Jersey & Guernsey Law Review – June 2009
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
CIVIL PROCEDURE
Costs—indemnity basis
O'Brien v Marett CA: (Sumption, Nutting and Pleming JJA) [2008] JCA 178
PC Sinel for the applicant (TP); MStJ O’Connell for DA O’Brien; MH Temple for JC Marett; NF Journeaux for the intervenor.
The facts of the case are summarised under the heading “Contract” below. TP further appealed against the decision of the Bailhache B on 1 June 2007[1] to award indemnity costs against him on the grounds that the Bailiff, sitting alone, did not have jurisdiction to make the findings of fact which he had made in relation to the costs order.
Held, dismissing the appeal:
Under art 2(1) of the Civil Proceedings (Jersey) Law 1956, art 15(1) of the Royal Court (Jersey) Law 1948 and Rule 3/6 of the Royal Court Rules 2004, the Bailiff has exclusive jurisdiction to make costs orders, in his discretion, “of and incidental to all proceedings in the Royal Court”. When making a costs decision, particularly where there is an application for indemnity costs, the judge is bound to investigate and reach a view on facts and matters such as those considered on in the judgment under appeal.
COMPANIES
Voluntary winding up—“just and equitable”
Representation of Poundworld Royal Ct: (Birt DB, and Jurats Le Brocq and Newcombe) [2009] JRC 042
MLA Pallot for the representors.
Poundworld (Jersey) Ltd, a Jerseycompany, was insolvent and initially intended to wind itself up in a creditors’ winding up. The directors, however, then took the view that it would be more beneficial to creditors for the company to be wound up in a just and equitable winding up under art 155(1) of the Companies (Jersey) Law 1991. The reason for preferring the art 155 route was that delaying the winding up in accordance with the timescales for a creditors’ winding up would prejudice the opportunity to come to an arrangement with the company’s unpaid shipper, who had de facto control of certain stock and the company’s landlord, who had a droit de gage. If no such arrangement were made the remaining stock would be sold at wholesale value, rather than by the liquidator at retail value, to the substantial prejudice of creditors generally.
Held, granting the application:
Certain categories of cases falling under art 155(1) have been developed under English law but these are not exhaustive and the jurisdiction is wide: Re Leveraged Income Fund,[2] Jean v Murfitt.[3] This was an unusual case since the Companies (Jersey) Law 1991 provided for a specific procedure for the winding up of an insolvent company and the court should be cautious before ordering a just and equitable winding up in the ordinary case of an insolvent company. In this particular case, however, it was right to exercise that jurisdiction since doing so would undoubtedly serve the best interests of creditors.
CONFLICT OF LAWS
Application of foreign law—enforcement of foreign judgment
Elder v Stock Royal Ct: (Clyde-Smith Cmmr, and Jurats Le Breton and Le Cornu) [2009] JRC 034
ML Preston for the plaintiff; the defendant appeared in person.
Pursuant to Rule 35(1) of Dicey, Morris and Collins on the Conflict of Laws (14th ed), the plaintiff sought to enforce, by claim in Jersey for the amount due, a judgment of the Princely Court of Justice of Liechtenstein. The judgment was in the nature of a judicial settlement under which the defendant had agreed to pay certain sums to the Plaintiff. Rule 35(1) provides:
“Subject to the Exceptions … a foreign judgment in personam given by the court of a foreign country with jurisdiction to give that judgment in accordance with the principles set out in Rules 36 to 39, and which is not impeachable under any of Rules 42 to 45, may be enforced by a claim or counter-claim for the amount due under it if the judgment is
(a) for a debt, or definite sum of money (not being a sum payable in respect of other charges of a like nature or in respect of a fine or other penalty); and
(b) final and conclusive, but not otherwise …”
Held, granting the plaintiff’s application:
In relation to private international law, the courts in Jersey had consistently had regard to English common law and in particular to the rules in Dicey. Applying Rule 35(1) on the basis of that expert evidence as to Liechtenstein law, the court found that that the judicial settlement was a judgment for the purposes of the Rule; that it was for a debt or definitive sum of money; that it was final and conclusive; that the defendant had submitted to the jurisdiction of the Liechtenstein court by voluntarily appearing in the proceedings in that court and thus that the Liechtenstein court had had jurisdiction to give the judicial settlement in accordance with the principles set out in Rules 36–39 of Dicey; and that the judicial settlement was not impeachable under any of the Rules 42–45. Judgment was accordingly entered for the plaintiff.
Assistance in foreign proceedings—comity—anti-suit injunction
De Sa v Luis Royal Ct: (Bailhache B, sitting alone) [2009] JRC 027
R Tremoceiro for the petitioner; DR Wilson for the respondent.
The petitioner and respondent were married in Madeira in 1989 but had been resident in Jersey since 1991. The respondent commenced divorce proceedings in Madeiraagainst the petitioner without notice to the petitioner and in 2006 obtained a decree absolute of divorce. The petitioner’s application to the Madeira courts to set this aside was unsuccessful. In October 2007 the petitioner filed divorce proceedings in Jersey, obtained freezing injunctions and sought ancillary relief through the Jersey courts. It then transpired that the respondent had already been married when he married the petitioner. The Jersey divorce proceedings were dismissed by consent. The petitioner then brought proceedings in Jersey for nullity of marriage, which the respondent did not contest. In May 2008 the marriage was declared null and void by the Registrar. In the meantime, in April 2008, the respondent brought ancillary relief proceedings in Madeira without notice to the petitioner and she was ordered to appear in the Madeira court. The petitioner sought an order directing the respondent to file a notice of discontinuance of ancillary relief proceedings in Madeira on the ground that the respondent’s conduct in commencing those proceedings had been unconscionable.
