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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Viscount of the Royal Court -v- Pitman [2014] JRC 063 (12 March 2014) URL: http://www.bailii.org/je/cases/UR/2014/2014_063.html Cite as: [2014] JRC 063, [2014] JRC 63 |
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Before : |
J. A. Clyde-Smith, Esq., Commissioner, and Jurats Morgan and Blampied. |
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Between |
The Viscount of the Royal Court of Jersey |
Representor |
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And |
Trevor Mark Pitman |
First Respondent |
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And |
Shona Pitman (nee Smith) |
Second Respondent |
IN THE MATTER OF THE DESASTRE OF MR TREVOR MARK PITMAN
AND IN THE MATTER OF THE DESASTRE OF MRS SHONA PITMAN (NEE SMITH)
AND IN THE MATTER OF THE REPRESENTATION OF THE VISCOUNT OF THE ROYAL COURT OF JERSEY
Advocate E. Drummond for the Viscount.
The respondents appeared on their own behalf.
judgment
the commissioner:
1. The Viscount applies to the Court for declarations in respect of two questions of law arising out of the désastres of the respondents ("Mr and Mrs Pitman") as follows:-
(i) Does a bare right of appeal fall within the scope of the property and powers of a debtor which vest in the Viscount immediately upon the making of a declaration of a désastre?
(ii) In whom does Mr and Mrs Pitman's claim for damages for libel against the Jersey Evening Post Limited ("JEP") and 1st Jersey Limited ("1st Jersey") (the "Defamation Claim") vest following the declaration en désastre?
2. In the event that the Court finds that the Defamation Claim vests in the Viscount, further directions were sought as what action the Viscount should take; hence the involvement of the Learned Jurats in what were otherwise questions of law.
3. The Royal Court dismissed the Defamation Claim brought by Mr and Mrs Pitman against the JEP and 1st Jersey on 10th May, 2012 ([2012] JRC 092). The JEP and 1st Jersey were awarded their costs which, after taxation, amounted to £73,318.08 for the JEP and £64,419.69 for 1st Jersey.
4. The judgment of the Royal Court was final and Mr and Mrs Pitman were entitled to appeal as of right (i.e. without the need for leave) (Article 12 of the Court of Appeal (Jersey) Law 1961). However, in accordance with Rule 3 of the Court of Appeal (Civil) Rules 1964, such an appeal had to be brought within one month of the date on which the judgment or order of the court below was pronounced (i.e. on or before 10th June, 2012), subject to any extensions of time granted by the Royal Court or the Court of Appeal or a single judge thereof pursuant to Rule 16.
5. Mr and Mrs Pitman did not appeal within that time but over a year later sought an extension of time from the Court of Appeal in which to do so. On the 27th November, 2013 the Court of Appeal refused to grant Mr and Mrs Pitman an extension of time to file their appeal out of time and further costs orders were made against them in favour of the JEP and 1st Jersey.
6. 1st Jersey applied for Mr and Mrs Pitman to be declared en désastre on the basis of their unpaid (taxed) costs. On 3rd January, 2014 the Royal Court granted that application and declared their property en désastre.
7. Pursuant to Article 14(1) of the Court of Appeal (Jersey) Law 1961, leave is required to appeal the Court of Appeal's decision of 27th November, 2013 to refuse Mr and Mrs Pitman's application for an extension of time. Article 14(1) states:-
8. However, there does not appear to be any requirement that one must first seek leave from the Court of Appeal before applying to the Privy Council for special leave (in contrast to the requirements of paragraph 4.1(a) of the Court of Appeal Practice Direction 05/01 in relation to seeking leave to appeal decisions of the Royal Court).
9. The procedure for seeking special leave from the Privy Council is governed by Part 2 of the Judicial Committee (Appellant Jurisdiction) Rules 2009 as amended (the "Privy Council Rules") and Practice Direction 3: Applications for Permission to Appeal.
