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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> JFSC -v- A.P. Black and Ors 6-Dec-2006 [2006] JRC 182 (06 December 2006) URL: http://www.bailii.org/je/cases/UR/2006/2006_182.html Cite as: [2006] JRC 182 |
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[2006]JRC182
royal court
(Samedi Division)
6th December 2006
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Before : |
H. W. B. Page, Esq., Commissioner, sitting alone. |
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Between |
Jersey Financial Services Commission |
Representor |
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And |
A.P. Black (Jersey) Limited |
First Respondent |
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Alistair Pollock Pedersen Black
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Third Respondent |
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A.P. Black Limited |
Fifth Respondent |
Advocate M. L. A. Pallot for the Representor.
The Respondents appeared for themselves.
judgment
the COMMISSIONER:
A. Introduction
1. The Representor ("the Commission") seeks leave to discontinue these proceedings against the remaining respondents, A.P. Black (Jersey) Limited ("Blacks Jersey"), Mr. Alistair Black, and A.P. Black Limited ("Blacks London"). There are also certain costs issues outstanding from earlier hearings.
2. The history of these proceedings is set out at some length in the Judgment given by this Court on 25th August last year on Mrs. Elia Black's application to strike out the Commission's claim against her. It is unnecessary to repeat that history here, the main events for present purposes BEING as follows:-
(i) 30th June 2000: Proceedings instituted against Blacks Jersey, Mr. Black, Cater Allen Trust Company (Jersey) Limited ("CATCJ") and Mr. Peter Langton.
(ii) 12th May 2003: Blacks London added as a respondent;
(iii) June 2003: Orders for discovery, exchange of affidavits of evidence-in-chief and for provisional listing of the proceedings for trial in January 2004: Black Respondents cease to play any further part in the proceedings and fail to comply with all current and subsequent orders for the next 17 months or so;
(iv) November 2003: The Commission settles with Cater Allen and Mr. Langton on terms approved by the Royal Court (The Bailiff assisted by Jurats de Veulle and Allo);
(v) December 2004: The Commission obtains ex parte leave to join Mrs. Black as a respondent; Mr. Black (but not at that stage Blacks Jersey and Blacks London) seeks leave to resume active defence of the proceedings;
(vi) Between February and May 2005 Mr. Black takes various steps towards complying with outstanding orders and demonstrating his intention to abide by future orders of the Court;
(vii) 16th May 2005: Blacks Jersey and Blacks London take similar steps;
(viii) 19th May 2005: Court Orders setting fresh deadlines for outstanding responses from Black Respondents;
(ix) 24th June 2005: Mrs. Black issues summons to strike out the proceedings against her; following the hearing of this in August 2005, the Court orders proceedings against Mrs. Black to be struck out.
3. As part of the terms on which Mr. Black was permitted to resume active defence of the proceedings, the Court ordered on 16th February 2005 that he was to
"pay the costs of the Representor [the Commission] on an indemnity basis for all such matters as the Representor can demonstrate represent additional costs or wasted expenditure resulting from [Mr. Black's] failure to comply with the order of the Court dated 17th June 2003, and/or his failure to participate in the action thereafter until December 2004" (paragraph 4) .
On 16th May 2005 the Court made similar orders against Blacks Jersey and Blacks London in relation to their failure to comply with the 17th June 2003 Order and their failure otherwise to participate in the action from that point until 16th May 2005 (see the chronology in paragraph 2 above). Also, at the time of striking out the proceedings against Mrs. Black the matter of costs was reserved. For a variety of reasons, principally court availability and a succession of on-off negotiations between the parties, each of these matters of costs had until now remained outstanding.
4. More recently, on 7th June this year, the Commission gave notice of its wish to discontinue proceedings against the remaining Black respondents and its submission that this should be permitted on the basis that there should be no further order for costs either way.
B Recent developments
5. The issues before the Court are accordingly three: (i) what costs the Commission could demonstrate as being recoverable by it within the terms of paragraph 4 of the Court's Order of 16th February 2005 and the corresponding provisions of the Court's Order of 16th May 2005; (ii) the appropriate order in costs to be made following the strike-out of proceedings against Mrs. Black; and (iii) the appropriate costs orders to be made on the Commission's application for leave to discontinue the proceedings against the remaining respondents.
6. All three matters had originally been listed, back in June, for hearing on 31st August this year. In the event, that hearing was adjourned when, the day before the hearing, the Court was informed that the parties were close to agreement and it was hoped that no hearing would be necessary. That hope came to nothing and the matter was re-fixed in due course for 12th October. Throughout this time all the Black Respondents had been represented by Crill Canavan (principally by Advocate Santos-Costa). But on 29th September 2006 Mr. and Mrs. Black suddenly gave notice to the effect that Crill Canavan would no longer be acting for any of the Black Respondents and that they would thereafter be representing themselves and the two companies. They asked for "a short delay [to the forthcoming hearing] of 7 to 10 days" in order to give them an opportunity to submit "an amendment to the Skeleton Argument presently submitted and to provide the Court with new supporting affidavits".
7. In response, the Court granted an adjournment of the hearing from 12th October to 7th November on terms that any additional materials sought to be relied on were to be served by no later than on 12th October 2006 and that the Commission was to have an opportunity to object to any of it.
