Companies – reasons relating to refusal to strike out or grant
summary judgment of the third party claim against Mr Kiereini.
[2017]JRC190
Royal Court
(Samedi)
9 November 2017
Before :
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Advocate Matthew John Thompson, Master of
the Royal Court.
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Between
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CMC Holdings Limited
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First Plaintiff
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CMC Motors Group Limited
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Second Plaintiff
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And
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Martin Henry Forster
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First Defendant
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RBC trust Company (International) Limited
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Second Defendant
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The Regent Trust Company Limited
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Third Defendant
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And
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Martin Henry Forster
Jeremiah Kiereini
Charles Mugane Njonjo
The Estate of Jack Mordejay Benzimra
The Estate of Prahlad Kalyani Jani
RBC Trust Company (International) Limited
The Regent Trust Company Limited
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Third Parties
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Advocate N. G. A. Pearmain for Jeremiah
Kieereini.
Advocate J. P. Speck for the Second and Third
Defendants.
CONTENTS OF THE JUDGMENT
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Paras
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1.
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Introduction
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1
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2.
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Background
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2
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3.
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Applicable
legal principles
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3
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4.
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The
contentions
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4-6
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5.
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Decision
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7-39
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judgment
the master:
Introduction
1.
This
judgment represents my detailed written reasons for refusing either to strike
out or grant summary judgment of the third party claim brought by the second
and third defendants against Mr Jeremiah Kiereini (“Mr Kiereini”).
Background
2.
The
background to the third party proceedings is set out in my two earlier
judgments in this matter reported at CMC Holdings Ltd-v-Forster and Others
[2017] JRC 014A (the “January judgment”) and CMC and Others-v-Forster
and Others [2017] JRC 141 (the “September judgment”). I therefore adopt paragraphs 3 to 8 of
the January judgment and paragraphs 2 to 8 of the September judgment.
Applicable legal principles
3.
There was
no dispute between the parties on the applicable legal principles on a strike
out application where it is argued that there is no reasonable cause of action
and on a summary judgment application.
These have been considered by the Royal Court in MacFirbhisigh and
Ching v CI Trustees and Ors [2017] JRC 130A and by me in Holmes v
Lingard and Anor [2017] JRC 113.
The contentions
4.
Advocate
Pearmain for Mr Kiereini argued as follows:-
(i)
As the
decision to join Mr Kiereini had been made at a hearing at which he was not
present, he was entitled to challenge that decision without having to appeal to
the Royal Court.
(ii) Mr Kiereini did not understand the case against
him.
(iii) By reference to Mr Kiereini’s affidavit
sworn on 6th October, 2017, Mr Kiereini disputed the allegations
against him, contended they had caused significant damage to his reputation in
Kenya, and stated that there were practical difficulties for him in defending
the proceedings in view of his age, the distance from Kenya to Jersey and the
expense of litigation in Jersey.
(iv) The doctrine of unjust enrichment could not be
used to permit someone who was found to have acted dishonestly to recover a
contribution from anyone else because the dishonest assistor could not invoke a
remedy in equity.
(v) The doctrine of unjust enrichment did not allow
for an allocation of responsibility between wrongdoers. This was both as a matter of Jersey law
and because the Jersey courts could not use general notions of fairness to make
such an allocation. Only
legislation equivalent to the Civil Liability (Contribution) Act 1978 in
England (“the 1978 Act”) could provide for contributions between
joint wrongdoers outside Article 3 of the Law Reform (Miscellaneous
Provisions)(Jersey) Law 1960 (“the 1960 Law”).
5.
Advocate
Speck in response in summary contended as follows:-
(i)
Although
his skeleton argument suggested that Mr Kiereini was not entitled to issue the
present application and he would have had to appeal the January judgment, he
did not pursue this argument orally. I consider he was correct not to do so.
(ii) The claim against Mr Kiereini was clear. It was the same claim as was made
against Mr Njonjo (and the other third parties convened by the second and third
defendants) as set out in the September judgment at paragraph 28. Advocate Speck’s skeleton argument
at paragraphs 76 (a) and (b) in addition repeated its explanation of its case
as recorded at paragraph 28 of the September judgment, but inserted appropriate
references to Mr Kiereini.
