The Jersey Law Review - June 2002

EDITORIAL MISCELLANY

COMPANIES (AMENDMENT NO. 6) (JERSEY) LAW 2002

Important amendments to the Companies (Jersey) Law 1991 (“the 1991 Law”) have been introduced by the Companies (Amendment No. 6) (Jersey) Law 2002 (“the No.6 Amendment”) which has been registered and will come into force later this year.  The amendments are said to reflect changes in international best practice over the past decade, but also to bring greater flexibility in the use of corporate vehicles for the holding of assets and the conduct of business.  The 1991 Law provided for the incorporation of companies the capital of which was divided into shares having a nominal value, and the liability of members (shareholders) was limited to the amount unpaid on their shares.  All companies were required to have at least two shareholders and, as a general rule, a company with more than 30 shareholders was treated as a public company for which special rules applied.

            The No. 6 Amendment introduces a wider range of options as follows –

(a) a company may be formed with members who hold shares, or with members whose liability is limited to the amounts they guarantee;

(b) a company may be formed either with shares that are expressed as having a nominal value (“par value shares”) or with shares that are not expressed as having such a value (“no par value shares”). 

A company may not, however, have both kinds of shares, although it may have guarantor members as well as shareholders, and may have only guarantor members. 

A private company may now be incorporated with a single member.^[1]  Companies may now be classified in a number of different ways.  A company may be a private company or a public company.  It may be (1) “a par value company”^[2], i.e. a company having par value shares, whether or not it also has guarantor members; (2) “a no par value company”^[3], i.e. a company having no par value shares, whether or not it also has guarantor members; or (3) “a guarantee company”^[4], i.e. a company with only guarantor members.  It may be a limited company or an unlimited company.  A limited company^[5] is one where the liability of any shareholder is limited to the amount unpaid on the share, whether or not it also has members whose liability is unlimited.  An unlimited company^[6] is one where the liability of shareholders is unlimited, i.e. where no person holds a limited share and no person is a guarantor member. 

The No. 6 Amendment also provides that two or more companies may merge, subject to safeguards for minority shareholders and creditors, to form a single company.  This facility to merge will not however be available if the company has any members who hold unlimited shares or are guarantor members (although these restrictions do not apply to the merger of wholly-owned subsidiaries.^[7]

It is now possible for a foreign incorporated company to apply to the Jersey Financial Services Commission to continue in existence as a company incorporated in Jersey under the 1991 Law.  The JFSC will have to satisfy itself that such a company is authorized to make an application under its own domestic legislation and that, when it becomes incorporated in Jersey, it will cease to be incorporated overseas.  Similarly, a Jersey incorporated company will be able to apply to the JFSC to seek continuance as a body corporate under the law of some other jurisdiction.^[8]

The No. 6 Amendment clarifies the circumstances in which a company may offer financial support to others to assist them in acquiring its shares.  It also extends the maximum period for which a person can be disqualified from being a director of a company to 15 years in line with the maximum period under the Bankruptcy (Désastre) Jersey Law 1990.^[9]

These substantial and generally admirable amendments to the 1991 Law contain various other provisions relating to, inter alia,  the concepts of holding subsidiary companies, the redemption of shares, the disqualification of persons for the management of companies and the disclosure of inspectors’ reports to overseas regulatory authorities.  It is perhaps surprising that the opportunity was not taken to provide for the maximum amount of security to be furnished pursuant to Article 128(3) to be fixed by subordinate legislation.  The No. 6 Amendment increases this figure from £5,000 to £10,000.  It must be unusual now for monetary figures to be amended by primary legislation. 

Finally, we draw attention to one small blemish.  By the schedule to the No. 6 Amendment the long title of the Borrowing (Control) (Jersey) Law 1947 is amended to insert the words “the admission of members of bodies corporate and the continuance on the Island of bodies incorporated abroad”.  Could the draftsman please note that one perches on a rock but that one lives in the Island?

EVIDENCE IN CIVIL PROCEEDINGS

The draft Civil Evidence (Jersey) Law has been circulated to local legal practitioners.  It is a law to provide for the admissibility of hearsay evidence and the proof of certain documentary evidence in civil proceedings.

