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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Leeds United -v- Admatch [2014] JRC 167 (05 September 2014) URL: http://www.bailii.org/je/cases/UR/2014/2014_167.html Cite as: [2014] JRC 167 |
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Before : |
Sir Michael Birt, Kt., Bailiff, sitting alone. |
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Between |
Leeds United Association Football Club Limited |
First Plaintiff |
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And |
Leeds United Football Club Limited (formerly Leeds United 2007 Limited) |
Second Plaintiff |
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And |
The Phone-In Trading post Limited (t/a Admatch) |
Defendant |
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And |
Robert Weston |
Party Convened |
Advocate S. M. J. Chiddicks for the Second Plaintiff.
The Defendant did not appear and was not represented.
Advocate W. A. F. Redgrave for Mr Weston.
judgment
the bailiff:
1. This is an application by the second plaintiff ("Leeds") that the party convened ("Mr Weston") personally, together with the defendant ("Admatch"), should pay the costs of the long-running litigation brought by the plaintiffs against Admatch which resulted in judgment in favour of Leeds being given against Admatch. Mr Weston was not a party to the litigation and accordingly the Court must consider the circumstances in which it is right to order a non-party to pay the costs of proceedings.
2. This litigation began as long ago as December 2005. There were innumerable interlocutory skirmishes resulting in several judgments which set out the background. I take the present summary largely from the judgment of 19th January, 2011, Leeds-v-Admatch [2011] JRC 016A.
3. The first plaintiff is an English company which once owned and operated Leeds United Football Club. Admatch is a Jersey company owned and controlled by Mr Weston. In August 2004 the first plaintiff and Admatch entered into an agreement for Admatch to act as agent for the first plaintiff for the purpose of selling match and season tickets by credit card. There is no dispute that Admatch received monies which it was duty bound to pay on in due course to the first plaintiff and that, at the date of termination of the agreement, Admatch had received £190,400 which it had not passed on to the first plaintiff.
4. In the course of 2005, control of the first plaintiff was acquired by interests associated with Mr Ken Bates. The present proceedings were issued by the first plaintiff in December 2005 seeking payment from Admatch of the sum £190,400. On 4th May, 2007, the first plaintiff went into administration, with net debts reported to be about £40 million. By an agreement of that date, the administrators transferred the assets of the first plaintiff (including the claim against Admatch) to Leeds and the shares in Leeds were sold to a consortium led by Mr Bates. Subsequently, the first plaintiff went into liquidation. On 26th July, 2007, Leeds was joined to the action. Amended particulars of claim (to take account of the addition of Leeds as second plaintiff) were filed on 31st July, 2007, and an amended answer was filed on 23rd August, 2007.
5. As already mentioned, Admatch has never disputed that it had received the sum of £190,400 which it was prima facie obliged to pay on to the first plaintiff. However, it contended that the agreement with the first plaintiff contained at Clause 9(f) a set off clause which entitled Admatch to set off from any monies it owed to the first plaintiff any sum owed by the first plaintiff (or by any parent, associate or subsidiary company of the first plaintiff) to Admatch (or to any parent, associate, or subsidiary company of Admatch). Admatch alleged in its answer that the sum of £1,439,734 was owed by the first plaintiff and/or an associated company of the first plaintiff to Cope Industrial Holdings Limited ("Cope"), which is a company in which Mr Weston has a controlling interest and is said therefore to be an associated company of Admatch. Admatch asserted that it was therefore entitled to set off the sum of £1,439,734 against the sum claimed of £190,400.
6. The case for the plaintiffs in relation to the set off provision has varied over the course of the litigation. In the original particulars of claim filed on 15th February, 2006, the first plaintiff expressly asserted that the terms of the agreement between the first plaintiff and Admatch were to be found in a document entitled 'Fourth Draft 10 Aug 04'. Admatch has always agreed with this assertion. The fourth draft contained at Clause 9(f) the set off clause described in the preceding paragraph. Admatch having raised the set off provision in its answer, the first plaintiff asserted in its reply that Clause 9(f) was not relevant because the debtor company in respect of the debt of £1,439,734 was not an associate of the first plaintiff, that the sum was in any event owed to Mr Levi (an associate of Mr Weston's and a fellow shareholder in Cope) rather than to Cope itself, and furthermore that Cope was not an associate of Admatch. These pleadings were repeated in the amended pleadings filed when Leeds was joined as second plaintiff.
