Trust - reasons for decision of 13 January 2017.
Before : |
David Roderic Notley Hunt, Q.C., Commissioner, sitting alone. |
|||
Between |
(1) Niall Iain MacFirbhisigh (as Curator of Barry Lionel Ching) (2) Barbara Mary Marvell Ching |
Plaintiffs |
|
|
And |
(1) C.I. Trustees and Executors Limited (2) Steven Gidley (3) Gary Killmister |
Defendants |
|
|
Advocate J. Garood for the First Plaintiff and Carey Olsen.
Advocate C. J. Scholefield for the First and Third Defendants.
reasons for decision of 13th january 2017 (revised)
the commissioner:
1. On Thursday 12 January 2017 I heard the applications of the First and Third Defendants (respectively "CITE" and "Mr Killmister") by their Summons dated 24 November 2016 in relation to potential third party and/or wasted costs orders in these proceedings. I gave my written Decision on the application on Friday 13 January, under cover of a short explanatory email. These are my reasons for that Decision, as revised (at para.39) following a hearing on 23 March 2017 ("the March hearing").
2. On 17 November 2015 the Court delivered its judgment ("the main judgment") in this case, dismissing the Plaintiffs' claims against the Defendants in their entirety. Following argument the same day on costs, I gave a further judgment on 6 January 2016 awarding the Defendants their costs of the action on an indemnity basis. I also reserved to myself any applications for what Mr Baxter of Messrs Viberts, then acting for CITE and Mr Killmister, described as non-party costs orders. On 1 April 2016 CITE and Mr Killmister submitted their claim for costs for taxation in the sum of £406,927.99 plus disbursements of £58,917.79, totalling £465,845.78. Messrs Carey Olsen for the Plaintiffs objected to the claim for costs, and taxation of CITE's and Mr Killmister's bill of costs remains to be determined. Following an application by CITE and Mr Killmister, on 7 September 2016 Master Thompson ordered a payment by the Plaintiffs of £230,000 on account of CITE's and Mr Killmister's costs; he also awarded CITE and Mr Killmister the costs of their application on the standard basis, to be summarily assessed. I was informed at the hearing on 12 January that such assessment had yet to take place. Following a sale of a property called Bokhara, which Mr and Mrs Ching ("the Chings") had inherited from Mr Ching's mother, CITE and Mr Killmister have received the sum of £36,571.81 on account of their costs. It follows that of the interim payment ordered on 7 September 2016 £193,428.19 remains unpaid, excluding interest and the costs of the application to Master Thompson. There are, so I was informed, no curatorship assets left with which the First Plaintiff ("Mr MacFirbhisigh") can pay the remainder of the costs due to CITE and Mr Killmister. The Second Plaintiff ("Mrs Ching"), who I was told is now living with her daughter in England, is also thought not to have any assets with which to pay the remainder of such costs, hence the fact that CITE and Mr Killmister have not pursued her for any of their costs.
3. It will be apparent, therefore, that these proceedings have proved to be the unmitigated financial disaster for the Chings that we predicted in para.369 of the main judgment. Indeed, not only is there nothing left of the Chings' assets which formed the subject matter of the action, but in addition the Chings have subsequently lost Bokhara in order to pay their own legal costs, and to pay the small amount to CITE and Mr Killmister which I have already mentioned.
4. The proceedings have, however, proved to be equally disastrous from the point of view of CITE and Mr Killmister. Despite having been wholly exonerated of the allegations made against them by the Plaintiffs (including, in Mr Killmister's case, allegations of dishonesty), they are out of pocket to the tune of some £400,000 of costs, depending on the outcome of the taxation. Understandably in those circumstances, CITE and Mr Killmister now wish to make such costs recovery as they can from others.
5. Accordingly in September 2016, following Master Thompson's judgment, Viberts wrote to each of Carey Olsen, Messrs Sinels, the Judicial Greffe and Sir David Kirch, warning them that applications for wasted and/or non-party costs orders would have to be considered by CITE and Mr Killmister in the light of the costs shortfall, and inviting voluntary disclosure in that regard. Some replies were received, to which I will refer later in these Reasons, but none which Viberts regarded as helpful, hence the Summons dated 24 November 2016.