10. Pursuant to Rule 11(2) of the Privy Council Rules:-
11. As the Court of Appeal's decision was delivered on 27th November, 2013, the deadline for applying to the Privy Council for special leave was therefore 22nd January, 2014.
12. On 20th January, 2014 and given the intervention of the désastres, Mr Pitman applied on behalf of himself and his wife for permission from the Viscount to apply to the Privy Council for leave. The Viscount issued a decision stating inter alia that he intended to apply to the Royal Court for directions but that so far as it was permissible for him to do so, he granted Mr and Mrs Pitman permission to seek the leave of the Privy Council purely protectively given that an imminent procedural deadline was reportedly due to expire on 22nd January 2014. He expressly stated that no view was given on Mr and Mrs Pitman's standing to pursue the Privy Council application.
13. Mr and Mrs Pitman issued and served their application to the Privy Council for leave on 22nd January, 2014. According to Rule 13 of the Privy Council Rules, each respondent who wishes to object to an application must, within 28 days after service, file a notice of objection or else it will not be permitted to participate in the application. As the Privy Council Application was served on the JEP and 1st Jersey on 22nd January, 2014, they have until 19th February, 2014 to file their notices of objection, if any.
14. The Registrar of the Privy Council wrote to Mr and Mrs Pitman by letter dated 3rd February, 2014 informing them that the Privy Council did not have jurisdiction to entertain their application, pursuant to Article 14(2) of the Court of Appeal (Jersey) Law 1961, which is in the following terms:-
15. Mr Drummond, for the Viscount, expressed some surprise at the interpretation placed upon Article 14(2) by the Registrar. It is true that in its judgment of 27th November, 2013 ([2013] JCA 236) the Court of Appeal refers, in a form of shorthand, to the application of Mr and Mrs Pitman as an "application for leave to appeal out of time" but in fact Mr and Mrs Pitman were entitled to appeal the decision of the Royal Court as of right. Pursuant to the Court of Appeal (Civil) Rules 1964, that right has to be exercised within one month and their application, therefore, was for an extension of time in which to exercise that right pursuant to Rule 16, not for leave to appeal. In Mr Drummond's view, Article 14(2) refers to those appeals which, pursuant to Article 13(1)(e) of the Court of Appeal (Jersey) Law 1961, require leave (i.e. appeals from interlocutory orders or judgments).
16. It would not be appropriate for this Court to express a view on the matter and it will be for Mr and Mrs Pitman to pursue the point with the Registrar. However, in the light of the views expressed by Mr Drummond, it would seem arguable at the very least that the Privy Council does have jurisdiction to entertain their application, and therefore the Viscount's application was not rendered academic. Furthermore, even if there was no right of appeal to the Privy Council, Mr and Mrs Pitman had made it clear that they intended to apply to the European Court of Human Rights in Strasbourg, so the issue of their ability to do so following the intervention of the désastres would arise again.
17. Two preliminary points were raised by Mr Drummond which we take in turn.
Directions
18. There is no express provision in the Bankruptcy (Désastre)(Jersey) Law 1990 ("the Désastre Law") permitting the Viscount to seek directions from the Royal Court. The Désastre Law is not, however, a codification of the customary law (see the preamble which refers to the Désastre Law being passed to "amend and extend the law") and thus the customary law continues to exist in parallel. There are numerous examples of the Viscount seeking the directions of the Court prior to and after the introduction of the Désastre Law (see Jersey Insolvency and Asset Tracking 4th edition by Anthony Dessain and Michael Wilkins at paragraph 5.12) in all of which cases it appears that the jurisdiction has been assumed.
19. We have no doubt that the jurisdiction exists under the customary law ( the law of désastre being a creation of the customary law) and that in any event the Royal Court would have jurisdiction to entertain such applications from its own Executive Officer as an aspect of its inherent jurisdiction, such applications being necessary for the administration of bankrupt estates and which can arise even though the Désastre Law is silent on the subject - necessity being the rationale for the invocation of the Court's inherent jurisdiction (see Jones v AG [2000] JLR 103 at page 109).
