Jersey Unreported Judgments

Trust - reasons for ordering a better statement of case and decision in respect of costs.

[2018]JRC227

Royal Court

(Probate)

6 December 2018

Before     :

Advocate Matthew John Thompson, Master of the Royal Court.

 

Advocate R. S. Christie for the Plaintiff.

Advocate M. H. D. Taylor for the First Defendant.

Advocate M. L. Preston for the Second Defendant.

CONTENTS OF THE JUDGMENT

		Paras
1.	Introduction	1
2.	Background	2-18
3.	The first defendant's answer	19-24
4.	Chronology of the first defendant's discovery	25-82
5.	Decision	83-104

judgment

the MASTER:

Introduction

1.        This judgment contains:-

(i)        My reasons for ordering the first defendant to file a further and better statement of its case and to file a further affidavit of discovery; and

(ii)       My decision in respect of the plaintiff's application for indemnity costs of and incidental to its application requiring the first defendant to file a further affidavit of discovery, including the costs of correspondence prior to the application and the cost of reviewing documents disclosed by the first defendant.

Background

2.        The plaintiff's claim is in respect of a trust known as the Cedar Trust ("the Trust").  The plaintiff claims that he is and always has been one of the economic co-settlors and one of the beneficiaries of the Trust.  The plaintiff's case is that the Trust contained family wealth belonging to the plaintiff and his three brothers, Michel, Gabriel, and Elie.  The eldest of the four brothers was Michel.  In the early 1980s it is alleged that the brothers wished to move to London and to purchase four neighbouring houses.  At this time they were receiving advice from the second defendant.  In 1982 four properties 40, 42, 44 and 46 Uphill Road, Mill Hill, London were acquired through a BVI company known as Cedar Estates Limited.

3.        The Trust was established on 9^th March, 1989, by a deed of settlement (the "Trust Deed").  The assets of the Trust included the two issued shares in Cedar Estates.  On the same day as executing the deed creating the Trust, Michel executed a letter of wishes which at paragraph 3 stated as follows:-

"The Trust assets ("the Trust Fund") consist of two shares in Cedar Estates Limited a British Virgin Island company.  The company is the freehold owner of four properties in Uphill Road, details of which are set out in the Schedule to this letter.  Together with cash sums which allow the directors sufficient funds to meet the running costs of those houses.  When considering the disposition of the company's assets under Clause 4 below the Trustees should notionally consider the company's assets as four separate funds, the assets of those funds representing the four respective houses referred to in the Schedule."

4.        The Schedule to the letter of wishes stated as follows:-

"Schedule

40 Uphill Road, Mill Hill - Gabriel G. Haddad Fund

42 Uphill, Mill Hill - Antony A. G. Haddad Fund

44 Uphill, Mill Hill - Elie G. Haddad Fund

46 Uphill, Mill Hill - Michel G. Haddad Fund"

5.        The plaintiff's complaint arose out of Cedar Estates evicting the plaintiff in 2014 from 44 Uphill Road where he was then living, having moved in late 2006 from number 42.  By this time Cedar Estates only owned two of the properties because two of the other properties had already been sold.  Of the remaining two properties one was then sold (with the proceeds largely applied to pay off the mortgage over both properties), and the other distributed to Michel who had been added as a beneficiary with the original named beneficiaries all being excluded.  The plaintiff complains that both his eviction and the distribution of the entire assets of the Trust to his brother Michel were in breach of trust because they failed to have regard to the plaintiff's interest as economic settlor of assets, alternatively as a person in whom trust assets had vested, alternately as a person who was intended to benefit. 

6.        The Trustee in its amended answer denies that the plaintiff was an economic settlor, denies that the plaintiff was ever named as a beneficiary and denies that the plaintiff ever had a vested interest under the Trust.  I address below the first defendant's pleading in relation to the plaintiff's case that he was intended to benefit under the Trust.

7.        As far as the second defendant is concerned, the second defendant is now elderly and has not been required by the plaintiff to file an answer in these proceedings and as long as discovery is provided the plaintiff does not intend to pursue its claims further against the second defendant at this time.  The real dispute is therefore between the plaintiff and the first defendant.

8.        On 21^st August, 2017, the action was stayed for one month to enable the parties to pursue alternative dispute resolution.  However, no mediation of any kind took place.

9.        On 27^th November, 2017, the matter came back for further directions when I made the following orders:-

"1.       by 5.00 p.m. Friday 22nd December, 2017, the First Defendant shall consider whether it wishes to re-amend its Answer by production of a draft for consideration by the plaintiff;

2.        the Plaintiff and the First Defendant shall make discovery of all relevant documents to each other by provision of a list of documents verified by affidavit by 5.00 p.m. Friday March 23rd 2018;

3.        there shall be inspection of documents within 7 days of service of the list of documents;

4.        signed and dated witness statements of fact to stand as evidence as in chief shall be simultaneously exchanged by close of business by 5.00 p.m. Friday 29th June, 2018..."