(iii) The writings of Pothier (Pothier
Traité des Obligations (1821 Edition)) recognised that a debtor
could recover from co-debtors part of a debt paid by that debtor based on équité. The law of unjust enrichment could
therefore be used to apportion liability between wrongdoers who were jointly
liable to a plaintiff even if the basis of their liability was different and
was not tortious.
(iv) Whether any wrongdoer would be entitled to
recover a contribution was a matter for trial, was a question of degree and
also depended on whether the misconduct was sufficiently serious to preclude a
party from invoking the court’s equitable jurisdiction (see Maçon
v Quérée [2001] JLR 80 at paragraph 65). Dishonesty was not an absolute bar at
this stage to a possible recovery by the second and third defendants from any
of the third parties they had convened.
(v) Care should be taken as to what was meant by
dishonesty. In Royal Brunei
Airlines v Tan [1995] 2 AC 378, cited in Nolan v Minerva Trust and Ors
[2014] 2 JLR 117, Lord Nicholls stated:-
“In the context of the
accessory liability principle acting dishonestly, or with a lack of probity,
which is synonymous, means simply not acting as an honest person would in the
circumstances. . . Carelessness is not dishonesty.
Thus for the most part dishonesty
is to be equated with conscious impropriety. However, these subjective characteristics
of honesty do not mean that individuals are free to set their own standards of
honesty in particular circumstances. The standard of what constitutes honest
conduct is not subjective.”
6.
Subsequent
cases both in England and Jersey have made it clear that the standard of
dishonesty is an objective standard.
Decision
7.
Firstly,
Advocate Speck was right not to contend orally that Mr Kiereini was not
entitled to a re-hearing and that his only remedy was a right of appeal. I addressed this position at paragraph
44 of the September judgment where I stated:-
“44. In relation to Advocate Steenson’s criticism
that I should have convened the prospective third parties to allow them to
address me at the hearing which led to the January judgment, I am not persuaded
by this submission. Firstly, all
the second and third defendants had to do was establish a prima facie
case. Any third party convened was
always entitled to argue that in fact no prima facie case existed, whether as a
matter of law or fact. Secondly, to
require a third party to appear at a hearing before they had been convened in
my judgment as a matter of general practice is likely to cause delay and
complexity. While there may be
exceptions to this general approach, in most cases, I consider the right course
to be for a party seeking to convene a third party to make the application to
see whether there is a prima facie case and, if there is a prima facie case,
the third party convened can then decide whether it wishes to challenge the
order made. That might be on
jurisdiction grounds, on the grounds of forum or on the merits using a strike
out or summary judgment application (as is now permitted in the case of a
summary judgment under Rule 7 of the Royal Court Rules).”
8.
I
therefore make no criticism of Mr Kiereini for issuing the application. Indeed, the application was beneficial
in the sense that the consideration of the third party proceedings brought by
the second and third defendants against the various third parties (including Mr
Kiereini) went further than the arguments canvassed for the January and
September judgments.
9.
Secondly,
in my judgment, the case of the second and third defendants as recorded in the
September judgment and repeated in the second and third defendants’
skeleton argument for this application is sufficiently clear for Mr Kiereini
and his advisors to know why he may be required to make a contribution. I accept that more detail may emerge on
discovery about the extent of his role and this may lead to amendments to plead
that detail. The essential hook on
which the second and third defendants hang their claim is, however, pleaded and
can only be resolved at trial.
10. What may have caused confusion are the
references in previous skeleton arguments to primary and secondary
liability. In future, it might be
helpful if this terminology could be avoided. Saying this, I accept that the second
and third defendants can only be found liable for dishonest assistance to the
plaintiffs if there is a finding of breach of duty by one or more of the
directors. Without such a finding,
there would be nothing for the second and third defendants to have assisted
dishonestly. In that sense, any
liability of the second and third defendants to the plaintiffs is contingent
upon breaches of duty being established against others. It is only on that
contingency being established that a contribution can be sought.
11. The other complication in this case that may
have caused confusion is that the plaintiffs have only chosen to pursue one
director, Mr Forster, the first defendant.
However, the effect of the third party notice is that the Royal Court,
absent any determination that there is no issue fit for trial, must determine
whether or not the other directors also acted in breach of duty. The fact that the plaintiffs have not
asked for such a finding does not matter.
