SGI v Wijsmuller [2008] JRC 078 (20 May 2008)

in the name of a Jersey company (Whitmill Properties Limited), the shares of which were owned by [an] (already existing) Dutch Foundation...(also formed, I assume, in the early 1960s). However, any enquiries which I have made about Verclut Farm have been unsuccessful. Whitmill Properties Limited is a company that has the same registered office as that of Whitmill Trust Company, of which my brother, Don, is the Managing Director and sole beneficial owner. According to Don, the two companies are not in common ownership. He named his Trust Company after Whitmill for sentimental reasons and because it is the Anglicised version of our surname, Wijsmuller. [On the directions of the Acting Batonnier, prompted by Mr Sinel drawing attention to the sale of Verclut Farm] I wrote to my brother seeking confirmation whether the property had been sold and, if so, for how much, and to enquire whether, if it had been sold, I was entitled to participate in the proceeds of sale. My brother replied, confirming that the property had been sold for £1.5 million (gross), since that was a matter of record. However, he maintained that I was not entitled to any further information, since otherwise the matter was confidential. I reported back to the Acting Batonnier (in fact Advocate Cadin, who was standing in for the Acting Batonnier at the time) and that position was accepted by him".

48. Commenting on this in his affidavit of 20 th February 2008 (his first in connection with the present application, Mr Sinel said that he had known Mr Wijsmuller and his brother for some forty years, that he had visited Verclut Farm on many occasions, and that he had believed the figure given in Mr Wijsmuller's affidavit to be a significant undervalue - by which he appears to have meant the figure of £250,000. (The brevity of the description is in fact ambiguous as to whether that figure was intended to represent the value of the property itself or the estimated value of Mr Wijsmuller's projected interest as a beneficiary; but, given that it appears to have been put on the market at an asking price of £2 million only a matter of months after Mr Wijsmuller had sworn his affidavit and had sold for £1.5 million, £250,000 as an estimate of value of the property would certainly have been unrealistic). But faced, in January 2008, with the information contained in Andrew Begg & Co.'s letter of 11 th January, Mr Sinel said that, whatever his doubts about Mr Wijsmuller's veracity, he has no alternative but to take Advocate Begg's word at face value and accept that his client has "nothing to hide" . The result of this, together with the further charge taken over Mr Wijsmuller's own properties to support his legal aid funding, means that he is no longer worth pursuing in Jersey:- "It is

now certainly not cost effective to do and I can no longer afford to fund this litigation and the litigation in Anguilla in circumstances where nothing will be gained in Jersey in doing so. Were judgment awarded in my favour (or indeed in favour of [SGI]), I now consider it highly unlikely that I (or SGI) would be able to recover from the limited assets which Mr Wijsmuller would now seem to have located within Jersey. This information, which is contrary to the information originally, and throughout the proceedings, provided by Mr Wijsmuller has only recently been disclosed by Mr Wijsmuller. Had Mr Wijsmuller acceded to my requests to update his affidavit of means (which he swore on 10 th May 2005) then I believe I would have decided to seek discontinuance of this action much sooner" (paragraph 6).

49. The position, submits, Mr Kelleher, is akin to that in the English case of Everton v WPBSA (Promotions) Limited December 2001 in which Gray J. held that it would be wrong to penalise a discontinuing plaintiff where he had in effect been compelled to abandon his claim against a defendant because, as he put it, "The reality is that the claimant's claim against the fourth defendant has become worthless through no fault of his own but rather by reason of the supervening bankruptcy of the fourth defendant". The facts of the present case, as in Everton , are to be distinguished, submits Mr Kelleher, from those of In re Walker Wingsail Systems plc [2006] 1 WLR 2194 , where the defendants' circumstances had remained unchanged but the plaintiff liquidator had decided to discontinue simply because he had re-evaluated the situation.

50. Mr Begg submits that the real reason for Mr Sinel's decision to discontinue has nothing to do with this and everything to do with the invalidity of the Assignment to Norglen and the absence of any basis for personal claims by Mr Sinel. And I would agree that what Mr Sinel suggests as the main reason would have carried more weight had it been articulated at the time when Carey Olsen gave notice on 22 nd January 2008 of his intention to discontinue or at the first court hearing in early February 2008, instead of waiting until service of Mr Sinel's affidavit and skeleton argument two weeks later. I can see that news of the further charge over Mr Wijsmuller's properties by way of security for his legal aid funding might have been one additional factor of relevance and that disclosure of the extract from Mr Wijsmuller's legal aid affidavit concerning Verclut Farm set out in Andrew Begg & Co.'s letter of 11 th January 2008 might well have served to point up afresh the difficulties likely to be encountered in trying to enforce any judgment against Mr Wijsmuller.

