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The Jersey Law Review – February 2005

MISCELLANY

VARIATION BIG BROTHER

1       Those Jersey lawyers who think that Jersey law trusts may only be varied by the Jersey courts will have to think again.  In Charalambous v Charalambous,[1] the English Court of Appeal was dealing with an ancillary relief application in the context of divorce proceedings.  It held that it had jurisdiction – so far as English law was concerned – to vary a Jersey law trust, allegedly made by the husband’s mother, under s 24 of the (English) Matrimonial Causes Act 1973 on the grounds that it was a post-nuptial settlement.  The husband, resisting the wife’s application, relied on Arts 6 and 8 of the Hague Convention on Trusts, which provide for a trust, and in particular the variation of the trust, to be governed by its proper law.  But Thorpe LJ held that those articles did not prevent the application of English law, because Art 15 provides that the Convention does not prevent the application of provisions of the law designated by the conflicts rules of the forum, which in this context s 24 was.  May and Arden LJJ agreed.

2       In reaching that conclusion, the court held that clause 3.2 of the trust instrument posed no obstacle.  That provided that “this Trust shall be subject to the exclusive jurisdiction of the Royal Courts [sic] of the Bailiwick of Jersey, which shall be the forum for disputes relating hereto (hereinafter called ‘the Forum’)”.  The judges held that clause 3.2 only dealt with the determination of “any question as to the construction or operation of the settlement qua settlement.”  But the right to seek a variation here derived from the matrimonial regime of the jurisdiction that dissolved the marriage, and not from the settlement itself.  And the parties both had and had exercised the right to invoke the English matrimonial jurisdiction. So the clause was no bar.

3       Only Arden LJ adverted to the procedural complication of making the variation binding on the trustees (who were in Jersey).  She said that the wife would have to take proceedings in Jersey against the trustees for the recognition of the order, so that they would be bound by it, but noted the decision of the Royal Court in Compass Trustees v McBarnett[2] to recognise a similar order made by the English court.  A curious footnote is that Arden LJ pointed out (correctly) that the Recognition of Trusts Act 1987 had never been extended to Jersey, although it had been to other British territories.  She appears to have been unaware that the Hague Convention had been extended to Jersey by virtue of a supplementary declaration by the UK Government under Art 29 of the Convention, and, the Trusts (Jersey Law) 1984 (unlike the pre-existing English law) containing detailed conflicts rules, there was simply no need to extend the provisions of the 1987 Act to the Bailiwick.

COSTS ORDERS AGAINST LEGALLY AIDED PARTIES

1       The recent case of Nicholson v Health & Social Services Committee[3]involved an appeal from the Royal Court which had earlier dismissed the plaintiff’s claim for damages. The claim arose from alleged medical negligence at the time of the plaintiff’s birth and, in particular, the alleged delay in carrying out an emergency caesarean section that was said to have resulted in the plaintiff suffering serious brain-damage. This case will be of interest to practitioners who specialise in medical negligence, particularly as the case now appears to be working its way up to the Privy Council. This note, however, focuses upon one order of the Court of Appeal, which might otherwise go unnoticed. As one might expect, the Court of Appeal ordered the unsuccessful appellant to pay the respondent’s costs of the proceedings before the Royal Court and the Court of Appeal. What is of interest, however, is that the Court of Appeal went on to direct “that such order be not enforced without the leave of the Royal Court.” The Court made such a direction upon the plaintiff undertaking (through his curator), inter alia, to assist in the subsequent enforcement of such order for costs, including notifying the respondent of any change in his circumstances. It would appear that this direction was made without any objection from the respondent, but was felt by the Court to be appropriate given that the appellant was legally aided and without any funds.

2       The Court of Appeal’s order is interesting because it is reminiscent of the order for costs which was conventionally made in England in legal aid cases, at least until the decision in Parr v Smith[4]. Until about this time, the conventional order for costs against a legally aided party included a direction that it was “not to be enforced without the leave of the court”. The reason for such a direction lay in the terms of section 17 of the Legal Aid Act 1988 which provided as follows -

“(1)    The liability of a legally assisted party under an order for costs made against him with respect to any proceedings shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances, including the financial resources of all the parties and their conduct in connection with the dispute.

