BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
Jersey Unreported Judgments |
||
|
You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Neal -v- Kelleher [2014] JRC 233 (27 November 2014) URL: http://www.bailii.org/je/cases/UR/2014/2014_233.html Cite as: [2014] JRC 233 |
||
[New search] [Help]
Curatorship - application to strike out part of order of justice.
|
Before : |
Advocate Matthew John Thompson, Master of the Royal Court, sitting alone. |
|||
|
Between |
Chrystal Pauline May Neal (nee Gardner)(Curator of John William Neal |
Plaintiff |
|
|
|
And |
John Daniel Kelleher (former Curator of John William Neal) |
Defendant |
|
|
Advocate S. J. Young for the Plaintiff.
Advocate N. L. M. Langlois for the Defendant.
CONTENTS OF THE JUDGMENT
|
|
|
Paras |
|
1. |
Introduction |
2 |
|
2. |
Background |
3-16 |
|
3. |
The allegations in the order of justice |
17-24 |
|
4. |
The draft amended order of justice |
25-27 |
|
5. |
In summary - the parties' arguments |
28-30 |
|
6. |
The applicable legal principles |
31-39 |
|
7. |
Decision |
|
|
8. |
The duties of a curator |
40-43 |
|
9. |
The applicable limitation period |
44-56 |
|
10. |
Empêchement/Breach of duty |
57-60 |
|
11. |
The draft amended order of justice |
61-74 |
|
12. |
The EHL Loans/AIEL Loans |
75-78 |
|
13. |
Breach of fiduciary duty |
79-82 |
|
14. |
Other alleged breaches of duty |
83-84 |
|
15. |
Omission of material averments |
85-86 |
|
16. |
The collateral attack |
87-88 |
|
17. |
The new causes of action raised in the draft amended order of justice are hopeless and bound to fail |
89-90 |
|
18. |
Conclusion |
91-92 |
judgment
the Master:
1. This judgment represents my decision in respect of an application by the defendant to strike out all or alternatively part of an order of justice issued by the plaintiff against the defendant. There is also before me an application to amend the plaintiff's order of justice. The arguments before me addressed both the allegations made in the order of justice and the amended order of justice, it being contended for the defendant that the amendments generally did not meet the defendant's objections. The only amendment consented to was a change in the plaintiff's status from curator to executor.
2. The proceedings were commenced in February 2013. An answer was filed on 21st June, 2013. The action was then stayed by various acts from 17th October, 2013, until 23rd March, 2014, to see whether the dispute could be resolved by way of mediation. Regrettably this proved unsuccessful. Accordingly, various directions have been given resulting in the present application.
3. The proceedings arise out of the appointment of the defendant as curator of the plaintiff's late husband John Neal ("Mr Neal"). The defendant was appointed curator because Mr Neal suffered a severe stroke in February 1999. After his stroke Mr Neal was incapacitated and needed extensive care for the rest of his life, until he passed away earlier this year.
4. Prior to his stroke, Mr Neal was a businessman who had accumulated substantial wealth, principally through commercial property. The commercial property business was operated through a trust and company structure referred to in the draft amended order of justice as the J.C.N. Group. The first trust was established by a deed dated 5th April, 1979, which owned the share capital of a Jersey company called Evreux Holdings Limited ("EHL"). EHL in turn owned 100% of J.C.N. Investments (Jersey) Limited ("JCN"). JCN had two wholly owned subsidiaries Anthony Investments (Esplanade) Limited ("AIEL") and J.C.N. Properties Limited ("JCNP"). EHL also owned a trading company known as J.C.N. Trading (Jersey) Limited ("JCNT"). I refer to these entities as the Companies.
5. At the date of the appointment of the defendant as curator, EHL was owned by the John Neal Family Trust which had been settled in 1997 (the 'Trust'). Royal Bank of Scotland Trust Company (Jersey) Limited ("RBST") was the trustee. Mr Neal was a director of EHL, JCN and AIEL.
6. The most significant property owned by the JCN Group through AIEL was a block of commercial buildings located at 44 The Esplanade/17-19 Seaton Place, St Helier, Jersey. At this point, I record that no party had any objection to me deciding in relation this matter, notwithstanding I was an equity partner in the Ogier Group which ultimately leased 44 The Esplanade once it was developed.
