Jersey Unreported Judgments

Trust - reasons relating to a set of directions.

[2017]JRC115

Royal Court

(Samedi)

24 July 2017

Before     :		Advocate Matthew John Thompson, Master of the Royal Court.
Between	David John Horne		Plaintiff
And	Equity Trust (Jersey) Limited		Defendant

Advocate J. M. Renouf for the Plaintiff.

Advocate E. B. Drummond for the Defendant.

CONTENTS OF THE JUDGMENT

		Paras
1.	Introduction	1
2.	Background	2-4
3.	Alternative Dispute Resolution	5-9
4.	Costs Budget	10

judgment

the master:

Introduction

1.        This judgment contains my brief reasons for issuing a set of directions.  Ordinarily the issuing of directions would not lead to a judgment, but in light of the introduction of the overriding objective, the reasons for my decisions may be more of general interest. 

Background

2.        The broad background to the dispute in summary concerns fees and expenses charged by the defendant in relation a Jersey foundation called the Rivid Foundation and the administration of two BVI Companies called Spiral Holdings Limited ("Spiral") and Firenze Group Holdings Limited ("Firenze") whom I refer to Spiral and Firenze.  The defendant pleads that fees charged in respect of Spiral since July 2009 amount to £91,385.47 and Firenze £46,224.23. 

3.        The defendant also pleads that fees in respect of the Foundation were written off before the proceedings were issued. 

4.        The issues between the parties appear to be as follows:-

(i)        Whether advice was given in relation to the creation of the Foundation and on what basis the plaintiff decided to establish Foundation;

(ii)       Whether the shares in Spiral could be declared as being held on trust for the Foundation or whether they were held for the plaintiff; and

(iii)      Why Firenze was maintained by the defendant. 

Alternative Dispute Resolution

5.        The principle issue on the directions hearing I had to determine concerned the timing of a stay for mediation under Rule 6/28 of the Royal Court Rules 2004, as amended, (the "Rules").  The parties were agreed a stay should take place.  However, the plaintiff wanted that stay to take place after provision of discovery and exchange of witness statements.  The defendant wished for the stay to take place before the costs of discovery and producing witness statements were incurred. 

6.        In view of the fact that this hearing occurred after the introduction of the Royal Court (Amendment No. 20) Rules 2017 and the amount claimed was less than £500,000, both parties provided budgets.  I make certain comments below on the budgets.  However the most significant information in these budgets was the total costs incurred or to be incurred.  The plaintiff's estimated total was £284,316 and the defendant's estimated total was £356,399. 

7.        It was because of the magnitude of these costs compared with the amount in dispute that I ordered a mediation to take place after certain preliminary steps had taken place.  This is because if a mediation only took place after discovery and the exchange of witness statements in relation to a fee dispute, I was extremely concerned that the case would become uneconomic and would become a battle about recovery of legal costs. 

8.        I accepted in making this decision that there was a risk that the attempt at mediation might be too soon.  I attempted to reduce that risk by ordering the following:-

(i)        the defendant was to provide a detailed schedule of the costs it had taken from Spiral and/or Firenze, setting out the total disbursements, fixed fees and time charged on annual basis with a breakdown of time charged by the earner;

(ii)       the defendant was further required to make its case clear as to why it appeared to be arguing that the plaintiff could not claim as a loss the fees charged.  This was an exercise of the power contained in Rule 6/15 of the Rules permitting the Court at any time of its own motion to clarify any matter in dispute in the proceedings;

(iii)      I also ordered the plaintiff to file a reply to certain paragraphs in the defendant's answer because it was not clear what the plaintiff's case was in relation to these paragraphs.  Again this was an exercise of the power found in Rule 6/15 of the Rules.  I made this order so that the defendant by the time any mediation would know the case the plaintiff was advancing. 

9.        I therefore refused to order discovery at this stage.  If the matter did not resolve at mediation in relation to discovery, I indicated I was sympathetic to requiring discovery of relevant documents in email accounts of two key individuals for the central period of 2009 to 2010 being provided, subject to being addressed on the most efficient manner of providing such discovery.  I indicated in particular I would want to be addressed on the identification of relevant documents by the use of technology.  I further indicated that I was sympathetic to limiting discovery to the key individuals because of the amount at stake. 

Costs Budgets

10.      In relation to the cost budgets produced I made the following observations which I set out for the benefit of the profession:-

(i)        The costs claimed should identify each fee earner;

(ii)       While the primary purpose of the Practice Direction RC17/06 is to provide information about the costs that might be claimed from the other party to a dispute, it is also helpful for a party to be made aware of the likely costs it will have to itself pay and which would be irrecoverable.  Provided it is not disproportionate to do so, it was agreed by both counsel and accepted by me that a budget identifying both costs to be claimed from the other side based on Factor 'A' Rates in Practice Direction RC13/02 and the Factor 'B' uplift, and costs to be incurred identifying the actual rates, would be useful.  I would like this approach to be followed generally;

(iii)      I indicated to both parties in this case that this was the sort of case where the proportionality approach in Treasurer of the States v Pearce [2016] JRC 101 might be applied because of the amount at stake;

(iv)      Both parties had built in significant allowances for contingences even though they had identified and set out the total costs estimated for the taking the matter to trial.  While this was because a budget is expected to be right first time, both parties inserted contingencies of over 20% of the time estimated for a relatively straightforward claim.  While I understand that parties do not wish to have an actual claim for costs challenged because they have not included those costs in a budget, a claim for additional contingencies of over 20%, when a cautious approach has already been taken to estimate costs, is too cautious an approach.  In this case I would have been sympathetic to a contingency of 10% rather than in excess of 20%. 

Authorities

Royal Court Rules 2004.

Royal Court (Amendment No. 20) Rules 2017.

Treasurer of the States v Pearce [2016] JRC 101.