(2)     Regulations shall make provision as to the court, tribunal or person by whom that amount is to be determined and the extent to which any determination of that amount is to be final.

(3)     None of the following, namely, a legally assisted person’s dwelling house, clothes, household furniture and tools and implements of his trade shall –

(a)     be taken into account in assessing his resources for the purposes of this section,

(b)     be subject to execution or any corresponding process in any part of the United Kingdom to enforce the order, so far as regulations may prescribe.”

3       It should immediately be noticed that these provisions allowed the liability of a legally aided party to be determined upon the basis of a flexible and broad ranged inquiry into “all the circumstances.” Section 11 of the Access to Justice Act 1999 now contains the relevant provisions and these closely follow the previous 1988 wording.  (See further the Guidance Notes to CPR Part 48.)

4       The Civil Legal Aid (General) Regulations 1989[5] supplemented section 17 of the 1988 Act.[6] In essence, whilst the Court might decide, in principle, that a legally aided party should pay the successful party’s costs, the amount of such liability first had to be determined before the order could be enforced. That determination could be postponed or adjourned by the Court, but once having been carried out, Reg. 130 imposed a time limit of six  years for the receiving party to apply to vary the order in the event, inter alia, of a change in the legally aided party’s circumstances. This became known as “a football pools’ order”.

5       As has already been noted, the conventional order made against a legally aided party was for costs “not to be enforced without the leave of the court”. In Parr v Smith this shorthand form of order was interpreted as including a determination of the legally aided party’s liability rather than an adjournment of it, as most practitioners had thought. Accordingly, it triggered the six year period, beyond which no variation could then be made. Subsequent to this decision, therefore, practitioners were careful to ask for an order which expressly adjourned the determination of a legally aided party’s liability, and the previous order became utilised less frequently.[7]

6       Given the unique origins and history of this form of costs’ order in England, it is extremely interesting that the Jersey Court of Appeal has felt it appropriate for such an order to be made in Nicholson.  It is immediately notable, for instance, that a legally aided party in Jersey enjoys no statutory protection from an adverse order for costs. Indeed, there is no statutory framework in the Island for the administration of legal aid at all, which, to the credit of the profession, largely rests upon the respective oaths of an advocate and écrivain, together with a resolution of the  profession in 1904.[8] It is submitted, however, that the order made in Nicholson is entirely justified in that it provides some measure of protection to those with limited or no resources. In particular, it is sometimes the case that a legally aided plaintiff will, for whatever reason, suffer an adverse judgement and consequent order for costs at an interlocutory stage. The ability of the opposing party to have those costs taxed within the period of two months of the order (RCR 9A/10(1)) and then enforced without further abatement or delay, is a strong disincentive for the legally aided party to continue with the proceedings.[9] This situation is particularly acute in the Petty Debts Court where the smaller value claims are heard and, save for a short mediation hearing where special rules apply,[10] the parties are always at risk of suffering an adverse order for costs that includes the attendance of a lawyer.[11] In this respect, the practice in the Petty Debts Court appears to have eschewed the small claims rules that operate in England (now under CPR Part 27) and which strictly limit the costs that may be recovered.

7       In appropriate cases in Jersey, therefore, it is submitted that the courts should be encouraged to make orders for costs in comparable terms to those previously achieved in England under the Legal Aid Act 1988, both at an interlocutory stage and at the conclusion of a case. In this respect it will be noted that the Civil Proceedings (Jersey) Law, 1956 confers a wide discretion upon the court as to the orders that may be made in relation to costs. Article 2 states that costs are -

 “…in the discretion of the court, and the court shall have full power to determine by whom and to what extent the costs are to be paid.” 

 8      It is to be hoped, therefore, that the order for costs made in the case of Nicholson will not be an isolated event. However, there remain a number of potential difficulties in the continued use of such an order. In particular, with the absence of any statutory framework comparable to the Legal Aid Act 1988, any judge would need to spell out the circumstances in which a costs’ order might be enforced; the court that would hear such an application; and whether such an order would prevent (without leave) the commencement of taxation proceedings or merely the enforcement of the sum so taxed. These are matters that might be more conveniently incorporated into a Practice Direction, should there be any intention to follow the Court of Appeal’s lead. However, to the extent that any greater emulation of the English position is felt to be appropriate, legislative intervention would appear to be required.

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