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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Incat -v- Luba Freeport [2010] JRC 165 (07 September 2010) URL: http://www.bailii.org/je/cases/UR/2010/2010_165.html Cite as: [2010] JRC 165 |
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[2010]JRC165
royal court
(Samedi Division)
7th September 2010
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Before : |
M. C. St. J. Birt, Esq., Bailiff, sitting alone. |
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Between |
(1) Incat Equatorial Guinea Limited |
Appellants/Plaintiffs |
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(2) Incat Oil Field Services Limited |
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(3) West African Marine Logistics Inc |
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(5) Incat Technical Services Limited |
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(6) Integrated Petroleum Services (Gabon) |
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And |
Luba Freeport Limited |
Respondent/Defendant |
Advocate M. C. Goulborn for the Appellants/Plaintiffs.
Advocate J. M. P. Gleeson for the Respondent/Defendant.
judgment
the bailiff:
1. This is an appeal by the plaintiffs against a taxation of costs carried out by the Assistant Judicial Greffier ("the Greffier") dated 18th May, 2010. It raises an issue as to the correct test to be applied by this Court when hearing an appeal from a taxation and also two general points of interest as to the principles to be applied by the Greffier.
Background
2. The case in question arose out of the provision of plant and services by the plaintiffs to the defendant at the deep water port of Luba in Equatorial Guinea, West Africa. There was a complex factual background and the contract in question was governed by English law. The original amount of the claim was US$9.1 million plus interest.
3. The proceedings began in 2006. According to the defendant, the nature and basis of the claim was unfocussed and kept changing. For example, it is said that there were seven versions of the particulars of the claim in the six months between November 2006 and April 2007. There were various interlocutory hearings. According to the defendant, its lawyers reviewed some 60,000 documents in relation to the supplemental discovery exercise alone. Eventually, at a hearing before Commissioner Clyde-Smith in February 2008, the issues for decision by the Royal Court were identified and reduced to three in number. The trial took place over five days (although one day was reserved for the preparation of closing submissions) and the court's judgment is dated 21st August, 2008. By an order dated 23rd September, 2008, the court ordered the plaintiffs to pay the defendant's costs on the standard basis in relation to two of the three issues which were before the court, with no order for costs being made in relation to the third issue.
4. Bills of cost were subsequently submitted by the defendant for taxation. Bedell Cristin, who acted for the defendant, had employed the services of English solicitors (DLA Piper UK LLP, referred to hereafter as "DLA Piper") and English counsel. The Bedell Cristin bill was allowed in the sum of £134,288.83 together with disbursements of some £70,000, which comprised for the most part counsel's fees, which had been reduced by the Greffier on taxation. There is no appeal against this part of the Greffier's decision.
5. The defendant also submitted a bill from DLA Piper for taxation. This was submitted in the sum of £515,000 together with disbursements of £73,000.
6. The procedure on taxation is governed by RCR 12/11, the relevant part of which provides as follows:-
7. The plaintiffs filed a 4½ page objection pursuant to Rule 12/11 (1)(a). The first 3 pages related to the fees of Bedell Cristin and English counsel and it is clear that the Greffier took these objections into account when taxing those costs. In relation to the DLA Piper bill, the plaintiffs objected to it in its entirety. It was contended that the instruction of DLA Piper was not necessary in relation to the trial. It was said that, although there were certain aspects of English law, there was extensive use of English counsel to deal with this. The use of DLA Piper had simply led to duplication and wholly unnecessary expense which should not be borne by the plaintiffs. The plaintiffs referred to the case of A C Mauger and Son (Sunwin) Limited-v-Victor Hugo Management Limited [1991] JLR N 3 as authority for the proposition that the costs of English lawyers' assistance and advice to Jersey advocates concerning proceedings brought under Jersey law are not recoverable on taxation. The final paragraph of the objection filed by the plaintiffs read as follows:-
8. Pursuant to Rule 12/11(3), the defendant filed a 16 page reply. In relation to the DLA Piper bill, amongst other matters, it correctly made the point that the A C Mauger case predated the introduction of Rule 12/7 of the Royal Court Rules which provides as follows:-
Bedell Cristin submitted that all of the work done by DLA Piper and included in their fee note fell within one or other of these two categories in that it was either work which was delegated by Bedell Cristin and which would otherwise have had to have been performed by their firm or was work concerned with the provision of English law advice.
