Geneva Trust Company (GTC) SA v Tchenguiz (Royal Court : Hearing (Civil)) [2025] JRC 063 (6 March 2025)

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Cite as: [2025] JRC 063, [2025] JRC 63

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Security for costs

[2025] JRC 063

Royal Court

(Samedi)

6 March 2025

Before     :

Advocate David Michael Cadin, Master of the Royal Court

 

Between

Geneva Trust Company (GTC) SA

(formerly Rawlinson & Hunter Trustees SA)

Plaintiff

And

Robert Tchenguiz

Defendant

Advocate J. S. Dickinson for the Plaintiff.

Advocate J. M. Sheedy for the Defendant.

judgment

the MASTER:

Introduction

1.        This is my judgment in relation to an application by the Defendant, Mr Tchenguiz, to vary an Act of Court dated 12 June 2019 which provided, amongst other things, that the Plaintiff, the Geneva Trust Company (GTC) SA ("GTC"), pay into Court the sum of £50,000 by way of security for costs to support an undertaking given by its parent company to pay any adverse costs orders obtained by the Defendant.

Background

2.        Whilst the factual background to these proceedings is complex, for the purposes of this judgment, I propose to adopt the summary set out by Commissioner Birt in his judgment dated 17 February 2025 (Geneva Trust v Tchenguiz [2025] JRC 046):

"4. The Plaintiff was the trustee of the Tchenguiz Discretionary Trust ("the TDT') from July 2010 to October 2017. The Defendant is a beneficiary of the TDT. There has been lengthy and complex litigation in Guernsey concerning the TDT and other trusts both before, during and after the time that the Defendant was the trustee of the TDT.

5. The Plaintiff claims that, by a deed of indemnity dated 14 April 2014, the Defendant agreed to indemnify the Plaintiff against any legal costs incurred in connection with what were described as "the Guernsey Proceedings"

7. The Plaintiff claims under the Indemnity against the Defendant in the current proceedings. It asserts that the Indemnity was executed by or on behalf of the Defendant or, that if he did not execute it, he is estopped from denying that he is bound by it. The Defendant, on the other hand, denies that he executed it or that he is bound by it. These claims are hotly contested and, Master Thompson said in an earlier hearing that "neither party has taken a proportionate approach to this litigation".

8. Until fairly recently, the issues which would require resolution at trial were therefore whether the Indemnity was binding on the Defendant and, if so, what sum was payable to the Plaintiff thereunder by reference to its legal costs. However, there is now a further issue for resolution "What is the effect of the Guernsey Consent Order?"

3.        The following procedural background is also relevant:

(i)        Proceedings were instituted in 2018 and Particulars of Claim were filed in September 2018.  An Answer was filed in October 2018.

(ii)       In June 2019, for the reasons set out in a judgment reported at Geneva Trust Company (GTC) SA (formally known as Rawlinson Hunter Trustees SA v Tchenguiz [2019] JRC 110A, Master Thompson ordered that GTC pay £50,000 into Court as security for the Defendant's costs.  Those monies were paid.

(iii)      There were further amendments to the pleadings, and as noted in a File and Parties' Judgment dated 31 October 2023:

"9. The Jersey Proceedings were listed for trial on 9 March 2020 with a time estimate of one week. That trial was vacated by consent on 3 February 2020. It was relisted for 19 October 2020, some 6 months' later. These dates were vacated on 17 September 2020, and the trial relisted for 5 July 2021, some 10 months' later. In March 2021 the parties filed a consent order seeking to vacate the hearing and to refix it. The Master declined to make such an order and instead vacated the hearing dates but ordered that -

"all directions previously issued in these proceedings insofar as not already complied with are stayed until determination of the proceedings in Guernsey between Fort Trustees Limited and Balchan Management limited against ITG Limited and Bayeux Limited;"

(iv)     The application to lift the stay came before me in October 2023 and I granted the application.  In giving a File and Parties' judgment dated 31 October 2023, I noted that Mr Tchenguiz did not oppose the application to lift the stay in principle "provided that the amount of security for costs is increased... albeit that he has not made any formal application to increase the amount of security" (at paragraph 12(ii)).  In the absence of any formal application, I declined to increase the amount of the security.