The second and third defendants have required the Royal Court to make
such a finding. This has two
consequences.
(i)
Firstly,
such a finding is relevant to whether or not the second and third defendants
are liable to the plaintiffs at all.
If neither the first defendant nor any of the other third parties are
found to have acted in breach of duty, then there can be no finding of
dishonest assistance.
(ii) Secondly, a finding of breach of duty by one of
the third parties is necessary for the Royal Court to be invited to require
that third party to make a contribution to any liability for dishonest
assistance falling upon the second and third defendants. Without a finding of breach of duty by a
third party, that third party could not be required to contribute because that
third party would not have been found to have been a wrongdoer. More specifically, in the context of the
principles of unjust enrichment, without a finding of breach of duty against a
director, that director could not be said to have been enriched or enriched
unjustly.
12. I next comment on the affidavit of Mr Kiereini. While I have read his affidavit with
care, ultimately the central argument that I had to determine concerned a legal
question; namely, whether or not as a matter of law it is possible for the
second and third defendants to seek a contribution from Mr Kiereini relying on
the doctrine of unjust enrichment.
While I do not underestimate the difficulties Mr Kiereini might face in
contesting a complex matter in Jersey for the reasons he sets out, those
matters are not relevant to the question of law his application requires me to
determine. This is not an
application for a stay of these proceedings to have them determined in Kenya
where such concerns would be relevant.
13. In relation to the scope of the law of unjust
enrichment, the development of this doctrine was recorded by me in the January
judgment at paragraphs 66 to 71 where I referred to Re Esteem Settlement
[2002] JLR 53 and Flynn v Reid [2012] 1 JLR 370. In addition to the extracts from Flynn
v Reid cited in the January judgment, I refer also to parts of paragraph
100 as follows:-
“However, the fact that
unjust enrichment could not have been contemplated until recently in the type
of circumstance facing the court in this case does not mean that the court is
unable to declare new limits on a cause of action for unjust enrichment today.
Indeed, we think that we would be failing the community in Jersey if we did not
attempt to do so, recognizing that the circumstances which apply here might
similarly apply in a good many other cases which might not necessarily be
expected to come to court.”
14. While the context of Flynn v Reid
related to the division of equity in a property, in my judgment the
observations of W. J. Bailhache, Deputy Bailiff (as he then was) are of wider
application. The final four lines
of paragraph 100 support this view where the judgment stated:-
“So the context for the claim
in unjust enrichment may change. However, the doctrine of unjust enrichment is
a vibrant doctrine. What we need to do is analyse its component parts because
there seems no doubt that the principles can be applied across a wider basis
than merely a cohabitation case of the kind presently under
consideration.”
15. Paragraph 101 of the Flynn v Reid
judgment then referred to extracts from Pothier and Domat. As Advocate Speck pointed out, Pothier
recognises five different bases for whether one party might be under some form
of legal obligation to compensate another.
As part 1, chapter 1 of Pothier (1821 edition) states, “Les
causes des obligations sont les contrats, les quasi-contrats, les
délits, les quasi-délits; quelquefois la loi ou l’équité
seule.” (underlining added).
16. Where useful analysis is found in Pothier
is in respect of joint debtors. At
paragraph 280 of the 1821 edition, the text states as follows:-
“280. Le débiteur
solidaire qui paye le total, peut n'éteindre absolument la dette que
pour la part qu'il est tenu de payer pour soi et sans recours. ll a le droit de
se faire céder les actions du créancier pour le surplus contre
ses débiteurs; et au moyen de cette cession d'actions, il est
censé, en quelque façon plutôt acheter la créance du
créancier pour le surplus contre ses codébiteurs, que l'avoir
acquitée.
Le créancier ne peut refuser
cette subrogation ou cession de ses actions au débiteur solidaire qui
paye le total lorsqu'il a lui demandé: et meme s'il étoit mis
hors d'état de pouvoir les céder contre quelqu'un, il donneroit
atteinte à son droit de solidité, comme il a été
dit supra.
