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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> JFSC v Black [2002] JRC 77 (11 April 2002) URL: http://www.bailii.org/je/cases/UR/2002/2002_77.html Cite as: [2002] JRC 77 |
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2002/77
ROYAL COURT
(Samedi Division)
11th April, 2002.
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Before: |
Sir Philip Bailhache, Bailiff, sitting alone |
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Between |
Jersey Financial Services Commission |
Representor
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And |
A.P.Black (Jersey) Limited |
First Respondent
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And |
Cater Allen Trust Company (Jersey) Limited |
Second Respondent
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And |
Peter Stuart Langton |
Third Respondent
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And |
Alistair Pollock Pederson Black |
Fourth Respondent |
Application to the Court for an order under Article 20(7) of the Collective Investment Funds (Jersey) Law 1988.
Advocate J.D.Kelleher for the Representor
Advocate D. Gilbert for the First and Fourth Respondents
Advocate A.R.Binnington for the Second Respondent
Advocate W. Grace for the Third Respondent
judgment
the bailiff:
Background
1. In these proceedings, the Jersey Financial Services Commission ("the Commission") applies to the Court for an order under Article 20(7) of the Collective Investment Funds (Jersey) Law 1988 as amended ("the CIF Law"). Article 20(7), as amended, provides -
2. There are four respondents to the application. In outline the proceedings concern a number of schemes and arrangements which are collectively described in the representation as "the Delta Scheme". It is alleged that the Delta Scheme was a collective investment fund. It is further alleged that the first and second respondents were or held themselves out as being "functionaries" of the alleged collective investment fund and that the 3rd and 4th respondents consented to or connived in and/or aided and abetted the alleged failures to comply with the CIF Law by the 1st and 2nd respondents. The Commission has described the Delta Scheme as being the instrument of a major fraud perpetrated by an American citizen and others as a result of which investors have lost significant sums of money. It is alleged that all the respondents have been guilty of misconduct of one kind or another and are liable, pursuant to Article 20(7) of the CIF Law, to pay into Court such sum as appears to be just. All these allegations made by the Commission are contested.
The preliminary issue
3. It is unnecessary, for the purposes of this judgment, to describe the background in any more detail. It is common ground that the cause of action in the present proceedings accrued at the latest on or before 27th September 1993. The alleged contraventions of the CIF Law, and any alleged accrual of profit or alleged loss by investors as a result of the alleged contraventions, occurred at the latest by that date. These proceedings were not commenced until 30th June, 2000.
4. The preliminary issue raises an important point of law. What (if any) is the prescription period applying to proceedings under Article 20(7) of the CIF Law?
Rival contentions
5. For practical purposes the arguments advanced by the different respondents in relation to the preliminary issue are indistinguishable. I shall therefore refer to the respondents collectively, notwithstanding the fact that they are separately represented. The respondents' case is that -
(1) the applicable prescription period is 3 years, pursuant to Article 2(1) of the Law Reform (Miscellaneous Provisions) (Jersey) Law 1960 ("the 1960 Law");
(2) if, contrary to the primary submission, the 1960 Law does not apply, the applicable prescription period is a year and a day; or
(3) customary law would now prescribe a three year period by analogy with the 1960 Law.
6. The Commission's case is that -
(1) no prescription period applies to proceedings under Article 20(7) of the CIF Law; or
(2) the applicable prescription period is 30 years under customary law.
It is convenient to consider first the prescription periods contended for by the Commission.
30 years' prescription
7. Mr. Kelleher advanced his argument in relation to the Commission's alternative case only tentatively. The high-water mark of the submission is to be found in Poingdestre's Remarques et Animadversions sur la Coûtume Réformée on Article 522 of the Coûtume Réformée. Article 522 provides -
Poingdestre comments on this article as follows -
8. This unpublished commentary on the Coûtume Reformée must however be read in the light of Poingdestre's writings on prescription in Lois et Coûtumes de l'Ile de Jersey (1928 edition). In that work Poingdestre writes extensively on prescription. He divides the subject into three headings of which the last is relevant for these purposes. He writes -
9. Poingdestre writes later of prescription quadragénaire, prescription de dix ans, and of lesser periods, but not of prescription de trente ans. It is clear that, so far as Poingdestre was concerned, prescription trentenaire did not form part of the law of Jersey.