(v)      In advance of a directions hearing listed for 28 November 2023, a letter was sent by the Defendant's Advocates to the Plaintiff's Advocates on 14 November 2023 seeking audited financial statements for GTC and its parent.  No such statements were supplied and nor did the Defendant issue any further application for security for costs at that time. Indeed, from the correspondence it does not appear that this issue was raised again until 9 January 2025.

(vi)     On 28 November 2023, I gave directions to progress the matter to a trial with a time estimate of 5 days.

(vii)     Between November 2023 and July 2024, there were without prejudice and other discussions between the parties. A consent order was issued in the Guernsey proceedings in July 2024.

(viii)    In August 2024, the parties applied for a date fix appointment for a trial and in September 2024, the trial date was fixed for 10 March 2025, with a time estimate of 5 days.

(ix)      Pursuant to a consent order, further amended pleadings were filed including a Re-Re-Amended Answer on 22 November 2024 and a Re-Re-Amended Reply on 27 December 2024.

(x)      On 13 January 2025, the proceedings came before Commissioner Birt for the purposes of a pre-trial review when extensive directions were given.

(xi)      On 31 January 2025, the Defendant's summons to vary the order previously made for security for costs was issued.

(xii)     That summons came before me on 17 February 2025 and by consent, I made an order providing for disclosure of unaudited balance sheets, profit and loss accounts and notes for the Plaintiff and its parent company, Geneva Holding Company (GHC) SA, for the period ending 31 December 2024 but subject to the imposition of restrictions as to their use/distribution.

(xiii)    Those unaudited accounts were provided to the Defendant and Ms Martin has now filed her Thirty-Sixth Affidavit setting out, amongst other things, the comments of PWC to the effect that:

" The information contained in the documents provided cannot be relied upon as they are unaudited;

-  The financial information contained in the documents is unconsolidated and so does not provide a full picture of the financial position of the entities and its subsidiaries; and

- There are issues with the documents including -

o Missing information required by the Swiss Code of Obligations; and

 o Discrepancies within the financial statements which raise questions with respect to accuracy."

Security for Costs

4.        Royal Court Rule 4/1(4) provides that "Any plaintiff may be ordered to give security for costs".

5.        The principles applicable in relation to this Rule have been the subject of numerous decisions and have evolved with time. However, in Café de Lecq v Rossborough (Insurance Brokers) Limited [2011] JLR 031, the Court held that:

"20 it will be the general practice of the court not to require plaintiffs (wherever resident) to provide security because there is reason to believe that they will be unable to meet orders for costs against them save in the case of -

(i) Corporate plaintiffs (wherever resident), where security may be ordered on such grounds following the principles set out by the Court of Appeal in A.E. Smith "

6.        Those general principles, set out by the Court of Appeal in A E Smith & Sons Limited -v- L'Eau des lles (Jersey) [1999] JLR 319, were as follows:

"(1) The Court has a complete discretion whether to order security.

(2) That the plaintiff company will be deterred from pursuing its claim by an order for security is not without more a sufficient reason for not ordering security.

(3) The Court must balance, on the one hand the injustice to the plaintiff company if prevented from pursuing a genuine claim by an order for security, and on the other hand the injustice to the defendant if no security is ordered, the plaintiff's claim fails, and the defendant is unable to recover its costs from the plaintiff. So the Court will seek not to allow the power to order security to be used oppressively, by stifling a genuine claim by an indigent company against a more prosperous company, particularly when the circumstances underlying the claim and/or the failure to meet the claim may have been the cause or a material cause of the plaintiff company being indigent. The Court will also seek not to be so reluctant to order security that the impecunious plaintiff company can be enabled to use its inability to pay costs as a means of putting unfair pressure on the more prosperous defendant company.

(4) The Court will broadly take into account the prospects of success in the action, and the conduct of the action so far.

(5) The Court has a discretion to order security of any amount, and need not order substantial security.

(6) If the plaintiff company alleges that the effect of an order for security would be unfairly to stifle its genuine claim, the Court must be satisfied that, in all the circumstances, the claim probably would be stifled. The test is one of probability, not possibility.

(7) The stage of the action at which security is sought is one aspect of the conduct of the action which the Court will take into account."

7.        An illustration of the impact of the last element of the test can be found in Banks v Apex [2023] JRC 197, where in relation to a sum of £2m sought by way of security for costs against Mr Banks in July 2023, Commissioner Martin held:

"36. So far as Mr Banks is concerned, I do not think it appropriate to order security. His proceedings were started in June 2019, and continued until October 2022 (when the security application was issued) without any attempt by the defendants to his proceedings to obtain security for costs. SHL and STCL having apparently been content until that point to take the risk that a costs order ultimately made in their favour would go unsatisfied, it seems to me now too late to change tack."

