Jersey Unreported Judgments

Costs - reasons for the costs order.

[2018]JRC181

Royal Court

(Samedi)

28 September 2018

Before     :

Advocate Matthew John Thompson, Master of the Royal Court.

 

 

Advocate D. R. Wilson for the Plaintiff.

Advocate J. C. Turnbull for the Defendant.

CONTENTS OF THE JUDGMENT

		Paras
1.	Introduction	1
2.	Background	2-6
3.	The parties' contentions	7-16
4.	Decision	17-30

 

the mASTER:

Introduction

1.        This judgment contains my reasons for the costs order I made consequential upon the withdrawal of the above proceedings by the plaintiff.

Background

2.        The present proceedings have led to two judgments dated 7^th June, 2016, Dubai Islamic Bank v Ridley [2016] JRC 102 striking out parts of the defendant's answer and the Royal Court's judgment dated 5^th December, 2017, reported at Dubai Islamic Bank PJSC v Ridley [2017] JRC 204 which overturned part of my decision in 2016. 

3.        The background to the dispute is set out in both judgments.  The procedural history of the present action is set out at paragraph 35 of my previous judgment. 

4.        Between the judgment being handed down by me and the appeal, the action was stayed because of certain other related proceedings taking place in England.  This led to the hearing of the appeal against my judgment being stayed. 

5.        Following on from the Royal Court's judgment the defendant filed a re-amended answer pursuant to directions given on 19^th March, 2018. 

6.        The plaintiff has decided not to pursue these proceedings further because the amount of any recovery of any assets in the trust fund is likely to be limited having regard to the complexity of the issues now required to be determined as a result of the Royal Court's judgment. 

The parties' contentions

7.        Advocate Turnbull for the defendant argued that his client should be paid his costs on an indemnity basis because the proceedings had been discontinued and withdrawn relying upon the decision in Marange Investments (Proprietary) Limited v La Generale des Carrieres et des Mines SARL [2013] JRC 119A. 

8.        He argued that this was a case where injunctions had been imposed and the beneficiaries of the trust could not have access to the assets for their benefit.  The fact that the plaintiff was discontinuing now because assets were limited was a fact always known to the plaintiff since proceedings were commenced and certainly known since 2015.  The point had also been flagged expressly with the plaintiff by the defendant. 

9.        The effect of the Royal Court's decision was that there were arguable points for trial which claims the plaintiff was not now pursuing.  That justified a costs order. 

10.      His client had attempted to negotiate matters but his request for a stay to do so has been refused.

11.       Advocate Wilson argued that there should be no order as to costs.  He emphasised that the defendant had challenged findings of fraud made by the English Court in the hearing before me, that no discovery had been provided pursuant to the injunctions granted and therefore the defendant had been in contempt of six and half years and that while a request for a stay was refused, the defendant was invited to put forward proposals to settle matters.  No such proposals had been made. 

12.      Ultimately, in deciding what costs order to make, the objective was to do justice between the parties. 

13.      The Marange case was different because, while merits could be taken into account, the facts in the Marange case were far removed from the instant scenario. 

14.      It was only the Royal Court decision that added complexity to the matter.  Otherwise the plaintiff would have been able to pursue the tracing claim to a conclusion and still effect a recovery. 

15.      If a costs order was made, it should not be enforced because a judgment of an English High Court had been registered earlier in the year in Jersey where the defendant owed the plaintiff $432 million and therefore any costs found to be owed to the defendant should be set-off against such an order and should not otherwise be enforced.

Decision

16.      Ultimately in respect of costs, the starting point for my decision is the general discretion vested in me pursuant to the Civil Proceedings (Jersey) Law 1956, Article 2.  How I should generally approach the exercise of that discretion is set out in the well-known case of Pell Frischmann Engineering Limited v Bow Valley Iran Limited & Ors [2007] JLR 479 with the overriding objective being to do justice between the parties.  The Pell Frischmann decision at paragraph 7 also considered when indemnity costs should be awarded (as approved by the Court of Appeal subsequently in C v P-S [2010] JLR 645).  These are the principles that I have adopted. 

17.      Ordinarily, where a party withdraws proceedings, I agree that it is likely that a costs order will be made in favour of the party or parties against whom proceedings had been commenced.  However, where a court is asked to make a costs order this is an exercise of discretion and to that extent every application must be treated individually, notwithstanding the normal practice of the court. 