Il y a plus: lorsque le debiteur a,
par l'acte de paiement, requis la subrogation, quand meme le
créancier la lui auroit expressement refusée, le
débiteur, selon nos usages, ne laisse pas de jouir de cette subrogation,
sans été obligé de poursuivre le créancier pour le
contraindre à la Iui accorder. La loi supplée, en ce cas,
à ce que le créancier auroit dû faire, et subroge
elle-méme le débiteur qui a requis la subrogation, en tous les
droits et actions du créancier.”
17. In other words, a debtor who pays the total of
a debt due by various debtors jointly is, as long as he seeks to exercise a
right of subrogation, entitled to step into the shoes of the creditor to
recover sums he has paid out (apart from those sums for which he is solely
responsible).
18. Pothier also
specifically recognises that in the case of a joint and several liability
arising from a delit, French law allows the debtor who has paid the entire debt
to recover a contribution from his co-debtors. At page 250 of volume 1 of the 1821
addition, the text states as follows:-
“Lorsque la dette solidaire
procéde d'un délit, lorsque plusieurs ont été
condamnés solidairement envers quelqu'un au paiement d'une certaine
somme pour la réparation civile d'un délit qu'ils ont commis
ensemble; celui qui a payé le total ne peut avoir contre ses
codébiteurs, ni l'action pro socio, ni l'action mandati : Selon les
principes scrupuleux des jurisconsultes ro-mains, le debiteur qui a payé
le total n'a en ce cas aucun recours
contre ses codébiteurs.
Notre pratique francoise, plus
indulgente, accorde en ce cas une action à celui qui a payé le total,
·contre chacun de ses codébiteurs, pour répéter de
lui sa part. Cette action ne naît pas du délit qu'ils ont commis
ensemble; elle naît du paiement qu'il a fait d'une dette qui lui
étoit commune avec ses codébiteurs, et de l'équité,
qui ne permet pas que ses codébiteurs profitent à ses depens de
la libération d'une dette dont ils étoient tenus comme lui. C'est
une espéçe d'action utilis negotiorum gestorum, fondee sur les
mêmes raisons d'équité sur lesquelles est fondée
l'action que nous donnons dans notre jurisprudence au fidéjusseur
·qui a payé contre ses co-fidéjusseurs..”
19. Pothier
therefore recognises that a joint tortfeasor
can recover from other joint tortfeasors
a debt that he has paid. No statute
was needed to justify this approach.
Rather, the rationale was équité,
which did not allow co-debtors to profit at the expense of the judgment debtor
who discharged the debt (for which they were also responsible), because the
remaining joint tortfeasors would
then profit from the debt being discharged.
20. Pothier also
clearly recognises that parties who are jointly liable under a contract are
able to seek contributions from each other. Again, what is significant is that the
basis of one debtor being able to seek contribution from another is équité.
21. While the concept of enrichissement sans cause only developed at the end of 19th Century
in France (as noted in Flynn v Reid at paragraph 104), and Pothier
therefore does not use the phrase 'enrichissement
sans cause' (or 'unjust enrichment'), the legal foundation for both Pothier’s
analysis and for enrichissement sans
cause is the same; namely, équité. That is why in Classic Herd Limited v
Jersey Milk Marketing Board [2014] 2 JLR 487, W. J. Bailhache, again as
Deputy Bailiff, at paragraph 121 stated:-
“In my judgment, however, the
claim here cannot be regarded as a legitimate claim in quasi-contract. Such
claims, like claims in unjust enrichment, are permitted because equité
allows the court to remedy what would otherwise be injustice arising out of the
lack of contractual obligation.”
22. Advocate Pearmain suggested that quasi-contract
and unjust enrichment are one and the same thing. While they have many similarities, and
the legal basis underpinning them both is équité,
the better view is that they overlap and are based on the same juridical
foundation of équité.