7. The Trust also owned other commercial property in Jersey at the time the defendant was appointed.
8. The plaintiff and Mr Neal had four sons, Mark, Simon, James and Stephen. Following Mr Neal's stroke, Simon played a more active role in relation to the Trust and Companies. On 31st January, 2000, the defendant, the plaintiff and Simon were appointed as new trustees in place of RBSI. Simon also became Managing Director of the JCN Group in 1999.
9. As at the date of the defendant's appointment, by reference to an inventory produced by the defendant in accordance with his obligations, Mr Neal's property was said to comprise the following as set out at paragraph 25 of the order of justice:-
"Immovable Property
Chateau Vermont, Jersey (jointly owned with spouse) 10,000,000.00
La Corona, Spain (jointly owned with spouse) 2,000,000.00
Kilmorie, Torquay 50,000.00
Movable Property
Midland Bank Current Account with spouse 40,000.00
Beneficiary of the Trust
Contents of Chateau Vermont (Insured Value) 700,000.00
Contents of La Corona (Insured Value) 150,000.00
Jewellery 50,000.00
Liabilities
Mortgage on Chateau Vermont 2,250,000.00
Mortgage no security with RBS 275,000.00
Mortgage no security with RBS 125,000.00"
Mr Neal was also a beneficiary of the Trust. It was accepted by the defendant in 2000 that the balance on the Midland Bank current account was a debit balance not a credit balance.
10. When the defendant resigned as curator, the assets of the Curatorship were La Corona, furniture and jewellery. Chateau Vermont had been sold in 2005 for £3.1 million. According to the defendant's answer, Mr Neal received £436,996 being half the share of the proceeds of sale of Chateau Vermont after deduction of the mortgage and estate agent and professional fees. In addition, as part of the basis upon which the Royal Court approved a sale of Chateau Vermont, JCN agreed within thirty-six months of the sale to transfer cash and/or Spanish property to the plaintiff and Mr Neal (acting through the defendant) to an aggregate value of £900,000 referred to as the Compensation Payment. This was to reflect that Chateau Vermont was being sold at a lower price than its estimated value. The Compensation Payment has never been paid, and JCN is now in liquidation.
11. In relation to the JCN Group, according to the plaintiff, the value of the commercial property portfolio held within the JCN Group in November 1998 was in excess of £17 million with a combined estimated annual rental value of over £1.8 million. In January 1999, according to Simon Neal, the indebtedness of the JCN Group was around £8.5 million. For the purposes of this application I am assuming, in the plaintiff's favour, that assets held by the JCN Group within the Trust were of this magnitude. It was not disputed by the defendant in its answer that the JCN Group held a significant asset in the form of its interest in 44 The Esplanade.
12. The plaintiff also alleges that on 26th November, 1980, Mr Neal entered into a series of agreements with EHL pursuant to which he transferred ownership of various companies, which became part of the JCN Group, in return for loans totalling £2,357,070 to be paid over a twenty year period in equal instalments. In this judgment I shall refer to these loans as the EHL loans.
13. In 1984, as EHL had not paid any of the instalments due under the EHL loans, the amounts due were instead agreed to remain as outstanding loans due from EHL to Mr Neal which loans were recorded in the accounts of the JCN Group as having no set repayment date and therefore were repayable on demand.
14. In relation to AIEL, the plaintiff asserts that, by reference to accounts of AIEL for the years ended 31st December, 1997, and 1998, a further loan was shown as being due to Mr Neal. The accounts for the year ended 31st December, 1998, record this loan as being in the sum of £909,904.
15. In relation to the Trust, the defendant, the plaintiff and Simon all retired as trustees on 16th July, 2006.
16. In or around January 2007 the Dandara Group offered to purchase 44 The Esplanade from AIEL for £11 million on purchase and a further £3 million on completion of the build assuming planning permission for another floor was granted. This offer was not accepted but is said to have been known to the defendant.
