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Jersey & Guernsey Law Review – February 2007
CASE SUMMARIES
The following key indicates the court to which the case reference refers.
JRC - Royal Court of Jersey
GRC - Royal Court of Guernsey
JCA - Jersey Court of Appeal
GCA - Guernsey Court of Appeal
JPC - Privy Council, on appeal from Jersey
GPC - Privy Council, on appeal from Guernsey
ADMINISTRATIVE LAW
JUDICIAL REVIEW
Bichard v States of Guernsey Royal Ct: (Southwell, Lieut. Bailiff) [2006] GRC 1004
R. I. C. E. Harris for the plaintiff; P. T. R. Ferbrache for the defendant.
The plaintiff was a long-serving civil servant. He was selected for redundancy. The question of how many years of service uplift in pension entitlement was to be given, if any, was a matter for the Public Sector Remuneration Committee (“PSRC”). The relevant pension scheme rules provided for a discretionary increase of up to 7 years but not exceeding the maximum reckonable service in any event. On all previous occasions the discretion had been exercised so as to give the maximum permissible increase. In addition to the PSRC a Pensions Consultative Committee (“PCC”) had been established comprising employer and employee representatives. The mandate of the PCC was to act as forum to discuss matters concerning the pension scheme. At meetings held to determine the plaintiff’s case the PSRC decided, without consulting the PCC or informing the plaintiff of any prospective or actual change of policy, that the discretion would no longer be exercised to increase reckonable service because of the PSRC’s perception of the state of Guernsey’s public finances. The plaintiff sought judicial review of the defendant’s decision. The defendant argued that this was a private not public law matter, and that judicial review was not available, but that in any event the respondent was entitled to rely on financial considerations as an overriding public interest.
Held, granting leave to apply for judicial review, granting the application itself, setting aside the PSRC’s decision, directing it to give the plaintiff the maximum enhancement permissible under the rules and awarding indemnity costs against the defendant, that -
(a) the complaint made by the plaintiff was appropriate for judicial review. While the plaintiff wished to secure a remedy in respect of his own individual position, the primary question raised related to decisions by the PSRC to change a long-standing general policy applying to all members of the pension scheme;
(b) the unfairness to the plaintiff was “stark”. The previous uniform exercise of the discretion to increase reckonable service by the maximum permitted had become an established policy. That policy continued to prevail at the time that the plaintiff was given notice of redundancy. The new policy was applied to the plaintiff on the basis of “… what can be described as a sudden impulse on the part of the chairman of the PSRC, without prior consultation …”;
(c) the difficulty the respondent faced in relying on financial considerations as an overriding public interest was the failure of the PSRC to analyse the financial position at all. In the absence of any attempt by the PSRC to make a rational assessment of the financial position, the States could not rely upon any such overriding public interest;
(d) citing R v North and East Devon Health Authority ex p Coughlan, all members of the pension scheme had the minimum legitimate expectation that a change to the operation of the relevant rule would, before being put into effect, be the subject of full consultation between employers and employees through the forum of the PCC;
(e) where legitimate expectation is established there were three possible outcomes; (i) a conclusion that the public authority was only required to bear in mind its previous policy or other representation, giving it the weight it thought right, but no more, before deciding whether to change course, (ii) a conclusion that the promise or practice had induced a legitimate expectation of, for example, being consulted before a particular decision was taken or (iii) a conclusion that a lawful promise or practice had induced a legitimate expectation of a benefit which was substantive, not simply procedural. The unfairness in dealing with the plaintiff’s legitimate expectation of a substantive benefit was so serious as to amount to an abuse of power by the PSRC;
(f) the States had acted unreasonably in its defence of the proceedings and an order for full indemnity costs was appropriate.
Comment [G Dawes]
This is a powerful and important judgment in the context of Guernsey public law and one of which all government departments will wish to take careful note. The Lieutenant Bailiff (formerly a senior Court of Appeal judge) also cited Guernsey and Jersey authority and plainly considered the law in this context to be very close to English law and the same in both Bailiwicks.
JUDICIAL REVIEW - EMPLOYMENT LAW
Stephens v Minister of the Department of Education Royal Ct: (Southwell, Lieut. Bailiff) [2006] GRC 14th June, unreported
C. Hay for the applicant; R.J. McMahon for the respondent.
The applicant teacher had begun teaching in Guernsey in 1986. In March 2004 she was appointed head teacher designate of a new school which was to be opened in September 2005. From January 2004 the plaintiff met the Director of Education on several occasions to discuss what the plaintiff perceived as bullying and harassment of her by officers of the Education Department. After exchanges of correspondence and an investigation, her complaints were rejected as unjustified in June 2005. In late September 2005, less than three weeks after taking up her appointment at the new school, the plaintiff was told that professional relationships between her and some Education Department officers had reached such a point that they were no longer able to work with her. She was asked to tender her resignation, the alternative being disciplinary procedures with a view to her dismissal. The plaintiff refused to resign and was dismissed in December 2005. The breakdown of relationships was relied upon. There was no suggestion of misconduct on the part of the plaintiff. The decision was confirmed by the Department Board in January 2006. There was no provision for an appeal. It was common ground that the plaintiff had a remedy for unfair dismissal under Guernsey employment legislation. The application for judicial review was not made until 2nd June 2006.
Held, refusing leave to apply for judicial review and awarding costs against the plaintiff, that -
(a) although the Department was a body exercising statutory powers all the matters complained of by the plaintiff arose out of a contract of employment and could be raised in proceedings under the employment protection legislation of Guernsey or in proceedings at common law;
(b) leave would also be refused on the ground of delay. The relevant practice direction required applications for judicial review to be instituted promptly.
Comment [G Dawes]
Compare this judgment with the judgment, two days earlier, by the same judge in the case of Bichard.
ABRITRATION
PROCEDURE
Wrench v Albany Hotel Limited Royal Ct: (Collas, Deputy Bailiff) [2006] GRC 926
M. G. Ferbrache for the defendant applicant; J. M. Wessels for the plaintiff respondent.
The plaintiff claimed damages in relation to the condition of a property purchased from the defendant. After proceedings were commenced in the Royal Court the parties agreed to refer the dispute to arbitration. The defendant subsequently complained that the arbitrator was proceeding by way of inquiry rather than employing an adversarial approach, that he had held meetings with the parties’ experts and heard evidence from them, and that he had misdirected himself as to the burden of proof. The defendant sought the removal of the arbitrator.
