Jersey Unreported Judgments

Injunction - reasons for making the declaration requested by the plaintiffs

[2019]JRC192

Royal Court

(Samedi)

26 September 2019

Before     :

Advocate Matthew John Thompson, Master of the Royal Court

 

Advocate J. M. Sheedy for the Plaintiffs.

Advocate M. P. Cushing for the Interveners.

CONTENTS

		Paras
1.	Introduction	1
2.	Background	2-13
3.	The parties' submissions	14-28
4.	Decision	29-40

judgment

the MASTER:

Introduction

1.        This judgment contains my reasons for construing paragraph 1 of a consent order dated 4^th April, 2019, to mean that the interveners could not participate in any part of these proceedings including taxation until compliance with the order of 4^th April occurred.

Background

2.        The background to the issue before me arose out of a judgment of the Royal Court dated 12^th February, 2019 in the present matter reported at Toorani v Toorani [2019] JRC 023.

3.        Paragraphs 1 to 3 of that judgment record the background to the dispute as follows:-

"1.      This is the application of Badriya Abdul Rasool Toorani ("Badriya"), Markh Abdul Rasool Toorani ("Markh"), Rabab Abdul Rasool Toorani ("Rabab"), Shadukh Abdul Rasool Toorani ("Shadukh") (hereinafter collectively referred to as "the Interveners") for the discharge or variation of a freezing injunction granted by this Court in favour of Sameera Abdul Rasool Toorani ("Sameera"), Khairayah Abdul Rasool Toorani ("Khairiyah"), Rouhangiz Abdul Rasool Toorani ("Rouhangiz"), Zainab Abdul Rasool Toorani ("Zainab"), Maryam Abdul Rasool Toorani ("Maryam") (hereinafter collectively referred to as "the Plaintiffs"). 

2.        On 30th August, 2017, interim injunctions were granted by this Court on an ex parte application by the Plaintiffs against Red Rose Limited (named in the original proceedings as the Defendant) ("Red Rose") and Ocorian Limited (named in the original proceedings as the Party Cited).  The injunctions restrained Red Rose and Ocorian Limited from disposing of the shares in Red Rose to a third party or disposing of the Burwood Estate or the net proceeds of sale of the Burwood Estate if it had already been sold.  The Interveners are Red Rose's beneficial owners.   

3.        The injunctions granted by the Court were obtained in support of English proceedings which the Plaintiffs stated that they intended to commence.  Those proceedings were to seek to recognise and enforce against the English estate of Behrooz Toorani ("BT") certain judgments obtained against BT in Bahrain by the Plaintiffs and to set aside a transfer in 2006 of the Burwood Estate ("Burwood") to Red Rose under Section 423 of the Insolvency Act 1986 on the basis that that transfer was at an undervalue and was made for the purposes of putting assets beyond the reach of BT's creditors ("the English Proceedings")."

4.        The challenge by the interveners to the injunctions granted was unsuccessful, leading to the Royal Court stating at paragraphs 124 and 125 as follows;-

"124.   In our judgement, as we have indicated, a number of the matters raised by the Interveners do not amount to a material lack of disclosure on the part of the Plaintiffs.  The delay in financing leading to a delay in the commencement of the English proceedings should however have been disclosed.  As we have said, it is likely to be the case that the judge considering the interim injunctions would have fixed a deadline for the commencement of proceedings.  However we do not consider on balance that the want of disclosure should lead us to raise the injunction.   

125.    In our judgement, therefore, we are not persuaded either that there has been a sufficient want of disclosure to justify raising the injunctions granted by the Court nor releasing the monies from the undertaking which replaced them.  Nor do we believe that we have sufficient information to make the orders requested by the Interveners for money to fund the English proceedings."