7. On 1st December, 2008, the stance of the plaintiffs changed. In an amended reply, they conceded for the first time that Cope was an associated company of Admatch and that the debtor company in respect of the £1,439,734 was an associated company of the first plaintiff. The sole dispute at that stage therefore appeared to be whether that sum was owed to Cope (as Admatch contended) - in which event it could be set off against the £190,400 - or to Mr Levi (as Leeds contended), in which event it could not.
8. On 29th January, 2009, Admatch filed a re-amended answer which alleged that the assignment by the first plaintiff to Leeds of the benefit of the claim to £190,400 was invalid under Jersey law. Subsequently Leeds filed a re-amended reply in relation to the issue of the assignment.
9. The proceedings now became side-tracked by an issue as to security for costs. On the application of Admatch, I made certain orders requiring Leeds to provide security for costs but on 19th May, 2009, the Court of Appeal allowed Leeds' appeal against those orders and ordered Admatch to pay the costs both in the Royal Court and the Court of Appeal. Those costs were subsequently taxed in the sum of £63,529.79 on 19th January, 2010.
10. Shortly before that, on 17th December, 2009, Leeds had applied for leave to further amend the claim so as to allege that, contrary to what it had asserted hitherto, the agreement did not contain the set off provision in Clause 9(f) because the agreement between the parties was in fact not that contained in the fourth draft but was set out in a document entitled 'third draft' (which did not contain the set off provision). I granted leave for Leeds to re-amend its particulars of claim and made certain other consequential orders. Clearly this was a major change to the issues in the case.
11. On 19th January, 2011, I made two 'unless' orders against Admatch. The first related to filing a re-amended answer and a revised affidavit of discovery and the second related to payment of the outstanding costs concerning the security for costs issue in the sum of £63,529.79. I ordered that unless these two orders were complied with by 23rd February, 2011, Admatch's answer would be struck-out without further order and Leeds would be entitled to judgment. Leave to appeal against those orders was subsequently refused by the Court of Appeal on 22nd March, 2011.
12. Admatch did not comply with either of the unless orders and accordingly on 19th May, 2011, Leeds-v-Admatch [2011] JRC 101, I granted judgment in favour of Leeds against Admatch in the sum of £190,400 together with interest.
13. The matter of costs was left over and it is that aspect which is now, over two years later, brought back before me at the instance of Leeds.
14. I should add that there have been subsequent proceedings in connection with the enforcement of the judgment. The costs of those proceedings have all been dealt with but I shall mention them for completeness.
15. Mr Weston has asserted throughout the proceedings that Admatch is a dormant company with no assets, only liabilities to him or to other members of his group of companies. He said that Admatch had ceased trading in 1999 and, since then, its only activity had been for a few months in 2004/2005 when it undertook the activities with the first plaintiff which were the subject of the proceedings. He made clear that the sum of £190,400 was no longer held by Admatch. In an earlier judgment, Leeds United-v-Admatch [2009] JRC 023, the Court summarised what Mr Weston had said about the position in the following two passages:-
16. In the light of Mr Weston's assertions, the Court, following an application by Leeds, made an order on 15th August, 2011, Leeds-v-Admatch [2011] JRC 159, that a director of Admatch file an affidavit setting out specified financial information about Admatch so as to assist Leeds in enforcing its judgment by finding out where the £190,400 had gone.
17. Subsequently there were contempt proceedings in relation to compliance with this order. The Court found that Mr Weston was in contempt and subsequently fined him £5,000. However it did not accept the submissions of Leeds as to the extent of the alleged contempt (see Leeds-v-Admatch [2013] JRC 058).
18. As already indicated, the costs of the subsequent proceedings described in the preceding two paragraphs have been dealt with. Accordingly, what now comes before me is an application that Mr Weston (and Admatch) should be ordered to pay the costs of the proceedings from their inception in December 2005 until judgment was entered against Admatch on 19th May, 2011.
19. In referring to the costs of the proceedings, all parties agree that there must be excluded any part of the proceedings where the Court has already made an order to contrary effect. Thus in relation to some of the interlocutory hearings, Leeds were ordered to pay costs. Any such order will remain unaffected by any order made in the present proceedings. In other instances, the Court specifically ordered 'no order as to costs', so that each side would bear their own costs. Again, such an order will be unaffected. On other occasions, costs were specifically reserved. I have heard no argument on reserved matters in the present case and accordingly the costs order I am making today does not include any occasion where costs were reserved. In other cases, costs orders have already been made against Admatch. Those orders are also unaffected. In summary therefore, so far as Admatch is concerned, the costs will include all the remaining costs. To the extent that orders are sought that Mr Weston personally should pay the costs of the proceedings, they are sought in respect of any costs which Admatch are ordered to pay, whether at this hearing or on previous occasions.