Held, dismissing the application with costs, that -
(a) Guernsey had not yet modified its written rules to introduce express provision for case management, but in recent years the Royal Court had been managing cases more actively;
(b) a modern arbitrator had to play an active part in managing the proceedings, albeit the Court agreed that arbitration proceedings should be adversarial rather than inquisitorial;
(c) the Court was not persuaded that the arbitrator had in any way misconducted proceedings judged against a modern standard, certainly not to such an extent that he should be removed.
BANKING
BANK MANDATES; BANKER'S NEGLIGENCE
Izodia v Royal Bank of Scotland International Ltd Royal Ct: (Birt, Deputy Bailiff and Jurats Georgelin and King) [2006] JRC 111
O. A. Blakeley for the plaintiff; M. St. J. O'Connell for the defendant.
In anticipation of acquiring a 26.6% share in Izodia Plc, the Orb group, whose dominant figure was Dr Gerald Smith, procured in August 2002 that an account in the name of Izodia was opened with Royal Bank of Scotland International Ltd ("RBSI") in Jersey. The meeting of the board evidenced by the mandate was fictitious. However, on the following day, after the acquisition, Izodia's board was informed of the opening of the account and transferred over £27 million into it in order to benefit from better interest rates. The board had delegated the details of the account to its finance director who was informed by RBSI, that same day, about the identity of the authorised signatories under the mandate and he discussed with the bank by email what would be required in order to make some alterations in that regard. On the authority of a person who was not an authorised signatory on the mandate RBSI proceeded to effect transfers of the funds out of Izodia's account into the account at RBSI of Lynch Talbot Limited, a company in the Orb group. It argued on behalf of RBSI that these transfers were effected electronically directly on behalf of Izodia under a further authority on which they were entitled to rely (the "EBS Letter"). The EBS Letter had been signed by two persons who were on the mandate and it authorised Izodia's account to be accessed under RBSI's electronic banking system by persons who were authorised in respect of accounts belonging to Orb Estates Plc and Lynch Talbot Limited. The funds were subsequently dissipated within the Orb group, which was suffering cash-flow difficulties. On 24 April 2006 Dr Smith pleaded guilty in the Crown Court in England to a number of offences relating to Izodia, including the theft of the three choses in action comprised by the transferred credit balances of over £27 million belonging to Izodia. Izodia claimed damages against RBSI. The questions arose as to: (1) whether the bank mandate, evidencing a fictitious board meeting of Izodia, though subsequently ratified by the board, was binding on Izodia; (2) whether the transfers out of Izodia's account had been effected in accordance with the mandate; (3) if not, whether those payments had been made under the actual authority of Izodia; (4) whether Izodia by subsequent acts had ratified the payments; (5) whether Izodia by subsequent acts had elected to treat Lynch Talbot as its debtor rather than RBSI; (6) whether Izodia was by subsequent acts estopped from claiming the transferred sums from RBSI; (7) whether RBSI had been negligent.
Held, granting judgment in favour of Izodia, that -
(1) The mandate was binding on Izodia. By the actions of Izodia's board and in particular its finance director the following day, Izodia had ratified both the opening of the account and the terms of the mandate, notwithstanding its initial invalidity.
(2) The electronic transfer of the funds was not in accordance with the mandate, being effected on the authority of a person who was not an authorised signatory. RBSI's further argument that they had been entitled to effect the transfers under the authority of the EBS Letter failed for a number of reasons. Inter alia, in the absence of express or implied authority, an agent cannot delegate his authority in whole or in part. The authorised signatories on a mandate are the agents of the company for the purposes of giving payment instructions to the bank. In the absence of any express or implied authority, they may not delegate that function. It is only the company which may appoint additional or alternative authorised signatories and this must be done by a further board resolution with an appropriate new mandate. Further, on its true construction the EBS Letter did not instruct RBSI to add Izodia to the relevant "EBS profiles" for payment purposes, but only for viewing purposes. The transfers had not, therefore, been effected in accordance with the mandate.
(3) As to whether there was actual authority for the payments, on the facts, the Court had no difficulty in concluding that Izodia's board did not give actual authority for the transfers; nor did it delegate that authority to anyone who authorised the transfers. In case the Court was wrong and a bank mandate itself conferred actual authority on the signatories in so far as they acted bona fide for the proper purposes of the company, the Court further held that the transfers were not effected bona fide for the proper purposes of Izodia.
(4) Izodia had not ratified the transfers. Ratification is the supply of authority after the event by approval or adoption of the unauthorised act. It may be express or implied. On the facts, any purported ratification of the transfers by Izodia's board had not been made bona fide in its best interests. It followed that Izodia's board had not ratified the transfers.
(5) Election. Counsel for RBSI argued that Izodia had elected to treat Lynch Talbot as its debtor rather than the bank. In order to establish an election to treat one party rather than another as debtor, there had to be an unequivocal act, with full knowledge of all the relevant facts, showing that the plaintiff has chosen that course. On the facts, any purported election by the board had not been bona fide in the best interests of Izodia. It followed that the directors had no actual authority to make an election and their decision did not bind the company. Further, the threshold for showing an unequivocal act was high (Limpgrange v BCC1) and the relevant act of the board was not sufficiently unequivocal.
(6) Estoppel. Counsel for RBSI further argued that Izodia, by representations made on its behalf, was estopped from denying the validity of the transfers. If a person (a) makes a representation or assurance upon which (b) another person relies and in consequence (c) acts to his detriment, an estoppel may arise. On the facts the Court found (a) that through its lawyers Izodia had made a representation to RBSI that the transfers were duly authorised and (b) that RBSI relied upon that representation. However it was also necessary to establish (c) that RBSI had suffered detriment by acting in reliance on the representation. The relevant representations were made after the transfers out of Izodia's account and there was no evidence that the bank relied on them at the time that the money was subsequently paid out of Lynch Talbot's account. Accordingly it could not be said that RBSI had acted to its detriment in reliance on the representations and the bank's claim of estoppel failed.
(7) Whether the bank was negligent.
