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Cite as: [2020] JRC 80, [2020] JRC 080

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Costs - plaintiffs' application for security for costs arising out of the defendant's counterclaims

[2020]JRC080

Royal Court

(Samedi)

5 May 2020

Before     :

Advocate Matthew John Thompson, Master of the Royal Court

 

Between

Hard Rock Limited

First Plaintiff

 

Hard Rock Café International (STP) Inc

Second Plaintiff

And

HRCKY Limited

(a company incorporated in the British Virgin Islands)

Defendant

Advocate J. D. Garrood for the Plaintiff.

Advocate E. Moran for the Defendant.

contents

 

 

Paras

1.

Introduction

1

2.

Background

2-18

3.

Submissions

19-47

4.

Decision

48-74

5.

Costs

75

judgment

the MASTER:

Introduction

1.        This judgment contains my decision in respect of the plaintiffs' application for security for costs arising out of the defendant's counterclaims.

Background

2.        The general background to this dispute is summarised at paragraphs 5, 7 and 8 of my judgment of 16th December 2019 reported at Hard Rock Limited and Anor v HRCKY Limited [2019] JRC 243 which I adopt for the purposes of this judgment.

3.        In relation to security for costs, on 7th April 2014, I ordered the defendant to pay the sum of £15,000 in relation to security for costs up to the provision of witness statements.  On 3rd July 2014, I confirmed that the action was to remain stayed until the security for costs was paid into court.  I further ordered that if security for costs was not paid into court before 31st October 2014 then the counterclaim would be struck out.  I also ordered that the £90,000 previously paid into court by the defendant as a condition of pursuing the counterclaim be paid out to the plaintiffs.

4.        In 2015, I gave permission to the defendant to amend its counterclaim as set out in my judgment reported at Hard Rock Ltd and Hard Rock Café International v HRCKY Ltd [2015] JRC 117 dated 28th May 2015 and also made various orders for discovery.  On 15th December 2015, I made orders for supplemental discovery, and exchange of witness statements of fact and expert evidence.

5.        In 2016, I dealt with an application by the defendant to adduce expert evidence in relation to franchise agreements which I refused and an application for specific discovery (see the judgments at Hard Rock Ltd and Another v HRCKY Ltd [2016] JRC 129 and Hard Rock Ltd and Another v HRCKY Ltd [2016] JRC 157).

6.        Part of my judgment in respect of specific discovery was appealed in relation to discovery concerning corporate cafés run by the plaintiffs.  That appeal was successful leading to an order on 21st November 2016.  The reasons for that order are reported in the judgment of Commissioner Birt dated 24th March 2017 Hard Rock Ltd v HRCKY Ltd [2017] JRC 048.  No orders for costs were made at that time.

7.        In early 2017, a pre-trial review date took place which required the exchange of witness statements to take place by 30th January 2017 which occurred.  By this time expert evidence had also been exchanged and experts had met.

8.        Trial dates were fixed for the middle of 2017 but were ultimately adjourned.  It is in dispute as to why an adjournment took place.

9.        However, the plaintiffs issued an application to dismiss summarily the defendant's counterclaim under an amendment to rule 7 of the Royal Court Rules which came into force on 1st June 2017.  The Royal Court granted the application for reasons set out in its judgment reported at Hard Rock Ltd v HRCKY Ltd [2018] JRC 026 dated 1st February 2018.  The Royal Court refused leave to appeal on 12th July 2018.  Leave to appeal was granted by McNeill J.A. on 30th August 2018 reported at Hard Rock Ltd and Hard Rock International (STP Inc) v HRCKY Ltd [2018] JCA 152.

10.      The appeal was successful leading to the Court of Appeal's judgment dated 2 July 2019 reported at HRCKY v Hard Rock Ltd and Anor [2019] JCA 123.

11.      On 23rd August, 2019 the defendant issued an application requiring the plaintiffs to comply with certain discovery orders leading to my judgment of 16th December, 2019 reported at Hard Rock Limited and Anor v HRCKY Limited [2019] JRC 243.

12.      The argument leading to my judgment of 16th December 2019 took place on 29th October 2019.  At the hearing Advocate Garrood recalls raising that his clients might seek security for costs.

