THE Royal Court has criticised ‘disproportionate’ legal fees estimated at more than £5.4 million which were racked up in a ‘bitter dispute’ between a former chief executive and the company he once ran.
The fees were ‘above the necessity threshold’, according to a recent judgment, which has also prompted an access-to-justice campaigner to call for an independent ombudsman to be established in the Island.
Fees lawyer Jim Diamond said: ‘It must be time to set up an independent ombudsman reviewing the legal costs in Jersey.’
In the judgment, Master of the Royal Court, Advocate Matthew Thompson, said the number of fee earners involved in defending GGH (Jersey) Ltd, Punter Southall Group Ltd and Simon Anthony John Davis from a claim by Daniel John Pender was ‘beyond what is necessary’ and ‘raised concerns about duplication’.
‘The point can be illustrated by this security for costs application which lasted no more than half a day, yet the defendants were represented by three qualified advocates in court,’ the Master said.
In a preliminary hearing to the main action, Advocate Thompson was being asked to determine how much security of costs – the guarantee that one party will meet the legal costs of the other if they win – should be granted to the defendants in a case he described as ‘far removed from many claims that come before the Royal Court’.
Estimates for the compensation Mr Pender is seeking in the case were said to vary between £12.3m and £51.1m.
Second and third defendants Punter Southall Group Ltd and Simon Anthony John Davis asked the court to increase from £500,000 to £2.1 million the security that Mr Pender would have to produce to pursue his case, based partly on a supporting schedule which suggested their costs could rise to more than £5.4 million. But the court decided to limit the amount to £1.25 million, having scrutinised some of the calculations provided on behalf of the applicants.
Analysing the application, the Master highlighted a number of items in the second and third defendants’ schedule, including discovery costs of nearly £1.2 million, involving six Jersey-based lawyers with unqualified legal assistants and four English lawyers and document reviewers; experts’ fees of £254,000; and nearly £1 million for statements taken by English solicitors with Jersey lawyers in attendance, something the Master called ‘duplicative’. Advocate Thompson acknowledged that the plaintiff would suffer greater financial impact with a larger costs order if he won the case because of the increased insurance premiums required.
But the Master also recognised that if the defendants were successful they should have access to money to start to recoup their costs rather than simply having to enforce a costs order in England.
‘The conclusion I have reached is that the plaintiff has not offered enough but the defendant is seeking too much.
‘Looking at both what the defendants might justify on a taxation and balancing all matters between the parties I have concluded that the plaintiff shall provide security from its after-the-event insurer of an additional £750,000.
‘A total figure of £1.25 million as a fund to meet costs necessarily incurred in my judgment strikes the appropriate balance between the plaintiff and the defendants.
‘It is a significant sum available to meet a costs order in the defendants’ favour and reflects the sort of costs that can be justified on a taxation, and which are proportionate for this dispute.
‘It is, however, not so large a sum which in my experience would have such an unduly adverse impact on the plaintiff that he could not proceed to trial and, if successful, achieve a significant recovery after taking into account payments due to his ATE insurer and/or litigation funder,’ the Master said in the judgment.