20. The JEP and 1st Jersey were notified of the Viscount's representation but not convened. As it transpired, neither of them sought to be heard in the interests of saving costs. They had no objection to Mr and Mrs Pitman pursuing their application to the Privy Council for leave to appeal, which they regarded as being of no merit. They were concerned as to whether an application by the Viscount for directions was proportionate in view of the limited funds likely to be available for distribution to the creditors (upon which we comment below).
21. As creditors, they have an interest in any application made by the Viscount in relation to this désastre, but they are also the defendants to the defamation proceedings in respect of which leave to appeal was sought. It would seem clear that as defendants they would have no locus standi on the issue of whether the cause of action against them was personal to Mr and Mrs Pitman or vested in the Viscount. That issue arose in the case of Mulkerrins v PriceWaterhouseCoopers [2003] UKHL 41, [2003] 1 WLR 1937 where the House of Lords held that entitlement to a right of action was an issue between the claimant and her trustee in bankruptcy and that the potential defendants, being strangers to that process, had no right to be heard on that issue or to challenge the Court's order.
22. No difficulty arises in this case as neither JEP nor 1st Jersey have applied to be heard, having made their positions clear in writing. If they had applied to be heard and the Court had granted that application, then their position would seem analogous to that of a Beddoes application brought by trustees where a beneficiary is a defendant to the main action and where such beneficiary is entitled to be heard but has to withdraw when the merits of the main action are discussed (see Lewin 21-114).
23. Whether in general terms creditors should be convened to an application by the Viscount for directions or given an opportunity to be heard will be dependent upon the circumstances of each particular case.
24. Before turning to the two questions, it is necessary to look at the express provisions of the Désastre Law.
25. Article 8 of the Law states as follows:-
26. Property is widely defined in Article 1(1) to mean:-
27. Article 1(1) refers to "incident to property" where perhaps "incidental to property" would be the usual grammatical language.
28. There are several statutory exclusions to the property that vests in the Viscount:-
(i) Article 8(3) provides that "Property held by the debtor in trust for any other person shall not vest in the Viscount".
(ii) Article 8A and the Bankruptcy (Désastre)(Pensions)(Jersey) Regulations 2006 make provision for certain pension arrangements and benefits to be excluded from a person's property for the purposes of the Désastre Law in the event of a declaration being made in respect of that person.
29. Pursuant to Article 26(b), the Viscount may:-
30. We now turn to the two questions before the Court, which we take in turn. Mr Drummond had very helpfully set out in his skeleton argument the competing arguments very fully, both for the benefit of Mr and Mrs Pitman, who are litigants in person, and for the Court. We have drawn extensively from his skeleton argument.
31. There would appear to be no Jersey authority on this question, but whichever way the question is analysed, the same conclusion is reached, namely that a bare right of appeal cannot be treated independently from the underlying cause of action to which it relates. It seems to us that that is the only logical conclusion that could be drawn.
32. The question was considered recently in the case of In re GP Aviation Group International Ltd (in liquidation) Williams v Glover and another [2014] 1 WLR 166 in which former directors of the company requested the liquidator to assign to them the company's right to appeal against tax assessments made against it. Pelling J held that a bare right to appeal against what would otherwise be a liability does not satisfy the classic definition of a chose in action identified by Channell J in Torkington v Magee [1902] 2 KB 427,430 - that it is an expression used to describe "all personal rights of property which can only be claimed or enforced by action and not by taking physical possession".
33. In the case of the Pitmans, their Defamation Claim would satisfy that definition; they had simply been unsuccessful in enforcing it. Pelling J went on to consider at paragraph 28 the distinction maintained by the authorities between a chose and the remedies available for its enforcement:-
34. As a matter of statutory construction of Article 1(1) of the Désastre Law, the right of appeal incidental to Mr and Mrs Pitman's Defamation Claim may itself constitute "property" in that the definition of "property" in Article 1(1) includes (unnecessary words omitted) "every description of . . . interest . . . arising out of or incident to property". On the natural interpretation of the article, a bare right of appeal may be said to be an "interest" which arises out of or is incidental to the Defamation Claim, so the bare right of appeal can also be regarded as "property", but this is logical. If a claim vests in the Viscount, he will be unable to pursue it pursuant to Article 26(b) unless he has the right to take steps incidental thereto.
