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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Hunters Investments Limited v Crill and Ors 17-May-2021 [2021] JRC 139 (17 May 2021) URL: http://www.bailii.org/je/cases/UR/2021/2021_139.html Cite as: [2021] JRC 139 |
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Before : |
Advocate Adam Justin Clarke, Judicial Greffier |
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Between |
Hunters Investments Limited (previously called Crill Canavan Investments Limited) |
First Plaintiff |
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And |
Geoffrey Crill |
First Defendant |
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Simon Young |
Second Defendant |
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Peter Machon |
Third Defendant |
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Sanne Holdings Limited |
Fourth Defendant |
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Sanne Fiduciary Services Limited (previously called Sanne Trust Company Limited) |
Second Party Cited |
Advocate H. Sharp for the Plaintiff.
Advocate W. A. F. Redgrave for the First Defendant.
Advocate J. D. Kelleher for the Second to Fifth Defendants
CONTENTS
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Paras |
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1. |
Introduction |
1-4 |
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2. |
HIL's submissions |
5-7 |
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3. |
Second to Fifth Defendants' submissions |
8-14 |
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4. |
First Defendant's submissions |
15-16 |
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5. |
HIL's Reply |
17-18 |
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6. |
Decision and Reasons |
19-20 |
judgment
the judicial greffier:
1. On the 20th April 2021, I issued directions in respect of a number of summonses filed by the parties in the above matter and also by the parties in the matter of Banks v Sanne Holdings Limited and another (2019/165). As both claims shared the same or similar factual backgrounds and a relief sought in one of the summonses was for the potential consolidation of these actions, the matters were heard at the same time by consent.
2. In the days preceding the hearing, the parties reached agreement on a number of the proposed directions. In respect to matter 2021/066, the issues that remained in dispute at the time of the directions hearings were:
(i) whether or not Hunter Investment Limited (HIL) should be allowed to bring an application for summary judgment until after the later of the hearing under RCR 6/11(1) of the Royal Court Rules 2004, as amended ("RCR") and the defendants have filed their answers;
(ii) whether there should be a preliminary hearing to consider whether the summary judgment application should be allowed to proceed at all (including inter alia whether "there is no other compelling reason" why the issues raised in the application(s) should not be heard at trial under RCR 7/1(b) and (if the application is allowed to proceed) to give directions for the sequential exchange of evidence and written submission, and
(iii) in the event that HIL issues a summons for summary judgment in respect of materially the same matters as the summons for summary judgment already issued in 2019/165, then it is the intention that both applications for summary judgment be determined by the Royal Court at the same time.
3. At the hearing, I heard submissions from Advocate Sharp representing HIL. I also heard representations from Advocate Kelleher representing the second to fifth defendants (who had also filed a skeleton argument in support of their position) and from Advocate Redgrave who represented the first defendant.
4. One of the summonses issued by HIL sought the removal of Carey Olsen as legal counsel for the second to fifth defendants on the grounds that their continued involvement in matter 2021/066 amounted to an unavoidable conflict of interest. Given that this application for removal needed to be heard as soon as reasonably practical and that the outcome would have a considerable impact upon the procedural timetable for the actions going forward and further that directions for the hearing of that application needed to be provided urgently, at the conclusion of submissions I gave an ex tempore judgment. The second to fifth defendants have subsequently issued an appeal against my direction declining to order a preliminary hearing (listed as matter (ii) in paragraph 2 above). I am therefore providing this judgment on that specific issue to assist the parties and the Royal Court when considering the appeal.
5. Advocate Sharp relied upon the substantial correspondence between the parties. He explained that as a result of the discovery process in 2019/165, his client had reviewed approximately 9,000 documents. Out of that review he had written a lengthy (69 page) Letter before Action dated 30th October 2020 on behalf of HIL. A considerably shorter response was received from Carey Olsen dated 12th November 2020. Advocate Sharp was critical of this response, characterising it as indicative of defendants who were unable to assert a defence to the allegations advanced in the Letter before Action.