10. Nothing is to be found in Le Gros, Droit Coutumier de Jersey (1943) nor in the records of decisions of the Court published in the Tables des Décisions de la Cour Royale, which suggests that prescription trentenaire in relation to moveable property applies in this jurisdiction. In my judgment the alternative argument of the Commission, that the right of action under Article 20(7) of the CIF Law is enforced by an action personnelle mobilière for which the prescription period is thirty years at customary law, is without foundation and I reject it.
No prescription
11. I turn next to the primary argument of the Commission which is that the right of action under Article 20(7) of the CIF Law is not subject to prescription at all. Counsel submitted that the law of prescription in Jersey was not a seamless web where all causes of action (other than actions against the Crown or in some circumstances against the Church) were subject to prescription of one form or another. He contended that the right of action conferred on the Commission by Article 20(7) was sui generis and that no prescription period had been provided by the statute. There was no all-embracing limitation statute in Jersey analogous to the Limitation Act 1980 in England. It followed that the States must have intended that an action by the Commission could be brought at any time. Counsel submitted that in such circumstances it was not appropriate to have regard to policy considerations.
12. If, contrary to this submission, policy considerations did apply, counsel contended that there were powerful reasons why the right of action under Article 20(7) should not be subject to prescription. The Commission was pursuing an action for the benefit of the public and not in its own interest. Investor protection and redress for investors who had suffered loss were important aspects of this representation. If the action were held to be prescribed, many investors would be left without compensation. It was almost inevitable in claims of this kind that the underlying circumstances would be complex and difficult to unravel. The necessary evidence might be in several different jurisdictions. To assemble a case justifying an application under Article 20(7) might take many years. Counsel conceded that an action by a private investor under Article 21 would be prescribed after 3 years. He drew an analogy with compensation orders to justify the distinction for which he contended between actions under Article 20(7) and Article 21. A civil claim arising out of an assault would be time-barred after 3 years whereas the power of the Court to make a compensation order under the Criminal Justice (Compensation Orders) (Jersey) Law 1994 could be exercised at any time. This does not seem to me, however, to be a true analogy. The power of the Court to make compensation orders under the 1994 Law is entirely discretionary and is part of the Court's criminal jurisdiction to punish an offender for an offence. The victim is entitled to make representations but no right of action is vested in the victim.
13. The other side of the public policy coin is that an imprescriptible right of action vested in the Commission to pursue wrongdoers under the CIF Law would run completely counter to all the efforts of this Court to make civil justice more speedy, cost-effective and fair. As Birt, DB, stated in Gallaher v. Dauny (2001) JLR 302 at 309 -
14. Observations by Lord Denning MR in Biss v. Lambeth Health Authority [1978] 1 WLR 302 at 389 in the context of the dismissal of actions for want of prosecution seems to me equally relevant here -
15. The proposition that the Commission has been empowered by the legislature to carry out its investigations at a leisurely or even dilatory pace and then, at a moment of its choosing, five, ten or more years later, to bring proceedings against hapless defendants under Article 20(7) of the CIF Law is inherently unattractive and not consonant with notions of justice in the twenty-first century. Counsel submitted that the remedy in such circumstances would be that the Court might in the exercise of its discretion decline to make an order. While I suppose that in theory the Court might act in that way, it seems unlikely that the Court would punish the dilatoriness of the Commission by failing to order wrongdoers to whom profits had accrued to pay into Court the appropriate sum of money for distribution to investors adversely affected by that wrongdoing. If it were necessary to resort to policy considerations I should hold that the balance tipped in favour of laying down a prescription period. But the strength of the Commission's primary argument lies rather in the contention that, as a matter of law, there is no prescription period. I turn now to consider whether, notwithstanding the absence of any provision for prescription in Article 20 of the CIF Law, the matter is covered by the general law.
The respondents' contentions
16. The respondents' primary argument is that the right of action conferred by Article 20(7) is a right of action in tort and is therefore embraced by Article 2(1) of the 1960 Law and accordingly prescribed. Article 2(1) provides -
Article 1 contains the following definitions -
Plainly the application under Article 20(7) of the CIF Law amounts to "proceedings in a court of law". The question is whether the proceedings are "founded on tort".