Held, granting the petitioner’s application:
(1) Principles to be applied. The court has no general power to give directions as to whether, or how, people litigate in foreign courts. The court can, however, grant an anti-suit injunction if (a) there are relevant proceedings in Jersey; and (b) those proceedings require to be protected against the vexatious, oppressive or unconscionable conduct of one of the parties to those proceedings: R v R.[4] The courts of Jersey, being a small country, regard the doctrine of comity as a particularly important consideration; but there are occasions where the court has to protect its own process by issuing orders which affect the process of a foreign court: United Capital Corp v Bender, [5] affirmed on appeal. The court in this instance was not being asked to direct how the respondent conduct the foreign proceedings; it was being asked to order that the respondent not continue his case at all. The court has a discretion whether or not to make the order requested, which was a matter to be decided on its own facts. The court had to decide whether the respondent had behaved, or threatened to behave, in a manner which was unconscionable in the sense that it was oppressive or vexatious or interfered with the due process of the court.
(2) Decision. On the facts, Jersey was the forum conveniens for the resolution of ancillary proceedings between the parties. In the present case, the respondent’s conduct had been unconscionable: litigation in both jurisdictions would lead to an increase in costs; he had demonstrated a willingness to use subterfuge in his dealings with the petitioner; and it not until seven months after the petitioner had commenced proceedings for ancillary relief in Jersey that the respondent sought, for the first time, ancillary relief in Madeira and this appeared to be a spoiling tactic designed to put unfair pressure on the petitioner. The application was accordingly granted.
Recognition of foreign proceedings—appointment of English trustee
In re Williams Royal Ct: (Clyde-Smith Cmmr, and Jurats Le Breton and Clapham) [2009] JRC 054
AJN Dessain for the representor.
Pursuant to art 49 of the Bankruptcy (Désastre) (Jersey) Law 1990, the Royal Court was requested to give assistance to the English High Court by recognising the appointment of an English trustee in bankruptcy and providing him with authority to obtain certain documents and information from a Jersey trust company (the United Kingdom being a prescribed territory for the purposes of Bankruptcy (Désastre) (Jersey) Order 2006, art 49). The notable features of the application were that the claim of UK HMRC comprised 99.8% of all claims in the bankruptcy and that there was only one other creditor.
Held, granting the representation:
The giving of assistance under art 49 is discretionary and the court is in particular required to have regard to the rules of private international law. As a matter of private international law, the court has no jurisdiction to entertain an action for the enforcement either directly or indirectly of a penal, revenue or other public law of a foreign state: Rule 3 Dicey and Morris Conflict of Laws, 13th ed; Government of India.[6] In the case of In re Tucker[7] assistance was refused where the UK HMRC was the only creditor. In the present case, however, the claim of HMRC was not the only creditor albeit that its claim comprised the vast majority of the totality and there was only one other creditor. It would be wrong to impose an arbitrary rule whereby the claim of a foreign revenue authority would not be assisted if it fell below certain proportion of the totality. A small percentage might itself represent a large sum; and it would unfair to non-revenue creditors not to grant assistance if there was at least one other creditor who would stand to benefit from the assistance: views of Bailhache B in the case of In re Bomford[8] followed.
CONTRACT
Creation—elements of valid contract—consent
O’Brien v Marett CA: (Sumption, Nutting and Pleming JJA) [2008] JCA 178
PC Sinel for the brother; MStJ O’Connell for the wife; MH Temple for the husband; NF Journeaux for the intervenor.
In matrimonial proceedings with respect to ancillaries, the husband (H) denied that he was interested in a certain company, averring that it was owned solely by his brother (TP). Two days before this question was to be determined at trial as a preliminary issue, H and TP agreed to concede the point for “commercial reasons”. The concession was enshrined in a consent order dated 29 May 2007. In a judgment on costs of 1 June 2007,[9] Bailhache B deduced certain findings of fact, was highly critical of TP’s conduct and awarded the wife indemnity costs jointly and severally against H and TP in relation to the preliminary issue. Under new legal representation, TP then applied to strike out the consent order inter alia on the ground that, on the basis of criticism of his previous lawyers, the consent order which had been agreed through his previous lawyers lacked the necessary contractual requirement for consent on his part. On 10 December 2007,[10] Bailhache B declined TP’s application that, in the light of his critical findings in relation to TP, he recuse himself from further involvement in the proceedings. On 13 December 2007,[11] Bailhache B struck out TP’s application to strike out the consent order. TP sought now leave to appeal against inter alia the decision of the Bailiff (13 December 2007) to strike out his application to set aside a consent order.
