Guernsey Law Reports 2009-10 GLR Note 1
SIR DAVID BARCLAY, SIR FREDERICK BARCLAY and THE BARCLAY FOUNDATION v. LATROBE-BATEMAN and SEVEN OTHERS
SENESCHAL’S COURT, SARK (Talbot, Lieut. Seneschal): February 4th, 2009
Civil Procedure—costs—rules applicable in Sark
The defendants, as past and present trustees of a charitable trust (The Sark School and Community Centre Trust) successfully defended an action by the plaintiffs alleging breaches of trust which had the effect that the New Island Hall, part of the premises of the Trust, was being used as a public house. The plaintiffs also failed to make out a case for negligent or innocent misrepresentation, or for the recovery (on grounds of unconscionability or pursuant to the “Sark law of gifts”) of substantial donations they had made to the Trust.
The court ordered the plaintiffs to pay the defendants’ costs and the court fees, and considered the basis on which costs should be assessed or taxed and paid.
Section 18(1) of the Reform (Sark) Law 2008 provided that “the costs of and incidental to all proceedings shall be in the discretion of the Court, and the Court shall have power to determine by whom . . . and to what extent the costs are to be paid.” Power was given in s.18(2) to make rules relating to proceedings in the Seneschal’s Court but no such rules had yet been made. The court should therefore proceed on the basis that its discretion was “not to be fettered or circumscribed, and [was] a discretion to be exercised judicially in the light of the particular facts of each case,” following the practice of the Royal Court of Guernsey (Hulme v. Matheson Secs. (Channel Islands) Ltd. (No. 2) (1997), 24 GLJ 80, dicta of Southwell, J.A. followed).
Held: (1) The phrase “to what extent the costs are to be paid” in s.18(1) gave the court power to order the payment of costs on a full or partial indemnity basis, or on the recoverable basis. The defendants primarily sought the award of costs on an indemnity basis, which, in the absence of rules under s.18(2), was to be interpreted with the persuasive guidance of the Royal Court Civil Rules 2007, r.83(2)(b) as referring to circumstances in which a party “pleaded or . . . pursued an action, claim or counterclaim unreasonably, scandalously, frivolously or vexatiously, or . . . otherwise abused the process of the Court.”
(2) No case had been made out that the plaintiffs had acted “unreasonably” in initially presenting their case widely and only at the very end limiting it to the public house issue, since it was perfectly normal practice in litigation for broad issues to be narrowed down before trial and the plaintiffs had not behaved improperly in doing that in this case.
(3) Nor was it “unreasonable” for the plaintiffs to have retained two experienced Guernsey advocates, thereby compelling the defendants to use the services not only of another principal Guernsey firm but also those of an experienced English solicitor. The defendants were effectively implying that, given the charity’s lack of funds, it was unreasonable for the plaintiffs to pursue their claims at such a high level of attention and cost, resulting in the defendants’ having to spend more to mount a genuine defence—a variation on the “equality of arms” argument. The correspondence and the appearances at the hearing indicated that this was never regarded as an issue between the parties.
(4) The plaintiffs had not “unreasonably” rejected the solution of the dispute by mediation—indeed, the “without prejudice” correspondence showed several attempts by the advocates on both sides to negotiate a settlement.
(5) Neither the defendants’ application for an order that would “make whole” the charity’s funds, nor their claim that there were “special circumstances” within the meaning of the Royal Court Civil Rules 2007, s.83(2) justifying the award of full indemnity costs was justified and would be rejected. As trustees of a charitable trust successfully defending their actions, the defendants would be entitled to seek to recover from the trust’s funds any part of their costs, disbursements and expenses not covered by whatever costs order was made.
(6) The court would order that the costs of the defendants be paid by the plaintiffs on a footing equivalent to the recoverable basis used in civil cases in the Royal Court of Guernsey. The plaintiffs had had reasonable grounds for pursuing the proceedings. They were of little financial importance to them but clearly of the highest financial importance to the defendants. To both sides, however, they had very considerable non-financial importance, as both had declared interests in the well-being of Sark and especially in the future running of the charity and the Hall. The following special qualifications would, however, be made to the order:
(a) the clear importance of the case, and the difficulty and novelty of the plaintiffs’ legal arguments, justified increasing the hourly recoverable rates for the defendants’ advocates’ and solicitors’ fees from £210 to £300 per hour;
(b) the defendants should recover in full the travelling and accommodation expenses of their advocate and solicitor to, on and from Sark; and
(c) the defendants should recover the full costs of instructing English leading counsel to provide an affidavit concerning English charities law, as this was evidence of foreign law in the Seneschal’s Court.
2009
Law Report
None
Guernsey Law Reports 2009-10 GLR Note 1