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
COMPANIES
Just and
equitable winding up—arbitration agreement
Representation of Shinhan Securities Co Ltd
[2022] JRC 293 (Royal Ct: MacRae, Deputy Bailiff, and
Jurats Christensen and Le Cornu)
NM Sanders for the representor; J Harvey-Hills for the
first respondent; NH MacDonald for the second respondent.
The question was raised as to whether an application by
a shareholder for the just and equitable winding up of a fund company under art
155 of the Companies (Jersey) Law 1991 should be stayed on the ground that
there was an arbitration agreement between the parties and that the mandatory
stay under art 5 of the Arbitration (Jersey) 1998. The law and place of
arbitration was Hong Kong and the Convention on the Recognition and Enforcement
of Foreign Arbitral Awards (the New York Convention) applied. In order for
there to be a mandatory stay under art 5 it is necessary, amongst other
conditions, that the court is satisfied that the arbitration agreement is not “inoperative or incapable of being performed”.
It was contended for the representor that the agreement was “inoperative” or “incapable of being performed” in the
sense that the disputes in question were not arbitrable owing to the fact that
representor was seeking the just and equitable winding up of the company.
Held, as to the arbitrability of
disputes in which a just and equitable winding up is sought, and staying that
application in this case:
(1) Arbitrability of claims for just and
equitable winding up of a company. The Jersey Court of Appeal held in Global
Gold Consolidated Resources Ltd v Consolidated Resources Armenia
that claims for winding up on just and equitable grounds are capable of
arbitration.
(2) La convention fait la loi des parties. Further, when interpreting the
parties’ intentions, an overriding principle of Jersey law is that la
convention fait la loi des parties. Parties are free to agree as to how
their disputes are resolved. There is no reason for the courts not to give
effect to their agreements unless the public interest demands that they do so. To
do otherwise than to give effect to arbitration agreements would not be giving
effect to the New York Convention and would defeat the objective of the
Arbitration (Jersey) Law 1996. Different principles may apply in a case where
(unlike the present case) the company is insolvent.
(3) Countervailing points not sufficient. The
fact that an arbitrator cannot determine whether the company should be wound up
on the just and equitable basis, which is a matter reserved for the Royal
Court, did not mean that the underlying dispute was not arbitrable by reason of
public policy. The fact that only shareholders participating in the arbitration
will be directly affected by the arbitration also did not mean that the dispute
was not arbitrable by reason of public policy. Nor was the fact there would be
additional costs, additional delay and possibly further proceedings in Jersey a
reason for holding that the dispute between the parties is not arbitrable by
reason of public policy. None of these matters overrode the strong public
policy of holding parties to their bargains and of giving effect to arbitration
agreements in accordance with art 5 of the 1996 Law.
Liquidators—application
for directions
In re Eagle
Holdings (in compulsory liquidation) [2023]GRC005 (Royal Ct: McMahon, Bailiff)
AC Lyne for
the applicants.
This application
was brought by the joint liquidators of three companies: Gull Investments Ltd (“Gull”),
Kestrel Investments Ltd (“Kestrel”) and West Derby Investments Ltd (“West Derby”);
and the joint liquidators of Eagle Holdings Ltd (“Eagle”).
Eagle was the holding company for a number of
entities within a complex group, including Gull, Kestrel and West Derby. The
business venture fell into difficulty and the entities within the group became
insolvent. Eagle was placed into compulsory liquidation in 2015. Gull, Kestrel
and West Derby were placed into voluntary liquidation in 2017 and, for the
purposes of the application, could be treated as subsidiaries of Eagle. The
structure included limited partnerships which, acting through their general
partners, had borrowed under various facility arrangements, including a
facility from Barclays Bank plc (“the bank”).
A company in the group came into a sum of money.
A series of inter-group loans meant that, using the ordinary process for
distributions under the 2008 Law, after Eagle paid the moneys to its
shareholders, they in turn would ultimately cascade the moneys back to Eagle. This
would involve the money passing through limited partnerships which, together
with their general partners, had been dissolved.
Instead of this approach, the applicants sought
directions from the Royal Court under s 426 of the Companies (Guernsey)
Law, 2008 (“the Law”) that Gull, West Debry and Kestrel would pay the balance
that was available to distribute directly to the group’s only external
creditor, the bank.