20. It seems that Admatch has no assets and indeed is no longer in existence having been struck off. It was not represented before me. It was not disputed that an order for costs should be made against Admatch. The contest in this case has to been as to whether any costs order should be made against Mr Weston personally. This requires me to consider the principles which are applicable when the Court is considering whether to order a non-party to pay the costs of litigation.
21. The principles which are applicable in deciding whether to order a non-party to pay costs were established by the Court of Appeal in Planning and Environment Minister v Yates [2008] JLR 486. At paragraph 74, McNeill JA said this:-
22. The Court of Appeal elaborated upon (v) above in Leeds United Association Football Club Limited v Admatch [2011] JCA 110 at paragraph 4 as follows:-
I should add that the correct reference for Dymocks appears to be [2004] 1 WLR 2807.
23. Both counsel accepted that I should apply these principles. However Advocate Redgrave submitted that, even if I were to conclude that Mr Weston had been promoting the defence of this litigation by Admatch substantially for his own financial benefit (so that an order for costs could be made against him), there was a principle that the Court should be slow to do so if the non-party has not been placed on notice by the other party that it will be seeking an order for costs against him personally in the event of success. I was referred to a number of authorities in this respect.
24. In Myatt v National Coal Board (No 2) [2007] 4 All ER 1094, it was held that certain proceedings had been carried on essentially for the benefit of the solicitors to one of the parties, namely Ollerenshaws. However the point was raised that they had not been warned that an application for a personal costs order against them might be made. In that respect Dyson LJ in the Court of Appeal said the following at paragraphs [13]-[15]:-
25. In Systemcare (UK) Limited v Services Design Technology [2011] EWCA Civ 546 Lewison J, giving the judgment of the Court of Appeal said this at paragraph 44:-
26. In that case and also in Gatnom Capital v Sanders [2011] EWHC 3716 (Ch), the Court found that a warning would have made no difference and therefore the failure to give one was not a weighty factor against granting the order for non-party costs.
27. It is conceded by Leeds that the first occasion on which any indication was given that an order for costs might be sought against Mr Weston personally was in a notice of appeal dated 9th July, 2010, against an order of the Royal Court on 10th June, 2010, where, in the final paragraph of a 16 page document, the following was stated:-
28. In fact, nothing came of that because the application by Leeds for leave to appeal was unsuccessful; but it is said that this was sufficient to put Mr Weston on notice of the risk as to a personal order for costs.
29. In the circumstances, it seems to me that this matter is best considered under three headings:-
(i) Apart from (ii) is this a case in which it is in principle right to make an order for costs against Mr Weston;
(ii) If so, should the Court only make such an order in respect of costs after 9th July, 2010, or some other date or should it otherwise take into account the failure by Leeds to give a warning before then.
(iii) Regardless of (ii) should the Court make some reduction in the costs which would otherwise be ordered to reflect unnecessary costs incurred by the plaintiffs and/or orders for costs made in favour of Admatch which were incapable of enforcement by reason of the decision of the Court of Appeal in relation to costs incurred by an unrepresented corporate entity.
I propose to take each of these in turn.
30. Advocate Redgrave accepted that a personal costs order had already been made against Mr Weston on two occasions in connection with this litigation. On 9th June, 2011, [2011] JCA 110, the Court of Appeal made such an order in respect of the costs of Admatch's unsuccessful application for leave to appeal against the decision of the Royal Court to make the unless orders on 19th January, 2011. The Court of Appeal said this at paragraph 6 of its judgment:-
31. The second occasion was in relation to the application by Leeds post judgment for an order that Admatch and its directors provide certain financial information (see para 16 above). In a judgment dated 7th November 2011, Leeds-v-Admatch [2011] JRC 217A, I ordered that Mr Weston personally pay the costs of that application. My reasons were summarised at paragraphs 11 and 12 of that judgment as follows:-
32. Advocate Redgrave submitted that these findings were made in the context of two specific applications. In the first case, it was an application for leave to appeal against an unless order and in the second case, it was in connection with an application to obtain financial information about Admatch post judgment. One could understand why the Court in those two cases had concluded that that particular matter was conducted for the benefit of Mr Weston rather than for the benefit of Admatch. But, he submitted, that said nothing about the defence of the proceedings as a whole.
33. He submitted that it was reasonable for Mr Weston, acting in Admatch's interest, to procure that Admatch defend what it considered was an invalid claim because of the right of set-off. Admatch had other creditors albeit that, essentially, they comprised Mr Weston and/or his other companies. Admatch had a legitimate interest in not being placed into bankruptcy proceedings on the strength of a claim which was not valid. Furthermore Admatch had a legitimate interest in preserving its relationship with bankers and providers of credit card facilities.
