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Editorial Miscellany
Enforcement Of English Judgements In Jersey
In Re Hardwick[1], the Royal Court decided that a judgment obtained in an English county court was not capable of registration in Jersey under the Judgments (Reciprocal Enforcement) (Jersey) Law 1960, Article 4(1), even though the county court proceedings had between the date of the original judgment and the date of the application for registration been transferred to the High Court for the purposes of enforcement. At the time, the decision was the subject of a note in the Law Quarterly Review[2]. The purpose of this further note is to draw readers’ attention to a recently reported decision of the Staff of Government Division of the High Court (effectively the Court of Appeal) of the Isle of Man, in which the same issue was briefly discussed, and which decision referred to an earlier decision of the Staff of Government Division in 1991, which decided the point in the opposite sense to the Royal Court in Hardwick.
The more recent Manx case is Davis v VAG (UK) Ltd[3]. There the appellant had previously brought county court proceedings in England against the respondent, but had failed. Costs had been awarded against him. The respondents now sought to bring fresh proceedings at common law in the Isle of Man court against the appellant, based on the costs order of the English county court. The appellant in his defence to the fresh proceedings pleaded that an English county court judgment (such as the costs order was) was not enforceable in the Isle of Man, since it could not be registered under the Judgments (Reciprocal Enforcement) (Isle of Man) Act 1968. The respondents successfully applied for this part of the defence to be struck out. The appellant appealed to the Staff of Government Division.
His appeal failed. The appellate court accepted that an English county court judgment without more could not be registered under the reciprocal enforcement legislation. But it pointed out that the Act did not in any way derogate from the common law right to enforce a foreign inferior court judgment by bringing fresh proceedings in the Isle of Man.
Thus far, the matter is orthodox, and no doubt the same position would obtain in Jersey. The appellant referred however in argument to an earlier decision of the Staff of Government Division, Video Vision Broadcast v Stapleford Flying Club Ltd[4], submitting that this case stood for the proposition that county court judgments from England could only be enforced in the Isle of Man if they had first been transferred in England to the English High Court for the purposes of execution. The Staff of Government Division rejected the appellant’s submission, on the basis, already stated, that the reciprocal enforcement legislation was irrelevant to the common law right to bring fresh proceedings on a foreign judgment, as the respondents had done.
But the earlier Manx case is of interest to Jersey lawyers because it dealt with precisely the same point as that dealt with in Hardwick but came to the opposite conclusion. In Video Vision Broadcast, the respondent had obtained an English county court judgment against the appellant, but by that time the appellant had moved to the Isle of Man. The respondent obtained the transfer of the proceedings from the county court to the English High Court, and then proceeded to register the judgment in the Isle of Man under the Judgments (Reciprocal Enforcement) (Isle of Man) Act 1968, section 4(I).
The appellant applied to set aside the registration, on the basis that the judgment had not been “given in the superior courts” in England, as required under section 1 of that Act, since “superior courts” were defined so as to exclude county courts in England. It will be observed that the wording of the equivalent Jersey legislation is identical in this respect, and that it was precisely this submission which found favour with the Royal Court in Hardwick. However, both at first instance and on appeal, the Isle of Man courts took the view that, once the judgment of the county court had been transferred to the High Court for the purposes of being enforced, such a judgment was for the purposes of the Manx legislation relating to enforcement a judgment of the High Court in England, and the registration was accordingly valid.
The appellant, like the Royal Court in Hardwick[5], founded his argument on the use of the word “given”, in the phrase “judgments given in the superior courts of any country outside the Isle of Man”. The argument was that this was not a judgment “given” in the sense of “pronounced” in the English High Court. The judgment itself had been pronounced in the county court. But both the first instance and the appellate courts rejected this view. At first instance, Deemster Corrin said:
“It seems to me, therefore, that there is no particular magic in the use of the word “given” in the 1968 Act. It is quite simply a very suitable and appropriate verb to describe the method of the declaring of a judgment, and so long as the document which arrives in the Island from another country can be labelled correctly and legally as a judgment issued by the superior court, that seems to me to be sufficient for the purposes of the 1968 Act”.
The appellate Court said:
“We agree with Deemster Corrin. In our view the word “given” cannot in this sense be used as a term of art. Many judgments in England are no longer given but are handed down in the American style. The term “entered by” would be more accurate to describe an historical act which would exclude judgments later transferred”.
It is a pity, but no-one’s fault, that this case was not known to the parties in the Hardwick case, and therefore not cited to the Royal Court. In view of the fact that the relevant terms and phrases in the reciprocal enforcement legislation in Jersey and the Isle of Man are identical, this decision must be of some persuasive force, and must lessen the value as a precedent of the Hardwick decision. In any event, as we now know, the doctrine of precedent is different in Jersey. In particular “the doctrine of stare decisis as expounded by the English courts is not part of the law of Jersey”. The State of Qatar v Al Thani[6]. The Royal Court no doubt has a duty to follow its own decisions, unless convinced that the decision in question was wrong. But the Isle of Man case in this respect gives litigants considerable ammunition for the future.