17. The order of justice was issued shortly before the third anniversary of the defendant's resignation as curator. No doubt this occurred in order to seek to avoid any issues of limitation, if proceedings were commenced more than three years after the defendant ceased to be curator. As limitation is one of the key arguments raised by the defendant in relation to its application, I address the issue of limitation in more detail later in this judgment.
18. What the plaintiff complained about in the order of justice in terms of loss was as follows:-
(i) Failure to collect the consideration monies due for the transfer to EHL of the other companies now within the JCN Group together with a failure to call in loans due from EHL and AIEL to Mr Neal. While these sums in the original order of justice were put at £6,027,000 and £3,117,464, the plaintiff now accepts that the amount it seeks under this heading is £2,989,127;
(ii) A failure to procure that the Trust or the JCN Group paid the mortgage on Chateau Vermont;
(iii) A failure to recover the sum of £900,000 being the Compensation Payment to be paid by the JCN Group from the sale of Spanish properties;
(iv) £1.5 million being the price that could have been achieved if Chateau Vermont had been sold in 2006.
19. The order of justice therefore claimed £13,794,464 as damages plus an account of fees and interest. In light of the concession in terms of the amount sought for the considerations and loans being £2,989,127 the damages payable were said to be in the region of £7.6 million.
20. The way the case was put, as distinct from what losses were claimed, is however more complicated. Paragraph 12 of the order of justice provides as follows:-
"Prior to the date of the Appointment Mr Neal's only source of income was from the Companies or Trust, either as creditor, director or beneficiary. Following his Stroke Mr Neal was unable to take any part in the running of the Companies and required constant care, which was and still is primarily provided by Mrs Neal. In the event Mr Neal was unable to continue to receive a salary from the Companies and is likely to continue to require paid care assistance as both he and Mrs Neal become older. By virtue of the discretionary nature of the Trust it is contended that the clear and unequivocal duty of the defendant as curator, whether Trustee of the Trust or not, was to ensure as close to the date of Appointment as possible that the assets of Mr Neal were both identified and preserved, ensuring that there was sufficient capital for him and his family to live on, and sufficient assets to pay for the continuing care of Mr and Mrs Neal as both he and Mrs Neal aged."
21. In paragraph 15 the defendant was criticised for allowing JCN Group through Simon to invest in property in Spain as follows:-
"15. From about May 1999 Simon caused JCN to start investing in residential housing projects which he was developing in Spain using Spanish companies controlled exclusively by him (the Spanish Projects), which projects Simon contended were highly profitable, but for which companies and projects there appear to be no accurate accounts and no audit was ever carried out. As joint venturer in the Spanish Projects there existed a significant issue of conflict as between Simon's acting on his own account and as Trustee, Beneficiary and Director of the Trust and Companies respectively."
22. Paragraph 16 and 17 of the order of justice provide as follows:-
"16. Dr Kelleher was well aware and on notice of these and other issues in relation to Simon's control and use of the Companies, the Spanish Projects and lack of income, through meetings, discussion and communication and correspondence at various times with, variously, Mrs Neal, James and Stephen, but abdicated his responsibility by allowing and continuing to allow Simon complete control over JCN and the Companies as evidenced by his e-mail to Simon dated 20 July 2004 in which Dr Kelleher stated and accepted "that in real terms the company [JCN] is run by [Simon]" and that everything is run out of Spain and "it is difficult for me to have a feel for what is going on." In that same e-mail Dr Kelleher stated that "a positive step forward would be for there to be an additional and independent director to be appointed. This director would provide independent corporate oversight over the operation of the business. It would probably be better to have someone in Jersey. I am sure we can come up with someone." Notwithstanding such insight and observation Dr Kelleher failed to pursue the appointment or procure the appointment of any independent director but allowed Simon to continue to conduct the business on his own, without any independent oversight either at director level or at an accounting/audit level. In fact Dr Kelleher was instrumental in allowing Simon control of the Companies by reason of his instructing his own firm in or about January 2006 to draft a Management Agreement for Simon to fulfil the role of Managing Director of the JN Group which comprised the Companies.
