Jersey Unreported Judgments

Costs

[2024]JRC038

Royal Court

(Samedi)

19 February 2024

IN THE MATTER OF THE REPRESENTATION OF COLLAS CRILL LLP, ADVOCATE NUNO MANUEL CAMILO SANTOS-COSTA AND ADVOCATE SAMUEL JAMES WILLIAMS

AND IN THE MATTER OF THE REPRESENTATION OF SG KLEINWORT HAMBROS TRUST (CI) LIMITED, NOCTULE SERVICES LIMITED, PALLAS HOLDINGS LIMITED AND MT SERVICES LIMITED (FILE NO: 2022/125)

AND IN THE MATTER OF THE REPRESENTATION OF B AND C (FILE NO: 2021/058)

AND IN THE MATTER OF ARTICLES 51 AND 53 OF THE TRUSTS (JERSEY) LAW 1984 (AS AMENDED)

Advocate S. J. Williams for the Representors.

The First Respondent did not appear.

Advocate M. P. Cushing for the Second Respondent.

Advocate R. D. J. Holden for the Third Respondent.

Advocate D. P. Le Maistre was excused appearance.

judgment on costs

the COMMISSIONER:

1.        On 24 November 2023, the Court gave judgment (unpublished) in relation to a Representation that had been issued in relation to two sets of proceedings ("the Proceedings") already before the Royal Court which were in turn a part of long-running trust proceedings in Jersey and Guernsey concerning family trusts settled by J, the father of B and C.  The Representors sought the directions of the Court as to whether they might continue to act in the Proceedings for B and C, for whom they had acted since 2020.

2.        For the reasons set out in that judgment, the Representation had been treated as a cause de brievete, and at the conclusion of the hearing the Court ordered that the Representors might continue to act as requested but adjourned the matter of the costs of the Representation for further argument.  Written submissions on the matter of costs were filed by the Representors and by the Third Respondent.  The Second Respondent confirmed, through her Advocate, that she was not making any application for her costs of the Representation and would rest on the wisdom of the Court in relation to costs more generally.  Prior to the hearing of the Representation the Fourth Respondent stated that he rested on the wisdom of the Court and was excused appearance.

The position of the parties in relation to costs

3.        The Representors proposed that any claiming parties' costs of the Representation should be met from the SG Trusts on the basis that they could be treated as incidental to the Jersey Restructuring Proceedings.  The Representors suggested that a declaration or at least an indication from the Court to that effect would be of assistance in order to enable the costs to be settled by the Trustees.  They further suggested that if the Court wished to hear from SG, then there would be no difficulty in convening them to the proceedings, which they attended as observers, for the purpose of making observations on the subject.  In the alternative, they suggested that the costs might simply be ordered against Mirafield.

4.        Subject to that submission, the Representors went on to argue that, if the Court were minded to make a party and party costs order, the Representors' costs of and incidental to the hearing should be paid by the Third Respondent on such basis as the Court saw fit.  They submitted that this was an outcome that reflected the overall justice of the case and the justice between the parties, taking into account that the Representors were, in their view, the successful party and that the hearing was only necessitated because of the Third Respondent's tactical decision to pursue her own interests.

5.        The Third Respondent sought an order that the Representors pay her costs of and incidental to the Representation, to be taxed on the indemnity basis if not agreed, with an interim payment on account of £52,231.20, alternatively £34,820.80.  It was submitted that this was to spare her the expense of satellite litigation to which the Representors convened her to manage, in her view, a conflict of interest faced, and created, by them.

Decision

6.        In their skeleton argument for the hearing of the Representation, the Representors noted that the Court was being asked to provide declaratory relief to the effect that the Representors may act.  This required consideration of two broad elements: (1) the professional obligations of the Representors pursuant to the Code of Conduct of the Law Society of Jersey, and whether they are satisfied; and (2) the legal duties or obligations that may otherwise affect the ability of the Representors to act.  Both elements invoke the Court's supervisory jurisdiction over members of the Jersey Bar, and the second element includes a consideration of the rights and duties of those who are in possession of confidential information.  Whilst the background to the application may concern litigation in both Jersey and Guernsey relating to certain family trusts, the application is not one that concerns the administration of a trust but is concerned with the ability of a law firm to continue to act for an existing client.  The First Respondent, trustee of the family trusts administered in Guernsey, whilst served with the proceedings, did not submit to the jurisdiction nor did they play any role in the proceedings, other than to confirm that they did not object to the Representors continuing to act.  I do not therefore regard it as appropriate for the Court to order that the costs of the Representation be paid out of the funds of the Mirafield trusts.  However, given that the outcome of the Representation may have avoided further delay in the conduct of the relevant proceedings, the trustees may wish to consider reimbursing beneficiaries whose costs have not been recovered, but that would be entirely a matter for the trustees in the exercise of their discretion.

