Jersey Unreported Judgments

Costs (on the papers).

[2022]JRC053

Royal Court

(Samedi)

28 February 2022

Before     :

T. J. Le Cocq., Bailiff, sitting alone.

 

Advocate H. Sharp Q. C. for Hunters Investments Limited

Advocate J. D. Kelleher for the Second to Fifth Defendants.

(on the papers)

judgment

the bailiff:

Introduction

1.        I have before me a number of applications in connection with costs to be decided on the papers.  The applications are as follows:

(i)        The application by the First Defendant and the Sanne Defendants for an extension of time in which to file their answers;

(ii)       An appeal by the Sanne Defendants to this Court against a decision of the Judicial Greffier on the matter of summary judgment;

(iii)      HIL's unsuccessful application for a freezing order. 

The extension of time application

2.        The First Defendant argues that having succeeded in obtaining an extension of time then the costs in this matter should follow the event.  A hearing had been required and it is something the Plaintiff should have agreed in advance given the complexity of the matter, the seriousness of, and length of the pleadings. 

3.        The Sanne Defendants also seek an order for their costs on the standard basis.  Again reference is made to the nature of the case and the Sanne Defendants point out, as indeed this Court referred to an earlier occasion, that in the context of the Plaintiff's application to remove Carey Olsen and the delay that would produce there was no prejudice suffered by HIL in agreeing to a reasonable extension. 

4.        HIL opposes these applications for costs and says that the costs should be in the cause.  It points out that the application for an extension of time were issued very late in the day and that it was purely by chance that the Court was available to deal with it promptly.  The argument about the extension of time was in no way a major argument and was fitted into dates allocated for another hearing in the same case.  HIL further points out that the extension of time had the effect in this case of delaying any application for summary judgment.  HIL was entitled to see significant progress in the case and the position that it had taken was reasonable.  Accordingly, so it argues, costs should be in the cause. 

5.        Whilst it is true that there was no prejudice suffered by HIL by reason of any extension of time because of the inevitable delay caused by its application to remove Carey Olsen as advocates for the Sanne Defendants, nonetheless this was in effect a case management exercise and HIL's position although ultimately unsuccessful, was not unreasonable. 

6.        In my judgment the appropriate order is costs in the cause and I so order. 

Appeal from the Judicial Greffier

7.        The Judicial Greffier, as was this Court on appeal, invited to introduce a mechanism whereby any application for summary judgment should undergo a preliminary screening process before it was permitted.  The Judicial Greffier declined to do this and that view was maintained by this Court on appeal.

8.        Accordingly, quite clearly, the Sanne Defendants, whose application it was, were the losing party at both stages of the process. 

9.        The Sanne Defendants accept, certainly in connection with the appeal to this Court, as losing party, costs should follow the event and they should have to pay HIL's costs on a standard basis. 

10.      HIL for its part, argues that those costs should be paid on the indemnity basis.

11.      HIL puts before me the case of Hong Kong Foods Limited v Robin Hood Curry Limited [2017] JRC 116 where Birt, Commissioner, says this:

"9.   The principles in relation to indemnity costs are well established.  A convenient summary is to be found in the decision of the Court of Appeal in C v P-S [2010] JLR 645 where Beloff JA said this at paragraph 11:-

"..... We do not accept that it is appropriate to import such a restrictive approach on the discretion of the court to make an award of costs on the indemnity basis.  The question will always be - is there something in the conduct of the action by one of the parties or the circumstances of the case which takes the case out of the norm in a way which justifies an order for indemnity costs, recognising there will usually be some reasonableness? We do not consider that there is a need for the claiming party to show of lack of moral probity or conduct deserving of moral condemnation, or malicious vexatious conduct."

10.   The Court of Appeal specifically approved the observation of Page, Commissioner in Pell Frischmann Engineering Limited v Bow Valley Iran Limited [2007] JLR 479 where the Commissioner said at paragraph 25:-

'25   At the risk of over simplifying matters, the result of these English authorities may be said to be this:  that the circumstances in which an award of indemnity costs may, as a matter of discretion, be ordered are less restrictive than they used to be; there must, ex hypothesi, still be something to take the case out of the ordinary, but the range of potentially relevant considerations ..... is considerable and need not involve any finding of a lack of moral probity; the test, is a word, is unreasonableness, the purpose of such an award is to achieve a fairer result for the party in whose favour it is made than would be the case if he were only able to recover costs on the standard basis; in the end, it is a question of what would be fair and reasonable in all the circumstances'."