Recovering The Proceeds Of Fraud
In Re a bank account in the name of Hamptonne International Ltd.[7] The Royal Court had to deal with the question who was entitled to the proceeds of a bank account that appeared to have been obtained by fraud.
The facts as stated in the judgment of the Royal Court are not given in any detail, and therefore it is only possible to give the barest outline of what happened. It appears that an American citizen, Mr Khan, was invited by a Nigerian fraudster to pay money into the bank account of a BVI company, called Hamptonne International Ltd, with a Jersey bank, in return for some percentage of a very large sum of money said to be available as a result of Nigerian civil engineering work. (This is usually known as “advance fee fraud”). The court ultimately took the view that Mr Khan, although he was “greedy” was not a party to the fraud and that it was a civil rather than a criminal fraud. It also appears – crucially – that other monies, presumably from other victims were also paid into this account. We are not told anything about withdrawals, or final balances.
Subsequently, the Jersey bank became aware of the possibility of a fraud having taken place, and froze the account. It then launched proceedings by way of representation to the court, asking for directions as to how it should deal with the funds standing to the credit of Hamptonne International’s account with it. To this representation Mr Khan and Hamptonne International were both joined. In fact Hamptonne International Ltd took no part in the proceedings. Accordingly, the arguments presented to the court were inevitably rather one sided, in that the bank accepted that they simply held the account, and it was a matter of indifference to them whether Hamptonne International or Mr Khan (or indeed anyone else) was entitled to the benefit of that account. What they were concerned to secure was immunity from liability for paying the wrong person. On the other hand, Mr Khan was concerned to recover, if he could, the money he had been deceived into paying over and, of course, there were no other claimants before the court. This means that the decision (which ultimately went in favour of Mr Khan) cannot be regarded as conclusive in any case where the account holder or some other person claims to be beneficially interested in priority to the alleged victim of the fraud, or, indeed, where the bank itself, no doubt declaring a plague on all their houses, argues that nobody should have the money but that the bank should keep it. These are all cases for another day.
Curiously the Court in its judgment took a few moments to consider whether it made any difference that this was a representation by the bank seeking directions as to what it should do with the money in the account, rather than a direct claim by the alleged victim to trace the proceeds of fraud into the account. The court thought that in the latter case there
“might be some problem as to whether it was a common law tracing or an equitable tracing”.
It is difficult to see why there should be a distinction between the two forms of proceeding. And it is not made clear what the court thought the problem (if any) might be in the latter case. Perhaps it was considered to be the difficulty of tracing through a mixed bank account. The Court stated and relied on the proposition enunciated by Millett J in El Ajou v Dollar Land Holdings plc[8]. This passage deals with the question why a person who is admitted to have a proprietary claim in equity can trace through a bank account in which money has been mixed with other money. But it does not explain why the victim of fraud has an equitable proprietary claim in the first place. The Court did not do this. In fact, the point is actually explained earlier in the same case by Millett J, i.e. that, having been induced to pay money by fraud, the victim can rescind the transaction and revest the equitable title in himself, as indeed can any other person who has been similarly defrauded.
Also curiously, but rather more seriously, the Royal Court did not focus on the extract that it did cite from Millett J’s judgment, to the effect that the reason why a person with an equitable proprietary claim can trace through a mixed bank account is because of the existence in English law of the equitable charge. But the equitable charge is not a concept native to Jersey. Traditional security interests in Jersey law involved certain kinds of hypothec (in the case of immoveable property) and the pledge, the hypothec simpliciter, and the droit de gage (for tangible moveables). Unlike English law, where the equitable charge was known from an early date, there was no satisfactory method of creating security in intangible moveable property, and as a result the Security Interests (Jersey) Law 1983 was passed.
Now it is true that the Trusts (Jersey) Law 1984, as amended, has put the concept of the trust in Jersey on a statutory footing, and trust are to be recognised as valid and effective. These statutory rules include rules on following trust property (see Article 50). But it does not follow that equitable charges are thereby brought into Jersey law. It is also true that, in Re PKT Consultants (Jersey) Ltd[9] (mentioned, but not discussed, in the present case) the Royal Court followed the English case of Re Hallett’s Estate[10], and held that equitable tracing, giving rise to a charge on assets, was to be applied in Jersey. But the facts of that case were very different from the present, there was argument really only on one side – in favour of tracing – and Tomes DB in his judgment expressly said that he had not had time to research the Jersey position. So this cannot be regarded as a concluded view. No-one could deny the usefulness of the equitable tracing process, especially in a case like this. But when the Court is faced with – indeed cites and relies on – a passage in an English judgment which explains that the process only works because of a concept which is otherwise unknown to Jersey law, it behoves the Court to say how that process can be make to work in Jersey. This it did not do.
Moreover, the discussion of the equitable charge aspect of the matter in the first El Ajou case was necessarily brief, because that case was only concerned with principle of liability, and not with the amount which might be recovered by the plaintiff. The question of quantum was determined in a second case between the same parties, decided by Robert Walker J in December 1994[11]. It is this case which explains how it is possible for one of perhaps many victims of fraud in essence to scoop the pool, and take the whole of the funds standing to the credit of a bank account when many victims must have sent their money into that bank account. This judgment expands considerably on the concept of the equitable charge and its importance in this context. But it was not cited. In the present case, where it appeared that other monies had been paid into the account, this was an important point. Alas, it was not dealt with.