34. Furthermore, he submitted, the level of costs claimed was oppressive. He pointed out that, in their skeleton argument, Leeds had stated that their total costs (with both their previous advocates and Sinels) amounted to £1,133,765; all this for a claim of £190,400. These costs had been incurred, he said, partly because of changes of tack by the plaintiffs. Thus they had initially relied on the fourth draft and accepted the right of set-off but had simply asserted that it was not applicable because the debtor in relation to the sum of £1,439,734 was not an associated company of the first plaintiff and Cope was not an associated company of Mr Weston. They had subsequently abandoned these two contentions in the face of the evidence produced by Mr Weston; so the issue was then confined to whether the sum of £1,439,734 was owed to Cope or Mr Levi personally. There had then been a complete change of tack in December 2009 whereby Leeds had disowned the fourth draft and asserted that the agreement was contained in the third draft, with the consequence that, they asserted, there was no right of set-off. This had completely changed the nature of the case.
35. Advocate Redgrave also pointed out that, unlike a number of the cases referred to where costs orders against non-parties were made in England, there had been no proven dishonesty on Mr Weston's part. The Court had never adjudicated upon whether there was a right of set off as set out in the fourth draft and whether, if it existed, that right of set-off was established on the facts. The case had ended without a decision on the merits because Admatch had failed to comply with the unless orders.
36. I have reminded myself that an order for costs against a non-party is generally to be regarded as an exceptional order. This is particularly so in the context of making an order against a director of a company. Thus Lloyd LJ said this at paragraphs 61 and 62 of the Systemcare case:-
37. The earlier passage of Millett LJ referred to at [61] in the preceding passage is to be found at [29] of the judgment of Lewison J in Systemcare which reads as follows:-
38. Nevertheless, as made clear in Dymocks and by the Court of Appeal in the present proceedings in its judgment of 9th June, 2011, the real issue is whether Mr Weston has promoted the defence of these proceedings for his own benefit or whether he can more realistically be regarded as acting in the interests of Admatch (and more especially its shareholders and creditors) than his own interests.
39. I have carefully considered Advocate Redgrave's submissions and reminded myself of the exceptional nature of an order for personal costs against a non-party. Nevertheless, I see no reason to differ from the conclusion that I reached (albeit in a different context) at paragraph 43(i) of my judgment dated 19th January, 2011, [2011] JRC 016A, which was endorsed by the Court of Appeal in its judgment of 9th June, 2011. The fact is that Admatch has been a dormant company since 1999 save for the limited activity which it undertook with the first plaintiff and which gave rise to the present proceedings. It is accepted by Mr Weston that the £190,400 which is otherwise owed to Leeds as assignee was not retained by Admatch but was disbursed for the benefit of him and/or one or more of his companies. Admatch has no assets other than (conceivably) a claim against Mr Weston or his companies for return of the £190,400. In my judgment, the sole interest in defending the case has at all times lain with Mr Weston and one or more of his other companies. The plaintiffs have made it clear that, in the event of success against Admatch, they would seek to recover the sum due from Mr Weston personally and/or some of his companies. The financial interest in defending the case lay with Mr Weston in that, if Admatch were successful in its defence, there could be no grounds for anyone coming after him or his companies for the £190,400. It made no difference to Admatch as such whether it succeeded in his defence or not because it had no assets to be taken and had no ongoing business to defend.
40. It follows that I find that Mr Weston has promoted the defence of these proceedings for his own benefit rather than in the interests of Admatch and that accordingly in principle (subject to (ii) and (iii) below), given that the proceedings ended in success for Leeds, it would be just and reasonable to order that Mr Weston pay Leeds' costs in connection with the proceedings (save to the extent, as discussed at paragraph 19 above, that alternative orders have already been made).
41. Advocate Redgrave argued that, even if I were to be against him on whether the proceedings were defended in Mr Weston's interests rather than those of Admatch, in the light of the authorities referred to at paragraphs 23-26 above, it would be wrong to order Mr Weston to pay any costs prior to 9th July, 2010, at the very earliest because this was the first occasion on which he was given any indication that he might be personally liable for costs. Even then, it consisted of one paragraph in a lengthy notice of appeal which merely asked that he be ordered to pay the costs of that appeal. There was no reference to his being at risk in relation to the costs of the litigation generally, whether past or future. He submitted that it was only after the decision of the Court of Appeal on 9th June, 2011, that it became clear to Mr Weston that he might be at risk as to costs if he continued to represent Admatch. Accordingly, that would be a more appropriate date from which to order costs against Mr Weston. He further pointed out that Leeds (and the first plaintiff) had known from an early stage that Admatch was a company with no assets. Mr Weston had repeatedly made this clear. It was therefore very unreasonable for Leeds not to have stated at an early stage that, if successful in the litigation, they would be seeking a costs order against Mr Weston. Mr Weston had been allowed to proceed, as a non-lawyer and unrepresented person, to cause Admatch to mount a defence which it (through Mr Weston) believed to be genuine in ignorance of the fact that he might be liable for costs.
