it into her own hands not to disobey that order.  She could, for example, have sought an urgent disposal on papers of her appeal against that refusal. 

19.      As in the cases of Jakobsson and Hammond Suddards, we considered that an order which sought to maintain protection for both parties was required.  Accordingly, we determined that the present appellant should provide to the court, in confidence, a disclosure so that, if properly done, she would then be entitled to proceed with her appeal.  If the appeal was successful, that disclosure would be returned to her; if unsuccessful, the disclosure would be handed to the present respondent.  An Act of Court was issued on 26 January. 

Subsequent events

20.      By a letter dated 30 January sent to us, the appellant indicated that she had received our order, and we understood the import of her communication to be that she would not provide disclosure as she considered it an invasion of privacy, but expected to be allowed to proceed with her appeal. 

21.      By letter dated 13 February, Advocate Baker for the applicant observed that there had not been compliance with our proposals and Order.  As the purport of our Order was to make continuance of the Appeal conditional on compliance, he therefore sought to have the Appellant's Notice of Appeal dated 9 December struck out with the consequence that the applications for discharge would stand dismissed.  He also sought costs of the Appeal on the indemnity basis.  He sought the costs of the proceedings following upon the Supplemental Order of Justice on the indemnity basis and the costs of and occasioned by the Respondent's December Summons on the indemnity basis. 

Second decision

22.      We have no hesitation in determining that the Appellant's Notice of Appeal dated 9 December be struck out with the consequence that the applications for discharge shall stand dismissed.  Our Order of 26 January gave every possible support to the Appellant to proceed with her Appeal whilst also protecting the Respondent.  The Appellant has failed to accept that proposal and must accept the consequences.  This court, and not the Appellant, is in charge of procedure. 

23.      We have considered the applications for costs on the indemnity basis.  It seems to us clear that the Respondent and Applicant is entitled to costs on the matters identified, but we must consider whether the test for indemnity costs is met. 

24.      The principles which should govern an award of costs on the indemnity basis were expressed succinctly in the decision of this court in C v P-S [2010] JLR 645, at paragraph 11 where Beloff JA, delivering the judgment of the court, stated:

"The question will always be - is there something in the conduct of the action by one of the parties or the circumstances of the case which takes the case out of the norm in a way which justifies an order for indemnity costs, recognising that there will usually be some degree of unreasonableness?"

25.      As was indicated by this court in Leeds v Admatch [2012] JCA 088, a court will generally look for a special or unusual feature such as culpability, abuse of process, unreasonable behaviour or abuse of court procedures. 

26.      Upon that basis we consider, on balance, that the manner in which the Appellant has pursued the proposed appeal to this court does not, in itself, feature unreasonable behaviour.  As Birt JA pointed out, there were important issues which might have been considered on appeal.  The costs of the appeal will be granted on the standard basis.  

27.      As to the costs of the proceedings following upon the Supplemental Order of Justice, we do not discern in the approach of the Appellant anything particularly unreasonable.  The Appellant had well arguable grounds for opposing the application and did so.  The costs of the proceedings following upon the Supplemental Order of Justice will be granted on the standard basis.  

28.      On the other hand we consider that, in respect of the proceedings following upon the issuing by the Respondent of its December Summons, the approach of the Appellant has been questionable.  Her decision not to instruct submissions to be made on her behalf before us might, in other circumstances, have been understandable as a means to restrict costs, but this litigant is already heavily involved in litigation.  The position of the Appellant which gives us cause for concern is her response to our January Order which gives every impression that the Appellant considers herself a better guardian of the rule of law than this court.  That is unacceptable and costs on this aspect will be awarded on the indemnity basis. 

Authorities

Crociani-v-Crociani [2016] JRC 220B.

Crociani-v-BNP Paribas Jersey Trust Corp Limited [2016] JCA 231.

Motorola Credit Corporation v Uzan [2002] EWCA Civ 989.

Raga v van Hoogstraten [2004] 4 All ER 793.

United Capital Corporation v Bender [2006] JRC 045.

Jakobsson v Offshore Nautical Sales Limited [2003] JLR 71.

Hammond Suddards Solicitors v Agrichem International Holdings Limited [2001] EWCA Civ 2065.

JSC BTA Bank v Ablyazov [2012] EWCA Civ 369.

C v P-S [2010] JLR 645.

Leeds v Admatch [2012] JCA 088.