8. The additional materials, when eventually served by Mr. and Mrs. Black, proved to be substantial and to seek to raise issues and to obtain relief against the Commission of a considerably wider kind than anything previously canvassed in the skeleton argument filed by Advocate Santos Costa on their behalf. I shall come back to this in due course, but I turn first to various cost issues left over from earlier hearings and the appropriate orders that I would be minded to make independently of any application by the Commission to discontinue.
C. Wasted costs orders against Mr. Black (16th February 2005 Order)
and against Blacks Jersey and Blacks London (16th May 2005)
9. The Commission seeks the recovery of three heads of wasted and additional costs.
(i) Additional costs involved in seeking and examining documents that might otherwise properly have been disclosed by Mr. Black and the two Black companies. In practice, says Mr. Pallot, this meant negotiating access to, and then examining, extensive documentation in the hands of the UK Financial Services Agency in London ("the FSA"). In principle this appears to me to fall within the terms of my previous order. True, it is not improbable that the Commission might at some stage have wanted to approach the FSA with a request for access to some at least of its files even if it had had due discovery from Mr. Black. But, with the benefit of having already had discovery from Mr. Black, that no doubt would have been a more limited and more focussed task. I consider that the Commission should be entitled to recover two-thirds of its costs under this head.
(ii) The costs of locating Mr. Black and investigating his assets in order to try to discover whether pursuing him further in the proceedings would be worthwhile. Of these, the second was almost certainly the more time-consuming. Whether Mr. Black was worth pursuing was, of course, a matter in which the Commission was always going to be interested. But the Commission's case, which seems to me to be a fair one, is that had it had discovery from Mr. Black in the second half of 2003 (as ordered), it would have learned much about his financial affairs - including the extent of profits (by way of commission) derived by him from the Delta Scheme and what had become of them - at that stage. In the absence of discovery, it was necessary for the Commission to make other inquiries of its own. To some extent, such inquiries might still have been necessary, even if Mr. Black had given discovery when he should have done, but I accept that the bulk of these costs are recoverable under this head and would again allow the Commission two-thirds of these costs.
(iii) Thirdly the Commission claims the additional costs of keeping Mr. Black informed of the progress of proceedings in circumstances where, if he had been properly engaged in them this would not have been necessary. I shall allow the entirety of such costs.
10. The foregoing rulings are, of course, decisions of principle, the quantification of which would ordinarily have to be worked out on taxation in the usual way. As it is, the Commission makes an unusual application. It invites the Court to make what is, in effect, a summary costs order: to dispense with taxation and make instead a costs order for a quantified amount of £60,000 or thereabouts that is immediately payable. The justification for this is said to be as follows. There is believed to be a cash balance of that order standing to the credit of Blacks Jersey on an account with Abbey National in Jersey; other than by way of recourse to those funds, the Commission is unlikely to recover any costs order made in its favour; £60,000 is way below what might reasonably be expected on a taxation, a submission supported by an affidavit from Advocate Olsen based on his examination of his firm's costs ledgers and (he suggests) certain conservative assumptions; the costs of taxation are likely to be substantial and to be irrecoverable from Mr. Black or either of the Black companies and it is in the public interest that such costs should be avoided if another solution, compatible with justice, is available.
11. The first question that arises is whether this Court has jurisdiction to make an order of this kind. The Commission submits that the power to do this is to be found in the all-embracing wording of Article 2(1) of the Civil Proceedings (Jersey) Law 1956 ("the CPL"), which reads as follows:-
12. Mr. Pallot, on behalf of the Commission, readily acknowledges that his application appears to be a novel one in this Court or, at least, that he is unable to produce any reported case on the point. This, of course, is a reason for caution, but is not of itself necessarily fatal to the submission. If one starts with the opening wording of Article 2(1), there is nothing in Part 1 of the Law ("this Part") that has any bearing on the matter. And as far as Rules of Court go, the only provisions that might be of relevance are Rule 12/2 ("Amount of Costs Recoverable") paragraph (1) which is in the following terms:
and Rule 12/3 ("Taxation by the Greffier"), paragraph (2) of which reads:
(the emphasis in each case being mine). It might, I suppose, be argued that the italicised words in Rules 12/3 (2) merely qualify "forthwith" rather than "shall be liable to taxation", and that neither Rule contemplates the possibility of costs being recoverable other than via the process of taxation. But this is to give these Rules of Court a more far-reaching and restrictive effect than is in my view warranted. In the first place, on a fair reading of the first of these provision in the context of the rest of the Rule it does no more, I believe, than provide for two alternative bases of taxation - in circumstances where taxation takes place. In the second place, the italicised words of Rule 12/3(2) are not inescapably inconsistent with the idea that the Court may, in an appropriate case, make an order for costs that does not require taxation at all. And thirdly, and most importantly, it would require clearer language to justify reading either Rule as cutting down the unqualified ambit of the terms of Article 2(1) of the CPL.
13. Is there anything else that points one way or the other on this question? Mr. Pallot suggests that the practice of the English Courts as governed by Order 62, Rule 7.4 of the Supreme Court Rules affords an instructive precedent which this Court should follow; but it would be wrong, I think, to attach significance to this beyond observing that that provision was introduced in response to the needs of modern-day litigation.
