Trust - dismissal of strike out and reverse summary judgment applications
by Sinels.
[2017]JRC130A
Royal Court
(Samedi)
14 August 2017
Before :
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David Roderick Notley Hunt, Q. C.,
Commissioner, sitting alone.
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Between
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(1)
C.I.
Trustees and Executors limited
(2)
Gary
Killmister
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Costs Plaintiffs
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And
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(1) Sinels Advocates
(2) Carey Olsen
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Costs Defendants
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Advocate C. J. Scholefield for the Costs
Plaintiffs.
Advocate J. M. P. Gleeson for the First Costs
Defendants.
Advocate N. F. Journeaux for the Second Costs
Defendants.
judgment
the commissioner:
1.
By a
summons dated 4 July 2017 the First Costs Defendants (“Sinels”)
applied to strike out certain paragraphs of the Grounds for seeking wasted costs
against the Costs Defendants (“the Grounds”) served by the Costs
Plaintiffs (respectively “CITE” and “Mr
Killmister”). I heard the
summons on 10 July 2017. Sinels
were represented by Advocate Gleeson of Dickinson Gleeson; the Costs Plaintiffs
were represented by Advocate Scholefield of Viberts; and Carey Olsen, the
Second Costs Defendants, were represented by Advocate Journeaux of the same
firm. In circumstances which I will
explain later in this judgment, Sinels subsequently amended their Summons to
claim summary judgment against the Cost Plaintiffs in respect of the same
paragraphs of the Grounds. At the
conclusion of the hearing I reserved my decision.
The procedural background
2.
The
procedural history is set out in detail in my judgments giving the reasons for
my decision of 13 January 2017 (as revised), and for my decision of 23 March
2017, and I do not repeat it in this judgment. Instead I confine myself to that part of
the history which bears directly on Sinels’ applications.
3.
Following
a hearing on 12 January 2017, I gave the Costs Plaintiffs leave to convene the
Costs Defendants for the purposes of applying for wasted costs orders. On 3 March Sinels issued an amended
summons seeking, inter alia, to set aside the leave which I had granted at the
January hearing. I dismissed that
part of Sinels’ summons following a hearing on 23 March.
4.
On 31
March the Costs Plaintiffs served the Grounds. The claim against Sinels includes the
following paragraph:
“7. The cost of
[Sinels’] claims against CITE
The matters aforesaid caused
[CITE] to incur costs, namely the whole of the costs incurred in defending the
substantive claims referred to above, being £426,279.47, and further yet
unquantified costs incurred in relation to the issues of costs, which can be broken
down as follows:
(a) Between 19 December 2010 being the
time that CITE transferred the trust assets to Mr MacFirbhisigh and August 2013
when Sinels were removed as representatives of the Plaintiffs, fees of
£60,938.50, disbursements of £714.29 and counsel fees of
£9,000 were incurred;
(b) Between September 2013 when Carey
Olsen were appointed as representatives of the Plaintiffs and August [2015]
when the trial concluded fees of £302,365.29, disbursements of
£2,595.63, travel costs of £5,264.97 (to attend trial), counsel
costs of £16,775 and £28,625.79 in respect of the appointed expert
of the Digger shares were incurred.
[CITE] maintains that, but for
the conduct of Sinels complained of above, none of its costs of the claim would
have been incurred.”
Para.10 is in the same terms, mutatis mutandis, in respect of Mr
Killmister’s costs. Finally,
para.12 of the Grounds reads:
“The ambit of
[Sinels’] responsibility
For the avoidance of doubt, the
[Costs Plaintiffs] include within the sums claimed from Sinels costs incurred
while Carey Olsen were acting for the Plaintiffs on the basis that, but for the
conduct of Sinels complained of, the Plaintiffs would not have had claims in
which instructions could have been transferred to Carey Olsen and any criticisable
conduct of Carey Olsen does not break the chain of causation.”
5.
Sinels
served their Reply to the Grounds on 12 May 2017. Their response to the paragraphs of the
Grounds set out in the preceding paragraph above is as follows:
“30. As to paragraph 7:
30.1 The alleged causative link between the criticisms made
of Sinels and the entirety of [CITE’s] costs incurred in defending the
claims brought against it is denied.
30.2 It is denied that the “but-for” test of
causation applied in the final sentence of paragraph 7 is the, or an,
appropriate approach to causation in this context. The jurisdiction to make a wasted costs
order can only arise where the improper, unreasonable or negligent conduct
complained of has caused a waste of costs and only to the extent of such wasted
costs. In any event it is denied
that but-for the conduct of Sinels complained of, none of [CITE’s] costs
of the claim would have been incurred.
30.4 Without prejudice to the foregoing, [CITE’s]
attempt to render Sinels liable for costs incurred by [CITE] during the
currency of Carey Olsen’s instructions is fundamentally flawed for at
least the following reasons:
30.4.1 Carey Olsen replaced Sinels as advocates for the Plaintiffs in
or around September 2013.
30.4.2 Thereafter the conduct of this litigation lay with Carey Olsen
and not with Sinels.
30.4.3 Master Thompson afforded Carey Olsen the opportunity to
consider the case afresh and, in effect, to start again by re-pleading the case
to be advanced against the Defendants.
Carey Olsen did so and by Order dated 5 February 2014 Master Thompson
permitted that re-pleaded case to proceed to trial. Sinels had no involvement whatsoever in
the re-pleading of the Plaintiffs’ case nor in any other matter
pertaining to these proceedings thereafter.