13.      It is also right to record that, as a result of my judgment of 16th December 2019, I made costs orders in favour of the defendant on the standard basis.  The Court of Appeal also made costs orders in favour of the defendant in respect of the summary judgment application before the Royal Court and the defendant's successful appeal to the Court of Appeal, again on the standard basis.

14.      In respect of the appeal against the specific discovery orders I made in 2016, on 23rd March, 2020 Sir Michael Birt issued a judgment reported at Hard Rock Ltd and Anor v HRCKY Ltd [2020] JRC 052.  As a result of that decision, the defendant was awarded its costs of the discovery application before me and the successful appeal before Sir Michael Birt again on the standard basis.

15.      The amount of costs claimed for these orders are as follows:-

(i)        The discovery application in 2019 - £40,809;

(ii)       The discovery applications and appeal in 2016 - £56,781;

(iii)      The summary judgment application before the Royal Court and Court of Appeal - £175,000.

16.      The total amount of costs therefore claimed in round figures is in the region of £270,000.

17.      In relation to taxation of the costs of the summary judgment application and the appeal to the Court of Appeal, on 5th February, 2020, Mr Thérin, as Assistant Judicial Greffier, wrote to the parties noting that £71,000 of the costs claimed by the defendant were not disputed.  Accordingly, he ordered an interim payment of this amount immediately.  On 7th February 2020, the plaintiffs issued an application for security for costs and also applied to stay the payment on account.

18.      In response, Advocate Moran has sought payments on account of the costs orders I made on 16th December 2019 and in respect of the costs orders made by Sir Michael Birt.  She also asked in the alternative for these costs to be summarily assessed by me.  These are the issues I therefore have to determine.

Submissions

19.      Advocate Garrood for the plaintiffs made the following submissions.

20.      Firstly, he reminded me the counterclaim was only against the first plaintiff and arose out of the restaurant franchise agreement dated 11th June 1999.  The claim by the second plaintiff only related to substantive memorabilia. 

21.      Secondly, in relation to the history of the litigation, what his client had faced were lengthy periods where nothing had happened.  It had taken the defendant 18 months from the end of 2013 until May 2015 to formulate its counterclaim.  Further amendments were still being proposed which were awaited.

22.      Although the plaintiff had not issued their summons until 7th February, 2020, Advocate Garrood recorded intimating at the end of the argument at the hearing on 29th October 2019 that his clients were minded to apply for security for costs.  At that stage a trial was listed for May 2020.

23.      His clients' position was that the defendant's case remained weak because the experts agreed that there was no loss.  All that the Court of Appeal stated on that issue was that the matter needed to be revisited in evidence and required a trial.

24.      In terms of why the trial was adjourned in 2017, the plaintiffs' position was that the defendant was making tactical applications to try and pressurise the plaintiffs into a settlement.

25.      Advocate Garrood accepted that the submissions would have had more force if his clients were seeking security for costs already incurred.  However, that was not his clients' position.  In their view the litigation was effectively restarting and therefore they were seeking security for future costs only.  That was because there will be more witnesses required to give evidence and more preparation.  Now that it was clear that the defendant was going to continue to pursue matters, the plaintiffs were entitled to seek security and had not delayed unnecessarily in doing so.

26.      In respect of the financial position of the defendant, Advocate Garrood was critical of the lack of accounts.  There was also no documentation supporting the evidence of Mr Doyle.  This was relevant because the burden was on the defendant to satisfy the court that the claim would probably be stifled.  What the court faced were bare assertions only.

27.      This lack of evidence meant that if costs were paid over to the defendant and the plaintiffs were later successful at trial those monies would not be recovered.

28.      In relation to whether or not the plaintiffs would fight the case anyway for reputational reasons, while Advocate Garrood accepted there was a reputational risk to his clients, they did not regard that risk as significant because they were dealing with matters that occurred a long time ago.

29.      The plaintiffs also faced the difficulty of dealing with the scattergun approach of the defendant which was highlighted by its approach to discovery and what was inserted in the trial bundles in 2017.  Much of the material was simply not relevant but it led to significant costs being incurred.  The plaintiffs view was that if it succeeded at trial a costs order in its favour would exceed significantly any costs currently found to be payable to the defendant.  Leaving aside hearings where costs were awarded against the plaintiffs, the plaintiffs had already incurred costs in the sum of £682,464.11 and estimated that a further £155,500 would incurred in relation to costs up to and including a trial.