14. One is left, therefore, with the wording of Article 2(1) and considerations of principle. So far as the first is concerned there is, as far as I can see, nothing in any legislative provision or in any decided case that qualifies the otherwise "full" power of the Royal Court to decide "by whom and to what extent the costs are to be paid". And so far as the second goes, it seems to me eminently desirable that the Court should be ready to adopt, wherever possible and consistent with the general considerations of fairness, practices that minimise rather than maximise costs.
15. In principle, therefore, I would be prepared to make an order of the kind sought by the Commission. The only caveat required on this, as on any such summary application, is that the Court is satisfied that the amount of costs claimed is, on any view, less than that which would be recovered on a taxation. Mr. Pallot invites me to make this judgment myself on the basis of the affidavit of Mr. Olsen to which I have already referred. But that - without going into the details of that affidavit - is to ask more than is reasonably possible on the material supplied: as it stands, it is insufficiently detailed or supported by documentation to allow a court to make an informed and confident judgment. The only safe and practical course, in my view, is for the matter to be referred to the Taxing Master for consideration and report with the benefit of all the experience that he will be able to bring to the exercise. The Commission will have the opportunity to place before him whatever material it thinks necessary to make out its case and Mr. Black (and the Black companies) will have an opportunity to comment and respond, accordingly. I shall hear further submissions on the precise terms of the order to be made.
16. The inter-relationship between Mr. Black and the two Black companies appears to have been such as to make it unnecessary and inappropriate to try to distinguish between them for the purposes of this application. Subject to the report of the Taxing Master, the Commission will, accordingly, have an order in its favour against each of these respondents.
D. The costs of Mrs. Black's strike-out application
17. Mrs. Black's case is simple: her application was successful and she should have her costs. But, while he accepts that, in principle, this would be the correct order in the ordinary way, Mr. Pallot submits, first, that special considerations apply where, as here, the unsuccessful proceedings were initiated in good faith by a public body pursuant to its statutory functions; and, secondly, that Mrs. Black could, at any time from mid-March 2005 onwards, have secured her release from the proceedings if she had been willing to confirm on affidavit her avowed impecuniosity - which she was not prepared to do: in such circumstances, he says, it would be wrong for her to have her costs.
18. In support of his first argument Mr. Pallot draws attention to the terms in which the Court of Appeal in this jurisdiction has analysed and described the operations of the Commission as those of "a regulatory body carrying out public law functions": Jersey Financial Services Commission v. A.P. Black & Ors. [2002] JLR 443, CA. He then goes on to rely on three English decisions: City of Bradford Metropolitan District Council v. Booth [2000] COD 338; Gorlov v. Institute of Chartered Accountants [2001] EWHC Admin 220; and Baxendale - Walker v. The Law Society [2006] EWHC Admin 634. The principle that these cases establish, argues Mr. Pallot, is encapsulated in a passage from the judgment of Moses LJ in Baxendale-Walker with which Burnton J concurred (at paragraph 43):
19. On the basis of this case the Commission submits that the mere fact that it failed in its application to join Mrs. Black as a respondent to the proceedings should not result in it being condemned in costs when it has acted in good faith and otherwise perfectly properly in pursuit of its public duty.
20. In the earlier case of Gorlov, Jackson J had said:
But in that particular case this prima facie position was displaced by other considerations as appears from the learned judge's next words:
The refusal of the Institute's Appeal Tribunal to make an award in favour of the accountant who had been the subject of the Institute's unsuccessful proceedings was accordingly quashed.
21. In City of Bradford (an appeal by a local authority against the justices' award of costs against a local authority following the over-turning of the authority's refusal to renew a licence to operate a hire-car business) Lord Bingham of Cornhill CJ had expressed his views in the form of three propositions. First, that the magistrates had a discretion as to the award of costs. Secondly, "What the court will think just and reasonable will depend on all the relevant facts and circumstances of the case before the court. The court may think it just and reasonable that costs should follow the event, but need not think so in all cases...." And thirdly, in words similar, but not identical, to those later used by Moses LJ in Baxendale-Walker,
Accordingly, said Lord Bingham, he would answer the two questions posed by the justices for the opinion of the court as follows: (paragraphs 26 and 27). Silber J agreed.
22. Taking Lord Bingham's judgment as a whole, it seems clear to me that what he was saying, in summary, was this: the ordinary rule that costs follow the event does not necessarily apply in such cases; it may, however, still be proper to order costs against a public authority, even though the authority has not acted unreasonably or in bad faith; the award of costs remains a matter of discretion, in the light of the circumstances of each particular case; but in cases such as those under discussion, a court should, among other circumstances, have regard to the two (often competing) considerations referred to by him in his third proposition (paragraph 26 of his judgment).
23. Unfortunately, Lord Bingham's carefully formulated propositions appear, with respect to the members of the Court in Baxendale-Walker (who expressly acknowledged those principles as the leading authority on the point), to have undergone a subtle and unwarranted transformation of emphasis in that case, resulting in the law being re-stated in terms more favourable to a public authority than can properly be derived from City of Bradford. The problem lies in the words used by Moses LJ in paragraph 43 where he says: "A regulator brings proceedings in the public interest in the exercise of a public function which it is required to perform. In those circumstances the principles applicable to an award of costs differ from those in relation to private litigation. Absent dishonesty or a lack of good faith, a costs order should not be made against such a regulator unless there is good reason to do so" (my emphasis). Intended or not, this conveys the impression that the starting point in such case is that a costs order will not ordinarily be made against a regulator or the like - which is not what Lord Bingham suggested. He did not speak of any prima facie rule: he merely said that it was right that a court, in exercising its discretion, should take into account additional considerations peculiar to the nature of the proceedings.