23. The observations of Pothier are also
consistent with the decision of the English Court of Appeal in Niru Battery
Manufacturing Co v Milestone Trading Ltd (No.2) [2004] EWCA Civ 487,
referred to at paragraphs 82 to 85 of the January judgment. Identical to the approach in Pothier
and the extracts cited above, the reason why, in that case, SGS (the fifth
defendant in the proceedings) was able to recover against CAI (the fourth
defendant) was because SGS stepped into the shoes of the creditor (Niru). SGS was a tortfeasor and CAI was liable in equity. At paragraph 61 (as cited in the January
judgment), Clarke L.J. stated:-
“I can see no reason of
public policy why the court should not afford SGS a remedy in equity in order
to achieve what I regard as the just result. I would accept Miss Andrews'
submission that, as the judge held in paragraph 54, if SGS is not subrogated to
Niru's rights, CAI will remain unjustly enriched, the only difference between
that position and the position before the judge's first judgment being that it
will be unjustly enriched at SGS' expense instead of at the expense of Niru. In
short, far from being contrary to public policy, it would, as I see it, be
unconscionable for CAI to keep any of the money which it received by mistake
and which it paid away otherwise than in good faith.”
24. I see no difference between the sentiments of
the English Court of Appeal in Niru in 2004 and the words of Pothier,
written nearly 200 years earlier.
25. I therefore do not agree with Advocate Pearmain
that the doctrine of unjust enrichment should be restricted to claiming an
interest in property, and/or that the doctrine cannot be used as the basis for
ordering an allocation of responsibility between joint wrongdoers.
26. I should also deal with the authorities insofar
as they relied on statute to allocate responsibility between wrongdoers. While I accept that Dubai v Aluminium
Co Ltd v Salaam [2003] 2 A.C. 366 (also referred to in the January
judgment) was based on an English statute (the 1978 Act), the rationale for the
liability being distributed between wrongdoers was still because it was just
and equitable to do so. At
paragraph 53 of Dubai, following the extract cited at paragraph 79 of
the January judgment, Lord Nicholls continued as follows:-
“53 In the present case a
just and equitable distribution of the financial burden requires the court to
take into account the net contributions each party made to the cost of
compensating Dubai Aluminium. Regard should be had to the amounts payable by
each party under the compromises and to the amounts of Dubai Aluminium's money
each still has in hand. As Mr Sumption submitted, a contribution order will not
properly reflect the parties' relative responsibilities if, for instance, two
parties are equally responsible and are ordered to contribute equally, but the
proceeds have all ended up in the hands of one of them so that he is left with
a large undisgorged balance whereas the other is out of pocket.
54 Rix J considered this was
obvious. So did Ferris J, in K v P [1993] Ch 140, 149. I agree with
them.”
27. There was also no statute in the Canadian case Peterson
Pontiac Buick GMC Ltd v Campbell and Isfeld [2013] ABCA 251 referred to at
paragraphs 53 and 54 of the January judgment. One of the bases for apportioning
liability in that case was the doctrine of unjust enrichment, notwithstanding
the absence of any statute. I do
not therefore accept that the law of unjust enrichment in Jersey should be
restricted so as to prevent an allocation of wrongdoing as between joint
wrongdoers, as contended by Advocate Pearmain.
28. I do not consider that to allow the doctrine of
unjust enrichment to develop in this way, so as to allow an apportionment of
responsibility between joint wrongdoers, is acting simply on the basis of some
general notion of fairness. All the
above authorities ultimately recognised that the basis for the applicability of
the doctrine is that it would be contrary to justice to allow loss to fall on
one party alone, thus allowing another party responsible for all or part of
that loss to escape any liability for it.
All regarded it as inequitable to allow liability to fall solely on the
entity with the deepest pockets, or against whom it is easiest to enforce a
judgment. This was the view I had
formed in the January and September judgments; the more detailed analysis
undertaken in this application has confirmed that view.
29. While it would be desirable for the 1978 Act to
be adopted in Jersey, I do not see why the development of Jersey law after its
English equivalent was passed should await such a statute being passed. I observe it took 25 years to bring in
the 1960 Law and that nearly 39 years have now passed since the 1978 Act was
passed in England, without any sight of it being adopted in Jersey.