30.      He also reminded me that the plaintiffs had costs orders in their favour.  The amount of actual costs incurred was in the region of £10,000, which had to be taken into account.

31.      Advocate Garrood accepted that the above figures for his clients' costs were all actual rates rather than costs based on Factor 'A' and Factor 'B' rates.

32.      He also contended that making costs orders in relation to interlocutory applications encouraged satellite litigation because, if litigation was pursued properly, then issues should not ordinarily arise on interlocutory applications.  This therefore justified staying payment of costs orders until the conclusion of a trial.  What he encouraged me to do was insulate the plaintiffs against the potential for it to suffer an injustice because it was successful at trial and yet could not recover costs already paid.

33.      The fact that a stay of costs orders might have to mean that Mr Doyle represented the defendant personally without representation was not a reason to refuse security.  He denied that this was tactical.  Rather his clients were seeking to protect themselves from an impecunious defendant if they were successful at trial.

34.      Advocate Moran in her contentions firstly criticised the timing of the application which she regarded as tactical.  The plaintiffs had been entitled to security from 30th January, 2017, and yet had not made any application until 7th February 2020.  She contended that the application was clearly prompted by an award for costs on account of £71,000 by the Assistant Judicial Greffier on 5th February 2020 which led to a summons being issued 2 days later by the plaintiffs both applying for security and seeking a stay.

35.      The primary purpose of the application was therefore to avoid having to pay this money.  Yet the money was needed by Mr Doyle to repay debts arising from previous hearings.

36.      I should add in that regard that after the judgment, I was provided with a schedule recording that £76,799 had been used out of a loan entered into by Mr Doyle to pay costs of experts or lawyers.

37.      Advocate Moran further argued that the effect of staying payment of the Court of Appeal costs and ordering a payment of security for costs into court in the sum of £40,000 as asked for by the plaintiffs would probably stifle the claim.

38.      It would also deny the defendant access to effective legal advice, meaning there would not be equality of arms between a significant financial group which included the plaintiffs and the defendant.

39.      Advocate Moran stated that the plaintiffs had accepted that the defendant and Mr Doyle were impecunious.  She referred to a letter dated 27th February, 2020, from Carey Olsen which described the defendant as a non-trading economically inactive company.

40.      She also referred to paragraph 41 of the second affidavit of Ms Pinares-Baez filed by the plaintiffs in support of its application which stated:-

"It is clear from the statements made by Mr Doyle that neither HRCKY nor Mr Doyle have any assets of any substance that could satisfy any costs order made against HRCKY at least at the time the statements were made in late 2017.  I am not aware that HRCKY or Mr Doyle's financial situation has changed much since these statements were made, particularly when considering the company searches referred to above; indeed it is like to have only been compounded by the expense of the Court of Appeal proceedings, regardless of any costs award made in HRCKY's favour."

41.      She argued that Mr Doyle in his affidavits had been entirely open about how he had funded the proceedings to date and his inability to fund the defendant going forward.  She referred to paragraphs 12, 15, 26 to 28 and 32 to 34 of Mr Doyle's 14th Affidavit.  She also referred to the following paragraphs in Mr Doyle's fifteenth affidavit:-

"9.       The Defendant HRCKY has never had a bank account because all financial banking transactions relating the Hard Rock Cayman business were through Island Taste Ltd.  I have one bank account with a balance of $1,700; cash of approximately $5,000 and a single shareholding worth approximately $10,000.  I have no other cash, no investments and no other assets other than the usual personal effects. 

10.      In their skeleton the Plaintiffs suggest that I should personally borrow money in order to fund the litigation going forward.  I mention in my 14th Affidavit that I was able to borrow money earlier this year for living expenses and to pay debts arising from the Court of Appeal hearing and the hearing before Master Thompson resulting in the judgment dated 16 December 2019.  I was able to borrow money on the basis of the costs orders made against the Plaintiffs.  The loan was for $107,250 and needs to be repaid in part when money is received from the costs orders or at the latest by February 2021."