6. The Summons of CITE and Mr Killmister was in two parts. Para.1, as amended in their skeleton argument and as further amended during the hearing, asked that the Plaintiffs should show cause why they should not be ordered to file an affidavit of discovery or witness statement:
"setting out their funding arrangements in this litigation, to include
(a) the identity of all individuals, companies and other entities that have provided funding to the Plaintiffs enabling them to meet the fees and disbursements incurred by them in these proceedings;
(b) the amount of such funding in each case;
(c) the terms on which such funding was provided, including exhibiting any related documentation or correspondence to the arranging, monitoring or spending of the funding, including:
(i) all correspondence and documentation relating to a 'litigation funding agreement' entered into between the Plaintiffs and the Judicial Greffier as referred to by Mr MacFirbhisigh in his Representation of 22 April 2010 and the Jurats' letter of consent dated the same day;
(ii) all correspondence and documentation relating to the bond subscribed by the Plaintiffs jointly and severally in favour of Sir David Roderick Kirch on 11th July 2014 and the associated hypothec;
(iii) all correspondence and documentation relating to the promissory note subscribed by the Plaintiffs jointly and severally in favour of Carey Olsen Nominees (Jersey) Limited on the 4th December 2015 and the associated hypothec;
(iv) all Representations or other applications, together with their exhibits and the letters under cover of which they were sent and other accompanying documents, if any, submitted to the Jurats seeking their consent to the conduct of any proceedings in the matter identified by case file no. 2009/448 or their consent to any financial transaction arising from those proceedings, together with all documents issued by or for the Jurats in response to such Representations or applications;
(v) all documentation evidencing the liability and calculation for the sum £282,739.99 described on page 3 of the curatorship accounts as outstanding legal fees as at 25 November 2015;
(d) [c]onfirmation of the total amount in fees paid by the Plaintiffs to Messrs. Sinels during the course of these proceedings."
7. Para.2 of the Summons asked that the Plaintiffs should show cause why CITE and Mr Killmister:
"should not be granted leave to join by ordinary service of a summons for a date to be fixed each or any of:
a. [Mr MacFirbhisigh] (in his personal capacity);
b. Sir David Roderick Kirch;
c. Mssrs Carey Olsen; and
d. Mssrs Sinels Advocates
as appropriate and in any case for the purposes of costs only and in particular (i) in the first instance seeking disclosure of matters relevant to costs in this action and (ii) orders for third-party costs orders and/or in the case of c. and d. wasted costs orders."
In their skeleton argument CITE and Mr Killmister added the States of Jersey to the list of persons against whom they sought a third party costs order. Their skeleton argument also indicated that as against Sinels and Carey Olsen they relied in addition on the power of the Court to order costs against lawyers in the exercise of the Court's disciplinary powers.
8. CITE and Mr Killmister were represented by Advocate Scholefield of Messrs Viberts. The Second Defendant, Mr Gidley, who represented himself at the trial in 2015, took no part in the hearing on 12 January, although I was informed that he was aware that the application was being made. In the explanatory email mentioned in para.1 of these Reasons, I directed that Viberts were to serve a copy of the Decision on Mr Gidley for his information.
9. Advocate Garrood of Carey Olsen appeared for both Mr MacFirbhisigh and his firm. Although Carey Olsen remain on the record as acting for Mrs Ching, I was informed by Advocate Garrood that his firm had not been in contact with, and had no instructions from, her in respect of the application and, indeed, that the firm did not know where she was presently living. (That said, I would be surprised if Mr MacFirbhisigh was ignorant of her whereabouts.) Sir David Kirch, Sinels and the States of Jersey were not represented at the hearing on 12 January.
