Before : |
M. J. Thompson, Esq., Commissioner, sitting alone |
Between |
Jacob Halabi |
Plaintiff |
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(1) Claire Louise Farrow |
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(2) Claire Louise Machin |
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(3) Angela May Morris |
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(4) Hugh Alan Le Vavasseur Dit Durell (NYS) |
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(5) Lewis James Lees Buckley |
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(6) Kelly Rhondda Watson |
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(7) Suntera Trustees (Jersey) Limited (formerly Helm Trust Company and SMP Helm Trust Company Limited) |
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Advocate L. A. Ingram for the Plaintiff
Advocate M. J. Davies for the Defendants.
judgment
the commissioner:
1. This judgment contains my reasons in relation to an appeal brought by the Defendants against two judgments of Master Cadin dated 29 May 2024 and 30 May 2024.
2. The judgments related to an Unless Order dated 29 April 2024 which provided:
"(1) The Plaintiff shall pay to the Defendants the sum of £45,163.94 as ordered by the Court in a file and parties judgment dated 13 February 2024;
The Plaintiff shall pay the Defendants' costs of the summonses dated 16 February 2024 and 4 March 2024 and the agreed sum of £16,000;
If the Plaintiff fails to comply with either or both orders of (1) and (2) above by 3pm on 23 May 2024:
The Defendants shall inform the Court of the said default by affidavit; and
The Plaintiff's Order of Justice in reply shall be struck out automatically and in their entirety without any further hearing."
3. The Defendants summarised the Master's judgment of 29 May 2024 granting the Unless Order in their skeleton argument in this way:
"(a) the Unless Act was ambiguous as to what constituted compliance or default by the Plaintiff (in particular, ambiguity about what steps were required by the Plaintiff to make payment);
(b) any potential ambiguity ought to be construed in favour of the Plaintiff on account of the draconian nature of the Unless Act ((a) to (b) together the Ambiguity Finding);
(c) it was wrong as a matter of principle to make a party liable for the acts of unrelated third parties such as an intermediate clearing bank or the receiving party's bank;
(d) the Unless Act was designed to ensure the Plaintiff complied with his obligation to pay costs previously order, and the only act the Plaintiff could control in that context was the giving of an instruction to make payment, and not the completion of that payment;
(e) the terms of the Unless Act did not require the Plaintiff to ensure receipt of funds by the deadline;
(f) the Plaintiff had complied with the obligation in (d) notwithstanding that the monies were received after the deadline ((c) to (f) together the Payment Finding); and
(g) the consequential orders in the Unless Act were therefore not invoked (the Breach Finding)."
4. In his second judgment of 30 May, the Master held that firstly he was functus officio in respect of the Breach Finding, but even if he was not, the time by which payment had to be made was ambiguous and therefore had to be construed in favour of the Plaintiff.
5. In relation to this appeal, both the Defendants as appellants and the Plaintiff as respondents filed extensive skeleton arguments. It is also right to say that Advocate Ingram who appeared for the Plaintiff was only re-instructed after the Master's judgments.
6. In relation to these arguments, I indicated prior to the hearing taking place that I wished to be addressed on the Court's power to grant relief from sanction. At the hearing I explained that if the Defendants were right in their grounds of appeal, I considered that the Court still possessed a discretion to grant relief from sanction if I concluded that the Plaintiff was in breach of the Unless Order.
7. Advocate Davies properly accepted that I did possess such a discretion and both he and Advocate Ingram were content to proceed on the assumption that the Plaintiff was in breach of the Unless Order but that it was not necessary to consider that matter if I concluded that I possessed a discretion, and that discretion should be exercised in favour of the Plaintiff. The hearing proceeded on this basis.
8. Following the hearing of submissions, I was satisfied that I did possess a discretion, and it was appropriate to exercise that discretion in favour of the Plaintiff. This judgment sets out my reasons for reaching that conclusion. While I have not therefore determined whether or not I agree with Master Cadin's judgments, I have also made certain observations on an obiter basis.
9. It is not necessary for the purposes of this judgment to set out the detailed allegations made by the Plaintiff, save to note that the claim concerns an alleged sale at under value of a property held through various companies by Sijar Trust Company Limited as Trustee of Ironzar VI Trust ("the Trust"). The Plaintiff is the assignee of Sijar's rights to pursue its former directors for alleged breaches of fiduciary duty. The First to Sixth Defendants are the former directors of Sijar. The Seventh Defendant is sued on the basis of dishonest assistance. The claim is disputed.