The applicants also sought an increase in
the amount of costs that had been estimated as involved in conducting that
liquidation under the terms of Practice Direction No 3 of 2015 and the
appointment of a Commissioner pursuant to s 417 of the Law.
Held,
(1) The court would exercise its discretion under
s 426 and allow the joint liquidators to make the distribution as proposed
(2) The court also agreed to the applicants’
proposed increase in the estimated costs of the liquidation and the Bailiff,
who had had to consider the matters in detail, would appoint himself as the
Commissioner as a cost-effective solution.
(3) The costs of the application to be taken
from the estate of Eagle, rather being taken from each of the four companies,
in appropriate amounts.
COURTS
Court of Appeal—
academic appeal
Camilla de Bourbon des Deux Siciles v Zedra Jersey
Trust Corp Ltd (formerly BNP Paribas Jersey Trust Corp Ltd) [2023] JCA 018
(CA: Bompas, Bailhache and Wolffe JJA).
HB Mistry for the appellant; WAF. Redgrave for the
respondent.
The question was raised as to whether the Court of
Appeal could hear an appeal even though the point in issue had become academic.
Held:
(1) The Court of Appeal may dismiss academic
appeal. The Court of Appeal may dismiss an appeal on the basis that the
appeal is, or has become, academic, in the sense that the outcome of the appeal
can have no practical consequences for the parties to the appeal: In re
Tantular.
(2) Circumstances in which academic appeal may
nevertheless be heard.
(a) The Court
of Appeal nevertheless has power to hear and determine an appeal which is
otherwise academic if both (i) there is good reason to do so in the public
interest (ii) the court is satisfied that both sides of the arguments will be
fully and properly ventilated (Viscount v Att Gen).
(b) Even if
these conditions are satisfied, the discretion to hear such an appeal should
still be exercised with caution. In Hutcheson v Popdog Ltd,
Lord Neuberger of Abbotsbury MR stated that it will generally not be
appropriate to determine an appeal which has become academic between the
parties unless the respondent agrees to the appeal proceeding or is at least
completely indemnified on costs and is not otherwise inappropriately
prejudiced. The Court of Appeal agreed with this further observation, at least
where the litigation is between private parties.
Appeal from
Master to Royal Court—approach on appeal—admission of fresh evidence
David Hick Antiques Ltd v HSBC Bank Plc [2022]
JRC 072 (Royal Ct: Sir William Bailhache, Commissioner, sitting as a single
judge).
WAF Redgrave for the appellants; KL Hooper for the
respondent.
On an appeal from a decision of the Master that the
appellants’ counterclaim was prescribed and giving summary judgment for the
respondent, the appellant the admission of further evidence going to whether
there had been an empêchement de fait. The question arose as to the
principles applicable to the Royal Court’s appellate jurisdiction and the
admission of fresh evidence.
Held:
(1) Downes
v Marshall test—appeals from Family Registrar.
In Downes v Marshall
the court (Sir Philip Bailhache, Commissioner, and Jurats Liddiard and
Marett-Crosby) held that appeal should only be allowed from a decision of the
Family Registrar pursuant to the Matrimonial Causes (Jersey) Law 1949 where
evidence has been heard and a discretion has been exercised, if there has been
a procedural irregularity, or if, in exercising discretion, the Family
Registrar has taken into account irrelevant matters, or ignored relevant
matters, or has otherwise arrived at a conclusion which the court believes to
be wrong. That test, which is not the same test as the test applied on an
appeal from the Royal Court to the Court of Appeal, reserved a wider discretion
for the Royal Court to intervene but it nonetheless placed greater weight on
the Registrar’s exercise of discretion.
(2) Murphy
v Collins test of more general application. Both the Master and the
Family Registrar are strictly Greffier Substitutes. However, the comments of
the Court in Downes v Marshall were expressly limited to cases on appeal
from the Family Registrar. In other appeals from the decisions of the Judicial
Greffier/Master, the old rule as summarised by the Royal Court in Murphy v
Collinscontinues
to apply: the long-standing approach in relation to appeals from the Judicial
Greffier/Master is that the Royal Court’s discretion is unfettered, subject
always to giving proper weight to the views expressed by the judge below.
