A Costs Order Too Far?

A Costs Order Too Far?

In the recent matter of The Law Trust Limited v JTC Trust Company Limited (formerly Minerva Trust Company Limited) [2020] JRC 012, the Master of the Royal Court made cost orders against the parties’ advocates personally to record his displeasure at what he regarded as a failure to provide certain information for a directions hearing intended to deal with issues of discovery.

The judgment is astonishing and worrying in several respects, not least of all the following three points:

First, the Master of his own motion made the order as against both parties’ advocates. The result being that neither firm acting should or could charge their clients for the directions hearing. The order was made where the parties had opposing positions as to discovery – namely the plaintiff and third parties considered electronic discovery to be appropriate whereas the defendant took the view it was not. The parties’ advocates considered both were reasonable positions to hold and for which there could be no criticism, let alone an application for personal cost orders.

Neither the parties nor the advocates before or during the hearing had contended that the other side’s approach was unreasonable and / or was such to warrant an unusual cost order against the opposing party, let alone against the advocate.

Secondly, the order was made without notice to the parties or the advocates and without any proper opportunity for full submissions. Ordinarily a person to whom an order is sought is required to have notice of the same and is allowed a proper opportunity to be heard. This was absent. The Master reasoned that there was no breach of natural justice because he had expressed his intention at the outset and allowed a 10 minute adjournment.

When considering if there should have been a further hearing to deal with detailed submissions, the Master reasoned that it would have been disproportionate to hear detailed submissions on costs of a relatively short hearing. By putting the advocates on the spot, not only could there not be full submissions but there was no opportunity for the advocates to consider or take instructions on the extent to which they could or should address any difficulties encountered by reason of their clients’ conduct.

Thirdly, the exercise of the power to order personal costs against a party’s advocate for (perceived or actual) non-compliance of the Court’s Practice Directions is a significant departure from previous exercises of the power to order personal costs usually reserved for serious egregious conduct of an advocate in case management. Previous examples include where an advocate has been adjudged to have been responsible for the inactivity of a matter for nearly three years or the pleading of fraud in the absence of evidence in support and proper particulars.

The marked departure by the Master is a significant shift for advocates. It may well be within the Master’s gift to make personal orders, but in doing so they must nevertheless be just. This one was not. The Master in this case justifies such orders to reflect his displeasure. The Master’s displeasure appears to come from his frustration that certain information relative to discovery that he had expected was not provided to him. The Master relied on a letter he wrote to the parties and Practice Directions, unfortunately, his judgment was not fully reflective of the facts.

However, the Master places little if any weight on the fact that both parties had engaged with each other on the issue of discovery and their respective cases. Also, that the parties have undertaken scoping exercises which they considered to be appropriate pending a further order of the Court. Further, to take matters beyond such points exposed the parties to significant potential costs, which may have been wasted if, for example, electronic discovery was not ordered. In the case of Sinels’ and its clients, electronic discovery was ordered as they had advocated for. These are points that are not addressed in the judgment along with other parts of the factual matrix. They are also points that are relevant and in-keeping with the Overriding Objective, to which the Practice Directions regarding directions are subject to.

The marked departure by the Master is made all the more concerning where it was made in the absence of notice, without full argument and where it is made of the Court’s own volition. Further, it was made in circumstances where there was no prejudice expressed by any party, the option of a short adjournment for the information to be provided was available, and these were the Master’s first and only complaints of non-compliance. In short and to the extent there was any offending, which this was not, it was a first offence and of a low level which could be easily rectified.

Sinels and Carey Olsen, representing the parties in this case, both take great exception to the Master’s order and his judgment. Neither consider it just or reflective of the facts and matters put before the Master; this is of concern, judgments should be fact specific and factually correct. To the extent that they seek to correct the position, it is likely incumbent on them to proceed by way of a doléance and engage in a lengthy appeal process. This will naturally be disproportionate to the sums in issue which the Master has noted is limited to the cost of attending an hour’s directions hearing. It therefore remains to be seen whether the Master’s judgment will be held to account, as it probably should.

Shortly before the handing down of the judgment, both Sinels and Carey Olsen indicated that they were strongly considering an appeal and asked that the Court hold-off publishing the judgment. The Master rejected the request to hold-off on publishing the judgment because he regarded the judgment “as being of general importance as to how parties and those advising them should approach directions hearings”. As neither party nor their Advocates were at fault, the judgment has achieved no proper objective. The intention from the Master is clear, the judgment is to be used as a measure or bar for local advocates involved in litigation before him and the Jersey Courts.

With all due respect to the Master and particularly where his departure from previous exercises of personal costs orders is extreme, it is right that more senior judges of the Royal Court review the matter. This is particularly so when the persons costs order was made without notice and without the benefit of full argument. The difficulty is that the only way the issue may heard by another judge is if an advocate or a law firm invests heavily to do so. Despite the judgment being published, it remains uncertain as to whether the Master’s view is shared by more senior members of the judiciary. This is likely to only become clear if there is an appeal on this or a similar case.