18.      Secondly, in deciding what costs order to make, I consider Marange makes it clear that I am entitled to have regard to the merits as far as I am able to do so based on the material I have seen.  In this case the material that led to my judgment in 2016 was extensive including the judgment of Flaux J.  I am of the view in relation to the issues the Royal Court determined were for trial, that the plaintiff had the better of the legal arguments and more likely than not would have prevailed if it could be shown that any proceeds of the fraud found their way into the trust. 

19.      In this case it is also right to record that the question of what costs orders to make as a result of the hearing before me and the subsequent Royal Court Appeal was left over to the trial judge.  This is significant because the defendant was successful in respect of some parts of his appeal but not others.  In addition, the defendant before me argued that he was not bound by the findings of Flaux J, a contention which I rejected. 

20.      In my view if there had been a clear winner in the previous hearings, the Royal Court would have made a costs order in favour of one party or the other.  The absence of such an order supports that the Royal Court did not consider there was a clear winner.  I consider I am entitled to take this into account in deciding what order to make now that the proceedings are being withdrawn. 

21.      I also agree with Advocate Wilson that it is relevant that the defendant was required to make disclosure pursuant to the original injunctions and has not done so.  I was informed at regular intervals that there were difficulties in the defendant providing discovery but these arguments were never tested or adjudicated upon.  Nor was any discharge or variation of the injunction ever sought by the first defendant. 

22.      This is also not a case, unlike Marange, where if the matter proceeded to trial, the injunction would have been discharged.  In light of the findings of Flaux J, this was more than an appropriate case for an injunction to have been granted and to have remained in force until trial. 

23.      Balancing that allegations had been made and later withdrawn on the one hand with the above matters on the other, until the decision of the Royal Court on 5^th December, 2017, I consider the just order is not to make any order as to costs up to 5^th December, 2017.  The issues I have raised in respect of the first defendant in my judgment cancel out that usually a costs order is made in a defendant's favour where an action is withdrawn. 

24.      It also follows from the above that I am not persuaded that exceptional circumstances exist to make any form of indemnity costs order. 

25.      After 5^th December, 2017, however, the first defendant has been required to take further steps in relation to the ongoing defence of the plaintiff's claim.  The plaintiff could have indicated sooner than it did after 5^th December, 2017, that it was no longer minded to pursue the proceedings for the reasons now advanced.  Accordingly, the defendant has been put to additional expense to file an amended pleading and the costs of doing so.  In my judgment in light of the plaintiff's decision to withdraw being based on the complexity of the case it now has to meet following on from the Royal Court judgment, it put the defendant to additional costs beyond the point it could have made a decision to withdraw. 

26.      I therefore ordered that the defendant after 5^th December, 2017, should recover its costs on the standard basis.  I did not order costs on the indemnity basis because I was not satisfied that the appropriate circumstances existed by reference to the facts of this case to make such an order. 

27.      These costs will be set-off against the amount due under a judgment of the plaintiff against the first defendant registered before the Royal Court and the costs order may not otherwise be enforced without either my permission or the permission of the Royal Court.  This is because the costs I ordered to be paid is money owed by the plaintiff to the first defendant who owes money under the registered judgment to the plaintiff. 

28.      While Advocate Turnbull did remind me that the first defendant was awarded legal aid and received payment of certain disbursements out of the legal aid vote, I do not consider that I can use my jurisdiction to require the plaintiff to reimburse the legal aid vote for costs paid out to counsel to advise the first defendant.  By analogy with Flynn v Reid [2012] (2) JLR 226, it is not appropriate for the court when making a costs order to become involved in arrangements between a legally aided individual and funds provided by the legal aid vote. 

29.      In respect of costs of the hearing itself, as each party was partially successful I consider that the just order in respect of the summonses was also no order as to costs. 

Authorities

Dubai Islamic Bank v Ridley [2016] JRC 102

Dubai Islamic Bank PJSC v Ridley [2017] JRC 204

Marange Investments (Proprietary) Limited v La Generale des Carrieres et des Mines SARL [2013] JRC 119A

Civil Proceedings (Jersey) Law 1956

Pell Frischmann Engineering Limited v Bow Valley Iran Limited & Ors [2007] JLR 479

C v P-S [2010] JLR 645

Flynn v Reid [2012] (2) JLR 226