5.        In respect of paragraph 125, the grounds of the application for the release of monies for legal costs were contained at paragraphs 104 to 114 leading to the court's conclusions at paragraphs 121 to 123 as follows:-

"121.   Having been placed on notice that the Plaintiffs are asserting a proprietary claim it was in our view incumbent upon the Interveners to place sufficient evidence before the Court in support of their application so that the Court could be satisfied that they did not have a ready recourse to alternate assets.  That is certainly the assertion made in Badriya's affidavits but the documentary support is, it must be said, thin.  The Court is not clear that the documentation exhibited relating to Badriya's own affairs represents the totality of her banking arrangements and we are not provided with any detail relating to the real property or personal property owned by the Interveners other than to some extent Badriya.  There is prima facie evidence that Rabab owns very substantial amounts of real property in Bahrain and, indeed, in London and we cannot be satisfied that the Interveners do not have recourse to significant assets sufficient to fund their litigation costs.   

122.    Furthermore, in our judgement, any alleged illegality in obtaining information from the public registry in Bahrain does not absolve the Interveners from meeting the financial case that they need to do in order to obtain money from the retained funds.

123.    We note that the legal costs incurred and in prospect are substantial and that we are informed that the most recent account rendered by the Interveners' legal advisers have not been met.  That does not say it could not be met and we simply do not have enough information to be satisfied that we should make the orders sought by the Interveners.  It may be that with further information the Interveners can make another application to the Court but at this point the evidentiary picture is insufficient."

6.        I set out these observations because they are pertinent to the submissions advanced by the interveners in the application before me.

7.        On 4^th April, 2019, the Deputy Bailiff ordered the interveners to pay 85% of the plaintiffs' costs on the standard basis and also ordered an interim payment on account of costs in the sum of £50,000.

8.        Paragraph 4 of the act of court directed that the interim payment had to be paid within 30 days unless there was a renewed application for leave to appeal which did not arise.  The time limit to make the interim payment therefore expired on 4^th May, 2019.

9.        Accordingly a summons was issued by the plaintiffs fixed for determination before me on 30^th May, 2019 seeking an order that, unless the costs were paid, the interveners would be barred from further participation in the proceedings.  This summons was resolved by agreement leading to a consent order signed on 28^th May, 2019 as follows:-

"WHEREAS the Plaintiffs obtained an injunction against Red Rose Limited and Ocorian Limited on 30 August 2017 ("the Proceedings");

AND WHEREAS upon the payment of the sale proceeds of Red Rose Limited into court, both Red Rose Limited and Ocorian Limited were discharged from the Proceedings;

AND WHEREAS the Intervenors' application to discharged and/or vary the injunction and obtain a payment out of the sums held in court were dismissed on 12 February 2019;

AND WHEREAS the Intervenors were ordered to pay the Plaintiffs' costs of and occasioned by the Intervenors' application with an order for payment of £50,000 on account by 4 May 2019 with the balance to be taxed if not agreed;

AND WHERES the Intervenors' failed to pay the Plaintiffs' costs by the appointed date;

AND WHEREAS the Plaintiffs applied for an unless order, the hearing for which has been fixed for 30 May 2019 at 14:30;

AND WHEREAS the parties have reached agreement in relation to the orders sought;

BY CONSENT IT IS ORDERED THAT:

1.        Unless and until the Intervenors pay the Plaintiffs' costs on account, as ordered under the Act of Court dated 4 April2019, the Intervenors will be barred from further participation in these proceedings.

2.        The Intervenors shall pay the costs of and occasioned by the Plaintiffs' summons on the indemnity basis to be taxed if not agreed.

3.        The hearing listed for 14:30 on 30 May 2019 be vacated."

10.      I issued an act of court approving the consent order the following day.

11.      Subsequent to the consent order of 28^th May 2019, £24,349.25 was paid and therefore a balance of £25,650.75 remained outstanding.

12.      The failure to pay the balance led to the plaintiffs issuing the present summons seeking the following relief:-

"1. A declaration that the term "these proceedings" in paragraph 1 of the Consent Order dated 28 May 2019 includes any part of these proceedings including taxation; or

2.        Unless and until the Intervenors pay the Plaintiffs' costs on account, as ordered under the Act of Court dated 4 April 2019, the Intervenors will be barred from any further participation in any part of these proceedings (to include taxation).

3.        The Intervenors shall pay the costs of and occasioned by this Plaintiffs' summons on the indemnity basis to be taxed if not agreed."

13.      At the hearing of the summons on 10^th September, 2019 I granted the declaration in the terms asked for by paragraph 1 of the summons.  This judgment therefore contains my written reasons for making the declaration requested by the plaintiffs.

