Settlement – application by the 4th plaintiff for leave to re-amend
the order of justice and application by the 4th defendant to strike out some or
all of the claims made against it in the re-amended order of justice.
[2014]JRC025
Royal Court
(Samedi)
24 January 2014
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Before :
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David Roderic Notley Hunt, QC.,
Commissioner, sitting alone.
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Between
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(1) Michaela Walker
(2) Ross Walker
(3) B (a minor by his guardian ad litem,
Michaela Walker)
(4) Delarose Trustee Limited
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Plaintiffs
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And
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(1) Paul Egerton-Vernon
(2) Walker Representatives Limited
(3) Mark Chown
(4) Hawksford Trust Company
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Defendants
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Advocate E. C. P. Mackereth for the
Plaintiffs.
Advocate P. D. James for the First Defendant.
Advocate B. J. Lincoln for the Second
Defendant.
Advocate P. G. Nicholls for the Third
Defendant.
Advocate M. L. A. Pallot for the Fourth
Defendant.
judgment
the commissioner:
1.
This is my
ruling on two procedural applications argued yesterday, namely:-
(i)
an
application by the fourth plaintiff, Delarose Trustees Limited
(“Delarose”), for leave to re-re-amend the Order of Justice so as
to allow Delarose to make against the first defendant, Paul Egerton-Vernon
(“PEV”), the second defendant, Walker Representatives Limited
(“WRL”) and the third defendant, Mark Chown (“MC”), the
claims already made against those defendants by the first, second and third
plaintiffs; and
(ii) an application by the fourth defendant,
Hawksford Trust Company Jersey Limited (“Hawksford”) to strike out
some or all of the claims made against it in the re-amended Order of
Justice.
It was of obvious importance to all parties
that they should know the outcome of these applications as soon as possible,
not least because of the potential implications in terms of the trial date; the
trial is presently fixed to start on 6th October, 2014, with a time
estimate of 20 weeks. I therefore
prepared this ruling overnight. As
a result, this ruling is briefer and less detailed than would otherwise have been
the case. I do, however, emphasise
that I have had regard to all the submissions made to me, even if I do not
refer specifically to them in this ruling.
The background
2.
The first
three plaintiffs are the beneficiaries of the Jack Walker 1987 Settlement
(“the Settlement”). PEV
was a trustee of the Settlement from its creation on 9th July, 1987,
until his retirement on 21st July, 2009. WRL was incorporated by Hawksford in May
1997 and was a trustee of the Settlement until it retired on 5th December,
2012. MC was a trustee of the
Settlement from 1st February, 2001, until his retirement on 6th
February, 2007. By 22nd July,
2009, therefore, WRL was the sole trustee of the Settlement. Both PEV and MC were directors of WRL;
PEV was also an employee of Hawksford.
Delarose was incorporated on 4th December, 2012, and
appointed a trustee of the Settlement the following day.
3.
This
action was commenced on 16th March, 2012. In summary, the plaintiffs allege that
the first to third defendants were grossly negligent in their handling of the
affairs of the Settlement, in particular in pouring very substantial amounts of
the Settlement’s funds into highly speculative and disastrous
investments. At the hearing
yesterday various figures were bandied about for the amount of the losses
sustained by the Settlement but Advocate Mackereth for the plaintiffs informed
the Court that the claims were presently valued in total at about £127
million.
4.
At a
hearing on 2nd October, 2013, the plaintiffs indicated an intention
to seek leave to add Delarose as a plaintiff in place of the existing plaintiffs
and to join Hawksford as the fourth defendant. They did not, however, pursue that
application. Instead, by a consent
order dated 25th November, 2013, Delarose was added as the fourth plaintiff
and Hawksford was joined as the fourth defendant, in each case pursuant to Rule
6/36 of the Royal Court Rules and the plaintiffs were given leave to re-amend
the Order of Justice accordingly.
(1) Delarose’s application
5.
By the plaintiffs’
summons dated 13th December, 2013, Delarose applied for leave to
file and serve on all defendants a re-re-amended Order of Justice, one effect
of which would be to allow Delarose to make against PEV, WRL and MC the claims
already made against those defendants by the first, second and third plaintiffs. The application was opposed by PEV and
MC, on the basis that each of them had a defence of prescription to the
proposed new claims. In short, each
of them contended that, by virtue of Article 57(3B) of the Trusts (Jersey)
Law 1984, Delarose’s claims were subject to a prescription period of three
years from the date of their retirement as trustees, so that the time for
making a claim against MC had expired on 6th February, 2010, and
against PEV had expired on 21st July, 2012. WRL, on the other hand, accepted that it
did not have this same prescription defence as PEV and MC, so it adopted a
neutral stance to the application and indicated that it would “rest on the wisdom of the Court in
this regard”.