10. At the outset of his submissions I investigated with Advocate Garrood the position of his firm vis-à-vis both Mr MacFirbhisigh and Mrs Ching. I was informed by Advocate Garrood that his firm had taken the view that if and as soon as any summons was issued pursuant to para 2 of the application, Carey Olsen would have to cease acting for either Plaintiff. In response I expressed the view that while this was clearly correct, it did not go far enough. In particular the issue of legal professional privilege would immediately raise its head in the event that I were to make an order as sought in para 1 of the Summons; indeed para 28 of Viberts' skeleton argument expressly invited the Plaintiffs to waive any privilege which might attach to any of the documents which CITE and Mr Killmister sought. It seemed to me that with regard to the issue of waiver of privilege there was clearly a potential conflict of interest between Carey Olsen on the one hand and the Plaintiffs on the other, so that the Plaintiffs would need to take separate legal advice on this issue without further ado. I record that I understood Advocate Garrood to accept this analysis of the position.
11. For the sake of completeness I also record that at the hearing Advocate Scholefield raised the further issue of a conflict between Mr MacFirbhisigh's personal position and his position as curator. Since Advocate Garrood did not have the opportunity of dealing with this issue, I say no more about it at this stage.
12. I start with the liability of non-parties for costs. In this regard the following matters were common ground between the advocates for the purposes of the 12 January hearing.
(1) Unlike the position in England, where wasted costs orders and third party costs orders are governed by different statutory provisions, in Jersey both types of order fell within Art.2(1) of the Civil Proceedings (Jersey) Law 1956, which provides that:
"the costs of and incidental to all proceedings in the Royal Court 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."
(2) In addition to the power to award wasted costs, the Royal Court has jurisdiction to order costs against lawyers in the exercise of its disciplinary powers. (In the remainder of these Reasons I use the expression "wasted costs" to include costs awarded in the exercise of the Court's disciplinary powers.)
(3) In the area of wasted costs orders and third party costs orders, the procedural position in Jersey had failed to keep pace with the substantive law, so that there was a lacuna in the Royal Court Rules in this regard.
(4) It was necessary to convene in some way all persons against whom wasted costs orders or third party costs orders were sought, so as to give such persons a full opportunity to be heard.
(5) In Jersey, as in England, there were two stages to the procedure with regard to such costs orders, the initial stage being an application to convene the non-party for the purposes of costs only and the second being to determine whether it was just to make a costs order.
The hearing on 12 January constituted the first stage of this process in this case. Since it was unnecessary to do so, the advocates sensibly did not address me on the substantive law regarding either third party costs orders or wasted costs orders.
13. In terms of procedure, Advocate Scholefield referred me particular to the reasoning of Morgan J. in PR Records Ltd v Vinyl 2000 Ltd [2008] 1 Costs L.R. 19, where he said as follows:
"43. In Dranez Anstalt v Hayek, Etherton J had to consider an application to add a party pursuant to Rule 48.2(1)(a). The applicant accepted that the court was not obliged to accede to the application and the court had some discretion in the matter. For example, if on a quick appraisal it was seen that the joinder of a non-party would be an abuse of process, then the court should decline to join the non-party. It was submitted that, at the stage of joinder, one should not attempt a preliminary assessment of the merits in order to see whether the application had a real prospect of success. The non-party resisted the application for joinder and wished to contend that there should be a preliminary hearing on the merits to see whether the application deserved to go forward to the second stage. Etherton J did not accept that submission. He said at para 39:
"Notwithstanding [Counsel's] eloquent and attractive submissions, the possibility of a preliminary hearing on the merits in those circumstances in order to see whether the application should go forward for a determination which is itself to be conducted summarily does not strike me as sensible or efficient. Contrary to the philosophy of a summary process, such a possibility is likely to encourage a proliferation of such preliminary hearings leading, in the case of failed challenges on the merits, to the airing of issues twice, delay and expenditure of more time, costs and resources both of the court and of the parties. Those adverse consequences would be magnified by any appeal from the initial decision on joinder."
44. Etherton J then considered the decision ... in Robertson Research International Ltd v ABG Exploration BV... Etherton J stated at para 50 that the idea of a preliminary assessment on the merits was contrary to the philosophy of a summary process which underlies this jurisdiction. At para 52 he rejected the idea that the applicant had to show an "arguable" case at the joinder stage.
