Jersey Unreported Judgments
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URL: http://www.bailii.org/je/cases/UR/2019/2019_107.html
Cite as: [2019] JRC 107
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Trico v Buckingham [2019] JRC 107 (10 June 2019) URL: http://www.bailii.org/je/cases/UR/2019/2019_107.html Cite as: [2019] JRC 107 |
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Before : |
Advocate Matthew John Thompson, Master of the Royal Court. |
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Between |
Trico Limited |
Plaintiff |
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And |
Anthony Buckingham |
Defendant |
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Advocate H. Sharp for the Plaintiff.
Advocate J. S. Dickinson for the Defendant.
CONTENTS
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Paras |
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1. |
Introduction |
1-3 |
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2. |
Contentions |
4-20 |
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3. |
Decision |
21-38 |
jUDGMENT
the MASTER:
1. This judgment represents my written reasons for the various costs orders made on the handing down of the judgment on 29th May, 2019, reported at Trico Limited v Buckingham [2019] JRC095 (the "main judgment"). For ease of reference I use the same definitions contained in the main judgment as well as relying on it for the background that led to my decision on costs.
2. The costs claims which I had to decide were as follows:-
(i) The costs of the defendant on his unsuccessful application to amend;
(ii) The costs of the argument about the construction of the Side Letter;
(iii) The costs of the argument about the construction of the Release;
(iv) The costs of the plaintiff's application for summary judgment that the defendant executed the Side Letter on 13th February, 2014, where I gave conditional leave to defend;
(v) The costs of the defendant's unsuccessful specific discovery application;
(vi) The costs of what I describe as the signature issue. The background to this issue is set out at paragraphs 12, 13, 16 to 22 and 26 of the main judgment. As a result of the defendant accepting on 29th November, 2018, that the signature on the Side Letter was his, by paragraph 5 of the Act of Court of 17th December, 2018, I reserved the costs of the matters that had led to this acceptance by the defendant until determination of the summary judgment application, albeit indicating that on balance that an order for standard costs was appropriate, subject to any further submissions made by any party to the estoppel.
3. If I made any costs orders in favour of the plaintiff I was also asked to determine whether or not to order a payment on account of costs.
4. Advocate Sharp's primary submission was that the defendant had lost on every issue except for one matter that required a short trial and therefore his client should recover a large percentage of its costs in the case incurred to date. He also sought this percentage on an indemnity basis. Based on a total figure for costs of £418,555.82, he therefore asked for an order that the plaintiff to recover 90% of its costs together with a payment on account of 50% of this sum with the balance to be determined by taxation if not agreed.
5. In oral argument, Advocate Sharp contended that indemnity costs should not be confined to individual issues. In appropriate cases the court could have regard to the overall conduct of the case by a party to order indemnity costs across the board. He argued that the present case was such a case because there was a pattern of behaviour justifying indemnity costs.
6. He relied on the case of PJSC Aeroflot - Russian Airlines v Michael Thomas Leeds & Ors [2018] EWHC 1735 (Ch) at paragraph 60 which allowed for indemnity costs to be ordered where the conduct of proceedings were "out of the norm". Paragraph 60 provides as follows:-
7. It is right to record that Advocate Sharp made it clear that he was not seeking indemnity costs on the other basis relied upon in Aeroflot set out at paragraph 48:-
8. Indemnity costs was justified because the defendant was aggressively pursuing litigation without any apology and this took the case outside the norm. The discretion vested in me, it was contended, allowed me to take an overall approach rather than approach issues on a discreet basis. In this case he reminded me that initially allegations of fraud were made against Mr Atherton (see paragraph 25 of the main judgment) which were later abandoned and replaced by allegations of fraud against Mr Ruane without explanation.
9. Advocate Sharp also drew to my attention to his email dated 4th February, 2014, to Dickinson Gleeson for the defendant sent very shortly after the draft re-amended defence was provided. This email stated that the proposed amended answer did not come anywhere close to satisfying the fundamental requirements to make an allegation of fraud. Yet the defendant continued with his application to amend and only partially withdrew it when pressed during the hearing without any apology.
10. In relation to the summary judgment summons, Advocate Sharp contended his summons raised three issues namely, whether the Side Letter was signed, construction of the Side Letter and construction of the Release. The plaintiff was successful on two out of these three issues and therefore should recover its costs for these two issues, if an issue based approach was taken. The plaintiff should also have its costs in respect of the unsuccessful applications to amend and the discovery issues. This was still on an indemnity basis.
11. In respect of the application for summary judgment in relation to when the Side Letter was executed, Advocate Sharp further contended that his client was entitled to start the summary judgment application and therefore at least should receive its costs up to the point that the defendant's partner filed her affidavit evidence on 30th January, 2019. He cited Wirsol Energy Ltd v Toucan Energy Holdings Ltd [2018] EWHC 3924 (TCC) at paragraphs 33 to 38 as follows:-
12. In respect of the signature issue he also asked for costs on an indemnity basis because the defendant abandoned his challenge to the signature not being his without explanation and only twenty-four hours before expert evidence was due.