24. But there is also earlier English authority of relevance, which appears not to have been cited in City of Bradford or in Baxendale -Walker. Crill Canavan, when still instructed by Mrs. Black, had drawn attention to the decision of the English Court of Appeal in In re Southbourne Sheet Metal Co. Ltd. [1993] 1 WLR 244. In that case proceedings had originally been brought by the Secretary of State for Trade and Industry seeking the disqualification of a director under the Company Directors Disqualification Act 1986, but had subsequently been discontinued. Allowing an appeal against the refusal of Harman J to make a costs order in the director's favour, Nourse LJ, having referred to the ordinary rule that costs should follow the event, said:
Having examined a number of earlier decisions to which he had referred, Nourse LJ concluded that no case for the application of a special rule as to costs in proceedings brought in the public interest had been made out:
McCowan LJ, concurring, said:
Beldam expressed his views in even more trenchant terms. Having referred to an earlier decision of the Court of Appeal in which Sir Robert Megarry V-C had drawn a distinction between litigation involving a proprietary claim and litigation pursued by the Crown in performance of a statutory duty, he continued as follows:
25. Beldam LJ evidently took a dim view of the conduct of the Secretary of State in that case. But even allowing for that, it is plain that none of the members of the court was prepared to recognise any special rule of the kind for which the Commission argues in the present case. The result is that the English reported cases are by no means consistent in their approach to this problem.
26. Turning to Jersey authorities, Crill Canavan had also drawn attention to a number of cases in which costs have been awarded against bodies engaged in litigation in discharge of public-interest functions. But the problem is that these cases make little real contribution to the issue of principle, either because of the particular circumstances in question or because the matter does not appear to have been the subject of argument or because the reported decisions give no reasons for the particular costs award. In Evans v. Agriculture and Fisheries Committee [1983] JJ 89, for example, no reasons are recorded as having been given; in Battônier v Sinel [2000] JRC 93, where disciplinary proceedings against Mr. Sinel had been instituted by the Bâtonnier but subsequently discontinued, the Batonnier "at once conceded that as a matter of principle Mr. Sinel was entitled to be paid his costs"; in De Gruchy v, Planning and Environment Committee [2001] JLR 196, the Court found the conduct of the Committee and its advisers to have been "totally unacceptable"; Planning and Environment Committee v. Lesquende & Ors [2003] JCA 021, was simply a case of refusal of leave to appeal - a slender basis from which to derive any general principle; and in Jersey Financial Services Commission v. Alternate Insurance Services Limited & Ors [2006] JRC 104. there was, again, no discussion of the principle contended for in the present case. The most that can be said, on the basis of these cases, is that in none of them does anyone appear to have suggested that any special rule applied to bodies exercising public-interest functions.
27. The closest that any case in the Royal Court comes to addressing the issue as a matter of principle appears to me to be the decision of the Deputy Bailiff in Ani v. Barclays Private Bank and Trust Limited and HM Attorney General [2004] JRC 69, the circumstances of which were, briefly, as follows. The Attorney General had started a money-laundering investigation against Mr. Ani in relation to certain trust funds of which he was the settlor and Barclays were the trustee. This had resulted in Barclays effectively freezing the trust fund, albeit without any court order. Mr. Ani then brought a Representation against Barclays complaining of their refusal to comply with a request by him for a distribution from the trust. The Attorney General was also convened but the only relief claimed was against Barclays. Before the Representation was heard, the Attorney General discontinued his investigation. Mr. Ani sought leave to withdraw his Representation on terms that the Attorney General pay his costs (or failing that, Barclays). The Deputy Bailiff declined to make any order against the Attorney General, primarily on the ground that the latter had not been made a party to any lis with Mr. Ani. He continued, however, as follows:
28. The importance of this case lies first in the Deputy Bailiff's strongly expressed sense that it would be wrong to make a costs order adverse to the Attorney General where he had behaved perfectly properly; and secondly, in his deliberate reservation of the question whether it would be right to make such an order even if the Attorney General's conduct were open to criticism ("Even assuming, without deciding ..............": see the full quotation already set out). What is less than wholly clear is whether his observations on the first of these points reflect a tacit acceptance that, in matters of costs, especially favourable considerations must always apply to bodies acting reasonably and responsibly in the pursuit of public-interest functions, along the lines of those espoused by the English courts in Baxendale-Walker (but rejected in Southbourne), or whether his decision simply reflected his view as to where the justice of the matter lay in the particular circumstances of that case. The uncertainty arises because none of the authorities, Jersey or English, to which my attention has been drawn appear to have been cited to the Deputy Bailiff in Ani and there is nothing to suggest that the issue was argued as one of principle rather than one of mere discretion.
29. In these sparsely-charted waters, it is therefore with some hesitation that I express the following conclusions, particularly in circumstances where only one of the parties before me was legally represented at the hearing itself and the issue is of some general importance:
(i) On any view, the idea that bodies engaged in performing public-interest functions must in all cases "take [their] chance on costs, just like any other litigant in these courts", as espoused by the members of the English Court of Appeal in Southborne, is at odds with the trend of thinking in the later cases discussed above, and would appear to be difficult to reconcile with the decision of the Deputy Bailiff in this court in Ani. Its rigidness would, in any event, sit uneasily with the general approach of the Royal Court to the exercise of discretion in matters of costs and is not one that I would want to follow unless constrained to do so (which I am not).