8.        In Home Farm Development and Others-v-Le Sueur [2014] JRC 241, Master Thompson was considering an application for an increase in the amount of security for costs that he had previously ordered.  He held that:

"10.      Mr Holmes, as part of his submissions, raised the argument that the Royal Court had already determined the matter and could not do so again absent a material change of circumstances which had not occurred.  He relied on the decision of Republic of Brazil v Durant [2012] JCA 025 in support of this submission.

11.      The factual background to the Brazil case concerned whether or not the Royal Court could grant leave for evidence to be adduced by video link, having previously dismissed a similar application.  Paragraphs 18 to 20 provide as follows:-

"In our opinion, the appropriate test in this jurisdiction, by reference to which the Royal Court exercising its jurisdiction in matters of case management is entitled to entertain a further application on a matter which it has already determined and refused or dismissed, is that there has been a material change of circumstances or that the court, whether innocently or otherwise, has been misled as to the correct factual position, or that the grounds upon which the application is made are materially different from those already considered.

In the present case the grounds were identical at each application - the relevant witnesses either refused or were not prepared to travel.  All that had altered was that the solicitors had made further significant attempts to persuade the witnesses to travel and to understand their reasoning.  Those further efforts on the part of the solicitors did not, in our opinion, constitute either altered grounds or a material change of circumstances.

We therefore grant this application for leave to appeal; and it follows that the appeal against the decision to allow this evidence to be given by video-link must be allowed as it was not open to the Royal Court to revisit its earlier decision.

12.      Advocate Taylor contended in response that the present circumstances are very different to the Brazil case and that it would be wrong in the present case for security to be left as it is.  A party must be allowed to apply for more security where circumstances have changed.  The change in circumstances relied upon were that the fact that the appeal was no longer proceeding in August as had been contemplated in June and secondly an affidavit which went beyond the pleaded case had been filed which the defendant might have to respond to.

13.      In my judgment, I accept that a party can always apply for additional security.  Indeed, it is often the practice to ask for security for costs up to a certain event and then to revert to the court if necessary to ask for security for subsequent events.  The position here however is slightly different in that what is being sought for is more security for the same event, namely an appeal against the March judgment.  In such circumstances, I agree with Mr Holmes that the reasoning in Republic of Brazil v Durant applies and that what has to be shown is a material change of circumstances

22 In my judgment, while the request for additional security followed a change of circumstances, the change was not so special or unusual to justify increasing the amount I originally ordered to be provided.  There are no new reasons for ordering security "

The June 2019 Decision

9.        In his 2019 judgment, reported at [2019] JRC 110A, Master Thompson noted that:

"27. In relation to the quantum of the security sought, the first respondent's cost to date were in the region of £350,000; the approach of the first respondent was to suggest that the likely future costs to be incurred would be a similar figure and therefore to seek the sum of £750,000 as security. What was required was expert handwriting evidence, evidence on English Law because of the estoppel argument and otherwise a trial which would last around a week "

10.     Master Thompson then went on to consider the granular detail of the costs claimed to conclude (at paragraph 90) that, "I am not satisfied that the amount suggested of £750,000 is justified".

11.     In relation to Collas Crill's costs to the date of the hearing, he noted that a schedule of costs had been provided giving a figure of £95,753.50, albeit calculated on the basis of the commercial rates charged to the client rather than the costs recoverable on taxation under the standard basis.  He therefore reduced that amount to reflect costs calculated on the basis of Factor A plus a Factor B uplift of 50%, and then further reduced that sum to £50,000 to reflect the likely outcome of taxation.  No schedule was provided for Collas Crill's future costs and Master Thompson therefore assessed the future costs based on his assessment of the litigation:

"96 The issues in this case are also relatively straightforward, even if the amount that might be claimed under any indemnity is significant. In addition, the likely recoverable costs for trial are no more than £5,000 per day based on an hourly rate of an advocate of £350 totalling £25,000 for one week. A similar figure for trial preparation of £25,000 is not inappropriate. In my judgment for counsel's opinion on estoppel the sum of £10,000 is a proportionate figure. Otherwise no more than £15,000 of costs is justified for help in preparing expert evidence and correspondence with the other side, with £25,000 for trial preparation and £25,000 for the trial. This leads to a maximum figure for future costs of £65,000 for Collas Crill plus £10,000 for counsel's fees."

