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URL: http://www.bailii.org/je/cases/UR/2023/2023_037.html
Cite as: [2023] JRC 037, [2023] JRC 37

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Costs - application by the Defendants for an order for payment of interim costs

[2023]JRC037

Royal Court

(Samedi)

8 March 2023

Before     :

Sir Michael Birt, Commissioner

 

Between

(1)   Monteagle International Limited

(2)   Monteagle International (UK) Limited

 

Plaintiffs

And

(1)   Grocery Market Research Limited

(2)   Anthony Dumas

 

Defendants

And

(1)   Monteagle Consumer Group Limited

(2)   Marshall Monteagle Plc

(3)   Monteagle Merchant Group Southern Holdings 2 Limited

 

 

 

Third Parties

Advocate J. Harvey-Hills for the Plaintiffs.

Advocate M. L. A. Pallot for the Defendants.

Advocate P. O. J. Lewis for the First and Third Third Parties.

judgment

the COMMISSIONER:

1.        This is an application by the Defendants for an order for payment of interim costs.  It follows on from two judgments of the Court, namely a judgment dated 14 October 2022, Monteagle International Limited and Anor v Grocery Market Research Limited and Ors [2022] JRC 216 ("the Main Judgment"), and a further judgment dated 28 November Monteagle International Limited and Anor v Grocery Market Research Limited and Ors [2022] JRC 261, ("the Costs Appeal Judgment").

2.        The Main Judgment was in respect of the conjoined hearing of (i) an appeal by the Plaintiffs against the decision of the Master to join the First and Third Third Parties ("the Third Parties") to the proceedings and to give leave for them to be served out of the jurisdiction and (ii) an application by the Third Parties to set aside the Master's order giving such leave.  I shall refer to the matters dealt with in the Main Judgment as "the Main Applications".  The Plaintiffs and the Third Parties were unsuccessful and, in the Main Judgment, the Court upheld the Master's decision joining the Third Parties and allowing service on them out of the jurisdiction.

3.        The Costs Appeal Judgment dealt with a small separate part of the Plaintiffs' appeal against the Master's decision.  The Master had ordered the Plaintiffs to pay the costs of the hearing before him and the Plaintiffs appealed against that costs decision ("the Costs Appeal").  Their appeal was dismissed in the Costs Appeal Judgment.

4.        Following these two judgments, by Act dated 28 November 2022, the Court made costs orders as follows:

(i)        The Defendants were awarded their costs in relation to the Main Applications on the standard basis against the Plaintiffs and the Third Parties jointly and severally.

(ii)       The Defendants were awarded their costs in relation to the Costs Appeal on the standard basis against the Plaintiffs jointly and severally.

5.        The Defendants now apply for an interim payment in respect of these costs orders.

The dispute in outline

6.        The Defendants submit that they should receive an interim payment in three respects:

(i)        They have submitted a schedule of costs in relation to the Main Applications prepared on the basis of factor A with a 60% factor B uplift.  This comes to £108,685.20.  They request an interim payment of 50% of this amount.

(ii)       In respect of the Costs Appeal, they have submitted a schedule of costs prepared on the same basis totalling £2,684 and ask again for an interim payment of 50% of this sum.

(iii)      They seek reimbursement of disbursements in connection with the Main Applications in the sum of ZAR 120,376.25.  This comprises four invoices from the South African firm of lawyers, Norton Rose Fulbright ("Norton Rose") and an invoice from Mr G D Harpur, SC.  They seek an order for interim payment of 100% of this sum. 

7.        The Plaintiffs' and Third Parties' primary submission is that there should be no order for interim costs.  They say this is because the Plaintiffs' claim is a large one and the Defendants may not be in a position to pay any sum eventually found due and/or enforcement may be difficult.  If an interim order is made, the Plaintiffs would lose the ability to set off the amount due under the interim costs order against any sum due by the Defendants in the event of liability on their part being established. 

8.        If, contrary, to this primary submission, the Court was minded to make an order, it should be reduced as follows:

(i)        The factor B uplift should be taken as 50% rather than 60%.

