Jersey Unreported Judgments

Costs

[2023]JRC004

Royal Court

(Samedi)

10 January 2023

Advocate I. C. Jones for the Plaintiffs.

Advocate A. D. Hoy for the Defendant.

judgment

the COMMISSIONER:

1.         Judgment was handed down on 8 April 2022 - at Dix and Ors v Sigma Group Limited [2022] JRC 087 (the "quantum judgment") - in respect of the quantum of damages and / or just and equitable compensation payable by the Defendant to the Plaintiffs following a hearing in March 2022 (the "quantum hearing").  At paragraph 35 of that judgment, it was indicated that the Court would deal separately with the costs of the quantum hearing, if that should be necessary.

2.         It has proved necessary as the parties were unable to agree on the question of costs.  However, they did agree that I should resolve the arguments on the papers, and I have received Skeleton Arguments filed by both the Plaintiffs and the Defendant, together with a detailed bill of costs.

3.         The Plaintiffs ask the Court to make the following orders:

(i)       That the Defendant pay the Plaintiffs their reasonable costs of and incidental to the quantum hearing on the standard basis to be summarily assessed / taxed;

(ii)      That the costs incurred by the Plaintiffs in a winding up application in respect of the Defendant, which had been agreed to be paid by the Defendant, should be summarily assessed; and

(iii)     That the First Plaintiff's outstanding costs arising from the original trial of the matter be summarily assessed (the 'trial costs').

4.         The Plaintiffs' Skeleton Argument was filed on 21 October 2022.  On behalf of the Defendant, Advocate Hoy filed his written submissions on 4 November 2022; however, he did not make any submissions in relation to the claims for a summary assessment both of the costs of the winding up application, and of the trial costs.  His submission in relation to the quantum hearing was that the Plaintiffs should be limited to 50% of their standard costs to be taxed if not agreed, or alternatively such other percentage reduction as the Court considered just.  The basis for this was that in principle there should be no order for costs for reasons I will set out below, but that, because the Plaintiffs succeeded in obtaining interest on the original award, then to that extent, some costs should follow the event.

5.         The reasons contended for by the Defendant as to why in principle there should be no order for costs were these:-

(i)       The Plaintiffs incurred the costs of two counsel from the same firm.  This is said not to be a taxation matter arising from duplication or unreasonable time incurred, but a simple matter of principle in relation to the quantum hearing;

(ii)      The judgment in 2021 (the "trial judgment") anticipated that Mr Holmes would give a supplementary report at the quantum hearing and a further set of calculations based upon the cost in 2008 of buying deferred annuity contracts for the remaining employees in the scheme.  However, the report subsequently filed by Mr Holmes did not deal with what he was invited to consider in the trial judgment and, to that extent, costs were wasted.  It is further said that the Defendant's arguments at the quantum hearing against the Second and Third Plaintiffs, and in particular the Second Plaintiff, that there had been acquiescence, concurrence and delay were claims which any trustee would be expected to make following the evidence given by the Second Plaintiff at the trial hearing.  The Court in fact found that the delay of the Second and Third Plaintiffs in bringing proceedings until after the trial judgment limited their entitlement to interest, albeit that did not amount to acquiescence, but the finding in question, it was contended by the Defendant, justified the submissions made about delay. 

Two advocates

6.         Advocate Boothman acted for the First Plaintiff at the trial hearing, and he also appeared for the First Plaintiff at the quantum hearing.  The Plaintiffs' Skeleton Argument on costs was however prepared on behalf of all three plaintiffs by Advocate Jones.  The latter was instructed by the Second and Third Plaintiffs when they were given the opportunity, following the trial hearing, of joining the proceedings for the purposes of the arguments on quantum.  Advocate Hoy, in his written submissions, made it plain that the Defendant objected to paying the costs of two counsel from the same firm.  The contention was that the law firm Preston Legal, where both Advocates Boothman and Jones work, must have taken the view that there was no conflict of interest in acting for all the Plaintiffs.  That being so, it is contended it was then unnecessary to appoint Advocate Jones to act in addition to Advocate Boothman, and accordingly the Defendant should not be liable for the costs of the two advocates.  The fact of two advocates representing the plaintiffs meant that it was inevitable that there was some duplication, because two advocates appeared in Court.

