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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Hard Rock Limited and Anor v HRCKY Limited [2023] JRC 236 (23 November 2023) URL: http://www.bailii.org/je/cases/UR/2023/2023_236.html Cite as: [2023] JRC 236 |
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Before : |
M. J. Thompson, Esq., Commissioner, sitting alone |
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Between |
(1) Hard Rock Limited |
Plaintiffs |
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(2) Hard Rock Café International (STP) Inc. |
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And |
HRCKY Limited (a company incorporated in The British Virgin Islands) |
Defendant |
Advocate M. L. A. Pallot for the Plaintiffs
Mr Kevin Doyle, Director, for the Defendant
costs judgment
the commissioner:
1. This judgment contains my decision in respect of an application by the Plaintiffs for an interim payment on account of costs (the "interim payment application") and an application by the Defendant that I stay assessment, alternatively enforcement, of any interim payment awarded.
2. These applications follow on from the substantive judgment in this matter reported at [2023] JRC 169 which was handed down on 21 September 2023. On the same date, I firstly ordered the Defendant to pay the costs of the Plaintiffs of and incidental to the case on the standard basis. However, this order did not apply to any costs orders previously made in favour of either party. I also ruled that the costs payable by the Defendant were enforceable against Mr Doyle personally.
3. At the same hearing, the Plaintiffs sought an interim payment on account of costs. At that stage, the Plaintiffs had not filed any relevant costs information. Accordingly, I directed that the application be determined on the papers and set a timetable for the parties to file their submissions and responses. As part of the directions, I also expressly gave Mr Doyle permission to apply for any stay in response to any application by the Plaintiffs for an interim payment on account of costs.
4. The Plaintiffs' interim payment application sought 35% of their costs as at 1 October 2023 and their disbursements in full. Spreadsheets were provided setting out the total amount of costs for which an interim payment was sought in the sum of £1,717,472.03. 35% of this figure was £601,115.21. The figure sought for disbursements was £1,110,743.71 plus US$31,908.42. Mr Doyle filed his twenty-second affidavit in response to the interim payment application and also sought a stay. Both parties filed submissions on the stay application.
5. It is convenient to deal with the stay application first.
6. In his affidavit, at paragraph 6, Mr Doyle stated as follows:
"I do not have finances which the Plaintiffs seek me to pay nor could I raise money from any potential backers or friends. The Borrelli Third Addendum Report of 20 April 2021 at pages 69- 81 (see KJD 1) details the losses of property and the funds borrowed by me in order to cover HRCKY's legal fees and debts as well as my family living expenses during the tenure of this Case, Notably the costs and damages recorded by Borrelli only cover the period to April 2021 but the costs have been updated in October 2022 at the Plaintiff's request during Mediation."
7. The reference to the third addendum report of Mr Borelli is a reference to table 26 in that report and the section dealing with consequential damages. The schedule described the sale of five properties owned by Mr Doyle and his wife, four of which were in Cayman and one of which was in Ireland, together with details of rent paid by them due to the sale of the properties one of which was their principal residence. The schedule also referred to various loans entered into by Mr Doyle in order to fund the litigation. These loans totalled over US$1.4 million. The largest loan was from Harbour used to settle outstanding legal expenses where Mr Doyle owed US$717,614 including interest owing as at February 2021. A confidential lender provided US$614,250, but the payment of this loan was only due if the case was won.
8. Mr Doyle, in his affidavit, contended that some of the conclusions reached by the trial court merited an appeal hearing. To date, however, no draft Notice of Appeal has been provided, although Mr Doyle indicated that the Defendant had retained a Jersey legal firm to assess the merits of an appeal.
9. Mr Doyle also expressed the concern that the seeking of an interim payment was another tactical move by the Plaintiffs because the Plaintiffs were aware that the Defendant was "indigent" and that they were aware that Mr Doyle did not have any funds to meet an interim payment. The implication that these concerns gave rise to was that this was a tactical move to stifle an appeal. Mr Doyle also explained in his affidavit that he was borrowing US$14,000 per month from friends in order to meet his living expenses, including health insurance, life assurance and rent. The same individuals have also assisted in providing Mr Doyle with funds to support the Defendant's case.