(ii)       The percentage of the claimed costs should be reduced from the conventional figure of 50% to one-third.

(iii)      There should be no interim order in respect of the claimed disbursements or, at most, there should only be an order for payment of one-third of Mr Harpur's invoice.

Payment on account - the general principle

9.        It is now well established not only that the Court has inherent jurisdiction to order a payment on account of costs (now reflected in RCR 12/2 (3)), but also that such an order should 'usually' or 'normally' be made.  Thus, in Crociani v Crociani [2014] (1) JLR 503, Beloff JA, in the Court of Appeal, at [16] said:

"16.  In my view, the achievement of justice, to which all exercises of discretion under procedural rules aspire, would usually require that a party who is, pursuant to a court order, entitled to his costs, should be paid on account a percentage of the amount he is likely to recover on taxation calculated on a conservative basis to avoid any real risk of overpayment."

10.      Beloff JA went on at [18] to quote with approval the observation of Jacob J in Mars UK Limited v Teknowledge Limited [1999] 2 Costs LR 44 at 46-47:

"I now turn to the second issue, whether or not there should be an order for interim payment.  The first thing to do is to consider what the general rule should be, interim payment or not.  There is no guidance given in the Rules other than that the court may order a payment on account.  There is no guidance in the Practice Direction.  So I approach the matter as a question of principle.  Where a party has won and has got an order for costs the only reason that he does not get the money straightaway is because of the need for a detailed assessment.  Nobody knows how much it should be.  If the detailed assessment were carried out instantly he would get the order instantly.  So the successful party is entitled to the money.  In principle, he ought to get it as soon as possible.  It does not seem to me to be a good reason for keeping him out of some of his costs that you need time to work out the total amount.  A payment of some lesser amount which he will almost certainly collect is a closer approximation to justice.  So I would hold that where a party is successful the court should on a rough and ready basis also normally order an amount to be paid on account, the amount being a lesser sum than the likely full amount."

Discussion

(i)         The contention that there should be no payment on account

11.      The Plaintiffs and the Third Parties (to whom I shall refer to together as "the Paying Parties") submit that there should be no order for a payment on account in this case. 

12.      They referred me to the case of Les Ambassadeurs Club v Albluewi [2020] 4 WLR 88 where the claimant claimed £2m from the defendant in respect of various dishonoured cheques and/or a loan for that sum.  The defendant contended that the sums claimed were illegal gambling debts.  A worldwide freezing order was obtained by the claimant but was subsequently discharged on the basis that there was no real risk of dissipation and a costs order in respect of that matter was made against the claimant.  The defendant then sought, inter alia, a payment on account of these costs.  Although the freezing order had been set aside, the court had found that there were aspects of the defendant's conduct which were not satisfactory in respect of incurring debts and not paying for them and not engaging with attempts to make contact with him and that he had in effect been guilty of conduct lacking in commercial probity.  The judge held that given this background and in circumstances where it might be difficult to enforce a judgment (if the claimant succeeded in its claim) against the defendant, the justice of the matter was best met by not ordering a payment on account so that, in the event of the claimant being successful, it would be able to set off the amount due to the defendant under the costs order against any amount due by the defendant to the claimant.  However, the judge emphasised that this set off point was a good one in the particular circumstances of that case, but it was not a point of general application (see [21]-[22] of the judgment).

13.      I was also referred to the judgment of Morgan J in Rawlinson and Hunter Trustees SA v ITG Limited and Another (as trustees of the Tchenguiz Discretionary Trust) [2015] EWHC 1924 (Ch).  In that case, the claimant had made an unsuccessful interlocutory application and the judge awarded standard costs against it.  The question arose as to whether he should also order a summary assessment, failing which a payment on account.  The judge refused to make either of these orders.  He noted that the trust of which ITG was trustee was insolvent.  He further noted that, if he ordered summary assessment or a payment on account, the claimant would lose the ability to set off the costs which it owed against any costs which might be awarded in its favour in future in the event of it being successful against ITG.  For those reasons, he did not make either order.