7.        In those circumstances, as recognised by the Representors in their skeleton argument, I therefore approach the matter of costs in terms of making a party and party costs order.

8.        The Representors seek their costs from the Third Respondent, essentially on the basis that they say that the hearing was only necessary because of the insistence of the Third Respondent on undertakings from them.  The Third Respondent seeks her costs from the Representors on the basis that the Representation would not have been necessary had the Representors obtained consent from the First and Second Respondents when B and C first sought to instruct them.  The Third Respondent also argues that a hearing was inevitable given the insistence of the First and Second Respondents that the Third Respondent give her consent before they gave theirs.

9.        The Third Respondent noted in her skeleton argument that the decision as to who should pay the costs of an application is not as simple as asking "Who won?".  As the Court made clear when surveying the exercise of its discretion in Watkins v Egglishaw [2002] JLR 1 (Page, Commissioner) (as approved by the Court of Appeal in Flynn v Reid [2012] (2) JLR 226):

"7 The principles that should guide the court in the exercise of its discretion in this area appear to me, therefore, to be as follows, stating them as shortly and simply as possible:

           7.1 The court's overriding objective in considering costs is, as in everything else, to do justice between the parties.

           7.2 In many cases, that objective will be fulfilled by making an award of costs in favour of the 'winning' party, where a 'winner' is readily apparent. In any event, the "follow the event' rule can still be a useful starting point.

           7.3 It is a mistake, however, to strain overmuch to try to label one party as the 'winner' and one as the 'loser' when the complexity or other circumstances of the litigation do not readily lend themselves to analysis in these terms.

           7.4 The discretion as laid down in Art. 2 of the Civil Proceedings (Jersey) Law 1956 is a wide one and ought not to be treated as fettered by any particular supposed rule or practice, other than that the discretion should be exercised judicially and broadly in accordance with the guiding principles referred to in In re Elgindata (No. 2) ... and A.E.I. v. Phonographic Performance ...

           7.5 It is, accordingly, open to the court to have regard to any and all considerations that may have any bearing on the overriding objective of doing justice. Its task is to take an overview of the case as a whole ...

           7.6 It is implicit in this that, even though a party would otherwise be regarded as having been 'successful,' justice may require that costs should not automatically follow the event."

10.     The Representors were engaged by J (via his lawyer, the Second Respondent, who became his executrix on his death) in or about February 2019.  The engagement was in respect of trusts of which he was the settlor.  Following his death they were instructed by the Second Respondent in December 2019 in relation to the probate of his will in Guernsey.  In June 2020 they were instructed by B in relation to the same trusts and in November 2020 by B and C jointly.

11.     Had the Representors taken steps in June 2020 either to ring-fence the file from their previous engagement or to obtain the consent of the Second Respondent and the trustees (as residual beneficiaries of J's estate) in respect of their acting for B (and later C), then it is arguable that the Representation would not have been necessary.  In relation to the confidential information, it would then have been for the Third Respondent to take such action as she thought fit to restrain its use had she been concerned at any possible disclosure by the Representors.

12.     When, at a much later stage, the consent of the First and Second Respondents was sought, they made the consent of the Third Respondent a condition of providing their consent, despite it not being strictly necessary.  It was only at, or shortly before, the hearing that they provided their respective non-objection and consent, this being on the basis that the Third Respondent had been made a party to the Representation.  Although the Third Respondent accepted, at the hearing of the Representation, that her consent was not required it is clear that she used the opportunity of the hearing to seek an order from the Court in terms of undertakings that she had previously requested.  In effect, she was seeking injunctive relief by another name, a point that Advocate Holden conceded when he referred the Court to Rule 10/6 of the Royal Court Rules 2004 relating to "Non-compliance with Rules of Court or rule of practice". The hearing itself was considerably prolonged as a result of the Third Respondent's pursuit of the claim for an order in terms of the requested undertakings, a claim which was ultimately unsuccessful.  Given that the Third Respondent conceded that her consent was not required, it is clear that a significant part of her legal costs were incurred in relation to that claim.

13.     This is not a matter in which there was an obvious "winner" or "loser".  It might be argued that the Representors were the "winners" in that they obtained the orders that that they sought and the Third Respondent's claim for an order in the terms of undertakings that she had previously sought, which formed a substantial part of the hearing, was unsuccessful.  On the other hand, the Representors' failure to deal with the potential conflict when first instructed by B and C was a significant factor in the Representation being brought.  Furthermore, by adopting the stance of resting on the wisdom of the Court, rather than relying on the consent of the First and Second Respondents, a hearing was required, albeit that in the absence of the Third Respondent's claim it could have been considerably shorter.

14.     Taking an overview of the application and the conduct of the hearing, I take the view that in order to do justice between the parties they should each bear their own costs and I so order.

Authorities

Watkins v Egglishaw [2002] JLR 1. 

Flynn v Reid [2012] (2) JLR 226. 

Royal Court Rules 2004