7.         The underlying assumption in those submissions is that there cannot have been any conflict of interest at the quantum hearing between the interests of the First Plaintiff on the one hand and the Second and Third Plaintiffs on the other.  Interestingly, the way in which the written submissions from Advocate Hoy have been formulated demonstrates a consistent implication that if the Second and Third Plaintiffs had chosen to instruct an advocate from a different firm, there would not have been any objection. It would seem to follow that a costs order made in favour of the Plaintiffs would naturally involve the costs incurred by the First Plaintiff with Advocate Boothman and the costs incurred by the Second and Third Plaintiffs with an advocate from another firm.

8.         In my judgment, that implication from the written submissions underlines the weakness in the objection.  The real question is whether there was any potential conflict between the Plaintiffs which ought to have resulted in different advocates representing them at the quantum hearing.

9.         At the time of the trial hearing, the First Plaintiff was the only plaintiff in the litigation.  He was successful in his assertions that the Defendant, qua trustee, had been in breach of trust by removing what has been described as the 'surplus' paid to the Defendant by the Norwich Union Life Insurance Society and taking those monies to itself qua employer.  The rules of the scheme meant that there was a cap on any potential claims that might be made against the Defendant, but it was clear that the Second and Third Plaintiffs could share with the First Plaintiff in the surplus.  What was unclear at the time of the trial hearing was whether the Second and Third Plaintiffs would in fact choose to make any claim - there were costs to be incurred if they did so and, with those costs, potential risks as any litigant has to face.  At the time of the trial hearing, the Court had no information as to the total claims which might be brought by the Second and Third Plaintiffs, and it could not make a decision on the overall value of the First Plaintiff's claim in the absence of any certainty in respect of the Second and Third Plaintiffs' claims.  The total of the Plaintiffs' claims might be such as took the amount claimed against the Defendant above the restricted liability which it had under the rules of the scheme. In that event, there would be no balance in the surplus available for return to the Defendant qua employer.  The uncertainty was compounded by the fact that if the Second and / or the Third Plaintiffs chose not to make any claim to their share of the surplus, then it might have been possible for the First Plaintiff to be fully paid out with his claims, and indeed then for there to have been a small amount left over for the Defendant to take qua employer.  It was thus theoretically in the interests of the First Plaintiff to associate himself with any arguments which the Defendant might raise which would have the effect of excluding the Second and / or Third Plaintiffs from sharing in the surplus.

10.       In my judgment it was therefore obvious, following the trial hearing, that there was a potential conflict between the First Plaintiff and the Second and / or Third Plaintiffs.  It thus was entirely legitimate for the First Plaintiff to have advice which was independent of the advice given to the Second and Third Plaintiffs.  I reject the view that, because Preston Legal acted for all the Plaintiffs, it followed that there was no potential conflict. 

11.       This conclusion does not carry with it any criticism of Preston Legal in so doing.  It was open to the Plaintiffs to agree between themselves what information could or could not be shared between each other and establish such joint litigation advice privilege as they wished to agree.  In fact, the First and Second Plaintiffs agreed, as did the Defendant, very early on that the Third Plaintiff was entitled to share in the surplus.

12.       When it came to the quantum hearing, it was apparent that the First Defendant did not criticise the Second Defendant's claim to share in the surplus either; notwithstanding that in fact Advocate Jones, on behalf of the Second Plaintiff, contended before me that the First Plaintiff was not able to assert that the Second Plaintiff was not entitled to his share - in submissions which were not in fact successful,  Advocate Jones argued that the First Plaintiff and the Defendant were in the same position in the sense that they were both bound by the decision that the Defendant was required to replenish the trust fund in which all the beneficiaries were entitled to share.

13.       In my judgment, there was a potential conflict which justified the Second and Third Plaintiffs having different advice from that of the First Plaintiff.  There was, however, no reason in principle why the Plaintiffs should not agree a litigation strategy together, with an information sharing agreement enabling them to claim joint advice privilege to the extent that matters were not in dispute as between the three of them.  There is no evidence that such an agreement was not made, and my understanding of the submissions of Advocate Boothman is that that there was. Indeed, the contentions from the Plaintiffs are that there was a saving in costs because much information was available to Advocate Jones in relation to the quantum claim as a result of Advocate Boothman acting for the First Plaintiff.

14.       I therefore reject the objections of the Defendant to the claim for costs incurred by two counsel.  In doing so I add that my notes of the quantum hearing show that Advocate Boothman and Advocate Jones did not in fact cover the same ground.