10. What led to the Unless Order in relation to costs concerned various applications made by the Defendants seeking requests for information, leading to a hearing on 13 November 2023 and a judgment issued by Master Cadin reported at [2023] JRC 251.
11. A costs order was then made on 10 January 2024 with the Master ordering the Plaintiff to meet the Defendant's costs of and occasioned by the summons heard on 13 November 2023, partly on the standard basis and partly on the indemnity basis.
12. Costs were then summarily assessed by the learned Master by a file and parties judgment dated 13 February 2024 in the sum of £45,163.94.
13. The Defendants issued a demand for payment on 15 February 2024 which was ignored.
14. This led to an application for an Unless Order which was resolved by agreement resulting in an order dated 13 March 2024 when the Plaintiff agreed to pay the costs summarily assessed by the Master, plus the costs of the application for an Unless summons in the agreed amount of £16,000. The Plaintiff agreed to pay these sums by 28 March 2024 but failed to do so.
15. Notwithstanding further accommodations given by the Defendants to the Plaintiff, payment was not made leading to the Defendants issuing a further summons dated 15 April 2024 seeking an Unless Order, which was granted at a hearing on 29 April 2024. This is the order set out at paragraph 2 above. Payment therefore had to be made by 3pm on 23 May 2024. However, payment had not been received by the Defendants' advocates, Ogier. Ogier therefore contended that the Plaintiff was in default and sought an order that the Order of Justice and Reply should be struck out without further hearing.
16. On 23 May 2024 at 16.29, the Plaintiff's father, Simon Halabi, emailed the Court stating that payment of £61,163.94 had been made by his bankers [Redacted] and that it was wrong and unethical for the Order of Justice and Reply to be struck out.
17. On 24 May 2024, the Court emailed Simon Halabi and requested that the Plaintiff file an affidavit evidencing that payment was made. No such affidavit was filed at that stage. The only affidavit filed by the Plaintiff was filed on 8 October 2024. That affidavit exhibited a letter from [Redacted] to Simon Halabi which stated as follows:
"On May 21st 2024 at 3.39 p.m., we received an email from your electronic address ([Redacted]).
This email included, among other documents, a letter signed by yourself. This letter contained several payment instructions, including one of GBP 61,163.94 in favour of "Ogier Client [Redacted] *.
Such payment was executed on May 23rd 2024, with value date May 24th 2024, as per debit advice enclosed."
18. The attachment was a transaction debit advice dated 23 May 2024 which stated, "As per your instructions of 23.05.2024" and then referred to the transfer to Ogier (underlining added).
19. The Defendants filed two affidavits from Charles Dessain, an associate in the Dispute and Resolution Department of Ogier in support of the Defendants' appeal.
20. Included in the exhibits to Mr Dessain's second affidavit was a schedule showing that [Redacted] had transferred monies on 23 May 2024 at 14:06 GMT. These monies had been received by an intermediary bank, Barclays the same day and then transferred on 24 May 2024 at 06:11 GMT. They had then been received by HSBC at 06:41 GMT. The funds are currently held in the client account of Ogier but have not been accepted as payment.
21. Mr Davies, during his submissions, was critical of the inconsistencies between [Redacted] letter of 18 September and the attached transaction advice. The former referred to an email sent on 21 May 2024; the latter referred to instructions of 23 May. He was also critical of the Plaintiff for not making disclosure of the email and the letter of instruction. It was certainly not clear to the Defendants in light of previous promises that had been broken why payment had only been made after 3pm Jersey time by [Redacted], therefore placing the Plaintiff in breach of the order on the Defendants' case.
22. Accordingly, I adjourned the hearing to see if both the email of 21 May and the payment instructions could be obtained. If they were not obtained, I indicated that this would be a relevant factor to any exercise of discretion.
23. The email was duly produced which was dated 21 May and contained four enclosures, one of which was the transfer letter, i.e. a letter of instructions. The email was from Simon Halabi to his banker at [Redacted], ("D"). D was the author of the letter attached to the Plaintiff's affidavit.
24. The transfer letter was also dated 21 May and was sent from Simon Halabi to D asking for twenty-nine transfers to take place that day from his sterling account at [Redacted]. Instruction number twenty-one was for a transfer of the monies due under the Unless Order and was an instruction to make a transfer to Ogier's client account.
25. In light of the production of this correspondence, I was satisfied that the failure to make payment by 3pm Jersey time was not the fault of the Plaintiff or his father. While Mr Davies suggested that the Plaintiff should have checked whether payment had been made, in my judgment, given he is only twenty-two, he was entitled to rely on his father stating that he would make payment. Furthermore, his father gave the instructions to do so on 21 May and instructed payment to be made that day.