42.      Subsequent to the hearing I was provided with an un-redacted version of the loan agreement referred to in paragraph 10.  Advocate Garrood was provided with a copy but not containing the name of the lender.  I also sought and received from Advocate Moran express confirmation that Mr Doyle had no beneficial interest directly or indirectly in any structure whatsoever concerning the lending entity.

43.      She was critical of the suggestion by the plaintiffs that a shareholder with no assets and with existing debts that had arisen due to the litigation should borrow further money.  She also argued that the financial position of the defendant and Mr Doyle arose as a result of the litigation because neither would have entered into the RFA but for the representations the defendant alleges were made fraudulently.

44.      She also contended that the current financial position of the defendant was due to the conduct of the plaintiffs in failing to comply with discovery orders.

45.      In relation to amount of security sought, she argued this was excessive based on work already carried out and that discounts needed to be made for this and because there were no Factor 'A' and Factor 'B' rates supplied.  On any taxation, the amount of any costs would be reduced significantly.

46.      If any order for security was going to be made, she argued this should be no more than £25,000 because any additional sum would compromise the defendant's ability to be represented at trial.  She further argued that any security should be set off against sums due under existing costs orders.

47.      Finally, she sought 50% of the costs claimed in respect of the order made on 16th December 2019, 50% of the costs claimed in respect of the order made by Commission Birt and a further payment on account in respect of the Court of Appeal costs.

Decision

48.      In respect of the applicable legal principles on applications for security for costs there was no real dispute between counsel on those principles.  I considered these principles most recently in Geneva Trust Company (GTC) SA v Tchenguiz [2019] JRC 110A at paragraphs 59 and 60.

49.      In my judgment there are two particular principles referred to in A.E. Smith & Sons Limited v L'Eau Des Iles (Jersey) Limited [1999] JLR 319 referred to in Geneva Trust v Tchenguiz which are particularly pertinent to the present case.  Those are factors 'c' and 'f' which state as follows:-

"(c) The court must balance, on the one hand, the injustice to the plaintiff company if prevented from pursuing a genuine claim by an order for security, and, on the other hand, the injustice to the defendant if no security is ordered, the plaintiff's claim fails and the defendant is unable to recover its costs from the plaintiff. So the court will seek not to allow the power to order security to be used oppressively by stifling a genuine claim by an indigent company against a more prosperous company, particularly when the circumstances underlying the claim and/or the failure to meet the claim may have been the cause or a material cause of the plaintiff company being indigent. The court will also seek not to be so reluctant to order security that the impecunious plaintiff company can be enabled to use its inability to pay costs as a means of putting unfair pressure on the more prosperous defendant company. 

(f) If the plaintiff company alleges that the effect of an order for security would be unfairly to stifle its genuine claim, the court must be satisfied that, in all the circumstances, the claim probably would be stifled. The test is one of probability, not possibility."

50.      In relation to whether an order for security would unfairly stifle a claim, Mr Doyle in his affidavit asserts that it would.  The plaintiffs also appear to accept that the defendant is effectively a dormant company not having filed any accounts since 2013.  However, the financial position of the defendant has never been explained.  I refer to this not only because it was raised in argument in respect of the present hearing but it was also an issue that was raised when security was initially ordered in 2014.  Although the defendant has not filed any accounts since 2013, I have never had any information provided about the financial position of the defendant, at least up to the point that the RFA was terminated.  This is relevant because it is for the defendant to satisfy me that the claim would "probably be stifled".

51.      It is also for the defendant to satisfy me that it cannot raise money from its backers.  While I accept the Mr Doyle has spent around £980,000 in relation to this litigation, I do not have breakdown of how this figure has been spent.  I do not know what sums have been paid or are owed to legal advisers, experts or whether any proportion represents costs claimed for Mr Doyle himself.  While Mr Doyle deposes he has sold three properties to pay these sums (and I am not ignoring that those sums said to have been spent in total are significant), I have no details of the properties sold and what happened to the proceeds of sale.

52.      As noted above subsequent to the hearing, I was provided with a schedule of sums paid out of the borrowing of $107,000.  This is the only detailed information I have received about what money has been spent on legal expenses or other expenses.

53.      It is right however to observe that that schedule still begs questions.  Part of the sums borrowed were used to pay, for one month only, life insurance, health insurance, monthly rent and household bills in the total sum of $10,000.  As these are monthly outgoings, I do not know how Mr Doyle is otherwise meeting them.  Yet they equate to an expenditure of $120,000 per year.

