Jersey & Guernsey Law Review – October 2008
BOOK REVIEWS
LAW AND OPINION IN SCOTLAND DURING THE SEVENTEENTH CENTURY by J D FORD.
Published by Hart Publishing (Oxford: Portland, Oregon USA) ISBN-13: 978-1-84113-789-6
1 This title does not speak immediately of matters germane to current legal practice in Jersey and Guernsey. But lawyers in seventeenth century Scotland were beginning to struggle with the possible repercussions of increasing calls for full economic and parliamentary union with England. It was important systematically to address where Scots Law itself stood; and in doing so, as Dr. John Ford recounts, they considered the writings of Terrien and Godefroy among many others.
2 It would be easy simply to direct readers of the Review to salient passages concerning the French writers but, for those interested in the development of Customary Law, its consolidation and use, it may be important to understand, in very short form, the context within which Ford – and those of whom he writes – is operating. Those interested in a more detailed appraisal (but not as detailed as Ford's) can be recommended an article by a then young Scots Advocate and latterly judge of the Courts of Appeal in these Islands, J T Cameron: 'Custom as a Source of Law in Scotland'.
3 Principally it is important to know that the system of Supreme Courts in Scotland was in its infancy. The College of Justice with Senators (judges) had been established only in 1532. The origins of the Faculty of Advocates probably dates from a similar time, but it is only in the early seventeenth century that we see the emergence of a Dean and only in the late seventeenth century the origins of their library which, by 1750 was becoming one of the great libraries of Europe and in 1925 became the National Library of Scotland.
4 With a Supreme Court system in its infancy, so, obviously, was the recording of decisions. Thus, whilst Bracton in England (De Legibus: 1250-1266) cites hundreds of cases, Craig in Scotland (Jus Feudale: 1603) cites only a few score. One of the Senators had been made responsible for keeping a record of decisions, but these were for the private use of judges in order to further consistency. By the late seventeenth century many decisions were being referred to by the Scottish Institutional Writers; but not so much as binding precedent, rather as evidence of custom. Thus Erskine, one of the leading Institutional Writers of the eighteenth century stated: "Decisions, therefore, though they bind the parties litigating, create no obligations on the judges to follow in the same track, if it shall appear to them contrary to law. It is, however, certain that they are frequently the occasion of establishing usages which, after they have gathered force by a sufficient length of time, must, from the tacit consent of the state, make part of our unwritten law."
5 This, then, is the context in which a subscriber to this Review might turn to read, for example, Ford's sections on the Reform of the Proper Law and on the Proof of Customary Law at pages 247 – 312. In these sections, as in the whole of the book, the reader will find the detailed results of immense scholarship and an invaluable resource for those with a need more clearly to understand the Scottish writings of the seventeenth century.
6 But not to understand the Scottish writings alone. Ford's exegetical guide is of present assistance to all of us charged with the maintenance of the Customary Laws in our two jurisdictions in the 21st century. The re-emergence of an interest in voisinage in Jersey has emphasised the importance of understanding the role of the Courts in considering Customary Law. It is therefore illuminating to have Ford's reference to the 1566 tract on philosophy and history by Jean Bodin, the eminent French jurist and natural law philosopher, who distinguished between four different kinds of lawyer. The first were the professors who concentrated exclusively on the academic study of learned laws. The second were practitioners who knew only about the judicial process regulated by the local laws. The third were those who had managed to combine the theory and practice, such as Pape and Dumoulin. But the fourth category, which Bodin wished to encourage were those "trained not only by precepts and forensic practice but also in the finest arts and the most stable philosophy … who determined skilfully the standards of equity; who traced the origins of jurisprudence from ultimate principles; who pass on carefully the knowledge of all antiquity.". Perhaps a period of mild recession will give us pause in our busy practices of public and commercial law to regenerate our knowledge of fundamental principles and gain a firmer understanding of our Customary Law sources.
