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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Optical Services and Ors -v- Carey Olsen and Ors [2014] JRC 208A (29 October 2014) URL: http://www.bailii.org/je/cases/UR/2014/2014_208A.html Cite as: [2014] JRC 208A |
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PETTY DEBTS COURT IN THE ISLAND OF JERSEY
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Before : |
Advocate Matthew John Thompson, Relief Magistrate |
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Between |
Optical Services (Jersey) Limited |
First Plaintiff |
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Ian Kenny |
Second Plaintiff |
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Julie Kenny |
Third Plaintiff |
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And |
Carey Olsen |
First Defendant |
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Christopher Duncan Philipott |
Second Defendant |
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Robin Leeuwenburg |
Third Defendant |
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The Second and Third Plaintiffs appeared in person and on behalf of the First Plaintiff.
Advocate I. C. Jones for the Defendants.
CONTENTS OF THE JUDGMENT
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Paras |
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1. |
Introduction |
1 |
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2. |
Background |
2-9 |
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3. |
The present proceedings |
10-13 |
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4. |
The arguments |
14-16 |
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5. |
Decision |
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A lacuna |
17-28 |
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A duty of care |
30-44 |
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6. |
Conclusion |
45-46 |
judgment
the relief magistrate:
1. This judgment represents my detailed reasons for ruling, firstly, that no duty of care is owed by a lawyer to his client's opponent in litigation, and secondly, that an opponent of a law firm's client in adversarial litigation may not bring a claim against that law firm on the basis of a breach of the Jersey Law Society Code of Conduct.
2. The current proceedings follow on from eviction proceedings that were brought against the present plaintiffs in the Petty Debts Court in September 2013 ("the eviction proceedings"). The eviction proceedings were brought by a Mr and Mrs Allenet (the "landords"), who were represented by the first defendant acting through the second and third defendant.
3. The eviction proceedings related to a lease granted by the landlords to the first plaintiff, guaranteed by the second plaintiff. The property was occupied by the second and third plaintiff and their children. The annual rental payable under the lease was £30,000.
4. On 5th August, 2013, the landlords served a notice to quit on the present plaintiffs. The notice to quit was served through the Viscount's Department. No challenge was made to the validity of the notice to quit under Article 2 of the Loi (1946) Concernant L'Expulsion des Locataires Refractaires (as amended).
5. The plaintiffs did not vacate the premises and therefore the landlords commenced eviction proceedings against the plaintiffs by summons. The summons firstly sought a declaration that the lease had been validly and effectively terminated by the notice given by the landlords on 5th August, 2013, and secondly sought eviction of the present plaintiffs. Relief was also sought in respect of costs of repair and redecoration as well as the costs of the action.
6. Two hearings took place in relation to the eviction proceedings. The first hearing took place on 13th September, 2013, when the Assistant Magistrate made an order permitting the landlords to have access to the property to inspect the state of repair of the property in various respects and otherwise adjourned the matter to 2nd October, 2013. On 2nd October, the Assistant Magistrate declined jurisdiction by order "on the basis that the lease had not been cancelled formally by any judicial act and it had no power to do so as the rental payable pursuant to the lease was £30,000 per annum, this in excess of the limits set out in Article 1(2) of the Petty Debts Court (Miscellaneous) (Provisions)(Jersey) Law 2000."
7. The order is silent to the costs of the eviction proceedings. On 5th October, 2013, the first plaintiff acting through second plaintiff wrote to Mr David Mallet, a Greffier at the Petty Debts Court. The first three paragraphs of the letter state as follows:-
"An interesting procedural bottleneck has arisen in respect of my stated intention to seek a wasted costs order against Advocate Leeuwenburg in respect of the doomed proceedings.
The power of the Petty Debts Court to award costs flows from Article 3 of the Civil Proceedings (Jersey) Law 1956 ("the law"). Copies attached for your convenience.
The Court's discretion is quite limited. The conditions to award costs to either the Plaintiffs or the Defendants in this action in accordance with either Article 3(1)(a) or Article 3(1)(b) of the law cannot be fulfilled when the court declines jurisdiction, since neither the Plaintiff wins nor is the Defendant discharged. And the court has no power to award costs against anyone other than the Plaintiff or the Defendant, which means its discretion to grant the wasted costs order I seek is frustrated."