Held, dismissing the application:
(1) Setting aside consent orders. The grounds for setting aside a consent order fall into broadly two categories: first, where it is alleged there was at the date of the order an erroneous basis of fact, such as misrepresentations or misunderstandings as to the position or in relation to assets; and second, where there has been a material or unforeseen change in circumstances after the order so as to undermine or invalidate the basis of the consent order. The court’s jurisdiction to vary or revoke a consent order is probably inherent (but in England is expressly included in CPR Rule 3.1(7)). A consent order, although not necessarily a contract, is to be interpreted like a contract: Weston v. Dayton,[12] Brennan v Bolt Burden.[13] The legal effect of a court-approved consent is derived from the court order itself and does not depend any longer on the agreement between the parties: Livesey (formerly Jenkins) v Jenkins.[14] A judgment given or an order made by consent may be set aside on any ground which would invalidate a compromise not contained in a judgment or order: Halsbury’s Laws of England, (4th ed) vol 37, para 1210. For reasons of Jersey contract law (see below) it may not be necessary for a mistake to be a mutual mistake in order to vitiate consent. Bad legal advice is not, without more, sufficient to set aside a consent order: Harris v Manahan.[15]
(2) Jersey law of contract. There are four elements necessary to constitute a contract under Jersey law: (i) capacity; (ii) consent; (iii) cause; and (iv) objet. As regards consent, which was the issue in this case, Jersey law determines consent by the use of the subjective theory of contract: Pothier, Treatise on the Law of Obligations or Contracts (trans WD Evans, 1806), paras 4, 91, 98, and Appendix 5 to Pothier by Evans; Selby v Romeril;[16] Mobil Sales & Supply Corp v Transoil (Jersey) Ltd.[17] La Motte Garages v Morgan[18] must now be considered per incuriam on this specific point in the light of Selby v Romeril.[19] For a contractual theory based on the subjective intention of the parties, a mistake is the principal obstacle to a valid contract: Sefton-Green, Mistake, Fraud and Duties to Inform in European Contract Law, Cambridge University Press, at 72–73. Mistake or erreur may be erreur obstacle (erreurs that prevent the meeting of minds) or erreur vice du consentement (a defect of consent where there is consent/meeting of minds but consent is impeachable for some other reason and which causes a contract to be a nullity relative). Erreurs obstacle prevent the necessary subjective meeting of minds and may, themselves, be of three kinds: erreur sur la nature du contrat (mistake as to nature of agreement); erreur sur l’objet (mistake as to subject of agreement); and erreur sur l’existence de la cause (mistake as to basis or purpose of agreement). Erreurs vice du consentement are of two kinds: erreur sur la personne and erreur sur la substance. The issue in this case was whether there was a vice du consentement.
(3) Cause. Cause is the basis of or the reason for the contract. It is thus constituted by the interdependence of promises or the mutual performance of obligations. Hence, where the basis upon which a party enters an agreement (the cause) either fails or never comes to pass at all, the agreement is, according to Jersey law, null: Pothier, paras 42–46; Domat, Lois Civiles, paras 147–48; French Civil Code, art 1131.
(4) Objet. Objet is a party’s obligation of performance under a contract: Pothier, para 53; French Civil Code, art 1126. It is what a party promises to do under the contract by way of performance/ discharge of his or her obligations. If there is to be objet under a contract, the promised performance must be: (i) certain; (ii) possible; and (iii) lawful. As regards (i), the objet must be sufficiently certain (Selby v Romeril[20]) or capable of determination (Groom v Stock[21]).
(5) No vice du consentement in this case. The order by consent in this case satisfied the requirements of the Jersey law of contract. Mutual mistake may be unnecessary to vitiate a consent order under Jersey law (at least as regards any underlying contract). But there was no vice du consentement in this case. There was no mistake as to the subject matter of the agreement or its principal terms. There may have been a misunderstanding by the applicant as to the consequences or ramifications of the agreement but that was not enough. This was not, moreover, a case that would fall within Marsden v Marsden,[22] and the “special facts in a rather special case” therein described, such as where a client gives a prohibition against a compromising except on certain terms.
COURTS
Récusation—apparent bias
O'Brien v Marett CA: (Sumption, Nutting and Pleming JJA) [2008] JCA 178
PC Sinel for the brother; MStJ O’Connell for the wife; MH Temple for the husband; NF Journeaux for the intervenor.
The facts of the case are summarised under the heading “Contract” above. TP further appealed against the Bailiff’s refusal (on 10 December 2007) to recuse himself from further involvement in the proceedings and in particular the strike out application.
Held, dismissing the appeal:
In any extended litigation there will be occasions when interlocutory matters have to be considered, including occasions when the court may be very critical of the conduct or tactics of one or other party. It did not follow that if there are challenges to such interlocutory decisions, the judge involved was automatically disabled from performing his or her judicial functions in relation to the remainder of the dispute. To hold otherwise would be to allow the discontented party to remove a judge merely by making personal attacks on the judge’s impartiality: Muir v Commr of Inland Revenue;[23] Locabail (UK) Ltd v Bayfield Properties.[24] The common law test was whether there was a real possibility of bias, as viewed by a fair-minded and informed observer: Baglin v Att Gen.[25] The court also referred to In re Medicaments and Related Classes of Goods (No 2)[26] where there was lengthy consideration and analysis of the Strasbourg jurisprudence considering art 6 of the ECHR. The comments and observations of the Bailiff in the judgment on costs were not such as to cause a fair-minded and informed observer to conclude there was a real possibility that the Bailiff was no longer independent and impartial (the art 6 test) or no longer free from bias (the common law approach). The judgment was not delivered in extreme or unbalanced terms. Much more was required before it was appropriate for the Bailiff to uphold the application for récusation.