(3) Admission of fresh evidence. The Ladd
v Marshall
principles for the admission of fresh evidence on an appeal, which were
regularly applied in the Court of Appeal on appeals from the Royal Court, were
not directly applicable to appeals to the Royal Court from the Judicial
Greffier/Master. To adopt those principles would be inconsistent with the
long-standing approach to such appeals. Nonetheless, there was much to be said
for the practice referred to in the Supreme Court Practice 1999, to the effect
that the Royal Court, like the judge in chambers, may well not permit new
evidence to be admitted if the party making that application has taken his
stand on the evidence as it was below; or indeed if the evidence which he
sought to have admitted on appeal was contradicted by the evidence which had
been submitted below and which he had not criticised there.
(4) Disposal. In this case an explanation
had been given, with medical evidence, as to why the evidence has not been
produced to the Master. The question was what was necessary to do justice. There
was no doubt in this case that the appellants should be granted leave to file
the fresh evidence.
CRIMINAL LAW
Evidence—admission
of statements under Police Procedures and Criminal Evidence (Jersey) Law 2003,
art 67A
Att Gen v Wildes [2022] JRC 140 (Royal Ct: RJ MacRae,
Deputy Bailiff, sitting alone)
RCL Morley-Kirk for HM Attorney General; AM Harrison
for the defendant.
The defendant was charged on an indictment containing
one count of common assault, one count of sexual touching without consent and a
count of sexual penetration without consent. The court considered an
application by the Crown under art. 67A (other previous statements of
witnesses) of the Police Procedures and Criminal Evidence (Jersey) Law 2003. The
complainant’s (C) recorded 999 call was admissible under the res gestae
principles which were preserved under the customary law provisions by art 64A. The
Crown wished also to adduce conversations that C had with her sister during the
evening and after the alleged assault.
Held:
(1) Timeliness goes to weight. There is no
need in order for a statement to be admissible under art 67A for it to be made
soon after the incident. Timeliness goes to the weight of the evidence after
its admission.
(2) Admissibility
of more than one statement. The English Court of Appeal in the case of R v O
held that the English provisions equivalent to art 67 allowed the admission
of more than one hearsay statement as to the complaint by the alleged victim of
a crime. However, the Court of Appeal added that it had to be remembered that
such evidence is admissible to prove the truth of the matter stated and not
merely to demonstrate consistency of the complainant’s account, as under the
previous law.
(3) Overriding power to exclude. A
complaint which satisfies all six conditions under art 67A may nevertheless
still be excluded as a matter of discretion in order to ensure that a defendant’s
trial is fair. Such an exclusionary power arises, inter alia, under the provisions of art 76 of the 2003 Law. In R
v Athwal,
referred to extensively by the Court in Att Gen v Freitas,
emphasised that the touchstone for admissibility is whether the evidence may
fairly assist the jury in ascertaining where the truth lies. It is for the
trial judge to preserve the balance of fairness and to ensure that unjustified
excursions into self-corroboration are not permitted, whether the witness was
called by the prosecution or the defence.
(4) Disposal. It was held that the Crown
was entitled pursuant to art 67A to adduce evidence through C’s sister that she
had a conversation with C in which she said that she had been sexually
assaulted the previous evening, to adduce evidence as to C’s demeanour and to
adopt similar approach to the evidence arising from a visit by the sister to C.
But on neither occasion should C’s detailed account be adduced. To adopt any
alternative approach would give too much weight to the complaints to third
parties given by C, particularly in the context of the detailed 999 call.
Mode of trial—mixed
indictment of statutory and customary law offences
Att Gen v Akhonya [2022] JRC 176 (Royal Ct: Sir
William Bailhache, Commissioner, sitting alone).
LB Hallam, Crown Advocate; MP Boothman for the
defendant.
The defendant was charged with two offences, namely
knowingly providing false information for the purposes of intended marriage,
contrary to art 76(1) of the Marriage and Civil Status (Jersey) Law 2001 and
bigamy, a customary law offence. He pleaded not guilty. The question arose, for
the first time now under the provisions of the Criminal Procedure (Jersey) Law
2018, as to the mode of trial where a defendant is charged with both a
customary law and a statutory offence. Both the prosecution and the defence
contended that a jury trial was the appropriate method of trial.