6.
At the
outset it was apparent from the respective Skeleton Arguments (and I express
the Court’s appreciation to all parties for their helpful Skeletons) that
the parties disagreed as to the nature of Delarose’s application. Advocate Mackereth contended that his
application was for leave to amend pursuant to Rule 6/12 of the Royal Court
Rules. Advocate James for PEV,
however, contended that in substance the application was for the joinder of
Delarose pursuant to Rule 6/36; he was supported in this regard by Advocate Nicholls
for MC. (Indeed Advocate James and Advocate
Nicholls effectively made common cause on the application.) Since it was clearly essential to
establish which jurisdiction was being invoked, I heard argument on this issue
by way, in effect, of a preliminary point.
7.
Advocate
Mackereth’s case was simple.
Delarose had been joined as fourth plaintiff by virtue of the consent
order of 25th November, 2013.
Since Delarose was already a party, his application could only be for
leave to amend. Although this
submission had an immediate logic, Advocate James and Advocate Nicholls
contended that it was misconceived in the light of the circumstances in which
Delarose had come to be joined in November. Following the abortive hearing on 2nd
October, 2013, there was a discussion between the then parties as to the way
forward. PEV and MC had indicated
that they would oppose any joinder of Delarose insofar as that would involve
any additional claims against them.
On the other hand Ogier for the plaintiffs were anxious to get
proceedings against Hawksford under way.
8.
Accordingly
on 7th November, 2013, Advocate Mackereth emailed Advocate James
(copied to Advocate Lincoln for WRL and to Advocate Nicholls) as follows:-
“Dear Advocate James
We note what you and Advocate
Nicolls say and in the light of your comments we intend to issue a summons in
relation to the claims intended to be brought by Delarose Trustee Limited
against the existing defendants.
However, that issue will inevitably take some time to be determined, and
in the interim please could each of the three existing defendants’
advocates confirm by return their consent in principle to the addition of the
proposed Hawksford defendant and the addition of Delarose in relation to the
claim against Hawksford (and only in relation to Hawksford). By bifurcating the process we can then
get the Hawksford timetable up and running as soon as possible whilst the
argument is had in relation to Delarose’s claims against the first and
third defendants.”
Mr James replied later the same day in
these terms:-
“Dear Advocate Mackereth
I understand the logic behind
your suggested approach to the convening of Hawksford and agree that it would
be sensible to try to agree a mechanism which gets the timetable up and running
as soon is possible. I confess that
I am not entirely sure how such a process will operate in practice, but I am
sure that the draft order will clarify matters. As a matter of principle, I am not sure
that my client has any right to object to your clients (whether beneficiaries
or trustee) bringing a claim against Hawksford and the only issue, at least
from my client’s perspective, is the procedural ramifications of
Hawksford being introduced. But to
the extent that you need it for the purpose of what you propose, please take
this e mail as providing the appropriate consent.
I look forward to sight of the
draft order.”
In response Ogier emailed, again the same
day, saying:-
“Dear Advocates James,
Lincoln and Nicholls
Further to the below, please
find attached a draft order and
draft re-amended order of justice which together provide for the addition of
the proposed Hawksford defendant and the addition of Delarose in relation to
the claim against Hawksford (and only in relation to Hawksford, as made clear
in the draft re-amended order of justice by paragraphs 12, 17 and the prayer
for relief). Please could you
confirm whether these documents are agreed.
We will write separately as
regards issuing a summons in relation to the claims intended to be brought by
Delarose Trustee Limited against the existing defendants.”
Finally, as foreshadowed in Ogier’s
email, para.17 of the Re-Amended Order of Justice read:-
“Pending a proposed
application for permission to amend to introduce the Fourth Plaintiff as a
Plaintiff to the claims made herein against the Trustee Defendants, the Fourth
Plaintiff only makes the claims made in this Re-Amended Order of Justice
against Hawksford, and does not (yet) make the claims made in this Re-Amended
Order of Justice against the Trustee Defendants.”
9.