35. We conclude that a right of appeal is an interest incidental to property and cannot be treated separately from the underlying cause of action to which it relates. Accordingly, whoever has vested in them the right to pursue the underlying claim for defamation in this case will also have vested in them any right to appeal to the Privy Council.
36. We now move on to the second question.
37. There are two possible candidates, namely the Viscount or Mr and Mrs Pitman.
38. The first proposition is that the Defamation Claim vests in the Viscount. The argument can be simply put. Articles 1(1) and 8 are expressed in wide terms. There is nothing in the wording of the Désastre Law that distinguishes in any way between different types of "things in action". All property is stated to vest. There is no latent ambiguity here (as there was in Re Ostroumoff [1999] JLR 238). The words in Articles 1(1) and 8 can be given their natural meaning - see Barclays Wealth Trustees Ltd v Equity Trust [2013] JRC 094 at paragraph 20, where Sir Michael Birt, Bailiff, quoted from the well known observation of Lord Reid in Pinner v Everett [1969] 1 WLR 1266 at 1273:-
39. There are two express exceptions set out in Articles 8(3) and 8A. The legislature could have, but did not, create any further exceptions for "personal" claims. This would therefore point against any particular claims remaining vested in the bankrupt - see the commentary on Code 394 in Bennion on Statutory Interpretation 6th edition at page 1130, namely that where an Act contains specific exceptions it is presumed that these are the only exceptions of the kind intended.
40. It would follow that pursuit of the Defamation Claim vests in the Viscount in the usual way upon the declarations en désastre and Mr and Mrs Pitman have no standing in the matter. It would make no difference that the proceedings being appealed are those which gave rise to the petition debt - see Heath v Tang [1993] 1 WLR 1421 CA. It will be a question for the Viscount to decide what action should be taken, having taken appropriate legal advice, and if necessary having sought further directions.
41. The second proposition is that the Defamation Claim, being of a personal nature, vests in Mr and Mrs Pitman.
42. As stated above, the Désastre Law was not a codification of the customary law, and the customary law continues to exist in parallel. The customary law is not fixed, but evolves over time and is a product of generally accepted usage in practice - see Snell v Beadle [2001] JLR 118 at pages 126 and 127.
43. There are exceptions to Article 8 that exist in practice that do not find statutory expression in the Désastre Law:-
(i) Certain movables are exempt from distraint when the Viscount makes execution of a judgment. Examples include the debtor's bed, necessary clothing and tools of the trade. Similar exemptions are given statutory force in relation to Petty Debts Court judgments by the Loi (1891) sur la cour pour le recouvrement de menues dettes at Article 1. Whilst the Désastre Law makes no express reference to this topic such assets are also exempt from arrest and realisation in a désastre. It is the long-standing practice of the Viscount to recognise that such categories of exempted property do exist.
(ii) It is the administrative practice of the Viscount not to open private correspondence of the debtor, but to pass it to the debtor unopened. We note that this accords with the practice of the English Court on the basis that such correspondence is of a peculiarly personal nature to the debtor and his life as a human being. In Haig v Aitken [2001] Ch 110, the trustee in bankruptcy of a well known former government Minister sought to sell the bankrupt's personal correspondence as forming part of the bankrupt's estate. In refusing to make the direction, Rattee J concluded in relation to a similarly wide definition of "property" that:-
44. Rattee J went on to say quite separately that it was strongly arguable that the sale of a bankrupts' correspondence would constitute an infringement of Article 8 of the European Convention on Human Rights, namely that everyone has the right to respect for his private and family life, his home and his correspondence. The Viscount's current practice in relation to personal correspondence would appear to be mindful of such rights. Haig was concerned with whether personal correspondence formed part of the bankrupt's estate which the trustee in bankruptcy would be able to sell but Rattee J recognised (on page 118) that such correspondence may include letters which relate to the property of the bankrupt which does form part of the estate and of which the trustee in bankruptcy may have to take possession in order to properly administer the estate. The same would apply in this jurisdiction, the Viscount having power to take possession of papers and documents relating to the property of the debtor under Article 20 of the Désastre Law.