Held:
(1) Previous position. The previous
position under the Loi (1864) réglant la
procédure criminelle was that where a defendant was charged with a
customary law offence, the defendant had the right to claim a trial by the
Inferior Number if they did not wish to be tried by a jury. Neither the Crown
nor the Court had any jurisdiction to deny a defendant that right to select his
mode of trial, where a customary law offence was charged. By contrast, the
position where a defendant was charged with a statutory law offence (or in the
old terminology, a “contravention”),
the mode of trial was always before the Inferior Number of the Royal Court,
sitting without a jury.
(2) Current position—defendant’s choice removed
in mixed indictment; discretion of court. The position was now governed by art
48 of the 2018 Law. Paragraph (1) provides for the alternative methods of trial—the
Royal Court sitting with a jury, or the Inferior Number of the Royal Court
sitting without a jury. Paragraph (2) confers on a defendant charged with an
offence under the customary law a right to choose whether to be tried by jury
or by the Inferior Number. Paragraphs (3) and (4) make it plain that where
paragraph (3) applies, namely where the defendant fails to make his choice or
alternatively where the indictment charges both customary and statutory
offences, the Royal Court has to decide the mode of trial. In reaching that
decision the court is to have regard to “the
nature and gravity of the offence” and is required to hear submissions
from the defence and the prosecution. Paragraph (5) then provides that where a
defendant is charged on indictment only with statutory offences, the mode of
trial is by the Inferior Number sitting without a jury.
(3) Duty of Crown and defence at earliest
opportunity. Where art 48(3) applies it is the duty of the Crown and the
defence to draw that to the attention of the court at the earliest opportunity
in order that the court can give directions as to how the case should proceed. This
followed from art 4 of the 2018 Law (Duties of the participants in criminal
proceedings).
(4) Nature and gravity of offence not only
consideration. Where art 48(3) applies, the Royal Court has to decide the
mode of trial. This involves an exercise of discretion. On the face of it, the
legislative provision refers only to the nature and gravity of the offence; but
it would be unnecessarily restrictive to construe that language as meaning that
the court has no discretion to consider other factors. This view is confirmed
by the terms of arts 2, 3 and 5 of the 2018 Law (which set and deal with the
overriding objective under the 2018 Law).
(5) Meaning of the nature and gravity of
offence. The expression “nature
and gravity of the offence” prompted a number of questions. The Court
held:
(a) The fact that
the overriding objective also falls to be considered means that the court must
have regard to the whole case when considering the nature of the offence—who
the witnesses are, where they live, how the evidence will be presented, how
much is in genuine dispute, how long the trial is expected to take, how complex
it is and other similar factors.
(b) The “nature”
of the was intended to include a consideration
not just of the seriousness of the offence but of the allegations in the round
which are to be proved. It may be that the facts of the particular case are
such that the court decides that a trial by the Inferior Number would be more
likely to provide justice—for the Crown and for the defendant—than a trial by
jury, perhaps by the reason of the complexity of the issues, the nature of the
evidence or the length of the trial.
(c) This was
absolutely not to say that juries are less capable of handling complex trials
than the Inferior Number; it is only to say that there are some complex trials
which are more suitable for the particular skills of the Jurats. In all these
considerations it is vital to recall that the jury and Inferior Number trials
are equally capable of providing justice. One is not intrinsically more just
than the other. They provide different modalities for achieving justice and
both are consistent with the Island’s history and traditions.
(d) The effect of
an order under art 48(4), that the defendant is to be tried by the Inferior
Number on a mixed indictment, is that the defendant’s choice (which existed
previously under the 1864 Law and is restated under art 48(2) in relation to
customary law offences) has been removed. Bearing in mind the overriding
objective and its implementation under Part 2 of the 2018 Law,
that was not a factor which fell to be taken into account of itself.
(e) The “gravity” of the offence is not to be
measured by the potential sentence to which a defendant is theoretically liable
by reason of the offence charged being a customary (in which case the sentence
is at large) or statutory offence. In assessing gravity the court must have
regard to the facts alleged by the Crown and, if necessary, to the defences
asserted by the defendant. One also had to question why the legislature has
provided that the gravity of the offence is relevant to the mode of trial,
bearing in mind that many modern statutory infractions can result in
substantial terms of imprisonment for the convicted defendant. However, the statute
requires the court to take the gravity into account.