45. What Etherton J was prepared to do was to consider a submission by the non-party that the applicant's delay in making the application for joinder had caused prejudice to the non-party so that joinder of the non-party should not be permitted. The learned judge ruled against this submission but stated that it would be open to the non-party, following joinder, at the second stage to renew its submissions based on delay as one of the matters to be taken into account by the judge at that hearing: see para 61.
....
47. In the present case, I will follow the approach of Etherton J in Dranez Anstalt v Hayek. That approach appears to me to be consistent with the general approach which is appropriate in the case of an application to join a party under CPR Rule 19.2. I also find Etherton J's comments about the inappropriateness of having a preliminary assessment at the first stage, followed by a summary assessment at the second stage, as being wholly justified. Whilst it is true that the second stage may be more summary in some cases and less summary in others, that does not to my mind invalidate the reasoning."
Advocate Scholefield invited me to adopt the same approach to para.2 of the application and Advocate Garrood did not contend otherwise. I accede to that invitation, on the basis that it represents the correct approach in Jersey to all applications to join parties for the purposes of third party costs orders or wasted costs orders. In short, therefore, CITE and Mr Killmister do not at this first stage have to establish even an arguable case or that they have a real prospect of success; rather I should allow the persons concerned to be convened unless it would be the equivalent of an abuse of process to do so. It follows that the bar which CITE and Mr Killmister had to overcome at this stage was not high.
14. It was also common ground between the advocates that the Court had jurisdiction to make disclosure orders in support of proposed third party costs orders or wasted costs orders. In this regard Advocate Scholefield relied on the decision of Flaux J. in Automotive Latch Systems Limited v Honeywell International Inc [2008] EWHC 3442 (Comm). In that case Flaux J. said as follows:
"3. At present none of the relevant potential non-parties is before the court and nothing that I say today either does or is intended to pre-empt any consideration I may have to give a later date as to the appropriateness or otherwise of making any order under section 51. What Honeywell seeks today is an order against ALS that by a particular date ALS shall serve on Honeywell a witness statement signed by one of its directors setting out:
(i) The identity of all individuals, companies or other entities that have provided funding to the Claimant since January 2004.
(ii) The amount of such funding in each case.
(iii) The terms on which such funding was provided.
(iv) The extent of each such party's involvement in the conduct of this action.
(v) The nature and extent of that party's interest (financial or otherwise) in the outcome of the action.
16. It seems to me implicit in the sentence which I have just read, "the power under section 51 would be ineffective unless there was an inherent power to discover who such persons might be", that where, in a case such as the present, the court is faced with a number of individuals or entities having funded the company, and it is said by ALS through its directors that that funding was for other purposes in the litigation but, as also seems to me to be ... prima facie the position, that assertion on behalf of ALS is questionable, then it seems to me that the process of discovering who the persons are who may have funded the litigation can only be achieved by more information being made available by ALS than just the listing of the names of the investors. Then it is said, principally by Miss Butler-Cole, that I should not make an order, the effect of which would be to duplicate what may happen hereafter, namely that having joined individuals or entities, Honeywell may apply for disclosure against them. Of course there may be an element of duplication, but it does not seem to me that that is answer to the question of whether or not the court has the relevant jurisdiction. That goes only to discretion. Unless it could be said that the court was pre-empting whether it would, in due course, exercise its jurisdiction under section 51 against a particular investor, which is clearly not the case where all that is sought is an order against ALS, then I can see nothing objectionable, in an appropriate case, in making an order requiring a party in the position of ALS to disclose more than just the names of the investors. I also see considerable force in Mr McQuater's submission that the relevant jurisdiction is a flexible one, capable of adaptation to changing circumstances. He referred me by analogy to the development of the Norwich Pharmacal jurisdiction, once thought to be limited to identifying wrongdoers, but now clearly of much wider scope. Accordingly, I am satisfied that the court has jurisdiction to make the order sought."
Again, Advocate Garrood accepted, in my view rightly, that the principles described in that case applied also in Jersey.