It was
clear to me from that exchange that all parties were agreed that the joinder of
Delarose was only in relation to the claims against Hawksford. There was no suggestion that PEV or MC
were agreeing to the joinder of Delarose so far as any claims against them were
concerned. Accordingly Advocate
James and Advocate Nicholls were, in my judgment, correct in submitting to me
that, in effect, PEV and MC were reserving all their rights in relation to the
joinder of Delarose as against them.
I agreed, therefore, with PEV and MC that in substance the application
of Delarose was to be joined in the proceedings against the first 3 defendants
and I so ruled. It follows that the
relevant Royal Court Rule is Rule 6/36, which reads:-
“6/36 Misjoinder and nonjoinder of
parties
At any stage of the proceedings in
any cause or matter the Court may on such terms as it thinks just and either of
its own motion or on application –
(a) order
any person who has been improperly or unnecessarily made a party or who has for
any reason ceased to be a proper or necessary party, to cease to be a party;
(b) order
any of the following persons to be added as a party, namely –
(i) any
person who ought to have been joined as a party or whose presence before the
Court is necessary to ensure that all matters in dispute in the cause or matter
may be effectually and completely determined and adjudicated upon, or
(ii) any person between whom and any
party to the cause or matter there may exist a question or issue arising out of
or relating to or connected with any relief or remedy claimed in the cause or
matter which in the opinion of the Court it would be just and convenient to
determine as between that person and that party as well as between the parties
to the cause or matter,
but no
person may be added as a plaintiff without that person’s consent
signified in writing or in such other manner as the Court may direct.”
10. Having delivered that ruling, I rose for a
short while to enable the parties to take stock of where they stood. Delarose, PEV and MC agreed that in
those circumstances the “relation back” principle did not apply and
Delarose would not be deemed to be a party at any earlier date than the date of
joinder. That still left the issue
of PEV’s and MC’s prescription defence. Delarose accepted that the relevant
prescription period was three years; its response was that it could rely on the
doctrine of empêchement
d’agir to defeat any such prescription defence. Happily Delarose, PEV and MC were also
agreed that the test for whether Delarose’s application should be granted
was whether it had an arguable case, in the sense of a case which would survive
a strike out application, that it could defeat PEV’s and MC’s
prescription defence. If it did
have such an arguable case, the application should be granted. If it did not, the application should be
refused.
11. All parties accepted that the relevant test for
empêchement was to be found in
the decisions of the Jersey Court of Appeal in Public Services Committee v
Maynard [1996] JLR 343 and Boyd v Pickersgill [1999] JLR 284. The test is one of practical
impossibility, which:-
“is to be applied objectively
to a reasonable person in the particular circumstances in which the plaintiff
was placed. It is not a subjective
test”
(per Southwell J.A. in Boyd (at
p.294). And as the headnote in Minories
Finance Limited v Arya Holdings Limited [1994] JLR 149 makes clear, what is
required is that the party claiming empêchement
should have been “incapable of acting at all” (at p.151). Finally, both PEV and MC accepted for
the purposes of the application that it was at least arguable that the doctrine
of empêchement could apply to
trust claims such as those which Delarose wished to make.
12. PEV and MC submitted that there were two
reasons why Delarose’s empêchement argument was inevitably doomed
to fail, either of which was sufficient for their purposes.
(i)
Since
Delarose was not incorporated, and therefore did not come into existence, until
4th December, 2012, it was incapable of being empêché prior to that date, by which time the three
year prescription period had expired in respect of both PEV and MC.
(ii) Even if empêchement
could in principle arise, on the admitted facts Delarose could not satisfy the
test of practical impossibility.
I take each of those points in turn.
(a) The incorporation of Delarose
13. This argument had the obvious attraction of
simplicity. It was, said PEV and
MC, only the plaintiff who could rely on empêchement;
if the plaintiff did not exist he could not be empêché.
Faced with the obvious force of this point, Advocate Mackereth submitted
that it was “the office of
trustee” which was subject to empêchement. Doing my best accurately to record his
submission, he contended that the doctrine should apply where (as in the
present case) there is a group of trustees who have been party to the same
impugned behaviour, where one or more of those trustees retire but part of the
group are left holding the remaining trustee positions. In those circumstances there is no practical
possibility that the remaining trustee will take proceedings against the
retiring trustee(s) although it is the duty of the person who holds the office
of trustee to take action in such circumstances. As and when a new trustee is appointed
who is prepared to take proceedings, the empêchement
to which the office of trustee has been subject accrues to the new
trustee. So here, when MC retired
in February 2007, WRL and PEV remained as trustees, and when PEV retired in
July 2009, WRL remained as trustee.