26. What was not clear was why [Redacted] did not make payment on that day as instructed, but only made payment on 23 May after 3pm Jersey time.
27. It also appeared from the evidence that the monies transferred were held by Barclays in London for some fourteen hours before they were transferred to Ogier in Jersey. Again, it was not clear why this happened but there was no evidence that this was due to any steps taken by the Plaintiff or Simon Halabi on his behalf.
28. In setting out this chronology, I proceeded on the assumption that the reference to 3pm in the order of 29 April should be construed as 3pm Jersey time. Generally, where a time appears in an Act of Court issued by the Jersey Court that, unless the order clearly states otherwise, should be construed as a reference to a time limit in Jersey and not in any other country. While I did not determine the point, I am generally of the view that an Act of Court that refers to a time limit is a reference to the time operating in Jersey and not to any other jurisdiction.
29. While Advocate Davies accepted that there was a discretion to be exercised, he contended that the discretion was as set out in Leeds v Admatch [2008] JRC 086.
30. In that judgment, Birt, Deputy Bailiff (as he then was), at paragraph 17, set out the principles in the Supreme Court Practice (White Book) which Master Wheeler had cited as follows:
"The Master reminded himself of the principles as set out in the Supreme Court Practice (White Book) at paras 3/5/2 - 3/5/4, 3/5/9 and 3/5/10. He quoted a number of extracts but we would refer to the following extract from 3/5/10:-
"The court observed that each case had to be considered on its own facts but the underlying approach might be encapsulated by the following:
1. An unless order was an order of last resort, not made unless there was a history of failure to comply with other orders. It was the party's last chance to put its case in order.
2. Because it was the last chance, a failure to comply would ordinarily result in the sanction being imposed.
3. The sanction was a necessary forensic weapon which broader interests of the administration of justice required to be deployed unless the most compelling arguments were advanced to exonerate the failure."
31. He then stated the following at paragraphs 33 and 34:
"33. The applicable principles in relation to 'unless' Orders are correctly stated in the passage from the White Book quoted at para 17 above. In particular, an 'unless' Order is a party's last chance to put its case in order and failure to comply with such an order will ordinarily result in the sanction referred to in the Order being imposed.
34. However, there is a discretion to extend time retrospectively which, however rarely, may in the particular circumstances of the case be exercised where the Court is satisfied that the failure to comply with the 'unless' Order was not intentional and contumelious."
32. Paragraph 35 then contains how he applied the exercise of discretion in that case.
33. Advocate Ingram contended that matters have moved on since Leeds v Admatch as a result of the introduction of the overriding objective.
34. He referred me to the latest decision on this topic, namely Waterfront v CineUK Limited [2022] JRC 260, where at paragraph 25, MacRae, Deputy Bailiff, referred to the decision of Sheyko Consolidated Minerals Limited [2021] JRC 267 which approved the approach I had set out in Newman v De Lima [2018] JRC 155 as Master. In particular, the Court emphasised that where a serious or significant breach had occurred, the approach in Jersey was different as I had held at paragraph 47 of Newman v De Lima as follows:
"47. In my judgment in this jurisdiction, the discretion is a more general one. This discretion still requires me to consider whether the case can be dealt with justly and at proportionate cost and any relevant factors listed in Rule1/6. However, I consider that I am also required to look at the case as a whole and the nature of the proceedings in particular, what is in issue where some form of strike out of a claim is contemplated. In cases involving a failure to issue a summons for directions (albeit pre-dating the overriding objective), the Royal Court has noted that the most severe sanction of striking out a plaintiff's claim should not be applied if there are other sanctions which could be applied which would enable justice to be done between the parties - see for example Viera v Kordas [2014] JRC 042 at paragraph 19 and Mayhew v Bois Bois [2016] JRC 024 at paragraphs 8 and 9. Whether the failure is to issue a summons for directions required by the Rules or a failure to comply with a particular order, I consider that the same approach should be taken to imposition of sanction which has the effect of striking out a claim or counterclaim or an answer, thus depriving a party of their day in Court."
35. This led to the following observations at paragraph 49 which approach was endorsed in Sheyko:
"49. I have referred to these different possibilities available to the Court because they are all illustrative of the more general discretion available to the Court where a party has not complied with a Court order. In reaching this view, it should not be forgotten that procedure is a means to an end namely a trial or settlement and breaches should be kept in that context. The key issue is therefore the effect of any non-compliance and whether or not a fair trial can take place after a breach. I accept I have to also take into account, if it is right to impose a sanction for non- compliance, whether that non-compliance was either deliberate or there is no justification for it. In every case there will always come a point where the conduct of a party in ignoring Court orders will lead to the ultimate sanction of a case being dismissed even if a trial could still take place. This judgment should not therefore be taken as any indication that non-compliance of any Rules and Practice Directions is acceptable, will be tolerated, or will not, in appropriate cases lead to the ultimate penalty of a claim or answer being struck out."