The learned Commissioner left open for argument in a contested case the
significance of this factor having regard to the overriding objective.
(f) It was not
appropriate in a case where there was no contest as to the outcome to lay down
firm guidelines as to other relevant factors. It would nevertheless seem
essential for the court to consider the nature of the evidence which is to be
adduced in respect of the different charges. Where there is a similarity of
evidence relevant to both statutory and customary law charges, it may well be
that a defendant’s right under art 48(2) will have more relevance: but this is
subject to the qualification that the overriding objective, including the
availability of courts, was a relevant—perhaps the most relevant—consideration.
(6) Disposal. In this case, both the
prosecution and the defence contended that a jury trial is the appropriate
method of trial. That was a factor to be taken into account but it was not conclusive.
In this case the court held that it was appropriate that the defendant be tried
by the court sitting with a jury.
Sentencing—murder—determination
of minimum period of imprisonment
Att Gen v Tregaskis [2022] JCA 267 (CA:
Montgomery, Bailhache, and McMahon JJA)
RCL Morley-Kirk for appellant; MT Jowit, Solicitor
General, for the respondent.
After conviction at a jury trial on one count of murder
and one count of attempted murder, the applicant/appellant was sentenced by the
Royal Court to life imprisonment for murder and 15 years concurrent for
attempted murder. The Royal Court (Sir John Saunders, Commissioner, sitting
with Jurats Ramsden, Pitman, Christensen, Dulake, Austin-Vautier, Averty,
Hughes and Le Heuze) noted that sentence for murder was a mandatory life
imprisonment sentence, and determined pursuant to the Criminal Justice (Life
Sentences) (Jersey) Law 2014 that the minimum period that the appellant must
serve before becoming eligible to apply for parole was one of twenty years,
less time spent on remand.
The appellant
appealed against sentence. It was contended on appeal that the offence took
place in 1990 and that the starting point should have been calculated in
accordance with the regime which was in place at that time and that this would
have resulted in a lower figure. It was in particular contended that the
Convention right in the second sentence of art 7.1 of the Schedule 1 to the
Human Rights (Jersey) Law 2000 was engaged and infringed:
“Article 7.
1. No one shall be held guilty of any criminal offence on
account of any act or omission which did not constitute a criminal offence
under national or international law at the time when it was committed. Nor
shall a heavier penalty be imposed than the one that was applicable at the time
the criminal offence was committed.”
Held, dismissing the appeal against
sentence:
(1) Legislation in question had retrospective
effect. The Royal Court had been correct in taking the view that the
Criminal Justice (Mandatory Minimum Periods of Actual Imprisonment) (Jersey)
Law 2005 and subsequently art 23 of the 2014 Law had unequivocal retrospective
effect.
(2) No direct historical comparator. On
analysis there was no direct comparator between the minimum term under the 2014
Law and the position in 1990. That being so, it was not possible to say that
the minimum term imposed by the Royal Court in this case would have been more
severe than that which would have been recommended in 1990. It was not
legitimate to have regard either to the approach taken by judges in England and
Wales under the different legislation in force there or to the guidance of Lord
Bingham in 1997 as indicating what the sentencing regime would have been in
Jersey in 1990. The evidence and material relied on by the appellant was not
capable of establishing that the penalty that was imposed by the Royal Court
was heavier than the range of penalties that would have been imposed in 1990. That
would be necessary in order to trigger any reading down of art 23 of the 2014
Law on the basis of the Convention right.
(3) Correct to assess sentence under the 2014
Law. Accordingly, although the reasons differed from those provided by the
Royal Court, the Court of Appeal concluded that the learned Commissioner below
had been correct to direct that the appellant should be sentenced in accordance
with the regime established by the 2014 Law.
EMPLOYMENT
Restraint of
competition—appeal against GCRA
Medical
Specialist Group LLP v Guernsey Competition and Regulatory Authority [2023]GRC006 (Royal
Ct: McMahon, Bailiff)
ER Gray for
the appellant; MG Ferbrache for the respondent.