In practice WRL would never institute proceedings against its own
directors, since that would involve pointing the finger of blame at itself and
would have invited claims for contribution from both individuals. So Delarose, when it came into existence
by virtue of its incorporation, could take the benefit of the empêchement which had accrued to
the office of trustee of the Settlement.
14. Not surprisingly, in my view, Advocate
Mackereth was unable to cite any authority in support of his proposition that empêchement can apply to the “office of trustee”. Indeed in my judgment Advocate
James’ description in his address of this office of trustee as a nebulous
entity was something of an understatement.
Suffice it to say that I am wholly unpersuaded by Advocate
Mackereth’s submission and I have no hesitation in dismissing it as
wholly unarguable. Delarose cannot
rely on the doctrine of empêchement
in respect of any period prior to its incorporation.
15. I record for the sake of completeness that Advocate
Mackereth had what he described as a subsidiary argument arising out of the
period from December 2011, when WRL was asked to retire, to December 2012 when
it actually retired (to be replaced by Delarose). During this period WRL, so Advocate
Mackereth contended, was unreasonably refusing to retire. Advocate Mackereth accepted that this
subsidiary argument could not assist him in relation to MC because the three
year prescription period in respect of MC had expired long before December
2011; Advocate Mackereth relied on this period in respect only of PEV. But leaving aside the question of
whether WRL acted unreasonably or not (and WRL did not accept that it had acted
unreasonably), this subsidiary argument inevitably fails for the same reason as
set out in the preceding paragraph.
16. That conclusion is, of course, sufficient in
itself to dismiss Delarose’s application as against PEV and MC. But for the sake of completeness I
proceed to consider PEV’s and MC’s second reason.
(b) Practical impossibility
17. It was Advocate Mackereth’s submission
that it was enough for the purposes of the practical impossibility test that
Delarose was unable to bring its claim until it had been incorporated and could
benefit from the empêchement
which had accrued to the office of trustee. It did not matter that other remedies
might have been available. On the
basis of the authorities I have already cited, I reject this argument also. It is clear, for instance, that the plaintiff
beneficiaries, or some other trust company engaged by them, could have applied
to this Court at any time under Article 51 of the 1984 Law to dismiss WRL as a
trustee and appoint a new trustee in its place, with a view to bringing
proceedings against PEV and/or MC within the relevant prescription period. They chose not to do so. Indeed in the context of the period
between December 2011 and December 2012, Advocate Edwards of Ogier, in her
affidavit sworn on 20th December, 2013, said at para.10 as follows:-
“In the light of
WRL’s demands, the Beneficiaries faced the horns of a dilemma:
(a) They were desperate for WRL to
cease being trustee because of the way in which they thought (and think) the
Trust had been mismanaged by WRL for so long, and the amount of money lost to
the Trust during WRL’s trusteeship; but
(b) They were faced with what they
regarded as excessive demands by WRL as the price for them going.
The beneficiaries had to
recognise that WRL would not retire until they had the indemnity and security
they wanted or were removed by the Court as a result of hostile court
proceedings the Beneficiaries would have to take. The beneficiaries thus faced the
unattractive alternatives of accepting WRL’s demands or incurring the
expense and delay of going to court.
They decided that agreeing to WRL’s demands was the lesser of
those two evils, and negotiations with WRL proceeded.”
That is clearly not the language of
practical impossibility; it is the language of choice.
18. Accordingly on both the grounds I have set out,
I find that Delarose does not have even an arguable case that it can rely on
the doctrine of empêchement. It follows that while I allow the
joinder of Delarose as against WRL and allow the proposed re-re-amendment of
the Order of Justice in that respect, I disallow the joinder of Delarose as
against PEV and MC and I disallow the re-re-amendment with regard to them.
(2) Hawksford’s application
19. Hawksford’s principal application was for
orders that (and I quote from its Summons):-
“1 Pursuant to Rule 6/13 of
the Royal Court Rules 2004 (the “RCR”) and/or the inherent
jurisdiction of the Court, the Plaintiffs’ claims against the Fourth
Defendant contained in their re-amended order of justice served on the
Defendants on 26 November 2013 (the “Re-Amended
OJ”) be struck out in their entirety on the basis that:
(a) In part, they disclose no
reasonable cause of action;
(b) In whole, they may prejudice,
embarrass or delay the fair trial of the action; and
(c) In whole, they are otherwise an
abuse of the process of the Court,
and that the Plaintiffs’
claims against the Fourth Defendant as a whole should not proceed.”