CRIMINAL PROCEDURE
Sentence—young offenders
Att Gen v Cameron Royal Ct: (Bailhache B, and Jurats Le Brocq and Morgan) [2008] JRC 182
S Sharpe, Crown Advocate; LKA Richardson for the defendant.
At the time of offending the defendant was under 21. He was, however, 21 by the time he pleaded guilty on the indictment. Article 3(1) of the Criminal Justice (Young Offenders) (Jersey) Law 1994 (the “1994 Law”) provides that “No court shall pass a sentence of imprisonment on a person under the age of 21”. Article 4(2)(c) provides that—
“(2) A Court shall not pass a sentence of youth detention unless it considers that no other method of dealing with the person is appropriate because it appears to the Court that:
. . .
(c) the offence or the totality of the offending is so serious that a non-custodial sentence cannot be justified”.
Held, on the issue of the relevance of the 1994 Law:
The proper interpretation of the relevant provisions of the 1994 Law meant that the defendant should be treated as an adult offender on the basis that he was 21 at the time he pleaded guilty on indictment. Nevertheless, where a defendant crosses a relevant age limit in this manner, the starting point in considering sentence is the sentence that the defendant would have been likely to receive had he been sentenced at the date of committing the offence: R v Ghafoor.[27] On the facts, a non-custodial sentence was imposed on the defendant.
HOUSING
Qualified residential status—discretion of Department
Jolly v Minister of the Environment Department GRC: (Collas DB) (2008) No. 39/2008
PTR Ferbrache for the plaintiff; HM Comptroller for the defendant.
The appellant came to live in Guernsey at the age of 21 in 1988. She had lived in Guernsey ever since. Her parents lived in an Open Market property. Her only sibling and her family also lived in Guernsey. Applications were made on her behalf to the respondent Department pursuant to the Housing (Control of Occupation) (Guernsey) Law, 1994. Successive licences were granted to her permitting her to live in Local Market accommodation but on certain conditions being met, with each licence only lasting one year at a time with the further consequence that if she lived away from the Island for any length of time her accrued rights would be lost. As matters stood, she would not become a qualified resident until 2023. A particular issue arose also as to whether the department had applied the correct test when considering a discretionary power to treat the appellant as having held a housing licence during an earlier period under s10(2)(j)(iii) of the 1994 Law.
Held, allowing the appeal and remitting the matter to the respondent Department:
(1) The respondent had applied the wrong test in law in making its decision under s10(2)(j)(iii) because it had failed to take into account all of the appellant’s relevant circumstances.
(2) The respondent was also to have regard to the appellant’s rights under the European Convention on Human Rights by reason of s 6(1) of the Human Rights (Bailiwick of Guernsey) Law, 2000 which provided that it was unlawful for a public authority to act in a way which was incompatible with a Convention right.
(3) The respondent’s decision meant that the appellant could not live away from the Island without losing her accrued rights under the 1994 Law.
(4) The respondent was unable to demonstrate that that it had properly considered whether its decision was compatible with the appellant’s Convention rights.
Comment: [GS Dawes] The case is noteworthy as being one of the first to be decided with the provisions of the Royal Court (Reform) (Guernsey) Law, 2008 in force. This amends earlier legislation to provide that the judge in a Royal Court civil trial need no longer sum up and may retire with the Jurats. Any judgment given by the Royal Court (including cases where Jurats sit) must now be reasoned. The judge may assist and advise the Jurats and draft or participate in the drafting of their findings and decisions, all for the purposes of preparing a reasoned judgment. However, the old division of responsibility between judge and Jurats, with the former deciding issues of law and procedure and the latter deciding questions of fact is retained—even if the process will no longer be as visible and transparent as it once was. The new law is reflected in the judgment which expressly states that the section of the judgment concerning legal issues is the Deputy Bailiff’s as opposed to the findings of the Jurats later in the judgment as to factual issues.
The legislation is also noteworthy for increasing the number of Jurats from 12 to 16, principally so that there would be a sufficient number from which to draw a second panel in the event of a re-trial of a criminal matter. The legislation is likewise notable for permitting judge-only trials of issues of fact and mixed fact and law, subject to an excessively complicated series of vetoes and trumps. In theory the Bailiff or judge can now impose (unappealably) a judge-only trial notwithstanding that there are issues of fact or mixed fact and law (see s 13).
IMMIGRATION
Deportation of offender—powers of Magistrate’s Court
Dryjanski v Att Gen Royal Ct: (Bailhache B, and Jurats Morgan and Newcombe) [2009] JRC 041
MJ Haines for the appellant; RCP Pedley for the Attorney General.