The cost of deferred annuity contracts

15.       The written submissions of Advocate Hoy focus on the fact that Mr Holmes, the expert instructed by the plaintiffs, did not carry out the exercise which the Court had envisaged in the trial judgment, but instead made a calculation of the total reinstatement cost to include missed pension payments in the past with interest and the cost to ensure future pension payments.  As set out in Advocate Hoy's written submissions, the Court gave a judgment on 24 December 2021 following a directions hearing in which it was said that the Court needed to be addressed at the final quantum hearing on why Mr Holmes' approach was the appropriate one to take.  In fact, although the Court did not follow the evidence of Mr Holmes in his calculations as to the appropriate amount of equitable compensation, because that would have taken the total payable by the Defendant for the breach of trust above the cap on the Defendant's liability under the rules of the scheme, the calculations of Mr Holmes were useful in settling the apportionment of the surplus between the First, Second and Third Plaintiffs, if the Second Plaintiff were not barred from establishing his claim by acquiescence, concurrence and delay.

Acquiescence and delay

16.       The Court found that the Second Plaintiff was not so barred, and he was therefore successful in defending himself against the assertions made by the Defendant in that respect. That was really the main issue argued at the quantum hearing. It is said by Advocate Hoy that the objections taken in this respect would be taken by any trustee and therefore the Defendant should not be penalised in costs for doing so. I do not accept that. The Defendant took the objections in my view with the intention of sharing in some part of the surplus, if successful, as employer. To the extent the Defendant had been a trustee, the only beneficiary who might have been able to benefit from a successful application by the trustee was the First Plaintiff, and he could have but did not take the point.  Accordingly, there seems to me to be no reason why costs should not follow the event, and the Defendant pay the costs of that hearing.  These should be assessed on the standard basis, because there is nothing which takes this part of the case into the territory where an indemnity costs order might be appropriate.

17.       Accordingly, I order the Defendant to pay the costs of each of the Plaintiffs of and incidental to the quantum hearing on the standard basis to be taxed if not agreed.

Summary Assessments

18.       It is contended by Advocate Jones that there should be a summary assessment of costs, not just in relation to the quantum hearing but also in relation to the costs of the winding up application and the costs of the trial hearing.  I now deal with those contentions.

19.       As to the trial hearing, my understanding from the Greffier Substitute is that the claims for costs have been submitted, but have not yet been taxed.  I am told that there is some further clarification or information which the Greffier Substitute requires to receive before he can proceed with that taxation.  I am told that the detail of what is needed has been made known to the parties.  In those circumstances I am not willing to exercise my jurisdiction to make a summary assessment of the trial costs, which I consider ought to be taxed in the usual way.  The First Plaintiff has already received an interim payment on account of costs and disbursements in respect of the trial hearing in the sum of £42,500. At that time, no detailed bill was available. He has since submitted a total bill for taxation in the sum of £99,647.  In my judgment, the Greffier should proceed with taxation in the usual way, but I accept that there should be a further interim payment on account.  I direct the Defendant to pay the sum of £18,627.50 (reflecting a further sum on account of fees plus the disbursements in the total bill claimed) within the next twenty eight days. 

20.       I now turn to the claim for a summary assessment in relation to the winding up costs.  These costs were allegedly incurred because, in so far as the Court ordered interest payments, the Defendant failed to make them, and forced the Plaintiffs to issue enforcement proceedings, incurring the associated costs of so doing.  The Defendant has agreed to pay the reasonable costs of the process.  I am asked to make a summary assessment of those costs.  The total claimed is £11,916.75, but having reviewed the draft bills of costs, I am simply not clear as to how much of this sum reflects only those winding up application costs.

21.       The Plaintiffs claim that 90% of those costs in the sum of £9,917.55 as a summary assessment.  In effect, it is a claim for indemnity costs, because it is asserted that the Plaintiffs should be permitted to recover 100% of the costs that they have incurred bearing in mind an agreed discounted hourly rate of £300 per hour for both of Advocates Boothman and Jones.  The claim for indemnity costs in this respect is made upon the basis that the Plaintiffs should never have been put into a situation where they had to take Court action to enforce a court order for payment of interest. 

22.       I accept that there is a difference between a debt which is clearly due but is not the subject of a court order for payment, and a debt which is due as a result of a court order for payment.  Whilst it may be that this would sometimes justify an order for indemnity costs, the fact is that the consent order dated 15 September 2022 shows that the parties have agreed that the costs of and incidental to the application are to be paid by the Defendant on the standard basis, to be taxed if not agreed.  In those circumstances, I do not consider that it is open to me to accept that I should make a summary assessment of the costs, nor do I accept the contention that the Plaintiffs should recover 100% of the costs they have been forced to incur regardless of the rules which apply on a taxation on a standard basis.