(ii) The fact that the unsuccessful or discontinuing party has been engaged in the proceedings in furtherance of its public-interest functions must, to my mind, be a relevant factor on the issue of costs. But the matter is best dealt with simply on that basis - as one element relevant to the court's exercise of discretion in any particular case - rather than treating that body's status as automatically giving rise to a hard-and-fast special rule, or, for that matter, even a prima facie rule. I say this because, in terms of principle, the justice of the matter can be argued with equal force both ways, as the conflicting English decisions show, and it is quite wrong to be prescriptive on the issue.
(iii) The approach adopted by Lord Bingham in City of Bradford, understood in the way that I have suggested it should be, is in my view the proper and fair one and is moreover in keeping with the governing principles in relation to the award of costs in the Royal Court as summarised in Watkins v. Egglishaw [2002] JLR 1 at paragraph 7.
30. What then should the proper order for costs be in the present case, looking at the matter overall? The first thing to say is that there is nothing that would warrant the court taking the view that the Commission behaved improperly or unreasonably in seeking to join Mrs. Black as a party to these proceedings. Her success in striking out the proceedings did not turn on showing that the case against her was wholly unfounded (although the strength of that case was difficult to assess), but to a large extent on the procedural unfairness that might affect her position as a result of the release of some of the other respondents following the settlement in November 2003 and the substantial lapse of time since the material events.
31. Secondly, as the judgments of the Court given on 16th May 2005 and on the hearing of Mrs. Black's application point out, over six months elapsed between the time when the Court originally gave leave ex parte for the Commission to join her as a respondent on 8th December 2004 and the service of her summons to strike out the proceedings on 24th June 2005; that delay appears in part to have been the result of complications with Mrs. Black's legal representation (initially Crill Canavan, who were already acting for Mr. Black, then Sinels, then back again to Crill Canavan) and in part the result of indecision whether or not to apply to strike out the proceedings; very considerable indulgence was shown by both the Court and the Commission in allowing Mrs. Black to preserve the opportunity to apply to strike out well beyond what would ordinarily be expected of a litigant; and it was only in response to what was, in effect, an ultimatum that the matter was brought to a head when it was. Whatever the full explanation for this extended period may have been, it was not something for which the Commission bore any responsibility. It will inevitably have resulted in considerably increased costs for the Commission as well as Mrs. Black and not just in relation to the additional hearings that were necessary (as to which, specific costs orders in favour of the Commission were in some cases made). At best, Mrs. Black might therefore argue that she should get her costs from 24th June 2005 onwards. The costs of settling her formal Answer to the Commission's case would, it is true, have been incurred prior to its service, but the need for that pleading as such only arose because of the delay to which I have referred and the importance of not allowing that delay to hold up the entirety of the proceedings; and it was not until 29th July and 17th August 2005 respectively that her skeleton argument and affidavit in respect of the strike out application as such were served.
32. But there is also, importantly, the Commission's point that from 10th March 2005 at latest an easy way out of the proceedings was open to Mrs. Black if only she had been prepared to swear an affidavit of her means and thereby verify her claim to be sufficiently impecunious to justify seeking legal aid - and, indeed, securing such aid for a period (although that state of affairs appears later to have ceased). The Commission's position was stated straight-forwardly in its skeleton argument for the 10th March 2005 hearing and repeated in its skeleton argument for the hearing on 22nd June 2005. Thus, argued Mr. Pallot, while the Commission would not contend that Mrs. Black had brought the original application to join her on her own head, she had only herself to blame for the continuance of those proceedings after mid-March 2005. There is well established authority for the proposition that successful defendants may be refused part or all of their costs if they have "brought the proceedings on their own head" (to use the expression most commonly employed): see for example, Watkins v. Egglishaw (ibid.). In most such cases this has been because defendants have behaved in a way that has helped to generate suspicion of material wrong-doing when they could have avoided or dispelled this had they been more sensible or co-operative. The present case is rather different. But the argument is analogous and, in my view, an entirely valid consideration in the context of costs. The Commission's invitation was not issued on its own initiative, out of the blue, but in response to a stance taken by Mrs. Black as to her financial situation. Having claimed limited financial resources for the purpose of legal aid, its is difficult to see why she should have been anything other than ready and willing to verify her means on affidavit; and if she had done that satisfactorily the Commission would, no doubt, have been ready to drop the proceedings against her: having publicly stated its position, it could hardly have done otherwise.
33. To deny Mrs. Black her costs of successfully resisting the application would, no doubt, be "financially prejudicial" to her, though precisely how prejudicial I am in no position to estimate, given the absence of any authoritative evidence of her means. But taking account of the circumstances as a whole and those that I have specifically mentioned in particular, I am in little doubt that the just result is that Mrs. Black should bear her own costs of the strike out application. On the other hand, the Commission does not ask for, and if it did I would not make, any further orders for costs in its favour beyond those already made on earlier hearings.