15. At the outset of the hearing on 12 January 2017 Advocate Garrood raised an issue of jurisdiction, namely that the hearing should be taking place before a court consisting of myself and two Jurats, not just myself. Having heard argument on this issue, I determined that, as submitted by Advocate Scholefield, the hearing did not involve any genuinely contested issues of fact which required the presence of two Jurats. In addition it seemed to me that the hearing on 12 January was essentially procedural. That said, I invited the advocates to discuss this issue in the context of any further hearings in this matter and, in particular, in the context of an eventual hearing on the merits of any applications made by CITE and Mr Killmister. If the parties are unable to agree on this issue, it will be necessary for me to rule separately on this point in due course.
16. Advocate Garrood started his substantive oral submissions by making three points, the general thrust of which was that CITE and Mr Killmister had only themselves to blame for their present predicament. These three points were, in the order in which he made them, that
(1) CITE and Mr Killmister had failed to apply for security for costs from the Plaintiffs;
(2) they had failed to enter a caveat in respect of Bokhara; and
(3) they should have made a claim on their insurers in respect of the Plaintiffs' claims.
Shortage of time prevented these three points from being considered in detail at the hearing but my provisional views in respect of them are as follows.
(1) Even if the Court had jurisdiction to make an order for security for costs against an individual (as opposed to a corporate) plaintiff, I very much doubt that any application for security would have succeeded in this case.
(2) I do not see how CITE or Mr Killmister could have entered any caveat in respect of Bokhara until such time as they had obtained the order for an interim costs payment. By that time (and, for good measure, by the earlier time in January 2016 that I had ordered the Plaintiffs to pay the Defendants' costs on an indemnity basis) Bokhara was already charged to Sir David Kirch and to Carey Olsen.
(3) I was told that the insurance in question did not extend to cover for fraud, of which Mr Killmister was accused by the Plaintiffs.
More importantly, I am not persuaded that any of these three points has any relevance in the context of the present application. Even if CITE or Mr Killmister did fail at some earlier stage to take all the steps that they could have taken in order to protect themselves against a potential failure or inability on the part of the Plaintiffs to pay the costs which might be ordered against them, I do not see how that could deprive CITE or Mr Killmister of the right to seek such costs from others who might be liable to pay them.
17. I now take the two parts of the application in turn.
18. Advocate Garrood's principal submission was that by reference to the ALS case the wording of the order sought under para 1 of the Summons was impermissibly wide. He took particular objection to the detailed wording of subpara (c) from the word "including" in the first line onwards. I do not agree. It seems to me that the detailed wording of which Advocate Garrood complained does no more than flesh out the first eight words of subpara.(c).
19. In the light, however, of my decisions as recited in paras 33 and 36 below regarding Carey Olsen (in the context of third party costs) and the States of Jersey, I restricted the scope of para 1 of my Decision accordingly, hence the exclusions at (iv) and (v) in para.1.
20. Given the position of Mrs Ching which I have described in para 9 above, I decline to make any order against her under para 1 of the Summons at this stage. If CITE and Mr Killmister wish to pursue the relief in para 1 of their Summons against her, they must take the appropriate steps to serve her with an application to that effect. In practice, I doubt that Mrs Ching would in any event have any information or documents additional to the information or documents which Mr MacFirbhisigh will be in a position, and will be obliged, to produce by virtue of the order which I have made against him.
21. I address separately the applications for
(1) third party costs orders; and
(2) wasted costs orders.
22. I take the various individuals and organisations in the order in which Advocate Scholefield addressed me at the hearing, namely:
(a) Mr MacFirbhisigh;
(b) Sir David Kirch;
(c) Carey Olsen; and
(d) the States of Jersey.
23. Advocate Scholefield submitted that Mr MacFirbhisigh was more than a pure funder by virtue both of his being in control of the case on the Plaintiffs' behalf and of his personal interest in the outcome of the proceedings as described at para. 85 of the main judgment. Advocate Garrood accepted that Mr MacFirbhisigh was in control of the case on the Plaintiffs' behalf but submitted that that was because it was his duty as Mr Ching's curator. He also accepted that Mr MacFirbhisigh had a personal interest in the outcome of the proceedings but pointed out that all Mr MacFirbhisigh had done was, in effect, to allow the Chings credit for his professional fees.
