Jersey Unreported Judgments

Companies - leave of appeal.

[2022]JRC043

Royal Court

(Samedi)

17 February 2022

Before     :

T. J. Le Cocq, Esq., Bailiff sitting alone.

 

Advocate H. Sharp Q. C. for Hunters Investments Limited.

Advocate J. D. Kelleher for the Second to Fifth Defendants.

judgment

the bailiff:

Introduction

1.        This is an application arising out of the judgment of the Court in these proceedings to 18^th November 2021 (Hunters Investments Limited v Crill and Ors [2021] JRC 295) ("the Judgment").  In the Judgment the Court ordered that Carey Olsen should no longer act for the Second to Fifth Defendants in this case ("the Sanne Defendants"). 

2.        The Sanne Defendants have already applied to me for leave of appeal against the Judgment which I have turned down.  That application is being renewed before a single judge of the Court of Appeal. 

3.        The instant application is for a variation of the order of the Court arising out of the Judgment.  The Sanne Defendants have, following the issuing of the Judgment, sought to secure alternative legal representation but they submit that they have not been able to find an alternative legal representative of sufficient resources or in which they are sufficiently confident to conduct the case in place of Carey Olsen. 

4.        They ask instead that Carey Olsen be allowed to continue as instructing solicitors in this case but that a new counsel be appointed, namely Advocate Michael O'Connell, of Ardent Chambers who would act as counsel for the Sanne Defendants going forward. 

5.        The application is based upon paragraphs 79 and 80 of the Judgment which is in the following terms:

"79.  I appreciate, however, in the light of statements set out in Abacus relating to the size of the Jersey Bar it may be some period before alternative legal representation can be secured and it seems to me that there could conceivably be circumstances in which it is difficult to secure suitable alternative representation.  I was not addressed on this point and the consequences of potentially leaving the Defendants without effective representation is something that I must of course take into account. 

80.  In my judgment, therefore, whilst Carey Olsen should step down I give liberty to apply should it be impossible to secure alternative representation.  In those circumstances, rather as transpired in the Abacus case, it may be necessary to deal with the matter differently." 

6.        The reference to "Abacus" in the above citation is a reference to the decision of the Royal Court in Abacus (C.I.) Limited and De Figuerado v Bisson & Others (practising as Appleby) [2007] JLR 499.  The Court said this:

"In our judgment, the court may, in appropriate circumstances, take account of the small size of the Jersey Bar and of the nature of the different firms within that profession.  Clearly, in some cases the small size of the Bar cannot make any difference.  For example, if there were a case where a firm was undoubtedly in possession of a substantial amount of highly relevant confidential information and if it was clear that an information barrier could not possibly provide the necessary protection, the court would be left with no alternative but to restrain the firm from acting.  However, where the relevance of the confidential information may be borderline or where the information barrier may be effective, it seems to us that the court must take into account the consequences of any order it makes.  If the consequence of an order prohibiting a firm from acting for a plaintiff were that the plaintiff would find it difficult or impossible to find an appropriate replacement firm, that must be a relevant factor in deciding how the court should exercise its discretion .............[E]ach case turns on its own facts.  In some cases, the small size of the Jersey Bar will be irrelevant and in others it may be a material consideration.  Ultimately, the court has to do its best to ensure protection of both the competing principles referred above but given the small size of the Jersey Bar, the significance of the second principle may be somewhat more material in Jersey than in the United Kingdom if clients are not to be seriously disadvantaged in bringing claims against substantial financial institutions in the Island."

7.        The two principles referred to above were, firstly, that a client should feel free to disclose information freely to his lawyer in the knowledge that will remain confidential and that he should not be put at risk of finding it being used subsequently for the benefit of someone with an adverse interest to him and, secondly, there is a public interest that the choice of lawyers open to the public should not be unduly or unnecessarily restricted.  A client should be free to go to the lawyer of his choice unless there is good reason to the contrary (see RBC Trustees (C.I.) Limited (formerly Abacus C.I. Limited) and another v Bisson and Others [2007] JRC 211).