10. In his written submissions, Mr Doyle contended as follows:
(i) The appeal was bona fide and had a realistic chance of success based on the evidence;
(ii) The risks inherent to HRCKY in refusing the stay were an inability to proceed with an appeal due to an inability to currently pay the costs awarded to the Plaintiffs;
(iii) That the appeal would be stifled;
(iv) There was a significant risk of harm to the Defendant if it was compelled to pay an interim costs order when it did not have the funds to do so.
11. Mr Doyle was also critical of the Plaintiffs' approach to discovery prior to trial which had impacted severely his financial resources.
12. In opposing a stay, the Plaintiffs' key submissions were:
(a) An appeal is only stifled by the payment of interim costs when the Appellant has no realisable assets and is unable to raise through acquired funds;
(b) The payment of interim costs would not render the prospective appeal nugatory or stifle it. The Plaintiffs emphasised that they were not seeking an order making any appeal conditional upon the Defendant or Mr Doyle meeting an interim payment, although they reserved the right to do so. As matters stood, that meant that the appeal would not be rendered nugatory by making of an interim payment order.
(c) The evidence filed by Mr Doyle for himself or HRCKY did not meet the threshold that the costs order sought would stifle the appeal. What was required was for each of HRCKY and Mr Doyle to prove that they did not have the resources or access to resources to pay any costs ordered.
(d) The prospects on appeal were fanciful at best. No grounds of appeal had been set out and to the extent that what was sought were to challenge factual findings, this was a high hurdle to overcome; and
(e) To the extent that a party was alleging that the effect of an interim order would be to stifle an appeal, then such a contention had to be established by the person seeking a stay and on the balance of probabilities (see Hincks v Sense Network Ltd [2018] EWHC 1241 (QB) at paragraph 8). Any difficulty in recovering costs should an appeal be successful was not a proper basis to grant a stay. In any event, if the Plaintiffs were not successful on appeal, they were more than able to re-pay Mr Doyle.
13. In relation to Mr Doyle's evidence, the Plaintiffs contended that he had no difficulty in raising funds for the purposes of the litigation or to meet his own expenses, but he was less than transparent about how the funds were used.
14. Finally, the Plaintiffs submitted that there was no basis which might lead the Court to exercise its discretion and order a stay. Nothing had changed since the judgment had been handed down from the position that had existed for many years in relation to the Defendant's conduct of the litigation through Mr Doyle.
15. In inviting written submissions from the parties on the question of a stay, I referred the parties to my decision as Master in Sheyko v Consolidated Minerals Limited [2022] JRC 082. I summarised the applicable legal principles on the grant of a stay pending appeal at paragraphs 36 and 37 as follows:
16. In Sheyko, I also concluded (at paragraph 46) that the appeal in that case had no real prospect of success and that there were no reasonable grounds to demonstrate a manifest judicial error in support of a position of doléance to the Privy Council. Having rejected this argument, I then considered the relevant test for whether an appeal would be rendered nugatory at paragraph 55 where I stated as follows:
17. This led to my conclusion at paragraph 63 that there was no evidence of irremediable harm at any potential difficulty in recovering funds which was not solid grounds to justify a stay.
18. The final limb of the test was to evaluate the balance of advantage between granting a stay and not granting a stay.
19. In relation to the merits of the appeal, I accept in relation to legal issues that the court's decision is arguable. In particular, the Court of Appeal has not previously considered the concept of dol par reticence. While I concluded that this principle is not part of the law of Jersey, it cannot be said to be fanciful or improbable that the Court of Appeal might not reach a different conclusion. Such a complex question of law is therefore always arguable.
20. In relation to an appeal against factual conclusions, the threshold for that is higher and therefore there is force to the Plaintiffs' contention that any appeal against the Court's findings at first instance is a higher hurdle to overcome. Equally, however, there are past cases where appellants have overcome such hurdles and therefore it would be wrong at this stage to conclude that Mr Doyle did not have an arguable appeal.