13. Advocate Dickinson argued in response in relation to his client's failed amendment application that costs should be paid on the standard basis. This case was very different from the Aeroflot litigation where Aeroflot withdraw its claim the day before trial having alleged fraud for eight years. It was also material that his client accepted at the hearing that allegations based on fraudulent misrepresentation or inducement should be withdrawn. I record for the sake of completeness during the course of argument Advocate Dickinson apologised for making those allegations. In respect of the remaining fraud allegation, this was an arguable matter which although, although unsuccessful, required determination and did not therefore justify indemnity costs.
14. In relation to the summary judgment summons, he argued for costs in the cause because, while his client had been unsuccessful on the construction arguments, the court had not granted summary judgment in relation to when the Side Letter was executed. Broadly these matters therefore cancelled each other out which was why costs in the cause was an appropriate order.
15. In relation to the summary judgment application concerning execution of the Side Letter, he also remaindered me that the defendant in his third affidavit at paragraphs 22 to 24 dated 9th November, 2018, had made his position clear in respect of why execution of the Side Letter was disputed and therefore there had been no change of circumstances occurring since the issue of the summary judgment application.
16. To the extent I approached issues separately, in relation to the construction arguments, there was nothing out of the ordinary in respect of these arguments and therefore, if a costs order was going to be made, standard costs was the appropriate order.
17. In relation to his unsuccessful discovery application, he conceded that standard costs was appropriate because the application failed. However, this was not anything other than an ordinary application and in particular he reminded me the application fell at the final hurdle only.
18. He further argued that this was not a case that justified a global costs order. By reference to the outcome of the different parts of the applications I had determined the claim for 90% of costs to date could not be justified. He reminded me that I already made an indemnity costs order against his client in respect of the abandonment of allegations against Mr Atherton on 17th December, 2018 (see paragraph 27 of the principle judgment). The effect of Advocate Sharp's approach was therefore to try to recover all of the plaintiff's costs to date. Such an approach was not appropriate.
19. In respect of the signature issue, it was the lack of detail from the plaintiff that led the defendant to challenge for some months whether the signature was not his. He therefore argued this matter should await determination of the trial rather than be the subject of a costs order at this stage.
20. In relation to the quantum of fees claimed, given that the plaintiff characterised this as a simple fees dispute, the number of senior fee earners and counsel involved was not justified. Any taxation was therefore unlikely to produce a much lower figure.
21. In relation to the relevant legal principles when making orders for costs, there was no dispute between the parties as to the approach to be applied which ultimately is about doing justice between the parties.
22. The first conclusion I reached was that it was not appropriate to make a global costs order but rather I should approach matters on an issue by issue basis. This was because the only issue where I was satisfied that indemnity costs was appropriate was in relation to the unsuccessful application to amend. This was in light of my conclusions at paragraph 48 to 50 of the main judgment; these conclusions meant that indemnity costs was appropriate in respect of the application to amend to plead fraud. Pleading fraud is a serious allegation and where it clearly cannot be justified, indemnity costs is a way for a court to express its displeasure at unjustified allegations of such a serious nature. I also took into account that as soon as the draft answer was provided, the defendant through his advocate was put on notice of the plaintiff's position in relation to the draft allegations by Advocate Sharp's email of 4th February, 2019, and yet proceeded to pursue them until the hearing.
23. I did not however reach the same conclusions in respect of the other issues referred to above and I do not regard the defendant's conduct otherwise as justifying indemnity costs.
24. In relation to the question of construction of the Side Letter and Release, these were arguable points which required determination. The defendant should pay the costs of these because the defendant firstly argued I should not construe either document at all and secondly its arguments on construction did not prevail even if in respect of the Side Letter I did not accept all of the plaintiff's arguments and reached a slightly different conclusion. Ultimately it was the defendant who disputed that the Side Letter did not apply to the 2018 transaction and also raised the issue that any claim in respect of the 2018 transaction was prevented by the Release. The defendant failed on both those arguments and therefore a costs order against him is justified. The defendant did not have to raises these defences but, having raised them and then having failed in his arguments, a costs order in respect of those issues in my judgment was appropriate.
25. It followed on from the above conclusions that I did not regard it appropriate to simply look at the outcome of the summary judgment application in the round. Rather I considered it just in this case to approach costs separately for each of three issues I had to determine on the summary judgment application. These were discrete and distinct questions which justified looking at what was the appropriate costs order for each issue.
26. In respect of the application for summary judgment in relation to whether or not the Side Letter was executed as alleged by the plaintiff, my conclusion was that the just order was costs in the cause. Firstly, the plaintiff should not recover its costs because this part of its application failed. In addition, there was no change of circumstance to justify a costs order up to 30th January, 2019, as suggested. The plaintiff, although it had not received an affidavit from the defendant's partner, was on notice of the defence to be raised before making its application, and yet proceeded to issue its summary judgment application.