The issue arose, on appeal from the Magistrate’s Court, as to whether it was appropriate for the Magistrate’s Court to make a recommendation for deportation at the end of sentence. The appellant accepted that the Magistrate had appropriate jurisdiction under s 6(1) of the Immigration Act 1971, as extended to Jersey. He contended, however, that as a matter of practice such issues should be considered only at Royal Court level, on the grounds that (a) if a case was fit to be dealt with by the Magistrate’s Court it could not be so serious as to merit a recommendation for deportation; and (b) the less structured process before the Magistrate’s Court meant that the defendant was not given the “fullest procedural protection” (Camacho v Att Gen[28]).
Held, dismissing the appeal:
The law in relation to recommendations for deportation was clear. The court must ask itself two questions: (1) Is the defendant’s continued presence in Jersey detrimental to the interests of the community? (2) If the answer to (1) is in the affirmative, would a recommendation for deportation be disproportionate having regard to the convention rights under the European Convention on Human Rights of the defendant or any other person? It was an incorrect approach to ask whether the offence was serious enough to merit a recommendation for deportation. This was merely one factor in determining whether the defendant’s continued presence in the Island was detrimental to the interests of the community. Moreover, the requirements of public policy in Jersey were not necessarily the same as in the UK. Nor could it be said that the procedure in the Magistrate’s Court did not give the defendant “the fullest procedural protection”. The Magistrate’s Court was well able to balance the competing arguments. It was also a “public authority” within the meaning of the Human Rights (Jersey) Law 1998 and thus under an obligation to respect convention rights. The statute conferred jurisdiction on the Magistrate to make a recommendation for deportation and there was no public policy reason why the Magistrate should not in an appropriate case make such a recommendation.
INJUNCTIONS
Freezing order—use for foreign proceedings
Garnet Investments Ltd v BNP Parisbas (Suisse) SA & Government of Republic of Indonesia GCA: (Rowland, Bailiff, Vos & Montgomery JJA) GCA (2009) No. 2/2009
CH Edwards for the appellant; T Corfield for the respondent; SH Davies for the third party.
The appellant company was beneficially owned and controlled by Tomi Soeharto, a son of the former President of Indonesia, who had achieved some notoriety, including spending time in prison for planning the murder of a judge who had previously found him guilty of corruption. The appellant company had some €37 million in a Guernsey account operated by the respondent. The respondent had refused to comply with instructions to pay away the monies and had notified the Financial Intelligence Service about its concerns as to the provenance of the monies. The appellant brought proceedings in March 2006, three years after the initial refusal of the respondent to obey the appellant’s instructions, seeking declaratory relief that they should be complied with. In January 2007, the third party applied to the Royal Court and, as a consequence, was joined to the proceedings and obtained a freezing order. It later applied for a disclosure order. In May 2007, the freezing order was continued and some disclosure ordered. The third party, who had brought no civil proceedings of its own against Mr Soeharto, whether in Guernsey, Indonesia or elsewhere, was required to undertake that it would bring proceedings within a fixed period. It subsequently issued proceedings in Indonesia on the day before that period expired. Those proceedings were ultimately dismissed and discontinued. A freezing order application in Indonesia had failed. Nothing had come of other civil proceedings. The appellant applied to discharge the Guernsey injunction. The Lieutenant Bailiff gave judgment in August 2008[29] ordering that the injunction should continue until 23 May 2009 by which time he envisaged that there would have to be a judgment in Indonesia which could be enforced in Guernsey or else the injunction would end. The appellant appealed, seeking the discharge of the injunction and an associated (but stayed) disclosure order.
Held, allowing the appeal, discharging the injunction, refusing leave to appeal to the Privy Council and refusing a stay of the discharge pending onward appeal:
(1) There were important distinctions between the Guernsey court’s powers to grant injunctions and those of the English courts. By s 1(7) of the Law Reform (Miscellaneous Provisions) (Guernsey) Law, 1987 an injunction might “in exceptional circumstances” be granted, notwithstanding that proceedings had not been, and were not to be, instituted before the court. By s 4 of the 1987 Law, the court was not to exercise its powers under, inter alia, s 1, unless satisfied that it was just and convenient to do so.
(2) By contrast, the English court was empowered, by s 37(1) of the Supreme Court Act 1981, to grant an injunction in all cases in which “it appears just and convenient to do so” and, by s 25 of the Civil Jurisdiction and Judgments Act 1982, it was permitted to grant all forms of interim relief in aid of foreign courts, subject to the further requirement at s 25(2) that it could refuse to grant relief if the fact that the court had no jurisdiction apart from s 25 made it “inexpedient for the court to grant it”.
(3) The court therefore doubted whether the powers in Guernsey were, in fact, as wide as those in England and Wales.
(4) Section 1(7) referred to substantive proceedings which might be instituted before the court (as opposed to before another court) to support the injunction as opposed to proceedings of any kind, however unrelated to the injunction that was sought, such as the proceedings brought in the present case by the Bank.
(5) It followed that the third party had to show exceptional circumstances before an injunction would lie. This distinguished Guernsey law from English law. The court declined to define precisely what precisely had to be shown. What would constitute exceptional circumstances would turn on the facts of each case. In a case where the substantive proceedings in aid of which the injunction was sought were not in Guernseythere had to be some additional factors which made it appropriate for the injunction to lie. Those factors would vary infinitely.