17. It was clearly not in Mr Neal's interest for the Trust and/or Companies to invest in the Spanish Projects when the conflict of interest between Mr Neal and Simon was patent. It is unclear whether Dr Kelleher made any or any proper and continuing enquiry as to whether investment by JCN in the Spanish Projects was of any interest or value to Mr Neal. The identification of such issues by Dr Kelleher, whether at this time or earlier, makes it clear that he was on notice that it was vitally important expeditiously to collect and call in and conserve all of Mr Neal's property."
23. Paragraph 28 to 33 of the order of justice plead the following:-
"28. In fact the Inventories prepared by Dr Kelleher in 1999 and 2000 should have shown:
(1) the purchase monies due from EHL, being the sum of the monies pleaded at 26.(1)(i)-(v) above, in the sum of approximately £6,027,000 (the Considerations);
(2) the loans due by AIEL and EHL to Mr Neal, being the sum of monies pleaded at 26.(2)(i) and (ii) above, in the sum of £3,117,464 (the Loans); and
(3) the fact that the Mortgage monies, pleaded at 26.(3) above, were in fact monies due back from the Companies, or some of them, to Mr Neal in the sum of £2,250,000.
Sale of Chateau Vermont
29. On or about 2 April 2004 Dr Kelleher applied to the Royal Court for permission to sell Chateau Vermont (the House) at a sum in excess of £4 million, which order was given on 2 April 2004. It is averred that the reasons provided in the affidavit supporting such application were neither complete nor entirely accurate but were alluded to in Dr Kelleher's affidavit dated 17 February 2005 supporting a further application to sell the House at £3 million. In terms the sale of the House was a forced sale. The House was sold on 5 November 2005 for £3.1 million, being significantly less than the valuation provided to Dr Kelleher by professional Estate Agents at between £4 million and £4.5 million.
30. The reasons for the sale were more properly and fully set out in the recitals to an agreement dated 26 March 2006 made by and between JCN, Dr Kelleher as curator and Mrs Neal (the Compensation Agreement) which records that the sale of the House was necessary because "[JCN] wished to be released and discharged from its obligations under the Guarantee [between JCN as guarantor and Citibank N.A. with respect to the Mortgage] to facilitate financing being made available to [JCN or the Companies] for the redevelopment of [the Site]." and provided a mechanism whereby JCN would, within 36 months of the sale of the House, transfer Spanish property to Mr and Mrs Neal (or for their benefit) having a value, as to 75% of its aggregate value, of £900,000 in order to compensate for the low sale price of the House (the Compensation).
31. It is averred that it should have been unnecessary to sell the House at this time but even if it is found that this was necessary and appropriate, the mechanism for the payment of the Compensation as provided for by the Compensation Agreement was inappropriate and again failed to conserve Mr Neal's property. Indeed by e-mail dated 24 February 2009 from Dr Kelleher to Mrs Neal he admits that the Compensation was due in November 2008 and states "for reasons with which you will be familiar, JCN is not currently in a position to pay the capital sum pending completion of the sale of 44 Esplanade." This again demonstrates a clear failure by Dr Kelleher properly to manage and administer the affairs of Mr Neal and to conserve his property.
32. In fact Mr Neal received only £412,000 out of the proceeds of sale of the House.
33. It is the plaintiff's case that the House should not have been required to be sold in 2004/2005. Whilst it might have been appropriate to sell the House at some time as part of the management strategy for Mr Neal, it should have been undertaken so as to achieve best price and not, in effect a forced sale to benefit JCN or the Companies. In 2006 the plaintiff was advised that the then owner of the House had been offered £5.5 million for the same. The plaintiff claims the loss on the sale of the property between £4 million as provided for by the Compensation Agreement and the value of £5.5 million which the plaintiff maintains the House could have been sold for in 2006, being a further £1.5 million (the Additional Compensation) which has not been paid."