The draft Law stems from the Report (No. 4) of the Jersey Law Commission published in September, 2000 entitled The Best Evidence Rule in Civil Proceedings.  The conclusions and recommendations of the Jersey Law Commission are that, in effect, certain sections of the Civil Evidence Act 1995 of the United Kingdom should be enacted in Jersey.

The hearsay rule provides that a statement, other than one made by a person while giving oral evidence in proceedings before the court, is inadmissible as evidence of the matter stated.  It allows an out of court statement to be admissible if the mere fact that it was made is of some relevance in the proceedings.  However if the court is asked to rely on it, as evidence of the very matter stated, it is inadmissible as hearsay. 

The Jersey Law Commission considered that in civil proceedings, in the absence of juries, the hearsay rule was unduly restrictive.  It is believed that judges are capable of evaluating evidence including attributing appropriate weight to evidence that comes to them indirectly.  This also reflects the trend in the United Kingdom to ensure that all relevant evidence is capable of being adduced and that litigation should be conducted in a more open climate.

The report accompanying the draft law indicated that it is intended to achieve the following broad results in civil proceedings -

(1)        evidence should no longer be excluded merely on the ground that it is hearsay;

(2)        hearsay evidence should remain a category of evidence  which is accorded special attention by the courts;

(3)        to this end, parties should give notice, where reasonable and practicable, that they intend to rely on such evidence;

(4)        facilitation of proof of statements contained in documents (essentially where the documents are relevant not for the statements they contain but because of the operative effect of the documents themselves e.g. written contracts);

(5)        the admissibility in evidence of a copy document;

(6)        the possibility for “fast track” proof of documents which are part of the records of the business or of a public authority.

VRAIC

It may come as a surprise to some readers that Jersey retains on its statute book a law which regulates the harvesting of seaweed.  Although in all probability seldom consulted, let alone enforced, the Loi (1894) sur la coupe et la pêche des vraics le long des côtes de l’lle represents the latest, perhaps the last, of a series of statutes relating to a once important aspect of the Jersey economy.   

Even the briefest of looks at the Loi gives a fascinating insight.  Article 1 permits the cutting of vraic along all the Jersey coast between the first day of February and the thirtieth day of April, inclusive, from sunrise on Mondays to sunset on Saturday.  Article 2 forbids the carrying of vraic in boats or by means of a net, other than on the coast of Noirmont, before the third day after the beginning of the permitted harvesting season.  Excepted from this are places which are impassable to carts.  Similarly, it is prohibited to utilise boats to cut or tear vraic from a place where on the same day a cart could have gone.

The rationale behind some parts of the Law must be comprehendable to only a select few.  For example, by Article 4 one is prohibited from harvesting vraic de venue in the Bay of St Aubin in a depth of water which exceeds two feet and from piling up vraic on the west coast, between Grève-de-Lecq and Noirmont Point.  In a number of particular bays (bearing such delightful names as Havre de Dehors and Havre des Haut Havres) it is forbidden to deposit vraic beyond the plein de Mars (the high tide mark of the full spring tide).

It is clear that to understand the now repealed Article 5 one needed to know one’s way amongst the rocks.  For example, the harvester was not permitted to take vraic de venue from the bays of St. Brelade and St. Ouen save from beyond (that is on the seaward side of) an iron bar attached to named rocks which included ones named Bunion de Haut at Le Braye, the Vieille Chaussée in le Havre du Petit Port and le Rocuet  in the Bay of St Brelade.

Such is (or should we say was) the precious nature of this harvest from the sea, that the Constables of St Brelade and St. Quen are permitted by Article 6 to sell vraic from certain parts of the bays in their respective parishes to remunerate those nominated by the Constables to guard the harvested vraic during the night and repair the roads (charrières) amongst the rocks in St Ouen’s Bay.

Contravention of the 1894 Law is punishable by a fine and comes within the jurisdiction of the Magistrate (at the time of the statute known as Le Juge de Police Correctionnelle).