D. Discontinuance against Mr. Black, Blacks Jersey and Blacks London
34. The Commission's wish to discontinue all further proceedings is said to be a pragmatic one: that "it is not considered to be in the public interest to continue an action against two companies of insignificant value, [save for the limited funds believed to belong to Blacks Jersey referred to elsewhere] and against an individual who has submitted sworn evidence to the Court that he is de facto impecunious". The Commission continues to suspect that Mr. and Mrs. Black between them have access to considerable wealth but believes that without Mrs. Black as a party to the proceedings, the task of trying to trace and recover any such assets (assuming that the Commission were successful in obtaining a judgment against one or both of them at trial) would be of such expense and uncertainty as not to justify continued pursuit of the current proceedings.
35. It is not for this Court to inquire into the detailed considerations that have led to this decision or to second-guess the wisdom or otherwise of the course that the Commission now wishes to take. But anyone with any experience of complex litigation and of the sort of considerations to which the Commission has alluded will know only too well that hard decisions of a practical kind have, not infrequently, to be made - usually involving an assessment of the likely return if the action is to be pursued weighed against the additional investment in costs likely to be required in order to secure that return. And where the expenditure of public funds is at stake, the need to keep that balance under review is all the greater.
36. I must, however, make it clear that, whatever the Commission's suspicions, there is no first-hand evidence before this Court of Mr. and Mrs. Black's means other than Mr. Black's affidavit of February 2005, and that nothing in this judgment should be taken as constituting a finding of any kind on this subject, one way or the other.
37. The Commission seeks leave to discontinue on terms that there be no further order for costs other than that discussed in Section C of this judgment. By contrast, the orders sought by the Black Defendants are (and here I quote from the skeleton argument filed by Crill Canavan shortly before the abortive hearing due to take place on 31st August this year, at a time when that firm was still instructed by the Blacks), "that the costs of the Respondents and of Mrs. Black of and incidental to these proceedings and this application be paid by the Respondents on such basis as the Court shall deem just".
38. Rule 6/31 (1) of the Royal Court Rules 2004 provides:
That rule plainly confers a wide discretion on the court in relation to matters of costs, akin to and consistent with that conferred by Article 2(1) of the CPL. This means that while it is common practice for costs to be awarded against the discontinuing party, on the basis that that reflects the justice of the case, each case has to be considered in the light of its own particular circumstances, with due reference to the principles summarised by this court in Watkins v. Egglishaw and, where the proceedings have been instigated by a body engaged in a public-interest function, the considerations discussed earlier in Section D of this judgment.
39. Crill Canavan, in their skeleton argument, had submitted that the case for awarding the costs of the entirety of the proceedings against the Commission was not only in keeping with the ordinary practice on such applications but was all the stronger because the proceedings were misconceived in the first place and had been brought and pursued other than "in good faith"; because, even after all this time, there has been no finding of wrong-doing by any of the Black Respondents while the publicity given by the press to the serious allegations made by the Commission has caused them substantial personal distress and "reputational" damage; and (it seems) that the reason given by the Commission for wishing to discontinue is not a true one.
40. As to the first of these contentions, Crill Canavan's skeleton had focussed on two matters: Mr. and Mrs. Black's reliance (it was said) on Mr. Langton of Cater Allen and his (alleged) reliance in turn on advice as regards the need for a Collective Investment Fund licence; and the Commission's decision in June 2000 to institute proceedings notwithstanding Advocate Wheeler's Report of October 1996 and the Commission's letter to Speechly Bircham, the Blacks' English Solicitors, of January 1999. These points were made fairly and squarely but occupied no more than half-a-dozen paragraphs out of the skeleton's total of forty-seven. But, with Crill Canavan's departure from the scene, and the indulgence allowed by the Court in granting Mr. and Mrs. Black's request for a postponement of the hearing due to take place on 12th October this year (having already been adjourned from 31st August 2006) this line of argument erupted into a wholesale, impassioned attack on the Commission's conduct from beginning to end. The Blacks had asked for a short adjournment in order to submit "an amendment to the [Crill Canavan] Skelton Argument presently submitted and to provide the Court with new supporting affidavits". What was actually served, when it came, consisted of a succession of further written submissions and notes, the main one running to twenty-seven pages of single-spaced typescript; a two-page affidavit by Mr. Black on behalf of himself and the two Black companies; a similar affidavit by Mrs. Black; and a full lever-arch file of supporting documentation.
41. Also served was a draft "summons" complaining that the settlement agreement between the Commission and Cater Allen and Mr. Langton had never been made available to Mr. and Mrs. Black, that funds now believed to be held by Abbey International on behalf of Blacks Jersey had been concealed from Mr. & Mrs. Black and should be released to Crill Canavan "in settlement of legal fees", and that the court should award Mr. and Mrs. Black damages to compensate for the adverse effect that the unavailability of these funds has (allegedly) had on the Blacks' defence of the proceedings and the quality of the advice available to them. In addition, in their principal written submission, the Black Defendants ask for their costs on an indemnity basis not just from the issue of proceedings in 2000 but from the Commission's first "intervention" in 1993, and for all existing adverse costs orders to be withdrawn.
