Jersey Unreported Judgments

Business dispute - application to deal with certain matters upon the judgment of the Court on 6th July 2017

[2018]JRC038

Royal Court

(Samedi)

15 February 2018

Before     :		T. J. Le Cocq, Esq., Deputy Bailiff, and Jurats Olsen and Ramsden
Between	Richard Andrew Campbell		Plaintiff
And	Robert Campbell		First Defendant
And	Longton Holdings Limited		Second Defendant
And	Financial Consultants (Jersey) Limited		First Party Cited
And	FCM Limited		Second Party Cited

Advocate J. S. Dickinson for the Plaintiff.

Advocate M. T. Jowitt for the First Defendant.

Advocate S. A. Franckel for the First and Second Party Cited.

judgment

the deputy bailiff:

1.        This is an application to the Court to deal with certain matters consequent upon the judgment of the Court in this matter on 6^th July, 2017 (Campbell -v- Campbell [2017] JRC 108). 

2.        We do not need to set out any of the background to this matter which is dealt with at length in the judgment of the Court mentioned above.  In short for the reasons set out in that judgment the Court found for the plaintiff ("Richard") in his claim against the first defendant ("Robert") and the orders sought follow on from that substantive finding. 

3.        The consequential orders (excluding the application for a stay) were sought within a summons which had appended to it a draft consent order ("the Draft Consent Order") and we shall deal with the application on the basis of the paragraphs of the Draft Consent Order, as filed by Richard (although Robert did file an alternative). 

4.        The Draft Consent Order, after a number of recitals, provides, using the same numbered paragraphs, as follows:-

"The Longton 2007 Loan, the Longton Interest (including the Received Interest and the Accrued Interest) and the Longton Interest Free Loan

1.     The Plaintiff is the beneficial owner of, and is entitled to:

1.1                50% of the capital of the Longton 2007 Loan;

1.2                50% of the Longton Interest; and

1.3                50% of the capital of the Longton Interest Free Loan. 

2.     The Second Defendant shall:

2.1                Within 7 days amend its records by way of a board resolution in order to (a) record the Plaintiff's beneficial interest in and entitlement to 50% of (i) the Longton 2007 Loan, (ii) the Longton Interest and (iii) the Longton Interest Free Loan and (b) record that when the Longton 2007 Loan is repaid 50% of the capital of the Longton 2007 Loan is to be repaid to the Plaintiff, and shall within the same period write to the Plaintiff and the First Defendant in order to confirm that such changes have been made and to supply them with a copy of the board resolution.

2.2                Within 7 days pay to the Plaintiff the sum of £132,494.00 (being 50% of the capital owed in respect of the Longton Interest Free Loan). 

2.3                Within 7 days pay to the Plaintiff the Accrued Interest in respect of the following:-

2.3.1             By way of payment to the Plaintiff of 50% of the Accrued Interest due to him;

2.3.2             By way of payment (on behalf of the First Defendant) of the sum of £151,288.32 referred to at Recital P.2 above, and

2.3.3             By way of payment of £38,759.76 (on behalf of the First Defendant) on account of the Interim Payment payable by the First Defendant to the Plaintiff pursuant to paragraph 8 below. 

2.4                Pay to the Plaintiff and the First Defendant 50% each of (a) any further capital repayments made in respect of the Longton Loans (as and when any such capital repayments are made) and (b) any further Longton Interest payments.

3.     That all issues relating to the ownership of the Five Payments and whether the Plaintiff and/or the First Defendant may owe any money to the other in respect thereof shall be determined in the Account in the English Proceedings and the Plaintiff and the First Defendant shall take all steps required to procure that outcome. 

Costs and related matters

4. In relation to the Forum Application, the First Defendant shall (a) pay the Plaintiff's costs on the standard basis down to 10 February 2016 and (b) pay the Plaintiff's costs on the indemnity basis thereafter, with such costs to be taxed if not agreed.      