9. The plaintiffs did not ask for a taxation hearing and accordingly, in accordance with Rule 12/11 (4), the Greffier proceeded to tax the bill of costs.
The Greffier's Decision
10. It is clear the Greffier applied himself carefully to the task, which was undoubtedly a complex one given that the fee note of DLA Piper alone ran to 165 pages. I was advised during the hearing that he spent several days at the offices of Bedell Cristin going through their files, which amounted to 29 correspondence files and 18 documents wallets.
11. He gave a detailed decision in a letter dated 13th May, 2010. He reminded himself of the principle applicable in relation to standard costs, namely that any doubt is to be resolved in favour of the paying party as set out in Rule 12/2. As already mentioned, he made reductions in the Bedell Cristin bill and in counsel's fees. In relation to the applicable factor B rate for the case, the defendant had submitted that there should be a 100% uplift whereas the plaintiffs had contended for 35%. The Greffier concluded that 65% was appropriate for areas 3 and 4 in the Practice Direction issued on the taxation of costs awarded on the standard basis in civil proceedings ("the Practice Direction") and 50% in relation to conferences.
12. In relation to the DLA Piper bill, the Greffier referred to Rule 12/7. He concluded that all the costs of DLA Piper fell within (a) or (b) of that Rule and were therefore in principle recoverable on taxation.
13. He turned next to the relevant hourly rates which were set out at the beginning of the DLA Piper bill. He concluded that they were all reasonable except for the rate for the relevant partner for work done in 2008 (referred to as MG3). This had been charged at the rate of £330 per hour whereas the Greffier held that it was only reasonable to charge at the partner rate for 2007 (referred to as MG2), which was £290 per hour. He said that this rate was broadly in step with partners' charge out rates in Jersey.
14. He then carried out a detailed assessment of the DLA Piper bill and reduced the fees allowed to some £301,689 and the disbursements to £55,797.50. In relation to the fees, this amounts to a reduction of some 41%. It is against the Greffier's decision in relation to the DLA Piper fees and disbursements that the plaintiffs appeal.
Test on appeal
15. Advocate Goulborn submitted that the test to be applied was the longstanding one established in Murphy-v-Collins [2000] JLR 276, namely that the Court should exercise its own discretion but give such weight as it thought fit to the decision of the Greffier.
16. Advocate Gleeson, on the other hand, submitted that the Court should adopt the test recently laid down in Downes-v-Marshall [2010] JRC 115B for appeals to the Royal Court from the Registrar of the Family Division. That test was summarised by Sir Philip Bailhache, Commissioner, at para 20 as follows:-
In effect, the court established a test which was a halfway house between that laid down in Murphy and that applied on appeal from the Royal Court to the Court of Appeal in matters of discretion.
17. I was referred to two previous cases of appeals against taxation. The first was Alhamrani-v-Russa Management Limited [2006] JLR 176, a decision of Bailhache, Bailiff. At paragraph 4 of the judgment the Bailiff stated that the parties were agreed that he should apply the test established in Murphy. In fact, most of the judgment was concerned with a very different issue, namely whether the taxation process should be applied at all to legal costs incurred by a trustee acting neutrally in the course of litigation. However, at paragraphs 36-46 the court dealt with a conventional order for costs which had been made and increased the factor B rate from the 35- 50% which had been applied by the Greffier to 60 - 75%. It seems to me that that was the sort of decision which could have been reached under the Downes test as well as the Murphy approach.
18. In Reg's Skips Limited-v-Yates [2009] JRC 156, Sir Philip Bailhache, Commissioner did not specifically refer to the relevant test but he made clear at paragraph 6 that it was not the function of the judge on appeal from the taxation process to engage in exactly the same line by line exercise as that conducted by the Greffier. He indicated that the appellant should confine herself to points of principle as to how the Greffier had misdirected himself or wrongly exercised his discretion.
19. In my judgment the Court should apply the test in Downes on appeals against taxation. I would summarise my reasons for so concluding as follows:-
(i) One of the reasons for the decision in Murphy was that the jurisdiction was given to the court (or judge) and had simply initially been delegated to the Greffier. Thus the court adopted the approach in the English case of Sansom-v Sansom [1966] P52 where Simon, P said at 53:-
Crill, Bailiff drew an exact analogy with delegation to the Judicial Greffier or the Registrar of the Family Division.
(ii) In relation to most of the matters heard by the Greffier, that remains the position. The Rules of Court usually confer a power for "the court" to do something and, save where it is not permitted under the Rules, the matter is delegated to the Greffier.