The parties' submissions

14.      Advocate Sheedy for the plaintiff informed me that why this issue had arisen was that there were taxation proceedings before the Assistant Judicial Greffier because the plaintiffs were seeking to have their costs taxed pursuant to the order made on 4^th April, 2019 in their favour.  The interveners wished to file objections to that taxation process.  The plaintiffs disputed that the interveners could file objections when the interveners had not paid the balance of the payment on account of £50,000 also ordered on 4^th April, 2019.  The Assistant Judicial Greffier ruled that this argument required a determination by me of the meaning of the consent order dated 28^th May, 2019 and whether it extended to taxation of the plaintiffs' costs.

15.      Insofar as the interveners were unable to pay, Advocate Sheedy argued that any such assertion was contrary to the decision of the Royal Court in particular paragraphs 121 - 123 set out above.

16.      He was also critical of the interveners' failure to take any steps to substantiate claims that they were unable to pay.  Such assertions were also contrary to the interveners retaining an experienced English barrister and Charles Russell Speechly LLP a well-known law firm of English Solicitors.

17.      He also referred to the fact that there was nothing on the face of the consent order to exclude the taxation process.  Yet the taxation proceedings took place within the same court file and were not a separate proceeding or process.

18.      Immediately following the consent order a bill of costs was filed leading to the interveners' objections being filed in response on 1^st July, 2019.

19.      On 9^th July, 2019 Advocate Cushing of Appleby wrote to Mr Thérin stating:-

"The consent order to which Advocate Sheedy refers makes express provision for costs to be taxed if not agreed.  It is that taxation process which is now underway.  The taxation process is clearly separate to ongoing participation in the substantive proceedings (indeed taxation of costs often follows the conclusion of proceedings, whether by trial, compromise or discontinuance) and there is no proper basis for the Interveners' objections to be disregarded as Advocate Sheedy suggests."

20.      To the extent that the interveners were arguing that the intention of the consent order excluded taxation because of paragraph 2 of the consent order which provided for the interveners to pay the plaintiffs' costs of the summons on the indemnity basis to be taxed if not agreed, Advocate Sheedy argued this was clearly a reference to the costs of the summons leading to the consent order not the general taxation process. 

21.      He also argued a finding of contempt for breaching the order was pointless where a party was outside the jurisdiction.

22.      There were also no other steps to be taken in Jersey because the proceedings were ancillary to English proceedings beyond enforcement at the conclusion of the English proceedings.  It was not fair to compel the plaintiffs to wait until the end of the action to get paid where a costs order had been made.  The court must have the power to enforce a payment on account it had ordered should occur.

23.      The order was reasonable because it was consistent with the principle.  There was also no appeal against the order.

24.      Since the initial payment was made at the end of May, notwithstanding Appleby's email of 28^th May, 2019 there had been no further information as to how or whether the balance was going to be paid.  The affidavit of Mr Gearon a Partner in the firm of Charles Russell Speechly LLP sworn on behalf of the interveners simply recorded that Mr Gearon had been told by the interveners that they had not been able to raise the balance of the monies to-date because they did not have liquid assets in order to do so and would not be in a position to settle the liability until the end of October having disposed of certain assets at the earliest.  Advocate Sheedy criticised this affidavit as entirely lacking in detail and not addressing the previous concerns of the Royal Court.

25.      Advocate Cushing in response argued that the consent order did have sanction because it prevented the interveners from bring any further application to vary or discharge the injunctions until the balance of the interim payment was met.

26.      He argued that there is a clear distinction between the taxation exercise and the substantive proceedings.  The fact that the plaintiff had sought the costs of the consent order fortified his argument that the consent order did not apply to the taxation processes.

27.      If the plaintiff wanted wording to prevent participation in the taxation proceedings (which only started after the consent order was entered into) then they should have inserted wording to that effect.