8. Mr Mallet replied on 7th October, 2013, by email. The second paragraph of his reply stated as follows:-
"Having considered your letter I concur with your observations in respect of your dilemma with regards to costs - particularly so in light to the fact that the Petty Debts Court declined jurisdiction."
9. The present position in relation to the eviction proceeding is therefore that no order for costs was made on 2nd October, no appeal has been made to the Royal Court in respect of costs and the court file has been closed.
10. The plaintiffs have issued the present proceedings to recover the costs they did not recover in the eviction proceedings as a result of the Assistant Magistrate declining jurisdiction. They seek to recover those costs from the defendants as legal advisers to the landlords. The first defendant was the entity retained by the landlords. The second defendant was the partner responsible and the third defendant was the advocate with day to day responsibility for the proceedings brought on behalf of the landlords.
11. Following an unsuccessful referral to mediation, on 30th April, 2014, the defendants requested that the court exercised its jurisdiction, pursuant to Article 2(1) of the Petty Debts Court (Miscellaneous)(Provisions)(Jersey) Law 2000 to transfer the proceedings to the Royal Court on the grounds that the claim involved an important and complex question of law. On 30th April, 2013, it was also noted that neither the Magistrate nor the Assistant Magistrate would be able to sit and hear the subsequent trial of the proceedings commenced by the plaintiffs given their prior involvement with the eviction proceedings. However, the request to transfer the matter to the Royal Court was refused.
12. On 7th May, 2014, the Assistant Magistrate ordered the plaintiffs to fully particularise their claims against the second and third defendants and adjourned matters until 21st May, 2014. As I had by that time been appointed as a Relief Magistrate to conduct mediations in the Petty Debts Court, I was asked to take on the future conduct of the case.
13. Accordingly, on 21st May, 2014, I ordered a preliminary issue as follows:-
"1) THAT having regard to paragraphs 29 and 30 of the Plaintiff's amended Statement of Claim, based upon the assumption that the matters detailed with paragraphs 1 to 28 are true, the matter as to whether or not:-
The duty of care owed by a lawyer to his client can be extended to a third party, or
The duties as enshrined in the Law Society Code of Conduct are "duties of Care" as contended for by the Plaintiffs and if they are (i) whether they are actionable by the Plaintiffs and (ii) whether that duty of care can be extended to apply to a third party.
should be determined as a preliminary issue."
14. The plaintiffs' principal complaint was that there is a lacuna in the law which needs to be filled by allowing the plaintiffs to sue the defendants. The lacuna is that, having been wrongly sued in the Petty Debts Court, the plaintiffs were unable to recover their costs either from the plaintiffs in the eviction proceedings or from the defendants personally on a wasted costs basis. In light of this gap in the law, the law should be extended to enable the plaintiffs to pursue the defendants either in negligence or by reference to the Law Society Code of Conduct. The breach of the code of conduct complained about is that the defendants failed to uphold the high technical standards required of lawyers because the plaintiffs were pursued in a court that lacked jurisdiction and this was known to the defendants.
15. The defendants argued as follows:-
(i) There is no lacuna. The Petty Debts Courts could have made a costs order either against the plaintiffs in the eviction proceedings or against the plaintiffs' advocate on a wasted costs order basis.
(ii) Generally a Jersey lawyer does not owe a duty of care to his client's opponents in hostile litigation save in exceptional circumstances.
(iii) No such circumstances arise in the present case.
(iv) There are sound policy reasons for the general rule that no duty of care is owed to an opposing litigant, which should be followed in Jersey.
(v) To impose a duty of care would render the litigation system in Jersey unworkable.
(vi) The duties set out in the Law Society Code of Conduct do not give rise to obligations or duties owed by Jersey lawyers to the world at large.
(vii) To find any such duty is inconsistent with the express provisions of the Code.
(viii) A breach of conduct does not of itself give rise to any form of civil liability; at best it is only evidence of a potential liability, if a duty of care exists.
16. The defendants also reserved their position as to whether the Assistant Magistrate was right to decline jurisdiction but no argument was heard on this point.
17. The plaintiffs' principal complaint, that there is a lacuna in the law which needs to be filled by allowing the plaintiffs to sue the defendants, requires me to consider Article 3 of the Civil Proceedings (Jersey) Law 1956. Article 3 contains the power for the Petty Debts Court to award costs and provides as follows:-
18. In my judgment, Article 3 allows the Petty Debts Court to make an order for costs where it declines jurisdiction. I have reached this view for the following reasons.