42. Leaving aside the unbridled, intemperate language employed, (for which Mr. Black apologised, in response to comment from the Court) the Blacks' main complaint is that by the time that the proceedings were launched in June 2000 there were six "red flags" that should have restrained the Commission from pursuing any of them. In summary these are said to have been the following:
(i) "The Interventions": Co-ordinated action by regulators, including the U.S. Commodity Futures Trading Commission ("the CFTC") and the Jersey Financial Services Commission (in its previous form), in a number of jurisdictions, is said to have culminated in foreign exchange positions and/or credit lines then held by Delta Options Limited ("DOL") with Credit Lyonnais, New York to the value $US 600 million being closed out on 9th July 1993 without prior notice and with no good reason - an action that is described as having been "malicious, premeditated with the sole purpose of causing maximum disruption and harm to DOL and its helpless investors."
(ii) "The U.S. Supreme Court Ruling": In 1997 the Supreme Court had ruled that off-exchange trading in currency options did not fall within the regulatory jurisdiction of the CFTC so that the co-ordinated action of the regulators had been illegal. The action against DOL had been the product of a jurisdictional contest between the CFTC and the US Treasury and the sole purpose of the interventions had been to cause losses within DOL which would help to justify their claim to be the proper body to regulate this trading activity.
(iii) "The cause of the losses": Having forcibly closed down DOL, the regulators then failed to conduct an orderly winding up of that company, failed to make provision for temporary liquidity facilities; and failed, in the case of the Commission, "to act to protect Jersey investors ........by ensuring that monies being paid back to the Jersey investors was managed through an escrow account, thereby causing such investors to lose US$21.43 million which they should not have lost." And so, "Knowing that they would eventually have to prove the cause of the losses under the proceedings and the CIF law these circumstances should have given much pause for thought."
(iv) "The Liquidator's Report": In 1995 a report by the Liquidators of DOL, Deloitte Touche, Bahamas, found trading losses of $US 31 million, but "could find no evidence of misappropriation of assets from DOL".
(v) "The Wheeler Report": The main conclusion of that report that there was no CIF. Without that there could be no legal basis for the Commission's proceedings.
(vi) The ECHR: (Semble) The institution of proceedings against Mr. Black and the two companies seven years after the material events and against Mrs. Black thirteen years afterwards was incompatible with the Convention, which by 2000 was "well established in the United Kingdom" and should have given the Commission pause for thought.
43. An extensive miscellany of other arguments and allegations was also advanced, attacking variously the legality of the proceedings; the impartiality of the Court (the Bailiff and Jurats) that approved the Commission's settlement with Cater Allen and Mr. Langton; the (alleged) denial of access for the Black Defendants to the files of Blacks Jersey and Cater Allen since 1993, and the competence of those responsible for the legal representation of Mr. and Mrs. Black. Complaint was also made of adverse press publicity and in particular of "a malicious and deliberate publicity campaign organised and orchestrated by [the Commission] in order to discredit and damage [Mrs. Black] and her future life worldwide".
44. It is impracticable within the scope of this judgment to recite in full all these contentions, let alone to deal with them in detail. Many of them do not deserve any such attention. My observations on the main points are, however, as follows.
(i) Nothing that I have seen would justify the conclusion that the Commission has acted other than wholly properly in instituting these proceedings in the first place, in pursuing them as it has done, in negotiating a settlement with Cater Allen and Mr. Langton, in seeking to join Mrs. Black (albeit unsuccessfully in the end), and in now seeking to discontinue rather than spend further time and funds in an attempt to obtain judgment against the remaining Black Respondents.
(ii) There is, in particular, not a shred of evidence to support the extravagant, vituperative allegations of malicious conduct on the part of the Commission with which Mr. and Mrs. Black's written and oral submissions were replete.
(iii) Nor is there any evidence to support the suggestion that the Commission has contrived to pursue a deliberate, sustained publicity campaign prejudicial to the Blacks. Such press reports as there have been are nothing out of the ordinary in the case of court proceedings of quite-understandable public interest.
(iv) The claims concerning the "interventions" by regulatory bodies in 1993, the Supreme Court Ruling in 1997 and the failure to procure an orderly winding up of DOL, the establishment of an escrow account, and the motivation of the Commission in bringing the proceedings, raise issues of fact which would require extensive evidence and which are wholly beyond the competence of a court to resolve on a hearing such as the present.
(v) It is, moreover, notable that the "interventions" by regulators in 1993, now characterised as conspiratorial and malicious, featured in the original Answers filed by Mr. Black and Blacks Jersey in December 2000 only in comparatively muted and cursory terms ("If loss has been suffered by any participant in the Delta Scheme, including APB and APBJL, this loss was possibly caused by the intervention in the Delta Scheme of the Commodities and Futures Trading Commission ("CFTC"). The intervention by the CFTC was subsequently found to be illegal by the Supreme Court of America in or about February,1997"); and in the Amended Answer served by Mr. Black and the two companies in June 2005, while the "interventions" by regulators are pleaded en passant, no specific complaint about the role of the Commission in that context was alleged in anything remotely approaching the terms now employed.
(vi) Other considerations apart, the dangers of accepting assertions of fact made by Mr. and Mrs. Black at face value are illustrated by their claim that "the Liquidator could find no evidence of misappropriation of assets from DOL", citing the Liquidator's report of 28th February 1995 as the source for this statement. But that, to put it mildly, is something of a gloss on what that report actually said. Take the following passage, for example:
"We have identified certain [customer] payees who received payments form bank accounts maintained by the Company, Delta Consultants or ABC, which we believe appear questionable. Each such payee is set forth below, together with the amount of the total transfer to the payee and a description of the reason why we believe the payment may be questionable. The total amount of gross payments to these payees is $35.5 million and the net amount of payments is $28.7 million."