24. The allegations of breach are contained at paragraph 35 which I set out as follows:-
"Breach
35. In breach of his statutory duties as pleaded at paragraphs 19. to 24. above, the defendant:
(1) failed timeously properly or at all to assess the then current and future needs of Mr Neal or his family and/or to consider what financial security would be appropriate for Mr Neal and/or his family in circumstances where neither Mrs Neal or Mr Neal were able to earn any money save through the Companies, was indebted by way of Mortgage in the sum of £2.25 million and had further unsecured borrowings of £440,000, in breach of his duty pursuant to Art43(15) of the Law or otherwise pursuant to the Law;
(2) failed to devise any or any suitable strategy designed to protect and enhance the assets of Mr Neal which strategy, without prejudice to the generality of the foregoing, should have included collecting in any loans or monies otherwise payable to him and if appropriate consideration of the sale of the House, La Corona and Kilmorie and the contents thereof, and sale of the Companies and/or assets thereof;
(3) failed to make any or any adequate enquiry of the directors of the Companies or any of them or any other persons so as to be able to ascertain whether Mr Neal was a creditor of the Companies or they were otherwise obliged to him (as set out in Paragraph 26. above), in breach of his duty pursuant to Article 43 (20) of the Law or otherwise pursuant to the Law;
(4) failed to make any adequate search of accounts, documents or other material belonging to or in the possession custody or control of the Companies or other relevant persons so as to be able to ascertain with accuracy the identity of all of Mr Neal's property and assets, in breach of his duty pursuant to Art43 (20) of the Law or otherwise pursuant to the Law;
(5) failed to make any adequate investigation of the property and assets belonging to Mr Neal so as to be able accurately to identify monies owed to him by EHL, AIEL, JCN or otherwise, whether within 90 or so days of the date of the Appointment or at any time during the term of his appointment as curator, in breach of his duty pursuant to Art43 (20) of the Law or otherwise pursuant to the Law;
(6) failed to provide an accurate inventory of all of the property and assets belonging to Mr Neal, in breach of his duty pursuant to Art43 (20) of the Law or otherwise pursuant to the Law;
(7) failed to produce true and full accounts of the management and administration of the property and affairs of Mr Neal for the period of the defendant's appointment as curator, in breach of his duty pursuant to Art43(20)(a) and (b) of the Law or otherwise pursuant to the Law;
(8) failed, in breach of his duty pursuant to the oath taken under the Law and Art.43(15) of the Law properly to manage and administer Mr Neal's property and affairs in such manner as to:
(i) conserve the same, and in particular expeditiously or at all to call in the Considerations, Loans, Mortgage and Compensation;
(ii) ensure that the Considerations, Loans, Mortgage and Compensation were paid to Mr Neal ahead of any consideration of the welfare of the Trust or Companies;
(iii) prevent the diminution of the chance of recovering sums payable to Mr Neal in clear breach of the defendant's sworn duty pursuant to the Law;
(iv) attend relevant and important meetings where the interests of Mr Neal were being discussed;
(v) take any, or any sufficient, expeditious steps to ensure and/or procure that:
(a) a suitably qualified and independent director with relevant experience was appointed to the board of JCN and the Companies, from the date of the Appointment and at least from 20 July 2004;
(b) the Site was sold to Dandara for £14 million and/or that the Considerations, Loans, Mortgage and Compensation were paid by making appropriate application(s) to the Royal Court as he was entitled to do whether pursuant to the Law, the Trusts (Jersey) Law, 1984 or otherwise;
(c) the House was sold at an appropriate time and not in a forced sale preferring the interests of the Trust and Companies to Mr Neal, in order to have achieved a reasonable sale price which the plaintiff avers should not have been below £5.5 million;
(d) Simon was not permitted to conduct the business of the Companies on his own;
(vi) obtain accurate records and information in a timely manner in order to monitor Mr Neal's income and produce accurate accounts; and
(9) failed, in breach of his duty pursuant to the oath taken under the Law and Art.43(15) of the Law to ensure that the Trust was not unreasonably dissipated and/or put at risk by the conduct of the directors of the Companies or the Trustees of the Trust;
(10) abdicated his responsibilities by allowing Simon complete and/or effective control over the Companies and, in particular, AIEL, JCN and the Spanish Projects, and failing to appoint a suitably qualified and independent director to the Companies, and in particular, AIEL, JCN and the Spanish Projects, with relevant experience to preserve and enhance the value of the same.
(11) It is further contended that having regard to the monies then owed to Mr Neal, as particularised at paragraph 26. above, and the Net Asset Value of the Trusts as provided by St Quentin in November 1998, Simon in 1999 and 2000 the sale of the House was unnecessary and in any event the forced premature sale of the property demonstrated a clear conflict between the defendant's role as curator and trustee which he failed properly to manage; and
(12) failed, by reason of the above, to take reasonable care in the management and administration of the property and affairs of Mr Neal."