21. The central issue for me to decide is whether the making of an interim payment on account of costs would render an appeal nugatory, I agree with the Plaintiffs that the assessment of an interim payment order would not render an appeal of no or very little purpose. As I noted in Sheyko, the Court of Appeal in Crociani v Crociani [2017] JCA 162, emphasised the importance of a successful party from not being prevented from exercising the necessary Court procedures to have the benefit of a judgment in its favour even though an appeal was pending. That extends to assessing an interim payment.
22. In this case, the Plaintiffs are not seeking, as part of their application, to impose a condition that the Defendant or Mr Doyle should be prevented from pursuing an appeal if they fail to make any interim payment assessed by the Court. Were they to seek such an order, that would be a very different consideration because such an approach could deny the Defendant the right to pursue an appeal. This would be relevant to the balance of advantage test. In that regard, it is also relevant that the Plaintiffs would appear to be in a position to re-pay any monies paid by Mr Doyle on account of costs. Even if that is wrong, potential difficulties of repayment are not in themselves a basis to grant a stay as set out in Sheyko.
23. The Defendant itself also has no assets. The making of an interim payment is not therefore going to prevent the Defendant from bringing an appeal.
24. Whether or not an appeal is brought therefore depends on whether Mr Doyle is able to obtain funds to obtain at least advice of the prospects of an appeal, to draft a notice of appeal, draft detailed written contentions and possibly present the appeal. In his evidence, while Mr Doyle has explained what properties he has sold, his affidavit is not a full affidavit of means. I do not have a full explanation of his financial position and the effect the proceedings have had on that position. Yet he appears to have been able to raise funds in order to obtain legal advice on the merits of an appeal. He has also raised funds in the past to meet legal costs. He has not explained whether he could raise funds to meet some form of interim payment as well as to obtain advice on the merits of an appeal. Nor has he explained the impact of raising further funds on existing loans in particular the borrowing from Harbour or any other borrowings.
25. As against these shortcomings, I have to recognise that a failure to meet an interim payment might have consequences for Mr Doyle. He could be made bankrupt and therefore might lose control of any appeal. Such a step could also occur outside the jurisdiction of this court. It would be of concern were any appeal to be prevented indirectly through such steps when the Plaintiffs do not seek to impose any condition to prevent an appeal if any interim payment is not met. In such circumstances an appeal would be rendered nugatory. This concern is an enforcement issue not one preventing assessment. It is also not one that is addressed by the evidence before me. My comments on the prospects of success are also generic in nature because no notice of appeal has yet been filed.
26. Standing back and looking at the balance of advantage, as matters are before me, the Plaintiffs are not seeking a condition to prevent the Defendant and Mr Doyle from pursuing an appeal as referred to above. There is also no evidence that the Plaintiffs would not re-pay any sums assessed as being due to the Plaintiffs by reference to the Plaintiffs' application for an interim payment. If I am wrong in that conclusion, a difficulty in trying to recover funds is not of itself a sufficient ground to grant a stay. As matters stand, therefore, the Defendant is not therefore precluded from pursuing its appeal and accordingly it is not necessary to stay either assessment of any interim payment. In relation to enforcement, there might be problems as I have foreshadowed above, but evidence on the concerns I have raised is required. In the interim therefore enforcement is only stayed until fourteen days after any notice of appeal is filed. If the Defendant or Mr Doyle wishes for that stay to continue until determination of that appeal, he will have to make a further application to me and to address the evidential concerns I have set out in this judgment. On any such application, the stay will then continue until the application is determined unless agreement is reached between the parties in the interim.
27. In light of my decision on the stay I therefore now turn to deal with assessment of the costs of the Plaintiffs. Mr Doyle did not make any observations on the Plaintiffs' figures. Nevertheless, I am required to be satisfied that what is claimed is appropriate applying the cautious approach set out by the Court of Appeal in Crociani v Crociani [2014] JCA 95 at paragraphs 16 to 18. These are the principles I have applied. The mere fact of a pending appeal is not a relevant factor as set out in the Crociani judgment at paragraph 27. In assessing the amount, I must ensure that I possess enough information before me to make an assessment.