17. Mr. Binnington summarized the case for the respondents in the following way -
(i) "tort" in the 1960 Law has the meaning which that term bears in Jersey law, having regard to (a) the customary law and (b) the history, structure and content of the Jersey law of prescription;
(ii) by 1960 the Jersey law of prescription recognised the year and a day period as applying to all civil proceedings for "tort";
(iii) "tort" in this context means a classification of civil actions where liability arises from a wrong as distinct from contract and property;
(iv) the scope of "actions founded on tort" in the 1960 Law encompasses all civil actions (outside contract and property) where liability depends upon a wrong ("tort") committed by the person against whom relief is sought;
(v) the present proceedings are within Art 2 of the 1960 Law, as they are civil proceedings under which liability depends on a wrongful act."
18. Before considering the submissions advanced on behalf of the Commission, it is right to advert to the confusion of analysis which has, in my view, resulted from linguistics. Prior to 1940, despite the predominance of English in the social and commercial life of the community, most of the business of this Court was conducted in French and most statutes were enacted by the States in that language. It was only after the Liberation in 1945 that the linguistic balance tipped dramatically. Most legislation came to be enacted in English and gradually the French language has been all but ousted from the Courts. The draftsman of the 1960 Law used the now familiar drafting technique of employing French words in an English context in the expectation, no doubt, that lawyers and the courts would readily understand what was meant. He would have had in mind the words of C.T. Le Quesne QC, Lieutenant Bailiff in Guernsey States Insurance Authority v. Ernest Farley and Son Ltd. (1953) JJ 47 when he stated -
Thus when tort was defined as a tort personnel or a tort matériel there is little doubt that the draftsman was referring to tort in a Jersey sense rather than to the concept familiar to English lawyers.
19. Counsel for the Commission contended however that tort was now to be construed in an English sense. In support of this contention he referred to Nicolle - the Origin and Development of Jersey Law - an Outline Guide where the learned author states at paragraph 15.23 -
[and the passage from Guernsey States Insurance Authority v Ernest Farley & Son Ltd. referred to above is then cited].
At paragraph. 15.24 she continues -
20. That passage was of course written before Arya Holdings went before the Court of Appeal to which decision I refer in more detail below. Counsel for the Commission drew comfort, however, from the adoption by the Court of Appeal in Arya Holdings of a definition of tortious liability in English Law. At (1997) JLR page 181 Southwell JA stated -
The Court of Appeal subsequently employed the Winfield definition in helping it to determine that a D'Allain-type action was founded upon tort.
21. Counsel for the Commission then contended, on the basis that English law had been used to assist in determining what was a tort in Jersey, that the following test was to be applied -
(i) was a duty owed as a matter of law?
(ii) to whom was the duty owed?
(iii) was the breach of such a duty to be redressed by an action for damages?
(iv) if the right of action was established, did the Court have a discretion whether or not to enforce it?
22. Counsel submitted that the right of action conferred by Article 20(7) of the CIF Law failed this test in that no duty was owed to the Commission, nor was the Commission itself entitled to damages, nor could it be said that the Court had no discretion as to the order which might be made against the respondents. These are perfectly proper submissions (although I must not be taken as endorsing them) but they are based, in my judgment, upon a flawed premise - that is, that the English law of torts is applicable in this jurisdiction.
23. It is true that Jersey, in common with many other jurisdictions, has been subject to the influences of other systems of law in the development of its jurisprudence. The classic description of this process is to be found in the judgment of Le Quesne JA in Foster v. A.G. (1992) JLR 6 CofA when the main issue was whether fraud was an offence under the law of Jersey. The learned judge of appeal described the numerous references to "fraude", "vol", "escroquerie" and similar terms in the cases recorded in the Poursuites Criminelles and referred to a particular case where the allegation of "fraude" had clearly been drafted by someone familiar with the terms of the English Larceny Act 1861. He continued -
24. A similar process is discernible in relation to what we now call the law of torts. The genesis and development of this branch of Jersey law is worthy of closer study and analysis by a legal historian but for present purposes the following synopsis will suffice. Mr. Binnington began with Chapter 51 of the Grand Coutumier of which the most accessible version is to be found in L'Ancienne Coûtume de Normandie (1881) edited by W.L. de Gruchy. Under the heading "De Tort Faict" one finds -