20. In summary, there were two parts to Advocate
Pallot’s application.
(i)
He sought
to have all the claims dismissed under Rule 6/13 of the Royal Court Rules
and/or the inherent jurisdiction of the Court.
Alternatively
(ii) He sought to strike out the claims at paras. 86
to 91 of the re-amended Order of Justice alleging contractual or tortious
liability on the part of Hawksford as disclosing no reasonable cause of action.
Again I take each in turn.
(a) Dismissal of all the claims
21. For the purposes of this application Hawksford
relied on Rule 6/13(1)(c) and (d) of the Royal Court Rules, which reads:-
“(1) The Court may at any stage of the
proceedings order to be struck out or amended any claim or pleading, or
anything in any claim or pleading, on the ground that –
(c) it
may prejudice, embarrass or delay the fair trial of the action; or
(d) it
is otherwise an abuse of the process of the Court
…,
and may make such consequential
order as the justice of the case may require.”
Hawksford also relied by analogy on the
principles governing the dismissal of claims for want of prosecution. Advocate Pallot accepted that he could
not rely on these latter principles in their strict sense, for the simple
reason that the delays in proceeding against Hawksford of which he was
complaining predated the commencement of proceedings.
22. I reject this part of the application by Hawksford
for the following reasons.
(i)
The
attempt to rely on the principles relating to dismissal for want of prosecution
by way of analogy is misconceived.
Hawksford has no right to complain of delay prior to the commencement of
proceedings.
(ii) As Advocate Pallot accepted, there is a body of
Jersey authority to the effect that Rule 6/13(1)(c) cannot apply to striking
out the whole of an Order of Justice (see Channel Islands and International
Law Trust Company Limited v Pike [1990] JLR 27, at p.38) and can only apply
to a party who will remain a party to the action after the strike out (see Jersey
Financial Services Commission v A.P. Black Limited [2005] JRC 119A, at
para.26). Nevertheless Advocate
Pallot invited me to have regard to the wording of Rule 6/13(1)(c) itself and
not to follow the Jersey authorities.
I am not persuaded that it would be proper for me to take that
course. On the basis of the Jersey
authorities I conclude that Rule 6/13(1)(c) does not avail Hawksford.
(iii) I see no basis on which the claims against
Hawksford could be categorised as an abuse of the process of the court.
(iv) I agree with the submission of the plaintiffs
that the practical difficulties relied on by Hawksford are not relevant to a
strike out of the claims; rather they go the question of whether the trial
should be adjourned.
(v) The reason given by the plaintiffs for not commencing
proceedings against Hawksford at the outset is set out in the 2nd affidavit of
Advocate Johnson of Ogier, sworn on 9th January, 2014, where she
says:-
“7. The claim is a breach
of trust claim: the central complaint made is that the trustees breached their
duty in making disastrous investment decisions. The obvious defendants to that claim
were therefore the trustees who were in office at the time the disastrous
decisions were made. Proceedings
were therefore launched against those trustee defendants, as the most
proportionate and effective way to proceed.
8. However, in May 2013, the
plaintiffs began to have serious concerns as to their ability to recover
against the trustee defendants if and when their claims succeeded against them,
because it started to become apparent that the trustee defendants had serious
and complex insurance coverage difficulties which the Plaintiffs had not
anticipated when they commenced the proceedings, and did not know about until
May 2013.”
I see no reason not to accept that
explanation. As the Deputy Bailiff
(as he then was) observed in Cunningham v Cunningham [2009] JLR 227, at
para.46:-
“It seems to me reasonable
that if, although he has potential claims against additional parties, a
plaintiff chooses to concentrate on just one defendant, on the basis that, if
successful, he will recover from that defendant all of his losses, he may wish
to change his tactics if he discovers that, contrary to his belief, the
defendant he has chosen may not be able to meet any judgment in full. Such
circumstances would, it seems to me, provide proper grounds for an application
to bring in defendants against whom he has an arguable claim but whom he
decided not to join when it did not seem necessary.”