30. In Patel v Mirza [2016] UKSC 42, on the
question of the issues of leaving law reform to the legislator, Lord Toulson at
paragraph 114 stated as follows:-
“In Tinsley v Milligan Lord
Goff considered that if the law was to move in a more flexible direction, to
which he was not opposed in principle, there should be a full investigation by
the Law Commission (which has happened) and that any reform should be through
legislation. Realistically, the prospect of legislation can be ignored. The
government declined to take forward the Commission’s bill on trusts
because it was not seen to be “a pressing priority for government”
(a phrase familiar to the Commission), and there is no reason for optimism that
it would take a different view if presented with a wider bill. In Clayton v The
Queen (2006) 231 ALR 500, para 119, Kirby J said that waiting for a modern
Parliament to grapple with issues of law reform is like “waiting for the
Greek Kalends. It will not happen” and that “Eventually courts must
accept this and shoulder their own responsibility for the state of the common
law”. The responsibility of the courts for dealing with defects in the
common law was recently emphasised by this court in R v Jogee [2016] 2 WLR 681,
para 85, and Knauer v Ministry of Justice [2016] 2 WLR 672, para 26. In each of
those cases the court decided that it should depart from previous decisions of
the House of Lords. That is never a step taken lightly. In departing from
Tinsley v Milligan it is material that it has been widely criticised; that
people cannot be said to have entered into lawful transactions in reliance on
the law as then stated; and, most fundamentally, that the criticisms are well
founded.”
31. Patel v Mirza
also considered how far the common law doctrine that a party could not rely on
an illegal agreement as a defence to a civil claim should continue to represent
the law of England and Wales. The
head note states as follows:-
“Per Lord Neuberger of
Abbotsbury PSC, Baroness Hale of Richmond DPSC, Lord Kerr of Tonaghmore, Lord
Wilson, Lord Toulson and Lord Hodge JJSC. The two broad policy reasons for the
common law doctrine of illegality as a defence to a civil claim are that (i) a
person should not be allowed to profit from his own wrongdoing and (ii) the law
should be coherent and not self-defeating. The essential rationale of the
doctrine is that it would be contrary to the public interest to enforce a claim
if to do so would be harmful to the integrity of the legal system (or,
possibly, certain aspects of public morality). The rule that a party to an
illegal agreement cannot enforce a claim against the other party to the
agreement if he has to rely on his own illegal conduct in order to establish
the claim does not satisfy the requirements of coherence and integrity of the
legal system and should no longer be followed. Instead the court should assess
whether the public interest would be harmed by *400 enforcement of the illegal
agreement, which requires it to consider (a) the underlying purpose of the
prohibition which has been transgressed and whether that purpose will be
enhanced by denial of the claim, (b) any other relevant public policy on which
the denial of the claim may have an impact and (c) whether denial of the claim
would be a proportionate response to the illegality, bearing in mind that
punishment is a matter for the criminal courts. Within that framework various
factors may be relevant, but the court is not free to decide a case in an
undisciplined way. The public interest is best served by a principled and
transparent assessment of those considerations, rather than by the application
of a formal approach capable of producing results which may appear arbitrary,
unjust or disproportionate (post, paras 99, 101, 107–110, 120, 122–124,
133, 142, 144, 173–175, 186).”
32. While Patel was about seeking a return
from monies paid under an illegal contract on the basis of unjust enrichment,
rather than an allocation of responsibility between wrongdoers, it is a
decision that is not inconsistent with the authorities and texts referred to
above for allowing unjust enrichment to be used as a basis to allocate
liability between joint wrongdoers.
To that extent, it is supportive of the conclusion I have reached; if a
party to an illegal contract does not face an absolute bar to recover sums paid
under that contract, why should one joint wrongdoer face such a bar?
33. The Patel decision is also not
inconsistent with my conclusion that a dishonest assistor could recover from a
joint wrongdoer, notwithstanding a finding of dishonesty. From a Jersey law perspective the point
is most clearly put in Maçon v Quérée at paragraph
65, which reads as follows:-
“Finally, we have had to
consider the impact on this exercise of the plaintiffs’ conduct in
relation to their inheritance from Mrs. Bessières as discussed earlier
in this judgment. It is axiomatic that those who invoke the principles of
equity in their favour are expected not to have behaved in an unconscionable
way themselves-or, as it is sometimes more colourfully put, those who seek equity
must come with “clean hands.
Where, as here, that principle is
violated, it becomes a question of degree whether the misconduct is
sufficiently serious to preclude the plaintiff from invoking the court’s
equitable jurisdiction (see, for example, Jones v. Watkins (10), per Slade,
L.J). The circumstances of the present case are not to be dismissed lightly by
any means, and we have considered whether it would be right on this ground
alone to dismiss the plaintiffs’ case in its entirety. In the context of
the case as a whole, however, we think that this would be going beyond the
requirements of justice.”