12.     Part of the costs claimed by the Defendant related to a company called R20 Advisory Limited.  This was a company ultimately owned by a related trust and provided group management and financial services; it is not and was not a law firm.  For this, and a variety of other reasons, Master Thompson concluded that "I am not satisfied that it is appropriate to make any orders for security for costs by reference to the work carried out by R20 Advisory Limited."

13.     As to the basis of the application, Master Thompson noted that:

"61. In the present application, the ground relied upon by the first respondent was that it was clear from the accounts of the representor that the representor was not in a position to meet any adverse costs order and therefore security for costs should be provided. In relation to the financial position of the representor, it is clear from its accounts that it has no assets to meet liabilities. In addition, its expenditure matches, if not exceeds, its income. This is not surprising because while the representor acts as trustee, the income and expenditure of the Geneva Trust Group is primarily recorded in the accounts of the parent company. The representor is therefore operated in a way that any income it receives is transferred to its parent by way of intergroup charges. I make no criticism in expressing this view because it is not an uncommon operating model for subsidiaries of any financial services group for a subsidiary to be operated in such a way that any profit is made by the parent rather than at any subsidiary level.

62. As far as the parent company is concerned, it has offered an irrevocable undertaking and, by reference to the accounts provided, it has a reasonably healthy profit margin; it also has a positive balance sheet in that its assets exceed its liability by an amount significantly in excess of the amount sought of £750,000. It also holds cash and cash equivalents which would enable it to meet the undertaking given."

14.     In terms of the principles, he went on to hold that:

"105. In the exercise of the discretion vested in me, both A E Smith & Sons Limited-v-L'Eau des lles (Jersey) Limited and Cafe de Lecq recognise that I can order any amount of security as a matter of discretion having regard to all the factors in A.E. Smith & Sons Limited-v-L'Eau des lles (Jersey) Limited set out above.

106. However, an undertaking has been given to this court on an irrevocable basis by the parent company of the representor to meet any adverse costs orders made against the representor. This is a promise which would be enforceable in this jurisdiction and if the parent company had been resident in this jurisdiction as a regulated entity, that would be sufficient not to require security for costs. The issue is whether this undertaking is sufficient to address why security may be required namely" protecting the interest of a defendant in being able to enforce a judgment for his costs if he succeeds." (Leeds v Admatch paragraph 19)

107. However, the accounts of the parent company which I have referred to above are in draft and are unaudited. The financial position of the parent could therefore be different from the accounts produced. Even if accurate, they are only a snapshot and could alter significantly in the future. In addition, no evidence was produced to me as to whether or not the undertaking offered can be enforced in Switzerland. I have therefore reached the view that some security is justified to support the undertaking to address the difficulties I have described in respect of the parent company's accounts and concerns about whether or not the undertaking can be enforced outside this jurisdiction.

108. In deciding on the appropriate amount of security to award, I have also taken into account that in my view neither party has taken a proportionate approach to this litigation. The issues are not complicated as summarised above. Rather, what exists on both sides is internecine warfare and a total lack of trust. This increases the costs being incurred significantly and in a disproportionate manner

109. Having regard to all the above matters and the principles as to whether or not security should be ordered, I consider that the representor should be required with the support of its parent company to pay into court security for costs in the sum of £50,000 to support the undertaking offered. This is a meaningful sum not a nominal amount to support the undertaking given and, had the parties taken a proportionate approach to the dispute, is a figure that I estimate is appropriate to represent costs that should have been or will have to be incurred."

The Parties' Submissions

15.     The Defendant advances his case on the basis the Thirty-Second, Thirty-Third and Thirty-Sixth Affidavits of Ms Martin sworn in January and February 2025. 

16.     Ms Martin deposes in her Thirty-Second Affidavit that the Defendant has been given further cause for concern that GTC and/or its parent, GHC, have insufficient assets to meet any adverse costs orders made in these proceedings and that the undertaking provided by GHC lacks substance.  She specifically relies on the grounds that:

(i)        following conversations with Mr Hiller, a former shareholder in GTC, in October and November 2024, she has become aware that he is apparently still owed money by GTC, that the parent company has no substance and that GTC had difficulty complying with an order to repay a sum of £1m when ordered to do so by the Royal Court in Guernsey in August 2019 (paragraphs 10(a) and 14(a) of her affidavit).