5. The First Defendant shall pay the Plaintiff's costs of the First Evidence Application on the indemnity basis, to be taxed if not agreed. 

6. The Plaintiff shall pay the First Defendant's costs of the Second Evidence Application on the standard basis, to be taxed if not agreed. 

7. The First Defendant shall pay the Plaintiff's costs of the proceedings (not already disposed of by other costs orders) on the indemnity basis, to be taxed if not agreed (including for the avoidance of any doubt the costs of and incidental to the Consequential Orders Hearing). 

8. The First Defendant shall within 7 days make an interim payment to the Plaintiff in respect of the costs of the proceedings in the amount of £468,933.44 or such other amount as the Court may order (the "Interim Payment"). 

9. The First Defendant shall pay the Second Defendant and the Parties Citeds' costs of the proceedings (not already disposed of by other costs orders) on the trustee indemnity basis (including for the avoidance of any doubt the costs of and incidental to the Consequential Orders Hearing). 

10. The First Defendant shall:

10.1      Within 7 days make an interim payment to the Second Defendant in the amount of £225,760.05 (amounting to [90%] of the Total Sum referred to in Recital O above);        

10.2      Within 24 days pay to the Second Defendant the balance of the Total Sum save where the First Defendant has (within the 24 days period) issued a Representation (the "Representation") seeking an assessment of such costs and expenses, whereupon the First Defendant's further payment in respect of the Total Sum shall be made in the amount and in the manner determined in the Representation; and

10.3      Any further claims for payments in respect of costs and expenses in the proceedings that are to be made by any of the Second Defendant and/or Parties Cited (together the "Receiving Parties" or individually a "Receiving Party") shall be dealt with in the following manner:-

10.3.1   Any Receiving Party wishing to make any such further claim for payment shall serve upon the Plaintiff and the First Defendant a schedule identifying the costs and expenses in respect of which a claim is being made (a "Schedule"). 

10.3.2   The First Defendant shall:

10.3.2.1 Within 7 days make an interim payment to the claiming Receiving Party or Receiving Parties, as the case may be, amounting to 90% of the sums claimed in the Schedule; and shall      

10.3.2.2 Within 24 days pay to such Receiving Party or Receiving Parties, as the case may be, the balance of the sums claimed in the Schedule save where the First Defendant has (within the 24 day period) issued a Representation (a "Further Representation") seeking an assessment of such costs and expenses, whereupon any further payment to be made by the First Defendant in connection with that Schedule shall be made in the amount and in the matter determined in the Further Representation.

11. There shall be liberty to apply." 

The Longton 2007 Loan, the Longton Interest (including the Received Interest and the Accrued Interest) and the Longton Interest Free Loan: Paragraphs 1-3"

5.        Some of the matters in the Draft Consent Order were agreed, or at least not opposed, by Robert.  These were those orders contained in paragraphs 1 and the sub-paragraphs thereof, 2.1, 2.2, 2.3.1 and 2.4 and accordingly we make the orders contained therein. 

6.        With regard to the remainder of the orders and directions our view is as follows:-

(i)        Paragraph 2.3.2

In this paragraph Richard seeks a payment by the second defendant on behalf of Robert in the sum of £151,288.32. 

There does not seem to be much dispute about this amount as to quantum but Robert argues that it should not be paid by the second defendant, Longton Holdings Limited ("Longton"), but rather it is for him to account to Richard for it.

It appears to be common ground that Robert has received interest payments in the sum of £1,040,084.60 and £5,046.05, as to which he must account to Richard for one half, holding as he does the capital and interest paid and due of the Longton Loans, as constructive trustee for Richard as to one half thereof. 

It is common ground that out of this sum received a certain amount, specifically £371,277 has been used by Robert for Richard's benefit and accordingly there is £151,288.32 remaining. 