51. But the idea that that letter involved the belated revelation that Mr Wijsmuller's "true financial position" is significantly different from what he had previously suggested it was and that, had it been disclosed at the time of the sale of Verclut Farm in November 2005, Mr Sinel would have abandoned the proceedings at that point, involves, I suspect, a degree of wishful thinking. In the first place, to speak of the 11 th January 2008 letter as disclosing the "true" situation is ironic, to say the least, given that Mr Sinel plainly does not believe a word that Mr Wijsmuller says about his assets and that, so far as Verclut Farm is concerned, the information supplied reveals nothing at all except that discovering the precise position as regards the extent of any potential beneficial interest that Mr Wijsmuller may have had in the past, or may now have, remains elusive. Mr Sinel says that at the time when the litigation was first launched he had "anticipated that we would attach a significant portion of the proceeds of sale of Verclut Farm" ; but when it came to the property being put on the market the autumn of 2005 - something of which he was well aware - no move to try to obtain an injunction of the kind threatened in Mr Sinel's letter to Mr Don Wijsmuller of 3 rd October 2005 or to try to "attach" the proceeds of sale (in whatever way Mr Sinel may have had in mind) was ever made. Nor did Mr Sinel move to terminate the litigation following receipt of Mr Wijsmuller's unsatisfactory letter of 15 th June 2006.

52. It is difficult, in fact, to believe that Mr Sinel did not recognise from the outset that, even if he were successful in obtaining judgment against Mr Wijsmuller, the prospects of ever being able recover anything in Jersey were slim: a potential beneficial interest in a discretionary trust hardly represents a readily accessible asset. And Mr Sinel will have been well aware that Mr Wijsmuller, if minded to make himself judgment-proof, would have known how best to set about this (noting in this connection, as I do, paragraphs 49, 50 and 52 of Mr Sinel's twelfth affidavit and page 2 of Mr Wijsmuller's letter to Mr Sinel dated 18 th January 2005). Re-iteration of his (supposed) inability to provide any informative details about the ultimate beneficial ownership of the proceeds of sale of Verclut Farm may have served to hammer home the difficulties that would be likely to attend enforcement of any judgment against Mr Wijsmuller, but the basic position cannot, in my view, be said to have changed in any real sense, other than as regards the further loan by way of legal aid obtained by Mr Wijsmuller and the related security over his properties. What had changed was that Mr Sinel had failed in his attempt to enlarge the Jersey proceedings so as to incorporate the Anguillan allegations, which had meant conducting litigation in two jurisdictions with all the attendant expense and

practical complications; SGI had gone into liquidation and the liquidators were in no position to continue the action themselves; rightly or wrongly, Mr Wijsmuller had finally been successful in obtaining legal aid; the Assignment had been revealed to be ineffective; the claims against Mr Parker-Garner were being discontinued; a substantial chunk of SGI's claims had, in any event, fallen away; and if Mr Sinel himself had wanted to have any chance of pursuing any personal claims against Mr Wijsmuller he was going to have to seek leave to undertake a radical re-amendment of his case or possibly even to start new proceedings, pleading a cause of action of the kind recognised by the English Court of Appeal in Giles v Rhind [2002] EWCA Civ 1428 , [2003] Ch 618 (shareholder entitled to recover for the loss of the value of his shares in circumstances where the wrong done to the company had rendered it impossible for it to pursue its own remedy). Any outside observer, presented with the evidence before this court, would be bound to conclude, in short, that the Jersey proceedings were in bad order and could only be rescued, possibly, at considerable effort and expense; that the chances of successfully enforcing any judgment against Mr Wijsmuller remained remote; and that it made more sense for Mr Sinel to consolidate his efforts on the proceedings in Anguilla. Mr Sinel's later,

5 th March 2008 affidavit (at paragraphs 64 and 65) is, perhaps, a little more realistic than his first in acknowledging that a number of factors had a bearing on his decision to discontinue, including in particular that "my reflective loss claims became live from the demise of SGI, but the claims have been assigned to Norglen, which assignation I now recently discovered is ineffective until we discontinue these proceedings" .

53. Mr Sinel's real grievance, as portrayed on a reading of his twelfth affidavit as a whole, is not that it was only in January this year that Mr Wijsmuller's "true financial position" has been disclosed, but that the true position (as he, Mr Sinel, alleges) has been successfully buried; that in spite of his skills as a litigator Mr Sinel has been unable to find the burial site; and that, as a result, Mr Wijsmuller has been successful in a wholly unmeritorious application for legal aid funding. Whether there is any substance to these serious accusations is not something that I can determine on this application: there is nothing in the material currently in evidence that would justify such a finding. Mr Wijsmuller is entitled to say that he has gone on affidavit as to his financial means on more than one occasion and has nothing to hide; that there has been no application to cross-examine him on his affidavits; and that the merits of his application for legal aid funding have been scrutinised and accepted by those responsible for administering the system. Mr Sinel's claims are, he insists, no more than the product of his "over-active imagination" .

54. Nevertheless, on two particular counts (in addition to what has already been said about Verclut Farm), Mr Wijsmuller's evidence on the present application is less than satisfactory.

