Costs.

[2024]JRC127

Royal Court

(Samedi)

5 June 2024

Before     :

M. J. Thompson Esq., Commissioner, sitting alone

 

Advocate M. St. J. O’Connell for the Plaintiff

Advocate J. N. Heywood for the Defendant

judgment

the commissioner:

Introduction

1.        This judgment contains my decision:

(a)   in respect of the costs of the summonses issued by the Plaintiff:

(a)   seeking permission to bring an application for specific discovery out of time; and

(b)   a second summons issued by the Plaintiff seeking specific discovery; and

(b)     a summons issued by the Defendant:

(i)    requiring the Plaintiff to undertake a specific e-discovery exercise;

(ii)   that the Plaintiff be debarred from filing any witness statements in proceedings; and

(iii)   that the parties should fix a date for trial.

2.        Judgment was handed down in respect of all these issues following a single hearing on 13 May 2024 (“the Substantive Judgment”).  Definitions used in the Substantive Judgment are adopted for this judgment.

3.        In summary, the Substantive Judgment reached the following conclusions:

(a)            The Plaintiff was granted leave to make an application for specific discovery out of time with costs being reserved until delivery of the Substantive Judgment;

(b)            The Defendant was ordered to write to each director and former director of the Defendant who was in post at the relevant time, notifying them that the Defendant had an enforceable right to receive all communications relating to the affairs of the Defendant and requesting that they provide copies of any work related email, WhatsApp and other electronic communication concerning the Defendant during the relevant period;

(c)            The Defendant was also ordered to file a further affidavit of discovery setting out:

(i)        The requests made of the directors and former directors;

(ii)       An explanation for an amendment to the Lewis Silkin report;

(iii)      The addition of one search term to searches of any further devices;

(iv)      A further update on the policies and procedures in place (paragraph 6 of the Plaintiff’s Schedule);

(v)       What devices had been received by directors who had retired during the relevant period; and

(vi)      Further enquiries were to be made of Ms Williams concerning a document related to her becoming CEO which may have been provided to any other directors or referred to at the meeting in August 2019 (paragraph 7 of the Plaintiff’s Schedule).

(d)            The relief sought in the Plaintiff’s specific discovery summons was otherwise refused.

4.        In respect of the Defendant’s summons:-

(a)      the Plaintiff was required to set out all information required in accordance with Practice Direction RC17/08, together with costings for any e-discovery process, with the parties then required to look to agree a process to move forward;

(b)      a time limit was set in respect of the Plaintiff’s filing of a witness statement which was a final order;

(c)   all of the Plaintiff’s other witness statements were be filed within fourteen days of the Defendant’s further affidavit of discovery; and

(d)   the Defendant was to file its witness statements within twenty-one days of the Plaintiff’s witness statements.

Submissions

5.        Advocate O’Connell for the Plaintiff made the following submissions.

6.        In respect of the application to bring an application for specific discovery out of time, he contended he was the clear winner because an extension of time was granted. The application was only one day late and it was irresponsible of the Defendant not to agree that it might be brought out of time.

7.        In relation to the Plaintiff’s specific discovery summons, he repeated his criticisms of the Defendant’s approach to recovering from board members emails or WhatsApp messages or other communications held on their own personal devices.  In addition, he emphasised that the Defendant tried to say that Sheyko was bad law.  He fairly accepted that in relation to the fifteen requests contained in the Schedule comprising the Plaintiff’s specific discovery application, a number of these requests had not been successful.  He submitted that this entitled the Court to make a percentage cost order in the Plaintiff’s favour.  This was because ultimately the Plaintiff had been successful in relation to what was at the heart of the dispute between the parties in the specific discovery summons.

8.        In relation to the Defendant’s summons, Advocate O’Connell contended that I should await the outcome of the e-discovery exercise because it was his client’s position, notwithstanding the cost of such an exercise, either nothing at all or nothing new that was significant would be produced.  In relation to this, his client filed a further affidavit stating that he had limited resources and had to borrow funds in order to pursue his claim against the Defendant.  Paragraph 7 of his affidavit of his states:

“I first met with Preston Legal in the last week of September 2023, only a matter of a little over two weeks before the initial date for my discovery to be completed.  Whilst I do recall e-discovery being discussed, I was advised that this was impractical in view of the time constraints.  Moreover due to the fact that the Defendant had severed all access to Society systems in July 2019, less than two months into my illness, and I was never permitted to return to Society premises, a manual search was considered an appropriate response in the circumstances.  At that stage I was not advised to seek a delay and believed I would adequately fulfil my obligations through the extensive and methodical manual search that I conducted.”