10.      The first defendant was allowed nearly four months to provide discovery because the matters in dispute went back to the early 1980s.  In addition the first defendant as Trustee had received legal advice.  The first defendant needed to consider whether claims to privilege could be made in respect of legal advice paid for out of assets of the Trust or whether it should be disclosed.

11.      At the same hearing I raised with Advocate Taylor for the first defendant the nature of the first defendant's case in relation to the plaintiff's assertion that they were intended to benefit under the Trust.  This was put most simply in the plaintiff's response to the first defendant's request for further and better particulars of the order of justice dated 6^th June, 2017.   Request 6 asked:-

"Please specify, for the avoidance of doubt and so that the first defendant may understand the case of the Plaintiff in this regard, what interest it is alleged that the brothers were intended to have in the Properties and/or in the Trust Fund".

12.      The plaintiff's answer was:-

"The order of justice is clear.  The interest which the brothers were intended to have was that they would be treated as the true discretionary beneficiaries of the Trust.  The context in which the Trust was established is, however, relevant background to the discretionary interests."

13.      The first defendant provided its first list of documents on 23^rd March, 2018 comprising of 1,747 documents listed in Schedule 1.

14.      A second list of documents was provided in a supplemental affidavit dated 2^nd May, 2018 comprising of some 500 additional documents.

15.      A third affidavit was provided on 5th September, 2018 listing 1,120 documents.

16.      Shortly before the hearing I was provided with a draft fourth affidavit by Advocate Taylor.  Advocate Taylor explained that the list attached to this affidavit was a complete chronological list to replace the lists attached to the three previous affidavits together with certain additional documents.  The final form of the list and the fourth affidavit was also going to have attached to it documents from an English firm of solicitors (Lester Aldridge) with correspondence from the Lester Aldridge files to be listed chronologically with other working papers also being disclosed.

17.      The plaintiff's application that the first defendant file a better affidavit of discovery was supported by a second affidavit from the plaintiff and the first affidavit of Matthew David Caples dated 24^th October, 2018 an employee of Dickinson Gleeson Advocates.

18.      The precise orders sought by the plaintiff in its summons are as follows:-

"1.       A final order that the First Defendant give discovery by such date as the Court thinks fit, in compliance with the requirements of Practice Direction RC 17/07, and in particular:

1.1.     that the First Defendant give discovery of all documents within its possession, or where it has a right to possession, inspection, or production of the documents;

1.2.     that the First Defendant make reasonable searches for documents;

1.3.     that the First Defendant give discovery of documents in a convenient order, preferably listed individually and in date order;

1.4.     that the affidavit verifying the list of documents include a statement setting out clearly the extent of the search that has been carried out to locate documents, and include a clear explanation of what has been done and a clear answer to the specific questions which have been put about specific classes of documents; and

1.5.     that the affidavit contain a written endorsement from the advocate with overall responsibility for the case or the discovery process that he or she is satisfied that his or her client's discovery obligations have been met.

2.        A final order that the First Defendant give inspection by such date as the Court thinks fit, in such a  format  that  the  documents  correspond  conveniently  with  the  List  of  Documents  in  the discovery affidavit, and without duplication.

3.        A final order that the First Defendant give the discovery and inspection in paragraphs 1 and 2 either:

 3.1.    in relation to all of its discovery documents, in one single list and one single deduplicated discovery run, and the First Defendant be liable for the Plaintiff's costs of dealing with the First Defendant's discovery and inspection to the date of this order on the indemnity basis; alternatively;

3.2.     in relation to the discovery documents not provided in the First Defendant's first two lists and first inspection, in one single list and one single discovery run, both deduplicated from the First Defendant's first two lists and first inspection, with such order as to costs as the Court thinks fit; alternatively;

3.3.     Such other order as the Court thinks fit."

The first defendant's answer

19.      I firstly deal with the first defendant's answer and the issue raised at the directions hearing on 27^th November, 2017 referred to above.  The Act of Court issued at this directions hearing gave the first defendant an opportunity to plead its case in response to the plaintiff's answer to request 6 of the first defendant's request for further and better particulars.  However, the first defendant has not done so.  This means that no case has been advanced to date by the first defendant in response to the plaintiff's claim that he was intended to benefit under the Trust.  Rather the pleading filed to date simply does not admit this aspect of the plaintiff's case.

20.      I should record the first defendant does plead that it was entitled to have regard to the letter of wishes provided by Michel and to exclude the named beneficiaries, to appoint Michel and to distribute all remaining assets of the Trust to him.  However, this is not an answer to the plaintiff's assertion that he was intended to benefit under the Trust.

21.      I consider that I possess power to require a party to make its case clear by reference to Rule 6/15 of the Royal Court Rules 2004, as amended, as applied in Holmes v Lingard & Anor [2018] JRC 184.

22.      My reasons for requiring the first defendant to make its position clear arise from the duty in the overriding objective contained in Rule 1/6 to actively manage cases, which includes a duty to identify issues.  Without a clear pleading from the first defendant on whether or not the plaintiff was intended to benefit under the trust at any time, the extent of the issue in dispute is not clear.  Simply not admitting the plaintiff's case was not a justifiable stance for the first defendant as trustee to take.