19. Firstly, I interpret "the hearing of an action" in paragraph 1 of Article 3 to mean any hearing of an action at any stage of proceedings. This could be when a claim first comes before the Petty Debts Court, when judgment is given on liability only, or on an application to bring the matters in dispute to early resolution (see Petty Debts Court Rule 27(f)). Therefore a hearing of the action does not mean in my view only when a trial occurs.
20. Secondly, in relation to paragraph 1(b) of Rule 3, I consider that a defendant can be discharged from the action in a number of different circumstances. This could be when a claim is struck out, or withdrawn, where an early determination has occurred in the defendant's' favour, as well as after a trial. When the Petty Debt Court reaches the view that it does not have jurisdiction then in declining jurisdiction it is still discharging a defendant from the action. The fact that it is doing so on jurisdictional grounds does not affect the conclusion that the defendant is discharged from the proceedings. All it means is that the defendant might still be sued in a different court. A costs order in a defendant's favour is therefore a consequential order and in that sense is part of the court's decision in declining jurisdiction, namely that because the defendant has been discharged, having been sued in the wrong court, the defendant should also be entitled to such costs as the court considers to be just and reasonable.
21. If I had to construe paragraph 1(b) otherwise, as the plaintiffs contend, then the Petty Debts Court could never make a costs order against a party who had wrongly invoked the court's jurisdiction. That is a construction that produces an unfair result for a defendant wrongly convened to proceedings and is not a construction I am prepared to uphold.
22. What costs order the Petty Debts Court might make in a matter where a defendant is discharged is for the individual judge presiding. While Article 3 makes it clear that a costs order must be made, the amount is a matter for the individual judge. The judge might order a plaintiff to pay all the defendant's costs. There may also be circumstances where only the wasted costs of the defendant are ordered to be paid. The judge on a case by case basis has to decide what is just and reasonable, which is a matter of judicial discretion.
23. I also consider that the power to make a costs order that is just and reasonable extends to requiring a party's legal adviser to pay those costs on behalf of a party if the circumstances justifying a wasted costs order are established. I should make it clear that I am not expressing any view whether or not there are such grounds. Rather I am simply concluding, as a matter of construction, that Article 3 of the Civil Proceedings (Jersey) Law 1956, permits the Petty Debts Court to require a Jersey Advocate or Ecrivain to pay costs personally on behalf of a plaintiff or defendant, if the judge considers that such an order is just and reasonable and if there are circumstances that justify such an order.
24. If I am wrong on this interpretation, because the Petty Debts Court can only order one party to pay the costs of the other, rather than that party's adviser on behalf of that party, this narrower construction does not assist the plaintiff in the present proceedings. The Petty Debts Court clearly possessed jurisdiction, in the sense of power, in the eviction proceedings to make a costs order in the plaintiff's favour payable by the landlords. If such an order had been made, but not made against the present defendants as the landlords' advisers because the court had no power to do so, the plaintiffs would still have recovered their costs. The potential lack of any ability to recover costs from the landlords' advisers on a wasted costs basis does not mean that that there is a lacuna to be filled in the law of negligence because the plaintiffs would have recovered their costs from the landlords if an order had been made in the plaintiffs' favour. Secondly, a wasted costs order is ultimately a court expressing its displeasure with a legal adviser of one party. Even if the Petty Debts Court does not have power to make a wasted costs order against a Jersey Advocate or Solicitor, it could in its judgment, if it thought it was appropriate to do so, suggest that such costs had been incurred as a result of the actions of a party's legal adviser. It would then be for the party and the adviser to resolve who would pay the costs order made against the party. In serious cases it could also refer the question of any misconduct by a Jersey lawyer to the Royal Court. Both these alternatives mean that there is no need to extend the law of negligence as the plaintiffs contend.
25. I accept the difficulty the plaintiffs now face is that the view the second plaintiff expressed to a Greffier of the Petty Debts Court and the Greffier's reply is different to the interpretation I consider (and Advocate Jones accepts for the defendants) should be placed on Article 3 as a matter of construction. The plaintiffs therefore complain they are still left without a remedy.