This was an
appeal by the Medical Specialist Group (“the MSG”) against decisions of the
Guernsey Competition and Regulatory Authority (GCRA) relating to non-compete restrictions
imposed on ex-consultants (18 months for employed associates and two years for partners).
This was the first appeal under the Competition (Guernsey) Ordinance, 2012 (“the
Ordinance”).
The decisions appealed were:
(1) GCRA’s decision that the MSG had
infringed the prohibition contained in s 5(1) of the Ordinance through
entering into agreements with other undertakings which had the object or effect
of preventing competition within markets in Guernsey for the provision of
services; and
(2) GCRA’s decision to impose a penalty of
£1,532,590 on the MSG.
In addition,
GCRA had directed the MSG to remove the non-compete provisions and this was
also considered in the appeal.
Held:
(1) Even if the finding of an infringement
of s 5(1) of the 2012 Ordinance were to be upheld, the GRCA’s blanket
direction to remove the non-compete provisions (rather than give a direction
that the period be reduced) was a disproportionate response to any finding of
infringement and/or an unreasonable exercise of the GCRA’s powers. The appeal
would have been allowed on this basis alone.
(2) Some of the reasons the GCRA had given
in its decision for its finding that there had been a contravention of s 5(1)
were unreasonable and/or based on material errors as to the facts. Accordingly
the appeal the GRCA’s decision that there was a contravention of s 5(1)
was allowed.
(3) The appeal against the financial penalty
was allowed.
(4) The matter was remitted to the GCRA to
consider, in light of the comments in the judgment: (1) whether it still found
there was a contravention, (2) substituting a different direction, and (3) the
level of any financial penalty.
(5) The following observations were relevant
to regulatory appeals more widely:
(a) The grounds of
appeal under s 46(2) of the 2012 Ordinance (which appear in similar terms
in other modern legislation conferring a right of appeal, such as the
supervisory and enforcement laws conferring rights of appeal against decisions of the Guernsey Financial Services
Commission) were wider than conventional judicial review and,
accordingly, judgments dealing with judicial review were not of direct
assistance.
(b) Although the
Royal Court’s powers did not go so far as enabling it to re-take the decision,
it was an appeal to a court with “full jurisdiction” within the meaning of the
European Court of Human Rights jurisprudence concerning art 6 (Y v Guernsey Fin Servs Commn).
(c) The court could
take into account material produced after the decision being appealed.
SUCCESSION
Wills—testamentary
capacity
Dorey v Ashton [2023]GCA008 (CA: McMahon, Bailiff, Bompas and Lord Anderson of Ipswich, JJ.A.).
The appellant claimants were three of the four adult
children of a former Bailiff of Guernsey, Sir Graham Dorey. The respondent
advocate made wills of personalty and realty for Sir Graham in 2004 when it was
known that Sir Graham had dementia, but a consultant psychiatrist had found
that he retained testamentary capacity. The claimants challenged the
circumstances in which the wills had been made. But for the wills, the children
would have received 100% of Sir Graham’s estate on intestacy, there being a
pre-nuptial agreement between Sir Graham and his second wife, the children’s
stepmother, which included a disclaimer of any interest in the estate, but
permitted the making of wills. By the wills, a proportion of Sir Graham’s
estate was to be given to his second wife. Sir Graham died in 2015. The four
children challenged the wills in proceedings against their stepmother. The
proceedings were settled for payment of a sum of money to their stepmother,
with each side bearing their own costs. The three children then brought
proceedings against the respondent advocate to recover their outlay, alleging
breach of a direct duty owed to them “to take proper steps to ascertain and
satisfy himself of Sir Graham’s capacity” and that, but for his alleged
negligence, “the wills would not have been drafted or … executed”.
The question
of whether the respondent advocate owed any duty of care to the claimants was taken
as a preliminary issue and decided at first instance in favour of the
respondent advocate.
Held, appeal dismissed:
(1) An advocate owed no duty of care
to existing beneficiaries when making new wills for a testator of uncertain
capacity.
(2) Where
there was a claim in tort for negligence purely for economic damage in a
context in which there was not yet an established duty of care it was not
sufficient that the loss was foreseeable as a result of the actions or inaction
of the person said to owe the duty. Foreseeability did not amount to proximity
as a touchstone. More was needed, typically that the person said to owe the
duty was found to have assumed responsibility to the injured party to use
reasonable care to avoid harm.