(6) The requirement at s 1(7) was not surprising, since it was more likely to be more common for injunctions to be sought in Guernsey than in England when the substantive proceedings, in aid of which the interim relief was sought, would be brought elsewhere. Guernsey would wish to be able to grant freezing injunctions in aid of proceedings elsewhere, but s 1(7) required the court to exercise appropriate caution before doing so.
(7) The court had considerable concerns on the facts of the present case and doubted that either the appellant or the third party had been entirely frank or open with the court. While the requirements of both arguable case and risk of dissipation had been made out in May 2007 they were not by the time of August 2008. The order should have been discharged at that time. The third party’s civil action against Mr Soeharto had failed, claims against Mr Soeharto for serious corruption had not materialised, his Indonesian assets had not been frozen, no claims had been brought in any other jurisdiction. The order would therefore be discharged.
Comment: [GS Dawes] This case illustrates well the importance of paying close attention to the wording of Guernsey statutes, particularly in areas of law which are over-familiar to English and English-trained lawyers and particularly when closely modelled on, but not copied word for word from, English statute. The freezing injunction regime had been assumed to be the same as that of the Courts of England and Wales, but the 1987 Law expresses itself differently to the acts founding the High Court jurisdiction. What ultimate consequence that has for the jurisdiction was left rather unclear in the present case given the court’s refusal to define what “exceptional circumstances” comprised and the conceptual difficulties begged by the requirement beyond the more general requirement that the power to grant an injunction only be exercised when it is just and convenient to do so whilst also adopting the criteria of English case law as to arguable case, presence of assets within the jurisdiction and a risk of dissipation. The case also begs the question as to the role of the FIS and the Bank’s position as regards obtaining permission to transfer the monies away.
LANDLORD AND TENANT
Eviction
Cotterill v Le Marquand CA: (Sumption, Nutting and Bailhache JJA) GCA 24 March 2009
The appellant was a tenant of a flat under a monthly tenancy. After a disagreement with her landlord (the respondent), she was given notice to quit by letter of 28 November 2008 which was confirmed by formal notice delivered by the Duty Sergeant on 2 December. In the meantime the appellant had sought an assessment of her rent by the Rent Officer pursuant to the Rent Control (Guernsey) Law, 1976. Knowing of the prospective eviction proceedings, the Rent Officer took no action. Section 14 of the Law, as amended, provides:
“(1) No proceedings shall be commenced in the Ordinary Court by the landlord of a controlled dwelling in respect of which a reference or application has been made under the provisions of this Law for the eviction of the tenant of such dwelling within twelve months of the date of the latest assessment … in respect of the basic rent thereof or, if an appeal has been lodged … within twelve months of the determination or abandonment of such appeal.
(2) The proceedings of the foregoing section shall not apply if the Ordinary Court is satisfied that the eviction proceedings are founded upon matters wholly independent of the operation of this Law.”
In the Royal Court much discussion took place on the motivation for the issuance of the notice to quit; the Bailiff decided as a matter of law that the eviction should be ordered and referred to the Jurats the question of the length of the stay. The appellant appealed.
Held, dismissing the appeal, that the provisions of art 14(2) were inapplicable as no assessment of the rent by the Rent Officer had ever been made.
Obiter:
(1) If S14(2) had been relevant, the determination of the factual issues would have been for the Jurats and not the presiding judge;
(2) The fact that eviction proceedings were in contemplation was no reason for the Rent Officer not to have performed his statutory duty once an application had been made for the assessment of the rent.
MENTAL HEALTH
Curatelle—court’s supervisory powers
In re X, an Incapable Royal Court: (Talbot LB) GRC (2008) No. 28/2008
PMA Palmer for the applicant guardian; MME Pullum for the patient; HM Procureur as amicus curiae.
The applicant was the curateur (guardian) of a 70-year-old incapable (patient) with substantial wealth. He had lived in Guernsey for 20 years and was both resident and domiciled there. He had made a will of personalty in favour of his adult children and former wife. There was no prospect of recovering mental capacity; the will was therefore final. His former wife and children were resident and domiciled in the United Kingdom. The curateur sought the approval of the Royal Court to settle the assets of the patient on trust, with the advantage that, upon his death, there would be a very substantial saving of United Kingdom inheritance tax. The question of whether the court had jurisdiction to make an order of the kind sought was taken as a preliminary issue.
Held,
(1) The Royal Court had a supervisory jurisdiction over curateurs in matters of curatelle. A curateur was permitted to seek the approval of the Royal Court in respect of a proposed transaction. Applications might also be made in the case of dispute or doubt or difficulty as to the extent of the powers of a curateur.
(2) The law relating to curatelle and tutelle had its origins in Roman law and the civil law tradition as opposed to Norman customary law specifically. It was not appropriate to follow developments of the law of England and Wales in this context.
(3) There was very little in the way of either legislation or case law to guide the court in the exercise of its powers.
(4) Guernsey customary law was not static but was developed by judicial decisions displaying the same quality of constant adaptability to changing social conditions as the common law.
(5) It was appropriate to take into account the make-up of Guernsey’s population and society today and the fact that the residents of Guernsey included many whose original home and domicile were elsewhere but who had chosen to emigrate to Guernsey to enjoy all the advantages, whether social, fiscal or climatic, which they believed such a move provided. Many of those residents had family members living elsewhere where more stringent tax regimes applied. This was not something which a developing customary law could properly ignore. As Guernsey’s population changed, so might the customary law of Guernsey change to meet the requirements of that population and society.