54.      Taking these matters in the round, I have not received enough information from Mr Doyle in support of his assertions to be satisfied that the claim would probably be stifled if I ordered security. In Young & Ors v Haden & Ors [2016] JRC 089D I emphasised that the required threshold was one of probability not possibility (see paragraph 43).  In that judgment I criticised the defendants who were resisting providing security for costs for a counterclaim for the lack of information provided in support of their assertions.  The same criticism applies to Mr Doyle.

55.      I am therefore not satisfied that to order security would probably stifle the claim.

56.      What is required is an appropriate balancing exercise to be carried out. 

57.      In relation to the plaintiffs, if no security is ordered, and the plaintiffs are successful in resisting the defendant's counterclaim, they are facing a company which has not filed any accounts since 2013 and where the plaintiffs have no information about the defendant's assets, if any. 

58.      In respect of Mr Doyle, should the plaintiffs obtain a third party costs order against him, which is a possible application they can bring as Advocate Garrood referred during the course of argument, again there is no information as to what assets Mr Doyle owns.  This lack of information means that the process of enforcing any such third party costs order, if granted against Mr Doyle, would not be easy.

59.      Against that, for the purposes of this application the claim is a genuine claim.  The Court of Appeal stated as much because it was of the firm view that the matter should proceed to a trial (paragraph 66).  The Court of Appeal was also not persuaded by the Royal Court's conclusions in respect of expert evidence (see paragraph 23 and 62). 

60.      In my judgment this is a genuine claim where a sole entity is trying to pursue a more prosperous entity i.e. the plaintiff companies as part of the Hard Rock Group.  It is also at least arguable that the circumstances underlining the claim may have been the cause or material cause of the defendant company being indigent.  I say that because both in my judgments of 16th December, 2019 and the judgment handed down at the same time as this judgment requiring the plaintiffs to take further steps to discharge their discovery obligations I was satisfied that documents existed where analysis of the probability of the restaurants of the corporate cafés was produced by the plaintiffs.  The evidence of Mr Goodwin referred to at paragraph 19 is particularly significant in relation to the Hard Rock Group knowing that the restaurant side only of the corporate cafés in the late 1990s were loss making.  The Court of Appeal also regarded the possibility of any such evidence as significant (paragraph 62).

61.      It is also relevant to take into account the timing of the plaintiffs' application.  In my judgment, while I accept that the plaintiffs are concerned about the defendant's financial position, there is a tactical element to the application.  It was only issued once Mr Thérin had ordered the plaintiffs to pay £71,000 on account of the costs of the summary judgment appeal.  Although I accept the possibility of such an application had been intimated, the application for security for costs and a stay of payment of those costs took place immediately after the plaintiffs were ordered to pay those costs.  Yet the application could have been issued earlier.  In particular, it could have been raised once the defendant pursued further its application for discovery in August last year.  However, it was not raised at all until argument on that application had been concluded.  Although this delay is relatively short it points towards the application at least in part being tactical. 

62.      I am supported in this conclusion because of the plaintiffs' approach to taxation of the costs of the summary judgment appeal and the hearing before the Royal Court.  The plaintiffs unusually in my view are insisting on a full oral taxation rather than agreeing to a provisional taxation.  This is despite the fact that an oral taxation will be likely to be time consuming and costly.  A more proportionate approach would have been to have allowed Mr Thérin to proceed to conduct a provisional determination with an oral hearing only taking place afterwards. 

63.      The other relevant factor in determining that the application for security for costs was tactical was because at the time it was made the trial was due to take place some 3 months later.  The application was therefore left late in the day at the time it was issued.

64.      It is also relevant to take into account the fact that the effect of the plaintiffs' application is to deprive the defendant of the benefit of costs orders in its favour.  Although Advocate Garrood suggested that such costs orders encourage interlocutory game playing, I disagree.  I consider the fact that applications which are unsuccessful may have costs consequences means that more rather than less thought is given as to whether or not to bring an interlocutory application.  I also doubt that if interlocutory sanctions did not attract costs orders that the number of matters I would have to determine would reduce rather than increase.  In any event, even if I am wrong in that view, it has been the practice of the Royal Court for many years to make a costs order in favour of a successful party on interlocutory applications.  It is not for me to depart from that practice.  A successful party ordinarily therefore should have the benefit of costs orders made in its favour.