8.        The appointment of Advocate O'Connell would appear to address all of the concerns that the Court had in connection with the identity of counsel and any particular conflicts that arise in that regard.  Advocate O'Connell is an experienced advocate and can deal with matters of this complexity and is felt able to do so by the Sanne Defendants.  He is independent practising, as he does, from Ardent Chambers in Jersey which operates along the lines of counsel's chambers in the United Kingdom.  It is right to note that Advocate Sharp, who represents the Plaintiff, also practises from Ardent Chambers but, as I have indicated, Ardent Chambers operate as counsel's chambers and I am informed that there is no danger of any conflict of interest or breach of confidentiality. Advocate Sharp, who for the Plaintiff, opposes this application, does not do so on the basis that he, too, is a member of Ardent Chambers. 

9.        It is clear that the Sanne Defendants have taken steps to give effect to the Judgment and find legal advisers to act as an alternative to Carey Olsen.  I have before me the affidavit of Alexander James Bermingham dated 3^rd December 2021, who is the Chief Legal Officer of the Sanne Group.  I do not propose to refer to Mr Bermingham's affidavit at length.  He points out, with ample justification, that there are serious allegations made against the Sanne Defendants and that they operate in a highly regulated environment and therefore a finding of bad faith, dishonesty and/or fraud would have a serious detrimental effect on them and their professional standing.  In addition, there are substantial damages sought and the scale of the case is itself substantial.  A very significant sum indeed by way of legal fees has already been incurred with Carey Olsen.

10.      Mr Bermingham goes on in his affidavit to explain many of the actions taken within the proceedings as illustrative of their scale and the number of fee earners needed to carry them out successfully.  In the light of the nature of the case, I accept that it needs to be adequately resourced and that this may have a bearing on which law firms are able to assume the representation of the Sanne Defendants. 

11.      Mr Bermingham in his affidavit then goes through a list of law firms and advocates who he has considered or consulted.  For some he has identified conflicts of interest and for others, when interviewing partners in the firms, he did not receive from them the confidence that the Sanne Defendants would be as well represented as they are by Carey Olsen.  He was, however, confident following interview with Advocate O'Connell.  Mr Bermingham takes note of rankings in the legal directories and whilst accepting that these are not definitive he felt that the Sanne Defendants were entitled to take such things into account. 

12.      Having reviewed the steps that the Sanne Defendants have taken to meet the order of the Court, in my judgment those steps, whilst not necessarily fully exhaustive, have been both substantial and reasonable. 

13.      During the course of the preparation of this judgment, I issued directions for further written submissions as to, should I be considering permitting Carey Olsen to remain on record as solicitors:

(i)        what qualifications or conditions should be required of Carey Olsen by way of undertakings; and

(ii)       what the consequences would be, were I to direct that Advocate Kelleher, who at present is counsel and the Advocate in charge of the litigation on behalf of the Sanne Defendants in Carey Olsen, be required to step down from any conduct of the proceedings.

I am grateful to Counsel for those further submissions which I have taken into account.

14.      The issue before me, therefore, is whether it is possible, in all the circumstances, to retain Carey Olsen on the record as solicitors in this case, whether generally, or subject to restrictions and undertakings as to the way the case would be conducted.  Inevitably I must consider the conflicts or potential conflicts as identified in the Judgment and whether these can be mitigated by undertakings and safeguards that may be put in place. 

The Sanne Defendants' Arguments

15.      The Sanne Defendants' initial arguments are directed to the factors referred to in Mr Bermingham's affidavit mentioned above.  The Sanne Defendants wish to be represented by one of the highly ranked larger Jersey law firms which have sufficient resources and experience to deal with large scale cases.  Two of the larger firms, however, are conflicted.  None of the three firms interviewed (which had been selected for the Sanne Defendants with the assistance of Carey Olsen) were, in Mr Bermingham's view, and that of his colleagues, able to represent the Sanne Defendants on the scale that they believe themselves to be entitled to expect.  He fears that the firms that he saw might be swamped. 

16.      With regard to the protection of confidential information, I was referred to paragraph 74 of the Judgment in which it is said:

"It is difficult to be certain as to what confidential information if any may be in play in this matter.  However, Carey Olsen acted for HIL and may very well be privy to confidential information which, even if it cannot be recalled either by Advocate Jeffrey or by Advocate Kelleher or Advocate Coltman at the present time, it may still in some way affect the manner in which the litigation might be conducted in the manner referred to in the Abacus case above."