34. This decision of the Royal Court, which I am
bound to follow, means that there is no absolute rule that either illegality or
a lack of clean hands or dishonesty operates as an absolute bar to a recovery
between joint wrongdoers. Rather,
the matter is a question of degree and whether a party’s conduct
precludes that party from invoking the court’s equitable jurisdiction to
seek a recovery from another.
35. Whether in this case the second and third
defendants, if found liable for dishonest assistance, will be able to persuade
the court to allow recovery of a contribution will very much depend on the
circumstances found by the court at trial.
As noted in previous judgments, Advocate Speck fairly accepted that the
court may ultimately not be willing to allow such a recovery having heard all
the evidence. That does not mean,
however, that the possibility of such a recovery can be ruled out at this
stage. Matters may turn on the view
the court forms of the directors, because they will have to be found to have
been in breach of duty in order for any contribution to be considered at all. The court's findings on whether and, if
so, how, any relevant officers of the second or third defendants acted
dishonestly will also be relevant; for example, why (if they did not) they had
not asked questions which the court considers they should have asked.
36. I also note that the doctrine of having clean
hands does not apply to claims under the 1978 Act – see K. and Another
v P and Others v J [1993] Ch. 140.
K v P was expressly approved in the Dubai case. If it does not apply to claims under
statute, why should it automatically apply to prevent a claim in unjust enrichment
being advanced at all?
37. Goff & Jones The Law of Unjust
Enrichment, as cited at paragraph 88 of the January
judgment, notes that the default position is an equal allocation, but that this
rule could be departed from “…and an unequal apportionment made,
where the causative potency of the parties’ actions was unequal.
Fourthly, the same result follows where the moral blameworthiness of the
parties’ actions was unequal.
Fifthly, the same result follows where one party gains a larger benefit
than the other from the transactions which gave rise to their respective
liabilities.” Again,
these observations do not exclude an allocation of responsibility between
individuals found to have caused a plaintiff loss, or suggest that the relative
merits of the conduct of parties should prevent such an allocation or at least
one being considered at a trial.
38. In conclusion, applying the strike out test,
and assuming for that purpose a finding of dishonesty against the second and
third defendants at trial, such a finding does not in my judgment mean that the
second and third defendants are prevented at this stage from seeking a
contribution from either their co-defendant, Mr Forster, or the other directors
convened as third parties (including Mr Kiereini). Likewise, applying the summary judgment
test, the arguments advanced by Advocate Speck for the second and third
defendants are not fanciful or improbable so as to deny the second and third
defendants a full exploration of those legal arguments and the relevant facts at
a trial. Whether they will prevail
is of course as noted above an entirely different question.
39. For all these reasons both applications by Mr
Kiereini were dismissed.
Authorities
CMC
Holdings Ltd-v-Forster and Others [2017] JRC 014A.
CMC
and Others-v-Forster and Others [2017] JRC 141.
MacFirbhisigh
and Ching v CI Trustees and Ors [2017] JRC 130A.
Holmes
v Lingard and Anor [2017] JRC 113.
Civil Liability (Contribution) Act
1978.
Law Reform (Miscellaneous
Provisions)(Jersey) Law 1960.
Pothier Traite des Obligations (1821
Edition).
Maçon
v Quérée [2001] JLR 80.
Royal Brunei Airlines v
Tan [1995] 2 AC 378.
Nolan
v Minerva Trust and Ors [2014] (2) JLR 117.
Re
Esteem Settlement [2002] JLR 53.
Flynn
v Reid [2012] (1) JLR 370.
Classic
Herd Limited v Jersey Milk Marketing Board [2014] (2) JLR 487.
Niru Battery
Manufacturing Co v Milestone Trading Ltd (No.2) [2004] EWCA Civ 487.
Dubai v Aluminium Co
Ltd v Salaam [2003] 2 A.C. 366.
Peterson Pontiac Buick GMC Ltd v
Campbell and Isfeld [2013] ABCA 251.
Patel v Mirza
[2016] UKSC 42.
K. and Another v P and Others v J
[1993] Ch. 140.
Goff & Jones: The Law of Unjust
Enrichment.