65.      Factor (c) quoted above also allows me to have regard to the equality of arms between the Hard Rock Group of which the plaintiffs are part and the defendant.  I also consider, in reaching my decision that the overriding objective also happens to take into account the relative equality between different parties.  Rule 1/6(2)(c) of the Royal Court Rules 2004, as amended, provides as follows:-

"(2)     Dealing with a case justly and at proportionate cost includes, so far as is practicable -

(a)     ensuring that the parties are on an equal footing..."

66.      If I granted security in the amount sought by the plaintiffs, the effect of this would be that Advocate Moran would cease to act for Mr Doyle (and no criticism is intended of Advocate Moran in expressing that view).  This would have the result that Mr. Doyle would then have to represent the defendant.  Although I do not consider that the relevant part of the overriding objective to which I have referred means that parties must have the same resources available in terms of legal representation, to prevent the defendant having access to costs orders made in its favour would mean that the plaintiffs and the defendant were far from being on an equal footing.  In other words, it is a relevant factor if the effect of requiring security means that one party cannot have access to legal representation at all.

67.      Ultimately, I have to strike a balance between these competing factors. I also note that the defendant contended that, if I was not persuaded that ordering security would probably stifle the counterclaim, then I should order no more than £25,000.

68.      In my judgment in exercising the discretion vested in me and having regard to all the above factors, out of the costs ordered by Mr Thérin, the sum of £25,000 should be paid immediately into court.  The balance of this payment on account should be paid to Advocate Moran's client account.  The plaintiffs should also pay to Advocate Moran's client account the further sum of £20,000 as an interim payment on account of the costs order I made on 16th December, 2019 and £28,000 on account of the costs order made by Sir Michael Birt last month in respect of the discovery applications in 2016.  In the case of Sir Michael Birt's order I consider I possess the power to make such an order applying MacFirbhisigh and Ching v CI Trustees and Others [2016] JRC 156 (paragraphs 16-22).  Such an order is necessary because of the link between the plaintiffs' security for costs application and using costs orders in the defendant's favour as security.  I also recall that the discovery application before me was extensive and complex whereas the appeal was on narrower grounds.  Accordingly I have sufficient personal knowledge to order a payment on account in respect of the discovery applications in 2016.

69.      In respect of a further interim payment on account of the summary judgment application, while I would be surprised if no other costs would be awarded, I consider that Mr Thérin is best placed to determine what is a just figure on the basis of the material already filed.  Accordingly, this part of the defendant's application is referred to him for early determination.  Any further costs assessed by Mr Thérin, whether on an interim or final basis, should also be paid into the client account of Advocate Moran and may be used for future costs but otherwise should be held by Advocate Moran until after trial or settlement of these proceedings.  The same applies to the costs of the judgment application handed down at the same time as this judgment.  It follows from the above that the application by the plaintiffs to stay the payment on account of costs ordered by Mr Thérin is refused.

70.      Any costs held by Advocate Moran may be used to repay the legal and related expenses of £76,779 set out in the schedule provided to me out of the loan of $107,250.  This is whether or not those costs are recoverable on a taxation following any trial.  Recoverability is a separate issue from preventing Mr Doyle from using costs awarded in his favour to repay for legal advice already incurred.  As I am satisfied such costs have been incurred the costs orders in the defendant's favour may therefore be used to repay this part of loan.

71.      I wish to make it clear however that the balance of the loan in relation to personal living expenses is not something that can be repaid out of the benefit of costs orders for the defendant.  These are personal obligations of Mr Doyle rather than the defendant.  I have also not had sufficient information from Mr Doyle about how he is meeting his monthly outgoings to justify these funds being released to repay this part of the loan.  I also note that the loan carries interest at 25% but I do not know how this interest is going to be repaid.

72.      The sums held in Advocate Moran's client account may also be used to pay any further outstanding legal costs of Advocate Hanson and future costs of Advocate Moran.  In relation to such costs, if any sums are withdrawn from the client account to pay such costs, notification and a copy of the bill (without any detailed narrative) shall also be provided to Carey Olsen at the same time as payment is made.  If payment is required to any experts, 7 days' notice with an appropriate summary of the costs should be given to Carey Olsen to give the plaintiffs a chance to object to any such expert costs.  Any dispute will be referred to me for summary assessment.