17.      The reference to the "manner referred to in the Abacus case" was a reference to authority quoted in that case which indicates that there can be a risk of unconscious use of confidential information in the conduct of the case. 

18.      In addressing some of the concerns set out in the Judgment I was referred to a number of cases relating to information barriers which suggest, and I accept, that if those barriers prevent the potential use of confidential information then they may provide a sufficient safeguard. 

19.      I was referred to the information barriers that are currently in place and indeed had been referred to them in the submissions by the Sanne Defendants on the last occasion.  In particular I was referred to the affidavit of Advocate Samantha Hoare of 12^th May 2021, which confirms:

(a)       The file relating to Advocate Kelleher's acting for the remaining partners in Crill Canavan more than 15 years ago is closed and has been for a significant period.  He has not looked at the file for a number of years and there is no suggestion that he nor Advocate Coltman or anyone else involved in these proceedings has seen any confidential information on the file;

(b)       in relation to Advocate Jeffrey, who acted for HIL in May 2011, he retired a number of years ago.  The file is long closed and there is no suggestion that Advocates Kelleher or Coltman or anyone else had viewed any confidential information;

(c)       Carey Olsen's computer system is designed to prohibit members of one department viewing the files of another department without partner approval;

(d)       The Representation of the Sanne Defendants in these proceedings sits within the Litigation Department under Advocate Kelleher's control and no one in the Litigation Department can access corporate files or vice versa without partner permissions;

(e)       Carey Olsen's internal technology department have been informed of the sensitivities in connection with this matter and instructed not to allow anyone access to Crill Canavan or HIL files without the prior written consent of Carey Olsen's Managing Partner, Advocate Alex Ohlsson. 

20.      In the light of the above there is, so the Sanne Defendants argue, an effective information barrier in place.  The Sanne Defendants point to the length of time elapsed since Advocate Kelleher had any involvement in the earlier matters or indeed did Advocate Jeffrey who had not had any involvement since May 2011.  A similar point is made with regard to Advocate Coltman's files and involvement and the concern relating to his involvement was in terms of the receipt of background information from Advocate Jeffrey and was limited.  It is further argued that there is no risk of Advocates Jeffrey or Coltman imparting anything of a confidential nature to Advocate Kelleher.  In short, there is no "real risk" of disclosure. 

21.      In response to the request for supplemental submissions referred to at paragraph 13 above, whilst arguing that the provisions put in place by Carey Olsen are sufficient, Carey Olsen offered the following additional undertakings:

(a)       An undertaking from Advocate Ohlsson, the Managing Partner, not to provide authorisation for access to any of the closed Crill Canavan or HIL files save pursuant to an order of the Court or after the conclusion of the proceedings;

(b)       Whilst there is no reason for anyone in Carey Olsen to seek to discuss the case with Advocate Jeffrey, Carey Olsen would undertake to write to him to confirm the current sensitivities to the effect that they would be unable to discuss the matter with him;

(c)       Advocate Coltman would undertake to the Court not to discuss any confidential information that he may recall nor to be involved in the representation of the Sanne Defendants with those at Carey Olsen involved in the Bank's proceedings and the HIL proceedings;

(d)       Advocate Kelleher can provide an undertaking to the Court not to discuss any matters relating to the 2005 Settlement Agreement which may be relevant to the HIL proceedings.

22.      The Sanne Defendants argue that Advocate Kelleher should not be required to step down from the case in its entirety however.  He has the greatest familiarity with the facts and has led the team since late 2018.  He drafted both of the answers in the relevant cases and has been the main contact with the clients and potential witnesses and has had a substantial hand in the preparation of witness statements.  The Sanne Defendants do not wish to lose the institutional knowledge that he has built up.  It is argued that the removal of Advocate Kelleher would give rise to substantial prejudice.  There is no real risk of any memory from earlier matters arising given the passage of time. 

