Jersey Unreported Judgments

[2005]JRC097

royal court

(Samedi Division)

 

14^th July 2005

 

 

 

 

 

Appeal by the Plaintiffs under Rule 20/02 of the Royal Court Rules, 2004 from the decision of the Master to dismiss the Plaintiffs' claim.

 

 

 

Advocate D. Le Cornu for the First and Second Plaintiff.

Advocate M. Preston for the Defendant.

 

 

judgment

 

the bailiff:

1.        This is an appeal against a decision of the Master of the Royal Court of the 16^th of March, 2005, dismissing a Summons issued by the Plaintiffs to show cause why their action should not be dismissed.

2.        The Master gave reasons for his decision and we gratefully adopt his summary of the facts and of the procedural history.  The Master stated:

"1.       The plaintiffs are the trustees of a Settlement known as the GEA Settlement ("the Settlement").  The original trustee was a company called Deltrust Limited, the Directors of which were Mr. C. A. Delaney and Mr. N. Munson.   The Settlement was established in October, 1987.  Whilst acting as trustee Deltrust Limited opened an account with the defendant in September 1990 and deposited the sum of £750,000.  A company mandate was completed (but not a trust mandate) and the authorised signatories were any Director of Deltrust Limited and the second plaintiff.  Subsequently, Mr. Delaney (who is now a convicted fraudster) used these funds as security for a loan made by the defendant to a company called Ballyroan Investments Limited which was totally unconnected with the Settlement but was, apparently, owned by Deltrust Limited.  In due course, the defendant called the security and the account set up in the name of Deltrust Limited for the Settlement was debited £640,000.  The second plaintiff did not consent to any of what transpired.  The plaintiffs say that the defendant acted in breach of mandate or its fiduciary duty or in breach of express or implied terms of the contract between banker and customer.   The plaintiffs seek various declarations and repayment of the sum of £640,000 together with interest and damages.

2.        In its Answer the defendant says that the relevant bank account was opened under a company mandate and, at that time, the defendant had no knowledge of the Settlement.  It was not aware of any dishonesty on the part of the Directors of Deltrust Limited.  Furthermore, the defendant says that (notwithstanding the contention of the plaintiffs to the contrary) there was a variation of the mandate which was properly effected to allow the transactions which took place.  The defendant refutes the allegations made by the plaintiffs and denies liability. 

3.        The events in issue took place in or around 1990.  A procedural history of the action is brief. The Order of Justice was issued by the plaintiffs on 14^th July, 1999 and the action first came before the Royal Court on 23^rd July in that year.  The action was placed on the pending list and an Answer was filed 19^th August.  A Reply was filed by the second plaintiff on 11^th May, 2000.  Further and Better Particulars of the defendant's Answer were provided on 15^th June, 2000.  On 5^th July, 2000 I ordered that the case be set down and that mutual discovery take place.  A peremptory order was then made by me on 30^th November, 2000 requiring the defendant to make discovery within 7 days.  On 2^nd October, 2001 by consent between the parties I made an Order for specific discovery.

4.        There was no further procedural activity until the matters which are the subject of the present application.  On 15^th October, 2004 I issued a Notice advising parties that I would consider the cases listed in the Schedule attached to the Notice for striking out pursuant to the Royal Court Rules 1992, as amended.  On 16^th November, 2004, the plaintiffs issued a summons in which they requested that the action be allowed to continue.  An original date of 6^th January, 2005 was fixed for the hearing of this summons but ultimately it came before me for consideration on 15^th February, 2005."

It was not seriously contested before the Master, and it was conceded before us, that there had been inordinate and inexcusable delay.  The only remaining question, applying the Birkett -v- James (1978) AC 297 test, is whether there was serious prejudice to the Defendant or a substantial risk that a fair trial could not take place.

3.        The Master expressed his conclusions on this question in this way:

"I have come to the conclusion that oral evidence will be material in this action and the matter can not be resolved simply in the way suggested by Advocate Le Cornu, namely by construing documents and drawing inferences. I have little doubt that oral evidence from those involved (which includes both the second plaintiff and various employees of the defendant) will be important in enabling the Royal Court to reach a decision.  I must also have regard to the factual position, namely that the defendant no longer employs anybody in Jersey and those who were involved in 1990 are no longer readily available.  I think it is also fair to conclude that memories would undoubtedly have become less clear with the passing of time.  I think there is a real risk that memory of witnesses will be impaired.  Furthermore, these matters will cause prejudice to the defendant.  I also conclude that because the plaintiffs delayed so long in issuing proceedings that delay has itself caused prejudice and the additional prejudice shown (which in any event I consider to be more than minimal) is something which I must take into account."

It is clear that the Master applied the correct principles on the Birkett v James test as set out in the judgment of this Court in Garfield Bennett v Phillips ( 6th November 2002 unreported.) 