James McNeill QC is a member of the Faculty of Advocates of Scotland, and has been a judge of the Courts of Appeal of Jersey and Guernsey since 2005.
THE LAW OF PRIVATE INVESTMENT FUNDS by TIMOTHY SPANGLER.
Published by Oxford University Press, 2008 £135, ISBN 9780199298464
1 Book-length treatment of the law relating to private investment funds – those such as hedge funds and private equity funds that cater to select groups of investors - has been slow to reach publication. The field is new and subject to continuing innovation. Furthermore, information about particular fund structures may be jealously protected by the participants. This book originates in a thesis completed at the London School of Economics by the author – a practitioner in the field - and develops an extended argument about the governance of such funds. It has the additional merit of addressing the relevant law of both the United States and United Kingdom, the main strongholds of investment management of such funds. It is a timely contribution on the law of these funds, which should lead to deeper reflection about this important sector.
2 The argument of the work is critical. The author develops the theme that the main impetus behind most private investment fund legal structures is the minimisation of tax and the avoidance of “onshore” financial services regulation. Fund governance and the protection of investors are therefore relegated to secondary considerations. The author’s argument addresses this “governance challenge”, and seeks to determine whether improvements to the governance structures of such funds can facilitate investor protection.
3 The critical approach is novel. Busy practitioners may take the pragmatic view that the efficient execution of a given structure is their primary concern. They may have little incentive to question the established forms in which funds are created. However, while in good times the structural focus on tax minimisation may seem self-evident to all participants, in times of volatility, the importance of the investors’ control over their interests in the fund becomes more apparent. Given the current investment climate, the author’s thesis is particularly relevant.
The outline of the work is as follows.
4 Chapter 1 establishes the background for the author’s thesis and briefly explains basic terminology and legal structures. All collective investment vehicles present governance challenges because investors do not have day-to-day control over their monies. The risks of fraud and negligence are thereby increased. The challenge becomes acute in the private investment fund context because the main vehicles that have been developed to avoid regulation and taxation – the limited partnership and the offshore company – are not designed for the enhancement of investor protection, but rather the minimization of tax.
5 Chapters 2 and 3 then analyse in some detail the legislation applicable to marketing investment funds in the United States and United Kingdom, and the taxation framework affecting investment funds and fund managers in both countries. Chapters 4 and 5 go on to examine the legal and regulatory duties that may bind the investment manager, to help address the governance challenge, while chapters 6 and 7 address particular governance issues applying to limited partnerships and offshore companies, these being the most typical existing forms of private investment funds.
6 After analysing some particular cases of governance failure in Chapter 8, the author outlines the use of structural approaches to address the governance challenge, and the role of regulation in resolving the challenge, in Chapters 9 and 10.
7 That the work is written by an experienced practitioner is reflected not only in the main argument, but in the many footnotes to the text that reveal nuances relating to the typical structure, marketing, taxation and governance of private investment funds. To take merely a few examples, there are notes on the differing expertise of placement agents, the allocation of responsibility for the tax strategy of a fund, and different conventions for the allocation of marketing costs of different types of funds.
8 Not all subjects relevant to such funds are addressed in the work, or perhaps in the depth that may be necessary for particular purposes – for example providing tax advice to a fund manager, or developing a litigation claim. That is not the purpose of the work, which is not a general compendium on the subject, or a collection of specialist topics, but an argument about the wider effects of the structure of these investment vehicles on investor rights. However, appraised against that background, the work does provide an excellent analysis of the existing architecture of private investment funds, and the funds sector generally.
9 Private investment funds to date have been the subject of a number of finance texts, but seldom has the applicable law been evaluated. This is a rare legal publication, written by a senior practitioner in the field, which develops an important thesis in an area not previously addressed in such depth. It will be of benefit to all funds lawyers.
Braydon Heape is a lawyer admitted in New South Wales, Australia, who is now working for Carey Olsen in Guernsey.