30.5 If, which is denied, any causative link commences
with Sinels’ conduct of the case during their instruction, that causative
relationship is interrupted or impeded by any of a number of novus actus
interveniens. Sinels will aver that
at least the following events constituted novus actus interveniens breaking any
causal relationship thereafter:
30.5.1 The instruction of Carey Olsen in place of Sinels;
30.5.2 Carey Olsen’s election to re-plead the case advanced on
behalf of the Plaintiffs thereafter;
30.5.3 Carey Olsens’ decision to introduce a pleaded case in
negligent misstatement and breach of fiduciary duty against [Mr Killmister] in
respect of the advice to set up the trust;
30.5.4 Master Thompson’s decision to permit the amendments
reflected in Carey Olsen’s re-pleaded case;
30.5.5 Carey Olsen’s rejection of a drop hands settlement in
May 2015; and/or
30.5.6 Carey Olsen’s approach to and conduct of the trial of
this matter.
30.5.7 The hearing of live witness evidence and resolution of issues
of fact at the trial of this matter, and in particular the substantial
rejection of [Mrs Ching’s] evidence at trial.
30.6 Without prejudice to the foregoing, if and insofar
as [the Costs Plaintiffs] demonstrate any improper, unreasonable or negligent
conduct on the part of Carey Olsen, Sinels will aver that any such conduct
necessarily breaks any chain of causation commencing with Sinels’ conduct
of the case.
33. As to paragraph 10:
33.1 Paragraph [30] above is repeated mutatis mutandis.
33.2 In any event, paragraph 10(a) cannot possibly accurately
particularise the costs of Sinels’ claims against [Mr Killmister] since,
by [Mr Killmister’s] own admission in paragraph 9(a), no claim was advanced
against [Mr Killmister] until the Amended Order of Justice dated 30 November
2011.
33.3 It is unacceptable, and illustrative of the [Costs
Plaintiffs’] broad stroke approach to the pleading of [their] Grounds,
that [Mr Killmister] has simply pleaded the entirety of the costs incurred by
all defendants from 19 December 2010 until September 2013, notwithstanding that
no claim was advanced against [Mr Killmister] until 30 November 2011.
35. Paragraph 12 is denied and paragraph 30
above repeated.”
6.
Sinels
also sought Further and Better Particulars of the Grounds. The relevant Request under para.7 of the
Grounds, and the Costs Plaintiffs’ reply, are as follows:
“Of “The matters
aforesaid caused [CITE] to incur costs, namely the whole of the costs incurred
in defending the substantive claims referred to above, being £426,279.47,
and further yet unquantified costs incurred in relation to the issues of
costs...” (emphasis added)
REQUEST
16. Please state with full particularity the
basis upon which it is alleged that the claims pleaded against CITE during the
currency of [Sinels’] instructions can possibly be causative of the
“whole of the costs incurred defending the substantive claims”,
notwithstanding that the claims pursued against the Defendants were abandoned
and replaced following the instruction of Carey Olsen.
RESPONSE
The [Costs Plaintiffs’]
case is that no claims should have been pursued against [CITE] after 19
December 2010. In those
circumstances, but for Sinels’ conduct, none of [CITE’s] costs after
that date would have been incurred.
Further it is fair and just that Sinels should contribute to costs
incurred after the instruction of Carey Olsen.
....
Of “[CITE] maintains
that, but for the conduct of Sinels complained of above none of its costs of
the claim would have been incurred.”
REQUEST
19. Please state with full particularity how
[CITE] reconciles this averment with the facts that: (i) following the
instruction of Carey Olsen in place of Sinels the Plaintiffs were afforded the
opportunity to, and did in fact, “start again”, and (ii) having
“started again” the reworked claims against [CITE] were pursued to
trial without any further involvement of Sinels whatsoever.
RESPONSE
The Plaintiffs did not entirely
start again after the instruction of Carey Olsen. Carey Olsen maintained the flawed
allegation of breach of trust against [CITE] which Sinels had introduced. Otherwise, see response 16 above.”
Turning to para.10 of the
Grounds against Mr Killmister, Request 24 is in the the same terms, mutatis
mutandis, as Request 16. The Costs
Plaintiffs answered as follows:
“The [Costs
Plaintiffs’] case is that no claims should have been pursued against [Mr
Killmister] at all. In those
circumstances, but for Sinels’ conduct, none of [Mr Killmister’s]
costs would have been incurred.
Further it is fair and just that Sinels should contribute to costs
incurred after the instruction of Carey Olsen.”
The Further and Better
Particulars continue:
“REQUEST
25. Please state further the basis upon which it
is alleged that the claims pleaded against Mr Killmister, as opposed to those
pleaded against the other Defendants, can possibly be causative of the “whole
of the costs incurred defending the substantive claims” in circumstances where the latter costs
include those incurred in respect of the claims against CITE.
RESPONSE
[Mr Killmister] only seeks to
recover his own costs as a consequence of the matters complained of in respect
of [Mr Killmister].
Of “[Mr Killmister]
maintains that, but for the conduct of Sinels complained of above, none of his
costs of the claim would have been incurred.”
REQUEST
26. Please state with full particularity how [Mr
Killmister] reconciles this averment with the facts that: (i) following the
instruction of Carey Olsen in place of Sinels the Plaintiffs were afforded the
opportunity to, and did in fact, “start again”, and (ii) having
“started again” the reworked claims against [Mr Killmister] were
pursued to trial without any further involvement of Sinels whatsoever.
RESPONSE
Please see response 24
above.”
7.
Finally,
on 20 June 2017 the Costs Plaintiffs served their Response to Sinels’
Reply. The relevant parts read as
follows:
“Costs claimed by [CITE]
41. As to paragraph 30 of the Reply:
(a) It would not be proportionate for
[CITE] to identify at this stage the costs attributable to each separate allegation
against Sinels. [CITE’s] primary case is that all of its costs were
incurred in defence of the claims which should not have been brought against it. If the Court upholds [CITE’s]
application in part, then the resulting wasted costs will be identified in
[CITE’s] bill for taxation and Sinels will have the opportunity to
challenge the attributability of those costs on taxation.