Comment [Gordon Dawes]: The case is an important
decision in the context of duties owed by those facilitating the making of
wills and also made important statements of general application for tort law
liability and novel duties of care. It is likely to be cited in equivalent circumstances
throughout the common law world.
TRUSTS
Blessing of
proposed decision—foreign tax claim—reimbursement in respect of foreign tax
paid
Equiom Trust (CI) Ltd v Mattas [2022] JRC (Royal
Ct: Birt, Commissioner, and Jurats Averty and Le Cornu)
SJ Williams for the representor; RDJ Holden for the
first respondent; P Ali-Noor for the second respondent; SJ Alexander for the
third respondent; SA Meiklejohn for the fourth respondent; the fifth
respondents were excused attendance.
The representor, as trustee of a will trust, sought inter alia the blessing of two decisions
which it had taken in connection with the potential French tax liability,
namely to challenge the imposition of the French tax levy and to grant security
in connection with that challenge to the French tax authority (“FTA”), thereby
releasing security given by one of the beneficiaries over his home in France.
Held:
(1) Whether a beneficiary’s claim for
re-imbursement of foreign tax paid would be enforceable.
(a) The primary
liability for payment of the French tax rested with the trustee, with the
beneficiaries being jointly and severally liable if the trustee did not pay. As
a beneficiary was resident in France and had given security over his home, any
enforcement would no doubt be against him with the result that he would
ultimately pay the levy. The trustee was advised that, in those circumstances,
the beneficiary would probably have a right of recovery against the trustee for
any sums which he paid.
(b) The issue of
whether any claim to reimbursement by that beneficiary would be enforceable in
Jersey or whether the court should approve a decision of the trustee to
reimburse the beneficiary might arise in due course, but the answer was not
straightforward and there were arguments both ways. On the one hand, the
revenue rule (see Rule 20 of Dicey, Morris and Collins, The Conflict of Laws, 16th ed, at 8R–001)
which prevents indirect as well as direct enforcement of foreign revenue claims
was a well-established rule of private international law which was applied in
Jersey (for example, Re
Walmsley). On the other hand, courts have
already recognised some circumstances in which a trustee may properly pay a
foreign tax liability: see Lewin on Trusts, 20th ed,
at 19–026.
(c) In those circumstances,
it was not appropriate at this stage to resolve the arguments over the effect
of the revenue rule on the particular facts of this case when those facts
remained undetermined.
(2) Decision to challenge the French tax levy
blessed. The trustee’s decision to challenge the imposition of the levy was
entirely reasonable and should be approved for the following reasons:
(a) The principal
liability to the levy rested with the trustee. It was reasonable therefore for
the trustee to take the lead on challenging the levy so as to be in control of
such challenge.
(b) The French tax
advice was that, if the trustee did not pay the levy, liability fell upon all
the beneficiaries. Whilst it was true that, because of the residence of some
beneficiaries, it might be difficult for the FTA to enforce that liability, the
fact remained that they would have this liability. In those circumstances, it
would be in their interests as well as the interests of those beneficiaries
resident in France for the levy to be successfully challenged.
(c) There was no
downside to the trustee challenging the levy other than the costs of doing so.
(d) The trustee
advised that there were reasonable prospects of removing or reducing the levy.
(e) The trustee had
been advised that the costs of challenging the levy would be comparatively
modest.
(3) Decision to provide replacement security
not blessed. The court fully understood the additional wish of the trustee
to assist the beneficiary by providing alternative security to the FTA in his
stead. However, the trustee’s duty was to act in the best interests of the
beneficiaries as a whole and, on the present facts, the court could not accept
that this proposal fell within bounds of a reasonable decision and accordingly
declined to bless the trustee’s proposed decision in this regard.
Trustees—disclosure
of trust documents—privilege
Fort Trustees Ltd
v ITG Ltd [2022] GCA 092 (CA:
Montgomery, Bompas and Wolffe
JJA)
P Richardson
for the appellants; J Wessels for the respondents.
The
context was the long-running litigation between the former and present trustees
of the Tchenguiz Discretionary Trust (“the TDT”), a Jersey trust. The respondents
were the original trustees of the TDT (“the original trustees”) until they were
removed in 2010.