42. Advocate Redgrave conceded that, as recorded in the judgment of 13th February, 2009, (see para 15 above), Mr Weston had accepted that, if Admatch lost at trial, he or one of his companies would have to put funds into Admatch so that it could pay Leeds and he accepted that, if Admatch did not pay, Leeds might seek personal relief against him as a director. However, this was in relation to the liability in dispute and not in relation to costs. The statement was also made in the context of a finding against Admatch on the merits after a trial in which the evidence had been heard. That had not in fact occurred.
43. Advocate Chiddicks emphasised that the purpose of a warning was to give a third party funder an opportunity to consider whether or not to continue to support the litigation. It was important therefore in such cases to consider whether the evidence suggested that, if a warning had been given, the third party funder would have behaved differently. He referred in particular to the observations of Lewison J in Systemcare and Newey J in Gatnom Capital (see paras 25 and 26 above). He submitted that the evidence showed that a warning would have made no difference. After 9th July, 2010, Mr Weston continued to cause Admatch to defend the case and continued to represent it. Thus he appeared for Admatch before the Royal Court at the hearing where the Court made the unless orders in January 2011, he conducted the application for leave to appeal to the Court of Appeal against those orders and he appeared for Admatch at the hearing which led to judgment in default being given on 19th May, 2011. Furthermore, even after the decision of the Court of Appeal on 9th June, 2011, to order him to pay the costs in relation to Admatch's application to appeal against the unless orders, he represented Admatch at the hearing in August 2011 which led to the orders for financial disclosure being made against Admatch.
44. In response, Advocate Redgrave submitted that it was not reasonable to expect Mr Weston to have understood from the short paragraph in the notice of appeal of 9th July, 2010, (which dealt only with the costs of the appeal) that he was at risk for all the costs of the proceedings as a whole. He did not clearly understand the position until the decision of the Court of Appeal on 9th June, 2011, ordering him personally to pay the costs of the application for leave to appeal. This was shown by the fact that, as appeared from the transcript of the hearing on 1st August, 2011, (which gave rise to the judgment of 15th August, 2011,) he began by saying that he did not wish to represent Admatch because of the risk of a personal costs order following the decision of the Court of Appeal. It was true that he had in fact gone on rather reluctantly to make submissions on behalf of Admatch but it was clear that the matter was very much in his mind. The hearing in question was a discrete matter concerning post judgment enforcement. It was impossible to know therefore whether, if a proper warning had been given much earlier in the proceedings, he would have ceased to cause Admatch to defend the proceedings.
45. Even if, submitted Advocate Redgrave, the Court found that Mr Weston would have nevertheless carried on, that did not mean that he should necessarily be ordered to pay the costs of the proceedings from the beginning. For example, in the case of Myatt the Court of Appeal concluded (at [13]) that it was unlikely that, if they had received the appropriate warning, the solicitors would have abandoned the appeal which they were funding. However, the Court went on to emphasise that what was important was that they were denied the opportunity of abandoning the appeal. Taking that and other matters into account, the solicitors were ordered to pay only 50% of the defendant's costs of the appeal.
46. As the cases make clear, it is not a pre-condition of a costs order against a non-party that a warning be given. As stated by Dyson LJ in Myatt at [13], a failure to do so is merely a factor to be taken into account. Nevertheless, as made clear at [14] in Myatt, it is desirable that such a warning be given. In my judgment, it is unfortunate that the plaintiffs did not warn Mr Weston in unambiguous terms that he was at risk as to costs. The fact that Admatch was a dormant company with no apparent assets was known to them from an early stage. The paragraph in the notice of appeal of 9th July, 2010, did not amount to such an unambiguous warning and Mr Weston may not have appreciated its significance.