26. In my judgment they were not without a remedy when the Petty Debt's Court declined jurisdiction. At the time of the Court's decision declining jurisdiction or shortly thereafter, they could have asked for a ruling on costs from the Assistant Magistrate following the exchange of correspondence between the second plaintiff and the Greffier. To the extent that the Assistant Magistrate made an express order that no party was entitled to their costs because jurisdiction had been declined, the plaintiffs could have appealed that order to the Royal Court. Neither of these options was pursued.
27. However, the plaintiffs still have a remedy in my judgment. As matters stand, I do not think it possible to now ask the Assistant Magistrate to consider the position in the eviction proceedings. This is because, firstly, I have expressed a potentially different view in this judgment to any views he may hold (assuming that the Greffier's email reflected his views). Secondly, the Assistant Magistrate has decided that it is not appropriate for him to sit any further in relation to issues involving the plaintiffs, (as has the Magistrate). However it is still open to the plaintiffs to apply as defendants in the eviction proceedings to the Royal Court to ask the Royal Court to make a costs order in their favour by way of appeal against the lack of any order made by the Petty Debts Court. It is a matter for the plaintiffs whether they would wish to pursue such a course because any appeal is out of time and they would therefore need the Royal Court's permission to make such an application. It is also a matter for the Royal Court as to whether it would allow an application out of time at this stage. On any such application it would want to hear from the landlords and the defendants as well as the plaintiffs. Nevertheless, it is still an option available to the plaintiffs to pursue.
28. I have set out the above because, in light of my view that the Petty Debts Court has jurisdiction to make a costs order and that the plaintiffs had remedies and still possess a possible avenue to obtain a costs order in their favour, there is no lacuna to be filled.
29. However, out of deference to the submissions of both parties, I will also consider whether or not a Jersey lawyer owes a duty of care to the opponent of a lawyer's client in litigation and alternatively whether or not a complaint can be brought on the basis of a breach of the Jersey Law Society Code of Conduct.
30. In relation to this part of the argument I was referred by Advocate Jones to Al-Kandari v J R Brown & Co (C.A.) [1988] QB 665. At page 52 lines A to F, Lord Donaldson M.R. stated as follows:-
31. It is to be noted that the reasons why Lord Donaldson found there not to be a duty of care were public policy reasons. Bingham L.J. expressed similar views at page 675 lines E to 676 line A and stated as follows:-
32. It can also be seen from the extracts cited above, that the reason why the defendants were found to be liable in Al-Kandari related to a voluntary assumption of responsibility of a duty by the defendants (who were solicitors) to their client's opponent. The solicitors had agreed to take care and control of their client's passport but then released it to him in breach of an obligation not to, allowing their client to remove his children outside the jurisdiction. The solicitors therefore, as Lord Donaldson put it, stepped outside their role as solicitors for their client and accepted responsibilities towards their client, the plaintiff and the children, which they breached.
33. In White v Jones [1995] 1 All EW 691 at 699 line B, Lord Goff, in summarising the conceptual difficulties in relation to whether a solicitor owed a duty of care to anyone other than a solicitor's client, stated:-
34. Nowhere in White v Jones was this view disagreed with by any other members of the House of Lords.
35. In Connolly-Martin v Davis Polk [1999] P.N.L.R. 826, Brooke L.J. stated as follows striking-out a claim for negligence against a barrister:-
36. I observe that in the case of in Al-Kandari, the lack of a duty of care is said to arise on the public policy grounds; therefore Lord Donaldson and Bingham L.J. implicitly accepted there was sufficient proximity between a lawyer and a client's opponent whereas in Connolly-Martin v Davis Brooke L. J. held that there was insufficient proximity for a duty of care to arise. It is not necessary to resolve this difference because both reached the same conclusion namely that no duty of care is owed absent a specific assumption of responsibility. The rationale for this approach is set out most clearly the remarks of Bingham LJ in Al Kandari in the second paragraph set out above.
37. Advocate Jones tested the position argued for by the plaintiffs by considering the obligations on cross-examination. Other than the duty not to mislead the court by making assertions an advocate knows to be untrue, an advocate's duty on cross-examination is to advance his client's interest as best he or she is able to do so. Such a duty does not sit with the notion of owing a duty of care to the client's opponent, who may be the very person the advocate is cross-examining. If it were otherwise, disputes could be endlessly re-litigated because the party who was dissatisfied with the outcome of the litigation might not just pursue its own adviser but also the opponents' adviser. As Advocate Jones observed in his skeleton, this would render the adversarial legal system unworkable.