24. Whilst I see the force of Advocate Garrood's submissions, it seems to me that CITE and Mr Killmister have clearly established that they are entitled to join Mr MacFirbhisigh for the purposes of a third party costs order for the reasons put forward by Advocate Scholefield. I also have in mind our comments about Mr MacFirbhisigh in para. 84 of the main judgment. It would not be an abuse of process to join him.
25. Advocate Scholefield also made reference to what he described as Mr MacFirbhisigh's failure to comply with a previous order of the Court to hold the sum of £20,000 for CITE from the assets of the curatorship. I agree that the failure to ringfence this sum (which Advocate Garrood did not address at the hearing) affords an additional reason for joining Mr MacFirbhisigh.
26. The documents deployed on the application show that Sir David lent the Chings the sum of £220,000 on 11 July 2014 at an interest rate of, as I was told at the hearing, 5%. The loan was secured by a hypothec in respect of Bokhara. In its letter to Sir David dated 15 September 2016, Viberts wrote as follows:
"We wrote to you in February 2015 in relation to the above matter and specifically your charge over the Chings' property in Jersey. You replied on 3rd March 2015 explaining to us that your loan to the Chings did not afford you any financial interest in the litigation, albeit you would be very disappointed if they lost as you did not wish to take over Bokhara.
...
These proceedings were made possible in part because of the loan you made available to the Chings in the knowledge that it would be used to pursue this litigation. My clients could seek to make you a party to the proceedings for the purposes of seeking disclosure orders detailing the nature of your agreement with the Chings. Obviously my clients would hope to avoid that and instead look to you to answer the following questions:
1) How did the loan to the Chings come about? We note that the charge is in favour of you personally which is unusual for a commercial lender.
2) What are the repayment and interest terms of the loan?
3) Was the loan made available for an agreed purpose?
4) Is there a written agreement? If so, please provide a copy together with any related security documents.
5) Do you know whether Mr MacFirbhisigh sought the consent of the Jurats before agreeing to a hypothec in your favour?"
Sir David's letter of reply, dated 3 October, was brief. It did not respond to any of Viberts' five requests and simply asserted:
"The loan arrangements you refer to were ordinary loan arrangements and, as you point out, have within them no financial interest in the outcome of the litigation."
27. Advocate Scholefield accepted, as I understood his submissions, that if Sir David had indeed done no more than lend the Chings £200,000 on commercial terms, with no ulterior motive, then he would be a pure funder and, as such, prima facie not liable to a third party costs order. But he referred to what Hale L.J. said in Hamilton v Al Fayed (No 2) [2003] QB 1175, [2002] EWCA Civ 665 at para.86:
"On balance, the arguments in favour of a general approach that "pure" funders should not be expected also to fund the opposing party's costs outweigh the arguments in favour of a general approach that they should. There must, however, be exceptional cases where it would be quite unjust not to make an order: principally where the litigation was oppressive or malicious or pursued for some other ulterior motive. The fact that it was quite unmeritorious would be powerful evidence of ulterior motive but neither a necessary nor a sufficient criterion in itself."
Advocate Scholefield raised the possibility that disclosure might unearth evidence which would make this case exceptional in the sense explained by Hale L.J.
28. Although the prospect of disclosure coming to the assistance of CITE and Mr Killmister in the manner described by Advocate Scholefield may be slight, I do not consider that I can discount the possibility altogether, especially given Sir David's uninformative reply to Viberts' letter of 15 September. Accordingly I conclude on the basis of the material deployed on the application that CITE and Mr Killmister have established that they are entitled to join Sir David for the purposes of a third party costs order and that it would not be an abuse of process to join him.
29. As I have already mentioned in para 9 above, Sir David was not represented at the hearing on 12 January, so unlike Mr MacFirbhisigh, Sir David has not yet had the opportunity of addressing me on the question of joinder. Clearly he must be afforded that opportunity in advance of his having to respond to any summons that might be served on him. That is the reasoning behind paras. 4 and 5 of my Decision.