28.      It was also open to the plaintiffs to enforce the outstanding bill against the interveners.

Decision

29.      In relation to enforcement of costs orders, I considered this in Sinel v Hennessy & Ors [2019] JRC 096 where I issued an unless order requiring the first defendant in that action to pay the outstanding costs orders by a certain date failing which the answer would be struck out automatically without further order.  The relevant legal principles were set out by Advocate Dickinson at paragraphs 6 to 11 of that decision as follows:-

"6.      Advocate Dickinson therefore referred me to Crystal Decisions (UK) Ltd v Vedatech Corp [2006] EWHC 3500 (Ch) and paragraph 16 which states as follows:-

"16 In any event I take the view that the orders of the court, even in relation to interim costs, require to be complied with and that, unless there is some overwhelming consideration falling within Article 6 that compels the court to take a different view, the normal consequence of a failure to comply with such an order, is that the court, in order to protect its own procedure, should make compliance with that order a condition of the party in question being able to continue with the litigation."

7.        He also noted that the English Court was prepared to make an unless order for a bill of costs for £15,600 because there was no appeal in respect of that costs order.  This was to illustrate the importance of requiring parties to meet costs orders made against them.

8.        He also drew to my attention to paragraph 10 of the same judgment which states as follows:-

"10 It is perfectly true, of course, that parties in the position of the claimants would, in these circumstances, have other remedies available to them. Those might include proceedings for contempt, but equally they might involve a more routine enforcement of the judgment for costs by for example, seeking an order for payment and a charging order against any known assets. In the present circumstances, however, where they are faced with defendants who are not resident within the jurisdiction and have no assets here, those remedies are likely to be of limited value."

9.        This paragraph was pertinent because the first defendant in her skeleton argument had suggested that the plaintiff could enforce his costs order in Belgium.  Advocate Dickinson argued that such an option was likely to be of limited value. 

10.      The principal judgment on which he relied was Leeds United Football Club Limited v Admatch [2011] JRC 016A dated 19th January, 2011.  In relation to striking out Sir Michael Birt at paragraph 35 stated as follows:-

"35.    I draw from the above authorities the conclusion that it is a strong thing to strike out a defence and there must be an abuse of process such as to render further proceedings unsatisfactory or prevent the court from doing justice or, to quote Page Commissioner, a party must have flouted or ignored the Court's orders or persistently conducted himself in a way that evinces an unwillingness to engage in the litigation process on an equal footing with the other parties."

11.      In relation to a failure to pay a sum ordered by the court the judgment then continued as follows at paragraphs 37 to 38:-

"37.    I turn next to consider the authorities in relation to a failure to pay a sum ordered by the Court, such as an order for costs.  There is clear authority for the proposition that such a failure may lead to a party being struck out provided that the failure is not due to an inability to pay.  Although the case involved very different issues, the observations of Millett LJ in Abraham v Thompson [1997] 4 All ER 362 at 377 are relevant:-

"It is not an abuse of the process of the court for an impecunious plaintiff to bring proceedings for a proper purpose and in good faith while being unable to pay the defendant's costs if the proceedings fail.  If the plaintiff is an individual the court has no jurisdiction to order him to provide security for the defendant's costs and to stay the proceedings if he does not do so.  It may be unjust to a successful defendant to be left with unrecovered costs, but the plaintiff's freedom of access to the courts has priority.  The risk of an adverse order for costs and consequent bankruptcy has always been regarded as a sufficient deterrent to the bringing of proceedings which are likely to fail.  Where there is no risk of personal bankruptcy as in the case of a plaintiff which is a limited company, the court has a statutory jurisdiction to award security for costs; but even in this case it will frequently not do so if this will have the effect of stifling bona fide proceedings.  It is preferable that a successful defendant should suffer the injustice of irrecoverable costs than that a plaintiff with a genuine claim should be prevented from pursuing it."

These observations are, a fortiori, applicable in the case of an impecunious defendant who finds himself brought before a court at the instance of a plaintiff.

38.      Nevertheless, the general principle is that, in the absence of an inability to pay, a party should pay an order for costs as it falls due and if the party does not do so, he may be struck out.  Thus in Crystal Decisions (UK) Limited v Vedatech [2006] EWHC 3500 (Ch), having observed that there was no suggestion that the defendants could not in that case pay the costs of an interlocutory hearing which they had been ordered to pay, Patten J said as follows at para 16:-

"In any event I take the view that the orders of the Court, even in relation to interim costs, require to be complied with and that, unless there is some overwhelming consideration falling within Article 6 [of the ECHR] that compels the Court to take a different view, the normal consequence of a failure to comply with such an order is that the Court, in order to protect its own procedure, should make compliance with that order a condition of the party in question being able to continue with the litigation."" and

"42. The starting position is that orders of the court are to be obeyed and if a party refuses to pay an order for costs against it is at risk of having its claim or defence as the case may be struck out."