23.      The first defendant is a trustee and has been so since 2004.  As a trustee the first defendant should therefore know whether it was intended that the plaintiff and his brothers were intended to benefit under the Trust or not.  The first defendant therefore should know whom the Trust was intended to benefit and whether anyone intended to benefit are those named as beneficiaries or other individuals.  A trustee should also ascertain whom a trust is intended to benefit when appointed as trustee.  In this case it was clear from Michel's letter of wishes that those named as beneficiaries were not persons whom it was intended should benefit when the Trust was set up.  In the well-known case of Schmidt v Rosewood Trust Ltd [2003] UKPC 26, the Privy Council held that the object of a power was as a matter of discretion potentially entitled to seek information from Trustees to hold them to account.  The plaintiff in the present case seeks to hold the Trustees to account based on his argument that he was always intended to benefit.

24.      An individual or entity that has acted as trustee for 14 years should be able to form a view as to whether or not someone was intended to benefit under a trust, even if they were not named as a beneficiary, where such a person seeks to hold a trustee to account for alleged breaches of trust.  The present pleading of the first defendant does not do so and therefore the Royal Court will not know what the first defendant's case is in relation to this important aspect of the plaintiff's claim.  The issue is also significant in relation to the production of witness statements because the plaintiff is also entitled to know what case he has to meet in advance of having to produce witness statements.

Chronology of the first defendant's discovery

25.      This section of the judgment deals with the events relevant to the plaintiff's application following on from the order for discovery set out at paragraph 3 of the Act of Court of 27^th  November, 2017.

26.      The first communication was a letter from Bedell Cristin for the first defendant suggesting mediation by a letter dated 2^nd March, 2018.  This letter stated:-

"The case is about to enter a more significant phase from a costs point of view and it would seem sensible to delay that expense if mediation is a proposal which is acceptable to your client."

27.      In relation to this letter, the implication is that the first defendant had not started preparing to meet its discovery obligations until early March, which is what appears to be meant by the reference to the case about to enter a more significant phase.  Advocate Christie made the submission, which was not challenged by Advocate Taylor, that as Bedell Cristin's letter was only being sent some three weeks before discovery was due to be provided and in the absence of any other evidence, the timing of this request for mediation suggested that the first defendant did not start preparing its list of documents until over three months after the initial discovery order had been made.

28.      The request for mediation was rejected until the discovery process was completed as a previous stay for ADR had not led to any ADR taking place or indeed to any response during the stay from Bedell Cristin to make arrangements for such ADR.

29.      The first defendant's first affidavit of discovery was provided on 23rd March, 2018.  This affidavit was not endorsed by Advocate Taylor as required by paragraph 20 of Practice Direction RC17/07 which provides as follows:-

"20.    Where the person swearing the affidavit is not the advocate with overall responsibility for the case or for the discovery process, the affidavit must contain a written endorsement from the advocate with overall responsibility for either the case or for the discovery process that the advocate concerned is satisfied that his or her client's discovery obligations have been met."

30.      Advocate Taylor during argument enquired why this endorsement was required.  As stated in my Article "Is there A 'Woolf' in Jersey?" 2018 JGLR Volume 1, the endorsement reflects the duty on advocates contained in Hanby v Olliver [1990] JLR 337 at 347 line 40, namely that:-

"The advocate owes a duty to the court carefully to go through the documents disclosed by his client to make sure, so far as is possible, that no relevant document has been withheld from disclosure. 

  The existence of this duty on the advocate enables-and, indeed, requires-the court to proceed on the basis that a list of documents which appears to have been prepared with the assistance of the party's advocate and is verified by an affidavit in proper form ought to be regarded as conclusive, save in exceptional circumstances."

31.      At paragraph 77 of the JGLR Article I stated:-

"...more is required than just advising the client of the test on discovery and leaving it to the client to carry out the entire process."

32.      The list of documents provided on 23^rd March, 2018, was in chronological order as required by paragraph 14 of Practice Direction RC17/07.

33.      On 29^th March, 2018 Advocate Christie informed Advocate Taylor that he would be in a position to exchange documents on 3^rd April, 2018 and suggested this occurred by means of an exchange of a USB stick, once the plaintiff's discovery list had been provided.

34.      Advocate Christie received a reply on 29^th March, 2018 that Advocate Taylor was on leave until Monday, 16^th April, 2018 and therefore his secretary would have to await Advocate Taylor's return for Advocate Taylor to deal with the matter.

35.      Given that the order of 27^th November, 2017 provided for inspection within 7 days of service, the reply that inspection should be delayed until Advocate Taylor's return was unacceptable.  Advocate Taylor, in view of his absence for two weeks, should have made arrangements with one of his colleagues to ensure that inspection could take place in compliance with the court order.

36.      The plaintiff's list of documents was provided by email on 5^th April, 2018.  In the same email Advocate Christie repeated his request for inspection of the list in the absence of Advocate Taylor.