Richard wishes the sum to be paid by Longton on the basis that he will be satisfied that the money will be forthcoming and there will not be any difficulty with recovery.  Robert, however, maintains the argument set out above, that he is constructive trustee, and he does not accept that Longton should meet his obligations to Richard. 

There are monies available to Longton to meet this payment.  We observe, as we did in our original judgment, that this has been a bitter and hard-fought case and that Robert had indicated in correspondence that he proposes to look to his own interests exclusively.  There has been a significant lack of co-operation and difficulties to which we make reference hereafter in the conduct of the litigation, including discovery.

In our view it would be better, if that could be achieved, to procure the payment by Longton of this liability on behalf of Robert and we accordingly make an order in the terms of paragraph 2.3.2 of Richard's draft consent order.

Some of the argument before us related to the timing of payment which was related in itself to the fact that Robert had made an application for a stay pending appeal.  As mentioned later in this judgment that application, having fallen away, there is no reason why Richard should not receive monies due to him in short order and accordingly we order that £151,288.32 be paid to Richard within 14 days of the date hereof.   

(ii)       Paragraph 2.3.3

The dispute under paragraph 2.3.3 relates to the method of payment of any interim award of costs that the Court might make.  As appears hereunder, an interim order has been made and we agree that to the extent that it is possible to do so as much as is reasonable of that interim order should be discharged out of monies held for Robert by Longton.

In our view for the reasons deployed by Richard in argument and on analysis of the way this case has been dealt with it would seem to us to be appropriate that the payment is dealt with in the way that Richard requests. 

In the circumstances we make the order set out at paragraph 2.3.3 of the Draft Consent Order.        

(iii)      Paragraph 3 

The issue between the parties under paragraph 3 of the Draft Consent Order relates to a number of payments that Robert has identified as being made out of interest that he has received and which he claims were used for the benefit of the jewellery business.  Those five payments together total £103,751.37.  As we understand Robert's argument he does not object to what is proposed and accordingly we make the order set out in paragraph 3 of the Draft Consent Order.   

Costs and Related Matters:  Paragraphs 4 - 10

7.        The matter of costs is one for the presiding judge alone and is dealt with accordingly.

Indemnity Costs

8.        Arguments were advanced before me by both sides relating to the payment of costs in connection with a number of applications made within the proceedings as well as the proceedings themselves that those costs should be paid on an indemnity basis.

9.        The basis for an order for indemnity costs has been considered in a number of cases in the past but, as both parties relied upon it, I will restrict myself to the observations of the Court of Appeal in Leeds -v- Weston and Levi [2012] JCA 088 in which in paragraphs 6 and 7 the Court said:-

"6. In C -v- P-S [2010] JLR 645, the Court rejected the submission that an indemnity costs order should only be considered where the actions of the paying party are malicious or vexatious.  Beloff JA, who delivered the judgment of the Court, said this:-

"We do not accept that it is appropriate to impose such a restrictive approach to the discretion of the court to make an award of costs on the indemnity basis.  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? We do not consider that there is a need for the claiming party to show a lack of moral probity or conduct deserving of moral condemnation, or malicious or vexatious conduct."  (Paragraph 11).

7.  In making an award of indemnity costs on the ground of unreasonableness, the Court is seeking "to achieve a fairer result for the party in whose favour it is made than would be the case if he were only able to recover costs on the standard basis; in the end, it is a question of what would be fair and reasonable in all the circumstances." (Pell Frischmann Engineering Limited -v- Bow Valley Iron Limited and others [2007] JLR 479 at paragraph 25, cited with approval in C -v- P-S at paragraph 7)."

10.      Accordingly, to make an order for indemnity costs, I must find some unusual feature which takes this case in general, or parts of it, outside of the norm.  Some measure of unreasonableness should be expected in litigation and would not necessarily take it out of the norm.

Paragraph 4

11.      The first cost question that is raised in the Draft Consent Order, in Paragraph 4, relates to a forum application made by Robert to stay the proceedings on the grounds of forum non conveniens ("the Second Forum Application").  He had already been unsuccessful in one such application.