45. The English courts have recognised as a matter of common law, since as long ago as the 1840s, that property of a nature peculiarly personal to the bankrupt is excluded from the property which vests in the trustee in bankruptcy - see for example Beckham v Drake (1829) 2 HL Cas 579 per Erle J, as cited by the Lord Atkinson in Wilson v United Counties Bank Ltd [1920] AC 102 at 130:-
46. Following Wilson, the English Court of Appeal in Heath v Tang [1993] 1 WLR 1421 at 1423A said that actions for defamation were one of the obvious examples of personal claims. Quoting from the judgment of Hoffmann LJ at page 1423:-
47. This is the case notwithstanding that these exclusions find no statutory expression. For example, the terms of sections 283 and 436 of the current Insolvency Act 1986 as amended contain wide definitions of "property" vesting in the trustee in bankruptcy (similar to those within Articles 1(1) and 8 of the Désastre Law) and a list of statutory exceptions. None of the statutory exceptions refer to personal claims and yet it is not in doubt that under English law such claims are excluded.
48. What is the logic of the bankrupt retaining such claims? Fletcher on the Law of Insolvency explains the position as follows at paragraph 8-012:-
49. It might also be said that the trustee in bankruptcy would not have an incentive to pursue purely personal claims, where, for example in the case of defamation, success might merely establish the good name of the bankrupt but without any great likelihood of recovering significant damages. But if the claim does give rise to damages, it is clear that under English law those damages do not pass to the bankrupt's estate - see Muir Hunter on Personal Insolvency paragraph 3-632 citing Wilson inter alia.
50. The Désastre Law is a modern statute formulated merely a few years after the Insolvency Act 1986 had significantly overhauled the English insolvency regime. It uses similar language to the Insolvency Act 1986. Mr Drummond submitted that there was no reason to suppose that personal claims might not also be excluded in Jersey even though they find no statutory expression here. If this persuasive line of authority was followed in Jersey, it would follow that despite the width of the definition of property in Article 1(1) as including "things in action", the underlying Defamation Claim did not vest in the Viscount on the declarations en désastre and therefore remained at all times vested in Mr and Mrs Pitman. Accordingly, they would be entitled to pursue the Privy Council application or indeed any further applications without the need for permission of the Viscount or any assignment of such claims from the Viscount to them, (assuming an assignment were possible given the general prohibition on assigning choses en litige - see Barclays Wealth Trustees Limited v Equity Trust [2013] JRC 094).
51. As Mr Drummond points out, such a conclusion would not be without its complications:-
(i) In pursuing the proceedings, Mr and Mrs Pitman are currently acting as litigants in person. As their property at the time of the bankruptcy vested in the Viscount, and any after acquired property will also vest in the Viscount pursuant to Article 9 of the Désastre Law, they are unlikely to be able to pay lawyers to pursue their appeals before the Privy Council.
(ii) If they are unsuccessful in their appeal to the Privy Council, it is likely that a further costs order will be made against them and in favour of the JEP and 1st Jersey, assuming they participate in the application. On an examination of Article 29 of the Désastre Law, it seems clear that such costs orders would not fall within the definition of provable debts. This is perhaps logical in circumstances where a personal claim is stated to fall wholly outside the scope of the bankruptcy: it would be odd if the bankrupt could pursue such claims and keep the benefit of any damages awarded, but any adverse cost orders fell on the bankruptcy estate. The corollary to the debts not being provable is that at the conclusion of their respective désastres, Mr and Mrs Pitman will not be discharged from those debts.