30. Advocate Scholefield confirmed that he was not pursuing the suggestion of maintenance by Carey Olsen made in para.37(c) of Viberts' skeleton argument. The only points on which he relied for a third party costs order against Carey Olsen were their control of these proceedings combined with what he described as their financial interest in the outcome.
31. As for the point about control, Advocate Garrood responded that his firm did no more than give advice to, and act on the instructions of, their clients. Leaving that point aside, it seems to me that Advocate Scholefield's contention would be true of any firm undertaking litigation; and any shortcomings in terms of the way in which a firm conducted the litigation would more appropriately be dealt with under the wasted costs regime. This first point could not, therefore, justify joining Carey Olsen. Advocate Scholefield's suggestion of a financial interest was based upon the contrast between on the one hand the figure of £282,739.99 described in the balance sheet of the curatorship accounts as at 25 November 2015 as due by way of outstanding legal fees, and on the other hand the figure of £154,241.45 which Carey Olsen accepted on 4 December 2015 as due by way of legal fees owed to them by the Plaintiffs, and in respect of which Carey Olsen took a second charge on Bokhara. Understandably, Advocate Garrood was unable to explain the figure in the curatorship accounts. But having seen various documents produced by Carey Olsen, including a copy of the fee agreement dated 4 December, I am persuaded by Advocate Garrood that there is no proper basis upon which his firm ought to be joined for the purposes of any third party costs order. Carey Olsen merely conducted the proceedings on credit and then procured payment of their fees, which cannot of themselves be a ground for such an order. As Hale L.J., said in Floods of Queensferry Ltd. v Shand Construction Ltd [2002] EWCA Civ 918:
"79. ... I wish only to add a few words about the application under Section 51 of the Supreme Court Act because I was recently engaged in Hamilton y Al Fayed and Others [2002] EWCA Civ.665, to my mind a more difficult case. As I ventured to say at paragraph 18 in that case, having well in my mind the decisions of this court in Tolstoy Miloslavsky v Aldington and Hodgson v Imperial Tobacco, there is a distinction between those who provide money to pay for legal services and those who provide those legal services.
80. There are two good reasons for the distinction. First, such services are of enormous benefit to the proper administration of justice, including securing equality of arms in access to the courts. That was a particular feature in this case. Secondly, there are strict professional rules as to the way in which and the terms on which such services can be provided. Thus if solicitors offer normal legal services on terms which are not contrary to the rules governing the profession and do not act in ways that fall within the wasted costs jurisdiction under Section 51, one would not, as a general rule, expect them to be vulnerable to an order that they pay the other side's costs.
81. The services supplied by the solicitors in this case were not, as far as anything of which we have been made aware is concerned, anything other than those of an ordinary solicitors acting for, if I may say so, a challenging client in complicated litigation. Mr Reese could not establish any improper professional conduct on their part. They did not engage in an improper no win/no fee arrangement. They simply took a risk and extended credit to their client. It would be a sad day if solicitors could not extend credit, even to their litigation clients, without fear of vulnerability to a Section 51 order. These solicitors were just like a builder who rebuilds a fire damaged house expecting that the home owner will pay him out of the proceeds of his home insurance policy. That is why the application under Section 51 against them fails."
32. Accordingly I refused CITE and Mr Killmister leave to join Carey Olsen for the purposes of any third party costs order.
33. Advocate Scholefield put forward two separate grounds upon which he contended that the States of Jersey might be liable for third party costs pursuant to the decision of the Court of Appeal in Channel Islands Knitwear Company Limited v Hotchkiss [2001] JLR 570. The first ground was that in 2010 the Judicial Greffier had agreed to loan the Plaintiffs the sum of £40,000 towards their outstanding legal fees and £20,000 towards the next stage of the proceedings, on the basis that these sums would be repaid from assets transferred from the trust to the curatorship, but that such sums were never in fact repaid. The second ground was that if it were the case (which only disclosure would show) that the Jurats had been properly advised as to the prospects of the Plaintiffs' litigation when being asked to sanction its commencement or continuation, they ought not to have given such sanction.