37.      No response was received to this email in the bundle provided to me.  Accordingly, Advocate Christie on 20^th April, 2018 made a further request for inspection.

38.      On 30^th April, 2018 Advocate Taylor responded indicating he would attend to the provision of documents that week i.e. by Friday, 4th May, 2018.

39.      Advocate Christie responded by email that same day and asked:-

"Could you let me know as soon as possible whether you are amenable to providing the entire discovery run on a flash drive, and in an order and file name format which is easily referable to your discovery list or whether you would like to provide inspection in a different format (and if so what)."

40.      The response was that the documents were being scanned on to a USB drive and would be ready on 2^nd May, 2018 (see Advocate Taylor's email of 1^st May, 2018).

41.      In fact the provision of documents on a USB stick took place on 3rd May, 2018.  On that day Advocate Christie by email again asked "I assume the file names on your drive will be in the same order as your list and easily referable to the list."

42.      At the same time as serving the list on 3^rd May, 2018 Bedell Cristin on behalf of the first defendant served a supplemental affidavit containing a second list of documents.  Paragraph 4 of the supplemental affidavit of William James Garfield-Bennett dated 23^rd March, 2018 stated:-

"The documents produced and shown to me in exhibit WJGB 2 were intended to be set out in the previous list in my original affidavit but due to a misunderstanding of the instructions by a member of staff who compiled that part of the list they were not individually described.  I now rectify that error by this supplemental affidavit."

43.      In the course of argument Advocate Taylor explained that part of the first list of documents had been compiled by an employee of the first defendant who had failed to list annexures to documents.  However, this explanation fails to discharge the obligation on an advocate which goes beyond just advising the client of the test of discovery and leaving it to the client to carry out the process by reference to Hanby v Olliver as set out above.

44.      Secondly, this explanation does not explain why some 500 further documents were disclosed.

45.      The production of two lists meant that the plaintiff then had two separate lists both in chronological order but did not have a single composite list.  The supplemental affidavit also did not contain any explanation as to the process that had been followed by the member of staff to explain which part of the original list was incorrectly disclosed and which documents had not been individually described.  It is not therefore clear from the supplemental affidavit which parts of the first affidavit were not accurate.

46.      Nor was any affidavit produced by the first defendant for the hearing before me with any explanation as to why a second list (or indeed a third list) had been provided.  Nor was there any explanation given as to how the employee of the first defendant was supervised or how documents provided by him were reviewed by Advocate Taylor to discharge Advocate Taylor's obligation to the court.

47.      The only other individual involved from Bedell Cristin was a paralegal.  No evidence was adduced as to the extent of his experience, his knowledge of the discovery process and his ability on behalf of Advocate Taylor to ensure that there had been compliance with the discovery process.

48.      There was also no endorsement on the second affidavit saying that Advocate Taylor or anyone else with appropriate experience from Bedell Cristin was satisfied that the first defendant had met its discovery obligations.

49.      It is right to record however that Advocate Taylor did say in submissions that his client was told it was not for the client to assess whether any document was disclosable or not and any questions should be referred to Bedell Cristin.  This submission did not however address my observations that there was no evidence that appropriate supervision of the discovery process had taken place.

50.      On 10^th May, 2018 Advocate Christie sent an email to Bedell Cristin which stated in the first paragraph:-

"Having had a chance to review the documents supplied, we note that they are not consistent with your discovery list and not therefore in an easy accessible format."

51.      Bedell Cristin responded the following day by email and stated at paragraph 2:-

"The documents listed within William Bennett's second Discovery Affidavit correspond entirely to Cedar Trust>Blue File, Red File and Yellow File, partially to Cedar Trust>Volume 1, Volume 2, Volume 4, Volume 5 and Volume 6, and partially to Cedar Estates Limited>Blue File and Yellow File.  I have included demarcations so that you can distinguish between which documents are included within William Bennett's first Discovery Affidavit and second.  For example, under Garfield-Bennett Disclosure>Cedar Trust Volume 1>Cedar Trust - Volume 1 (list), you will notice that there are two lists.  The first list corresponds with documents contained within our client's first Discovery Affidavit, whilst (scrolling down) the second list (titled with 'supplemental list') corresponds with documents contained within our client's second Discovery Affidavit.  I recommend using this list which corresponds, in order, to the documents contained within the same folder and which I trust you will find easily referable."

52.      It is fair to say that this instruction is not easy to follow.  What was not provided on the USB stick were copies following the chronological format of either the first list or the supplemental list.

53.      What Advocate Taylor explained had been provided for inspection were electronic copies of the original files.  He took this approach because he had been concerned not to alter the format of the original files and to avoid any criticism for doing so.

54.      While it is right for the original hard copy files to have been preserved in their original state, the approach taken by Bedell Cristin meant that the plaintiff could not easily identify by reference to the lists and documents disclosed whether the documents described in the list or in the supplemental list had in fact been disclosed.