55. The first concerns an amount of US$746,632-62 apparently billed by Mr Wijsmuller to Barwys in respect of services rendered and expenses incurred in 2005/2006. The figure comes from a schedule ("JB2") exhibited by Mr Brice to an affidavit sworn in his capacity as a director of Barwys in proceedings in Anguilla between Mr John Koonmen and Mr Gareth Philips as recently as 12 th November 2007. At paragraphs 8 and 9 of that affidavit Mr Brice says:- "8. The second spreadsheet attached hereto and identified as "JB" relates to additional fees incurred [sic] by Bart Wijsmuller who acted as director of Barwys from 27 th April 2005 until 8 th February 2006. I am aware that he also conducted work on behalf of various Koonmen entities and in relation to legal proceedings in Jersey in which companies affiliated with Barwys (such as Whitmill Trust Company ..........).

9. The first and second spreadsheets show a total of US$2,085,189-50 incurred to date. This figure is therefore due and payable by the Claimants" (i.e. Mr Koonmen and Mr Phillips).

56. The schedule at "JB2" is headed "BTA Limited respect of "Fees and Disbursements claim re Bart Wijsmuller" and lists some 27 items totalling £746,632-62. On 10 th December 2007 Carey Olsen wrote to Andrew Begg & Co. asking for an explanation of this in the light of Mr Wijsmuller's oft repeated assertion that he has been unable to find work since proceedings were started against him in Jersey in April 2005. Replying on 11 th January 2008, Advocate Begg wrote "My client has received no money in relation to the invoices for work raised between 27th April 2005 and 8th February 2006 and those fees have all been waived as part of the settlement of the UCC action": that was all.

57. The matter was pursued further by Carey Olsen in an affidavit by Mr Kellick of Carey Olsen dated 20 th February 2008 and also in a faxed letter dated 27 th February 2008 to Mr Begg in which Mr Kelleher pointed out that there was no reference to any such waiver in the UCC settlement agreement. Mr Begg replied bluntly declining to answer any of the questions raised (which covered other matters, as well as the one immediately in issue here), adding that they were none of Mr Sinel's business. But in his third affidavit dated 4 th March 2008 Mr Wijsmuller gave the following explanation:- "38. Barwys did, indeed, produce a statement of expenses incurred by various parties who were indemnified by Mr Bender and Mr Koonmen under a Settlement Agreement made in 2003 (in an action in this Court: Koonmen v. Bender). I have always believed that they were liable under the terms of that Settlement Agreement to pay for work which Barwys and I undertook in defence of the claim brought by UCC. I gave the statement to Mr Koonmen to let him know that there were, in my view, expenses to which [sic] I expected him to pay or to which I expected him to make a contribution. However, I have never been paid anything on this invoice and never sought to enforce it in any way; and last year, Mr Koonmen insisted that I disclaim, and waive, any claim to fees from Barwys as part of the settlement which I made with him and Mr Bender in the UCC litigation. My advocate was involved in those negotiations and, to the extent that Advocate Sinel does not believe me (and he appears not to ............) I am happy to waive privilege and allow my Advocate to confirm personally to the Court that I did indeed waive those fees last year.

39. What I did was hardly "employment", but rather, piecemeal assistance which they later said they never wanted carried out........[Advocate Sinel] knows full well, but I can repeat it for him: I have never held a job nor had any sort of employment since I left SGI on 16 th March 2005. He knows that because he has been instrumental in ensuring that I have stayed unemployed." 58. When it came to the hearing of the present application Mr Begg informed the Court that Mr Wijsmuller had indeed waived his right to receive the fees and expenses in question and Barwys had, correspondingly, waived any claim for re-imbursement. But this, with all due respect to Mr Begg, is not a satisfactory way for an issue such as this to be dealt with. Any litigant in Mr Sinel's position would be entitled to feel that too many loose ends remain unanswered and that it is not right that the matter should be closed out simply by an assurance from the other party's Advocate. Apart from anything else (including how fees and expenses on this scale were generated by mere "piecemeal assistance"), waiver of a claim of this size, in the context of the settlement of highly contentious litigation, would ordinarily be recorded in writing somewhere. But nothing of that kind has been produced, let alone on affidavit, and the circumstances and manner of the waiver remain unparticularised. Nor is any explanation

offered as to how it is that, although the UCC litigation was settled in early July last year, as recently as November 2007 Mr Brice was asserting, on behalf of Barwys, a claim against Mr Koonmen and Mr Phillips based on Barwys's liability to Mr Wijsmuller in an amount of US$746,632-62, or how, if this substantial (alleged) debt was indeed waived, that was thought to be compatible with the restraint on disposal of assets imposed by the orders arising from service of the Order of Justice.

59. The second matter concerns the loan facility of £500,000 granted to Mr Wijsmuller by Reserve Holdings in (it seems) February 2005: not, at this point, the granting of this facility but Mr Wijsmuller's insistence that, in the event, he never drew down or borrowed against it because the intervention of the litigation prevented him from setting up a new trust company and, in any event, the terms of the injunctions contained in the Order of Justice barred him from drawing on it.

60. The actual terms of the order were that Mr Wijsmuller should "make no further drawings" , reflecting Mr Sinel's information and belief that US$100,000 had already been drawn down under the facility, the immediate source of the funds being Rising Star Limited, "another Bender Family Trust company" (Sinel first affidavit, paragraphs 179 and 180).