47. As to whether, if he had received such a warning, he would have ceased to promote Admatch's defence of the action, it is difficult to know. On the one hand, he continued to represent Admatch even after the decision of the Court of Appeal in June 2011 by representing it at the August 2011 hearing; on the other hand, it is clear from the transcript of that hearing that he was troubled by the decision of the Court of Appeal and did not wish to place himself at risk of a personal costs order. He proceeded somewhat reluctantly. On balance, given that he did in fact continue, I find that he would probably have continued to promote Admatch's defence even if he had been warned unambiguously at a much earlier stage. However, I also consider that there is a possibility that, had he received such a warning, he would have ceased to promote the defence. Because of the failure to give a warning, he was denied the opportunity of making that choice.
48. Ultimately, as pointed out by the Court of Appeal in Reg's Skips at para 74(iv), the guiding consideration must be reason and justice. Given my finding at para 47 that Mr Weston would probably have continued to promote Admatch's defence even if he had been warned, I do not think it would be fair to Leeds to order costs against Mr Weston only from July 2010 or June 2011. Both dates came comparatively late in the case. As against that, the fact remains that the failure to give a warning may have prejudiced Mr Weston. I consider the fairest course is to follow the approach of the English Court of Appeal in Myatt where, despite finding that it was unlikely that the solicitors would have abandoned the appeal they were funding even if they had received the appropriate warning, the Court nevertheless went on to make a reduction in the percentage of costs which the solicitors were ordered to pay to reflect the fact that they were denied the opportunity of deciding whether to abandon the appeal. I think that in this case, the best approach is to make a reduction in the percentage of costs payable by Mr Weston to reflect the possibility that, had he been given an appropriate warning, he might have acted differently. As to the level of percentage, I shall reach a conclusion on that after considering question (iii).
49. Advocate Redgrave pointed to two matters which, quite apart from any reduction because of the lack of a warning as per paragraph 48, should lead to a reduction in the costs which would otherwise be ordered. First, as pointed out earlier, Leeds' case in relation to these proceedings has changed substantially on at least two occasions. Having initially denied that the debtor company in relation to the £1,439,734 was an associate of the first plaintiff or that Cope was an associate of Admatch, it subsequently accepted that neither of these denials was correct. Secondly, having accepted from December 2005 until December 2009 that there was a set-off clause and that therefore the case turned on whether the terms of the set-off clause were met or not, Leeds then amended its claim to assert that in fact the agreement between the first plaintiff and Admatch did not even contain a set-off provision, because the agreement was contained in the third draft rather than the fourth draft. In my judgment, it would be unfair to make Mr Weston pay for all of the costs during this period when some of them were incurred unnecessarily on the part of Leeds. However, many of the costs would have been incurred in any event.
50. Secondly, Advocate Redgrave points out that on three occasions costs orders were made in favour of Admatch against one or other of the plaintiffs in respect of particular hearings. In its judgment of 19th May, 2009, (reported at [2009] JLR 186), dealing with the issue of security for costs, the Court of Appeal in passing expressed the view that Admatch, even if it could properly be treated as a litigant in person (which was unlikely) had not incurred any actual pecuniary loss so as to entitle it to recover any costs. The upshot was that Admatch has not been able to recover any costs orders made in its favour against either of the plaintiffs. It seems to me only fair that, if Leeds now wish to look through Admatch and obtain a personal costs order against Mr Weston, it is right that some allowance should be made for the fact that they were ordered to pay costs but did not in fact have to pay these because, as the Court of Appeal pointed out, the litigant was Admatch rather than Mr Weston personally. Interestingly, following the Court of Appeal's decision, the Royal Court Rules were amended so that in future, a company such as Admatch would be able to recover costs as a litigant in person, thereby curing the perceived unfairness resulting from the Court of Appeal's decision. It has to be said that the amounts involved here are in context rather minor. Even on Mr Weston's own estimate, his total costs in relation to these three matters comes to £31,500. Given the observations of the Court of Appeal in its 2009 decision criticising the level of costs claimed by Admatch, I have no doubt that much less than this sum should be allowed for.
51. Taking into account the fact that Mr Weston was not given an unambiguous warning of his potential liability early on, that Leeds litigated for a number of years on a basis which they subsequently resiled from and that some modest costs orders were made in Admatch's favour which were not capable of recovery, taking a broad view I consider that a fair outcome is that I should make a reduction of one third in the costs that I would otherwise have ordered against Mr Weston.
52. Advocate Chiddicks argued that costs should be on the indemnity basis. Advocate Redgrave contended to the contrary, namely that, to the extent that any costs orders are made against Admatch or Mr Weston, they should be on the standard basis.