12.      I was also referred to case law in which the English High Court had indicated that the pursuit of a weak claim will not usually of its own justify an order for indemnity costs provided that the claim was arguable.  The pursuit of a hopeless claim, or claim which the party pursuing it should have realised was hopeless, may well lead to an order for indemnity costs. 

13.      HIL points to the background of this matter and, in particular, that the Answers of the Sanne Defendants, after delay, was eventually filed on 9^th September 2021 and whilst running to over 330 pages does not plead to certain points which the Plaintiff views as significant.  The Plaintiff characterises this is an "obfuscation and delay" and says that the application before the Judicial Greffier and then before the Royal Court should be seen in that context and as more of the same.  The arguments advanced in connection with the Sanne Defendants application was made without any supporting authority nor on any appropriate reading of the Royal Court Rules.  This was, so it was characterised, in pursuit of an unarguable case for the purposes of delay and should be seen as an abuse of process.  This, so HIL argues, is sufficiently unreasonable to justify and order for indemnity costs. 

14.      In response the Sanne Defendants argue that the appeal was not hopeless or inarguable.  The Sanne Defendants had already experienced one summary judgment application in the related Banks proceedings which had not advanced the case and had raised waste of time and costs.  They wished to put in place a mechanism to ensure that that did not happen again. 

15.      The Sanne Defendants had not argued that there was any precedent for the imposition of a preliminary screening stage and that they were asking the Court to exercise its case management powers and discretion.  It is not unreasonable to ask the Court to evolve or adapt its procedures.  They cite paragraphs 40 and 41 of the Judgment in this matter in which I said:

"However, I add this.  The nature of this litigation requires in my view robust management to bring this matter before the Court for final determination.  Interlocutory processes which do not advance the matter to final determination, cause unnecessary delay or unnecessarily add to the costs, are to be avoided.  The original summary judgment application does not appear to me to have been thought by the determining court as achieving a great deal.

Should therefore any summary judgment application be made which, so the Defendants may wish to argue, clearly does not advance the matter to final determination or result in a material narrowing of the issues or the potential saving of time or costs overall, it is open of course to them to seek the directions of the Court in a case management hearing."

16.      Moreover, the Sanne Defendants point to the progress of the proceedings and point out that in reality their application has caused no delay.  Their appeal was due to be heard at the same time as the application made by HIL to remove Carey Olsen as legal advisers but because of an insufficiency of time was held over until 2^nd July 2021, notification of the decision being given on the 8 July.  The answer of the Sanne Defendants was filed on 9^th September 2021, and HILs reply on 29^th October 2021. 

17.      The Sanne Defendants go on to argue that the costs of the matter before the Judicial Greffier should be dealt with by him as the hearing before him involved not only this application but other matters as well. 

18.      The application by the Sanne Defendants in this matter was novel and certainly had it been achieved would have amounted to a development in the procedural law that applies to summary judgments in certain cases.  In my judgment it was an ambitious application but not one that was unreasonable in the context of hard fought and extensive litigation to the extent that it should justify an order for indemnity costs. 

19.      I do not accept, however, that it would not be relatively easy to separate out the costs of these issues from other costs incurred before the Judicial Greffier. 

20.      Accordingly, I order that Sanne Defendants pay the Plaintiff's costs of and incidental to the appeal and the original application before the Judicial Greffier which was subject to appeal on the standard basis to be taxed if not agreed. 

Freezing Order

21.      On 1^st October 2021, HIL made an ex parte application before me for interim injunctions.  Although the application was made ex parte, because of what was characterised to me at the "urgency of the matter" the skeleton argument foreshadowed the possibility of an early inter partes hearing.  I declined to grant the interim injunction on an ex parte basis and the Court sat on 4^th October 2021 to determine the Plaintiff's application.  The Judgment was handed down on 10^th November 2021 (Hunters Investments Limited v Crill and Ors [2021] JRC 276) and I refused the Plaintiff's application for the reasons set out therein.