9.        Mr Heywood for the Defendant reminded me of the applicable principles by reference to Flynn v Reed [2012] 2 JLR 226 approving Watkins v Egglishaw [2002] JLR 1, and the applicable principles in relation to the award of indemnity costs.  He then made the following submissions.

10.     In relation to the Plaintiff’s request for an extension of time, this followed on from what the Defendant said was a flagrant disregard for Court orders where he had ignored time relevant dates on a number of occasions.  He emphasised that the Plaintiff’s discovery was three days late and that the Plaintiff failed to file his witness statement at all.  He was critical of the Plaintiff failing to explain why he had not adhered to another deadline and why he failed to make the application for relief from sanction and failed to seek leave to file out of time.  He therefore emphasised the findings at paragraph 82 of the judgment. This led to the Defendant seeking its costs of the application for an extension of time on an indemnity basis.

11.     In relation to the Plaintiff’s approach to e-discovery, the Defendant sought its costs on an indemnity basis because the approach of the Plaintiff and his advocates took the case out of the norm.

12.     In relation to the Plaintiff’s applications for specific discovery, he sought his order on the standard basis, firstly because a majority of the orders sought were refused outright and, secondly, the Plaintiff’s other requests could and should have been made at the outset of the discovery process, but the Plaintiff refused to engage.

13.     Advocate Heywood also contended that notwithstanding that this was a personal injury action and therefore the provisions of Royal Court Rule 12A would ordinarily apply, in this case the Defendant should be permitted to enforce any costs orders made in its favour.

Discussion and decision

14.     I have reminded myself of the applicable legal principles both in relation to the making of costs orders and indemnity costs in light of the submissions made.  I am extremely familiar with these principles and therefore it is not necessary to set them out in this judgment.  Nevertheless, I have reminded myself of them and have taken them into account.

15.     In relation to the Plaintiff’s request for an extension of time, the date by which the parties were expected to bring any application for specific discovery were clear. Yet the Plaintiff failed to comply. Although the Plaintiff was only one day late, why this occurred was because of Advocate O’Connell’s absence on holiday. This should have been made clearer much earlier.  It is also right to state that the Plaintiff was seeking the indulgence of the Court. The reasons why the deadline had been missed should therefore have been explained at the outset.  As against that, ultimately an extension of time was granted, and it would have been disproportionate not to allow the Plaintiff to bring his summons. It would not therefore be just or appropriate for the Defendant to recover its cost of this summons.  Equally, the Plaintiff must understand that although he is an individual bringing a claim against a significant company, this does not mean that Court deadlines and rules do not apply to him.  In my judgment, the just and fair order in relation to the Plaintiff’s application for an extension of time is therefore to make no order as to costs.

16.     In relation to the Plaintiff’s application for specific discovery, I accept that the Plaintiff was successful on the issue which took up most of the argument between the parties which concerned paragraphs 1 and 2 of the Schedule to the specific discovery application and material stored on personal devices of directors or former directors. On this issue, the Plaintiff was the clear winner. However, the Plaintiff was unsuccessful on the majority of requests made.  In relation to a number of them, as set out in the Substantive Judgment, the requests were not supported by the affidavit filed by the Plaintiff as is required. The only other issue of substance where the Plaintiff was successful related to paragraph 7 and Ms Williams’ asserted interest in becoming CEO of the Defendant.

17.     While by reference to the time spent the Plaintiff had the better of the argument, standing back, there is no clear winner; rather the Plaintiff has won by a short head to apply a racing terminology. Advocate O’Connell was therefore right to concede that any costs order should reflect this position. In my judgment, the just order should be that the Plaintiff should recover 50% of its costs of the specific discovery application on the standard basis, with the parties each bearing the remainder of the costs themselves.  This reflects the fact that on the main issue before me and where most of the time was spent the Plaintiff was successful, but in respect of a number of other grounds his application was rejected.