25. The draft amended order of justice maintains the claim for breach of duty by alleging that the defendant failed to call in the considerations and the loans in the sum of £2,989,127. However, the amended order of justice argues that Chateau Vermont should not have been sold in 2005 but rather should have been sold in 2000. The detail of these allegations is contained at paragraphs 115 to 118.
26. A complaint is also made about the defendant filing a defective inventory at paragraph 113, a failure to keep and provide accounts at paragraph 119 and a failure to ensure that the Citibank facility (i.e. the mortgage on Chateau Vermont) was serviced and repaid by the JCN Group.
27. The loss claimed in respect of Chateau Vermont is that it should have been sold for a sum in excess of £8.5 million in or around 2000. This would have avoided the need for subsequent expenditure for its maintenance. The proceeds of sale could then have been put into an investment fund. The amount claimed is therefore a substantially larger claim than that set out in the order of justice. It is also alleged that La Corona should also have been sold in 2000.
28. The defendant contended:-
(i) All causes of action raised in the order of justice and the draft amended order of justice are prescribed;
(ii) Even if the causes of action raised in the order of justice are not prescribed, the draft amended order of justice raises new causes of action which are prescribed;
(iii) The reason why the causes of action were prescribed is that all matters complained of occurred more than three years prior to the issue of the order of justice;
(iv) Three years is the applicable limitation period because the plaintiff's claims are all claims for breach of statutory duty, which is a claim in tort;
(v) The relevant time period of three years started to run from the time any alleged loss was suffered;
(vi) The plaintiff cannot complain she was under an empêchement de fait because the plaintiff had sufficient knowledge to remove the defendant as Curator by analogy with Walker & Ors v Egerton-Vernon & Ors [2014] JRC 025.
(vii) The decision of Gale v Rockhampton [2006] JRC 189A and [2007] JCA 117B was in respect of the application of the doctrine of voisinage and does not assist;
(viii) The failure to call in the EHL loans was prescribed before the defendant was appointed as Curator;
(ix) The complaints that the defendant acted in breach of duty by failing to sell Chateau Vermont and its contents 2000 is hopeless and bound to fail;
(x) The complaints that the defendant acted in breach of duty by failing to sell La Corona and its contents in 2000 is hopeless and bound to fail;
(xi) The draft amended order of justice alleges other breaches of duty against the defendant, but it is not alleged that such breaches caused loss. Such allegations are unsustainable in law;
(xii) The allegations in the draft amended order of justice that Advocate Kelleher failed to act in relation to the Trust and/or companies in the JCN Group are unsustainable in the law and the defendant cannot be held liable for losses which, if caused at all, were caused by the acts or omissions of the trustees of the Trust or directors of companies in the JCN Group.
29. In response Advocate Young argued as follows:-
(i) The allegations are not prescribed;
(ii) The applicable limitation period is ten years because the claim is a claim in quasi-contract;
(iii) Ten years is alternatively the default period, where no period is defined;
(iv) Time does not start to run until Advocate Kelleher resigned because Mr Neal was under an empêchement;
(v) To hold that the principles in Walker v Egerton-Vernon apply to Mrs Neal would in effect to make her a shadow curator;
(vi) The amended order of justice does not contain any new causes of action. Rather it provides further and better particulars of the plaintiff's claim;
(vii) It is a factual dispute as to whether the EHL and AIEL loans were repayable or not at the time the defendant was appointed as Curator and when those loans to ceased to be repayable;
(viii) The defendant's actions also amount to a breach of fiduciary duty which entitles the plaintiff to equitable compensation. It is not necessary to plead loss for breaches of fiduciary duty.
30. Despite the brevity of this summary of the submissions, I wish to thank both advocates for the clear and helpful way in which they set out their submissions both orally and in writing. I expand upon their submissions in more detail when setting out the reasons for my decision.
31. There was no dispute between the parties as to the approach I should take in relation to a strike out application. I most recently considered these principles in Haden-Taylor v Canopius Underwriting Limited [2014] JRC 221 reported at paragraphs 105 to 110.
