Jersey Unreported Judgments

Trust.

[2024]JRC214

Royal Court

(Samedi)

14 October 2024

Before     :		M. J. Thompson, Esq., Commissioner, sitting alone
Between	Company A		Representor
And	Company B		Respondent

IN THE MATTER OF THE D TRUST

AND IN THE MATTER OF ARTICLES 51 AND 53 OF THE TRUSTS (JERSEY) LAW 1984, AS AMENDED

Advocates M. P. Renouf for the Representor

Advocate L. A. Woolrich First Respondent

judgment

the COMMISSIONER:

Introduction

1.        This judgment contains my reasons for initially adjourning the Respondent's summons itself seeking an adjournment to enable parties and counsel to have settlement discussions and for further granting an adjournment to the next available court date to enable the parties to finalise the significant progress towards concluding a settlement that I was informed was made during the initial adjournment I granted.

2.        The background to the dispute between the Representor and the Respondent is a fee dispute.  The Representor is the former Trustee of the ("D") trust ("the Trust").  The Respondent is the current trustee.  The amount of fees claimed in round sums are Swiss Francs 150,000 (approximately £130,000).  Correspondence in relation to these fees began in the summer of 2023.  After the Representor retired as Trustee in favour of the Respondent in October 2023, the Representor sent a letter before action claiming unpaid fees of then Swiss Francs 129,485.58 plus accrued interest.  When the subsequent proceedings commenced in March further fees were claimed by the Trustee in relation to its retirement together with legal fees of Seymour Law, Advocates for the Representor, leading to the total fees claimed of Swiss Francs 149,880.79.  Proceedings were started by way of a representation dated 12 March 2024.  The matter came before me for a directions hearing on 29 April 2024 when I ordered the Respondent to make a payment of Swiss Francs 160,000 into court within 14 days.  I also issued directions for the filing of an answer of affidavit evidence.  The purpose of this order was to break the log jam that had arisen because the Representor had not released all documents to which the Respondent was entitled as successor Trustee because its fees had not been paid.

3.        As a result of these directions, extensive affidavits have been filed on behalf of both parties.  I have read these affidavits in preparation for the hearing that has led to this judgment.

4.        On 15 May 2024, Seymour Law for the Representor wrote to Carey Olsen for the Respondent offering on an open basis to resolve the fee dispute by receiving 50% of its fees plus 40% of the interest claimed with the Court then determining the question of costs.

5.        On 31 May 2024, the Respondent filed its answer and counter claim.  Its reasons for disputing the fees claimed was set out in detail but was summarised at paragraph 16.

6.        The Respondent also complained that all relevant documentation for the purposes of the fee dispute were not before the Court, that there were other documents that the Representor had failed to hand over and that the Respondent was considering a breach of trust claim based on poor investment performance.

7.        On 12 September 2024, Advocate Woolrich for the Representor issued an application for an adjournment.  This summons was issued 5 days before the matter was due to be heard on 17 September 2024.  That hearing, however, was adjourned for matters beyond the control of the parties until 2 October 2024.

8.        The reason for the adjournment, in summary, was that the Respondent wanted more time to continue reviewing the documents that had been disclosed, to ensure that the Court had before it all relevant documents in relation to the fee dispute, to formulate any claim for a breach of trust and to consider whether all Trust documents had been handed over.

9.        During this submission I was informed by Advocate Woolrich that the review of documents provided had largely been carried out by ("E"), one of the beneficiaries of the Trust and the person with whom primarily the Representor dealt with while they were Trustee.  Some material had also been reviewed by the Respondent in question.  The review of documents had been carried out this way for reasons of cost.

10.     However, I was also informed that the legal fees incurred to date on behalf of the Respondent totalled in the region of £150,000.  I was also informed that the fees of the Representor were approximately £115,000.  In light of these fees, which I find nothing short of astonishing for a fee dispute of Swiss Francs 150,000 and where the Representor was willing to settle for half this sum, that costs of this magnitude had been incurred by both parties.  I informed the parties that based on my experience whatever the outcome of the fee dispute, this dispute was already going to be uneconomic.

11.     In relation to fee disputes my experience was that a party claiming its fees generally recovered some but not all of its fees.  Without making any findings in relation to the specific grounds relied upon, in addition, some of these could be arguable.  If any were arguable that would lead to a lesser recovery for the Representor than the amount claimed.  In relation to the costs incurred or to be incurred the Representor would be unlikely to recover all of its costs if it was only successful in part.

12.     The same analysis applied to the Respondent.  The likelihood of the Respondent being successful in all of its challenges is a high hurdle.  If it was only successful in part of them, they would have to pay some fees and would either have to pay some costs of the Representor or at least each party would bear its own costs.

13.     It is also right to add that even if either party was successful completely, in this case, because what is required for any dispute is a proportionate approach which has been emphasised in respect of fee disputes, the successful party in addition would be lucky to find their costs capped to a significant degree when the approach taken to the fee dispute by both parties meant that whatever the outcome of the case both parties would be out of pocket to a greater or lesser degree.  By this judgment I have simply endeavoured to illustrate the different ways in which that might occur.  This is why I adjourned the parties to use their best efforts to focus on settlement immediately because any other outcome would lead to further costs being incurred.

14.     To illustrate the point, I concluded that to settle whether or not any part of the fees should be referred for taxation would require two days with all the parties who have provided affidavit evidence having to attend for cross-examination, given the approaches taken to date.  The costs incurred for such a hearing would only make matters worse.

15.     I also indicated my view that any delay should be a short one because I was not persuaded that there was a sufficiently close connection between the challenges to the fees claimed and any possible claim for a breach of trust which the Respondent was still entitled to bring (subject to any question of limitation).  The question of a fee dispute, apart from identifying existing documents not already disclosed which should be before the Court for the fee dispute, was also a separate issue which the court could adjudicate upon if not resolved between the parties.  I have made these points because the settlement I encouraged the parties to explore was only in respect of the fee dispute and did not affect any other request for outstanding documents or any possible claim for breach of trust that the Respondent might choose to bring in the future, if advised to do so.

16.     It is also right to add in relation to these views that if the Respondent finds itself in a position where the beneficiaries do not agree with the approach the Respondent is minded to take, this Court has the facility to approve a trustee entering into a compromise where to do so is a momentous decision.  Such an exercise is likely to be cheaper than any two-day hearing with cross-examination and any subsequent taxation.

17.     Following the adjournment granted during the hearing, the parties asked for more time to continue their discussions because they indicated they had made significant progress but needed more time to resolve matters.  They also asked that I set out the observations I had set out in Court in a File and Parties judgment which this document endeavours to do.  I therefore adjourned the Respondent's application for an adjournment for the first available date in the week commencing Monday 14 October to enable a settlement to be concluded.  If a settlement was not concluded I indicated I would issue directions along the lines set out in this judgment in relation to resolution of the fee dispute in short order. 

Authorities

Trusts (Jersey) Law 1984, As Amended.