Costs recoverability and instruction of foreign lawyers in Guernsey

November 2015 | EXPERT BRIEFING | LITIGATION & DISPUTE RESOLUTION

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In Guernsey, as with many jurisdictions, costs generally ‘follow the event’ in the sense of being awarded to the winning party against the losing party. It is at the discretion of the court whether to allow costs in particular cases and also to determine the extent to which they will be allowed. The starting point in Guernsey is to allow costs on the ‘recoverable’ basis and departure from this basic principle, while far from uncommon, requires some justification.

An area where the court has been most inclined to exercise its discretion in recent times has been in the use of ‘foreign’ lawyers. These are lawyers who are not resident in Guernsey but whose expertise or resources may be used from time to time by Guernsey law firms. Unlike in many offshore jurisdictions, foreign lawyers do not have rights of audience in Guernsey and cannot acquire such rights without fulfilling a two-year residence requirement and sitting exams at both the Université de Caen and in Guernsey.

Foreign lawyers are often used in Guernsey where it is thought that their particular expertise would best meet the needs of the case. It is also the case that foreign lawyers often instruct Guernsey lawyers at the outset of a case or represent insurers’ interests throughout the life of a matter. The Royal Court in Guernsey has jurisdiction to order that the costs of instructing foreign lawyers to assist in a case should be recoverable by a party in appropriate cases. Traditionally, the costs of both local and foreign lawyers have been awarded on the ‘recoverable’ basis which in Guernsey can be a little lower than in other jurisdictions at around 40 to 50 percent of the total costs to the client.

In Ladbrokes vs. Galaxy International Limited Royal Court, 24 November 2008, Lieutenant Bailiff Southwell elaborated on the court’s jurisdiction to allow foreign lawyers’ costs. He stated that the jurisdiction should be exercised in “appropriate and exceptional cases”, and where such costs had been reasonably incurred and were reasonable in amount. The Lieutenant Bailiff considered that such appropriate and exceptional cases would be “relatively few” and gave five non-exhaustive example situations, as outlined below.

Guernsey being a small jurisdiction, the Lieutenant Bailiff considered that it may be necessary to instruct foreign counsel where a case involved a highly specialist field of law. It was considered that there may be situations where the field of law would be so exceptional as to rarely arise in Guernsey and therefore Guernsey advocates may not have the necessary specialist expertise.

The Lieutenant Bailiff anticipated that there may be situations where litigants from outside Guernsey may have pre-existing ties with foreign lawyers, justifying their being instructed in order to ensure the conveying and continuity of knowledge. It was considered that this would be a rare and exceptional situation. This has been applied by the court in a number of recent cases such as in Jackson vs. Dear where the use of London solicitors, to coordinate vast swathes of evidence with a London based client, was acceptable and costs were recoverable.

A further circumstance may be where Guernsey law requires consideration of principles of English law, or laws of other jurisdictions, and research into that law cannot be readily carried out by the firm of Guernsey advocates.

Fairly similar to the first scenario, it was considered that there may be situations where getting to the heart of a problem involving complex facts and law is most efficiently done by going to a specialist lawyer in another jurisdiction, as ‘the best lawyer available’.

Finally, there may be situations where a case involves such a large amount of documentation that management of it may reasonably be beyond the capabilities or resources of the Guernsey firm.

The Lieutenant Bailiff reasoned that his justification for being sparing in permitting such costs was the importance to Guernsey of having its own sufficient pool of well qualified, trained and experienced advocates, capable of handling the great majority of legal proceedings in Guernsey.

In the main, although this decision had been used to limit recoverability in the past, it had not been used to refuse costs altogether until the recent decision as to costs in Raymond Anthony Dobson Broadhead vs. (1) Spread Trustee Company Limited (2) Andrew Pollock (3) Geoffrey William Allez. In her judgment, Lieutenant Bailiff Hazel Marshall used the Ladbrokes decision as justification for deciding that none of the costs incurred by foreign lawyers would be recoverable. In this case an English QC had been used because the action was factually and legally complex, the material was lengthy and over 2400 items had been disclosed in 40 lever arch files.

Lieutenant Bailiff Marshall rejected these assertions on the ground that this was a Guernsey law case, litigated between Guernsey residents about two Guernsey trusts with Guernsey trustees and applying Guernsey trust law and Guernsey legislation. In addition, she commented that most Guernsey advocates’ firms now have employees who have qualified or practiced in other jurisdictions, and are at ease with researching other jurisdictions’ laws, and English law in particular.

While this judgment could not be interpreted as a move away from the principle that the costs of foreign lawyers are recoverable in appropriate and exceptional cases, it could be seen as an indication that the court will scrutinise the nature of the work undertaken by foreign lawyers much more closely and perhaps be more critical about the use of English lawyers on matters where advocates firms should be capable of handing the matter themselves. For that reason, greater thought should perhaps be given to the level of input exerted by onshore counsel when instructing offshore lawyers. It should be carefully explained to clients that onshore counsel may remain involved but that this may be a cost borne by the client regardless of the outcome of the case.

Simon Davies and Mathew Newman are partners and Emma Hill is a senior associate at Ogier. Mr Davies can be contacted on +44 (0)1481 737 181 or by email: simon.davies@ogier.com. Mr Newman can be contacted on +44 (0)1481 752 253 or by email: mathew.newman@ogier.com. Ms Hill can be contacted on +44 (0)1481 752250 or by email: emma.hill@ogier.com.

Simon Davies, Mathew Newman and Emma Hill

Ogier