(iii) The position is rather different in relation to the taxation of costs. Rule 12/3 confers the power to tax costs on the Greffier, not the court. There is no question of any delegation. The primary responsibility for the taxation of costs is given to the Greffier pursuant to the Royal Court Rules. In those circumstances, it seems to me appropriate that a greater latitude should be given to the decisions of the Greffier than is perhaps given in other cases where there has been a delegation.
(iv) Because taxation is carried out by the Greffier, he builds up a considerable expertise and familiarity with the process of taxation. That facility is not acquired by the Court. That is an additional reason for the Court to recognise the discretion conferred upon the Greffier and it supports the opinion of Bailhache, Commissioner in Reg's Skips Limited that it is not for this Court to engage in the same line by line exercise as that conducted by the Greffier. Appeals should be confined to points of principle.
(v) It seems to me that the test laid established in Downes strikes the right balance in matters of taxation. It prevents the parties simply seeking a fresh bite of the cherry and hoping that the court will reach a different decision on individual matters from the Greffier; but on the other hand it allows the court to intervene if it thinks that intervention is required in the interests of justice and fairness. It would therefore still allow the court to intervene if, for example, it thought that the Greffier had erred to a material extent on the appropriate factor B rate or, as was contended by the plaintiffs in the present case, had failed to apply the correct rates to a foreign lawyer's bill or had failed to take sufficient steps by way of inspection to enable him to reach a proper conclusion. In other words, the court will intervene if it thinks that the Greffier has erred on a matter of principle or has gone wrong in exercising his discretion to the extent that intervention is required in the interest of justice and fairness.
20. I should add that, in practice, I see little difference between the test established in Downes and the approach adopted by Bailhache, Commissioner in Reg's Skips but for the sake of clarity, I hold that the articulation of the appropriate test should be that laid down in Downes. I should also add that my decision in the present case would have been the same even had I applied the Murphy test.
Grounds of appeal
21. Although the skeleton argument ranged somewhat more widely, it became clear during the hearing of the appeal that Advocate Goulborn was no longer contending on behalf of the plaintiffs that DLA Piper's fees should be disallowed completely nor, subject to two points which I shall refer to later, was he asking the court to conduct a detailed review of the Greffier's decision on individual entries in the bill of costs. He confined himself to two general points of principle as follows:-
(i) He argued that the Greffier must apply the factor A and factor B rates to the fees of foreign lawyers;
(ii) He argued that the Greffier should have inspected the files of DLA Piper and could not have reached a proper decision without doing so.
I shall take each of these in turn.
22. However, before doing so I would refer briefly to the reliance placed by the plaintiffs on the A C Mauger case referred to at paragraph 7 above. In my judgment that case is no longer to be considered as good law, not only because of the specific terms of Rule 12/7, but also because the nature of litigation before the Royal Court has changed substantially since 1991.
23. As Bailhache, Bailiff, stated in Alhamrani (supra) [2006] JLR 176 at paras 28 - 30, it is often reasonable and proportionate for English solicitors and English counsel to be instructed in connection with litigation before the courts of Jersey. These observations were specifically approved by the Court of Appeal (Alhamrani-v J P Morgan Trust Company (Jersey) Limited [2007] JLR 527 at para 67). Although the observations were made in the context of trust litigation, the point is equally applicable to other complex and substantial litigation. In my judgment, given the nature of the proceedings in this case, the Greffier was clearly entitled to conclude that it was reasonable and proportionate for English solicitors and counsel to be instructed and for their fees to be recoverable subject to taxation.
(i) Factor A and factor B rate
24. It appeared initially that Advocate Goulborn might be seeking to argue that the Greffier must calculate a factor A rate for each foreign lawyer; in other words he should calculate the rate for a firm practising in, for example, central London. However, it became clear that Advocate Goulborn was arguing that, for all foreign lawyers, the maximum amount that could be allowed for any work was an hourly rate calculated by reference to the applicable factor A rate for Jersey lawyers uplifted by the factor B rate for the relevant case.