(a) A bank is entitled to rely on the ostensible authority of the signatories under a mandate, unless it has notice that a signatory is acting outside or beyond his actual authority. There is also an implied term in the contract between the bank and its customer that the bank will observe reasonable skill and care in executing the customer's orders, and a matching duty in tort. Although these issues were conceptually distinct, in practice they overlapped and it was convenient simply to consider the issue of negligence, which was the wider concept.
(b) On the Court's findings, the question of negligence did not arise. The question of negligence only arose if the payments had been made in accordance with the mandate but without actual authority, whereas the Court had found that the payments had not been made in accordance with the mandate. However since this was the first occasion on which the Court had considered a bank's duty of care under Jersey law the Court set out some extracts from Barclays Bank Plc v Quincecare Limited,, approved by the English Court of Appeal in Lipkin Gorman v Karpnale Limited. The law as stated in those cases reflected the law of Jersey.
(c) As established by those cases, a fair balance had to be struck between the competing considerations. A bank must refrain from executing an order if and for as long as the bank is "put on enquiry" in the sense that it has reasonable grounds (although not necessarily proof) for believing that the order is an attempt to misappropriate the funds of the company. The external standard of the likely perception of an ordinary prudent banker was the governing one.
(d) The alleged negligence of the bank consisted in its allowing operatives of Lynch Talbot and Orb to make payments out of Izodia's account under the EBS Letter. On the facts, and applying Quinecare and Lipkin Gorman, the Court found that, had RBSI acted in accordance with the mandate (e.g. if the transfers had been effected directly on the written instructions of authorised signatories under the mandate) the bank could not in all the circumstances be considered to have been put on enquiry as to the real possibility of misappropriation and accordingly it would not have been in breach of its duty of care: and in that event Izodia's claim would have been dismissed. However, in allowing the transfers to be effected pursuant to the EBS Letter, RBSI did not act in accordance with the mandate and, its defences of ratification, election and estoppel having failed, the bank was liable to Izodia.
CIVIL PROCEDURE
SERVICE OUT OF THE JURISDICTION
United Capital Corp. v Bender and others CA: (Smith, Jones and McNeill JJA) [2006] JCA 094
J. P. Speck for the appellants (first and second defendants); S. Young for the plaintiff; P. D. James for the fifth and sixth defendants; the fourth defendant, Mr Wijsmuller, appeared for himself
On appeal to the Court of Appeal, the questions arose inter alia (1) whether it was necessary, for the purposes of Rule 7(c) of the Service of Process Rules 1994 (the "1994 Rules"), that, in the case of the person served within the jurisdiction, the proceedings had been "properly" brought in order to establish that the foreign defendant was a necessary or proper party; (2) whether Rule 7(j) of the 1994 Rules applied only to express trusts; (3) as to the scope and territoriality of Rule 7(q) of the 1994 Rules.
Held, dismissing the appeals, that -
(1) Rule 7(c). Having regard to the legislative heritage of Rule 7(c) of the 1994 Rules, the Court of Appeal was unable to conclude that it was intended that the word "brought" should be construed as meaning "properly brought". On the on the evidence before him the Deputy Bailiff had been quite entitled to reject the argument that the domestic defendants were minor players and that they had been convened only as a device to justify service on the defendants who were out of the jurisdiction.
(2) Rule 7(j). Rule 7(j) of the 1994 Rules provides that leave to serve out of Jersey may be granted where the claim or application is brought within the terms of article 5 of the Trusts (Jersey) Law 1984 (the "1984 Law"). The applicants argued that Rule 7(j) applies only to express trusts, and they pointed to Rule 7(q) which, in terms, applies to constructive trusts. They submitted that support for this proposition is to be found in the case of Chellaram v Chellaram (No. 2). However Chellaram was of no assistance; it dealt with the interpretation of differently worded English rules. The definition of the word "trust" in the 1984 Law was wide enough to encompass constructive trusts. The Deputy Bailiff had been entitled to conclude that the plaintiffs had made out a good arguable case that their claims fell within Rule 7(j).
(3) Rule 7(q). The applicants contended (a) that the scope of Rule 7(q) did not extend to claims for accessory liability for breach of trust (i.e. dishonest assistance and unconscionable receipt) such as was alleged against them and (b) that, in any event, the plaintiff had failed to make out a good arguable case that the rule applied to them because there was no territorial connection between their alleged liability and Jersey. However, the statutory provisions governing service out of Jersey fell to be construed sympathetically with the statutory provisions which define the extent of the Court’s jurisdiction. The term "constructive trustee", when it is used in Rule 7(q), therefore, should be construed in the same way as when it is used in the 1984 Law. The plaintiff had made out a good arguable case that both applicants had made or received a profit, gain or advantage from the alleged breach of trust and were, therefore, constructive trustees within the meaning of article 33 of the 1984 Law and of Rule 7(q). Furthermore it was sufficient for this purpose that the acts were committed to material extent in Jersey. A good arguable case had been established that that was the case here.
STRIKING OUT
Ogier v Grand Havre Holdings Ltd. Royal Ct: (Hancox, Lieut. Bailiff) [2006] GRC 205
A. M. Merrien for the plaintiff; M. G. A. Dunster for the defendant.
The defendant company applied to strike out the plaintiff’s proceedings, which had been commenced in 1997 on the grounds that they were perempt and for want of prosecution.
Held, the proceedings were perempt; no step had been taken in the proceedings between September 2001 and July 2004. Notwithstanding the delay the Court would have been minded to restore the action but, citing and applying English authority, the case would be struck out for want of prosecution. There had been inordinate and inexcusable delay. The defendant had also shown that there was a substantial risk that it was not possible to have a fair trial of the issues in the action. The totality of the delay would inevitably cause serious prejudice to the defendant.
CONTRACT
CONDITIONAL SALE
F R Properties Ltd. v Skipton CA (Vaughan, Mantell, and Carey JJA) [2006] GCA 362
P. T. R. Ferbrache for the appellant; J. D. Loveridge for the respondent.
The appellant had signed conditions of sale to purchase two properties belonging to the respondent. The conditions of sale were in standard Guernsey form and gave the prospective purchaser a right to withdraw prior to the “operative date” on notice that a satisfactory survey report had not been obtained, the appellant undertaking in the conditions of sale to give immediate instructions for the same. The operative date definition was left incomplete as the “ day of 2002”. A deposit of £53,500 was paid, such deposit amounting to liquidated damages if the appellant failed, wrongfully, to complete. The appellant did not in fact instruct a surveyor until January 2003. The survey stated that the properties were in poor condition. The appellant purported to exercise its right to withdraw; the respondent denied that the right was exercisable, the same having expired on a proper construction of the conditions of sale on 31st December 2002 at the latest. The appellant contended that it was entitled to withdraw up until the intended completion date of 29th April 2003.