23.      Pausing at that point, it does not appear that this argument necessarily addresses one of the concerns set out in the Judgment, namely that in some manner, Advocate Kelleher's continued involvement will give rise to some inadvertent recall of confidential information.  Whilst it is of course the case that Advocate Kelleher will have a significant amount of institutional knowledge, were I to make the order that Advocate O'Connell take over as counsel, Advocate O'Connell will need to assume the same level of knowledge currently held by Advocate Kelleher to be able to take the matter forward as lead counsel in the manner suggested by the Sanne Defendants.  It is proposed that Advocate O'Connell will occupy an office at Carey Olsen and will effectively lead the team.

24.      In paragraph 27 of the additional submissions the Sanne Defendants say:

"What the Sanne Defendants envisage is that Advocate O'Connell will assume essentially the current role of Advocate Kelleher, with the support of the existing Carey Olsen team members (with the exception of Advocate Kelleher) and with the Carey Olsen litigation partner (to be confirmed) appointed to act as necessary as a point of contact and liaison and also in relation to the firm's obligation from a human resources/employment perspective."

HIL's arguments

25.      In its skeleton argument HIL draws my attention to a number of ongoing difficulties with discovery.  It is clear that HIL remains suspicious of the discovery process and why, in its view, further information that it has requested has not been forthcoming in connection with the meeting of 19^th May 2011 and other issues. 

26.      HIL argues that having identified Advocate O'Connell as a new lead counsel, to which HIL raises no objection, there is no reason why a medium-sized firm or a combination of other firms and counsel brought in from the United Kingdom could not provide all the necessary support for the Sanne Defendants in the conduct of the litigation.  It is not necessary, so HIL argues, for Carey Olsen to remain in place. 

27.      There is a significant criticism raised by HIL of the approach of Mr. Bermingham in his affidavit and the reasons that he expresses for not wishing the smaller firms that he consulted to act.

28.      It would not be helpful in this judgment to go through the list of potential legal advisers that the Sanne Defendants had considered and had decided that they did not wish to instruct.  Many of the reasons advanced by the Sanne Defendants in fact do not in the slightest way suggest that they did not view the firms and advocates concerned as having ability and competence.  The primary concerns raised by Mr Bermingham were those as to resources but, on occasion, it was a result of the impression given to Mr Bermingham by those that he interviewed.

29.      HIL suggests that it would be possible for another firm to provide the resources and then instruct Advocate O'Connell as counsel.  That was not, in fact, explored by Mr Bermingham, but I can see that it would be difficult to procure that a firm should accept instructions as instructing solicitors only and instruct an external counsel in the form of Advocate O'Connell when it would usually expect to field perfectly able senior advocates of its own. 

30.      HIL puts forward the concern that Carey Olsen would have too much of an involvement with regard to the discovery process.  At paragraph 15 of its skeleton argument HIL says:

"Carey Olsen would remain in control of the discovery process, all the preparations for trial, including preparing the D's' witness statements, presumably including those of Advocates Coltman and Kelleher.  Carey Olsen lawyers would sit behind and give instructions to MOC at all future hearings and trial (when not moving across the court room to enter the witness box to give evidence or to the front bench to provide additional advocacy support to MOC).  Such an arrangement would be entirely artificial and would fundamentally undermine the Royal Court's removal judgment."

31.      That is, of course, a potential outcome of leaving Carey Olsen in the position of instructing solicitors in the normally understood sense of that term in England and Wales.  Much will depend, however, on the precise basis on which Carey Olsen might continue and the necessary qualifications that might apply. 

32.      HIL is critical of the Sanne Defendants for discounting the two larger firms that it considered as it discounted them for reasons of conflict without having had a conversation with the firm to determine whether it considered itself conflicted.  In one case HIL suggests that the firm could keep files that might conceivably be relevant and confidential were it now to act for the Sanne Defendants.  I cannot readily see how that sits comfortably with the arguments made in the removal application itself but, be that as it may, it does not seem to me that the concerns raised with regard to potential conflict in the two large firms referred to in the affidavit of Mr Bermingham are without merit. 

33.      Turning to the addendum skeleton argument prepared by HIL in the response to my request for further submissions, HIL maintains its original position and further makes the point that Advocates Coltman and Kelleher are irretrievably potentially conflicted and also that it cannot be appropriate or even open to Carey Olsen to say that the contents of its letter authored by Advocate Jeffrey of 20^th May 2011 was wrong.  

34.      HIL argues that it is clear from Mr Bermingham's affidavit that Carey Olsen will continue to run the litigation with "complete autonomy". 