34. I have no doubt that both grounds are misconceived. As to the first, I fail to see how by making the loans in question the Judicial Greffier could be said to be anything other than a pure funder, if indeed he is properly to be regarded as a funder at all. Nor do I see how making such loans more than six years ago could possibly avail CITE and Mr Killmister. As for the second ground, the terms of the advice given to the Jurats, if misconceived, may form part of the case for CITE and Mr Killmister in the context of wasted costs. But in my view it would be wholly wrong as a matter of public policy, and therefore an abuse of process, for the Court to hold Jurats to account for their decisions in relation to the commencement or continuation of proceedings by a curator.
35. I therefore refused CITE and Mr Killmister leave to join the States of Jersey.
36. Finally I record that, despite some suggestions to the contrary in Viberts' skeleton argument, Advocate Scholefield did not seek to join Sinels for the purposes of any third party costs order.
37. Again I take the two firms in the order that Advocate Scholefield took them, namely
(a) Carey Olsen; and
(b) Sinels.
38. In both the main judgment and my judgment awarding CITE and Mr Killmister indemnity costs, we made a number of criticisms of the way in which the proceedings had been conducted by the Plaintiffs. It is unnecessary for me to recite those criticisms in these Reasons. It is clear to me that these criticisms are more than sufficient to justify joining Carey Olsen for the purposes of a wasted costs order.
39. Para 47 of Viberts' skeleton argument read as follows:
"It is also relevant that the Plaintiffs were found to have effectively started again when Messrs. Carey Olsen took control of the case, the implication being that Messrs. Sinels, which firm had been responsible for the original pleadings already criticised by this court, achieved nothing for the Plaintiffs despite incurring significant fees (the curatorship accounts, as appeared in the trial bundles for these proceedings ... show that in 2009 and 2010, long before the change to Messrs Carey Olsen, the Plaintiffs had incurred a total of £230,741.34 as legal expenses in the Jersey proceedings). The statement made by Advocate Sinel in his letter [of 28 September 2016] that he can only recall providing 'some assistance' to the Plaintiffs is surprising given the level of fees charged over the course of just the first two years."
(I record that at the March hearing Advocate Scholefield accepted that the word 'nothing' should be replaced by the word 'little'.) I agree with Advocate Scholefield that that state of affairs is likewise more than sufficient to justify joining Sinels for the purposes of a wasted costs order.
40. That said, Sinels too did not appear at the hearing on 12 January so my comments in para. 29 above apply mutatis mutandis to Sinels as well.
41. I add one final comment. The mere fact that I have given CITE and Mr Killmister leave to join certain parties as set out above does not, of course, mean that they must do so. I have no doubt that CITE and Mr Killmister will, in conjunction with their legal advisers, consider carefully their position vis-à-vis each such potential party in the light of the disclosure which Mr MacFirbhisigh is to provide before taking any final decision in this regard.
42. In the course of the hearing I made clear to Advocate Scholefield that I expected any summons issued by CITE and Mr Killmister pursuant to para 2 of the Decision to be accompanied by a detailed pleading, equivalent to an Order of Justice, which gave full particulars of each and every ground upon which the party in question was said to be liable, and the amount of costs claimed by CITE and Mr Killmister in respect of such ground. Likewise I expect any pleaded responses to condescend to the same degree of detail.
43. The explanatory email accompanying the Decision suggested a timetable for the next steps in this litigation. If the parties are unable to accept my suggested timetable, or to agree a substitute timetable, I shall invite submissions in writing.
44. I confirm that, as I said at the conclusion of the hearing, the time for appealing against my Decision will not start to run until these Reasons are communicated to the parties.
Authorities
Civil Proceedings (Jersey) Law 1956.
PR Records Ltd v Vinyl 2000 Ltd [2008] 1 Costs L.R. 19.
Automotive Latch Systems Limited v Honeywell International Inc [2008] EWHC 3442 (Comm).
Hamilton v Al Fayed (No 2) [2003] QB 1175, [2002] EWCA Civ 665.
Floods of Queensferry Ltd. v Shand Construction Ltd [2002] EWCA Civ 918.
Channel Islands Knitwear Company Limited v Hotchkiss [2001] JLR 570.