61. Responding to Mr Sinel's affidavit, Mr Wijsmuller says:- "I should make clear that the US$100,000 paid by Rising Star Limited to my American account with Charles Schwab & Co. was not a drawdown on the RHL facility........ This was made the day after I resigned from SGI. By the time of making my schedule and Affidavit of Means in early 2005, about $45,000 of that sum was in my Jersey RBS account .....and the balance remained in the Charles Schwab account..." (fourth affidavit, paragraph 23). But beyond this he says and produces nothing to substantiate this assertion. No explanation is given for this US$100,000 payment (and it is not denied that Rising Star Limited was a Bender Family Trust company), let alone any supporting documentation demonstrating that it had nothing to do with the £500,000 facility. No reference is made to the minutes of the board meeting of RTCL on 1 st February 2005, which record the agreement of "the shareholder" (i.e. Mr Bender) to a loan of US£500,000 by Reserve Holdings to Mr Wijsmuller and the resolution of the board (Mr Wijsmuller abstaining) approving the loan on "commercial terms" to be recorded in a memorandum or side letter between Mr Wijsmuller and Mr Bender. No such document recording the terms of the loan has been exhibited. And no explanation is given of how and where "it was agreed that the Board of RTCL would have to be approve [sic] each and any drawdown on the facility" as claimed by Mr Wijsmuller in paragraph 15 of his 4 th affidavit (no mention of which is to be found in the RTCL board minutes).

62. Nor is it unreasonable to suppose that at some point in the course of the three years that have elapsed since February 2005 - during which time the related charges over Mr Wijsmuller's properties in Jersey have, it seems, remained in place - there would have been some form of correspondence between Mr Wijsmuller and Mr Bender making reference to the fact that the original facility had never been drawn on. Indeed, Mr Wijsmuller says that, although, he has not applied to have the charge released because his assets remained frozen until 29 th January this year, he has in the past asked Mr Bender whether he would object to releasing the charge but he considered that he could not do so "whilst he was under the terms of the freezing injunction over his own assets in the UCC action" (displaying a touching concern on the part of Mr Bender for court orders that was not, as I recall, much in evidence at the time). He adds:- "I have not recently asked him whether he would consent to the release of the charge: I am taking matters one step at a time. For my part, I cannot see how he could oppose the release, given that I did not borrow against it" (affidavit paragraph 21). On the other hand, the very limited correspondence actually exhibited by Mr Wijsmuller includes an e-mail from Mr Bender to Mr Sinel dated 29 th March 2005 in which he delivers a lengthy, detailed rebuttal of

complaints made by Mr Sinel some days earlier but notably takes no exception to the suggestion that Mr Wijsmuller had borrowed money from him. Mr Sinel had objected to Mr Wijsmuller's "overly close relationship with you, the clients" and had written:- "The fact that he has borrowed money from a client is a matter of concern to the Regulators both here and in Anguilla and it is simply inappropriate at every level." In reply, Mr Bender stoutly defended Mr Wijsmuller from the charge of having done anything inappropriate, adding:- "You may feel that it is wrong for a fiduciary to be close to his clients, but I think many clients prefer it that way. I can't imagine being a good trustee for a family trust without being fairly close to the family." He did not, however, take issue with Mr Sinel's charge that he had lent Mr Wijsmuller money.

63. The impression given by Mr Wijsmuller's treatment of these two items in his affidavits is one of determined minimalism so far as the provision of information and supporting material is concerned: an approach that is, whether by design or by accident, decidedly unhelpful, particularly in the case of the second item above, given that Mr Wijsmuller had been specifically required to swear a further affidavit (his fourth) in order to deal with this matter. In other circumstances, I might have felt it right to allow Mr Sinel an opportunity to probe these matters further, but in the wider context of things I think it better to let matters rest where they are rather than prolong this litigation further. Whether those responsible for administering the legal aid vote feel the need to take them further is a matter for them (only part of the information supplied to them has been disclosed in these proceedings, and for all I know these things have already been fully explored in that context).

64. Complaint is also made on behalf of Mr Sinel about one further aspect of Mr Wijsmuller's assets. This concerns the sum of £224,341-43 payable to Mr Wijsmuller under the terms of the agreement reached by him with Mr Bender and Mr Koonmen in connection with the settlement of the UCC litigation in July last year (under Clause 2 of the "Release and Discharge Agreement" dated th July 2007). This was to be paid into the client account of Baker Platt on terms that it was to be transferred to Andrew Begg & Co, for the account of Mr Wijsmuller on satisfaction of certain conditions, as, in the event, they were. According to Andrew Begg & Co.'s letter dated 11 th January 2008, following receipt of this amount it was applied in part (£23,862-50) to settle the outstanding fees of Appleby/Bailhache Labesse (Mr Wijsmuller's previous legal advisers), in part (£181,681-41) towards reimbursing the legal aid vote, and as to the balance (£18,797-52) in settlement of the fees of Andrew Begg & Co. In his response to this point Mr Wijsmuller said that he did not understand Carey Olsen's complaint: the money had never been under his control and in any event it was simply the re-imbursement of debts that he had incurred in defending himself in the UCC case (third affidavit, paragraph 37); and in a belated affidavit tendered by Mr Begg himself after the th March hearing he says that although they did come into his firm's client account, "they had already been allocated and it was known and agreed, in advance, that none of these funds would be payable to [Mr Wijsmuller] nor held to his order" (second affidavit, paragraph 3).