Under the heading "Payees and Bank Transferees Warranting Further Inquiry" there were then listed some 17 names, including "A.P. Black Limited" which is shown as having received net payments of $US 4,524,765. Commenting on this entity, the report continued
"A.P. Black Limited (UK and Jersey Isles): These are two affiliated United Kingdom and Jersey Isles entities. A.P. Black was a purported customer of The Company and its lead sales agent. We have not been able to determine the appropriateness of the payments made to either of the A.P. Black entities."
In addition, the report recommended further inquiry into payments amounting to $US 22.9 million made to "individuals and entities who made no monetary contributions to Delta Options/Delta Consultants" - that is, persons who did not appear to be customers. (Whatever the appropriateness or otherwise of the payments to the two Black companies, Mr. Brown asserts on affidavit that little long-term benefit has accrued from them to him or Mrs. Brown, the bulk having been employed in payments to other 'introducers' (some US$1,500,000), legal fees (US$1,350,000), States of Jersey taxation (US$375,000), ultimately worthless investments in various projects (US$565,000), and in the costs of running a London office for six years (US$600,000)).
(vii) If the legality of the Commission's decision to institute proceedings in the first place was to be challenged, whether on "the six red flags" grounds or otherwise, this could and should have been done by Mr. Black and the two Black companies long ago by way of judicial review (or, perhaps, an application to strike out as an abuse of process). As this Court pointed out in its judgment on Mrs. Black's strike-out application (paragraph 32), no move to do this was ever made.
(viii) In expanding the scope of complaint about the conduct of the Commission and the relief sought so far beyond the ambit of Crill Canavan's skeleton argument, Mr. and Mrs. Black took wholly illegitimate advantage of the adjournment granted to them by the Court between 12th October and 7th November this year.
45. In weighing up how my discretion on costs should be exercised on discontinuance of these proceedings, I therefore reject, for a start, any suggestion of impropriety on the part of the Commission.
46. On the other hand, a major consideration is the decision of Mr. Black and the two Black companies to withdraw from all further participation in the proceedings and co-operation with the Commission and the Court in mid-2003, and the maintenance of that stance until December 2004 in the case of Mr. Black and May 2005 in the case of the companies. Those properly joined as parties to litigation in this Court who take it upon themselves to act in such a way - particularly where matters as important as those at issue in the present proceedings are at stake - should not be surprised if their conduct counts heavily against them on an occasion such as the present.
47. Nor is it clear to what extent Mr. Black personally will suffer financially if no award of costs is made in his favour. Given his legally-aided status, much of his costs will almost certainly fall on others. In any event, his costs up to the point of his decision to take no further part in the proceedings may not have been extensive, if the nature and terms of his perfunctory original Answer and those of the two Black companies are anything to go by; and his costs since being granted leave to resume defence of the proceedings will have been incurred almost entirely in getting himself into the position in which he should have been in the autumn of 2003. For the most part, similar considerations apply to the two Black companies.
48. And, having regard to the other particular consideration suggested by Lord Bingham in City of Bradford, the present case appears to me to be one in which "the need to encourage public authorities to make and stand by honest, reasonable and apparently sound administrative decisions made in the public interest without fear of exposure to undue prejudice if the decision is successfully challenged" is a factor deserving of considerable weight.
49. All in all, the just and proper course appears to me to be to give leave for the Commission to discontinue without any further order as regards costs (other than as discussed in Section C above); in other words, all parties will bear their own costs save in so far as specific orders previously made otherwise provide.
Summary
50. To summarise, therefore,
(i) the Commission will have leave to discontinue proceedings on terms that all exiting costs orders will remain in force but that no other order for costs will be made (except as provided for in Section C of this judgment);
(ii) Mrs. Black's application for an order for costs in her favour following the striking out of the claim against her is refused;
(iii) the extent of the Commission's wasted costs arising from the failure of Mr. Black and the two Black companies to comply with the Court's orders of June 2003 and otherwise to participate in the proceedings the next 17 months or so, is to be referred to the Taxing Master for inquiry and report as indicated above; subject to such report, there will be a summary award of costs in the Commission's favour against Mr. Black, Blacks Jersey and Blacks London of £60,000 or such sum other as the Court thinks appropriate; as indicated earlier, the Commission is invited to propose detailed terms for giving effect to the intention of the Court.
51. As regards the costs of and incidental to the various applications with which this judgment is concerned, my provisional thinking (as to which all parties will have an opportunity to make written representations) is that in respect of (i) and (ii) above, there should be an award of costs in the Commission's favour; and that as regards (iii), the parties should each bear their own costs, given the novelty of the orders that I am making.
52. There will be liberty to all parties to apply if there are thought to be any loose ends not covered by this judgment.
53. The draft summons by Mr. and Mrs. Black making claims in relation to the funds said to be held by Abbey National on behalf of Blacks Jersey is not something that I am prepared to admit at this last-minute stage as properly having any bearing on the present hearing. If it is to be pursued it will have to be the subject of separate proceedings. There will, however, be an injunction with immediate effect against Mr. Black, Mrs. Black, Blacks Jersey and Blacks London requiring them to refrain from procuring, encouraging or assisting directly or indirectly the transfer or charging of, or other dealing with, any assets or other resources of Blacks Jersey pending further order of this Court.