6. On the 8th January 2021, Advocate Sharp wrote, again at length, in a 17 page letter to Advocate Kelleher setting out his justifications for summary judgment on the misstating of the Sanne Holdings Limited 2010 accounts (something which had been granted in the 2019/165 action by judgment dated 10th December 2019 in Banks v Sanne Holdings Limited and Anor [2019] JRC 222A). He submitted that the defendants had failed to substantively reply to either the Letter before Action or the 8th January 2021 letter. There had been two clear opportunities to answer the assertions made and the defendants had failed to seize either. In his submission the application for summary judgment was reasonable and supported by the evidence.
7. Advocate Sharp was clear that there was no need or expectation for a preliminary hearing on the issue of summary judgment. He took the court to RCR 7/1 and noted that the rules made no provision for any filtering or screening application. On the contrary, the rules did provide for the grounds for a successful application, the procedure to be followed, the evidence that may be filed in respect of such an application and the orders that the court is entitled to make. Advocate Sharp submitted there was no reference within those rules to a two-stage process where one had to convince the court of the validity of the application before the substantive application would be heard.
8. Advocate Kelleher commenced his submissions to the court on the need for a preliminary hearing for the summary judgment application by conceding that there was no caselaw in support of his assertion that the court should impose this additional threshold hearing. Nevertheless, his position was that a preliminary hearing would actually save costs and time as the preliminary hearing would act as a short cut to a resolution of the matters in dispute.
9. Advocate Kelleher's submissions were threefold. First, he submitted that, given that the thrust of the allegations in the Letter before Action related to allegations of Dol, fraud and whether or not actions by the defendants had been undertaken deliberately, the credibility of the defendants would be under examination in the summary judgment application. The appropriate means of making an assessment of that credibility should be by way of oral evidence (subject to cross examination) at trial.
10. Whilst he accepted that there was no longer an outright prohibition against summary judgment in cases alleging fraud, he drew the court's attention to the warnings that were amplified in the case of The Federal Republic of Nigeria v Santolina Investment Corporation and Others [2007] EWHC 437. At paragraphs 3 and 4 of the judgment, Mr Justice Lewison sets out the test that applies to summary judgment under part 24 of the CPR and the guidance that the Courts in England and Wales has established. The Court was taken specifically to the following sub-paragraphs of paragraph 4:
11. Secondly, the Sanne defendants asserted that, as they had previously been obliged to respond to an application for summary judgment from Mr Banks in 2019/165 in relation to accounting issues, they should not be placed in a position of having to respond to successive piecemeal applications on this specific issue or any other facts in issue. To allow this to occur would be to contrary to the intention of the Overriding Objective. In support of this position, Advocate Kelleher submitted that this was especially the case when the evidence to be presented by the Sanne defendants in response to the proposed summary judgment application would be predominantly the same evidence that they would be utilising at trial. There was a great deal of evidence to be covered in the summary judgment application and it would be a poor use of time and resources for it all to be repeated at the subsequent trial.
12. Third, Advocate Kelleher argued that a further application for summary judgment on whether or not the accounting error was deliberate or innocent would not dispose of (or even significantly reduce) the parties costs at trial. He reminded the court of the passage at paragraph 42 of the 10th December 2019 judgment ([2019] JRC 222A) where, having granted summary judgment in limited terms, the court said:
13. Advocate Kelleher correctly acknowledged that under the RCR, the plaintiff is entitled to make an application for summary judgment. However, he also asserted that there was nothing in the same rules to prevent the court from making directions for a preliminary assessment of the validity of the application. Indeed, to do so would be consistent with the spirit of the Overriding Objective. He specifically took the court to RCR 1/6(3) and (5) which he submitted demanded active case management and then to RCR 1/6(h) "considering whether the likely benefits of taking a particular step justify the costs of taking it". In Advocate Kelleher's submission, the obligations placed upon the court for active case management must be able to override the rights of the parties under RCR 7 to apply for summary judgment when the circumstances demand. In his view, those circumstances existed here.
14. In conclusion, a preliminary hearing would allow an assessment (of whether the application should be allowed to be brought at all) to be made well ahead of the actual summary judgment hearing (if it were allowed to be heard) thereby potentially avoiding the expense of preparing for the substantive hearing. It would also grant an opportunity for the court to issue directions on the orderly exchange of evidence by the parties for any such summary judgment hearing that was allowed to proceed.