65. But the point made on behalf of Mr Sinel is that it is in the nature of things that money in such an account is the property of the client and that this sum was, accordingly, caught by the terms of the injunctions contained in the Order of Justice of 27 th April 2005 and should not have been dispersed without prior sanction of the court in the form of a variation of those injunctions (as happened on a later occasion towards the end of last year when Mr Begg sought and was granted a variation authorising the granting of security over Mr Wijsmuller's properties in order to enable him to obtain further funding from the legal aid vote). On the face of things the complaint appears to be well founded and the fact that the court might have been ready to have grant a variation, so as to allow distributions in the way that actually occurred, had an application been made (which it might well have done), is no answer to the charge that a regrettable breach of the injunction appears to have occurred. But, in the interests of finality, and as the matter has not been fully explored, I propose to leave the matter there unless either party wishes to take it further.

66. So far as concerns costs, that leaves for consideration Mr Wijsmuller's complaint that on a number of occasions in the course of the litigation Mr Sinel wrote, not only to the legal aid authorities, but also to the JFSC, in terms designed to damage his credibility and his standing in the financial services community. In the former case a number of letters have been exhibited including letters to the Batonnier dated 18 th January 2007, to the Treasury Minister dated 16 th February 2007, and to the Deputy Judicial Greffier dated 31 st July and 15 th November 2007. In varying ways but to substantially similar effect, they contain express assertions of dishonesty on the part of Mr Wijsmuller in terms which, to an uninformed reader, would suggest that these charges were established facts rather than allegations yet to be proved: assertions that Mr Wijsmuller had "defrauded" Mr Sinel; had "looted" and "embezzled" money from SGI and STAL; had "shuffled off" inherited wealth into a discretionary trust and "defrauded" the legal aid vote. In the case of the JFSC, the correspondence itself was not in evidence, but Mr Sinel admits that he repeated allegations of this kind to the JFSC.

67. The question whether a litigant who believes that his opponent is applying for legal aid when, in truth, he could well afford to pay for his own representation is entitled to make representations to the legal aid authorities, and, if not, whether he should be so entitled and how any such representation should be handled procedurally, was not something that was argued before me: I therefore express no view on the matter. But, assuming for present purposes, that it was not illegitimate for Mr Sinel to oppose Mr Wijsmuller's application, it remains the case that, as an Advocate of the Royal Court, Mr Sinel should have been well able to make his point without resorting to the sort of fevered tone and pejorative language of some of the material found in these letters. The same goes for his correspondence with the JFSC and the financial services regulators in Anguilla, as well as the Attorneys General of Jersey and Anguilla (see paragraphs 6 and 7 of Mr Sinel's affidavit of 25 th May 2005), assuming that these followed the same pattern.

68. Not that Mr Sinel, was alone in giving full vent to his perceived grievances outside the four corners of the litigation itself. On 16 th October 2006 Mr Wijsmuller wrote to Mr Sinel's new partner in Sinels in terms that accused Mr Sinel, in effect, of destroying or removing "sensitive data directly relevant to active litigation matters", with copies to, among others, the liquidators of SGI, the Batonnier, the JFSC, the Joint Financial Crimes Unit and Carey Olsen (under cover, in the last case, of a letter headed "Carey Olsen - conspiracy to pervert the course of justice - Preservation of data and records" ). And in a lengthy e-mail letter on 27 th November 2006 referring to events earlier in the year concerning STAL, Mr Wijsmuller accused Mr Sinel, together with another Jersey Advocate and Leading Counsel at the English Bar, of fraudulent conduct, and then broadcast these allegations by copying his e-mail to more than fifty other lawyers, regulators, bankers and others.

69. Both sets of correspondence are sadly illustrative of the bitterness that has engulfed the relationship between these former close friends and colleagues. In neither case is it likely to have advanced the writer's cause on any front: certainly not so far as this court is concerned. As regards Mr Wijsmuller's specific complaints as to the effect of Mr Sinel's interventions, I have already said that they appear to me to have had little if any adverse effect on his application for legal aid funding. And although Mr Wijsmuller has repeatedly claimed that Mr Sinel's correspondence with the JFSC has effectively barred him from ever again working in the financial services industry in Jersey, there is nothing beyond this assertion that would justify any such finding in the current proceedings. Conclusions on costs 70. What then, are the appropriate orders to make as regards costs, as between the plaintiffs and Mr Wijsmuller, having regard to the principles summarised in Watkins v Egglishaw [2002] JLR 1 and the observations of this Court in JFSC v Black [2007] JLR 1 at 20. Given that the action is being discontinued short of trial, the starting point is to ask whether there is any good reason not to make an award of costs in the defendant's favour. In short, my answer is most certainly that there is as regards the early stages of the action, in as much as it is hardly surprising