14.      The Paying Parties submit that the position is similar in the present case.  They say that the claimed losses of the Plaintiffs in the Jersey proceedings, if assessed for five years, could be in excess of US$13m.  There is also a claim by MCG in the South African proceedings against Mr Dumas for over US$3m.  They referred to Mr Dumas' assertion in his fifth affidavit that the loan account of US$5.4m owed by MIL to the Defendants represents almost all Mr Dumas' liquid assets.  The Plaintiffs reserved their position as to whether this was an accurate statement, but say that Mr Dumas should be held to what he has said.  They therefore submit that there is a significant likelihood that the Defendants would be unable to satisfy a judgment that was significantly in excess of US$5.4m and the Plaintiffs would be prejudiced by being unable to set off the amount due under the above costs orders against the amount ultimately found to be due under any judgment in respect of the claims.

15.      I do not accept this argument.  The two cases referred to by the Paying Parties turned on their very specific facts.  In Les Ambassadeurs, the defendant was found to have behaved in a way which showed a lack of commercial probity and there appears to have been little defence to the claim other than that it was a gaming debt.  The judge specifically said that the set off point, whilst a good one in the circumstances of that case, was not a point of general application.  Similarly, in Rawlinson and Hunter, the trust of which ITG was trustee, was insolvent and accordingly would certainly not have been in a position to pay any costs order made against it in future. 

16.      The situation here is very different.  There is no direct evidence of the Defendants' financial position but, to the extent that the Plaintiffs ultimately prove substantial loss, this is likely to be because the Defendants have benefitted by diverting the Plaintiffs' business to themselves.  If that is the case, they are likely to have some assets.  Accordingly, on the facts of the case, I see no reason not to make the usual order for a payment on account.

17.      In any event, with respect to the judges in the above two cases, I consider that the loss of the possibility of future set off should be very closely confined as a ground for refusing a payment on account of costs.  A plaintiff takes a defendant as he finds him.  It seems to me to be wrong in principle that a defendant who is thought perhaps to be at risk of not being able to pay any sum ultimately found due is to be treated less favourably in relation to interlocutory applications.  Bearing in mind the reason for interim payments referred to by Beloff JA and Jacob J cited above, it seems to me that it is particularly important for a party who may be a little short of funds not to be kept out of his money when the Court has decided that he should be awarded his costs in respect of an interlocutory application.

18.      There is also an additional reason for considering that an order for payment on account should be the 'usual' or 'normal' order.  It helps discourage unnecessary interlocutory jousting if the cost of making unsuccessful applications (in circumstances where the Court has felt it right to award costs rather than order costs in the cause) is brought home to the losing party by making him put his hand in his pocket at that stage.

19.      Ultimately, it is a matter of discretion according to the circumstances of a particular case and in my judgment, there is no good reason not to make the usual order in this case.

(ii)        Factor B uplift

20.      The Paying Parties submitted that, if there is to be an order for payment on account, the schedule of costs should be assessed on the basis of a 50% factor B uplift, not a 60% uplift.  Advocate Pallot, on the other hand, submitted that this was a complex multi-jurisdictional case involving issues of foreign law where a 60% uplift was easily justified.  He also referred to the passage in the Main Judgment at [104] where the Court was critical of the fact that not only had the Third Parties applied to set aside the order for service out (as is normal) but the Plaintiffs had appealed against that order.  This had led to a duplication of costs. 

21.      In relation to the latter point, I accept that the Defendants' advocates would have been put to extra work by reason of having to respond to and deal with skeleton arguments, correspondence etc from two different parties.  However, this point can be met by reference to the time spent.  Thus the Greffier, when taxing the costs, will be able to allow more time for the Defendants' advocates than would have been the case if there had only been the Third Parties applying to set aside the service out order in the normal way.  However, I do not see that this amounts to a reason for increasing the factor B uplift, which is intended to reflect the complexity, amount involved etc of the case. 