12.      In the Second Forum Application the Court, (Commissioner, Sir Michael Birt sitting alone (see Campbell-v-Campbell and Others [2016] JRC 070)) confirmed that the further application for the stay of proceedings on the same basis was brought because the Court was misled or was under a misapprehension in reaching its conclusion in the first forum application.  It is clear, from paragraph 40 of that judgment, that the Court felt that it had been misled at the time of the first forum application.  The Court said this:-

"40. I conclude therefore that I was misled on this aspect at the time of the forum judgment.  However I accept without reservation that this was due to inadvertence and not to any intention to mislead the court.  I can fully understand that Advocate Dickinson's concentration was on the primary claim because that was his client's main case.  In relation to the primary claim it was correct to say that this was separate from ownership of the business. 

41. Nevertheless this means that it is open to me to reconsider the issue of forum and to exercise my discretion afresh.  That will however be done in the context of the situation as it now is rather than the situation as it was in November 2014."

13.      The Court then went on to consider the position and to reject the application of the first defendant for a general stay save as to one limited issue which was whether or not the provenance of monies were to be attributed to Richard and Robert equally or in propositions 49% to Richard and 51% to Robert.  This, so the Court clearly felt, would cause no prejudice to the Jersey proceedings and that question would be dealt with, as indeed it subsequently was, in the English proceedings.

14.      It is clear from the Act of Court that the issue of costs of and occasioned by the Second Forum Application would be reserved pending this Court's judgment.

15.      It seems to me to be clear that the learned Commissioner had in mind that the question of costs would be determined once there had been an overall winner within the proceedings generally and then, possibly, against the backdrop of any finding by the English court of the percentage by which Richard and Robert each owned the business.  That finding was in fact made, and the English court determined it was owned on a 50-50 basis.

16.      Robert urges that he should receive his costs because the Second Forum Application had in effect come about as a result of the court being misled by Richard during the first application.  Irrespective of that, however, it is clear that even had such misleading submissions not been made and the Court had not been misled, the outcome, namely the refusal of the stay, would have been the same.  The only distinction was the partial stay that I have mentioned above.

17.      That partial stay was offered as a compromise position prior to the hearing on 10^th February, 2016, from Richard's legal advisers to Robert's English solicitors.  It was rejected.

18.      It seems to me that looking at the matter in the round, with regard to the Second Forum Application, Robert made an application for a general stay which was rejected after a careful consideration of his arguments and on the merits by the Commissioner.  A partial stay, which had already been offered by Richard, was agreed by the Court.  Whilst there had been a misleading of the Court, the Court expressly absolved Richard and his legal advisers from any deliberate failing in that regard.

19.      In my view Richard was the successful party in that application and should be entitled to an order for costs with regard to it.  Should those costs be on an indemnity basis?  In my view they should not.  I do not see anything exceptional in the conduct of Robert or his legal advisers in making a second forum application.  In fact in doing so they were acting in accordance with authority given that the Court had, albeit inadvertently, been misled on the earlier forum application.

20.      It was not in my view wrong, or at least not exceptionally so, for Robert to reject the offered compromise position albeit that that is the position that was eventually reached by the Court. 

21.      In my view, on this aspect of the matter, Richard should receive his costs of and incidental to the Second Forum Application on the standard basis to be taxed if not agreed.

Paragraph 5

22.      This paragraph concerns the costs of Richard's application to admit new evidence after the hearing had closed but before judgment was handed down.  The Court's judgment in that case can be found at Campbell-v-Campbell and Ors [2016] JRC 190. 

23.      All parts of the application, which was to adduce further evidence in three categories, were resisted by Robert.  He was unsuccessful.  Accordingly costs should follow the event. 