27. However, although the application was unsuccessful, I also concluded, based on the material before me, that the defendant's case was weak for the reasons set out at paragraph 111 of the main judgment leading to an order of conditional leave to defend. I therefore also concluded that it would not be just for the defendant to recover its costs at this stage either.
28. Rather, the conclusion I reached was that costs should follow the event so that if the plaintiff prevailed at trial it should recover the costs of the unsuccessful summary judgment application because the Royal Court would have accepted that the plaintiff was entitled to the fees claimed as argued for whereas if the defendant's defence prevailed, notwithstanding the reservations I expressed in the main judgment, it would then be just for the defendant to recover his costs of the summary judgment application.
29. In relation to the costs of the specific discovery application, I agreed with Advocate Dickinson's contentions that standard costs was the appropriate order. The defendant in particular did not prevail because it fell at the final hurdle, but I did accept that documents had been deployed so that a waiver had occurred. The application failed only because I concluded that the waiver was limited.
30. In relation to the costs of the signature issue, I was satisfied that a costs order was justified because the signature issue had now been concluded. There was therefore no reason to await a trial to make a costs order where the defendant has ultimately accepted the signature was his after time and expenditure had been incurred in correspondence and court applications in respect of this issue. I also regarded the issue of whether or not the defendant executed the Side Letter on 13th February, 2014, as alleged as separate from whether or not the signature was that of the defendant. Ultimately the defendant conceded the signature issue and so should pay costs incurred to deal with it.
31. In relation to the claim for indemnity costs while the defendant can be criticised for not explaining why he admitted that the signature was his the day before expert evidence was due, his initial reluctance to admit his signature is understandable in light of the lack of particulars as to when the Side Letter was said to have been executed. In addition, although the signature issue overlapped with the abandoned fraud allegations against Mr Atherton, an indemnity costs order has already been made in respect of those abandoned allegations. On balance, albeit it was a fine decision, I was not satisfied that the defendant's conduct in respect of the signature issue, as distinct from the allegations against Mr Atherton, took this part of the case out of the norm to justify indemnity costs.
32. The difficult issue I then faced, having concluded that an order for indemnity costs should be made in respect of the failed amendment application and orders for standard costs should be made in respect of the construction issues, specific discovery and the signature issue, was whether I should determine what percentage of the plaintiff's costs should be awarded to reflect all of these orders, or whether matters should be left to taxation.
33. I ultimately decided not to allocate a percentage. Firstly, to do so would have been little more than guesswork because, while I was aware of how much time was spent on each issue at the hearings before me, I did not know how much time was spent on preparing for each issue or engaging in correspondence. Any attempt at assessment to allow a plaintiff to recover a percentage of the total costs incurred therefore ran the risk of being unjust to one party or the other because any percentage adjustment could either be too low or too high.
34. The conclusion I reached therefore was that in due course, if necessary, it was for the plaintiff to analyse its own costs to set out what costs had been incurred related to each of the issues where a costs order had been made in its favour. However, this conclusion led me also to stay the taxation process until the trial had completed. Otherwise the plaintiff would be required to incur costs to analyse what it claimed for each issue which task might be unnecessary if the plaintiff's main claim prevailed. This order also extended to the indemnity costs order made in respect of the abandoned allegations against Mr Atherton. The unusual facts of this case meant that I regarded it as more appropriate for one taxation process to occur once the final outcome of the trial is known.
35. However, to leave matters there would mean that the plaintiff would recover nothing at this stage when the point of costs orders against an unsuccessful party is in part to act as a sanction to prevent unmeritorious applications. While therefore I concluded that it was right to stay the final taxation process, I also concluded that the plaintiff should receive a proportion of its costs. This required me to look at the amount of costs claimed.
36. In considering the amount of costs asked for, I had regard to two principles. Firstly, of the costs claimed were not proportionate applying Pearce v Treasurer of the States [2016] JRC 101. A claim for costs incurred to date of over £400,000 for a claim to recover debt of US$3 million when final witness statements had not yet been exchanged and preparations for trial had not yet started is of concern and runs the risks of being held on a taxation to be disproportionate.
37. Secondly, other than in respect of the application to amend I have ordered standard costs. This means that the rates claimed will be reduced significantly to reflect Practice Direction RC13/02 and the Factor 'A and B' Rates. In addition, the claim involves Advocate Sharp, a Barrister from England and a number of fee earners from Baker & Partners including two partners. On a taxation on a standard costs basis, these fees are likely to be reduced significantly because they will not be shown to be necessarily incurred and will represent duplication.
38. Taking all these matters together in the round, I determined that a much more realistic claim for costs based on the orders I have made is a sum in the region of £150,000. Applying Crociani & Ors v Crociani [2014] 1 JLR 503 which requires me to take a cautious approach, the conclusion I reached was to order the plaintiff to pay 50% of this sum on account of costs i.e. £75,000 to be paid within 28 days.