(6) There was a fundamental distinction to be drawn between the role of curateur and that of trustee. Whilst both were obliged to act en bon père de famille, the curateur was, in essence, an attorney or manager of the incapable’s assets. The assets of the incapable were not vested in the curateur. The Trusts (Guernsey) Law, 2007 had no application.
(7) This distinction had the further consequence that a curateur was not subject to the same constraints as a trustee; it was permissible for a curateur to take account of the likely actions of the incapable should his incapacity have been temporarily removed and he found himself in the position of the curateur.
(8) Adopting the “five aids to navigation” propounded by Lord Lowry in C (A Minor) v DPP[30] and citing, at length, Scottish judgments concerning the analogous situation of a curator bonis, the supervisory jurisdiction of the Royal Court in curatelle matters included a power to give authority to a curateur in suitable cases to make a settlement of his incapable’s assets or a substantial part thereof in order to save tax, including inheritance tax, which would otherwise be payable on the death of the incapable.
Comment: [GS Dawes] This case is particularly noteworthy for the court’s willingness to consider and adopt Scottish case-law in its reasoning and decision: quite properly in the view of this commentator. The Scottish cases were plainly on all fours with the issues in the Guernsey case and, by virtue of the shared civilian strand, were of considerable assistance in evolving Guernsey customary law in a principled fashion. The case is also noteworthy for the court’s willingness to take into account tax planning as a legitimate end of its own when considering applications of this nature.
TRUSTS
Variation of trust—receivers
Mubarak v Mubarak CA: (Beloff, McNeill and Montgomery JJA) [2008] JCA 196
AP Begg for the appellant; CGP Lakeman for the first respondent; JMP Gleeson for the second respondent; MP Renouf in person.
In English matrimonial ancillary proceedings, Holman J, acting pursuant to s 24(1)(c) of the Matrimonial Causes Act 1973, varied a Jersey trust of which the husband (H) was a settlor and beneficiary so as to require the trustee to pay a lump sum to the wife (W). Holman J noted that, as a general rule, it would be an exorbitant exercise of the High Court’s jurisdiction to purport to vary a Jersey trust but found that this was an extreme case of a recalcitrant spouse who had persistently failed to abide by court orders. The position under the trust was that W was not a beneficiary: although she had initially been a beneficiary, H had already exercised his power under the trust instrument to exclude her as a beneficiary and the trustee had no power to add an excluded person as a beneficiary. The trust further contained provisions enabling the trustee to pay capital or income to any charitable institution at the request of beneficiary and to add any person (other than an excluded person) as a beneficiary. W sought an order of the Royal Court enforcing or giving effect to the Holman order. The Royal Court (Birt DB and Jurats Le Brocq and Liddiard[31]) held that by reason of art 9(4) of the Trusts (Jersey) Law 1984 the Royal Court could not enforce a foreign judgment which, under foreign law, purported to vary or alter a Jersey trust. It was true that in appropriate circumstances the Royal Court could, as a matter of discretion having regard to the interests of the beneficiaries, give directions to a trustee under art 51 of the 1984 Law with a view to achieving the same objectives as the foreign order. However, the Royal Court had no power to authorise or direct a trustee to act in a manner which was outside the powers conferred on it under the trust instrument (which in the terminology adopted by the court would amount to an “alteration” rather than a “variation” of the trust). In the present case, since H had exercised the power conferred on him to exclude W as a beneficiary and the trustee had no power under the trust to add an excluded person as a beneficiary, the Royal Court had no power to authorise or direct the trustee to comply with the Holman order. On the facts, however, H had by the terms of an earlier letter to the trustee, which he had written pursuant to a Hadkinson order by Bodley J, irrevocably requested the trustee to assist him in meeting his obligations under the English court orders. The Royal Court found that this amounted to a consent by H to the alteration of the trust for the purposes of compliance with the Holman order. Applying the rule in Saunders v Vautier,[32] to the effect that all the beneficiaries may get together and alter a trust, the Royal Court further gave leave to W to make an application for the court’s approval for the alteration of the trust under art 47 of the 1984 Law and, finding that the proposed alteration was in the interests of those beneficiaries not capable of approving themselves and had been approved by the other adult beneficiaries, approved the necessary changes to the trust so that effect could be given to the Holman order. The court further appointed two representatives of KPMG as receivers of the trust with defined powers.
H appealed inter alia on the grounds that (a) since the effect of the Royal Court’s order was that the whole fund would be paid to an excluded person, it amounted to a complete resettlement and as such was neither a variation or revocation within the meaning of art 47; (b) the terms of the Royal Court’s order had given consent only on behalf of the minor and unborn beneficiaries and not the unascertained beneficiaries; (c) the existence of (i) an unreleased power on the part of H to add beneficiaries, and (ii) power on the part of the trustee to pay capital or income to any charitable institution rendered the class of unascertained beneficiaries so wide as to be outside the jurisdiction of the court to approve an arrangement on their behalf under art 47; (d) H’s letter to the trustee was part of an unaccepted contract and vitiated by duress; and (e) that the Royal Court’s exercise of its jurisdiction to appoint a receiver of a trust was exercised in an excessive manner.