that Mr Sinel and SGI felt obliged to start it in the first place. On the other hand, there unquestionably came a time when the "credit balance" represented by that initial justification was exhausted, the steam went out of the proceedings and their usefulness became questionable; from that point onwards there ceases, in my view, to be any justification for depriving Mr Wijsmuller of his costs. It seems to me that there also came a further point, later in time, when the futility of further pursuit of the action as constituted was, or should have been, so evident that it would be right for Mr Wijsmuller's costs to be paid on an indemnity basis. Looking at the matter as whole, the fair orders to my mind would, accordingly, be as follows:- (i) As regards the period from inception of the action up until 31 st August 2006: no order as to costs of the action (leaving each party to pay his/its own costs). (ii) As regards the period from 1 st September 2006 to 31 st August 2007: Mr Wijsmuller's costs of the action to be paid by SGI and by Mr Sinel on the standard basis. (iii) As regards the period from 1 st September 2007 until service of their respective formal notices of discontinuance on 4 th January 2008 (SGI) and 22 nd January 2008 (Mr Sinel): Mr Wijsmuller's costs to be paid by SGI and by Mr Sinel on the indemnity basis (including all costs of and associated with the hearing on 13 th December 2007). (iv) The foregoing to be subject in each case to the qualification that pre-exiting costs orders remain undisturbed. (v) Mr Wijsmuller's application for an immediate order for a payment on account of costs to which he is entitled under the foregoing orders is adjourned, with liberty to restore in the event of any undue delay in taxation.

71. Everything that I have seen suggests that the driving force behind the litigation at every stage has been Mr Sinel and it is for that reason that I make no distinction between him and SGI for the purpose of these orders.

72. I have taken 1 st September 2006 as the first break-point, because it was at about that time that the plaintiffs conducted a substantial review of the case for the purpose of making a report to the Court (as Carey Olsen did in their letter dated 7 th September 2006). By then, the action had been running for some sixteen months. SGI was in liquidation and the liquidators were disinclined to pursue the litigation. Mr Sinel and those representing him at that stage may, in practice, still not have realised that the Assignment was ineffective to vest SGI's claim in that company, but there had been more than enough opportunity for this to have become evident. Carey Olsen were complaining about the deficiency of Mr Wijsmuller's discovery, but their own clients' discovery was also woefully inadequate, particularly as regards SGI documents. There was no sign of any draft amended pleading to substitute Norglen for SGI. Momentum had been lost and, despite the serious nature of the allegations and the subsistence of freezing injunctions, the action was not making the progress that it should have been, not least, almost certainly, because of the demands being made on Mr Sinel's time and finances by the proceedings in Anguilla (as recognised in paragraphs 31 and 32 of his affidavit of 5 th March 2008 and is evident to some extent from the chronological summary of those proceedings exhibited to Mr Sinel's affidavit as 'PCS5').

73. As regards the second break-point, I have taken st September 2007 because, having at last sent Andrew Begg & Co. a draft summons for directions on 19 th July 2007, which included an application for leave to substitute Norglen for SGI and to amend the Order of Justice accordingly, one would have expected the plaintiffs to have pressed ahead full steam, in which case the problem with the Assignment would have come to light very quickly. Instead, what appears to have happened was an exercise in procrastination (largely unexplained), with sight of the Assignment being denied to Andrew Begg & Co. until some months later and no draft amendment to the Order of Justice either to substitute Norglen or to plead reflective loss claims by Mr Sinel personally ever being produced right up until the end. If it was not incontrovertibly clear by 1 st September 2007 that the action as constituted had no future, it should have been.

74. Mr Begg also contends that there should be an order against the Joint Liquidators, Mr Rabet and Mr Boylan of Moore Stephen, personally that they pay his client's costs since 16 th November 2005 when they first indicated that SGI could not afford to continue the action. In advancing this case, Mr Begg is critical in particular of the Liquidators' failure to take their own advice on the Assignment and their admission that they relied on Mr Sinel and the discussions that he said he had with (English) Leading Counsel, in circumstances where Mr Sinel represented, in effect, the counterparty in the transaction. On the face of things the point looks, in principle, a fair one (as does Mr Begg's criticism of the assertion by Mr Clive Barton, senior partner of Moore Stephens, in an e-mail to Mr Parker-Garner on 16 th February 2007 that all the actions taken by the Liquidators had been "reviewed, considered and approved by their legal advisers"). On the other hand, it is not difficult to see how this might have happened and be thought to have been justifiable.