Held, dismissing the appeal, that -
a) the question in this case was one of construction. Although the Court of Appeal disagreed with the methodology of the Royal Court in treating the matter as one of implied terms, the result was the same;
b) citing English contract law authority as to the nature of obligations under conditional contracts, the operative date had to be some date prior to the completion date. The purchaser’s undertaking was also material, likewise the reference to an undefined date in 2002. In all the circumstances the appropriate date for the operative date was 31st December 2002 and the purchaser’s purported withdrawal was ineffective.
Comment [G Dawes]
It is noteworthy that no reference was made either to Pothier’s treatises on the contract of sale or obligations, nor to modern French law.
CRIMINAL LAW
ROAD TRAFFIC OFFENCES; DISQUALIFICATION FROM DRIVING
Hernandes v Att. Gen. Royal Ct: (Bailhache, Bailiff, and Jurats Georgelin and Allo) [2006] JRC 147
S. Sharpe, Crown Advocate, for the Crown; S.E. Fitz for the defendant.
Upon sentencing in the Magistrate's Court for an offence of driving after consuming an excessive amount of alcohol contrary to article 28(1) of the Road Traffic (Jersey) Law 1956, the Magistrate was informed by the Centenier, on information given to him, that the defendant had no previous convictions. The Magistrate sentenced the defendant inter alia to a disqualification for holding a driving licence of 15 months. In fact the defendant had three previous convictions for the same offence, including one within the previous 10 years, and the mandatory minimum period of disqualification was three years. Pursuant to article 21 of the Magistrate's Court (Miscellaneous Provisions) (Jersey) Law 1949 the Attorney General queried the legality of the sentence by case stated.
Held, overturning the sentence and substituting a three-year disqualification –
(1) The Magistrate had exceeded his jurisdiction. The legislature had limited the discretion of the Court by requiring that a defendant who had been convicted during the previous 10 years of an offence under article 28 of the Road Traffic (Jersey) Law 1956 must be disqualified for a minimum period of 3 years. An error of law had therefore been committed and could not be allowed to stand.
(2) As regards any substituted sentence, the Court could not impose a sentence which was not permitted by law. The disqualification for 15 months was accordingly substituted by one for three years. As the necessity for the appeal was not the fault of the defendant, the defendant's costs were ordered to be paid out of public funds.
EMPLOYMENT
HEALTH AND SAFETY – PROHIBITION NOTICE
Cyma Petroleum (CI) Ltd. v Chairman of the Policy and Finance Committee, and the States of Alderney Royal Ct: (Collas, Deputy Bailiff) [2006] GRC 957
J. A. S. White for the appellant; R. J. McMahon for the respondent.
The appellant appealed from a decision of the Court of Alderney upholding prohibition notices issued by an inspector pursuant to s.19 of the Health and Safety at Work (Alderney) Ordinance 2003 in connection with the storage, transportation and handling of aviation gasoline in Alderney. The Ordinance provided that the decision of the Court was final, subject to an appeal on a point of law to the Ordinary Division of the Royal Court of Guernsey.
Held, dismissing the appeal, that -
(a) the appeal criteria of the Ordinance corresponded to the wording of s.56 of the Housing (Control of Occupation) (Guernsey) Law 1994 and accordingly the guidance set out by Beloff JA in Walters v States Housing Authority would be applied;
(b) the Jurats of the Court of Alderney were judges of both law and fact (unlike the Guernsey Jurats who are only judges of fact);
(c) the right of appeal was on a point of law only and accordingly the issues were restricted to questions of vires or Wednesbury unreasonableness/perversity;
(d) there was evidence before the Court of Alderney to support its finding that the prohibition notices had been validly made and consequently there were no grounds to hold that the decision of the Alderney Jurats was perverse or Wednesbury unreasonable.
TRIBUNAL PROCEDURE
Credit Suisse (Guernsey) Ltd. v Carré Royal Ct:(Collas, Deputy Bailiff) [2006] GRC 974
J. E. Roland for the appellant; P. Richardson for the respondent.
The appellant challenged the refusal of an employment tribunal to give reasons, pending final judgment, concerning the preliminary question of the effective date of termination for the purposes of deciding whether or not the claim for unfair dismissal had been brought in time.
Held, dismissing the appeal, that –
(1) citing obiter dicta of Southwell JA in Garenne Group Limited v Falla to the effect that the adjudication procedure was not intended to mirror that of the Royal Court and was intended to be less formal, less legalistic and speedier, the complainant’s rights were to be determined with such reasonable speed and efficiency as were consistent with giving each party a reasonable opportunity to be heard;
(2) the Court would accordingly decline to interfere with the exercise of the adjudicator’s discretion to defer the giving of reasons until his judgment as being a procedural decision well within his powers.
TRIBUNAL PROCEDURE
Credit Suisse (Guernsey) Ltd. v Meyerhoff Royal Ct: (Collas,
Deputy Bailiff) [2006] GRC 975
A. M. Ozanne for the appellant; F. J. Haskins for the respondent.
In the context of unfair dismissal proceedings under the Employment Protection (Guernsey) Law 1998 the appellant challenged the adjudicator’s decision not to hold the proceedings in private. The respondent had held a senior post in the appellant’s organisation and the appellant expressed concern that information would be made public in breach of the express and/or implied duties of confidentiality owed by a banker to its customers. The adjudicator decided that the hearing should proceed in public, save that, during the hearing, the parties would be free to apply (at the hearing) for those parts of the hearing concerning confidential information to be heard in private.