15. Advocate Redgrave briefly addressed the court in general support of the position taken by Advocate Kelleher's clients. He took the court to RCR 7/1(2) which provides that an application for summary judgment may be ordered by the court of its own volition. Advocate Redgrave submitted that this was support for the contention that the court was not bound to simply allow matters to be driven by the parties but could take matters into its own hands. If that were the case, then surely the court must have the authority to order a preliminary hearing to determine the merit of a further summary judgment application where its value and purpose are deeply questionable.
16. In addition, as this will be an application which seeks judgment on the issue of the deliberate nature of the actions undertaken by the defendants, it will clearly require a consideration of the point of view and state of mind of the individual defendants. Advocate Redgrave made clear that his client would have a great deal to say about that and the application would be hotly contested. In his submission, this all justified the need for a preliminary hearing.
17. In reply, Advocate Sharp was not impressed by the argument that the costs of the hearing would be high. He stated that the costs of the previous summary judgment had been driven up by the failure of the defendants in action 2019/165 to concede the points in contention in the application until the eleventh hour or even during the hearing. If they avoided approaching any summary judgment application in action 2021/066 in a similar way, then costs need not be a determining factor.
18. Advocate Sharp's position remained that his client was entitled to bring a summary judgment application in accordance with the RCR. There was nothing in the rules that provided for the preliminary assessment of the merits of a claim. Unless the application was bad on its face, the usual procedures should apply, the application should be heard and the court should apply the usual principles in reaching a decision.
19. During the ex tempore judgment, I expressed the view that the court was uncomfortable with the notion of a preliminary hearing on the issue of the summary judgment application. I also expressed the view that in light of the fact that any such application was likely to be strongly contested and given the views that had been aired during the directions hearing on this topic, unsuccessful parties in any subsequent summary judgment application can expect the court to take a strong view on the issue of the costs incurred in the application.
20. I made those observations for the following reasons:
(i) First, whilst I acknowledged the duties imposed upon the court to take a proactive stance in case management, I did not consider that RCR 1/6 (and particularly RCR 1/6(6)(h)) was intended to encourage the court to add further layers of screening to any application brought in accordance with the existing RCR. To suggest that it did would be to invite such applications in regard to all and any contested applications brought to Royal Court. It cannot be appropriate that any recipient of a summons will be entitled to have what amounts to two bites at the cherry in defeating the application; one where the efficacy of the application is determined by the court and then a second when the actual application is substantively heard.
(ii) In my estimation, to accede to the request for a preliminary hearing would be akin to encouraging the practice of determining cases on an issue by issue basis. I therefore had regard to the court's comments in Corbin v Dorynek and Flath [2020] JRC 031 at paragraph 57:
(iii) Second, to give provenance to a principle that the court should or could screen applications via a preliminary hearing process ignores the very real possibility that the issues that will be raised at the preliminary hearing will be the same as those raised at an actually summary judgment application. All the points raised by the defendants in questioning the purpose and proportionality of the proposed summary judgment application are ones that the court would have regard to at the actually hearing. The principles established in the The Federal Republic of Nigeria case are principles intended to be utilised by the court within the summary judgment application and not in assessing the merits of an application in a preliminary hearing. The appropriate methodology of ensuring that inappropriate or vexatious applications are not made without consequences is the exercise of the discretion of the court to award costs. I was clear at the hearing that unsuccessful parties in summary judgment applications can expect the court to take a strong view on costs.
(iv) Third, and without derogating from the two reasons set out above, at the time of the hearing (whilst the plaintiff has indicated in detail that it intended to bring an application for summary judgment) neither the court nor the defendants were actually in possession of the exact wording of the proposed summons. The plaintiff may recast its application (as is its right) thereby invalidating or mitigating the arguments already raised by the defendants for a preliminary hearing. As such, notwithstanding that I had concluded that employing a preliminary hearing was fundamentally a regressive proposition, had I concluded otherwise, I would still have determined that it "too early" to adjudicate on the need for a preliminary hearing prior to the issuance of the summary judgment summons.