35.      Again, HIL raises a number of concerns relating to discovery and what has or has not been provided in terms of evidence or documentation.  It is strongly argued that it will be wholly inappropriate for Carey Olsen to take discovery decisions.  Paragraph 13 of the skeleton argument HIL says:

"The same observations apply to the prospect of CO taking witness statements from those involved in these events whether that be Advocate Coltman, Advocate Kelleher or anyone else given their extensive involvement in the factual matrix from 2011 onwards.  It is difficult to imagine junior lawyers within CO Litigation Department approaching senior CO partners for such statements".

Conclusion

36.      In the light of the concerns raised by Mr Bermingham in his affidavit, which I accept, I must balance the two principles referred to above in this case. 

37.      In the light of the Judgment I can, of course, see the force in some of the concerns raised by HIL if Carey Olsen continue as instructing solicitors in the traditional sense of that term.  It is appropriate however, to consider whether their involvement, suitably prescribed may nonetheless continue.  Much of it may depend upon how one interprets the phrase "instructing solicitor".  It is clear to my mind for the system proposed by Carey Olsen to be operated successfully, Advocate O'Connell must in effect take over the running of this litigation.  Carey Olsen can function as instructing solicitors only to the extent that they can provide logistical and technical support and legal support under his direction but will not be in a position to give tactical or legal instructions to Advocate O'Connell.  He will take on full responsibility for the conduct of the litigation and there will be no Carey Olsen partners who have had any prior involvement in earlier matters present with him in Court or purporting to instruct him.  He will take his instructions in the normal way that a lead counsel in Jersey would, directly from the client, having first advised them appropriately.  He may look to Carey Olsen's staff, through the liaison of a litigation partner not previously involved in the matter, for logistical and legal support but all decisions relating to discovery, witnesses and the conduct of the litigation will be for him as lead counsel. 

38.      In summary, in my judgment a great deal of potential difficulty in the conduct of this litigation is addressed by the replacement of Advocate Kelleher as lead advocate with a fully independent counsel who will have control over the conduct of the litigation subject, of course, to instructions from the client in the normal way. 

39.      I further accept that if any professional undertaking is given to the Court by any partner in Carey Olsen, then that will be adhered to strictly and to the letter.  However, whilst I do not doubt that Advocate Kelleher would act at all times with the utmost probity I do not think that the Abacus type risk is effectively precluded and he should accordingly step down from any involvement in this case. His place, in terms of the management and direction of this case and the functions of counsel, should be taken over by Advocate O'Connell. 

40.      Balancing the principles referred to above, I conclude that the concerns raised in the removal application can be addressed by a combination of Advocate O'Connell taking over the matter in the manner proposed by the Sanne Defendants and, specifically, with the manner set out at paragraph 27 of the additional submissions mentioned at paragraph 24 above, together with the information barrier provisions already in force coupled with the additional undertakings set out in paragraph 21 above.  Advocate Kelleher would step away from this litigation.

41.      Those undertakings given and those steps taken I would be prepared to grant the Abacus style application made by the Sanne Defendants. 

42.      It will inevitably take time for Advocate O'Connell to read into the file and to become fully versed in the details of this case.  Accordingly, it seems to be not unreasonable for Advocate Kelleher to remain involved in the conduct of this matter, purely for the purposes of briefing Advocate O'Connell and ensuring that the Sanne Defendants interests are protected whilst Advocate O'Connell is coming up to speed, for a period of six weeks from the date hereof.  There will be liberty to apply should there be practical difficulties. 

43.      It has been argued before me that the Sanne Defendants are on notice of potential summary judgment applications in both sets of proceedings.  It is of course a matter for the Plaintiffs as to whether they wish to bring such an application but if they seek to do so within the period that I have specified (subject to any potential extension) it may be that Advocate Kelleher will need to have a continued involvement to deal with that.

Authorities

Hunters Investments Limited v Crill and Ors [2021] JRC 295.

Abacus (C.I.) Limited and De Figuerado v Bisson & Others (practising as Appleby) [2007] JLR 499.

RBC Trustees (C.I.) Limited (formerly Abacus C.I. Limited) and another v Bisson and Others [2007] JRC 211.