(b) It is denied that any actions taken by
Carey Olsen constitute a break in the chain of causation. If it is Sinels’ case that Carey
Olsen’s conduct was so grossly improper, unreasonable or negligent as to
amount to a novus actus interveniens, then Sinels are invited to plead full
particulars of the same.
(c) Further and in any event, Carey Olsen
did not completely replead the claim against [CITE]. The allegation of breach of trust in
relation to the AIG bond and the Digger shares was introduced by Sinels in the
Amended Order of Justice and preserved by Carey Olsen.
....
47. As to paragraph 33 of the Reply, paragraphs
41 above are repeated mutatis mutandis.”
The original summons
8.
By their
summons as originally issued, Sinels applied to strike out paras.7, 10 and 12
(or more accurately 7(b), 10(b) and 12) of the Grounds pursuant to Rule 6/13(1)
of the Royal Court Rules 2004 (as amended) (“the Rules”),
alternatively pursuant to the Court’s inherent jurisdiction, on the basis
that:
(a) they disclose no reasonable cause of action;
(b) they are scandalous, frivolous and vexatious;
(c) they are otherwise an abuse of the process of
the Court.
In effect, therefore, Sinels sought to
strike out those parts of the Grounds which claim wasted costs against them
from September 2013, after they had been replaced by Carey Olsen (“the
later claim”); the costs (which, as I was informed, are currently being
taxed) claimed in respect of this period amount to some £355,626.68. They did not seek to strike out the
Costs Plaintiffs’ claim against them in respect of the earlier period
from December 2010 to August 2013 (“the earlier claim”), in respect
of which the untaxed costs amount to some £70,652.79.
9.
Not
surprisingly, there was no real dispute between the parties as to the test to
be applied under Rule 6/13(1)(a).
Thus in In re Esteem Settlement [2000] JLR 119, the Deputy
Bailiff summarised the position as follows (at p.127):
“Many cases were cited to me
but, in my judgment, the principles upon which the Royal Court should proceed
in considering an application to strike out on the grounds that the pleading
does not contain any reasonable cause of action are clear. The Royal Court has said on a number of
occasions that, in such matters, it will apply the same principles as have been
adopted by the English courts.
It is only where it is plain and
obvious that the case cannot succeed that recourse should be had to the summary
jurisdiction to strike out. To
quote from para.18/19/10 of 1 The Supreme Court Practice 1999, at 349: Aso long
as the statement of claim or the particulars disclose some cause of action, or
raise some questions fit to be decided by a Judge or jury, the mere fact that
the case is weak, and not likely to succeed, is no ground for striking it
out”.”
In other words, in order to be struck out,
the claim must be obviously unsustainable (Poole v. Poole [1987-88 JLR
Notes-5a]).
The parties’ submissions
10. In summary, Advocate Gleeson’s primary
submission was that the later claim against Sinels was bound to fail on the
ground of causation. Although
Advocate Gleeson relied on both subparas.(a) and (b) in this context, in
reality his argument under subpara.(b), namely that a “claim is frivolous or vexatious if it is obviously
unsustainable” took him no further than subpara.(a). Accordingly I say no more about
subpara.(b). It also follows that
the prohibition in Rule 6/13(2) on adducing evidence applies, in my view, to
Sinels’ primary submission; for this reason I disregard that part of
Advocate Gleeson’s argument which sought to rely on evidence of what
happened in the course of the original proceedings. Advocate Gleeson’s alternative
submission was that the later claim represented an abuse of process within subpara.(c)
because it amounted to an attempt to recover from Sinels by “the back door”. I add for the sake of completeness that
in his skeleton argument Advocate Gleeson added a submission that the later
claim was “clearly hopeless or
speculative” and that as such it should be struck out pursuant to the
Court’s inherent jurisdiction.
Again, however, this contention adds nothing, in my view, to his
reliance on subpara.(a) of Rule 6/13(1), so I say no more about it.
11. In addition to resisting Sinels’
submissions, Advocate Scholefield argued that the application should be
dismissed on the ground that it was procedurally inappropriate.
12. At the hearing in July Advocate Journeaux
adopted a neutral position in relation to the summons.
The amended summons
13. In the course of the hearing I pointed out to
Advocate Gleeson (on the basis of information given to me by Master Thompson)
that the Royal Court Rules had recently been amended so as to include provision
for what is commonly described in England, and which I propose to describe, as
reverse summary judgment. I
therefore gave Advocate Gleeson 24 hours within which to reach a decision as to
whether he wished to amend his clients’ summons so as to include an
application for reverse summary judgment.
Advocate Gleeson did so indicate and Sinels duly served an amended
summons on 12 July 2017 seeking such relief in respect of the same paragraphs
of the Grounds, on the basis that
(a) the Costs Plaintiffs had no real prospect of
succeeding on the issues raised by those paragraphs; and
(b) there was no other compelling reason why such
issues should be disposed of at trial.
Advocate Scholefield sensibly did not
object to the proposed amendment and I therefore granted Sinels the necessary
leave to amend their Summons.
14. It was agreed between the parties that, subject
to the right of any party to request a further oral hearing, I should determine
the outcome of the amended application on the basis of written submissions in
addition to the oral submissions presented on 10 July. To that end Advocate Gleeson served a
supplemental skeleton argument, together with an Affidavit of Mr Philip Sinel
(albeit at that stage in an unsworn draft, later replaced with a sworn version)
on 18 July. The Affidavit did no
more than confirm the veracity of the factual averments made in Advocate
Gleeson’s original and supplemental skeleton arguments. Advocate Scholefield responded with
written submissions on 24 July.
Advocate Gleeson served reply submissions on 27 July, and on the same
day there was a further exchange of emails between the parties. Again Advocate Journeaux adopted a
neutral position in the sense that he made no submissions in relation to
Sinels’ amended Summons.