That said, Advocate Pallot was at pains to
point out that even if Hawksford were to be found liable, that would not
necessarily increase the size of the insurance pool which might be available to
satisfy the plaintiffs’ claims.
(b) The contractual and tortious claims
23. The re-amended Order of Justice makes two
distinct claims against Hawksford.
As summarised in paras13 to 16 of the re-amended Order of Justice, those
claims are as follows:-
“13 WRL was a private
trust company the purpose of which, and the only purpose of which, was to act
as trustee of the JW 1987 Settlement.
14 Hawksford provided the JW 1987
Settlement with trust services from 1997 onwards, including the provision of
the administration, operation and management of WRL and the JW 1987 Settlement.
15 Hawksford is liable for the
foregoing losses which were caused by its negligent provision of trust services
to the JW 1987 Settlement and/or WRL, in particular in failing to supervise or
monitor the operational performance of the JW 1987 Settlement and/or failing to
prevent the former trustees from procuring the disastrous investments to be
made.
16 Further or alternatively
Hawksford is vicariously liable for the foregoing losses on the basis that Paul
Egerton-Vernon is liable for them as a trustee of the JW 1987 Settlement and
Paul Egerton-Vernon’s services as trustee of the JW 1987 Settlement since
prior to 2000 until his retirement as trustee on 21st July 2009 were
provided by him as employee or agent of Hawksford such that Hawksford is
vicariously liable for the liabilities of Paul Egerton-Vernon as trustee of the
JW 1987 Settlement.”
I say at once that Hawksford does not apply
to strike out the vicarious liability claim. Their challenge is limited to the
contractual/tortious head of claim.
The claims against Hawksford are set out in detail at paras.78 and
following of the re-amended Order of Justice. The contractual/tortious claims are
pleaded at paras.86 to 91, which read as follows:-
“86 Hawksford owed
86.1 The trustees of the JW 19897 Settlement from time
to time a duty of care in tort to administer, operate and manage the affairs of
the JW 1987 Settlement with the skill, care and diligence to be expected of a
professional and regulated trust service provider charging substantial fees for
its services; and/or
86.2 WRL as trustee of the JW 1987 Settlement a duty of
care in contract and/or in tort, or in either, to provide the services set out
above with the skill, care and diligence to be expected of a professional and
regulated trust service provider charging substantial fees for its services.
87 These duties, and clause 4 of
the 2002 Agreement, required Hawksford to monitor and/or supervise the
investment activity of the JW 1987 Settlement and if necessary to intervene, by
issuing directions to the First Defendant and/or the Hawksford employees on the
board of WRL, reconstituting the board of WRL and/or procuring proper
professional investment advice for the JW 1987 Settlement.
88 In breach of those duties, and
in breach of clause 4 of the 2002 Agreement, Hawksford failed to
88.1 Monitor and supervise the financial performance of
the JW 1987 Settlement, with the result that the disastrous investments were
not prevented;
88.2 Intervene promptly with the result that the
disastrous investments continued to be made and/or
88.3 Use every effort to safeguard the property, rights
and interests of the JW 1987 Settlement and/or of WRL as trustee of the JW 1987
Settlement with the result that the disastrous investments were made, not
prevented, and continued to be made and not prevented.
89 In further breach of duty,
Hawksford also failed to
89.1 Administer, manage or operate the affairs of the
JW 1987 Settlement or
89.2 provide its trust services to the JW 1987
settlement and/or WRL as trustee of the JW 1987 Settlement
with the
skill, care and diligence to be expected of a professional and regulated trust
service provider charging substantial fees for its services in that it
(a) Permitted
the disastrous investments to be made; and/or
(b) Failed
to prevent the disastrous investments being made.
(c) Failed
to advise and require the former trustees of the JW 1987 Settlement and/or WRL
to take all appropriate advice before committing the JW 1987 Settlement’s
funds to the disastrous investment
(d) Failed
to replace the directors of WRL with directors who could ensure that WRL acted
competently as a trustee in connection with the use and investment of the JW
1987 Settlement’s funds and/or
(e) Failed
to procure the former trustees to appoint alternative, competent, trustees
before, themselves, resigning.
90 As a result of Hawksford’s
said breaches of duty and/or contract, the JW 1987 Settlement has suffered the
loss and damage caused by the disastrous investments, as set out above.