BENNION ON STATUTORY INTERPRETATION (5th Edition)
Published by Lexis Nexis, 2008, £325, ISBN 9781405718684
1 The great achievement of Francis Bennion’s seminal book is to organise the principles underlying statutory interpretation into a coherent Code, informed by a comprehensive commentary, and following its first publication in 1984 it quickly became the practitioner’s bible whenever the meaning of an enactment was in doubt. For this fifth edition the author and his two assistant editors have not only updated the material but also re-edited the whole text. This edition, Bennion tells us, will be last that he will himself prepare – he is now in his mid 80s – and the task of entirely re-reading and re-considering the text was undertaken because he wished “to pass on a work that is in the best condition possible”. All the more reason, therefore, for practitioners to wish to acquire the new volume.
2 It is certainly a monumental work, with over 1500 pages in all. The Code itself comprises 464 Sections; and there are 1750 numbered examples. Most lawyers (this reviewer, dare he confess, among them) will lack the time to follow Bennion’s own advice that they should read every word “from cover to cover”. But Bennion is aware of this. The book is notable in containing much to assist the busy practitioner who is unable to follow the author’s counsel of perfection. There is a helpful section on “How to Use this Book”; very useful on first acquaintance, too, are the Preface and Introduction, the full Tables and Index, the two Summaries of the Parts and Sections of the Code, and the checklist of interpretative criteria set out in Appendix B. Few books can repay so well the comparatively short time it takes to familiarise oneself with the underlying principles, with the help of which its more detailed contents can confidently be navigated.
3 The subject is still largely based on common law and thus a work of such comprehensive treatment retains its usefulness in all jurisdictions where English common law is persuasive or applicable. This is the case in Jersey, where Bennion’s work continues to inform the reasoning of judges, the arguments of counsel and the drafting of documents. In 1980 Crill, Deputy Bailiff (as he then was), set out twelve propositions for the interpretation of statutes which could be gleaned from earlier Jersey decisions. That these can be helpful is not in doubt; but he did not have the benefit of Bennion’s book. As Hamon, Deputy Bailiff reminded us in 1999 in the case of In re Ostroumoff (née Martland), the “basic rule of statutory interpretation” (Section 193) requires the judge to weigh in the balance all the relevant principles of construction. Echoing this a few years later, Birt, Deputy Bailiff, in AG v Smith noted that there were certainly more than twelve such principles and found that the presumption that the legislature did not intend an absurd result (Section 312) was determinative in that case. The process of weighing and balancing various factors is, as Bennion points out, a very familiar process for judges and the potential factors that may weigh on the question of statutory interpretation are numerous: the checklist of interpretive criteria set out in Appendix B, and elsewhere treated in detail, stretches to some fifty principles. Statutory interpretation is not, Bennion has always been at pains to stress, just a winner-takes-all competition between the literal, golden and mischief rules.
4 The range of the book is naturally wide. The reader will find, for example, a full discussion of the use of enacting history, including Hansard and other materials; an analysis of the doctrine of judicial notice; and an expanded treatment of the Human Rights legislation. There is a short series of Sections and commentary on the use of deductive logic (Sections 357 to 361) which will no doubt strike most readers as academic; but, given that it is touched upon, one might equally wish that the author had had the space to devote a fuller treatment to this interesting topic.
5 As the body of statute law grows ever larger, so the importance of this work can only increase. Litigators on both sides of an argument will wish to have at their disposal the latest edition of (what is now appropriately called) Bennion on Statutory Interpretation. Their non-contentious colleagues undertaking transactional work will equally wish to have the book within easy reach.
Andrew Bridgeford is an advocate of the Royal Court of Jersey and a consultant with Ozannes, Jersey. He is the author of “1066: The Hidden History of the Bayeux Tapestry” (Fourth Estate, 2004), and writes “The Weekly Digest of Jersey Law”