Held, dismissing the application, that –
The Court had some doubts whether the statutory right of appeal against “a decision or award of an adjudication” extended to every decision on procedural or other preliminary issues of the present kind. However, on the present facts, if the adjudicator had erred in law the appeal had to be heard at the present stage, otherwise the appeal would be rendered nugatory. The adjudicator’s decision could only be set aside if it was irrational, perverse or Wednesbury unreasonable. Accordingly the guidance set out by Beloff JA in Walters v States Housing Authority would be applied including the distinctions there elaborated between unreasonable decisions which can be set aside (by the Bailiff) as questions of law and those that would be considered questions of fact (and therefore not capable of being set aside given the restricted right of appeal). The adjudicator’s decision was not so perverse, irrational or unreasonable as to justify being overturned on a question of law.
EVIDENCE
POLICE PROCEDURES AND CRIMINAL EVIDENCE (CODES OF PRACTICE) (JERSEY) ORDER 2004
Att. Gen. v McIntyre Royal Ct: (Birt, Deputy Bailiff) [2006] JRC 112B
J.C. Gollop, Crown Advocate, for the Crown; M. Pallot for the defendant.
The question arose as to whether paragraph 12.13 of Code C of the Police Procedures and Criminal Evidence (Codes of Practice) (Jersey) Order 2004 applied before as well as after the time for a caution to be administered. Paragraph 12.13 provides that "A written record should also be made of any comments made by a suspected person, including unsolicited comments which are outside the context of an interview but which might be relevant to the offence. Any such record must be timed and signed by the maker. Where practicable the person shall be given the opportunity to read that record and to sign it as correct, or to indicate the respects in which he or she considers it inaccurate. Any refusal to sign should be recorded." In the present case a relevant statement had been made by the defendant before the need for a caution had arisen. It had not been recorded by the Customs Officer who stopped the defendant, nor had it been put to the defendant in accordance with paragraph 12.13. The defendant applied inter alia to exclude the statement.
Held, granting the defendant's application –
No English authority was produced to the Court as to whether paragraph 12.13, which was an exact copy of the relevant provision in England, applied to comments made prior to the need for a caution. In the absence of authority the Court had, for the purposes of this case, to revert to first principles. The whole purpose of Code C was to prevent endless disputes as to what was said in answer to questions. That principle applied equally to remarks made by a defendant prior to the need for a caution. Paragraph 12.13 therefore did apply pre-caution. On the facts of the case, the relevant statement had been obtained in breach of paragraph 12.13, was highly material and it would be unfair to the defendant for it to be admitted. In the future the contents of any remarks made when a defendant is originally stopped should be recorded in a notebook and the contents of that notebook put to the defendant during the course of the interview.
PRIVILEGE AGAINST SELF-INCRIMINATION
Trant v Att. Gen. and others Royal Ct: (Birt, Deputy Bailiff, and Jurats Le Breton and Clapham) [2006] JRC 172
P. C. Sinel for the plaintiffs; A.J. Belhomme, Crown Advocate, for the Attorney General; C. J. Scholefield for the second defendant; S. E. Fitz for the third defendant.
The Attorney General issued a request to the UK authorities under article 4 of the Criminal Justice (International Co-operation) (Jersey) Law 2001 seeking assistance in the obtaining of evidence for the purposes of a prosecution in Jersey. The Secretary of State nominated Southampton Magistrates Court under section 30(3) of the Crime (International Co-operation) Act 2003 for the purpose of evidence being given through a live television link. Prior to the trial, two persons summonsed brought proceedings in the Royal Court seeking inter alia (1) a declaration that they were entitled to claim the privilege against self-incrimination in the criminal proceedings and that, on the facts, such claim was validly made and upheld and (2) a declaration that the taking of witness statements in March 2006, under the mistaken belief that they were under compulsion to attend, violated their rights under article 8 of the European Convention on Human Rights and/or the common law on the ground that the Attorney General had committed the torts of misuse of private information, breach of confidence and abuse of power. The Attorney General applied to strike out the Order of Justice.
Held, granting the application in part –
(1) Jersey recognised a privilege against self-incrimination in the same way as English law. The privilege arose if both (a) an answer to questions would have a tendency to expose the witness to criminal charges and (b) the danger of prosecution was real and appreciable with reference to ordinary principles of law and the ordinary course of things. Whether the plaintiffs were entitled to refuse to answer questions on this ground was a decision to be taken by the court before whom they were to give evidence. It was not a matter to be decided in the present application. Where evidence in Jersey criminal proceedings was to be given in the UK by television link pursuant to statutory authority the primary decisions as to such evidence fell to be taken by the trial judge in Jersey with a form of instantaneous appeal to the UK tribunal before whom the evidence was given. As this was not a matter to be decided in the present application, the relevant claims in the Order of Justice were struck out as being frivolous, an abuse of process and under the inherent jurisdiction of the Court.
(2) The Human Rights (Jersey) Law 2000 was not yet in force. On balance, however, the Court was persuaded that it would be wrong to prevent the plaintiffs from pursuing their allegation that the statements were obtained unlawfully at common law as a result of misrepresentations on behalf of those representing the Attorney General and that, as a result, they had a claim against the Attorney General for misuse of private information, breach of confidence and/abuse of power. The Court therefore declined to strike out that part of the Order of Justice.
FAMILY LAW
FINANCIAL PROVISION; MATERIAL NON-DISCLUSURE
P-S v C Royal Ct: (Bailhache, Bailiff, and Jurats Le Brocq and Allo) [2006] JRC 139A
A.D. Robinson for the representor; A.D. Hoy for the respondent.
In divorce proceedings in 2003 (P-S v C & M, in which the principles of White v White were applied) the wife was awarded 56% of the matrimonial assets. Some two years later the wife issued a Representation seeking to set aside that part of the 2003 judgment which awarded her a lump-sum payment of £2.2 million, and a fresh adjudication of that part of the award. The basis of the application was that the husband had been guilty of material non-disclosure of financial information. The husband denied the allegation and further contended that the wife had been guilty of such delay in seeking to challenge the award that she ought not to be allowed to be heard on the merits.
Held, granting the wife's application –
(1) Delay. The principle of finality in litigation had to be balanced against the need for full and frank disclosure. Balancing these considerations was an exercise of discretion based on the facts of the particular case. Applications to set aside a financial award in matrimonial cases broadly fell into two categories: (a) where non-disclosure of material facts prior to the Order was alleged and (b) where there had been some relevant supervening event. In the case of deliberate and dishonest material non-disclosure, the Court has been deprived of the opportunity fully to exercise its powers: T v T. The disaffected party must act with reasonable promptitude having regard to all the circumstances of the case: Shaw v Shaw. On balance the delay in this case was not so excessive as to cause the Court not to hear the wife's application on the merits.