(ii)       GTC's conduct has been criticised, and in particular:

(a)      they wrongly used trust funds to pay their own expenses (paragraphs 10(b) and 14(a)(ii)(b) of Ms Martin's affidavit), albeit that on closer analysis it appears that this criticism was in August 2019;

(b)      GTC sold assets in 2018 and was criticised for so doing in a judgment of the Royal Court in June 2023 (paragraphs 10(c) and 14(a)(ii)(a) of Ms Martin's affidavit);

(c)      GTC has refused service of proceedings in the BVI and Guernsey and was criticised by the BVI Commercial Court for so doing in March 2018 (paragraph 10(d) of Ms Martin's affidavit);

(d)      GTC was removed as trustee of a trust in 2019 but has refused to retire as director of a Panamanian company and this issue is to be dealt with by the Guernsey Court (paragraph 10(e) of Ms Martin's affidavit).

(iii)      Costs have significantly increased beyond those estimated at the time of the previous application for security for costs (paragraphs 11 and 14(b) of Ms Martin's affidavit):

(a)      The only figures provided in her Thirty-Second Affidavit are for the fees incurred by Collas Crill to date (amounting to £474,629) and the fees to be incurred to trial by Collas Crill, R20 and Counsel amounting to £201,455 which gives a total sum of £676,084. 

(b)      In her Thirty-Sixth Affidavit, Ms Martin expanded on those figures giving a total figure for costs incurred to date of £782,035.18 and to be incurred of £251,430, giving a total figure for costs of £1,033,465.

(c)      Of Collas Crill's fees:

(1)      some £219,379.99 apparently relates to the period August 2018 to June 2019, whereas Master Thompson's judgment notes that the costs then claimed amounted to £95,753.50;

(2)      £255,249.97 related to the period July 2019 to December 2024;

(3)      the estimate to trial was for a further £142,390, including £121,800 for preparation for trial and trial itself, in respect of which Master Thompson had previously allowed £50,000.

(d)      R20 has incurred fees to date of £146,250 and has estimated future fees of £23,040; Master Thompson previously refused to take any such costs into account;

(e)      Counsel has charged £133,105 to date and has an estimate for costs to trial of a further £50,000, in respect of which Master Thompson previously allowed £10,000;

(f)       Experts' fees to date are £19,821 and estimated to trial in the sum of an additional £36,000.

(iv)     There is the potential for a part-heard trial (paragraph 14(c) of Ms Martin's affidavit).  Whilst the time estimate of 5 days was given in July 2019, the parties were free to depart from that time estimate, and in particular, they could have given a longer time estimate when they fixed the trial date in September 2024.  They did not do so and as a matter of fact, the time estimate for the trial is the same estimate that was before Master Thompson when he was considering security for costs.

(v)      GTC has failed to respond properly to correspondence about security for costs (paragraph 12 of Ms Martin's affidavit).

17.     As to the timing of the application, Ms Martin deposes that this is not down to any delay on the Defendant's part but arises from:

(i)        the protracted stay of the proceedings from March 2021 to October 2023;

(ii)       negotiations in 2024 leading to the consent order in Guernsey;

(iii)      belated indications made by GTC that they would be pressing ahead with these proceedings notwithstanding the consent order in Guernsey; and

(iv)     GTC's delay in filing the Re-Re-Amended Reply.

18.     An affidavit has been filed on behalf of the Plaintiff by Mr Hodges.  He deposes that:

"17 The Plaintiff can afford the £80,000 top up, but it would rather not have those funds tied up in Court when it has ongoing funding requirements for its business and the current litigation. The Plaintiff has suffered extreme financial damage and setbacks arising from its relationship with the Defendant and continues to live with the long-term effects of that. The Defendant has made no secret of the fact that he wishes to destroy my business."

19.     He further notes that:

(i)        The Plaintiff has submitted it is owed approximately £600,000 in costs by the Defendant and in a letter dated 23 January 2025 sent in response to the Defendant's letter of 9 January 2025, the Plaintiff offered the Defendant an assignment of these monies.  No response was given to that offer and instead, the Defendant issued his application for additional security.

(ii)       Insofar as the Defendant's application is based on recent conversations, Mr Hillier has "an axe to grind" with the Plaintiff.

(iii)      The Plaintiff is concerned that any financial information GTC provides to the Defendant will be shared with others and this is not a risk GTC is willing to take.  GTC has therefore offered to provide it in a confidential manner, but this has not been accepted by the Defendant.

(iv)     The application is an unnecessary distraction from the process of preparing this matter for trial, which is due to commence in 2 weeks.

20.     Ms Martin's Thirty-Third Affidavit responds to Mr Hodges' Affidavit.  Her Thirty-Sixth Affidavit was sworn after she was provided with the unaudited accounts.  I have set out above her summary of PWC's comments.   In addition, Ms Martin raises complaints about a "lack of transparency" on the part of GTC by reference to matters set out in her Eleventh Affidavit, sworn on 1 March 2019.

Discussion

21.     Master Thompson dealt with the issue of security comprehensively in June 2019.  He did so on the basis of the material provided to him by the Defendant, his assessment of the proportionate and recoverable costs that would be incurred by the Defendant in progressing this matter to a trial on the basis of a time estimate of 5 days, and he made an order that extended through to trial. Crucially, his order was made to support the undertaking given by the Plaintiff's parent company and is not an order simply to provide security of £50,000.

22.     If I am to revisit the issue of security, in my judgment, there must be a material change in circumstances following Republic of Brazil v Durant [2012] JCA 025 such that the security previously ordered is now insufficient. 

23.     However, in this case, the time estimate for trial is still 5 days and the Plaintiff's claim is still a claim under an indemnity which the Defendant denies is valid and/or effective.  Little has changed since the matter was considered by Master Thompson although I do accept that the consent order entered into by the parties in Guernsey in July 2024 provides an added complication.

24.     Ms Martin's Thirty-Second Affidavit contains hearsay evidence from Mr Hillier.  However, he has not provided an affidavit and there may be a variety of reasons why GTC might not have paid sums owing to a former shareholder.  I do not think that the hearsay evidence takes matters much further than the concerns which were raised before Master Thompson about GTC's financial position and that of its parent.

25.     Mr Hillier apparently told Ms Martin that the parent company has no substance and could not meet any adverse costs order.  However, Master Thompson had draft accounts before him; I have unaudited financial statements.  Whilst there may be a disagreement between the parties as to the conclusions, if any, that can be drawn from the audited documents recently provided, the Plaintiff's parent company remains in existence, the Plaintiff continues to be regulated by FINMA in Switzerland and there is no indication that FINMA has any concerns over its financial viability. In my judgment, Master Thompson's conclusions apply with equal vigour to the current position:

"70. I also have to take into account the fact that the accounts provided for the parent are draft accounts. The observations set out above are therefore based on the figures provided to me but they have not been approved by the directors. Nor have the figures been audited. The parent company may not therefore be as financially viable as the picture painted by the representor suggests. This increases the risk of the first respondent not being paid by the parent company and its assurances that it will pay not being honoured in the future."

26.     It follows that I do not regard any of the matters allegedly raised by Mr Hillier as being sufficient to establish a material change in circumstances.

27.     Ms Martin's Thirty-Second Affidavit makes various complaints about GTC's financial and litigation conduct.  Some of that conduct itself pre-dated Master Thompson's decision; some of the criticism post-dated it.  The judicial criticism of the Plaintiff's conduct as a trustee and as a litigant is extensive.  However, a Plaintiff's character is not relevant for the purposes of the test for security for costs set out in A E Smith & Sons Limited -v- L'Eau des lles (Jersey).  Nor do I think that the judicial criticisms identify that the Plaintiff company is now in such financial distress that it amounts to a material change in circumstances which requires the Court to reopen the security previously ordered.

28.     As to the costs, I can readily accept that the Defendant has spent, and will spend, significant sums of money in defending these proceedings.  Those figures are not, and cannot be, determinative given Master Thompson's finding that the parties had engaged in internecine warfare which had led to significant and disproportionate increases in the costs being incurred.  Indeed, according to Ms Martin's affidavit by the end of trial, the Defendant will have spent over £1m defending a claim which has now been quantified for trial at approximately £745,000.

29.     Moreover, little substantive detail has been provided in relation to any of the figures claimed for costs.  For the purposes of the application before me, I think that these claimed costs must be discounted significantly following Procom (Great Britain) Ltd v Provincial Building Co. Ltd [1984] 1 WLR 557 (which was cited with approval in Montague Goldsmith AG (in liquidation) v Goswick Holdings Limited [2020] JRC 245B):

"Furthermore, if very little information is put before the court upon which it can estimate costs, then again it will be reasonable to make a large discount "

30.     There are, however, some islands of certainty amongst the otherwise swirling fog of costs:

(i)        Master Thompson refused to allow any sums for R20's costs, and in my judgment, I should do likewise;

(ii)       at the time of the application before Master Thompson, the costs incurred to date with Collas Crill were said to be £95,753.50 but had not been calculated on the standard basis.  They are now claimed at £219,379 albeit that no substantive detail has been provided nor has an explanation been proffered as to the difference;    

(iii)      Master Thompson exercised his judgment to determine that of the fees incurred with Collas Crill, £50,000 was potentially recoverable by the Defendant were he to prevail at trial and that assessment was not appealed;

(iv)     in my judgment, Master Thompson's assessment of the recoverable costs at that date was entirely appropriate;

(v)      he further decided that a further £65,000 should have been sufficient to progress the matter to trial.  I do not disagree.

31.     On the basis of Ms Martin's current figures, Master Thompson identified 23% of the Defendant's costs with Collas Crill as being potentially recoverable, although I fully accept that he did not approach the assessment in that way.  Between Master Thompson's decision and the end of trial, according to Ms Martin, the Defendant will have incurred a further £397,639 with Collas Crill.  There is nothing before me to indicate that the Defendant and/or his lawyers have changed their approach to this litigation such that the recoverability rate applicable to their costs might have altered.  Applying a 23% allowance to the amount claimed from Master Thompson's decision to the end of trial, gives an amount of recoverable costs in the sum of £91,456, as opposed to the sum of £65,000 allowed by Master Thompson. 

32.     I accept that the fees incurred with Counsel and experts are significantly higher than those allowed by Master Thompson (£238,926 as against £10,000) but in absence of any substantive detail, it is difficult, if not impossible to form a proper view as to recoverability.   In my judgment, although somewhat arbitrary, it is not unreasonable to apply a similar 23% allowance, which would give a figure for the recoverable costs of counsel and experts in the sum of £54,952.

33.     In terms of the overall likely recoverable costs, on the basis of applying the 23% recoverability rate, these have therefore increased by a total of £71,408. 

34.     Whilst an increase in recoverable costs of that amount might appear to be material as against the initial total of £125,000 allowed by Master Thompson, that is only one half of the equation. 

(i)        In the course of these and related proceedings (conducted under Case No, 2017/278) the Plaintiff has obtained orders for its costs to be paid from the trust on the usual trustee indemnity basis.  In correspondence, the Plaintiff's advocates have assessed those costs as amounting to approximately £600,000.  In support of those orders, Collas Crill hold a sum in excess of £328,000.  One of the orders (for some £200,000) is subject to appeal, and the other (for some £400,000) is still subject to taxation.

(ii)       The Defendant also has the benefit of an order for costs in his favour against the Plaintiff and approximately £81,000 remains outstanding prior to taxation. 

(iii)      Even allowing for a significant 20% reduction in the amount of costs owing to the Plaintiff and yet to be taxed on the trustee basis, and the amount likely to be due to the Defendant under his existing costs order after taxation gives a figure due to the Plaintiff of just under £300,000, which sum is currently held by the Defendant's Advocates, albeit that they are holding it on behalf of another client. 

(iv)     The monies due to the Plaintiff are assets of the Plaintiff which are now within the jurisdiction, within the control of the Court given that they emanate from costs' orders in favour of the Plaintiff and are also within the control of Collas Crill as they hold the funds.

(v)      Quite apart from the fact that there may inevitably be a netting of costs' orders before any funds are finally paid away to the potential prejudice of any party, given the control mechanisms in place, these additional assets amount to additional security for costs which has been provided since Master Thompson considered the position. 

35.     In my judgment, when determining whether there has been any material change such as might allow Master Thompson's order to be reopened, the apparent increase in the Defendant's recoverable costs must be put alongside the increase in the assets of the Plaintiff which are now subject to the control of the Court and/or the Defendant's advocates.  When the two are side by side, it is evident that any apparent increase in recoverable costs is not material.

36.     As to the other factors raised by Ms Martin:

(i)        She complains that GTC has failed to respond properly to correspondence about security for costs.  Having reviewed the correspondence between the parties, I do not accept the criticisms made.  If anything, it was the Defendant that failed to engage with the Plaintiff and chose instead, to issue a summons.