55.      Where inspection is provided electronically, paragraph 24 of the Practice Direction on discovery (RC17/07) provides:

"1.      The parties may agree for copies to be provided electronically provided that the relevant requirements of the practice direction in relation to electronic discovery are adhered to."

56.      General principle 4. h. of the Practice Direction on electronic discovery (RC17/08) states:-

"h.      Subject to the obligation to provide Electronic Documents in the Original Format, Electronic Documents shall generally be made available for inspection in a form which allows the party receiving the documents the same ability to access, search, review and display the documents as the party giving discovery."

57.      Listing documents chronologically (albeit in two separate lists) and then providing inspection of original files in a different order does not meet this general principle.  The documents provided electronically should have been in the same format as the lists.  This did not require any alteration to the original files from which the documents were taken.  Indeed, based on my experience of being involved in the discovery process for many years, it is likely that a chronological bundle was created by taking copies of relevant documents from original files that had to be disclosed.  All therefore that was required to demonstrate compliance with general principle 4h was to scan electronically any copies so taken to produce a copy of the list of documents so that effective inspection could take place.

58.      Advocate Christie in his letter of 4th July, 2018 where he continued his criticisms of the first defendant's approach stated:-

"We have been provided with two separate chronological lists, but the discovery provided was not two chronological runs matching those lists.  It was a series of files grouped thematically.  Given that many of the files contained a number of documents from each list, it is impossible to understand why some documents were not included on the first list.  This is exacerbated by the fact that, in breach of Practice Direction RC17/07 paragraph 19, your client's two affidavits of discovery make no attempt to explain what searches have been made for documents.  In the absence of an explanation, this gives rise to questions as to whether or not the discovery review has been done properly.

Given the documents discovered are not in chronological order, nor in list order, nor indeed in many cases in any obvious order at all, it is impossible in practice to tell whether all documents on list have been provided.

The process of review of these documents has also been seriously delayed by the problems above and the enormous amount of duplication in the documents you have provided.  Many appear over ten times in the same or different folders."

59.      The question of duplicates is addressed by paragraph 12 of Practice Direction RC17/07 which states as follows:-

"12.    In providing discovery a party need not disclose more than one copy of a document where any copy only contains identical relevant information.  A copy of a document that contains a modification, obliteration or other marking or feature relevant to any issue in dispute shall be disclosed as a separate document."

60.      Advocate Christie's letter of 4th July, 2018 also raised that various documents that appeared to be missing, both generally and by reference to documents referred to in the disclosed documents.  This included files from Lester Aldridge who had acted for Cedar Estates in relation to the eviction of the plaintiff.  This was notwithstanding the fact that the plaintiff had raised at the directions hearing on 27^th November, 2017 the question of whether such legal advice was discoverable (see paragraph 22 of the plaintiff's skeleton) and that I allowed nearly four months for discovery to enable this issue (among others) to be addressed.  Yet it did not appear to have been addressed at all by the first and supplemental lists that were produced.

61.      By the time of Advocate Christie's letter of 4^th July, 2018 the deadline for witness statements being exchanged had passed.  Clearly witness statements could not be produced until the first defendant had complied with its discovery obligations.  At this stage the non-compliance should have been brought back to me.

62.      On 18th July, 2018 Advocate Christie wrote further to Advocate Taylor stating:-

"Further to our letter of 4 July 2018, in William Bennett's Supplemental Affidavit dated 2 May 2018 it was stated at paragraph 5 that he had become aware of various errors concerning dates and descriptions which would be remedied in a further separate Affidavit.  We have heard nothing further in relation to this.  Please state when you will be in a position to remedy these matters.  We request that you provide a substantive response to these questions also within 7 days."

63.      On 3rd August, 2018 Advocate Taylor replied to Advocate Christie.  Paragraph 1 of his letter stated:-

"My client did undertake an email search of their system to identify relevant e-mails.  It was conducted by a senior member of the Trustee.  It was the policy of the fee earners to print off and file e-mails hence the code which you have identified on the e-mails.  However, I have requested that my client undertake a further search using its IT consultant.  A search will be made of the electronic file for all relevant personnel who worked on the file during the period.  The current server dates back to 2010."

64.      In relation to this paragraph, it therefore appears that when the discovery order was made in November 2017, the first defendant did not carry out a general search of its electronic files to produce the first list or the supplemental list.  While I note the first defendant's policy, that policy does not obviate the need to carry out relevant searches of all areas unless discovery is limited. No such order was asked for or made.

65.      Secondly, the reply indicates that the review of emails was left to an employee of the first defendant without any review by Bedell Cristin.

66.      Thirdly, it appears that a general search of electronic files only started in August 2018 over four months after the original discovery deadline had elapsed.  Even then the scope of what was being searched was not clear and whether it was all of the electronic files or systems of the first defendant.  In addition, nothing was provided to me to show that the IT consultant was aware of Practice Direction RC17/08, the general principles applicable to making discovery of any documents stored electronically, how documents should be preserved, the obligations on the party to explain their approach and the methods they used.  Any affidavit of discovery of electronic documentation is also required to identify the processes followed in providing electronic discovery.  This has not occurred to date.