53. The principles upon which the Court will make an award of indemnity costs are well established. They were conveniently summarised by William Bailhache DB in Dalemont v Senatarov [2013] JRC 209 at paras 9 and 10 as follows:-
54. Advocate Chiddicks also referred me to the decision itself in Dalemont. In that case the Deputy Bailiff held that the entire defence had been based upon a lie, namely that the assets in dispute were owned by the various entities in the corporate structure in question and were accordingly not beneficially owned by Mr Senatarov. On the first day of the trial, Mr Senatarov conceded that this was untrue and that the assets were held by the various entities as nominee for him so that he was in truth the beneficial owner. The Deputy Bailiff summarised the position at paragraph 21 of his judgment as follows:-
55. Advocate Chiddicks submitted that that was also the position in this case. Mr Weston knew that Admatch was not entitled to the set off because the agreement was contained in the third draft rather than the fourth draft and furthermore that the monies had been paid away to Mr Weston or one or more of his other companies. The defence was throughout based upon a lie. Accordingly, said Advocate Chiddicks, the Court should follow the approach of Dalemont and make an award of indemnity costs solely on this basis.
56. The difficulty is that, unlike in Dalemont, I am not in a position to find that Admatch's defence was based upon a lie. In Dalemont, the defendant conceded this on the first day of the trial; and accordingly the Deputy Bailiff was in a position to proceed on that basis. That is not the case here. There has been no trial on the merits because judgment was taken in default following the failure to comply with the unless orders. Accordingly, there has been no finding as to whether the agreement was that contained in the third draft or the fourth draft and therefore whether there was or was not a set-off clause and, if so, whether Admatch was able to rely upon it on the facts. It appeared at one stage that these issues would be resolved in the subsequent proceedings which Leeds instituted against Mr Weston and Mr Levi personally and which were subsequently transferred to the English courts following the decision of this Court that England was the appropriate forum for those proceedings. However, Leeds failed to comply with an order for security for costs in those English proceedings with the result that they have been dismissed with an order for costs against Leeds. It follows that, not having heard any evidence and there having been no trial on the merits, I am not in a position to make a finding that the defence concerning the set-off was based upon a lie. I simply do not know. As to the whereabouts of the £190,400, it is true that Mr Weston appears to have given somewhat misleading information to Leeds prior to the commencement of the proceedings but, after the commencement of the proceedings, he made it clear that Admatch was a dormant company with no assets and that the monies had been applied elsewhere within his group. It follows that I do not consider that I can make an award of indemnity costs on the ground that the whole defence was a lie.
57. Advocate Chiddicks next pointed out that Mr Weston used Admatch as a mechanism designed to defeat the legitimate claims of Leeds. I do not accept that this assertion is made out. Admatch was the company with which the first plaintiff chose to enter into an agreement. It is hard to see that there could have been any intention at that stage to defeat the legitimate claims of Leeds because no dispute had arisen. The fact that subsequently, Mr Weston conducted the defence for his benefit rather than that of Admatch is a reason for ordering Mr Weston to pay costs personally but not of itself a reason to order indemnity costs. I respectfully agree with the way in which the Court of Appeal put it in its judgment of 9th June, 2011, (when awarding the costs of the application of the leave to appeal against Mr Weston personally but declining to do so on an indemnity basis) as follows:-
58. Advocate Chiddicks further submitted that the conduct of the proceedings generally by Admatch and/or Mr Weston was unreasonable and an abuse of process as well as being deceitful. He referred me to paragraphs 27-28 of his skeleton and specifically to paragraphs 28(k)-28(o). I have carefully considered the submissions contained in the skeleton but I do not consider that Leeds has established that this case is sufficiently out of the ordinary to justify indemnity costs. It follows that the costs against Mr Weston (and Admatch) are awarded on the standard basis, to be taxed if not agreed.
59. So far as Admatch is concerned, as set out at para 19, the costs with which I am concerned are those incurred in these proceedings before the Royal Court except where Leeds has been ordered to pay costs, where the Court has specifically ordered 'no order for costs', where costs have been reserved or where a costs order has already been made against Admatch. For convenience I shall refer to these costs as the 'unawarded costs'.
60. Although technically the arguments referred to at para 49 could be said to point to a deduction in any order for costs against Admatch as well as Mr Weston, no one has appeared for Admatch to make this point, it has no assets and has in any event ceased to exist. Accordingly the point would appear to be academic. I therefore propose to ignore it and I order Admatch to pay the unawarded costs on the standard basis. Thus Admatch has been ordered in total to pay the unawarded costs plus those costs where orders have previously been made against it. I shall refer to the aggregate of these two sums as the 'total Admatch costs'.