(2) Full and frank disclosure. The leading case in England was Jenkins v Livesey: each party concerned in claims for financial provision and property adjustment and other forms of ancillary relief in matrimonial cases owes a duty to the Court to make full and frank disclosure of all material facts to the other party and the Court. Material non-disclosure may be active or passive: Burns v Burns. It is no defence to an allegation of material non-disclosure that the true facts might have been elicited by the other party if greater diligence had been exercised. It is not the duty of the opposing party to act as a ferret:Robinson v Robinson. The duty is a high one; it is a necessary condition of the Court being able to establish a clean break between the parties. That the wife had received a substantial sum under the 2003 award was not relevant. The question was whether the duty had been breached. However, not every failure in the duty of full and frank disclosure would lead to the setting aside of an award or of an agreement leading to a consent order. The non-disclosure had to be material: Jenkins v Livesey. On the facts, there had been a failure by the husband to disclose information as to his assets to a material extent. Accordingly the Court set aside the award in 2003 of a lump sum payment of £2.2 million to the wife.
INCOME TAX
DEDUCTIBILITY OF INVESTMENT MANAGEMENT FEES
Administrator of Income Tax v Cachemar Ltd. CA: (Smith, Rokison and Steel JJA) [2006] GCA 361
R. J. McMahon for the appellant; P. T. R. Ferbrache for the respondent.
The taxpayer investment company challenged the refusal of the Administrator of Income Tax to allow deduction from its income of investment management fees paid to an Isle of Man company pursuant to an investment management agreement. The taxpayer claimed that these were permissible management expenses within the meaning of s.169 of the Income Tax (Guernsey) Law 1975 (as amended). The taxpayer succeeded before the Guernsey Tax Tribunal and in the Royal Court (Talbot, Lieut. Bailiff).
Held, dismissing the Administrator’s appeal, that -
(a) the Royal Court had construed “permissible management expenses” correctly as having a broad meaning and not being restricted to additional expenses incurred in relation to the corporate acts of managing the company itself;
(b) furthermore, there was no suggestion that the expenditure in issue was not wholly and exclusively for the purpose of managing the company.
LAND LAW
SALE OF LAND; CAVEAT PREVENTING SALE
MacKinnon v Crill Canavan Royal Ct: (Birt, Depty Bailiff, and Jurats de Veulle and Tibbo) [2006] JRC 159; [2006] JRC 159A
O. A. Blakley for the applicant; S. Franckel for the respondents; A. J. Olsen for Renaissance (Jersey) Ltd
By ex parte application to the Bailiff, a Jersey law firm obtained a caveat against the interest in Jersey immovable property of a client in respect of whom they had a claim for fees. As a result of an error in the address of the client shown on the law firm's application, the notice of the caveat sent by the Bailiff's chambers to the client was returned undelivered. The fact that the client had not been informed of the caveat was not notified to the law firm or its legal advisers. The client, being unaware of the caveat, proceeded to sell the property for £3.2 million. The law firm acting for the purchaser of the property did not repeat its title check at the Registry immediately prior to the sale and for this reason was also unaware of the existence of the caveat. By coincidence the law firm which obtained the caveat also acted for the bank which lent £2.25 million to the purchaser to be secured on the property but, as a result of different persons acting within the firm, those acting for the bank were unaware that a caveat had been obtained. Moreover, in accordance with common practice, they relied on title confirmations from the law firm acting for the purchaser, which did not disclose the caveat either. As a result of the caveat, the sale was void pursuant to Rule 18/4(4) of the Royal Court Rules 2004 but the lawyers acting in the sale for the client paid away the net proceeds of sale before being notified of this fact by the Registrar. Thus the contract was void and the property remained owned by the vendors but the purchaser was out of pocket to the extent of £3.2 million and owed the bank £2.25 million, a loan for which the bank had no security. The client applied for the caveat to be lifted on the grounds inter alia that it had been wrongly issued and was void.
Held, dismissing the application –
(1) Validity of caveat. The commentary of Le Gros on caveats should be considered in the context of its time and did not have the authority of statute. In the case of an application for a caveat the duties of an applicant and of the Bailiff were similar to those applying in the case of an application for a Mareva injunction relating to immovable property. Whilst an applicant for a caveat should in most cases explore with the debtor whether alternative security might be available, a caveat could nevertheless be issued without such discussion if, for example, the urgency of the situation so demanded. There was no rule that a caveat could not be obtained against a solvent debtor; there was no rule that a creditor must pursue all normal methods of enforcing a claim prior to lodging a caveat; and there was no rule that a caveat could only be obtained in exceptional circumstances. Warren v Hackett provided no authority for any of these propositions and they provided no basis for criticism of the law firm. Nor was there any rule to the effect that a caveat could not be obtained in respect of a contested debt. Whether a claim was contested was a factor to be considered by the Bailiff in determining whether to grant a caveat, but the fact that a claim was contested did not render the caveat void, nor did it lead to the conclusion that the caveat had been wrongly issued and should be lifted. Nor did the fact that notice of the caveat had not, in fact been given to the client render it void. This was rather a matter to be taken into account in determining whether in all the circumstances a caveat should be lifted.
(2) Ex parte application. The practice has always been for applications for caveats to be made ex parte. In the present case the law firm had not been kept advised of the client's intentions as to the proposed sale and they had given him warning that they intended to obtain a caveat. In these circumstances they had been entirely justified in proceeding ex parte.
(3) Full and frank disclosure. Any applicant for an ex parte order owes a duty to make full and frank disclosure to the Court. On the facts, the affidavit sworn on behalf of the law firm in support of the application was misleading as to the extent to which the firm knew of the client's other assets. However the Court was satisfied that this made no difference to the application and it was not necessary to lift the caveat on this ground.
(4) Whether caveat should be lifted in all the circumstances. The purpose of a caveat was to ensure that there were assets in Jersey available to meet any claim due. In order for the caveat to be lifted it was necessary for the client to place the disputed amount in a joint account in Jersey with the law firm. As this had not been done, the caveat would not be lifted.