22.      As to Advocate Pallot's main point, the Main Judgment shows that this was quite a complex matter and I am most definitely not indicating that a 60% factor B uplift would be inappropriate when this matter comes to taxation.  I am expressing no view whatsoever, not being familiar with the Greffier's practice in this respect on taxation.  But, I am of the opinion that, for the purposes of assessing a payment on account, one must err on the side of caution and I think it safer therefore to only allow a 50% uplift at this stage, as has been done on previous occasions.

(iii)       Appropriate percentage of the costs figure

23.      The Paying Parties submit that, if a payment on account is to be ordered, it should be fixed at 33.3% of the costs claimed rather than 50%, which is the figure suggested by the Defendants and is also the figure which has been applied in many previous cases. 

24.      In support of their submission, the Paying Parties repeat the point that the Defendants may not be able to meet any sum ultimately awarded against them and that there may be difficulties of enforcement. They also refer to the alleged strength of the Plaintiffs' claim.  I do not consider that these points are relevant to the applicable percentage.  They may in some circumstances, as discussed earlier, be relevant to whether a payment on account should be ordered at all, but once the principle of making a payment on account has been addressed, they are no longer material.

25.      The key consideration in fixing the appropriate percentage is to ensure that, whilst the receiving party obtains a significant payment towards the costs which he has been awarded, the amount to be paid should be assessed on a cautious basis so as to avoid any real risk of overpayment.  The Paying Parties point to various entries in the schedule of costs which they say amount to duplication of time or to excessive time.  These are matters for taxation in due course.  The authorities are clear in saying that the Court's task when considering the amount of a payment on account is not to carry out a detailed review of the successful party's costs, but is to adopt a 'rough and ready' approach in order to arrive at a figure which the successful party will almost certainly collect following taxation (see for example Crociani at [23]).

26.      Whilst each case must be considered on its merits and in some cases the Court has awarded a lower percentage, 50% is a percentage which has frequently been ordered.  I am satisfied that a 50% margin is more than adequate to protect the Paying Parties from any risk of overpayment and allows adequate scope to deal with deductions which may be made on taxation.  I therefore reject the Paying Parties' submission that I should fix a lower percentage than 50%.

(iv)       Disbursements

27.      The Defendants seek an order for payment of 100% of their disbursements in the sum of ZAR 120,376.25 which consists of a payment of ZAR 48,300 to Mr Harpur SC and the balance to Norton Rose Fulbright ("Norton Rose"), a firm of South African lawyers.  Given the connection with South Africa referred to in the Main Judgment, it is not surprising that South African lawyers have been instructed.  Furthermore, the invoice from Mr Harpur SC relates to an issue of alleged prescription under South African law, which was an issue raised by the Paying Parties to which the Defendants had to respond. 

28.      The position on taxation of foreign lawyers costs is dealt with at RCR 12/7 which provides as follows:

"12/7  Lawyers outside the jurisdiction

The cost of advice obtained from or work done by lawyers outside the jurisdiction shall be allowable on taxation to the extent that:

(a)       Where that advice or work done could, in the context of those proceedings, reasonably have been obtained from or done by a Jersey lawyer, the costs allowable on taxation shall be no greater than those allowable on taxation in respect of a Jersey lawyer's fees; and

(b)      Where that advice or work done could not, in the context of those proceedings, reasonably have been obtained from or done by a Jersey lawyer, the costs allowable on taxation shall be no greater than those which are reasonable in all the circumstances of the case."

29.      On the face of it, the matters advised on by Mr Harpur and Norton Rose are matters of South African law and accordingly taxation of their fees will fall to be considered under Rule 12/7(b) and the Greffier will allow what is reasonable. 

30.      The hourly rates charged by Norton Rose are set out at paragraph 20 of Advocate Pallot's reply skeleton but I have no information as to the reasonableness of these rates by reference to the hourly rates normally charged by South African lawyers. 

31.      Advocate Pallot submits that 100% of the South African invoices should be allowed, but I cannot accept this submission as it makes no allowance for the possibility of any reduction in their invoices by the Greffier upon taxation.

32.      On the other hand, neither can I accept the Paying Parties' submission that nothing should be allowed in respect of the invoices because, in relation to Norton Rose, it is unclear why they were instructed and, in relation to Mr Harpur, there is no evidence as to the reasonableness of his fees under South African law. 