61. So far as Mr Weston is concerned, I order that he pay two thirds of the total Admatch costs subject only to the proviso that these must be costs incurred in the Royal Court. At paragraph 45(b) of his skeleton argument, Advocate Chiddicks submits that any order made against Mr Weston personally should include the taxed costs of £63,529.79 which Admatch was ordered to pay in connection with security for costs issue. To the extent that this sum represents costs incurred at first instance before the Royal Court, Mr Weston must pay two thirds of them. However, to the extent that this sum represents costs incurred before the Court of Appeal, I do not consider that I have any jurisdiction to order Mr Weston to pay personally those costs incurred in connection with an appeal. Only the Court of Appeal has power to make such an order and if Leeds wished to obtain an order for personal costs against Mr Weston in respect of that appeal, (or any other proceedings before the Court of Appeal), they should have requested the Court of Appeal to make such an order at the time.
62. As already stated, in December 2010, Leeds commenced separate proceedings in this Court against Mr Weston and Mr Levi seeking payment of the £190,400 from them ("the Jersey Levi and Weston proceedings"). On 28th September, 2011, this Court stayed those proceedings on the grounds that England was the more appropriate forum. A subsequent appeal by Leeds against that decision was dismissed. Leeds was ordered to pay the costs of the forum hearing both at first instance and on appeal.
63. Leeds duly brought proceedings in the English High Court against Mr Weston and Mr Levi but these came to an end on 27th March, 2014, when Leeds failed to comply with an unless order requiring Leeds to provide security for costs. The English Court made an order that Leeds should pay the costs of Mr Weston and Mr Levi in connection with the English proceedings.
64. On 21st July, 2014, I ordered Leeds to pay the remainder of the costs of Mr Weston and Mr Levi in connection with the Jersey Levi and Weston proceedings (i.e. so far as not already dealt with in relation to the forum application).
65. The upshot is that, as a result of my decision in the present proceedings, there are costs orders going in opposite directions. Leeds has to pay the costs of Mr Weston in connection with the Jersey Levi and Weston proceedings (including the forum application and its appeal) and of the English proceedings. In the contempt proceedings referred to at paragraph 17 above ("the Jersey contempt proceedings") Mr Weston was ordered to pay some of the costs to Leeds and Leeds was in turn ordered to pay certain other costs in those proceedings to Mr Weston. Conversely, Mr Weston now has to pay two thirds of the total Admatch costs in relation to the original proceedings before this Court. My provisional view is that it would be wrong for either Leeds or Mr Weston to have to pay a gross sum to the other before the counter-balancing costs have been established. In other words, I consider that one party should pay to the other the net sum owing by way of difference between the awards going in each direction. I emphasise that this is a provisional view and I am willing to hear the parties upon formal delivery of this judgment as to whether it is practical or desirable to make an order in this respect and certainly one must make sure that there is no incentive on the party which believes that it will be the net paying party to delay in taxing any costs.
66. At the conclusion of the hearing I directed that Mr Weston should provide a list of the occasions when costs orders had been made in favour of Admatch and that Leeds should thereafter have seven days to comment on such a list.
67. In response to that direction, Advocate Redgrave filed not only the required list and a short 3½ page memorandum from him but also a number of documents collated or specifically prepared by Mr Weston on the point. As Advocate Redgrave accepted in his covering memo, the documents submitted went beyond that which the Court had directed; but he emphasised the importance of the issue to Mr Weston and Mr Weston's desire that all material which he (Mr Weston) considered to be relevant be drawn to my attention.
68. Advocate Chiddicks responded that the material filed went well beyond that which had been envisaged and that the Court should not admit it. He referred me to the observations of William Bailhache, Deputy Bailiff at paragraphs 51 and 52 of Nautech v CSS Limited [2014] JRC 071 where he said:-
I agree with the Deputy Bailiff's comments.
69. The material submitted went well beyond that which the Court had asked for and, to the extent that it did, I have ignored it. I should add for the sake of clarity that I did look at the material upon receipt but concluded that most of it either simply repeated points which Advocate Redgrave had already made entirely satisfactorily at the hearing or it was irrelevant material which did not assist in resolving the matter. One point is worthy of particular mention. Mr Weston emphasises in the material that, as a layman, he on a number of occasions did not ask for a costs order which a lawyer might have asked for or did not oppose the making of a costs order suggested by others in circumstances where a lawyer might have done so. I have to say that this point does not assist Mr Weston in any respect. Throughout the proceedings, the Court repeatedly advised him to procure that Admatch should be legally represented so that the company could do itself justice; but he resolutely refused to do so. He cannot now pray in aid that refusal in order to help him avoid the consequences of such costs orders.