Held, dismissing the appeal:
Article 47 empowers the Royal Court to approve a variation or revocation of a trust even though it might be so extensive as to leave little of the existing trust provisions extant. Article 47 says nothing about preserving the “substrata” of the trust; but nevertheless, if the trust is not to come to an end, the arrangement must be such that the assets remain dedicated to some form of trust purposes; and, obiter, in the case of an arrangement whereby the assets are henceforth to be held in trust under the law of another jurisdiction the court should give careful consideration as to whether that jurisdiction provided broadly similar protection to Jersey: decision of Tomes DB in the case of In re Osias Settlements[33] affirmed, with the above qualifications. On the facts, the arrangement in this case did not amount to a complete resettlement and the trust structure remained. Nor was there satisfactory evidence that the whole fund would be applied to the benefit of W.
It is a matter for the courts in individual jurisdictions as to how to provide for the representation of persons without legal capacity, unascertained, or those as yet unborn. If, in proceedings under art 47, an unborn or unascertained person is to be represented, this may be best covered by the trustee (In re Osias Settlements) unless the trustee’s position is not neutral. On the facts, there was no doubt that Advocate Renouf had been instructed to consider the interests of the unascertained beneficiaries and the interests of all the relevant parties had been considered by the Royal Court. The lack of reference to the unascertained beneficiaries in the substantive order was a mere slip. Even if the unascertained beneficiaries had not been covered, the Court of Appeal had power inter alia under r 12(2) of the Court of Appeal (Civil) Rules 1964 to draw inferences of fact and give any judgment which ought to have been given.
The interests of potential charitable recipients under the trust did not need to be considered by the court. They were not within the class of beneficiaries as defined in the trust and the relevant clause made it clear that any such payment would be for the benefit of the beneficiary requesting it and not the charity. To suggest otherwise would mean that such a trust could never be varied without the consent of every charity in the world, which was absurd. As to the question of the unreleased power to add beneficiaries, the Jersey courts had power to approve an arrangement under art 47 on behalf of unascertained beneficiaries even if a potential member of the relevant class is in existence. The position may be different under s 1(1)(b) of the Variation of Trusts Act 1958, art 47(1)(b) being a truncated version of s 1(1)(b). The object of a fiduciary power generally has the ability to block a relevant arrangement unless the trustees have authority to release the power granted to them: see Schmidt v Rosewood Trust Ltd.[34] But in the context of an arrangement presented to the court for approval under art 47, only where the court was considering either (a) the position of a single default beneficiary, or (b) a restricted class from whom one or more must be chosen, and all of whom agree in objecting, could it be said that the object of a fiduciary power would have power to block an application for approval. The court was not persuaded that a wide power of appointment, covering the whole world, could be properly characterised as fiduciary and in the present case the power in question was to add to the class of persons whom the trustees may chose in their discretion to benefit and was not therefore a fiduciary power of the nature envisaged by Lord Walker in Schmidt v Rosewood Trust Ltd and not a bar to approval of an arrangement pursuant to art 47.
H’s letter to the trustee was not part of a contract, had been given as a matter of choice and was sufficient for the purposes of supplying H’s consent to the present arrangement for the purposes of the rule in Saunders v Vautier.
The exercise of the court’s judgment in appointing a receiver contained no error which would allow the Court of Appeal to intervene even if the circumstances were such that for its part it would not have granted such an order. In any event the Court of Appeal was entirely in agreement with the Royal Court’s reasoning with regard to such appointment.
Comment: [M Renouf] This judgment is important because the Court of Appeal does not interfere with the reasoning of the Deputy Bailiff at first instance in In re IMK Family Trust,[35] whose judgment sought to reconcile previous authorities on the enforcement of foreign judgments which had been thought to conflict. The judgment sets out, and therefore appears to implicitly affirm, the distinction drawn at first instance between foreign orders which seek “variation” of a trust, as opposed to “alteration” of a trust. (It will be recalled that “variation”, which can be given effect to under art 51 of the Trusts (Jersey) Law 1984, as amended, takes place in accordance with the scope of the trustee’s powers under the trust instrument and the law; as opposed “alteration”, which cannot be enforced, which would ride roughshod over the trust instrument and the law). It is regretted that the Court of Appeal’s judgment does not go one step further and expressly approve this part of the lower court’s analysis of art 9 of the Trusts Law.
The judgment is also important because it clarifies a number of other points of trust law and practice, including (i) that powers under art 47 of the Trusts Law to vary a trust are very wide (although the court did not accept that variations altering the ‘substratum’ of a trust were permissible, it held that in practice provided the assets remain dedicated to some form of trust purposes, they are likely to be acceptable[36]); (ii) in Jersey, unlike England, art 47 permits the court to approve variations on behalf of unascertained beneficiaries of full age and capacity (on the facts in this case, the rule in Saunders v Vautier[37] was relied on to vary the trust to permit payment to be made to the non-beneficiary wife, who had in fact been revocably excluded); and (iii) that the existence of an unreleased power in the trust instrument will not necessarily preclude the court from giving consent on behalf of the unascertained beneficiaries.