75. Of greater concern is the overly-passive attitude that appears to have been adopted by the Liquidators following the execution of the Assignment. They say, perfectly fairly, that they were entitled to assume that Mr Sinel would take the necessary steps to have Norglen substituted for SGI and would from then on "drive the litigation". But anyone who starts legal proceedings, particularly proceedings involving allegations as serious as those involved here, assumes responsibility to some extent for its conduct, and remains so responsible as long as he/she/it continues to be a named party to the litigation. It follows that if the Liquidators wanted to be relieved of those responsibilities it was for them to satisfy themselves that appropriate steps had in fact been taken to effect the substitution of Norglen for SGI. The liquidation of SGI and its subsidiary Delta Management Services Limited may have been more than usually complex and onerous (Liquidators' affidavit of 22 nd February paragraph 4); but one might reasonably expect the matter of substitution to have been addressed within six months or, at the very latest, by 24 th October 2006 when, according to the Liquidators, they had "first confirmed the fact of the assignment" to Mr Wijsmuller at a meeting that day. In fact, it is evident from Mr Wijsmuller's e-mail to the Liquidators on 29 th September 2006, that he had

already been told something of what had happened and, moreover, was rightly challenging its validity, albeit not for the right reason:- "Please note that I do not consider the sale of your claim against TPG and myself to Norglen Too Limited to be valid and that you continue to be in litigation against me. The purported sale of a claim of such magnitude to a related party would surely be subject to the consent of the creditors committee and I am not aware that such consent has been sought nor [sic] obtained." The suggestion made in Mr Hanson's skeleton argument on behalf of the Liquidators that no issue as to efficacy of the assignment was made at that time by Mr Wijsmuller is not, therefore, entirely correct. Be that as it may, the Liquidators left the conduct of the litigation to Mr Sinel and, as we have seen, it was only on 19 th July 2007 that Carey Olsen actually took out a draft summons seeking leave to make the substitution and only on 3 rd December 2007 that they supplied Andrew Begg & Co. with a copy of the Assignment. Moreover, as at the time of abandonment of the substitution application there was still no draft Amended Order of Justice. In the intervening period the Liquidators also appear to have been as reluctant to provide a copy of the Assignment as Carey Olsen had been: Andrew Begg & Co. had first written to them asking for a copy on 24 th August 2007, and had sent chasing e-mails on 8 th and 24 th October 2007, only to be told, eventually, that a copy should be requested from Carey Olsen.

76. On any view, this passivity on the part of the Liquidators was regrettable. Had they insisted on the matter of substitution being tackled more promptly, there is a good chance that the problem with the assignment and the inevitability of discontinuance would have come to light much earlier than it seems to have done. But these are the only respects in which I regard the Liquidators as open to criticism: they cannot, I think, be held responsible generally for the lack of progress of the action. Nor do I consider that their conduct in the respects criticised was such as to warrant any costs order against them personally. In the absence of any reported Jersey precedent for such an award (as I was informed is the case), the closest guidance is to be found in the English Court of Appeal decision in Metalloy Supplies Ltd. (in liq.) v MA (UK) Ltd [1997] 1 WLR 1613 , [1997] 1 BCLC 165. Waller LJ, giving the leading judgment summarised the proper approach to the matter as follows:- "I think ..........that there is jurisdiction to order a liquidator as a non-party to pay the costs personally; but it will only be in exceptional cases that the jurisdiction will be exercised, and impropriety will be a necessary ingredient, particularly having regard to the fact that the normal remedy of obtaining an order for security for costs is available; the caution necessary in all cases where an

attempt is being made to render a non-party liable for costs will be the greater in the case of a liquidator in the case of a liquidator having regard to the public policy considerations" (at 1618). And Millett LJ (as he then was) spoke of it being rarely appropriate for a costs order to be made against a non-party, such cases being confined for the most part to cases where the third party was the real party interested in the outcome, or:- "where the third party has been responsible for bringing the proceedings and they have been brought in bad faith or for an ulterior purpose or there is some other conduct which makes it just and reasonable to make the order against him" (at 1620). He then considered the position of company directors and the inappropriateness of personal costs orders in the absence of "some impropriety or bad faith" : otherwise "the doctrine of the separate liability of the company and the principle that such orders should be exceptional would be nullified" . The position of a liquidator was, in his view, "a fortiori" (at 171,172). Butler-Sloss LJ agreed. The conduct of the Liquidators in the present case falls, in my view, well short of the threshold of impropriety discussed in Metalloy that would justify a costs order against them personally. This particular application therefore fails. Other conditions 77. The only remaining matters are Mr Wijsmuller's

submissions that, as conditions of being permitted to discontinue the present action, (i) Mr Sinel should be restrained by order of this Court from repeating "any of the allegations made in this action outside Court to any person whether in Jersey or anywhere else in the world, whether invited to do so or not save under compulsion of law" ; and (ii) there should be orders barring SGI and Mr Sinel (as a director or officer, or controlling mind of Norglen) from seeking to assign any cause of action that they may have against Mr Wijsmuller to any other party and barring Mr Sinel himself from causing Norglen to bring any proceedings against Mr Wijsmuller based on any purported assignment of a cause of action from SGI or Mr Sinel.