25. It seems to me that the answer to Advocate Goulborn's submission is to be found in the terms of Rule 12/7 quoted at para 8 above. It is clear that paragraph (a) and paragraph (b) envisage two different situations. In the circumstances envisaged by paragraph (a), the work done by the foreign lawyer is work that could have been undertaken by the Jersey lawyer e.g. preparing a witness statement, drafting a pleading. In those circumstances, it is only fair to the paying party that the amount allowed on taxation should be no greater than that which would be allowed for a Jersey lawyer to do the same work. Indeed, this is what paragraph (a) says in unambiguous terms. A Jersey lawyer would be entitled to an hourly rate calculated by reference to the factor A rate current at the time the order for costs was made, uplifted by such factor B rate as the Greffier allows in relation to the particular case. That determines the maximum hourly rate which a foreign lawyer may be allowed on taxation for any work falling within paragraph (a). It follows that the Greffier must, in relation to such work, check the hourly rate claimed by the foreign lawyer against the hourly rate calculated by reference to the factor A and factor B rate which would be allowed for a Jersey lawyer. If the hourly rate claimed by the foreign lawyer exceeds the amount which would be allowed to a Jersey lawyer, it must be reduced to the hourly rate for the Jersey lawyer. If the hourly rate of the foreign lawyer is equal to or less than the Jersey rate, the hourly rate claimed by the foreign lawyer may be recovered.
26. The circumstances envisaged by paragraph (b) are different. This relates to work done by the foreign lawyer which, in the context of the proceedings, could not reasonably have been done by a Jersey lawyer. In those circumstances, the amount recoverable by the foreign lawyer is not related to a Jersey lawyer's fees; it is simply what is reasonable. It is for the Greffier to assess in a particular case what is reasonable but clearly in some circumstances e.g. the use of specialist counsel or solicitors, the hourly rate allowed may be greater than that which could be recovered by a Jersey lawyer.
27. In the present case, the point turned out to be academic. Except for the MG3 rate (which was reduced on taxation to the MG2 level), none of the hourly rates claimed by DLA Piper exceeded the factor A rate for the comparable Jersey lawyer uplifted by 50% (being the minimum factor B rate applied). To illustrate this by one example, the MG2 rate for the partner of DLA Piper was £290 per hour. Factor A for a Jersey partner at the material time was £203 per hour. Allowing for an uplift of 50%, this comes to £304.50 per hour. The amount claimed by DLA Piper therefore is less than the amount which would be allowable for a Jersey partner. Thus paragraph (a) was complied with. In so far as the work of DLA Piper fell within paragraph (b) it was clearly open to the Greffier to find that the hourly rates claimed by DLA Piper were reasonable, given that they were less than would be allowed for a Jersey lawyer. In the circumstances the plaintiffs can have no complaint at the hourly rates allowed in respect of the DLA Piper fee note.
28. For all of these reasons, I do not accept that the Greffier's decision can be criticised on this ground.
(ii) The Greffier should have inspected the DLA Piper files
29. In his decision letter of 13th May, the Greffier stated that he had not had access to the DLA Piper correspondence files and had therefore perused their bill and considered the reasonableness of the items claimed in the round.
30. Advocate Goulborn referred me to the following passages from appendix A of the Practice Direction:-
31. Advocate Goulborn submitted that the Greffier should have demanded to see the office files of DLA Piper in accordance with para 4.2 of the Practice Direction because he could not properly assess the reasonableness of the time spent without inspecting those files.
32. In response, Advocate Gleeson submitted that the ability to call for a lawyer's office files under para 4.2 was confined to Jersey lawyers. If he was wrong about that, he submitted that it was reasonable for the Greffier, in the circumstance of this case, not to have asked to inspect DLA Piper's files.
33. I do not accept Advocate Gleeson's first submission. I see no reason to confine the language of paragraph 4.2 in this way. Indeed paragraph 3.4 states specifically that the Greffier may require further information in respect of the fees of a foreign lawyer. The Greffier is concerned in such cases with litigation conducted before the courts of Jersey where the receiving party is seeking to recover fees paid to a foreign lawyer. In my judgment, if the Greffier thinks it is necessary to call for the office files of such a foreign lawyer in order to assess the reasonableness of the bill, he is entitled to do so.
34. However, whether to call for the files of a foreign lawyer in any particular case is a matter of discretion for the Greffier, just as it is a matter of discretion as to whether he inspects the office files of a Jersey lawyer. It will probably be unnecessary in most cases. Paragraph 3.4 and paragraph 4.1(f) of Appendix A make it clear that the bill of costs submitted by foreign lawyers must contain sufficient detail to enable the paying party to properly consider the sum claimed and if the detail is insufficient, the Greffier may call for the provision of more detailed information.