THE ART OF THE ADVOCATE

A newly qualified Jersey advocate will have been examined thoroughly in the substance of Jersey law, but he will not have received any training in the skills of advocacy.  When the judge ticks him off for asking a leading question, he may well not know what he has done wrong.  English barristers used to be in the same position.  They simply had to learn by experience.  But for many years now the Inns of Court have recognised the need for post-qualification training of young barristers in the skills of advocacy. 

The Jersey judiciary are keen to ensure that the standard of advocacy in Jersey is as high as possible.  Given the differences between the practice of law in Jersey and at the English bar, it is particularly unsatisfactory to rely upon practical experience in Jersey as a substitute for being taught the basics of advocacy.

Following approaches from Jersey, Gray’s Inn has very generously agreed to assist in establishing an advocacy training scheme in Jersey.  Indeed the Deputy Bailiff, the Attorney General and Crown Advocate Whelan (amongst others) have already attended a two-day residential course in England run by Gray’s Inn designed to train senior advocates how to teach advocacy skills. 

In order to progress matters further, a distinguished team from Gray’s Inn is coming to Jersey for four days in the first week of June.  The team consists of two high court judges, one senior circuit judge and two experienced silks.  The first two days will be devoted to running a course to train established Jersey advocates to teach advocacy skills to young practitioners.  Some eighteen advocates have volunteered to undergo this training.  It is hoped that from this number, a nucleus of Jersey practitioners qualified to teach advocacy skills will be established.

The second two days will be spent running a new practitioner’s course.  Because no such training has been offered in Jersey previously, the opportunity has been taken to offer the course to all Jersey advocates (who appear regularly in Court) of five years’ call or less.  Some thirty advocates have volunteered for this course. 

Following the two courses, there will be review of how best to provide training for newly qualified practitioners in the future, but the judiciary are clear in their view that it is not acceptable any longer to expect young advocates to pick up the difficult skills of advocacy by practical experience alone.  The Island is fortunate that senior members of Gray’s Inn are willing to devote their time to assisting the courts in Jersey in this way. 

INSANITY AND THE ECHR

The decision of theRoyal Courtin Att. Gen. v Prior^[10] on a preliminary point of law as to the meaning of “insanity” for the purposes of art. 2(1) of the Criminal Justice (Insane Persons) (Jersey) Law 1964 was recently the subject of adverse comment in the Court of Appeal.  TheRoyal Courtdecided that a person was insane if, at the time of the commission of the offence, his unsoundness of mind affected his criminal behavior to such a substantial degree that the jury considered that he ought not to be found criminally responsible. This test was considered to be consistent with the European Convention of Human Rights, and with local jurisprudence.  TheRoyal Courtfound that the McNaghten Rules were not part ofJerseylaw and should not be applied because it was strongly arguable that they did not comply with the convention.  This last (obiter) finding of theRoyal Court provoked an (obiter) response from the Court of Appeal when Prior’s appeal against sentence was heard.  The Court stated –

     “… we consider that at some more appropriate time the correctness of that ruling may have to be re-visited, not least because in our opinion, the argument that the McNaghten rules are incompatible with the European Convention on Human Rights does not seem to us to be correctly based and even more so because the Bailiff of Guernsey has subsequently, having considered the Bailiff’s ruling in this case, reached exactly the opposite conclusion in relation to both historic practice in Guernsey and the Human Rights Convention in the Law Officers of the Crown v Derek Lee Harvey judgment of August 3rd, 2001.  It would seem to us to be highly undesirable that the effect of “insanity” should be different in the two jurisdictions.  In any event we should add that it is our understanding that the whole law of insanity and diminished responsibility is under consideration in jurisdictions in the United Kingdom and it would seem highly desirable that any reform of the law should result from legislation and involve a co-ordinated law applicable in all jurisdictions in the United Kingdom and in the jurisdictions of Jersey and Guernsey”.

            While a decision of the Court of Appeal on the correctness or otherwise of the Royal Court’s ruling in Prior is obviously to be welcomed, it is earnestly to be hoped that it will not be based either upon historic practice in Guernsey or upon statutory intervention in the United Kingdom, neither of which seems particularly relevant to what is the law of Jersey.