23.       I am however prepared to make an order that there should be a payment on account of the costs of the winding up application.  I assess a proper payment on account, on a rough and ready basis, at £5,000, which I order the Defendant to pay to the Plaintiffs within the next twenty eight days.

24.       The Plaintiffs request me to make a summary assessment of the costs of the quantum hearing on the standard basis.  I am not willing to do this, not least because I am unclear as to the extent of the claim for those costs.  I am however willing to make an order for an interim payment on account of costs.  Having regard to the draft bills of costs prepared, and taking into account that the amounts ordered are on a rough and ready basis, I order that the Defendant pay to the First Plaintiff the sum of £12,500 on account plus the disbursements claimed of £1,445, and the Defendant to pay the Second Plaintiff an amount on account of costs in the sum of £12,500 plus disbursements of £1,445.  I have not included in the payment on account to the Second Defendant the professional fees of the leading counsel instructed in the matter: this is not because I do not necessarily regard those costs as having been properly incurred, but I simply am not clear what they represent, and that is a matter which can be decided on taxation.

25.       In relation to the payment on account of the costs of the quantum hearing, I direct that those should be paid by the Defendant to the Plaintiffs respectively within the course of the next twenty eight days.

26.       I have noted the assertion in the Plaintiffs' Skeleton Argument that the Plaintiffs wish to draw a line under the matter, hence their application for summary assessments.  It is said they do not have limitless resources and have been forced to fight the litigation which has impacted on their health and that of their immediate family members.  I have sympathy with those submissions, albeit I also would be minded to accept that the Defendant directors have almost certainly suffered stress from this litigation as well.  It is all the more important that the Greffier Substitute proceeds with outstanding taxation matters as quickly as possible.

27.       What is left is the costs of the costs application. The Plaintiffs shall have two thirds of their costs of the argument over the costs of the quantum hearing and summary assessments given that they have not been wholly successful in their application.  I invite broad detail of those costs, calculated on the standard basis, within twenty-one days of this costs judgment being handed down and I shall then make a summary assessment of those costs which shall be paid by the Defendant to the Plaintiffs within twenty eight days thereafter.

Postscript

28.       The draft judgment in the terms set out above was circulated to counsel in the usual way for comment as to factual and typographical errors. No comments were volunteered by Advocate Jones, but Advocate Hoy submitted there was a factual error in that Rule 6.1 of the Law Society Code of Conduct rules, which deals with conflicts of interest, prohibited Preston Legal from acting for all the Plaintiffs and therefore the claim for costs would be in respect of fees not properly incurred. Accordingly, he invites me not to make any order for costs, alternatively not to allow more than one set of costs.

29.       Whether or not that falls within the description of "factual or typographical error", in my judgment this argument fails. The Jersey Law Society (the "Society") adopted its Code of Conduct to ensure high standards for the profession. If there has been a breach of those standards, then anyone with a proper interest in the matter is able to complain to the Society and request that the complaint be dealt with in accordance with the Society's disciplinary procedures. I do not comment on whether the Defendant would have a proper interest for that purpose.

30.       I do not consider that the Society was making a rule which overrides the court's discretion in costs matters. Indeed, it would be an unlikely result that the party on the wrong end of a costs order should escape its otherwise proper liability on the facts of a particular case simply because of a  rule made in the general interests of the profession or its clients. Here, there has been no complaint from any of the Plaintiffs about the joint representation for the purposes of the costs application or the separate representation within the same firm for the purposes of the quantum argument.

31.       Nor do I think it is for me to make any ruling on the language or the effect of Rule 6 in the present case. The Society is not a party, nor is it in anyone's interests that costs be driven up by making it a party for this limited purpose. Indeed, there has been no disciplinary complaint, as far as I am aware, no disciplinary investigation, and no disciplinary finding or recommendation.

32.       I was conscious of the Society's Code of Conduct because they were referred to in Advocate Hoy's written submissions. Without intending to make any statement one way or another for future cases, I did not and do not consider them relevant to the exercise of my discretion in the particular circumstances of this case.

33.       For these reasons my decision on costs remains as set out in paragraphs 1 to 27 above.

Authorities

Dix and Ors v Sigma Group Limited [2022] JRC 087.