30.      At paragraph 18 I recorded that I was persuaded by the arguments of Advocate Dickinson.

31.      The suggestion that the plaintiffs could enforce the order for a payment on account elsewhere just as in the Sinel case is of likely to be of limited value. Nor does a finding of contempt assist where the intervenors are all outside the jurisdiction.

32.      Furthermore, in this case, no step is to occur other than taxation in these proceedings until the English proceedings had been concluded.  I accept the interveners could apply for a further variation of the injunctions granted and they cannot do so while the payment on account of costs has been made.  However, they do not have to bring such an application.

33.      In respect of the taxation process, this is also part of the same proceedings.  It is not separate to the substantive proceedings commenced by the plaintiffs.  Generally where a party brings a claim and is successful and obtains judgment, such a judgment includes an order for costs (whether fixed or on a taxation basis).  Enforcement of the judgment including any costs orders and any assessment therefore arises from the judgment itself.  There is therefore no basis to exclude taxation from being part of the proceedings or to regard it as separate from any other part of an action before the Royal Court.  The plaintiffs in the present case did not therefore have to expressly state the taxation was included in the reference to "these proceedings" because a taxation process is part and parcel of a court proceeding.  Rather it was for the interveners, if they wished to exclude the taxation process, to have inserted wording to that effect.

34.      I was also not persuaded by the argument that the reference to taxation in paragraph 2 excluded a taxation generally.  This reference in paragraph 2 was clearly in respect of the costs of a consent order itself and cannot be construed as excluding the taxation process from the ambit of paragraph 1 of the order.  Such an argument was hopeless.

35.      As Sir Michael Birt put it in Leeds United Football Club Limited v Admatch [2011] JRC 016A at paragraph 42 cited above:-

"The starting position is that orders of the Court are to be obeyed ...."

36.      The construction argued for by the interveners would allow the interveners to avoid the effect of an order of the Royal Court.  It is not therefore a construction I am prepared to accept.

37.      The construction I consider applies namely is that what is meant by the proceedings include taxation of costs orders.  The interveners brought an argument which was unsuccessful and have been ordered to make a payment on account and to pay taxed costs.  This is all part of the same proceedings.  The order for a payment is part of the proceedings.  There is no basis to treat the taxation of costs any different or filing a separate process. 

38.      In reaching this conclusion I was not persuaded by the affidavit of Mr Gearon.  That affidavit did not advance matters beyond the position put before the Deputy Bailiff.  It recorded no more than that Mr Gearon had been told by the interveners that they were still unable to pay without any more detail beyond that they may pay by the end of October.  If they do they will then take part in the taxation if it is not concluded by the time of payment of the balance.

39.      For all the above reasons paragraph 1 of the consent order on 28^th May, 2019 is therefore construed as applying to any part of the present proceedings including any taxation of the plaintiffs costs pursuant to paragraph 2 of the act of court of 4^th April, 2019.

40.      Finally, this outcome is not unfair.  The plaintiffs will still have to file a bill of costs and will have to justify that bill to the Assistant Judicial Greffier.  Where another party does not file any comments in response to a claim for costs and is prevented from doing so because of the effect of a court order, the Assistant Judicial Greffier should still review the claim for costs to decide based on his experience whether the claim for costs is made out.  The lack of objections from the interveners should not mean that the plaintiffs will simply recover the costs they have claimed.  The plaintiffs still have to persuade the Assistant Judicial Greffier that the amounts claimed are sums to which they are entitled.  The extent and scope of that review is of course a matter for the Assistant Judicial Greffier's discretion.

Authorities

Toorani v Toorani [2019] JRC 023. 

Sinel v Hennessy & Ors [2019] JRC 096. 

Leeds United Football Club Limited v Admatch [2011] JRC 016A.