VOISINAGE; PRESCRIPTION
Gale & Clarke v Rockhampton Apartments Ltd. & Antler Properties CI Ltd. (Bailhache, Bailiff) [2006] JRC 189A
P.M. Livingstone for the plaintiffs; K.J. Lawrence for the defendants.
The plaintiffs brought proceedings in respect of damage allegedly caused to their properties by the defendants on the basis of the tort of negligence and in voisinage. Proceedings were not validly brought within three years of the accrual of the cause of action and consequently the tort claim was prescribed by virtue of the Law Reform (Miscellaneous Provisions) (Jersey) Law 1960. Pursuant to RCR 7/8, the matter then came before the Bailiff for determination as to the prescription period applicable to a claim in voisinage. The plaintiffs argued that as a claim in voisinage arises out of a quasi-contract between neighbours, the action could only be prescribed by a period of 10 years and was therefore brought well within time. The defendants argued that voisinage was in fact not part of Jersey law; that the previous decision to the contrary effect in Searley v Dawson was wrongly decided and that the plaintiff’s remaining claim was governed by the tort of nuisance as applied in previous Jersey authority such as Curry v Horman and Keough v Farley. The defendants further argued that, in any event, an action in voisinage should be prescribed by the period of 3 years being analogous to a tort action.
Held, deciding the preliminary question in favour of the plaintiffs,
(1) there was insufficient evidence from previous authority that Jersey law had assimilated the English tort of nuisance whereas quasi-contract was known to the customary law of Normandy and the Royal Court was further entitled to have regard to guidance as to the meaning and extent of the term voisinage by reference to the neighbouring legal system of Orléans and, in particular, to Pothier’s Traité du Contrat de Société. Such authority had been relied upon in Searley v Dawson which was a decision of 40 years standing that the Court was now obliged to follow unless convinced that it was plainly contrary to earlier authority or wrong. In fact, the decision in Searley v Dawson was plainly right;
(2) as to the applicable prescription period for a claim brought in voisinage, the action was properly classified as an action personelle mobilière and therefore a prescription period of 10 years applied (Albright v Harrison (née Wailes) and, further, such a period represented a sensible default period (In re Esteem.)
Obiter: The duty of a landowner not to use his land in such a manner as to cause harm or injury to his neighbour is not founded in tort at all but in voisinage or quasi-contract and claimants should plead their cases accordingly. Contrary to the judgment of Tomes, Deputy Bailiff, in Mitchell v Dido Investments Ltd and to the apparent vindication of “an action in trespass” in Parish of St. Helier v Manning, the torts of nuisance and trespass were English terms that were not part of Jersey law.
Comment [TVR Hanson]
This case will reinforce the view of those who see Jersey law as something of a battlefield between competing legal principles and where there appear to be wider issues at stake. (In this respect, see the earlier comment on Grove & Briscoe v Baker, and Steelux Holdings Ltd v Edmonstone.) The judgment in this particular case follows a similar path to that taken by the same Court in JFSC v Black (but overturned on appeal) in eschewing conventional English tort classification as laid down in cases such as Arya Holdings v Minories Finance Ltd. So far, the Court of Appeal of Jersey (Southwell JA delivering the judgment of the Court of Appeal in both the two latter cases) has adopted a different approach to the Royal Court and it will be interesting to see in the event of an appeal in this matter, whether or not a similar pattern will emerge.
In this respect, there must at least be a possibility that the Court of Appeal would test the cause of action permitted by voisinage against the same factors that led it to conclude in Arya Holdings v Minories Finance Ltd that the D’Allain action was a tort, albeit one peculiar to Jersey law. Such an approach is further supported by Brown v Premier Builders (Jersey) Ltd where voisinage was treated as if it were “akin to a duty imposed in tort.” At paragraph 26 to the instant judgment “quasi-contract and land law” are however added as areas where a conventional tort classification should not apply but it is noteworthy that a similar argument in respect of a “property” exception appears to have received no support on appeal in JFSC v Black. Further, given the collective weight of the authorities referred to in the instant matter that either do apply, or appear to apply principles of tort law - albeit each case is explained away by the Royal Court - some may find a “land law” exception to the general law of tort a little unconvincing. Note also the Statutory Nuisances (Jersey) Law 1999 which is further commented upon in Editorial Miscellany of this Review. Indeed, given that the Court of Appeal held in Picot v Crills that the tort of negligence was the same in Jersey as it was in England - and incidentally referred to Mitchell v Dido Investments Ltd without criticism- it would seem particularly surprising if the tort of negligence was now not to apply to matters pertaining to land law but this appears to be the effect of the instant judgment. Accordingly, had the plaintiff’s negligence action not already been prescribed, this judgment suggests that it would have been vulnerable to a strike out application in any event.
However, there perhaps is a middle course between reclassifying voisinage as a tort or, as the instant judgment seeks to do, separating tort from land law completely: the Court of Appeal could simply recognize that both causes of action co-exist but accept that they have different jurisprudential roots. (For the origins of nuisance see Sedleigh-Denfield v O’Callaghan.) In such circumstances, a plaintiff would be entitled to rely upon the cause of action that is most beneficial to him even if this means that he might thereby enjoy a longer prescription period.
In the event of an appeal, Fournel’s mid 19th century Traité du Voisinage (which has been held to be of persuasive authority in Guernsey) might be worthy of consideration but was not cited in the instant matter: see Russell & Caine v Gillespie & Ford.
As to the finding that a cause of action in voisinage (not being a tort) has a 10 year prescription period, there are a number of interesting points that arise, but it is a shame that the Royal Court did not consider this aspect in greater detail for here too, we find a confusing admixture of competing English, French and Jersey principle. It is noteworthy, however, that the Royal Court did resist the simplistic approach of holding that quasi-contractual claims such as voisinage should be prescribed by the same period as contractual claims being “in general, ten years.” In fact, clear and reasoned authority for the alleged general contractual period of 10 years is arguably non-existent and Jersey authority such as Albright v Harrison (née Wailes), Giot v Giot (1876) (as referred to in Albright), Bichard v Bichard and Le Geyt’s Privilèges, Loix et Coutumes at 64 (Title X, Article 9) for example, all refer to contractual claims where the prescription period varies according to the subject matter or aim of the action in question. Thus contractual claims involving land (an immovable) enjoy a period of a year and a day (Giot and Bichard), whereas Le Geyt refers to a variety of other contractual relationships where the prescription period varies from 1, 3 and 10 years. Having ruled out tort, the approach in the instant matter was to ascribe a prescription period upon the basis that voisinage was an action personnelle mobilière and this approach is consistent with long standing authority in this jurisdiction.