78. At root, the basis for these submissions is that Mr Sinel has in the past shown himself to be ready to make allegations of fraud and the like against Mr Wijsmuller to a number of people; that he has had the opportunity to have those allegations tried in court but has chosen to discontinue the action after two and three-quarter years; that notwithstanding such discontinuance there have been hints, during the course of these current applications, that Norglen may at some future date try to pursue a fresh action against Mr Wijsmuller concerning substantially the same matters. Although conditions of this kind were canvassed in general terms by Mr Begg in the course of the hearing itself, argument was limited and I therefore invited written submissions to be made, for which I am grateful to both Advocates.

79. So far as the first of these is concerned, while I prepared to assume that the jurisdiction to impose conditions on the grant of leave to discontinue an action is a wide one (RCR 6/31 (1) and Baron Everlo v Fitel Ltd [1987-88] JLR 687), I suspect that Mr Kelleher is right in submitting that any such jurisdiction would, today, have to take account of the Human Rights (Jersey) Law 2000 and Article 10 of the

ECHR . However, even without reference to that body of jurisprudence, the imposition of a term of the kind sought would be a strong thing to do in any circumstances, and not one, to my mind, that could possibly be justified as a matter of discretion when Mr Sinel's complaints have not been shown to be false or malicious and when Mr Wijsmuller himself has not shrunk from publicising his own allegations of impropriety on the part of Mr Sinel in the way that he has. On reflection, both parties may think it wise to exercise restraint in what they say in future outside court.

80. As regards the imposition of conditions of the second kind, Mr Kelleher accepts that there is jurisdiction to impose restrictions on the bringing of further proceedings by the discontinuing party, though not by a non-party; but, he submits - rightly in my view - that it is a jurisdiction that should be exercised sparingly.

81. At one stage it appeared that Mr Wijsmuller was looking for a blanket prohibition on any further claim, in any form, based on the current allegations. But Mr Begg's post-hearing skeleton argument emphasises that it is not intended to prevent either (a) Mr Sinel (after complying with any conditions of discontinuance as regards costs or otherwise) from bringing a claim for his own personal losses qua shareholder of SGI or otherwise (provided it is otherwise maintainable and not inconsistent with the reflective loss principle of Johnson v Gore-Wood [2002] 2 AC 1 ), or (b) the Liquidators of SGI (after complying with any conditions of discontinuance as regards costs or otherwise) from pursuing any claim against Mr Wijsmuller. The rational for the orders sought is, he submits, that they would "strike a fair balance between permitting any further legitimate claims while prohibiting any unfair and potentially champertous other claims run from behind the scenes by Advocate Sinel with the protection of a limited liability vehicle". But that, of itself, is hardly a cogent reason, given that the court has power to award security for costs against a Jersey resident plaintiff if necessary in the interest of justice ( Les Pas Holdings Ltd v Receiver General [2002] JLR N 27) and the courts are well capable of making costs order against a non-party where he is the real party interested, as

recognised by Millett LJ in Metalloy ; and if that is the sole point of objection and concern, the case for imposing conditions of the kind sought is tenuous. The only question that causes me to pause, is whether it would be right to make the institution of any fresh action subject to leave of the court; but on balance I think not. If any attempt to re-litigate the current allegations is made and can properly be shown by Mr Wijsmuller to be an abuse of process, then it will no doubt be stopped in its tracks; but that is something that would have to be addressed in the light of all the circumstances prevailing at the time. Costs of this application 82. As regards the costs of the various issues that have been raised in connection the applications for leave to discontinue, I shall, if necessary, hear submissions that any party wishes to make; but my strong sense is that, looking at the matter in the round and in the interests of minimising the costs of any taxation, the fair orders would be as follows: (i) as between Mr Wijsmuller on the one hand and SGI and Mr Sinel on the other, each party should bear his/its own costs (i.e. no order); (ii) the Liquidators' costs of Mr Wijsmuller's application for costs orders against them personally should be paid by Mr Wijsmuller on the standard basis. Generally 83. The Advocates for the parties are invited to endeavour to agree the precise terms of orders resulting from this judgment for incorporation in an Act of Court, failing which I shall hear submissions at a convenient time to be fixed.

84. This dispute has, quite plainly, already taken a sad toll on both the principal protagonists. Difficult as it may be to accept, a negotiated end to hostilities could now, almost certainly, only be to the long-term advantage of each of them. Authorities UCC v Bender [2006] JRC 068A . UCC v Bender [2006] JRC 150A . Everton v WPBSA (Promotions) Limited (unreported) 13 December 2001. In re Walker Wingsail Systems plc [2006] 1 WLR 2194 . Giles v Rhind [2002] EWCA Civ 1428 , [2003] Ch 618 . Watkins v Egglishaw [2002] JLR 1 . JFSC v Black [2007] JLR 1 . Metalloy Supplies Ltd. (in liq.) v MA (UK) Ltd [1997] 1 WLR 1613 , [1997] 1 BCLC 165. Baron Everlo v Fitel Ltd [1987-88] JLR 687. Human Rights (Jersey) Law 2000. European Convention on Human Rights. Johnson v Gore-Wood [2002] 2 AC 1 . Les Pas Holdings Ltd v Receiver General [2002] JLR N 27. Page Last Updated: 15 Mar 2017 BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII