Recovery of external lawyers’ costs

Dispute resolution in Guernsey is commonly international in its nature, frequently involving parties outside of this jurisdiction. 

However, Guernsey is a distinct legal jurisdiction and only Guernsey Advocates are qualified to advise on Guernsey law and have rights of audience before the Guernsey courts. 

Given the global nature of business in Guernsey, it is not uncommon for lawyers in other jurisdictions to be involved in disputes before the Guernsey courts.  For example, parties based outside of Guernsey may have lawyers in their “home” jurisdiction with whom they have long established relationships with or have panel solicitors they use.  In addition, where a matter involves a particular specialist area of law on which there is limited Guernsey case law or where Guernsey law may be influenced by that of other jurisdictions, Guernsey Advocates may instruct specialists from the English Bar or another appropriate jurisdiction. 

Recoverable costs

The starting point as regards the recovery of costs incurred in a dispute before the Guernsey courts is that only the costs of Guernsey Advocates are recoverable.  The Royal Court has rules regarding costs and fees which set down the rate of recoverable fees for Advocates. 

However, it is recognised that there will be circumstances where the use of external lawyers is beneficial to the administration of justice. The courts will allow recovery of the costs of external lawyers where “exceptional and appropriate”. 

Guidance on “appropriate and exceptional” circumstances was set down in the Royal Court case of Ladbrokes PLC v Galaxy International Limited, and several examples were provided:

• Where external lawyers have necessary full specialist expertise:
  • This would cover circumstances where there is a highly specialist area of expertise, such as catastrophic brain injury;
  • Cases of this nature do not frequently occur in Guernsey and there may not be an Advocate with the necessary, in-depth specialist expertise. Specialist advice from an external lawyer will be in the interests of justice in that case.
• Where litigants from outside Guernsey have long-standing ties with external lawyers;
  • For example, the matter before the Guernsey court may be part of a wider multi-jurisdictional dispute and lawyers in a different jurisdiction are dealing with the management of that dispute;
  • The external lawyers will have existing knowledge of the underlying dispute and the facts which may assist the litigation in Guernsey.
• Where disputes in Guernsey involve considerations of English law or that of other jurisdictions;
  • Some areas of Guernsey law, for example, tortious claims, are strongly influenced by English law, and there may be the need to look to the law in other common law jurisdictions such as Australia to determine the relevant principles or to consider the development of the law in another jurisdiction without the intervention of statute;
  • The court will allow provision for the costs of legal research of external lawyers in these jurisdictions where it cannot be done by Guernsey Advocates;
  • Notable decisions in Guernsey, such as Morton v Paint (on occupiers’ liability) indicate that reference to legal developments in other jurisdictions are a necessary part of decision making in the Guernsey courts.
• Where using external lawyers is the cheapest and speediest way of getting to the heart of a problem:
  • This exception commonly applies to the use of English counsel (but may also include solicitors) to advise on the best solution to a problem;
  • For example, junior counsel who frequently advise on value in personal injury cases may be able to prepare a schedule of loss (which can involve complex calculations) more speedily and for proportionate cost.
• Where document heavy cases may involve outsourcing to ease the burden on the Guernsey firm’s resources:
  • Firms in Guernsey tend to be smaller in size than English firms and may not have capacity to manage a large document-based exercise;
  • Outsourcing to or assistance from external firms may help with providing the resources appropriate to the case.

These examples are not exhaustive but provide an example of the practical and constructive approach the Guernsey court will take in supporting litigants to access justice.

If you anticipate issuing proceedings in Guernsey and have retained lawyers in another jurisdiction (for example if you are an insurer using a panel firm) it is recommended that Guernsey Advocates are involved from an early stage to ensure that appropriate advice on recovery of costs is received. 

Finally, it should be noted that VAT is not payable in Guernsey.  Therefore, if external lawyers have charged VAT on their costs, that VAT is unlikely to be recoverable under a costs order in the Guernsey courts. 

At Ferbrache & Farrell LLP, we frequently work with firms in other jurisdictions, insurers and unions.  We welcome a collaborative and proportionate approach with our colleagues in other jurisdictions to ensure the best result is achieved for the client.