PARTNERSHIP
ELEMENTS OF PARTNERSHIP; TERMINATION OF PARTNERSHIP; PROPRIETARY ESTOPPEL
Cannon v Nicol and Nicol Royal Ct: (Birt, Deputy Bailiff, and Jurats Allo and Clapham [2006] JRC 089A
J. Gleeson for the plaintiff; R. J. Michel for the defendant and the party cited.
The plaintiff alleged that he was in partnership with the defendant in connection with a recycling business. The defendant denied the existence of a partnership, contending that she merely loaned money to the plaintiff who was carrying on business on his own account. The defendant also alleged that certain immovable property in Jersey was an asset of the partnership, failing which that the defendant, as one of the joint owners of the property was estopped from denying the interest of the plaintiff therein on the grounds of proprietary estoppel. The issue also arose as to whether the defendant had lawfully terminated such partnership as may have existed.
Held, giving judgment in part for the plaintiff –
(1) Whether there was a partnership. The Court had to look at the effect of the parties' agreement, not the label they chose to put on it. The constituent elements of a partnership were reviewed by Bailhache, Bailiff, in Bennett v Lincoln, in which case the Court approved Pothier's definition of a partnership in his Coûtume d'Orléans; Traité du Contrat de Société and the four characteristics which Pothier states are essential to a partnership. On the facts, the plaintiff and the defendant had been in partnership.
(2) Ability to terminate a partnership. Under English law a partnership at will may be terminated at any time by a single partner provided that he is not acting in bad faith. According to Pothier, a partnership with no limit of time may be dissolved by any partner subject to two necessary conditions: (i) that the termination is effected in good faith and (ii) that it is not effected at an "unseasonable" time (for example, at a time when it would be in the interest of the partnership to defer dissolution). The Court expressed the view obiter that the second condition was too vague and capable of giving rise to endless argument. The Court was not bound to follow Pothier if the rule was clearly inappropriate for modern times. In the event, however, neither party sought to argue that both conditions should not apply and the Court accordingly applied them. On the facts, the defendant's termination of the partnership had not been in good faith and had also not been at a "seasonable" time.
(3) Proprietary estoppel. On the facts, the plaintiff had no interest in the freehold of the property and neither was there sufficient certainty for an agreement to lease or licence the ground floor to be construed. It was clearly established in Macon v Quérée, however, that the doctrine of proprietary estoppel forms part of the law of Jersey. The Court quoted with approval the principles set out in Macon by Page, Commissioner, extracted from the leading English case of Gillett v Holt. On the facts the requirements for proprietary estoppel were met.
(4) Remedy for proprietary estoppel. The question then arose as to what remedy the Court should award. It was argued by counsel for the plaintiff that where a claimant has established a claim of proprietary estoppel, the basic rule should be that the equity established is to be satisfied by making good the expectation aroused by the assurances which have been given. But the English Court of Appeal rejected this proposition as too rigid in Jennings v Rice. Rather, the value of the equity depends on all the circumstances, including the expectation and the detriment. The most essential requirement was that there had to be proportionality between the expectation and the detriment. Whilst in some cases the natural response would be to fulfil the claimant's expectation, in others the expectation may be uncertain or extravagant or out of all proportion to the detriment suffered and in such cases the Court should satisfy the claimant's expectation in some other (generally more limited) way. The essence of the doctrine was to avoid an unconscionable result and a disproportionate remedy was the wrong way to do that. The Court therefore had a discretion as to the remedy for proprietary estoppel and would exercise that discretion in a cautious way in order to achieve "the minimum equity to do justice to the plaintiff" (per Scarman LJ, Crabb v Arun.) In the present case, having regard to the uncertainty of the assurances and the level of detriment, a monetary award of £60,135 was made (for the manner of calculation see judgment) with interest at the court rate since the date on which the Order of Justice was issued.
PLANNING LAW
CONDITIONAL CHANGE OF USE
Johns v Minister of the Environment Department Royal Ct: (Collas, Deputy Bailiff) [2006] GRC 20th March & 23rd November, unreported
J. A. S. White for the appellant; F. Raffray for the respondent.
The appellant challenged the respondent’s refusal to allow change of use of a former vinery packing shed to residential accommodation. The appellant relied in particular on his personal circumstances and inability to accommodate himself elsewhere. The appellant was content for conditions to be attached to any such change of use restricting occupation to himself and his partner for their lifetimes with a further obligation to make no external changes to the appearance of the building. The respondent argued that personal circumstances were not a material consideration under Guernsey law.
Held, notwithstanding the failure of the Guernsey legislation to refer to “any other material consideration” (by contrast to the Town and Country Planning Act 1990), it would be “inhuman pedantry to direct the Island Development Committee that it must always ignore the human factor and that it must never take account of exceptional or special personal circumstances”. The Jurats would nevertheless be directed that it was only in exceptional or special cases that personal circumstances could be considered a relevant factor as an exception to the general rule that they were not to be taken into account. Furthermore, until the Human Rights (Bailiwick of Guernsey) Law 2000 was brought into force there was no binding obligation on the States or its decision makers to act in accordance with the Convention and there would be no domestic remedy available in the Royal Court if they failed to do so. The Royal Court could not set aside a discretionary decision of the Island Development Committee on the ground of it being in breach of rights contained in the Convention. The ratification of the Convention did not, without more, give rise to a legitimate expectation enforceable by the appellant.
The hearing before the Jurats proceeded. The Jurats found (by a bare majority) that the Committee (now Department) had not reached a conclusion reasonably open to it. Accordingly the decision of the Department would be set aside and remitted for the Department to grant the change of use on such conditions as were lawful and reasonable, the Deputy Bailiff holding, as a matter of law, that the Department had power to grant conditional planning permission or permission to change use, including the power to attach conditions restricting the period of time for which the permission was valid.
Comment [G Dawes]
The Human Rights (Bailiwick of Guernsey) Law 2000 came into force on 1st September 2006.
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