(iii) If Mr and Mrs Pitman are successful in their appeal to the Privy Council:-
(a) They will keep any damages awarded against the JEP and 1st Jersey.
(b) If the existing adverse costs orders against Mr and Mrs Pitman are overturned, the existing provable debts will fall away and no distribution will be made to the JEP and 1st Jersey. Therefore, the Viscount may not feel able to complete activity in the désastres until the attempted appeal has concluded.
(c) The estates may well become solvent again, leading to a recall or termination of the désastres.
52. The position of the Viscount is that it is appropriate for Jersey to adopt and apply the long-standing common law principle of English bankruptcy law that "personal claims" such as claims for defamation, do not vest in the trustee in bankruptcy upon a declaration of bankruptcy, for the same reasons that such a principle has long been applied in England. Accordingly, Mr Drummond submitted that the Court should declare that the Defamation Claim is a personal claim which did not vest in the Viscount upon the declarations en désastre, and that Mr and Mrs Pitman could therefore pursue their application to the Privy Council outside the désastres (with all the consequences which flow as a result).
53. As the Privy Council stated in Snell at paragraph 21, the customary law of the Island is capable of being refined or clarified by judicial decision as it is applied to a new set of facts. The customary law recognises that there are exceptions to the property that vests in the Viscount. Despite the wide definition of property in Article 1(1) of the Désastre Law as including "things in action", we agree that under our customary law, consistent with English law, those exceptions extend to assets of a peculiarly personal nature, such as a claim for defamation. We would adopt the words of Rattee J in Haig at page 118:-
54. Whatever view one may have of the merits of the Defamation Claim brought by Mr and Mrs Pitman, and the Royal Court has reached its conclusion in that respect, their claim is peculiarly personal to them and their lives as human beings. Unless personally entitled to sue, the bankrupt's incentive to vindicate legal wrongs done to him would be much diminished. Furthermore there is no reason to think that creditors in a désastre would have any interest in financing such personal claims, concerned as such claims are with the good name of the bankrupt, with the result that bankrupts who may have been defamed would be deprived of any remedy. As English common law has long recognised, such claims should remain with the bankrupt with the benefits and burdens that go with it.
55. A cause of action may give rise to heads of damage under both the "personal"' and the "proprietary" categories. Under English law such "hybrid" claims vest in the trustee in bankruptcy in the first instance but any damages recovered for the "personal" aspects of the claim are held on constructive trust for the bankrupt by the trustee-see Fletcher on the Law of Insolvency at paragraph 8-013 citing the English Court of Appeal decision in Ord v Upton [2000] Ch 352. No such hybrid claim arises in this case. If it did then it would seem logical for the same approach to be adopted in this jurisdiction, but we have not heard submissions on the matter.
56. We recognise that whilst Mr Drummond has very ably set out the contrary arguments, the declarations sought by the Viscount have not been opposed by any party before us and therefore the matter would be open to argument before a future Court but on the basis of the submissions made to this Court, we make the following declarations:-
(i) A bare right of appeal is not property or a power that can be treated independently from the underlying cause of action to which it relates.
(ii) The Defamation Claim is a personal claim which did not vest in the Viscount upon the declarations en désastre, and that Mr and Mrs Pitman can therefore pursue the Privy Council Applications outside the désastres (with all the consequences which flow as a result).
57. The usual order on an application by the Viscount for directions would be for his costs to come out of the property of the debtors. The costs incurred by the Viscount on this application come to some £22,000 which represents a very substantial proportion of the surplus likely to be available to pay a dividend to the unsecured creditors. Very often, the directions sought by the Viscount will relate exclusively to issues arising in relation to the property of the debtors which are for the benefit of the creditors alone. However, in this case, the Viscount's application has raised issues of law which are of general application and in these circumstances we think it appropriate that costs should be paid out of public funds and not out of the property of the debtors.