The applicants
(“the current trustees”) applied to the Royal Court under s 68 and s 69
of the Trusts (Guernsey) Law, 2007 for an order that the original trustees file
copies of documents that had been withheld by them on the basis of privilege,
so that the court could determine whether each claim to privilege was justified
and an order that any document where the claim to privilege was found to be
unjustified be disclosed to the applicant.
This was an
appeal of the Bailiff’s decision that: (1) the original trustees had ultimately
complied with the terms of the order for disclosure meaning that there was no
basis for the court or a third party to conduct a review of the documents; (2)
certain documents did not fall within the terms of the disclosure order; and
(3) no order would be made concerning the question of whether the current trustees
should be deprived of their indemnity for their costs of the proceedings
concerning disclosure of the documents, which would be dealt with in other proceedings,
at the time ongoing, concerning the priority of creditors of the TDT.
Held, appeal dismissed: the Bailiff was
entitled to reach the above conclusions.
(1) Whilst a
claim to privilege may be supported by evidence from any appropriate witness, it
is highly desirable that, where the claim to privilege is disputed or
challenged, a supporting affidavit should be sworn by a qualified lawyer who is
in a position to vouch for the exercise which has been carried out. In the
absence of contrary information, the court is unlikely to “look behind” the
claim to privilege asserted by the lawyer in their affidavit. The court considered
the observations of Beatson J in West
London Pipeline & Storage Ltd v Total UK Ltd as to the level of detail
required in such an affidavit.
(2) As to
whether the court or a third party should review a sample of the documents, the
principles set out in WH Holding Ltd v
E20 Stadium LLP, which held that the power
to inspect a document is a matter of general discretion, applied to the power
which the Royal Court may exercise to direct a party to produce to it for
inspection a document for which privilege is claimed under r.76 of the Royal
Court Civil Rules, or where the court was regulating the disclosure of
documents by a former trustee to a present trustee under s 68 and s 69
of the Trusts (Guernsey) Law, 2007, or in the exercise of its inherent powers.
Nevertheless, it was not a power which should be exercised lightly and the court
must be cautious about exercising this jurisdiction.
Trustees—leave
to appeal against order for interim payment
ITG Ltd v Glenalla Properties Ltd [2022] GCA 091 (CA: Crow; Storey; Wolffe
JJA)
J
Wessels for the plaintiffs; NJ Robison for the intervening parties; P
Richardson for the proposed intervening parties.
This was
another judgment in the TDT litigation (see above). The context was the
long-running litigation between the former and present trustees of the
Tchenguiz Discretionary Trust (“the TDT”), a Jersey trust. This was an
application for leave to appeal against an order for interim payment in the sum
of £5m. on account of the former trustees’ claim to an
indemnity out of the assets of the TDT, and an application for leave to
intervene in that appeal.
Held,
leave to
appeal granted but on limited grounds; joinder application granted:
(1) With regards to the test for leave to
appeal, the court should not grant leave unless it was at least satisfied that:
(a) the appeal had a real prospect of success; or
(b) even though the case had no real prospect of success, there
was an issue which, in the public interest, should be examined by the Court of
Appeal.
(2) Cases in the second category—which would
be exceptional—may arise, in particular, where a question of general principle
fell to be decided for the first time, or where there was an important question
of law upon which further argument and a decision of the Court of Appeal would
be to the public advantage. A case might conceivably, on other grounds, raise “questions
of great public interest” consistent with the absence of any express statutory
constraint or limit on the power to grant leave.
(3) Further, even if one of the two
conditions identified above was met, other factors may, depending on the
circumstances of the particular case, justify refusing leave.
(4) In Crociani v Crociani, the
Jersey Court of Appeal had aligned the approach in Jersey with Guernsey at that
time. It was accordingly well-settled in Jersey that the appellant must show:
(a) the appeal had a real prospect of success;
(b) a question of general principle fell to be decided for the
first time; or
(c) there was an important question of law upon which further
argument and a decision of the Court of Appeal would be to the public
advantage.
It
would be for the Jersey Court of Appeal to consider whether it agreed with the
caveat expressed in the present case as to whether heads (b) and (c) of this
test were necessarily exhaustive of circumstances in which the public interest
might justify leave being granted.