38. The view I have reached is also consistent with remarks of Scott J. in Business Computers v Company Registrar [1987] 1 Ch. 229. At page 239 Scott J. stated as follows:-
39. If a party through their legal adviser fails to adhere to the procedural rules of a court the appropriate remedy is under the rules, which could include an adverse costs order. That might be, as I have set out above, against a party's legal adviser if grounds for a wasted costs can be established. A failure to adhere to procedural rules therefore has its own remedies and does not require the notion of a duty of care to be extended to an opponent in adversarial litigation. Indeed suing in the wrong court which does not possess jurisdiction is itself an example of a failure to follow the correct procedural rules. Costs are a part of the mechanism by which such procedural defects are corrected.
40. I see no difference between the law of Jersey and the law of England in respect of the plaintiffs' arguments and the responsibilities of Jersey lawyers in what is also for civil disputes, an adversarial system. I therefore consider the extracts I have set out above also represent the law of Jersey. Accordingly, I rule against the plaintiffs that any duty of care is owed to them by the defendants as advisers to the plaintiffs' opponents in the eviction proceedings.
41. In the alternative the plaintiffs claim damages from the defendants for breach of the Law Society Code of Conduct ("the Code") in particular the second paragraph of the Code because the defendants failed to uphold the high technical standards required of lawyers by pursuing the plaintiffs in a court that lacked jurisdiction when this was known to the defendants.
42. In short, I find against the plaintiffs in respect of this alternative argument also and agree with Advocate Jones that the Code does not give rise to obligations or duties owed by members of the Society to the world at large. This is so even if the defendants have breached the Code which I have assumed in the plaintiffs' favour without deciding the point. The Code is not a code of general responsibility. Rather the Code governs how Jersey Advocates and Solicitors behave. It also reminds Advocates and Solicitors that they are officers of the Royal Court and owe duties to all the courts in Jersey which prevail over all other duties. There is no reference in the Code to any duty being owed to a client's opponent in adversarial litigation. Indeed paragraph 2(3) of the Code warns that a member should not act contrary to the interests of his client. This provision is inconsistent with a notion of a duty of care being owed to the client's opponent.
43. A breach of the Code also gives rise to disciplinary proceedings under the Law Society of Jersey. Under English law a breach of a disciplinary code does not give rise to any form of civil liability. In Johnson v Bingley Dyson & Finney [1997] P.N.L.R. 392 at page 404 A to E, Benet Hyttner Q.C. sitting as a Deputy High Court Judge considered the code of conduct applicable to English Solicitors and stated as follows:-
44. I of course accept that the Code may be relevant to the standards by which Advocates and Solicitors are judged when pursued for breach of contract or breach of duty. Thus in Mortgage Express Limited v Bowel [1996] 1 P.N.L.R. 62 the Court of Appeal relied on codes of conduct as evidence as to how a reasonably competent a solicitor might act. However, the courts have not relied upon codes of conduct as giving rise to a civil liability where, absent a code, no duty was present. In other words, in Jersey, the Code may be evidence of a breach of duty. It is not sufficient to give rise to a duty or otherwise to create a stand-alone liability. Accordingly, I have reached the view that the plaintiffs cannot pursue the defendants for breach of the Code in order to claim damages. In reaching this view I make it clear that I express no view as to whether not a breach of any professional obligation has occurred. Rather, on the assumption that a breach has occurred, the existence of such a breach does not give rise to a claim the plaintiffs may bring against the defendants, without there being a duty of care owed to the plaintiffs. In this case I have found, as a matter of law, that no such duty of care exists.
45. In conclusion I therefore find as follows:-
(i) There is no lacuna to be filled because the plaintiffs either had and may still have a remedy in respect of the costs of the eviction proceedings;
(ii) I am not prepared to extend the duty of care owed by Jersey Advocates or Solicitors to opponents of their clients in litigation, absent a specific assumption of responsibility;
(iii) Any breach of the Law Society Code of Conduct does not create a cause of action or a potential civil liability in favour of the opponents of a lawyer's client in litigation.
46. In light of these conclusions I dismissed the plaintiffs claim against the defendants.