36. In my judgment, the starting point for breach of an unless Order is still Leeds v Admatch and the approach set out at paragraphs 17, 33 and 34. I consider that the remarks of Sir Michael Birt apply with equal force today and have not been qualified by Newman v De Lima. Newman concerns what sanctions to impose where an order has been breached. While the extracts I have quoted recognise the significance of a party being deprived of its day in court, I consider that Sir Michael was well aware of that principle. He recognised that a party facing an unless order had already been given a final chance to put its house in order. Even then he recognised the power to grant relief from sanction where a breach of an unless order was not intentional or contumelious. While that could be a breach due to the acts of a third party, paragraph 34 is wider than that as is the Supreme court extract. As the latter observes a "failure to comply with such an order will ordinarily result in the sanction referred to in the Order being imposed (emphasis added).
37. In Powell v Chambers, which was approved in Sheyko, the relief from sanction was granted because notwithstanding that an unless order had been made, on the particular facts of that case, I concluded that it was a disproportionate sanction for the breaches that had occurred at that stage. The Court's discretion may therefore go beyond unintentional breaches but may also extend to breaches where to give effect to an unless order would clearly be unfair and it would be wrong to deprive a party in breach of an unless order of a trial. I wish to stress however that such a case would be exceedingly rare and that deliberate failures or breaches where there is no justification are highly likely to lead to the unless order taking effect. This conclusion does not detract from the approach in Newman. By the time a court is reviewing a breach of an unless order, the party in default has already been given at least one, if not more than one, opportunity to comply. That party's right to a trial has therefore already been recognised and respected. Something more is therefore required to avoid the effects of an unless order taking effect.
38. To the extent that Master Cadin suggested at paragraph 6 of his second judgment dated 30 May 2024 that he had no further discretion, while I agree with him that the more draconian the order the greater the scrutiny to be applied to the condition, I do not agree that he does not possess any further discretion where a breach of an Unless Order has occurred. In my judgment, Leeds v Admatch always gives a discretion to retrospectively excuse a breach, albeit this will be very rarely exercised for the reasons I have given.
39. In this case, I was satisfied that the fault was not that of the Plaintiff or his father. The Plaintiff was entitled to rely on his farther saying he had made payment. His father had also given instructions two days beforehand and had no reason to expect that the instruction would not be acted upon. It was right therefore to grant relief from sanction and excuse the breach of the unless order on this occasion.
40. It is also right however to observe that neither the Plaintiff nor his father helped themselves by not responding earlier and making payment earlier to comply with orders. Had they done so, neither the Unless Order nor this application would have come about. In addition, it should not have taken a court hearing for the email of 21 May and the instruction letter to be produced. These documents should have been produced even on a redacted basis prior to the Court hearing itself.
41. I also stated at the conclusion of the hearing that the Plaintiff and to the extent he was being supported by his father were very much in the last chance saloon and that I indicated that Master Cadin should in future set strict timetables, and that if those timetables were not met, he should impose appropriate sanctions. How Master Cadin approaches that is of course a matter for him and the discretion vested in him as Jersey's civil procedure judge. However, the Plaintiff and his father should be aware that the sort of conduct that has occurred to date that led to the Unless Order will not be tolerated in the future and that should there be further breaches, in particular of any sanctions, relief from sanction, may well be refused.
42. Finally, in relation to Master Cadin's judgment, I had reservations about the conclusion of the Master that ambiguity was to be construed in favour of the Plaintiff as this did not appear to be consistent with the approach set out in Trilogy Management v YT [2012] (2) JLR Note 19. In particular, the contra proferentem rule only appears to apply in certain types of cases as discussed in Alwitry v States Employment Board [2019] JRC 014 at paragraph 286. Master Cadin did not however have the benefit of these authorities and the submissions of Advocate Davies before him on this point.
Authorities
Halabi v Farrow and Ors [2023] JRC 251.
Leeds v Admatch [2008] JRC 086.
Waterfront v CineUK Limited [2022] JRC 260.
Sheyko Consolidated Minerals Limited [2021] JRC 267.
Newman v De Lima [2018] JRC 155.
Trilogy Management v YT [2012] (2) JLR Note 19.