35. In my judgment, no criticism can be made of the Greffier's decision not to call for DLA Piper's files in this case. I would summarise my reasons as follows:-
(i) The DLA Piper bill of costs fully complied with the requirements of paragraph 3.4 of appendix A. It ran to 165 pages and an inspection of the bill shows that it was extremely detailed in setting out exactly how much time was spent by which fee earner and what the fee earner was doing during that time. It was open to the Greffier to consider that the bill contained sufficient detail to allow him to assess the reasonableness of the time claimed on particular matters.
(ii) The Greffier did inspect the 29 correspondence files and 18 document wallets of Bedell Cristin, spending several days in the offices of Bedell Cristin doing so. I accept Advocate Gleeson's submission that, from this exercise, the Greffier would have seen all the correspondence, file notes, time sheet entries, draft pleadings, witness statements, affidavits, skeleton arguments, expert reports, discovery documents, bundles for interlocutory hearings etc and he would have had ample opportunity and the necessary information with which to cross check items contained in the detailed bill of costs submitted by DLA Piper.
36. There is an important additional factor in this case. As already stated, Rule 12/11(1)(a) states specifically that the paying party must set out his written objections to the bill of costs "in full". In this case, apart from an objection to a particular disbursement (which disbursement was subsequently disallowed by the Greffier) the defendant lodged no objections to the detail of the DLA Piper bill other than to refer to the unnecessary attendances of (often more than one) DLA Piper representatives at the various hearings and the fact that the involvement of DLA Piper served only to create duplication and unnecessary expense. The objection was to the entirety of the DLA Piper bill in principle. The written objection sought to reserve the plaintiff's right to object to individual items.
37. In my judgment this approach did not accord with the requirements of Rule 12/11(1)(a). If he wishes to challenge individual items, it is not open to the paying party to take some broad objection of principle but not descend into the particular. A paying party must put all his objections of whatever nature in the document which he files pursuant to Rule 12/11(1)(a). Where, as in this case, a paying party has raised no objections of detail, it is an additional reason as to why the Greffier was perfectly entitled to conclude that he had sufficient information from his inspection of the Bedell Cristin files coupled with the detailed bill of costs from DLA Piper. In saying this, I am not to be taken as implying that, where detailed objections by the paying party are lodged, it is incumbent upon the Greffier to inspect the files of a foreign lawyer. As already stated, I would expect this to be the exception rather than the rule and ultimately it is a matter for the Greffier to assess whether he has sufficient information to determine the reasonableness of the foreign lawyer's bill without access to the files of that lawyer.
(iii) Detailed objections
38. Although these were not referred to in the grounds of appeal or his skeleton argument, Advocate Goulborn raised two points of detailed criticism of the Greffier's decision at the hearing.
39. First, he pointed out that, pursuant to paragraph 2.6 of the Practice Direction, travelling and waiting time does not attract a factor B rate. A Jersey lawyer can only recover the factor A rate for such time. He further pointed out that the travelling and waiting time costs in the DLA Piper bill had been charged at the standard hourly rate for the applicable member of staff. Although, as mentioned earlier, such rates were within the combined factor A and factor B rate, they all exceeded the factor A rate alone. This meant that more was being recovered in respect of travelling and waiting time in the DLA Piper bill of costs than would be allowed in respect of Jersey lawyers.
40. It seems to me that determination of such an objection would require the Greffier to assess whether the particular travelling and waiting time fell within paragraph (a) or (b) of Rule 12/7. If the former then the rate could only be allowed at that applicable to a Jersey lawyer; but if the latter, a reasonable rate could be allowed which might well be the hourly rate claimed by the foreign lawyer. The difficulty in this case is that the plaintiffs raised no objection to these items when they filed their written objection. It is now far too late to raise such a point for the first time. They have to live with the consequences of not having taken the point at the correct time.
41. The second detailed objection relates to page 143 of the DLA Piper bill of costs where 8 hours of the partner's time has been allowed at the MG3 rate rather than the MG2 rate. Given the Greffier's decision that he would only allow all the partner's time at the MG2 rate, this is a simple arithmetical error and Advocate Gleeson agreed that it could be corrected by the Greffier under the "slip" rule, just as an earlier arithmetical error was corrected informally by the Greffier at the request of Advocate Gleeson.
Conclusion
42. The total level of costs allowed by the Greffier came to a substantial sum. However, this was complex commercial litigation. For the reasons I have given, I discern no error in the Greffier's decision and the appeal is dismissed.