15. Part 7 of the Rules, as amended with effect
from 1 June 2017, now reads as follows (insofar as relevant to the present
case):
“7/1 Grounds for summary judgment
(1) The
Court may in any proceedings give summary judgment against a plaintiff .... on
the whole of a claim or on a particular issue in any pleading if B
(a) it
considers that B
(i) the plaintiff has no real
prospect of succeeding on the claim or issue,
....; and
(b) there is no other compelling reason
why the case or issue should be disposed of at a trial.
(2) A summary judgment hearing may be
ordered by the Court of its own motion or on application made by either party
in accordance with this Part.
7/2 Procedure
....
(3) An application for summary judgment
must be made by summons which must set out the claims or issues which it is
proposed that the Court will decide at the hearing.
(4) The application must be supported by
an affidavit verifying the facts to which the application relates and stating
that, in the deponent=s belief, the other party has no real prospect of
succeeding on the claim or issue or of defending the claim or issue set out in
the application as the case may be.
(5) Unless the Court otherwise directs, an
affidavit for the purposes of this Rule may contain statements of information
or belief with the sources and grounds thereof.
....
7/3 Evidence filed in response to a summary
judgment application
(1) If the respondent to an application
for summary judgment wishes to rely on evidence at the hearing, he or she must
B
(a) file an affidavit containing or
exhibiting the evidence to be relied upon;
....
7/4 Orders the Court may make
(1) The orders the Court may make under
this Part include B
....
(b) the dismissal of the claim, answer or
issue;
(c) the dismissal of the application;
....”
Because of the way in which the reverse
summary judgment issue arose, I abridged the various time limits for the
service of affidavit evidence without objection by the parties.
16. Since the wording of Rule 7/1(1)(a)(i) mirrors
that of the English CPR Part 24.2(a)(i), it seems to me that the Royal Court
should, when applying Rule 7/1(1)(a)(i), follow the principles which have been
developed in the English courts in relation to Part 24.2(a)(i). This approach reflects that adopted by
the Royal Court in AG v. Contractors Plant Service Ltd. [1967] J.J. 785
where the Deputy Bailiff said (at p.786):
“The Solicitor General has
drawn our attention to the fact that the provisions of the [Scaffolding
(Jersey) Regulations, 1960] follow closely those of the Building (Safety,
Health and Welfare) Regulations 1948, made under the Factories Act 1947, and
other enactments of the Parliament of the United Kingdom, and he has therefore
sought to support his case against the defendant company by quoting from
judgments given in the English Courts on matters affecting the interpretation
of those regulations. Although, as
has often been said in this Court, the Courts of this Island are not bound by
judgments of the English Courts, we feel that in this instance, we should have
close regard to the judgments in question ...”
Both Advocate Gleeson and Advocate
Scholefield agreed with this approach.
17. In Trilogy Management Ltd. v. Harcus
Sinclair [2017] EWHC 1164 (Ch), Rose J. said as follows (at para.32):
“The principles to be applied
are those set out by Lewison J in Easyair Ltd v Opal Telecom Ltd [2009] EWHC
339 (Ch) at paragraph 15. The
correct approach on applications by defendants is as follows:
“(i) The court must consider whether the claimant
has a “realistic” as opposed to a “fanciful” prospect
of success: Swain v Hillman [2001] 2 All ER 91;
ii) A “realistic” claim
is one that carries some degree of conviction. This means a claim that is more than
merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at
[8];
iii) In reaching its conclusion the court
must not conduct a “mini-trial”: Swain v Hillman;
iv) This does not mean that the court must
take at face value and without analysis everything that a claimant says in his
statements before the court. In
some cases it may be clear that there is no real substance in factual
assertions made, particularly if contradicted by contemporaneous documents: ED
& F Man Liquid Products v Patel at [10];
v) However,
in reaching its conclusion the court must take into account not only the
evidence actually placed before it on the application for summary judgment, but
also the evidence that can reasonably be expected to be available at trial:
Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) Although a case may turn out at trial
not to be really complicated, it does not follow that it should be decided
without the fuller investigation into the facts at trial than is possible or
permissible on summary judgment. Thus the court should hesitate about making a
final decision without a trial, even where there is no obvious conflict of fact
at the time of the application, where reasonable grounds exist for believing
that a fuller investigation into the facts of the case would add to or alter
the evidence available to a trial judge and so affect the outcome of the case:
Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007]
FSR 63;
vii) On the other hand it is not uncommon for an
application under Part 24 to give rise to a short point of law or construction
and, if the court is satisfied that it has before it all the evidence necessary
for the proper determination of the question and that the parties have had an
adequate opportunity to address it in argument, it should grasp the nettle and
decide it. The reason is quite
simple: if the respondent=s case is bad in law, he will in truth have no real
prospect of succeeding on his claim or successfully defending the claim against
him, as the case maybe. Similarly,
if the applicant=s case is bad in law, the sooner that is determined, the
better. If it is possible to show
by evidence that although material in the form of documents or oral evidence
that would put the documents in another light is not currently before the
court, such material is likely to exist and can be expected to be available at
trial, it would be wrong to give summary judgment because there would be a
real, as opposed to a fanciful, prospect of success. However, it is not enough simply to
argue that the case should be allowed to go to trial because something may turn
up which would have a bearing on the question of construction: ICI Chemicals
& Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.”
18. Since neither counsel had referred in their
skeleton arguments to the Easyair or Trilogy cases, the Court
notified all parties of my provisional view that the principles quoted above
were those which I should follow in the present case, giving them the
opportunity to challenge my provisional view if they wished. Advocate Gleeson indicated his agreement
with my intended approach. Advocate
Scholefield likewise did not seek to challenge my provisional view but referred
me to the judgment of Master Thompson in Holmes v. Lingard [2017] JRC
113, delivered on 21 July 2017.
19. At para.160 of his judgment in Holmes, Master
Thompson said as follows:
“This is the first occasion
upon which Rule 7 introduced by Royal Court (Amendment No.20) Rules 2017
has been considered. The wording of
Rule 7 is based extensively on Rule 24 of the Civil Procedure Rules
(ACPR”). As there is no
material difference between the wording of Rule 7 of the Royal Court Rules and
Rule 24 of the CPR, I have followed the relevant English jurisprudence as to
how the power contained in Rule 7 should be interpreted and applied.”
His judgment does not refer to either Easyair
or Trilogy but the principles which he deduced from Civil Procedure
2017 Vol.1 (the White Book) and from the authorities upon which he relied
are, it seems to me, entirely consistent with those in Easyair, as
approved in Trilogy, which I have quoted in para.17 above. Accordingly I propose to follow the
principles in Easyair.
20. If Sinels can succeed on their reverse summary
judgment application, they have no need of their application to strike
out. Conversely, since the onus on
a defendant in respect of a reverse summary judgment application under Rule
7/1(1)(a)(i) is less severe than that in respect of a strike out application
under Rule 6/13(1), it follows that if Sinels cannot succeed on their reverse
summary judgment application, they will not succeed on their strike out
application either. I therefore
turn immediately to the reverse summary judgment application.
21. Whereas evidence is, as I have already indicated,
not admissible on Sinels’ strike out application, it is in principle
admissible on their reverse summary judgment application. In the context of the present
proceedings, however, I bear in mind the following points.
(i)
Sinels
were not a party to the original action, so the extent to which any factual
findings in that action would be binding on them may be open to argument.
(ii) Given the current uncertainty about the extent,
if any, to which Sinels can rely on an opinion of Mr Joffe Q.C. which the
Plaintiffs provided to the Court in 2011 in support of an application to amend
the original proceedings, I consider that it would not be right for me to take
any account of what that opinion may or may not have said. I therefore disregard Mr Joffe’s
opinion in its entirety for present purposes.
(iii) The extent of the evidence adduced by the
parties was in any event extremely limited and consisted, in effect, simply of
references to various aspects of the conduct of the original proceedings and to
passages in the Court’s judgment of 17 November 2015 dismissing the
Plaintiffs’ claims.
In reality the arguments adduced by
Advocates Gleeson and Scholefield on the reverse summary judgment application
were simply a re-run of those which they had deployed on the strike out
application, largely based upon the allegations in the pleadings which I have
set out earlier in this judgment.
Discussion and conclusions
22. I take in turn the two limbs under Rule 7/1(1).
Rule 7/1(1)(a)(i)
23. Advocate Gleeson made a preliminary point about
the burden of proof. He accepted
that ordinarily Sinels, as the applicants, would have borne the burden of
establishing that the later claim had no real prospect of success. As Potter L.J. said in terms in the ED&F
Man case (at para.9):
“the overall burden of proof
rests upon the claimant to establish that there are grounds for his belief that
the respondent has no real prospects of success...”
But in the particular circumstances of the
present case Advocate Gleeson submitted that it was the Costs Plaintiffs who
bore the burden of showing that the later claim had a real prospect of
success. He relied for this
contention on the two stage process inherent in a wasted costs application, the
first stage of which involves the applicant for a wasted costs order showing
cause why he should be permitted to issue such an application. Advocate Gleeson submitted that it was
only now that the Costs Plaintiffs had served the Grounds that the Court could
properly exercise this first stage of its discretion and that Sinels’
amended application should be treated as, in effect, challenging the Costs
Plaintiffs to show cause.
24. Not surprisingly, Advocate Scholefield
disagreed with this suggestion. In
my judgment his objection was well founded. The first stage to which Advocate
Gleeson referred came and went when I initially granted the Costs Plaintiffs
leave in January of this year to convene the Costs Defendants, coupled with my
dismissing in March Sinels’ application to set that leave aside. Nor am I persuaded by the other points
made by Advocate Gleeson on this issue.
Accordingly I conclude that it is Sinels who, in the usual way, bear the
burden of establishing on this application that the later claim lacks any real
prospect of success.
25. Advocate Gleeson conveniently summarised
Sinels’ contentions at para.9 of his supplemental skeleton argument, as
follows:
“9.1 Firstly, there is no
causative link between Sinels’ alleged conduct and any costs said to be
wasted following their ceasing to act for the Plaintiffs; and
9.2 Secondly, that the Costs Plaintiffs cannot
show that but-for [sic] Sinels’ alleged conduct the Plaintiffs would, on
a balance of probabilities, have abandoned all claims against the Costs
Plaintiffs and have taken the matter no further. On the contrary, as in fact happened,
the Plaintiffs instructed Carey Olsen to devise and pursue further claims
against the Costs Plaintiffs.”
Although the Advocates’ written
submissions in some respects cast their net wider than this issue of causation,
I propose to confine myself to Sinels’ case on causation, since their
amended application stands or falls on that point.
26. Advocate Gleeson emphasised the importance of
causation in the context of wasted costs applications, referring to para.22 of
my judgment of 23 March 2017 MacFirbhisigh and Ching-v-CI Trustees and
Others [2017] JRC 057 where I said:
“As Ridehalgh makes
clear (at p.17), demonstration of a causal link between the conduct complained
of and the alleged wasted costs is essential. .... It will be up to CITE and Mr Killmister
to establish the necessary causal link in due course; if they fail to do so, their
wasted costs application will fall at that hurdle.”
In addition, he relied upon the endorsement
by the Court of Appeal in Kilroy v. Kilroy [1997] P.N.L.R. 66 of the
proposition that the impropriety, unreasonableness or negligence must have “directly
caused” costs to be wasted.
He also referred the Court to a number of other wasted costs cases,
including CMCS Common Market Commercial Services AVV v. Taylor [2011]
EWHC 324 (Ch) in which Briggs J. said as follows (at para.65):
“The wasted costs jurisdiction
is compensatory rather than punitive in nature. It is therefore necessary for an
applicant to establish that, if the alleged breach of duty or improper,
unreasonable or negligent act of the respondent solicitors had not occurred,
then on the balance of probabilities the applicant would not have incurred the
costs, or some part of those costs, in respect of which the application is
made: see Brown v Bennett (No.2) [2002] 1 WLR 713 at 729 to 731. In particular, the loss of a chance to
save the costs alleged to have been wasted is an insufficient basis for the
application: see Neuberger J at para.54.”
27. Advocate Gleeson placed particular reliance on
two English cases in which the court had to consider the position where two
firms of solicitors had been involved, the first being the decision of the
Court of Appeal in Byrne v. South Sefton (Merseyside) Health Authority
[2001] EWCA Civ 1904 and the second being the decision of Neuberger J. In Radford
& Co. v. Charles [2003] EWHC 3180 (Ch).
28. In Byrne, solicitors had acted for the claimant
in connection with allegations of clinical negligence by the defendant, but had
ceased to act for the claimant before proceedings were issued. The claimant then instructed other
solicitors in their place, who duly commenced proceedings. The claim was dismissed as being time
barred. The defendant health
authority sought an order for its wasted costs of defending the claim from the
first solicitors, on the basis that their failure to bring proceedings within
time caused the health authority to incur the costs of having the claim
dismissed as being out of time. At
first instance the judge made the order sought against the first solicitors
under s.51(6) of the Supreme Court Act 1981. On the appeal by the first solicitors,
the health authority sought to uphold the judge’s order on the
alternative ground of the more general power conferred by s.51(3) of the same
Act.
29. The Court of Appeal allowed the first
solicitors’ appeal against the order under s.51(6) on the basis that they had not exercised
rights of audience or the right to conduct litigation on behalf of the
claimant, and so were not persons against whom a wasted costs order could be
made. Dismissing the health
authority’s alternative case based on s.51(3), Chadwick L.J. (with whom
Peter Gibson and Longmore LL.J. agreed) said as follows:
“35. Third, it cannot be right to make an order under
section 51(3) of the 1981 Act unless the court is satisfied that the conduct of
the person against whom the order is to be made has been causative of the costs
which have been incurred by the person seeking the order. There must be a sufficient causal link
between the person who is to pay the costs and the incurring of those
costs. It is necessary to determine
whether the conduct complained of is really an effective cause of the costs
incurred. In the present case the
costs of these proceedings were incurred because Mr Byrne, with the advice of
Carter Hodge in 1998, decided to issue proceedings at a time when the primary
limitation period was long since passed.
Carter Hodge may have thought that it was worth taking the risk that the
proceedings would be struck out or dismissed if the court could not be
persuaded to exercise its powers under section 33 of the Limitation Act
1980. It may have been thought that
that was a risk worth taking in circumstances in which the action was to be
publicly funded. If the risk
failed, the costs would fall on the Legal Aid Board on the one side; and on the
health authority on the other side.
36. It is that decision that led to the costs in
this action being incurred. It has
not been suggested that that decision was either improper, negligent or
unreasonable; and Calthough I confess to finding the decision a surprising one CI
make no such suggestion. Nor has it
been suggested that the further prosecution of the proceedings by Mr Byrne and
his new solicitors was improper, negligent or unreasonable. The real question is whether the action or
inaction of Dooley & CoCwhich enabled the health authority to obtain an
order dismissing the proceedings on the grounds that there was a limitation
defence can be said to have been causative in any real sense of the costs which
the health authority incurred. To
my mind the answer to that question is plainly “No”. There is no difference, in principle,
between the position of Dooley & Co, whose action enabled the action to be
dismissed, and the position of the original assailant, whose conduct enabled the
claim to arise in the first place.”
30. Based on that decision, Advocate Gleeson’s
skeleton argument reads as follows (at para.59):
“Thus the causal link
demands a direct causal relationship between the conduct complained of and the
costs said to have been wasted in consequence. The simple fact that, but for [sic] the defendant’s
conduct, no opportunity would have arisen for the events which then directly
caused wasted costs is insufficient to demonstrate a causal relationship
between the defendant’s conduct and the costs said to have been
wasted. Where a second firm of
solicitors are instructed in place of the first and bring proceedings which
fail, the first firm’s conduct is not causative of the wasted costs of
defending those proceedings, even where the first firm left no time in which to
commence such proceedings before the expiration of limitation. The facts are starker still in the
present case. Carey Olsen substantially
re pleaded the case advanced against the Costs Plaintiffs and were permitted to
do so by Master Thompson in the context of the strike out application. Far from Sinels’ conduct creating
a fatal flaw in those claims (as did the expiration of limitation in Byrne),
Carey Olsen were given a chance to (and did in fact) re plead and advance a
case of their own formulation to trial, the merits of which were unaffected by
Sinels’ conduct.” (Emphasis as in the original.)
31. In Radford, the appellants were the
claimant’s former solicitors, who negligently failed to issue within the
permitted time an appeal against the local authority’s decision on the
claimant’s housing needs. The
claimant transferred his instructions to other solicitors who made an
application for permission to appeal out of time. The judge dismissed that application and
made an order that the appellants should show cause why they should not pay the
costs personally. On the full
hearing, the judge concluded that the application for permission had been
caused by the appellants’ negligence, and ordered that they should pay
the claimant’s and the defendant’s costs of the application for
permission.
32. The appellants’ appeal to Neuberger J.
was successful. For present
purposes the following are the relevant paragraphs from the judgment of
Neuberger J:
“65. However, I do not accept a third ground of appeal based
on Byrne raised by Mr Charles Phipps, in his argument on behalf of
Radfords In para.[36] of his
judgment Chadwick L.J. held that there was not a “sufficient causal
link” between the solicitors’ negligence and the incurring of the
costs which were claimed against them.
In that case, the negligence, in letting the limitation period pass,
cannot be said to have been a cause of the issue of the substantive proceedings
which were eventually dismissed on the limitation ground.
66. Here
I think that there was a sufficient causal link between the negligence in
letting the limitation period pass and the making of an application to issue
the appeal out of time. Indeed if
that were wrong, a failure to meet a time limit imposed by the court or by the
CPR could not lead to a wasted costs order, whereas it was accepted on all
sides here that it could do so, quite rightly, in my view.”
33. Mr Scholefield submitted at para.23 of his
initial skeleton argument that if there was a sufficient causal link between
the failure of Radford to issue an appeal within time and the unsuccessful
application by their successors, so in the present case:
“there can also be a
sufficient causal link between Sinels’ proceedings and Carey Olsen’s proceedings
which adopted similar themes and in which claims made by Sinels were maintained
by Carey Olsen.”
Advocate Gleeson, on the other hand,
contended the opposite. He
submitted that on the authority of Radford all that the Costs Plaintiffs
could recover from Sinels in respect of the later period would be the costs of
Carey Olsen seeking to put right the assumed previous mistakes of Sinels, what
he described as “mopping up
costs”. As soon, however,
as Carey Olsen chose to do the exact opposite and pursue the case to trial, any
causal link was necessarily broken.
He added, for good measure, that it did not matter that the case as
pursued to trial by Carey Olsen maintained some of the causes of action originally
pleaded by Sinels, for example the claim in respect of the Digger shares, in
addition to fresh causes of action introduced by Carey Olsen. He also contended that given the
findings in the Court’s judgment of November 2015, the Plaintiffs would
undoubtedly have pursued their claims to trial irrespective of what Sinels had,
or had not done, in the past, so that the costs incurred by the Costs
Plaintiffs in relation to the later claim would have been incurred by them
irrespective of Sinels’ past conduct of the proceedings.
34. In support of his submissions that there was a
causative link between Sinels’ conduct of the case up until August 2013
and the later claim, Advocate Scholefield also relied upon two decisions of the
Court of Appeal, namely Rahman v. Arearose Ltd. [2001] Q.B. 351 and Webb
v. Barclays Bank Plc [2001] EWCA Civ 1141, both involving loss occasioned
by two parties in the context of medical negligence. Thus in Rahman, Laws L.J. (with
whom the other members of the Court agreed) said as follows (at para.29):
“On these materials it does not
seem to me to be established as a rule of law that later negligence always
extinguishes the causative potency of an earlier tort. Nor should it be. The law is that every tortfeasor should
compensate the injured claimant in respect of that loss and damage for which he
should justly be held responsible.
To make that principle good, it is important that the elusive conception
of causation should not be frozen into constricting rules.”
35. Advocate Gleeson contended that these cases
were simply irrelevant, for at least two reasons. Firstly, there is no suggestion in any
of the English authorities that the principles of causation in medical
negligence cases have any application in the field of wasted costs. Second, liability in medical negligence
cases depends upon the existence of a duty of care owed by the defendant to the
claimant/plaintiff. But a lawyer
for a party to litigation owes no duty of care to the opposing party (Customs
and Excise Commissioners v. Barclays Bank plc [2006] UKHL 28, per Lord
Rodger at para.47). Indeed, as
Neuberger J. emphasised in Radford (at para.22), negligence to the
client will not of itself suffice to make a lawyer liable for wasted costs:
“There must also be some sort
of breach of duty to the court.”
In my view there is considerable force in
both of Advocate Gleeson’s objections to the relevance of medical
negligence decisions in the context of wasted costs cases. Finally, Advocate Scholefield sought in
his further email of 27 July to rely on the discussion of causation and remoteness
at para.175 of the Court’s judgment of November 2015. Apart from this submission coming too
late, I am not persuaded that that discussion assists him in any event.
36. I accept generally that for the reasons put
forward by Advocate Gleeson the Costs Plaintiffs may face an uphill struggle to
establish that his clients have any liability for wasted costs in respect of
the later claim. That said, I echo
Laws L.J.’s description of the concept of causation as elusive,
particularly, as it seems to me, in the context of the present case. In those circumstances I am not
persuaded by Advocate Gleeson that the Costs Plaintiffs have no real prospect
of establishing a causative link between Sinel’s alleged negligence and
the later claim. I also think that
there is force in Advocate Scholefield’s submission that the Court is in
effect being invited by Advocate Gleeson to conduct a mini-trial of the
causation issue. Accordingly I
conclude that Sinels have not discharged the burden of establishing that the
Costs Plaintiffs have no real prospect of succeeding on the causation issues
raised by paras.7(b), 10(b) and 12 of the Grounds. The causation issues raised by those
paragraphs, not least the impact of Sinels’ conduct of the claim prior to
August 2013 on the Plaintiffs’ approach to the litigation after Carey
Olsen had taken over, should be the subject of full argument at the substantive
hearing on the basis of all the materials which will be available to the Court
at that stage.
37. I add one final comment. In his written submissions on the
amended Summons, Mr Scholefield saw fit to refer to other cases in which when
Mr Philip Sinel has been criticised by the Court. I make clear that in reaching my
conclusion in the preceding paragraph I have entirely disregarded these
criticisms for the simple reason that they are, as Advocate Gleeson rightly
contended, wholly irrelevant to these wasted costs proceedings in general, and
to Sinels’ amended Summons in particular. I also agree with Advocate Gleeson that
these criticisms should not have been raised by Advocate Scholefield in the
first place.
Rule 7/1(2)
38. I was referred to Zuckerman on Civil
Procedure, para.9.48 of which reads as follows:
“However, the fact that the
summary judgment will not dispose of the whole of the case, may in certain
situations lead the court to conclude that it would be better for the whole
matter to go forward to trial. The
appropriateness of summary judgment will depend in such situations on the extent
to which it is likely to contribute to settlement of the remaining issues or to
their expeditious and economical disposal.”