73.      In relation to the assessment of costs following my judgment of 16th December 2019 and those of Sir Michael Birt, the defendant shall file a claim for costs in the usual way, with the plaintiffs providing their written response to those costs.  If they are not agreed, and it is not agreed that a provisional assessment of those costs will take place, at that stage Mr Thérin on my behalf will carry out a summary assessment.  Only then will an oral hearing take place.

74.      In conclusion, the approach set out above means that the plaintiffs will have the benefit of some security. I accept that this is not the full amount of the costs they claim will be incurred.  However, those costs have to be reduced anyway because they are actual costs not taxed costs and I am not persuaded that I should order security on the basis that indemnity costs might be ordered.  At present, this is a hard if not bitterly fought case but no more than that. To order full costs on the other hand would lead to a lack of legal representation (which may happen anyway if Advocate Moran cannot be funded until trial) which I consider I am entitled to have regard to.  The approach I have adopted also takes into account that, in my view, the plaintiffs and the Hard Rock Group are resisting this claim in part for reputational reasons in any event and are incurring costs for that reason, as well as the application being late in the day and that the plaintiffs may have caused or contributed to the defendant's' financial position.

Costs

75.      In respect of costs I ordered the plaintiffs to pay the defendant's costs on the standard basis.  This was because on 27th February, 2020, Carey Olsen for the plaintiffs set out the amount of security they were seeking.  On 4th March, 2020 Advocate Moran offered by way of security the sum of £25,615 to be paid into court out of the interim payment ordered by the Assistant Judicial Greffier on 5th February 2020.  This offer was rejected by Carey Olsen in their letter of 6th March, 2020 with no counter proposal and with the Plaintiffs therefore maintaining their application.

76.      In my judgment the overall effect of the orders I have made is that the plaintiffs by pursuing their application have achieved no more than was offered by the defendant.  In reaching this view I accept the plaintiffs' submission that I have imposed conditions as to how the balance of costs orders may be used but these conditions were no more to ensure that Mr Doyle used monies to meet legal expenses as he indicated he wished to do in his fourteenth and fifteenth affidavits.  I also accept the defendant's submission that the suggestion I made at the hearing to ensure that monies paid could only be used to meet such costs could have been explored in correspondence.  Instead the plaintiffs pursued their application to seek much more security and to stay payment of the costs orders until trial which failed.  As noted at paragraph 61 of the judgment, there was a tactical element to the plaintiffs' approach which was unsuccessful.  Having identified the defendant as the clear winner there is no reason to depart from the usual rule that costs should follow the event (see the discussion in In the matter of Saisies Judiciaires in respect of the realisable property of Robert Tantular [2020] JCA 013 at paragraphs 55-57).

Authorities

Hard Rock Limited and Anor v HRCKY Limited [2019] JRC 243. 

Hard Rock Ltd and Hard Rock Café International v HRCKY Ltd [2015] JRC 117. 

Hard Rock Ltd and Another v HRCKY Ltd [2016] JRC 129. 

Hard Rock Ltd and Another v HRCKY Ltd [2016] JRC 157. 

Hard Rock Ltd v HRCKY Ltd [2017] JRC 048. 

Hard Rock Ltd v HRCKY Ltd [2018] JRC 026. 

Hard Rock Ltd and Hard Rock International (STP Inc) v HRCKY Ltd [2018] JCA 152. 

HRCKY v Hard Rock Ltd and Anor [2019] JCA 123. 

Hard Rock Ltd and Anor v HRCKY Ltd [2020] JRC 052. 

Geneva Trust Company (GTC) SA v Tchenguiz [2019] JRC 110A. 

A.E. Smith & Sons Limited v L'Eau Des Iles (Jersey) Limited [1999] JLR 319. 

Young & Ors v Haden & Ors [2016] JRC 089D. 

Royal Court Rules 2004, as amended

MacFirbhisigh and Ching v CI Trustees and Others [2016] JRC 156. 

In the matter of Saisies Judiciaires in respect of the realisable property of Robert Tantular [2020] JCA 013


Page Last Updated: 14 May 2020


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