67.      The letter of 3rd August, 2018 from Advocate Taylor at paragraph 4 also indicated that relevant material from the files of his firm were to be provided.  This was also over four months after expiry of the discovery deadline had passed and suggests that the relevant files of Bedell Cristin were not reviewed until August 2018, notwithstanding the order made in November 2017 referred to above and the time period allowed.

68.      Advocate Christie responded by a letter dated 15^th August, 2018 which included the following statement:-

"It is now almost 5 months beyond the deadline for discovery, and we are still in receipt of partial discovery only, in a format which was extremely difficult to review, as the disclosure lists were entirely inconsistent with the documents provided, which were not in chronological order and contained large amounts of multiple duplication.  The way your client has discharged (or failed to discharge) its disclosure obligations has created huge delay and greatly increased the cost to our client of the discovery exercise."

69.      On 5^th September, 2018 a third affidavit was provided by the first defendant.  Again, there was no endorsement on this affidavit by Advocate Taylor.  Paragraphs 4 to 9 of the affidavit state as follows:-

"4.       The lists set out in the First and Supplemental affidavits were in chronological order and the documents disclosed should also have been in that sequence.

5.        I confirm that I have reviewed all the hard copy files held at the offices and storage of GB Trustees Limited which are connected to this matter. Furthermore I have instructed the Trustees IT consultancy firm to undertake a review of the electronic files and this has required the back-up tapes to be reviewed and copies produced on USB sticks for inspection initially by the Trustee and its lawyers. That process is still on-going.

6.        I have made enquiries from Hawksford in Jersey which purchased the business of Rathbones which in turn had purchased the business of Nigel Harris which was the firm that set up the Cedar Trust. I have been informed that there are no documents held by Hawksford.

7.        Documents held by the Trustees Advocate have been disclosed. I can also confirm that I have made contact through my Advocate with the firm of Lester Aldridge who represented Cedar Estates Limited in the possession proceedings to request documents.

8.        I do not consider that there are any other sources of documents which I can call upon save that the second Defendant may have material but he still remains a separate party to the action.

9.        I have attached as "WJGB3" a list of documents of the First Defendant which consists of documents that the First Defendant either had or used to have in its physical possession or has or had a right to possession or has or had a right to inspect or take copies or has or had the right to compel someone else to provide.

70.      In relation to this affidavit, I firstly note at paragraph 4 the admission that the documents disclosed by USB stick should have been in chronological order.

71.      In relation to paragraph 5, the affidavit still does not meet the requirements of Practice Direction RC17/08.

72.      The enquiries of Hawksford as the former Trustee should have been made shortly after the discovery order was made.  In addition, during the course of argument I enquired whether any company records held by Hawksford had been sought, rather than records held by Hawksford as the former Trustee.  Advocate Taylor was unable to give this clarification and indicated that he would seek the same.

73.      In respect of the approach to Lester Aldridge this also should have occurred shortly after the discovery order was made and not left until some nine months later.

74.      In relation to paragraph 8, since 2013 the Trustee has administered Cedar Estates.  No list provided explained whether requests were made to former directors of Cedar Estates for any records they had; nor does any list refer to former directors holding such documents.  Advocate Taylor's response was that any request would be ignored.  However, that is not a justification for either not making the request, nor for not making any explanation in the affidavit of discovery because such documents are within the power of the first defendant.

75.      The explanation at paragraph 9 of the third affidavit is not clear.  The paragraph confuses listing what further documents the first defendant possesses with an explanation of any original documents (such as originals of letters) that the first defendant no longer possesses albeit the first defendant may have retained copies.

76.      The further affidavit led Dickinson Gleeson to write to Advocate Taylor on 21^st September, 2018 as follows:-

"It is difficult to understand what the provenance is of the documents which this affidavit discloses, and there is no explanation in the affidavit itself. All of the emails concerned have a file number written at the top right, which makes clear that this is not the result of any electronic search of the email files. It appears that this is simply the result of further material being disclosed from your client's paper files. Please confirm. If this is the case, please explain why these documents were not disclosed previously. Your client has an obligation under practice direction RC 17/07 (inter alia) to explain what it has done, not least so that our client can judge whether he is satisfied that your client has discharged his disclosure obligation properly.

We have a significant concern about this further material, which is that having briefly reviewed certain parts of it, it appears on the face of it that there is significant duplication between this material and the material already disclosed. This would be completely unacceptable (as we made clear in our letter of 15 August 2018). It is difficult enough for our client that material is being produced in instalments. This already causes great inefficiencies in reviewing your client's disclosure. There was also, as we have previously observed, very significant duplication in your client's first tranche of documents disclosed. If there is to be significant duplication again in this material (which we understand is not even the final material to be provided) of the material already provided, that is intolerable. We therefore request an assurance that this material has been deduplicated as against the material already provided, before our client incurs time and money reviewing it properly. If such an assurance is given and turns out to be incorrect upon our beginning to review the material properly, our client will apply for an order that your client deduplicate the material (and for the costs of any such application).