The Court nonetheless concluded that Mr Khan was entitled to trace his money into the account of Hamptonne International with the bank. Having reached that conclusion, the court then went on to refer to the judgment of Goulding J in the case of Chase Manhattan Bank NA v Israel British Bank (London) Ltd[12], dealing with the recovery of mistaken payments in equity. Given that the Court considered it appropriate to mention this case at all, it is strange that this was not a direct citation, but one made only through the medium of a work by Brindle & Cox, The Law of Bank Payments. But even if the case were relevant, the Court had obviously not been told that the decision in this case, insofar as it concluded that money paid under mistake (without more) would be held by the payee on trust for the payer, was disapproved by Lord Browne-Wilkinson in the House of Lords in Westdeutsche Landesbank v Islington London Borough Council[13]. The significance of this part of the judgment is very difficult to assess.
So, whilst the decision itself is to be welcomed, and indeed on these facts, where there apparently were no other claimants to the money in the account, any other result would have seemed inconsistent with a civilised system of justice, there must nonetheless be a little unease about the precise juridical basis for reaching the decision, consistently with the principles of Jersey law. This is not, after all, a case of a beneficiary tracing misapplied trust money, where the Trusts (Jersey) Law 1984 would be concerned. This is a case of recovery of the proceeds of fraud, entirely apart from trust law.
One final point concerns the costs orders made. The court awarded indemnity costs to the bank, but costs only on the standard basis to Mr Khan (in both cases to be paid out of the monies in the account). There is no doubt that Mr Khan only recovered standard basis costs because the court thought that he had been greedy. He had contributed to his own misfortune. But it is interesting that the court thought it appropriate to award indemnity costs to the bank. The poverty of the facts stated in the judgment means that we are not clear whether there would be money left in the account after Mr Khan had recovered the funds he said he had lost, but if there was not, and there was any doubt as to whether Mr Khan would recover everything that he was owed, then effectively he would he paying the costs of the proceedings. Yet it does not appear that the court investigated in any way the conduct of the bank. For example, nothing was said as to how promptly the bank reported its suspicions of the existence of the proceeds of fraud in its account, or whether it complied with all its duties under the appropriate money laundering regulations. It does seem as if the court was in a sense “rewarding” the bank for bringing the matter before it. It is very similar to treating the bank as though it were a trustee, although of course banks holding customers’ money do not do so as trustees. Moreover, the court does not seem to have taken into account any benefit accruing to the bank by having the use of its customers’ money over a length of time.
The Age Of Majority
On November 1st, 1999[14] the Age of Majority (Jersey) Law 1999 came into force converting a swathe of eighteen and nineteen year old young persons into adults in the eyes of the law. Will they notice? Notwithstanding that the customary law provided that “la minorité finit à l’âge de 20 ans accomplis”[15] statute law had already extended their capacity to do most things desirable in the eyes of youth.
They could obtain a licence to drive a motor car at the age of 17[16] and at the age of 18 they could (lawfully) purchase intoxicating liquor at licensed premises[17] place a bet on the Grand National,[18] and vote in public elections[19]. The Marriage of Infants (Jersey) Law 1961 had even enabled them in certain circumstances to dispense with the requisite parental consent to marry.
What they have gained is the full capacity to make a contract. But the corollary of course is that they have lost the protection which the law formerly accorded them. The Court would usually uphold a contract with a minor for “nécessaires”. But the other contracting party was bound to take care. Le Geyt put it this way:-
“Comme le mineur ne doit pas demeurer sans secours, on ne le doit pas soûtenir dans des dépenses inutiles. Le Créancier y doit apporter de la modération aussi bien que de la bienveillance. Il doit considérer l’âge, la condition, le bien, la famille et les inclinations du mineur, et ne pas profiter de sa foiblesse, sous prétexte de luy rendre service.”[20]
The Schedule to the law contains the usual provisions for consequential amendments to other legislation.
One consequential curiosity arises however in relation to the Education (Jersey) Law 1999, not specifically mentioned in the Schedule, and passed by the States two months later. Article 3 of the Age of Majority Law provides that the reduction of the age of majority to eighteen shall apply “in the absence of a definition or any indication of a contrary intention” in (inter alia) any subsequent enactment. Article 1 of the Education Law defines a child as “a person who has not attained the age of nineteen years”, and states that a “parent” in relation to any child, includes a guardian and every person who has the actual custody of a child. This is certainly both “a definition”, and an “indication of a contrary intention”, but can one have custody of a person who has attained the age of majority? A similar point arises in relation to Article 30 of the Education Law which provides that the Education Committee “may cause any child who is believed…. to have educational needs to be assessed…..”. But what if the eighteen year old “child” does not want to be assessed? Perhaps the answer is that at least he now has the capacity to engage an advocate.