22.      HIL accepts that the Sanne Defendants are entitled to their costs on a standard basis in connection with this unsuccessful application.  The Sanne Defendants, on the other hand, argue that they should be entitled to their costs on a full indemnity basis as the actions of HIL so it is argued, placed it beyond the norm of adversarial proceedings and into the realms of unreasonableness. 

23.      The Sanne Defendants also cite the dicta of the Court in Hong Kong Foods Limited and the other principles to which I make reference in paragraph 11 above.

24.      The Sanne Defendants further argue that an application which requires the urgent attendance of another party is bound to cause serious disruption to professional arrangements and if there was no such urgency that would justify an award of indemnity costs. 

25.      The first factor that the Sanne Defendants list as justifying this assertion of unreasonableness is that HIL had misrepresented the urgency of the application.  Carey Olsen had offered a meeting which had been declined by HIL and the affidavit in support of the application for a freezing order raised issues of urgency in connection with the sanction of a Scheme before the Courts.  This urgency was not justified because of the nature of the Scheme.  Amongst other things it was pointed out that no Court sanction date had been fixed and it was plain from reading the Scheme document (which was in fact appended to Mr Bank's affidavit in support) of the freezing application that it was anticipated that the Scheme would be effective in the first half of 2022 and that there were numerous steps that had yet to be taken.  Had these matters been brought to the attention of the Court, it would have been clear that there was no urgency.  It was clear that no sanction hearing was going to take place in the short-term and certainly not "imminently" as had been suggested in HIL's application.  The Judgment of the Court itself raises that concern when it states:

"I am concerned that the timing in the Scheme documentation was not more clearly put before me at the ex parte stage."

26.      This misrepresentation of the urgency caused, so it is argued, very substantial work at short notice in preparing arguments in rebuttal. 

27.      The second point is that there was no basis to allege a risk of dissipation.  HIL's basis of its assertion as to a risk of dissipation were largely the allegations of dishonesty in its amended Order of Justice.  Dishonesty can indeed be the basis of an inference of a risk of dissipation but, so the Sanne Defendants argue, the dishonesty alleged in HIL's claim were based on actions taken by individuals who had long since left Sanne. 

28.      In the light of these two factors, so it is argued, HIL should pay the Sanne Defendants' costs on an indemnity basis.

29.      HIL for its part, argues that the Court accepted for the purposes of the application that it had a good arguable case for fraud and was therefore entitled to argue that the allegations of fraud coupled with other false statements and other features of the litigation constitute evidence of a real risk of dissipation.  The prospect of corporate restructuring can increase the risk of dissipation. 

30.      HIL also argues that it did not push for an ex parte hearing and the skeleton argument specified that Carey Olsen had asserted that there was more time available and that was brought to the Court's attention under the heading "full and frank disclosure".  The Court was informed that Carey Olsen had offered a without prejudice meeting and HIL had a reasonable and legitimate concern that the Scheme approval hearing might be brought forward and indeed that was indicated to the Court by Carey Olsen on 9^th September 2021.  Even if the ex parte application had referred specifically to the Scheme's conclusion on the first half of 2022, that could still have been very early in the New Year.  Freezing order applications are normally heard extremely promptly even when they are done on an inter partes basis.  

31.      I accept that the Plaintiff was concerned and had all the matters that could have been brought to my attention when the matter was presented on an ex parte basis had been brought to my attention there still would have been an inter partes hearing although both possibly of less urgency.

32.      In my judgment this is a simple matter in which the Plaintiff made an application and failed for the reasons set out in the Judgment but did not behave in a way which was of its nature sufficiently unreasonable to incur an order for indemnity costs.

33.      Accordingly, HIL will pay the Sanne Defendants' costs incidental to the application on a standard basis to be taxed if not agreed. 

Authorities

Hong Kong Foods Limited v Robin Hood Curry Limited and Ors [2017] JRC 116.

Hunters Investments Limited v Crill and Ors [2021] JRC 276.