91 For the avoidance of any doubt,
this claim against Hawksford does not depend upon the Plaintiffs establishing
that Hawksford was grossly negligent in its provision of services to the JW
1987 Settlement. It is the
Plaintiffs’ case that Hawksford will be liable to pay it damages if it
establishes that Hawksford acted in breach of duty and/or contract (without the
need to establish gross negligence) which caused loss to the JW 1987
Settlement.”
24. The test applicable in this jurisdiction to
applications to strike out is conveniently set out by Beloff J.A. in Trant v
AG [2007] JLR 231, where he said (at para.22):-
“22 The test on an application to strike out is
well established. It is only where
it is plain and obvious that the claim cannot succeed that recourse should be
had to the court’s summary jurisdiction to strike out. Particular caution is required in a
developing field of law. Provided
that a pleading discloses some cause of action or raises some question fit to
be decided only by a judge, jurats or jury, the mere fact that a case is weak
is not a ground for striking it out.
These propositions are vouched for by a wealth of Jersey authority
embracing principles deployed by the courts of the United Kingdom, see e.g. In
re Esteem Settlement (2000 JLR at 127) (we note en passant that a new regime,
arguably more favourable to an application to strike out, has been introduced
in England and Wales by the Civil Procedure Rules).”
25. Not surprisingly in the light of the passages
from the re-amended Order of Justice which I have just read out, Advocate
Pallot submitted that both the contractual and tortious claims as pleaded were
bound to fail. As for the
contractual claims, there was no allegation that the plaintiffs were parties to
the contracts with Hawksford, or that the plaintiffs were in any way privy to
those contracts. As for the
tortious claims, which were for pure economic loss, there was no allegation of
proximity such as to found a duty of care in negligence. He also complained that the reference in
the re-amended Order of Justice to Hawksford providing “trust services” was misleading; all that Hawksford
contracted to provide was administrative services. More particularly, Hawksford could not,
and did not, control the exercise by the individual trustees of their
discretion in managing the affairs of the Settlement.
26. It was not until Advocate Mackereth addressed
the Court that it became clear, at any rate to me, how the plaintiffs put this
part of their case against Hawksford.
He explained that it was not the plaintiffs’ case that the
contractual and tortious duties as pleaded were owed to the plaintiffs; he
accepted that they were owed to WRL.
Rather the plaintiffs’ case (albeit unpleaded) was that
WRL’s claims against Hawksford for breach of the contractual and tortious
duties which Hawksford owed to WRL constituted assets of the Settlement, which
the plaintiffs were entitled to enforce against Hawksford, in accordance with
the principles explained by Mr Commissioner Page in Alhamrani v Alhamrani
[2007] JLR 44. In the light of that
explanation, I am persuaded that the application to strike out this aspect of
the claims against Hawksford must fail.
It is clearly arguable that the plaintiffs can recover against Hawksford
on the basis explained by Advocate Mackereth. I do, however, direct that the draft re-re-amended
Order of Justice be changed before service so as to include a plea along the
lines indicated by Advocate Mackereth.
In that way all parties will know precisely how the plaintiffs put this
part of their case against Hawksford.
27. Whilst I see the force of Advocate
Pallot’s further submission based on the extent of the control (or lack
of control) exercised by Hawksford over the individual trustees, it seems to me
that this point is likewise clearly arguable and cannot therefore be stuck out.
28. It follows that I dismiss Hawksford’s
application in its entirety and that Hawksford will remain a party to these
proceedings. Although there was
some discussion at the hearing yesterday about the potential consequences in
the event that I dismissed Hawksford’s application, I made clear that all
parties were at liberty to return to this issue once I had delivered my ruling
today. I will, therefore, hear such
further submissions as the parties wish to make in this regard, in addition to
the submissions on the other matters before the Court at this hearing.
29. I invite all parties to prepare an agreed order
reflecting this ruling and any subsequent directions that I make today.
Authorities
Trusts (Jersey) Law 1984.
Public
Services Committee v Maynard [1996] JLR 343.
Boyd
v Pickersgill [1999] JLR 284.
Minories
Finance Limited v Arya Holdings Limited [1994] JLR 149.
Channel
Islands and International Law Trust Company Limited v Pike [1990] JLR 27.
Jersey
Financial Services Commission v A.P. Black Limited [2005] JRC 119A.
Cunningham
v Cunningham [2009] JLR 227.
Trant
v AG [2007] JLR 231.
Alhamrani
v Alhamrani [2007] JLR 44.