(ii)       There is always a risk of a trial going part heard.  However, given the additional assets of the Plaintiff which are now subject to the control of the Court and/or the Defendant, any increase in costs which might occur as a result of the trial going part heard would not be material.

(iii)      She refers to a "lack of transparency" as set out in her Eleventh Affidavit, sworn on 1 March 2019.  This affidavit and/or its contents would have been available to Master Thompson in June 2019 and in my judgment, it cannot amount to a material change in circumstances.

37.     In my judgment, there has been no material change in circumstances, and certainly nothing "so special or unusual" (which was the phrase used in Home Farm Development and Others-v-Le Sueur) that might justify the revisiting of the amount of security for costs and on that basis alone, I would dismiss the application.

38.     Further and/or alternatively, if I were to be wrong about there not being any material change in circumstances, I would in any event hold that the application was too late.

39.     The overwhelming majority of the costs have been incurred by the Defendant; on Ms Martin's figures some £782,035 has been incurred and there is a further £251,430 to be incurred.  The Defendant committed to incurring these costs on the basis of the security previously ordered, and without having raised the issue of additional security in correspondence with any vim.  Indeed, Mr Tchenguiz has defended these proceedings from 2018 to the end of December 2024 on the basis of the security ordered by Master Thompson and it was not until January 2025 that he really started asking further questions about this issue.  In my judgment, echoing the comments of the Court in Banks v Apex, it is "now too late to change tack".

40.     That is particularly so as this application:

(i)        was first mooted in October and November 2023, but not pursued by the Defendant;

(ii)       could have been made shortly after the Guernsey consent order in July 2024 and/or at or about the time the trial dates were fixed with the Royal Court in September 2024 when the majority of the matters now raised by Ms Martin as allegedly giving her cause for concern would have been known; and

(iii)      is being heard 2 weeks before the start of the highly-contested trial and I note the comments of Sir Michael Birt, Commissioner, in his judgment dated 17 February 2025 in which he declined to order the trial of a preliminary issue on the basis that, amongst other things:

"(vi) In my judgment, the risk of the trial date having to be vacated should be avoided as far as possible. This litigation has been going on for many years with many false starts for the hearing of the trial. There are witnesses of fact who will be giving evidence about matters as long ago as 2014. In my judgment, it is vital that the trial date be held to and that any step which increases the risk of the trial date having to be vacated should be avoided."

41.     Further, in my judgment, the usual order would be for a stay of proceedings pending provision of the additional security which would inevitably impact on the trial and/or trial preparations.  Even were I not to order a stay pending provision of any additional security, that risk remains, especially given Master Thompson's finding that "what exists on both sides is internecine warfare and a total lack of trust."  The practical consequences of any order I might make are matters which I must take into account when exercising my discretion as to whether to order additional security, particularly if those consequences might contravene the Overriding Objective (paragraphs 1/6(2)(a), (2)(b), 2(d), 2(f) and 1/6(6)(b), (6)(g) and 6(l)) or conflict with the very recent observations of the Royal Court in this case.

42.     Accordingly, I decline to order any additional security for costs on the basis that there has been no material change in circumstances and/or in any event, the application is made too late and/or cannot be ordered without interfering with the trial and/or preparations for the same.

Authorities

Geneva Trust v Tchenguiz [2025] JRC 046.

Geneva Trust Company (GTC) SA (formally known as Rawlinson Hunter Trustees SA v Tchenguiz [2019] JRC 110A.

Royal Court Rules 2004.

Café de Lecq v Rossborough (Insurance Brokers) Limited [2011] JLR 031.

A E Smith & Sons Limited -v- L'Eau des lles (Jersey) [1999] JLR 319.

Banks v Apex [2023] JRC 197.

Home Farm Development and Others-v-Le Sueur [2014] JRC 241.

Geneva Trust Company (GTC) SA (formally known as Rawlinson Hunter Trustees SA v Tchenguiz [2019] JRC 110A.

Republic of Brazil v Durant [2012] JCA 025.

Procom (Great Britain) Ltd v Provincial Building Co. Ltd [1984] 1 WLR 557.

Montague Goldsmith AG (in liquidation) v Goswick Holdings Limited [2020] JRC 245B.


Page Last Updated: 18 Mar 2025


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