Costs –application by the appellant for costs on an indemnity basis.

[2018]JRC025

Royal Court

(Samedi)

30 January 2018

Advocate J. D. Kelleher for the Appellant.

Advocate N. M. Sanders for the Respondent.

judgment

the bailiff:

1.        The test for deciding whether or not to apply indemnity costs but not standard costs is well established and I have been referred to put to counsel Pell Frischmann Engineering Limited-v-Bow Valley Iran Limited [2007] JLR 479 paragraphs at 25 and 30.

“25     At the risk of oversimplifying matters, the result of these English authorities may be said to be this: that the circumstances in which an award of indemnity costs may, as a matter of discretion, be ordered are less restrictive than they used to be; there must, ex hypothesi, still be something to take the case out of the ordinary, but the range of potentially relevant considerations, as described by Millett, J. (later Lord Millett) in Macmillan Inc. v. Bishopsgate Inv. Trust (11), is considerable and need not involve any finding of a lack of moral probity; the test, in a word, is unreasonableness; the purpose of such an award is to achieve a fairer result for the party in whose favour it is made than would be the case if he were only able to recover costs on the standard basis; in the end, it is a question of what would be fair and reasonable in all the circumstances”.

“30     This is not, overall, a case of litigation brought and pursued in bad faith or involving a lack of probity as such, but rather one that was the product of a wholesale loss of judgment on the part of Pell Frischmann combined with an irrational conviction of having been wronged on a scale wholly disproportionate to the reality; a readiness to see conspiracy at every turn, when a dispassionate assessment of what happened would have led to the recognition that allegations of conspiracy, malicious falsehood and the like were unsustainable. The result was litigation pursued, for the greater part, on a scale and in a manner that was wholly unreasonable and oppressive and it is difficult to see why Bow Valley should be left carrying a substantial portion of the costs of defending it”. 

And that test was approved in C-v-P-S [2010] JLR 645 paragraphs 7 and 11 to 12

“7       The principles, or guidelines, to be considered when deciding whether or not to award costs on an indemnity basis are not in this case the subject of dispute (save for one matter), although the parties rely on different case law: Dixon v. Jefferson Seal Ltd. (1), a decision of the Court of Appeal, for the wife; and Pell Frischmann Engr. Ltd. v. Bow Valley Iran Ltd. (8), a more recent decision of the Royal Court, for the husband. The Royal Court in Pell Frischmann did not purport to depart from the approach in Dixon but helpfully updated the position in light of recent case law from the English appellate courts (2007 JLR 479, at paras. 25 and 27): 

“25       At the risk of oversimplifying matters, the result of these English authorities may be said to be this: that the circumstances in which an award of indemnity costs may, as a matter of discretion, be ordered are less restrictive than they used to be; there must, ex hypothesi, still be something to take the case out of the ordinary, but the range of potentially relevant considerations, as described by Millett, J. (later Lord Millett) in Macmillan Inc. v. Bishopsgate Inv. Trust . . . is considerable and need not involve any finding of a lack of moral probity; the test, in a word, is unreasonableness; the purpose of such an award is to achieve a fairer result for the party in whose favour it is made than would be the case if he were only able to recover costs on the standard basis; in the end, it is a question of what would be fair and reasonable in all the circumstances.

. . .

27         In this jurisdiction, the Court of Appeal in Jefferson Seal . . . (in 1998) was plainly minded to follow the practice of the English courts as reflected in the cases referred to by Collins, J.A.; and, while Jersey has not adopted anything equivalent to the English Civil Procedure Rules which feature strongly in the post-1998 cases, I can think of no reason why the general approach adopted in those cases should not be followed in the Royal Court and every reason why it should be.””

“11     The husband, relying on the change brought about by the Practice Direction, refers to the Pell Frischmann (8) decision and submits that “the concept of an indemnity costs order now is so draconian in its nature that the same should only be considered by the court where the actions or intentions of the paying party are malicious or vexatious.” We do not accept that it is appropriate to impose such a restrictive approach on the discretion of the court to make an award of costs on the indemnity basis. The question will always be-is there something in the conduct of the action by one of the parties or the circumstances of the case which takes the case out of the norm in a way which justifies an order for indemnity costs, recognizing that there will usually be some degree of unreasonableness? We do not consider that there is a need for the claiming party to show a lack of moral probity or conduct deserving of moral condemnation, or malicious or vexatious conduct.”

“12     We therefore approach the costs contentions on the understanding that in order for an indemnity award to be made there must be something to take the case out of the ordinary and a degree of unreasonableness (of which abuse of process is but an example) but recognizing that there is an “infinite variety” of circumstances where it may be right and proper for the court to make such an award.” 

2.        Although it is in the authorities bundle before me but I deal with it only for that reason, I do not think the developing jurisdiction of Protected Costs Orders that is Flynn-v-Reid [2013] JRC 112 applies.  Those orders are made in judicial review cases where there is almost by definition a public interest element and they are made in advance of a trial and in advance of the decision.  The rationale for those orders does not apply once judgment has been handed down. 

3.        I do not think that the fact that the JCRA is a regulator inhibits me from making a Costs Order whether indemnity or standard.  It is true that the JCRA was performing a public function but the regulator was not bringing the proceedings in exercise of that function, rather it was the subject of proceedings challenging its decision, and the legislature have expressly provided for the modalities of that challenge in Article 53 of the Competition (Jersey) Law 2005 (the “Law”). 

4.        I also mention Article 52 which especially draws our attention to a different position, where the JCRA is the party commencing the proceedings.  Both parties referred me to the Jersey Financial Services Commission-v-A.P. Black (Jersey) Limited and Ors [2005] JRC 119A and Jersey Financial Services Commission-v-A.P. Black (Jersey) Limited Black and A.P. Black Limited [2007] JLR 1, and in the skeleton reference is also made to Volaw Trust and Corporate Services Limited and Larsen-v-Comptroller of Taxes [2013] (2) JLR 203. 

5.        It is apparent that the fact that the JCRA was performing a public function is a factor to be considered and taken into account but as has been said the fact that a private party is put to expense by the conduct of the public authority is also a factor which works in the opposite direction.  In my view both those factors apply so both the public function and the private party have been put to expense factors apply both to whether an order for costs should be made and to the basis of such an order. 

6.        I am also referred to MacFirbhisigh-v-CI Trustees and Executors Limited [2016] JRC 002A which endorsed the principles in the case of Richmond Pharmacology Limited-v-Chester Overseas Limited [2014] EWHC 3418 (Ch).  I see that they were applied, also in AG-v-Rosenlund and FNB International Trustees Limited [2016] JRC 078 by Commissioner Clyde-Smith and I agree with those principles and they are taken into account in the decision which is now made. 

7.        There is no argument here that no order for costs should be made against the JCRA and in my judgment the factors that ATF have raised do not for the most part relate at all to the conduct of the proceedings.  The only one that does is the submission that the JCRA ought to bear indemnity costs because it failed to concede the appeal.  As to that argument I don’t think it meets the Pell Frischmann test.  Indeed if it did, as I put to Advocate Kelleher, the probability is that there would be an indemnity costs application either way in every appeal, that the appellant would be saying to the JCRA, ‘you are wrong for the following reasons’; the JCRA would respond, ‘no you are wrong for the following reasons’ and the consequences of a failure to review would be an application for indemnity costs.

8.        As to the other four arguments that is to say, unreasonably getting the price and assessment wrong, failing to investigate properly with the Ports of Jersey Limited, failing to clarify that ABP did need a licence, failing to clarify that from Ports of Jersey and unreasonably setting evidentially high thresholds for ATF to meet; they relate more to the conduct of the JCRA prior to the appeal than to the appeal itself and I do not think that they are sufficient to merit an Indemnity Costs Order.  They point up the fact that the JCRA was wrong in the way it tackled the matter and it made a mistake.  That is why the appeal and succeeded and that is why there would be in my judgment an entitlement to standard costs, even though those in fact have been conceded but it does not make the JCRA so unreasonable that an Indemnity Costs Order should follow. 

9.        It is true that if the JCRA had not gone wrong no costs would have been incurred but if that were the test again there would always be an application for indemnity costs, and it is clear Article 53 of the Law, does not contemplate that. 

10.     And so for all those reasons I decided in my discretion to award costs to ATF on the standard basis. 

11.     There will be no Order in relation to the costs of and incidental to today. 

Authorities

Pell Frischmann Engineering Limited-v-Bow Valley Iran Limited [2007] JLR 479

C-v-P-S [2010] JLR 645

Flynn-v-Reid [2013] JRC 112

Competition (Jersey) Law 2005

Jersey Financial Services Commission-v-A.P. Black (Jersey) Limited and Ors [2005] JRC 119A

Jersey Financial Services Commission-v-A.P. Black (Jersey) Limited Black and A.P. Black Limited [2007] JLR 1

Volaw Trust and Corporate Services Limited and Larsen-v-Comptroller of Taxes [2013] (2) JLR 203

MacFirbhisigh-v-CI Trustees and Executors Limited [2016] JRC 002A

Richmond Pharmacology Limited-v-Chester Overseas Limited [2014] EWHC 3418 (Ch)

AG-v-Rosenlund and FNB International Trustees Limited [2016] JRC 078