18.     In relation to the Defendant’s summons, the Defendant was successful on this and, as found in the judgment, the Plaintiff was in clear breach of Practice Direction 17/08 (see paragraphs 105 and 107).  Had this been the only issue raised by the Defendant’s summons, I would have ordered the Plaintiff to pay the Defendant’s costs on an indemnity basis because a deliberate failure to follow a Practice Direction is the sort of conduct that takes matters out of the norm and justifies indemnity costs.  The Plaintiff should have engaged at the latest with the Defendant as soon as an e-discovery order was made but did not do so.  The explanation set out in paragraph 7 of his latest affidavit does not excuse this failure and does not address the approach taken on behalf of the Plaintiff by Advocate O’Connell in his email of 13 October 2023 set out at paragraph 105 of the Substantive Judgment.

19.     However, the Defendant sought other relief including preventing the Plaintiff from filing a witness statement at all.  This was never going to succeed, albeit I did require the Plaintiff to file a witness statement in short order and under the penalty of a final order. 

20.     I also did not fix trial dates but rather set a timetable for the filing of other evidence once the additional discovery I had ordered was complete.

21.     In my judgment, looking at the relief sought by the Defendant in its summons as a whole, while the Defendant is a clear winner on the e-discovery exercise, the other matters mean that, in the round, an order for standard costs is in the interests of justice.

Enforcement and taxation

22.     I next deal with Rule 12A of the Royal Court Rules which provides as follows:

“12A/1 Scope and Interpretation

(1)…..This Part applies to proceedings which include a claim for damages –

(a)     for personal injuries;

(b)     under the Fatal Accidents (Jersey) Law 1962; or

(c)     which arises out of death or personal injury and survives for the benefit of an estate by virtue of Article 1(1) of the Customary Law Amendment (Jersey) Law 1948,

but does not apply to applications pursuant to Article 2 of the Law Reform (Disclosure and Conduct before Action) (Jersey) Law 1999.

(2)     In this Part, “plaintiff” means a person bringing a claim to which this Part applies or an estate on behalf of which such a claim is brought, and includes a person making a counterclaim or an additional claim.

12A/2 Costs orders against certain plaintiffs – limit on enforceability

(1)     Subject to Rule 12A/3, orders for costs made against a plaintiff –

(a)     may be enforced without the permission of the Court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the plaintiff; and

(b)     may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.

(2)     An order for costs which is enforced only to the extent permitted by paragraph (1)(a) shall not be treated as an unsatisfied or outstanding judgment.

12A/3 Exceptions

(1)     Orders for costs made against the plaintiff may be enforced to the full extent of such orders without the permission of the Court where the proceedings have been struck out on the grounds that –

(a)     the plaintiff has disclosed no reasonable grounds for bringing the proceedings;

(b)     the proceedings are an abuse of the Court’s process; or

(c)     the conduct of –

(i)     the plaintiff, or

(ii)     a person acting on the plaintiff’s behalf and with the plaintiff’s knowledge of such conduct,

is likely to obstruct the just disposal of the proceedings.

(2)     Orders for costs made against the plaintiff may be enforced to the full extent of such orders with the permission of the Court where the claim is found on the balance of probabilities to be fundamentally dishonest.

(3)    Orders for costs made against the plaintiff may be enforced up to the full extent of such orders with the permission of the Court, and to the extent that it considers just, where –

(a)     the proceedings include a claim which is made for the financial benefit of a person other than the plaintiff or a dependant (other than a claim in respect of the gratuitous provision of care, earnings paid by an employer or medical expenses); or

(b)     a claim is made for the benefit of the plaintiff other than a claim to which this Part applies.

(4)     Where paragraph (3)(a) applies, the Court may, subject to paragraph (5), make an order for costs against a person, other than the plaintiff, for whose financial benefit the whole or part of the claim was made.

(5)     Where the Court is considering whether to make an order against a person as described in paragraph (4), that person must –

(a)     be added as a party to the proceedings for the purposes of costs only; and

(b)     be given a reasonable opportunity to attend a hearing at which the Court will consider the matter further.