4.        The Master also founded his decision on the basis that there had been an abuse of process by the Plaintiffs.  He cited a passage from a decision of this Court in Bourne v Axford and Ors (2003) JRC114A where the Court stated on another appeal from the Master's decision to strike out an action:

"Looking at the matter more broadly it is conceded by Counsel for the Plaintiff that if this action were to be allowed to proceed, it could not be ready for trial until 2004 at the earliest.  Counsel for the Defendant suggested that a date in 2005 might be more realistic.  Even assuming, however, that the action were to be tried in 2004, the Court would be considering events which took place sixteen years ago in 1988.  Delays of this order place impossible strains on the memory of witnesses and involve a considerable risk of injustice being done.  The leisurely pace at which the Plaintiff has proceeded is no longer acceptable in the context of civil litigation.  If a litigant seeks justice from the Court he must be prepared to advance his case with reasonable expedition."

5.        Counsel for the Plaintiffs had contented before the Master that the Plaintiffs' inordinate and inexcusable delay amounted to an abuse of process and that the action could be dismissed on that basis.  The Master decided that this was a case where, "the leisurely pace at which the Plaintiff has proceeded is no longer acceptable in the context of civil litigation" and, accepting Counsel's submissions, dismissed the action as an abuse of process.

6.        Mr Le Cornu for the Plaintiffs has contended that the Master was wrong in both respects and that there was no serious prejudice to the Defendant from the admitted delay and no abuse of process.  We take first Counsel's submissions on the question of prejudice.  The real thrust of the Plaintiffs' argument was that, in certain respects, if not all, the case was document based and did not require oral evidence to be heard.  In particular Counsel contended that the Plaintiffs' claim that the Defendant had failed to comply with the terms of a bank mandate spoke for itself and required no further evidence.  Whether or not the bank was liable was, he submitted, a matter of law.  Without of course expressing any concluded view on the matter, it does seem to us that the Defendant's apparent failure to comply with the mandate is relatively straightforward and we can not understand why the Plaintiffs' claim was not pursued on this basis in very short order, but it was not.  The event complained of took place in 1990 but proceedings were not instituted until 1999 shortly before the expiration of the relevant limitation period.  It is not for us to speculate on the reasons why an apparently straightforward claim should have taken so long to get away from the starting line.

7.         Mr Preston for the Defendant contended that even an apparently simple contractual matter required to be examined in context.  He drew the Court's attention to passages from the Interpretation of Contracts by Kim Lewison, Q.C. Sweet and Maxwell 2004, where the author states the principal at page 81:

"In construing any written agreement the court is entitled to look at evidence of the objective factual background known to the parties at or before the date of the contract, including evidence of the "genesis" and objectively the "aim" of the transaction.  However, this does not entitle the court to look at evidence of the parties' subjective intentions."

8.        The author continues at page 82:

"Accordingly, evidence of the surrounding circumstances is admissible in all cases to place the contract in its correct setting, even where there is no ambiguity apparent on the face of the document.  Thus in St Edmundsbury & Ipswich Diocesan Board of Finance v Clark (No 2) Sir John Pennycuick, delivering the judgment of the Court of Appeal said it was contended: "that the proper method of construction is first to construe the words of the instrument in isolation and then look at the surrounding circumstances in order to see whether they cut down the prima facie meaning of the words.  It seems to us that this approach is contrary to well-established principle.  It is no doubt true that in order to construe an instrument one looks first at the instrument and no doubt one may form a preliminary impression on such inspection.  But it is not until one has considered the instrument and the surrounding circumstances in conjunction that one concludes the process of construction."

9.        Counsel also drew attention to a passage in the judgement of Sir Thomas Bingham, MR as he then was, in Arbuthnott and Fagan 1995 C.L.C:

"Courts will never construe words in a vacuum.   To a greater or lesser extent, depending on the subject matter, they will wish to be informed of what may variously be described as the context, the background, the factual matrix or the mischief.  To seek to construe any instrument in ignorance or disregard of the circumstances which give rise to it or the situation in which it is expected to take effect is in my view pedantic, sterile and productive of error.  But that is not to say that an initial judgment of what an instrument was or should reasonably have been intended to achieve should be permitted to override the clear language of the instrument, since what an author says is usually the surest guide to what he meant.  To my mind construction is a composite exercise, neither uncompromisingly literal nor unswervingly purposive: the instrument must speak for itself, but it must do so in situ and not be transported to the laboratory for microscopic analysis."

10.      We can not therefore exclude the possibility that, in the construction of the contract between the Defendant and the original Trustees, oral evidence will be relevant.  As Counsel indeed contended, the Plaintiffs' pleaded claim is that the Defendant, "ought to have known that the object of the said provisions [that is the requirement on the mandate for the signature of the second Plaintiff] was to permit the second Plaintiff to regulate and supervise the said bank account."  The state of knowledge of the bank's officials at the material time is likely to be relevant evidence.  Insofar as other elements of the claim are concerned, namely breach of contract, breach of trust, negligence and knowing assistance, we think that this conclusion applies a fortiori.  In our judgment the delay involved in this case is such as to lead to serious prejudice to the Defendant if the action were allowed to proceed to trial.  A number of the relevant employees have left the employment of the Defendant.  The Defendant has closed down its banking operations in Jersey and the body of collective memory has gone.  If the case were to come to trial it would not do so until at best 2006, by which time some sixteen years would have elapsed since the events in question.  The fading of memories over such a period of time is inevitable. 