We also do not understand why this material has been provided in a separate batch when we understand that your client is still undertaking further review of the electronic material, rather than producing the remainder of your client's disclosure in a single, chronological, deduplicated run. Please provide an explanation.

Finally, we note at paragraph 4 of Mr Bennett's Third affidavit his comment that the documents disclosed with the First and Supplemental affidavits should have been in the same chronological sequence as the lists. That admission is noted, but the fact is that this did not happen. Our client's rights are reserved in relation to that and in relation to this new disclosure if the same turns out to be the case."

77.      On 28^th September, 2018 Advocate Taylor replied indicating that, in providing the third affidavit, he had sought to ensure there was no duplication in the list contained in the third affidavit but this was not cross-referred to the other disclosure previously given.  This meant that the issue of any duplication between the third list and the first two lists or between the first list and supplemental list remained unaddressed.

78.      The email of 28^th September, 2018 also explained that the search of the hard drives would be completed by the first defendant and additional material be sent the following week.  I observed that this email was sent some ten months after the original discovery order had been made.

79.      On 3^rd October, 2018 Advocate Taylor indicated that a chronological list of all disclosable documents held by the first defendant would be provided within a week with a USB stick containing all the documents on that list.  By this time the plaintiff had issued and arranged the present summons.

80.      The same email indicated that files with Lester Aldridge had still not been received.

81.      In relation to the fourth affidavit produced shortly before the hearing (although due to administrative error I did not see it until the hearing itself), this was still in draft.  While it was a list of documents in chronological order, a comparison between it and the first list indicated that documents described in the first list did not appear in the fourth list.

82.      Also in the fourth affidavit there was still no explanation of what searches had been carried out both of hard copy files and for any electronic documents in compliance with Practice Direction RC17/07 and 17/08.

Decision

83.      The above chronology is a sorry saga and falls woefully short of how an Advocate should approach discovery both by reference to Hanby v Olliver and the two Practice Directions to which I have referred.  I say this for the following reasons by reference to the above chronology:

(i)        The first defendant did not appear to have started the discovery process until March 2018;

(ii)       The first list did not meet the first defendant's discovery obligations because two further lists have been produced and now a fourth list has been produced to replace the prior three lists with additional documents;

(iii)      There was no search of electronic files until August 2018;

(iv)      The extent of the searches to be carried out of hard copy and electronic files has not been explained in any affidavit;

(v)       The manner in which searches appear to have been carried out for the first three lists appears to have left the process of searching for documents either to the first defendant or to a paralegal without any evidence the paralegal was qualified to supervise discovery or was being supervised.

(vi)      The legal advice of Bedell Cristin  was not reviewed until August 2018 even though the first defendant was on notice in November 2017 that these files had to be reviewed;

(vii)     The legal advice from Lester Aldridge was not asked for until August 2018 even though the first defendant was on notice from November 2017 that those files also had to be reviewed;

(viii)    A single chronological list was not provided in breach of paragraph 14 of Practice Direction RC17/07;

(ix)      Duplicate documents were provided in breach of paragraph 12 of Practice Direction RC17/07;

(x)       None of the first three affidavits contained the required endorsement from an Advocate;

(xi)      The method of inspection of the USB stick provided in May 2018 breached paragraph 24 of Practice Direction RC17/07 and general principle 4.h. of Practice Direction RC17/08;

(xii)     It is still not clear that the first defendant in its review of its electronic files has made appropriate use of technology as required by general principle 4.c. of Practice Direction RC17/08.

84.      The overall effect of the first defendant's approach means that discovery will only be completed nearly one year after the original order was made and nearly eight months after the time allowed;

85.      Where a party breaches a court order, I considered in Newman v De Lima [2018] JRC 155 and Powell v Chambers & Anor [2018] JRC 169 what approach I should take.  In summary I have to consider:-

(i)        Was the breach serious or significant;

(ii)       Was there good reason for the breach;

(iii)      What approach I should take in relation to any breach of any order and whether I should grant relief from sanction.

86.      In Newman v De Lima in relation to a failure to provide expert evidence in accordance with the court's timetable, I was satisfied that a fair trial could take place but required the second defendant to pay the costs of the application for more time on an indemnity basis; I also made unless orders to ensure future compliance.

87.      In Powell v Chambers & Anor, I granted partial relief from sanction because I felt that a total strike out for failure to provide discovery in relation to part of the plaintiff's claim was a step too far.

88.      As noted at paragraph 69 of Powell discovery is serious obligation.  Documentation in most cases forms a key part of the evidence before a trial court.  This case is no different.

89.      Secondly, as again noted in Powell discovery is necessary because it allows parties to prepare their witness statements to address any evidence raised in documentary form.  It also allows an adviser to advise their client on the merits of their claim or defence.

90.      The failure to provide discovery in this case was also not trivial or minor.  It was not a delay of week or so (as occurred with the plaintiff); it was a delay running to eight months, where there have been serious failings and where the action cannot progress without discovery.

