Prestigic (Wisley) Nominees Ltd v JTC Management and Others

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: J. A. Clyde-Smith
• Judgment Date: 08 June 2012
• Neutral Citation: [2012] JRC 114
• Date: 08 June 2012

[2012] JRC 114

ROYAL COURT

(Samedi)

Before:

J. A. Clyde-Smith, Esq., Commissioner, sitting alone.

Between

Prestigic (Wisley) Nominees Limited Companyl

Representor

and

(1) JTC Management Limited

(2) Wharf Land Investments (Jersey) Limited

(3) The Green Light Property Fund Limited

(4) Thames Ltd

(5) Wisley (Jelly) Nominees Ltd

(6) Hilex Limited

(7) Maximilian Zu Furstenburg

(8) Persistency Private Equity Limited

(9) Sonia Land

(10) Arlington Special Situations Fund Limited

(11) Rose Nominees Limited

(12) Alexandrina Investments Limited

(13) DPM Design Consultants Holdings Ltd

(14) Wisley Investments Holdings Limited

Respondent

Advocate S. J. Young for the Representor.

Advocate J. D. Kelleher for the First, Second and Third Respondents.

Authorities

Companies (Jersey) Law 1991.

Watkins -v- Egglishaw [2002] JLR 1 .

Dixon -v- Jefferson Seal Ltd [1998] JLR 47 .

Marett -v- Marett [2008] JLR 384 .

Leeds United Association Football Club Limited and Another -v- The Phone-In Trading Post Limited t/a Admatch [2011] JCA 110 .

Gamlestaden Fastigheter AB -v- Baltic Partners Limited, Boleat, De Figueiredo and Bailey [2007] JLR 393 .

Foss -v- Harbottle [1843) 2 Hare 461 .

Bespoke Investments Ltd -v- Lincoln Nominees Ltd [2005] JRC 098 .

Manley -v- Bell [2007] JRC 025 .

Halsey -v- Milton Keynes General NHS Trust [2004] EWCA Civ 756 .

Money Laundering (Jersey) Order 2008.

Companies — costs judgment.

THE COMMISSIONER:

1 This judgment is concerned with costs arising out of the representor's unsuccessful application under Article 141(1) of the Companies (Jersey) Law 1991. The judgment of the Court is dated 14 ^th May, 2012, (JRC 097). I will refer to the representor as “Prestigic”, the first respondent as “JTC” and the second respondent as “the Company” and generally use the definitions contained in the judgment.

2 Mr Kelleher applies for the costs of JTC, the Company and the Green Light Property Fund Limited (“Green Light”) on an indemnity basis.

3 I had regard to the general principles that should guide the Court in the exercise of its discretion in relation to costs as set out in Watkins -v- Egglishaw [2002] JLR 1.

4 The circumstances in which it may be appropriate to award costs on the indemnity basis have been considered on a number of occasions by the Court of Appeal. In Dixon -v- Jefferson Seal Ltd [1998] JLR 47, Collins JA, with whom Harman and Southwell JJ.A agreed, concluded that there had to be “some special or unusual feature in the case” to justify such an award (Page 59). In Marett -v- Marett [2008] JLR 384, Plemming JA, Sumption and Nutting JJ.A concurring, said this:-

“A court may make an indemnity costs order only where there has been some culpability, some abuse of process such as deceit, underhanded or unreasonable behaviour, abuse of court procedures, or the submission of voluminous and unnecessary evidence. There are many examples in decided cases of the application of these broad principles (see Dixon -v- Jefferson Seal Ltd. (1998) JLR at 52–53 ); Maçon -v- Quérée (née Coligny); andJones (née Ludlow) -v- Jones (No. 2), noting the reference to “some special or unusual feature” to justify the award of indemnity costs). There are also examples of cases where the court has made an indemnity order, even in the absence of culpability or abuse … relying on the court's general discretion, in England and Wales, under the CPR, r. 44.3" (Paragraph 73).

5 In Leeds United Association Football Club Limited and Another -v- The Phone-In Trading Post Limited t/a Admatch [2011] JCA 110, at paragraph 11, the Court of Appeal pointed out that the limitation placed on the exercise of the Court's discretion by the use of the word “only” in the first sentence of the foregoing passage must be regarded as an error.

6 When these proceedings were commenced by Prestigic by way of representation, they comprised a personal claim in which Prestigic sought rescission of the contract with the Company by which it had become a shareholder investing some £600,000 as well as seeking, as a shareholder, an order under Article 141 of the Companies Law; positions which are incompatible. At a directions hearing on 4 ^th July, 2011, the Bailiff required Prestigic to elect whether it wanted to proceed with the claim for rescission, which it should do by way of Order of Justice, or to seek relief under Article 141. Prestigic elected to proceed with the latter.

7 Advocate Damien James represented JTC at the next directions hearing on 25th August, 2011. Mr Young, for Prestigic, apparently agreed with Mr James that JTC should play no further part in the proceedings but Prestigic was not prepared, apparently on his advice, to release JTC which has remained a party ever since. Bearing in mind that JTC was the prospective defendant in the civil proceedings which Prestigic sought authority to bring in the name of the Company pursuant to Article 143(c) of the Companies Law, there could be no basis for its involvement and retention as a respondent to the application. It cannot have and did not have any part to play in the decision whether it should be actioned by the Company.

8 Bearing in mind the confused nature of the original representation and the election made by Prestigic, I can only regard JTC's involvement and retention as a party as unreasonable and unjustified and in my view, it should have its costs on an indemnity basis.

9 Turning to the costs of the Company, Mr Kelleher's central submission was the unreasonable conduct of Pres t igic as a 2.84% shareholder in bringing and pursuing this application against the wishes of the overwhelming majority of its fellow shareholders:-

• (i) Without any evidence that those shareholders were acting unfairly.

• (ii) Relying solely on the Privy Council decision in Gamlestaden Fastigheter AB -v- Baltic Partners Limited, Boleat, De Figueiredo and Bailey [2007] JLR 393, which did not assist on the criteria the Court should apply in the granting of an application under Article 141 (see paragraphs 34 and 35 of the judgment).

• (iii) When it conceded that it did not come within any of the exceptions to the rule in Foss -v- Harbottle (see paragraph 44 of the judgment).

10 Mr Kelleher submitted that the costs of the application were out of all proportion to the “reflected loss” to Prestigic which were at stake in the matter. In relation to the payments, Prestigic complained that £1,492,050 was wrongly paid away. The “reflected loss” of value of Prestigic's shareholding calculated on the basis of the notional diminution of its shareholding due to the payments was £43,374. The total fees stated to have been charged by JTC to the Company since September 2006 as set out in Philip Burgin's first affidavit of 12 ^th November, 2011, were...