Donkey work

Guernsey and Jersey share a similar relationship to that of Lancashire and Yorkshire – neither likes being mistaken for the other and ritual forms of abuse are commonplace. Guernseymen are known as “donkeys” and Jerseymen as “toads”. What they do share, however, is a fierce sense of independence from both England and France. Indeed, Guernsey will celebrate its 800th anniversary of independence in 2004.

The effect of Guernsey’s constitutional independence has been an ability to attract and retain substantial numbers of financial institutions. Rated a “first-division” offshore financial centre by the Financial Stability Forum earlier this year, and likely to be excluded from the Organisation for Economic Cooperation and Development (OECD) blacklist of uncooperative jurisdictions, the future for Guernsey looks extremely bright.

During the 1970s and 1980s, the bulk of Guernsey’s offshore business was transactional work involving trust and other fund structures. In recent times, however, the litigious age has spread to Guernsey, which is now home to some of the most complex and high-value litigation outside London.

There are a number of reasons which explain this increase in litigation. First, the boom in financial services work of the 1980s and 1990s has, much the same as in London, resulted in greater amounts of commercial and financial services litigation – some things, after all, inevitably go wrong. With more than 79 banks from various parts of the world, the Guernsey legal market has had to develop to accommodate the increased demand for litigation services.

Second, much of Guernsey’s early business was founded on the settlement of trusts of high net-worth for individuals. As settlers begin to die, so disputes arise between those who have benefited under a trust structure and those who think they ought to have done. In addition, whenever there is a shortfall in anticipated asset value or income, the traditional tactic of the aggressive plaintiff is to include as many parties as possible, particularly if they are insured. As a result, there has been a huge increase in litigation against trustees, accountants and even lawyers, all accused of mismanaging the family wealth.

Third, it should be remembered that Guernsey is not a provincial town or a regional city. It is, notwithstanding its small geographical area and relatively small population (60,000), a whole society generating its own range of legal and other problems. It has its own parliament (the States) and all the departments of the executive which one would expect from an independent state, the one major exception being foreign affairs, for which the UK is still responsible.

The level of activity in the public and privatised sector has inevitably meant that litigation has arisen between the States and those who come into contact with it. Add to that a general increase in the number of staff bringing legal proceedings against their employers (of which the States is the biggest) and, although judicial review is still in its infancy, litigation involving the public sector increases year on year. And the likely incorporation into domestic law of the Human Rights Convention in the early part of 2002 can only lead to further activity in this area.

An indication of the extent to which the States anticipates an increased demand for legal services is its recruitment of four new lawyers in the last year and the fact that it is still advertising for more.

On an island of full employment, recruitment is always a hot issue. The most substantial law firms, Ozannes and Carey Langlois, continue to recruit wherever possible. Given the tight employment market and the need to bring in the kind of staff necessary to service client demands, firms have traditionally looked to London.

Those arriving from London to litigate in Guernsey are met by a system which, although based on the Supreme Court Rules, has not yet incorporated to the letter the Woolf Reforms, and is still struggling to understand their spirit. That said, due to the fact that the Guernsey Court of Appeal (where appeals from the Royal Court are conducted) is constituted primarily of senior English QCs (the present managing judge is Richard Southwell QC), the effect of the Woolf Reforms cannot be ignored in Guernsey. In a case earlier this year, by reference to, among other things, the Overriding Objective, Ozannes succeeded in persuading the court that it should give effect to a Notice to Admit Facts for which, in fact, there is no formal provision under the Guernsey Rules of Civil Procedure. Although the Guernsey court was not necessarily familiar with the details of the Woolf Reforms, the matter was not appealed, perhaps because all parties knew that the Court of Appeal would look dimly on such an appeal.

A significant omission from the Rules of Civil Procedure is the requirement to exchange witness statements of fact prior to trial. While some firms may seek to exchange statements in any event, the absence of any formalised procedure means that the less progressive firms can cause unnecessary delays and costs by failing to produce key evidence until much later in the day. In a recent case, important evidence on quantom was not disclosed until six weeks before trial. Had it been necessary to prepare and exchange witness statements in accordance with Part 32 Rule 4 (or even RSC Order 38 Rule 2A), that case may well have settled significantly earlier.

That said, the great advantage of litigating in Guernsey is that your advocate will know both your opponent and the judiciary very well. The advocates’ offices are all close to the court and if a case can be settled by way of negotiation, it usually is.

Such ease of negotiation may also explain the slow development of mediation services. However, with the influx of experienced lawyers from the UK and elsewhere, the concept of mediation is becoming less alien to the island’s lawyers and, of course, the clients.

Now is a time of great change and opportunity in Guernsey’s legal market. It has developed City-quality legal services in banking and corporate work to meet the needs of the financial services industry, which has been nurtured over the last 30 years. However, the challenge now is to provide equivalent quality litigation services. This has led to a high demand for experienced lawyers and also caused a number of the smaller firms either to merge locally or to seek associations with smaller Jersey firms in order to preserve their market share.

Guernsey’s history shows that it is well used and well equipped to adapt to the prevailing economic circumstances. To date, the steps taken by Guernsey show that it should be well able to meet those demands. The donkey may not be quite so stubborn after all.

Robert Shepherd is a litigation lawyer at Ozannes.