24.      The question before me is whether or not those costs should be on an indemnity basis.  The larger part of the application was necessitated by the fact that Robert had failed in the proceedings to disclose documentation which was clearly relevant to the proceedings before the Court.  In fact the documentation only came to Richard's attention when it was disclosed in the course of the English proceedings. That the first category of information was highly relevant may be seen from the fact that they were referred to in paragraphs 91 to 96 of the judgment of the Court. 

25.      In my view this failure of disclosure was serious and the evidence clearly went to some degree to establishing Richard's case and undermining Robert's.  It seems to me that Richard was driven to make the application to admit this evidence within the Jersey proceedings by reason of this inexplicable failure on the part of Robert. 

26.      In my view this is a factor that takes the matter out of the norm.  I think that the failure by one party to disclose material documentation, and then to resist its inclusion once its existence becomes known, is always going to be a matter of concern to a trial court because it potentially strikes at the root of the Court's ability to do justice between the parties. 

27.      In the circumstances, this is a feature that takes the conduct of this litigation out of the norm and I order that Robert pay Richard's costs of and incidental to the application to admit new evidence on an indemnity basis to be taxed if not agreed. 

Paragraph 6 

28.      Paragraph 6 concerned the second evidence application.  In this case it arose in part out of the documentation that was filed with the evidence which was admitted in the first evidence application.  Richard accepts that he lost this application and does not argue that he should not be subject to an order for costs on the standard basis in Robert's favour in that respect. 

29.      Robert, however, seeks an order for indemnity costs.  He points to a number of factors which he prays in support of this outcome which amount to the fact that the plaintiff's legal adviser should have known better than to purport to put in documentation without the leave of the court, that the inappropriateness of the procedure was made plain to them by Robert's lawyers and that nonetheless Richard persisted with the application and caused a hearing to take place and costs to be incurred unnecessarily. 

30.      This does not, so it seems to me, point to any particularly unusual feature in the context of litigation.  A professional difference with regard to the correct mode of proceeding had to be resolved by the court.  This it seems to be is part of the cut and thrust of litigation in many cases. 

31.      In the circumstances I see no basis for an order for indemnity costs and I order that Richard pay Robert's costs of and incidental to the second evidence application on the standard basis to be taxed if not agreed. 

Paragraph 7

32.      This paragraph of the Draft Consent Order deals with the larger part of the costs in connection with this case. 

33.      Richard was the clear winner and Robert does not argue that he should not be liable for Richard's costs of and incidental to the proceedings (save as dealt with otherwise in the costs orders mentioned above) on a standard basis. 

34.      Richard, however, argues for indemnity costs. 

35.      Richard bases this submission on the bases that Robert has behaved with outright and/or unacceptable hostility towards him, that he has refused to engage with Richard's attempts to resolve the matter by alternative dispute resolution and refused to provide financial information that Richard requested to facilitate in meditation.  Further he points to the fact that Robert has refused to engage in pre-action correspondence including, so Richard says, to clarify Robert's case.  He also points to the fact that Robert's case has changed from time to time and has therefore produced what might be termed as a "moving target" which has inevitably increased the costs.  Richard also pointed to the fact that Robert ran defences which he later withdrew and, as set out above, that Robert had withheld highly relevant documents.  He points to the general unreasonableness of Robert in the conduct of the litigation. 

36.      For his part, whilst conceding that he should pay costs on a standard basis Robert contends that the litigation was hard-fought and bitter, the correspondence was characterised by "purple prose" but it was not out of the ordinary and did not take the case outside the realms of ordinarily hard-fought litigation.  Furthermore, Robert points out that Richard won on in part his contentions relating to the existence of the common intention constructive trust which was to an extent new territory for the Court and Robert's election to defend that argument could hardly be said to be unreasonable. 