28. It was having regard to the Crociani principles that the Plaintiffs only sought 35% of their costs and disbursements. The figure for costs put forward by the Plaintiffs in their detailed schedules was also after they had deducted those costs which related to costs either already recovered or awarded against the Plaintiffs. The Plaintiffs were correct to take this approach.
29. The Plaintiffs, for the purposes of an interim payment application, have applied factor A rates plus a 50% uplift for factor B. I agree that this approach is consistent with the approach endorsed in Crociani. When it comes to any taxation, for certain of the tasks carried out by the Plaintiffs, a higher rate may be justified, in particular for the advocates taking the lead in presenting a case to Court. For other tasks, on a taxation, there may be a lower rate. A 50% rate across the board is however an appropriate starting point for a broad brush approach.
30. The Plaintiffs have also correctly addressed risks of duplication and changes of personnel by only seeking 35% of their costs.
31. I am also aware that this is a case that has lasted over ten years leading to a ten day trial. I was involved in many of the procedural applications as well as presiding at trial. Given this involvement and adopting a cautious approach I consider on its taxation that it is unlikely that the Plaintiffs will be awarded less than £600,000 on account of their costs, and accordingly I assess an interim payment on account of legal costs in this amount.
32. In relation to disbursements, I was provided a detailed schedule of disbursements. The total figure for disbursements was £1,110,743.71 plus US$ 31,908.42. Of these, £882,285.54 fell to discovery services from Consilio, an e-discovery provider, US$ 177,671.91 related to US law advice from Quarles & Brady LLP, and US$ 31,908.42 was a payment made to Mr Dodds. There were also various other disbursements such as photocopying and Court fees and advice from counsel.
33. In relation to these disbursements, I start by reference to the discovery services of Consilio and their invoice of £882,285.54. I was not provided with any invoice in relation to Consilio's retainer. However, in the Act of Court of 5 May 2020, in allowing the Plaintiffs a final opportunity to provide discovery, I required, by paragraph 6 of that order that the Plaintiffs appointed an expert e-discovery provider, and by paragraph 13 ordered that "the Plaintiff shall not recover on any taxation of any costs order in their favour following a trial the costs of any searches required by this Act of Court which are a repetition of searches already carried out;". The instruction of an e-discovery provider was therefore the price to be paid for the Plaintiffs being permitted to continue to defend the Defendant's counterclaim. In the absence of a detailed breakdown showing that some of the costs of Consilio were incurred other than in relation to this order, it is not appropriate at this stage to make an interim payment on account of Consilio's fees. This application can be renewed as long as detailed evidence is provided showing the period of any retainer for Consilio and that it does not cover costs incurred as a result of the Act of Court of 5 May 2020.
34. There is also another disbursement due to Consilio of £18,327.70. Again, I am not satisfied why this is recoverable for the same reasons as the main claim for £882,285.54.
35. It is also not clear to me why the Plaintiffs should recover US law advice claimed. The only relevant law advice was from a franchise law expert, but he works for the firm Plave Koch Plc and not Quarles & Brady LLP.
36. Nor is it clear why any payment is due to Mr Dodds. He was a witness of fact. Again, therefore, the Plaintiffs have not satisfied me what this sum relates to.
37. There is also a disbursement claimed for secretarial services of US$1,275. This should be an overhead.
38. Accordingly, the only disbursements which are allowed are in the sum of £31,183.56.
39. Accordingly, an interim payment is assessed in favour of the Plaintiffs in the total sum of £631,183.56. Enforcement of this award is stayed initially until fourteen days after any notice of appeal is filed by the Defendant. If any application is made to extend the stay either by the Defendant or by Mr Doyle, enforcement is stayed until determination of that application. Any such application shall be made to me as a single judge.