11.      We think that the Master was amply justified in reaching the conclusion that serious prejudice would be caused to the Defendant if the action proceeded to trial.  That conclusion is of course sufficient to dispose of the Appeal.  But we think it is none the less desirable, in deference to the arguments ably addressed to us by both Counsel, to deal with the alternative basis upon which the Master decided to dismiss the action, namely abuse of process.  Much water has passed under the bridge since Birkett v James was decided in 1978.  Indeed both in England, and in Jersey, there has been a wholesale change in culture.  The change in England came about as a result of the Woolf report and subsequent changes to Rules of the Supreme Court.  In Jersey the catalyst for change was a judgment of the Court of Appeal in  re Esteem when Southwell J.A. stated

"From now on it has to be appreciated by all who are involved in civil proceedings in the Royal Court that their objective has to be to progress those proceedings to trial in accordance with an agreed or ordered timetable, at a reasonable level of cost, and within a reasonably short time."

12.      Since re Esteem there have been changes in the Royal Court Rules designed to give the Court a greater authority to manage litigation and a number of cases have been decided in which the Court has emphasised the importance of bringing litigation to a conclusion within a reasonable time and a reasonable cost to the parties.  On the 31^st of October, 2003, the Master sent a circular letter to all members of the legal profession stating that:

"The Bailiff has indicated the wish of the Royal Court to ensure that existing actions progress as quickly as is reasonably practicable.  Furthermore, in relation to new actions, it is the express wish of the Royal Court that all parties and their advisors should seek to have actions disposed of within twelve months of their commencement, wherever that is possible."

13.      The chronology in this case is that the cause of action arose in 1990, but proceedings were not instituted until the 14^th July, 1999.  In those circumstances it was incumbent on the Plaintiffs to proceed with all due expedition.  Pleadings were completed by June 2000 and the action was set down for hearing on the 5^th July, 2000.  Discovery took place sporadically over the next fifteen months but after the 22^nd October, 2001 there was no procedural activity until the Master sent his circular in October 2004, requiring the Plaintiffs to show cause why the action should not be struck out.  Counsel for the Defendant submitted that for fifty-seven of the sixty-three months between the institution of proceedings and the circular there was no procedural activity.  Counsel for the Plaintiff submitted, and we accept, that there were complications in the sense that the Plaintiffs as trustees were required to seek the approval of the Court from time to time.  We have received no details of when or why those applications were made but we accept nonetheless, that they were made.  We also accept that the Plaintiffs experienced difficulty in finding an expert witness to advise on bank procedures and that the Plaintiffs were obliged to change legal representation as a result of disagreements. 

14.      The fact remains, however, that not withstanding the various judicial and official encouragements to litigants to proceed with due expedition the Plaintiffs did not communicate with the Defendant, nor with the Court, for three years between October 2001 and October 2004.  This procedural inactivity is to be set against the background of an unexplained delay of at least seven years in instituting proceedings.  Rule 6/21 of the Royal Court Rules imposes a duty on a plaintiff within one month after the time limit for filing pleadings has expired, to issue a summons for directions.  That duty, which came into force on the 1^st of November, 2001, was also ignored by the Plaintiffs.  In our judgment the admitted inordinate and inexcusable delay in this case did amount to an abuse of the process of the Court and the Master was right so to find.  We reject the submission of Counsel for the Plaintiffs that mere delay can, by itself, never amount to an abuse of process.  While that might have been arguable prior to the decision in re Esteem in 2000, it is no longer a tenable argument.  Of course, not every case involving an inordinate and inexcusable delay will give rise to an abuse of process; much will depend upon the circumstances of each case. 

15.      Where a Plaintiff finds time slipping away because of practical or other difficulties, his remedy is to comply with Rule 6/21 and to make an application for directions or to seek a stay.  These Plaintiffs did nothing.  Three years of procedural inactivity against a background of the Institution of proceedings nine years after the cause of action arose, amount in our judgment to an abuse of the process of the Court.  The Appeal is accordingly dismissed.

Authorities

Birkett v James (1978) AC 297.

Garfield Bennett v Phillips (6^th November 2002) Jersey Unreported 2002/214.

Arbuthnott and Fagan 1995 C.L.C.

Arbuthnott Latham Bank Limited -v- Trafalgar Holdings (1998) 1 WLR 1426.

St Edmundsbury and Ipswich Diocesan Board of Finance v Clark (No 2).

Bourne v Axford and Ors [2003]JRC114A.

Kim Lewison Q.C. Sweet and Maxwell 2004.

Re Esteem

Interpretation of Contracts (by Kim Lewison, Q.C.) Sweet and Maxwell 2004.