(6)     For the purpose of paragraph (3)(a) “dependant” means –

(a)     the wife or husband or former wife or husband of the deceased;

(b)     the civil partner or former civil partner of the deceased;

(c)     any person who –

(i)     was living with the deceased in the same household immediately before the date of the death, and

(ii)     had been living with the deceased in the same household for at least 2 years before that date, and

(iii)     was living during the whole of that period as the husband or wife or civil partner of the deceased;

(d)     any parent or other ascendant of the deceased;

(e)     any person who was treated by the deceased as his or her parent;

(f)     any child or other descendant of the deceased;

(g)     any person (not being a child of the deceased) who, in the case of any marriage to which the deceased was at any time a party, was treated by the deceased as a child of the family in relation to that marriage;

(h)     any person (not being a child of the deceased) who, in the case of any civil partnership in which the deceased was at any time a civil partner, was treated by the deceased as a child of the family in relation to that civil partnership;

(i)     any person who is, or is the issue of, a brother, sister, uncle or aunt of the deceased.”

23.     Advocate Heywood accepted that this case was a personal injury case and therefore ordinarily costs orders made at this stage could not be enforced without leave.  However, he tried to persuade me that I should allow the Defendant to enforce any costs order made in its favour because of the deliberate breach of Practice Direction 17/08.

24.     However, Rule 12A/3(1) only allows orders for costs to be enforced where the plaintiff has disclosed no reasonable grounds for bringing the proceedings, the proceedings are an abuse of process, or the conduct of the plaintiff or someone on his behalf is likely to obstruct the justice process of the proceedings. I do not consider that any of the summonses that I had to consider in relation to the Substantive Judgment fall within any of these categories.  Even if the summons might be said to amount to proceedings, they came nowhere near being an abuse of the Court’s process. 

25.     The only other possible ground which could apply is Rule 12A/3(2) which provides “Orders for costs made against the plaintiff may be enforced to the full extent of such orders with the permission of the Court where the claim is found on the balance of probabilities to be fundamentally dishonest”.  While this may relate to the substantive claim only, in my judgment, it is possible to also construe ‘claim’ to mean a procedural claim made in a particular summons.  That would allow a cost order to be made in respect of summonses that met the extremely high bar of fundamental dishonesty.  Costs orders against a plaintiff in a personal injury case could also be made if the proceedings were struck out as an abuse of process for procedural failings.  The Plaintiff’s failings in this case came nowhere near this threshold. 

26.     However, the plaintiff should not be able to enforce the costs orders in his favour without setting off the same against costs orders in favour of the Defendant.  This should be the normal order in personal injury cases unless the court orders otherwise, for example to prevent tactical or unmeritorious procedural applications.  That does not apply in this case.  Accordingly, none of the costs orders made by this judgment should be enforced until determination of this matter.  Instead, they should be taken into account at the conclusion of the Plaintiff’s claim.  If the Plaintiff is successful, there will have to be a netting off of costs orders in favour of either party, both in relation to any procedural applications and after any trial, with any net balance due to the Defendant being set off against any damages awarded to the Plaintiff.  Otherwise, the Defendant will have to bear its own costs.  That is a matter for the Defendant to take into account with its advisers. It is right to add that following the conclusion of the trial, this decision does not affect the right of the Defendant, if successful to make an application to enforce any costs order made in its favour by reference to any of the exceptions found in Rule 12A/3.  It is a matter for the Defendant whether to make such an application based on the court’s judgment after a trial. How far the parties take these provisions into account in relation to the future conduct and defence of these proceedings, or any settlement of the same, is of course for the parties and their advisers.

27.     In relation to taxation, this can occur at this stage if requested. If the parties have not recorded their time costs separately for each summons I consider, applying a broad brush approach based on the material before me, that the parties each spent 15% of the time on the Plaintiff’s First Summons, 60% on the Plaintiff’s Second Summons and 25% on the Defendant’s Summons and so any time not recorded separately should be allocated to the relevant summons applying the split set out in this paragraph. If time has been recorded separately for each summons, then then the claiming party will simply set out the costs claimed in the usual way.

Costs of the Costs hearing

28.     As the result is something of a draw each party shall bear their costs of the costs hearing.

Authorities

Flynn v Reed [2012] 2 JLR 226.

Watkins v Egglishaw [2002] JLR 1.

Royal Court Rules.