91.      The only excuse involved was that discovery was an ongoing obligation.  While that submission is true, and the first defendant has provided additional documents and is still endeavouring to do so, this ongoing duty does not explain why the first defendant did not start to tackle discovery shortly after the order was made and why there has been significant non-compliance with the Practice Directions to which I have referred.  The fact that discovery is an ongoing obligation is not a valid excuse for the delays that have occurred.

92.      In relation to what sanction should apply, this is a claim that goes back to the 1980s and the relationship between four brothers.  I am satisfied that a fair trial could still could take place and therefore this is not a case where a strike out should occur.  Also, given that the first defendant has attempted to provide further documents albeit still without yet complying with the requirements on discovery, the obligation to provide a further affidavit is subject to a final order albeit I gave serious consideration to making the obligation subject to an unless order.  If the obligation is not met by the time period I allowed and any further orders are required then absent circumstances beyond the first defendant's control, the first defendant will find themselves in unless order territory.

93.      As far as costs are concerned, Advocate Christie sought the costs of and occasioned by his application on an indemnity basis including costs of correspondence since provision of the supplemental list and the wasted costs of reviewing the first defendant's first three lists of documents.

94.      In relation to the test for awarding indemnity costs, this is well-known; in particular something is required to take the case out of the ordinary.  The chronology set out above and the matters listed at paragraph 83 above clearly mean that this test is satisfied subject to one point I now address.

95.      The one point is that some of the correspondence from Advocate Christie on behalf of the plaintiff were requests for specific discovery.  Also, in his summons, the plaintiff asked for "a clear answer to the specific questions which have been put about specific classes of documents".

96.      In my judgment this part of the summons went beyond asking for an order that the first defendant meet its discovery obligations but was rather an application effectively for specific discovery.

97.      In relation to this part of the summons, I indicated to Advocate Christie that at present that door was not open to him because an application for specific discovery was premature.  The argument before me was about whether the first defendant had met its discovery obligations generally rather than whether or not specific documents or categories of documents were missing notwithstanding a properly formulated general affidavit of discovery.

98.      This means that both in respect of the application itself and the correspondence, costs have been incurred which relate to requests for specific discovery.  In my judgment those costs are for another day.  This means that the plaintiff cannot recover all of the costs incurred in correspondence on discovery issues since May of this year leading to its application, as asked for.  One approach could be to consider separately each specific item of correspondence and each preparatory task to ascertain what part of any costs incurred related to specific discovery requests rather than non-compliance with general discovery orders.  However this approach still involves an element of guesswork after the event and leads to a hugely complicated taxation exercise.  I therefore consider it is better to approach matters in the round.

99.      In my judgment, while I am ordering the first defendant to pay the plaintiff's costs of and incidental to the application including correspondence since the second list of documents on an indemnity basis, this should be restricted to 80% of the plaintiff's costs.  The balance of the costs will either be considered on any subsequent specific discovery application or failing that are plaintiff's costs in cause.  In other words they will be recovered by the plaintiff if the plaintiff is successful at trial.

100.   In relation to the costs of reviewing documents, this is more complicated.  Where an advocate reviews documents disclosed by another party, the review of documents disclosed is for a number of purposes.  In particular it is to ensure that copies of documents listed have been produced, to consider whether there is a need to apply for specific discovery and to review the contents of documents to advise on the merits.  It is clear that Advocate Christie was carrying out all of these tasks.  By way of illustration Advocate Christie on 18th July, 2018 stated:-

"Despite the deficient nature of your client's discovery, our review of what has been disclosed strongly and comprehensively supports our client's case."

101.   In the circumstances it would not be just to require the first defendant to pay the entire costs of the reviews carried out to date of the first defendant's lists already disclosed; equally the plaintiff has incurred some costs in reviewing those documents which will be wasted because a fresh list is going to be provided, which will also have to be reviewed.

102.   In my judgment, again a broad approach should be taken to avoid a complicated and costly taxation.  I am therefore going to allow the plaintiff at this stage to recover 50% of its costs of reviewing the documents disclosed by the first, second and third lists on the indemnity basis with the balance of the costs being costs in the cause.

103.   Subject to any further order the trial court may make after the trial of this matter, or which may be made by the Royal Court on any application for directions by the first defendant, the first defendant should in the interim also bear these costs personally.

104.   As far as its own costs of producing and providing the first, second and third lists of documents are concerned, given these are to be replaced by production of a fresh list, these costs should also be borne by the first defendant personally. The costs incurred by the first defendant in producing a new list are costs in the cause.

Authorities

Royal Court Rules 2004, as amended. 

Holmes v Lingard & Anor [2018] JRC 184. 

Schmidt v Rosewood Trust Ltd [2003] UKPC 26. 

Practice Direction RC17/07. 

Hanby v Olliver [1990] JLR 337. 

Practice Direction RC17/08

Newman v De Lima [2018] JRC 155. 

Powell v Chambers & Anor [2018] JRC 169.