Some light is shed on the word "oultrage" by examining the Latin text of the Grand Coutumier, also printed in the de Gruchy edition. The heading is "De injuria" and the opening words of the chapter are "Injuria est actio laeso jure indebite alicui irrogata ...". In the Introduction to Roman Law by Professor Nicholas (1962 edition) the following passage is to be found at page 215 under the heading "Iniuria" -
25. The Roman law of delicts had no general principle; it was a law of specific wrongs. In that respect it was more akin to the modern English law with its system of specific torts. The wrong of iniuria, and the related damnum iniuria datum, of which the essence was loss (damnum) caused by culpable conduct (iniuria datum), do, however, stand out for their generality. On the basis of those wrongs civilian systems built a general theory of civil wrongs. Thus Article 1382 of the French Code Civil provides, under the heading "Des délits et des quasi-délits" -
26. It is to be noted that a délit has a different meaning in Jersey. A délit is a criminal offence and not a civil wrong. That was well established by the time of the enactment of the Loi (1843) sur la préscription des poursuites which provided -
27. It seems clear, however, that Jersey law has not followed the civilian path in developing the law of torts. It has retained a system of specific wrongs for which a cause of action arises, even if some of the wrongs are fairly general in character. Examples of this generality are to be found particularly where the law of torts (if I may so call it) abuts upon the law of property. Thus, in Shaw, widow Key, v. Regan (1962) JJ 189, the plaintiff claimed damages inter alia for injury to her health caused by building works on adjacent land. Although the head note to the case begins with the word "Nuisance", it is noticeable that the judgment of the Court contains not one reference to that concept. Instead the existence (or non-existence as it turned out) of a tort is analysed on principle. Le Masurier, Bailiff, stated at page 192 -
28. Indeed the records of the Court are replete with references to conduct alleged to constitute "un tort". In Watson v Priddy (1977) JJ 145, cited by counsel on a different point, there are references to earlier cases where the plaintiffs founded their actions in part on what would now be described as the tort of seduction. In Le Roux v Agnes (1891) 214 EX 517 the plaintiff claimed "tant pour le tort subi par ladite remontrante.....". In Hands v Sweeney (1956) 250 Ex 173, 252, the plaintiff similarly claimed damages for "le tort subi .... par suite de la conduite repréhensible .... etc".
29. It is the case, however, that in the modern period (mid-nineteenth century onwards), Jersey lawyers, and the Courts, have increasingly turned to English law both for labels to attach to particular torts and for assistance in defining the ambit of those torts. In Curry v Horman (1889) 213 Ex 511 it was decided that "balayures amoncelées près d'une maison d'habitation constituent une nuisance". Many cases involving injury to reputation are recorded in the Tables des Decisions towards the end of the nineteenth century under the rubric "Diffamation". These references were made, however, against a background of knowledge of existing causes of action arising under the customary law. Jersey lawyers, and the courts, employed English terminology and, to an extent, legal principle to supplement but not to subvert the customary law.
30. What has happened in the last 35 years in the context of certain areas of the law of torts is of a different character. Dicta from three cases will suffice to illustrate the point.
31. In Louis v E. Troy Ltd. (1970) JJ 1371, where the plaintiff slipped on oil and suffered injury in the course of his employment, the Court stated at page 1377 -
In Filliastre v Harbours and Airport Committee (1970) JJ 1511 the Court stated, at page 1515 -
In Dale v Dunell's Ltd. (1976) JJ 291 the Court stated at p 296 -
32. Miss Nicolle in "The Origin and Development of Jersey Law" described this as the "overpowering wave" of English influence which came upon the law of tort. In many of these cases the application of exclusively English principles no doubt led to the same result as would have emerged had counsel troubled to research the local cases. But does this mean, as submitted by counsel for the Commission, that the English law of tort now governs Jersey legal thinking? The proposition that a combination of indolence by counsel and acquiescence by the Court is sufficient to bring about fundamental change to the substance of the Jersey law of torts is not one that I would readily accept. Fortunately, there is higher authority upon which I am able to rely. In Arya Holdings Ltd. v Minories Finance Ltd., to which I have already referred, Southwell JA, giving the judgment of the Court of Appeal stated -
33. It is in the context of this statement of principle that the employment by the Court of Appeal of the Winfield definition of tortious liability in Arya Holdings must be viewed. I do not understand the learned judge of appeal to be stating that the definition is necessarily of universal application. On the contrary, he cautioned that it was "not without difficulties" although it was of "some use" in deciding whether a right of action under Jersey law gave rise to tortious liability.