37.      It is entirely clear that this case was both hard-fought and characterised by a bitterness and mistrust to which the Court made reference in its judgment.  Sadly, particularly in family disputes, that is not exceptional.  Often cases are so characterised and people take every possible point that they can.  Although I do not think that Robert's behaviour can be characterised as reasonable, to reach the view that it was so unreasonable as to generally merit an order for indemnity costs I would have to also take the view that it was outside the norm for hard-fought litigation.  I keep in mind, of course, the fact that there will, in the words of Beloff JA, "usually be some degree of unreasonableness". 

38.      I do not think that Robert's actions, unhelpful and difficult although they may in some respects have been, are such that should attract an order for indemnity costs.  Accordingly I make an order for standard costs in favour of Richard to be taxed if not agreed on all of those aspects of outstanding costs orders not dealt with by the orders made above. 

Paragraph 8

39.      Paragraph 8 deals with the application by Richard for an order for an interim payment on account of his costs in the proceedings. 

40.      I have seen a schedule of costs which, on an indemnity basis, is claimed in the sum of £1,193,449.63.  Somewhat counter intuitively there appears to be only a relatively small difference between the fees calculated on an indemnity basis and those calculated on a standard basis. 

41.      I do not need to resolve those matters, however, as whilst I propose to make an order for an interim payment I think the appropriate sum pending final quantification (and given that an element of fees is to be paid by Richard to Robert and therefore offset against the final amount due), is the sum of £300,000.  I appreciate that this may well be a very significant underassessment of the ultimate sum found to be due.  In my view that payment should be made within 21 days of the date hereof and I so order. 

Paragraphs 9 and 10  

42.      These paragraphs deal with the position relating to Longton and the two parties cited.  Longton is owned as to one half by each of Richard and Robert and has played an entirely neutral part in the proceedings other than to give discovery (along with the parties cited) and to file a brief affidavit which was taken as read. 

43.      Advocate Franckel, who appeared for the parties cited and for Longton informs the Court that the parties cited have a contractual arrangement with Longton for the payment of their costs.  In fact the position of his clients should be seen as an analogous to those of a trustee who, having adopted a neutral stance, and not being subject to criticism, should receive an indemnification of their costs on a trustee type basis. 

44.      It seems to me to be correct that the parties cited should be entitled to their costs from Longton on the usual trustee indemnity basis.  It is often the case that when parties cited are joined to proceedings the plaintiff indemnifies them as to their fees as costs and then claims those fees and costs back from the unsuccessful party in the event that the plaintiff is successful. 

45.      It seems to me that the appropriate order to make in this case Robert should pay the costs of the parties cited and Longton on a trustee indemnity basis to be taxed if not agreed.  In making such an order I do not suggest that there is something in the interaction between Robert and the parties cited and Longton that takes this into the realm of indemnity costs.  Rather I make this order on the basis that in effect the parties cited and Longton are neutral parties and are there in effect on a quasi-fiduciary basis and should not be out of pocket in any way as a result. 

Paragraph 11 

46.      For the avoidance of doubt the costs orders made above to the extent that they are general in nature and not limited to the costs of specific applications and/or issues also include the costs of and incidental to this consequential orders application.   

Stay pending appeal

47.      As mentioned above the argument before for us also concerned an application by Robert for a stay pending appeal against the substantive judgment of the Court.  There was some argument as to whether Robert had met the formalities for such an application but in any event there were submissions made by both Robert and Richard on the merits. 

48.      In between the conclusion of oral argument and this judgment, however, Robert indicated that he no longer sought to appeal against the substantive judgment of the Court and the application for a stay accordingly fell away. 

49.      Although we have not been notified that such is the case it may be that in the intervening period between argument on this matter and this judgment other financial issues have arisen or there is a need in some manner to make further consequential orders.  In the circumstances we give liberty to apply for that purpose. 

Authorities

Campbell-v-Campbell [2017] JRC 108. 

Leeds -v- Weston and Levi [2012] JCA 088. 

Campbell-v-Campbell and Others [2016] JRC 070. 

Campbell-v-Campbell and Ors [2016] JRC 190