In Iliffe v. Feltham Construction Ltd.
[2015] EWCA Civ.715, the Court of Appeal allowed an appeal against the grant of
summary judgment in favour of the claimant. Jackson L.J. (with whom the other two
members of the court agreed) said as follows:
“72. When I stand back from the detail and look at this case
in the round, I conclude that as at 20 June/3 July 2014 the position as to
causation of the fire was not so clear as to justify the grant of summary
judgment on liability in favour of the claimants. Also I think it was inappropriate to do
so when similar issues remained to be determined at a full trial as between the
other parties. In the particular
circumstances of this case that constitutes a “compelling reason”
not to enter summary judgment within the meaning of CPR 24.2(b). A judge in multi-party litigation must
aim to do justice as between all parties involved in the case.
73. A further significant feature is that summary
judgment in this case achieves much less in terms of saving costs and court
time than is normal. There is going
to be a trial anyway at which extensive factual and expert evidence will be
called in order to establish (a) what caused the fire, (b) who is
responsible. The claimants will
have to participate in the trial, because they need to prove the quantum of
their damages.”
39. As Advocate Scholefield rightly pointed out,
irrespective of the outcome of the reverse summary judgment application:
(i)
Sinels
will continue to be a party to the wasted costs proceedings in respect of the
earlier claim and will therefore be a full participant at the substantive
hearing; and
(ii) liability for wasted costs in respect of the
later claim will continue to be in issue, and therefore the subject of
argument, between the Costs Plaintiffs and Carey Olsen.
In short it seems to me that there would be
little, if any, saving of cost to any of the parties if Sinels’ reverse
summary judgment application were to be granted. It may also be that in due course Carey
Olsen seek to blame Sinels (or vice-versa) in respect of the later claim. In those circumstances I conclude that
this is one of those unusual cases like Iliffe (albeit that the factual
situation in that case was, I recognise, somewhat different) in which there is,
irrespective of my conclusion in respect of Rule 7/1(1)(a)(i), a compelling
reason within Rule 7/1(b) why the issues raised by paras.7(b), 10(b) and 12 of
the Grounds should be disposed of at trial. For this reason also I decline to grant
Sinels the relief which they seek.
The strike out application
40. In the light of my conclusions thus far, I need
say no more about the strike out application, save to deal with Advocate
Gleeson’s abuse of process argument as summarised in para.10 above. I recognise that in Ridehalgh v.
Horsfield [1994] Ch. 205 Sir Thomas Bingham M.R., giving the judgment of
the Court of Appeal, said (at p.478B) that:
“wasted costs orders should
not become a back-door means of recovering costs not otherwise recoverable
against a legally-aided or impoverished litigant”.
But if the Costs Plaintiffs’ claim in
respect of the later period is properly arguable against Sinels, as I have
found that it is, I see no reason why to allow such a claim to proceed to trial
should be an abuse of process of the Court. Indeed, of course, in most instances the
very reason for the successful party seeking wasted costs from the losing
party’s lawyers is that the losing party itself is unable to meet the
costs which will already have been awarded against it. As Lord Hobhouse said in Medcalf v.
Mardel [2003] 1 AC 120 (at para.58):
“The legitimate interest of
an applicant for a wasted costs order is financial, a reduction in the costs he
has to bear, but the application must be merits based and clearly made out; it
must not raise a suspicion of being itself abusive.”
I am not persuaded by Advocate Gleeson that
there is anything abusive about the later claim against Sinels.
Conclusion
41. For the reasons I have set out in this
judgment, I decline to grant any of the relief sought in Sinels’ amended
Summons.
42. I ruled at the hearing in July that any
application for leave to appeal against this judgment (if required) would be
dealt with in writing. If Sinels
wish to seek leave to appeal against my decision as set out in this judgment,
they are to make their reasoned application to the Court by email by no later
than 4 pm on Friday 25 August 2017.
The Costs Plaintiffs are to lodge any response to such application by
email to the Court by 4 pm on Thursday 31 August 2017. I will determine any such application on
paper.
43. The proceedings are already subject to a
temporary stay for the purposes of possible mediation. There will be no further or additional
stay in the proceedings associated with any application for leave to appeal.
44. I reserve all issues as to the costs of the
amended Summons.
Authorities
Royal Court Rules 2004.
In
re Esteem Settlement [2000] JLR 119.
Poole
v. Poole [1987-88] JLR Notes-5a.
AG v. Contractors Plant Service Ltd.
[1967] J.J. 785.
Trilogy Management
Ltd. v. Harcus Sinclair [2017] EWHC 1164 (Ch),
Holmes
v. Lingard [2017] JRC 113.
Civil Procedure 2017 Vol.1 (the White
Book).
MacFirbhisigh
and Ching-v-CI Trustees and Others [2017] JRC 057.
Kilroy v. Kilroy [1997] P.N.L.R. 66.
CMCS Common Market
Commercial Services AVV v. Taylor [2011] EWHC 324 (Ch).
Byrne v. South
Sefton (Merseyside) Health Authority [2001] EWCA Civ 1904.
Radford & Co. v. Charles [2003]
EWHC 3180 (Ch).
Supreme Court Act 1981.
Rahman v. Arearose
Ltd. [2001] Q.B. 351.
Webb v. Barclays
Bank Plc [2001] EWCA Civ 1141.
Customs and Excise
Commissioners v. Barclays Bank plc [2006] UKHL 28.
Iliffe v. Feltham
Construction Ltd. [2015] EWCA Civ.715.
Ridehalgh v.
Horsfield [1994] Ch. 205.
Medcalf v. Mardel
[2003] 1 AC 120.