34. It is certainly true that it is difficult to shoe-horn the right of action under Article 20(7) of the CIF Law into the Winfield definition. The principal difficulty arises from the requirement that the breach of duty should be redressable by an action for unliquidated damages. Mr. Binnington argued that tort in Jersey was a wrong-based concept with less emphasis on the remedy. He referred to Pothier: Introduction Générale aux Coûtumes, Chap iv, para 116 -
In my judgment this submission is correct. In determining whether a right of action is "founded on tort" it is necessary to ascertain whether the cause of action is based upon wrong-doing of some kind. The precise remedy available to the victim or to the body representing the victim is not of significance. The important factor is that the cause of action gives rise to a remedy of some kind - it is not essential that the remedy should be what English law would describe as "damages". In support of this submission counsel referred to Hamon v Mourant (1852) 173 Ex 425. The Court held -
"Dédommagement" may be translated as "compensation". The wrong in that case was an alleged failure to comply with a statutory obligation.
This approach seems to me also consistent with Chapter 51 of the Grand Coutumier to which I have referred above.
35. What then is the basis of the right of action vested in the Commission by Article 20(7) of the CIF Law? The basis is -
(1) that there must have been a failure by a person "to comply with any provision of [the CIF Law], or of any Regulation or Order made, or permit granted, or with any direction given, under [the CIF Law]" and
(2) that profits have accrued to that person as a result of the failure, or one or more investors have suffered loss or been otherwise adversely affected as a result of the failure.
The failure to comply with a statutory obligation with the result either that profits accrue to that person or that losses are suffered by investors must surely be an example of wrongdoing. It is true that such a failure may also constitute a criminal offence, but that does not mean that the underlying conduct cannot also amount to an actionable civil wrong or tort. Is it significant that the Commission is not the party suffering loss? It seems to me that no significance attaches to that fact. The statute empowers the Commission to bring what is in effect a representative action. Individual investors may not have the ability or resources to bring an action under Article 21 of the CIF Law. Article 20(7) empowers the Commission to protect the interests of all investors by interceding on their behalf. Counsel for the Commission submitted that the right of action arose even if no loss had been suffered by investors. It was possible therefore that the Commission might bring an action for purely punitive reasons to require a person to disgorge illicit profits. This is of course correct, but this possible employment of Article 20(7) does not in my judgment negate the wrongdoing which is the basis of the action. By definition illicit profits are derived from prejudice caused to others even if it is not possible to identify those others. Finally, counsel for the Commission objected that the discretion conferred on the Court as to the making of an order was inconsistent with a right of action founded on tort. This argument seems to me again to place undue emphasis on the remedy provided by the statute. It is true that the legislature has employed the permissive "may" rather than the imperative "shall". But the same phraseology is used in Article 3 of the Drug Trafficking Offences (Jersey) Law 1988 where the Court, having determined that a person has benefited from drug trafficking, "may" make a confiscation order. Notwithstanding the permissive "may" it seems to me improbable in the extreme that the Court would decline to order a drug trafficker to surrender his proceeds of drug trafficking. It seems to me equally improbable that the Court, having satisfied itself that a person has failed to comply with his obligations under the CIF Law and as a result caused loss to investors, would decline to order that person to pay the appropriate sum into Court for distribution. In my view the courteous use of the permissive form does not deprive the Commission of its legal right to a remedy on the assumption that the statutory preconditions to its cause of action are made out.
36. Before arriving at my conclusion, I should briefly revisit the policy issues that were urged upon me by all counsel. As I indicated at paragraph 15 above, if it were necessary to resort to such considerations, I should hold that public policy required the imposition of a limitation period. I accept the force of the arguments advanced by counsel for the Commission as to the complexity of many investigations into alleged wrong-doing of this kind and as to the time needed to bring such investigations to a conclusion. It seems to me, however, that the customary law affords a protection for the interests of the Commission and of investors in the doctrine of "empêchement d'agir". By this doctrine, as laid down by the Court of Appeal in Public Services Committee. v Maynard (1996) JLR 343 at 351 -
The doctrine is expressly preserved in relation to actions founded on tort by Article 2(2) of the 1960 Law.
37. I conclude that the right of action created by Article 20(7) of the CIF Law is founded on tort and that it is subject to a prescription period of three years pursuant to Article 2(1) of the 1960 Law. I accordingly hold that the action brought by the Commission against the respondents in this case was already prescribed at the time when the Order of Justice was served, and I answer the question posed in the preliminary issue in the affirmative. It only remains for me to express my gratitude to Mr. Binnington and Mr. Kelleher for their assiduous researches and for the clarity of their submissions.