33.      As to the first point, it is perfectly obvious that South African lawyers had to be instructed, particularly given the heavy emphasis which the Paying Parties placed in their submissions in the Main Applications on the importance of South African law as compared with Jersey law. 

34.      As to the second point, the Paying Parties referred me to a judgment of Master Gordon-Saker in the English High Court in the case of Societa Finanziaria Industrie Turistiche SpA v Di Balsorano [2006] EWHC 90068 (Costs) where at [42] the Master said:

"...the amount of the Italian lawyers' fees must be assessed according to the rules and in the way in which they would have been assessed in Italy."

They submit that, as there is no evidence of what fees would be recovered on taxation in proceedings in South Africa, the appropriate course is to allow nothing at this stage in relation to South African fees.

35.      I do not accept that the statement by the Master reflects the practice in Jersey.  The position is dealt with specifically in RCR 12/7(b) and, given the international nature of many cases in Jersey, the Greffier is very experienced in deciding whether fees of foreign lawyers are reasonable.  I agree that, in deciding whether such fees are reasonable, the Greffier is likely to wish to know whether the rate of charge of the particular foreign lawyers is broadly in line with general rates of charge in the relevant country, but he will not be assessing what would be recoverable on taxation in South African litigation, as the position is governed by Rule 12/7 in relation to Jersey litigation.  I appreciate that I do not at present have any information about rates normally charged by South African lawyers, but it is a reasonable assumption that the Defendants would not have agreed to rates which are out of kilter with normal rates given that, if they lose, they will have to pay the South African fees themselves and, even if they win, they will have to bear any amount above that which the Greffier considers reasonable.  I do not think that uncertainties over the rate which the Greffier may in due course find to be reasonable are such as to lead to no interim order being made at this stage. 

36.      In my judgment, the right course is to order 50% of the South African fees to be paid on account in the same way as for the Carey Olsen fees.  In my view, this will give adequate protection to the Paying Parties as I consider it unlikely that taxation will reduce such fees by more than 50%, but it also complies with the underlying objective of ordering payments on account, namely that a receiving party should not be kept out of pocket for the whole amount.

Conclusion

37.      In summary, I order as follows:

(i)        The Paying Parties jointly and severally to pay 50% of the schedule of costs prepared in respect of the Main Applications, but calculated with a factor B uplift of 50% rather than 60%.  According to my calculations, the total schedule of costs on this basis comes to £101,892.38 (being £67,928.25 factor A, plus a 50% factor B uplift of £33,964.13), of which 50% is £50,946.19.  I would therefore round the sum to be paid up to £51,000.

(ii)       The Plaintiffs jointly and severally to pay 50% of the schedule of costs in respect of the Costs Appeal but again with a factor B uplift of 50% rather than 60%.  According to my calculations, the total amount on this basis comes to £2,516.25 (being £1,677.50 factor A, plus a 50% factor B uplift of £838.75), of which 50% is £1,258.13, which I would round up to £1,259. 

(iii)      The Paying Parties jointly and severally to pay ZAR 60,188.13, being 50% of the claimed invoices of ZAR 120,376.25. I would round this sum up to ZAR 60,200.

All these sums must be paid within 28 days.

Authorities

Monteagle International Limited and Anor v Grocery Market Research Limited and Ors [2022] JRC 216. 

Monteagle International Limited and Anor v Grocery Market Research Limited and Ors [2022] JRC 261. 

Crociani v Crociani [2014] (1) JLR 503. 

Mars UK Limited v Teknowledge Limited [1999] 2 Costs LR 44. 

Les Ambassadeurs Club v Albluewi [2020] 4 WLR 88. 

Rawlinson and Hunter Trustees SA v ITG Limited and Another (as trustees of the Tchenguiz Discretionary Trust) [2015] EWHC 1924 (Ch). 

Societa Finanziaria Industrie Turistiche SpA v Di Balsorano [2006] EWHC 90068 (Costs). 


Page Last Updated: 09 Mar 2023


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