32. In addition, I accept that where a limitation defence is raised which it is entirely clear on the pleadings or the material before the court will succeed, the action will be struck out on the grounds that it is frivolous and vexatious and an abuse of process (see Re Woolley [1991] JLR Note 11, Minories Finance Limited v Arya Holdings [1994] JLR 149 at page 165 and Classic Herd v Jersey Milk Marketing Board [2014] JRC 127 at paragraph 5. This is the test I am going to apply to the claims in the order of justice.
33. Insofar as a party seeks to introduce a new cause of action which is arguably time barred, the party seeking to introduce such a cause of action has to establish that a defendant has no reasonable prospect of success on the limitation argument. If the party seeking to introduce the amendment cannot establish that a defendant has no reasonable prospect of success then leave to amend should be refused (see Bagus Investments Limited v Kastening [2010] JLR 355).
34. In deciding whether to strike out an action on the basis that it is either scandalous, frivolous or vexatious or an abuse of process, I accept I am entitled to look at all of the evidence. However, as Hamon, Commissioner noted in Lazard Bros v BoisBois, Perrier and Labesse [1987] JLR 639, the summary jurisdiction of the court to strike out a claim "was never intended to be exercised by a minute and protracted examination of the documents and facts of the case in order to see whether the plaintiff really has a cause of action".
35. I also accept that, if there is a point of law which requires serious discussion, the matter should be referred to the Royal Court for determination (see Cooper v Resch [1987-88] JLR 428).
36. In relation to applications to amend, I considered the relevant legal principles in MacFirbhisigh & Anor v C.I. Trustees and Executors Limited [2014] JRC 033 at paragraphs 28 to 29.
37. At paragraphs 28 to 29 I considered the principles as to whether a new cause of action arose out of the same facts or substantially the same facts as an existing cause of action by reference to the judgment of Page, Commissioner in Alhamrani v Alhamrani [2007] JLR 44 (see paragraphs 28 to 29 of MacFirbhisigh).
38. Advocate Langlois also referred me to the judgment of the Royal Court in Freeman v Ansbacher Trustees (Jersey) Limited [2009] JLR 001. Paragraph 67 of the judgment provides as follows:-
39. In Alhamrani the approach involved considering whether a defendant would be required to investigate facts and matters completely outside the ambit of or unrelated to those facts which he could reasonably be assumed to have investigated for the purposes of defending the un-amended claim. In Freeman, for the facts to be substantially the same as those relied upon, those facts were limited to minor differences not requiring major investigation or to facts collateral to the main substance of the new claim, proof of which would not necessarily be essential to its success. I consider that the approach in Freeman appears to be slightly more restrictive than Alhamrani because it requires me to consider whether the proposed amendment introduces new facts which have to be proved to establish the amended claim. In light of the fact that Alhamrani was cited to the Royal Court in Freeman, I consider I am required to follow the approach set out in Freeman to consider whether the proposed amendments add a new cause of action and whether or not the new cause of action arises out of the same facts or substantially the same facts as a cause of action already pleaded.
40. The starting point for an analysis whether the plaintiff's claims are time-barred is what duties a curator owes. The relevant provisions concerning curators are contained in Article 43 of the Mental Health (Jersey) Law 1969 and are to be found in paragraphs (1), (2), (5), (6), (7), (8), (12), (15), (17), (20), (22) and (23) of Article 43 and Schedule 2:-
41. In Marriot v AG [1987-88] JLR 285, the Court of Appeal, in relation to a conviction for fraudulent conversion by a curator, considered whether the curator was entrusted with an interdict's property. Le Quesne J. A. gave the judgment of the Court of Appeal and defined the duties of a curator at page 288 lines 1 to 12 as follows:-
42. The reference to Article 50 is now a reference Article 43 following amendments to the Mental Health (Jersey) Law 1969. What is clear from Marriot is that a curator is under a "legal duty" to control and manage a property and affairs of an interdict. That legal duty arises according to Marriot by reference to the terms of the oath and paragraphs 15 and 17 of what is now Article 43. While paragraphs 15 and 17 refer to powers a curator may exercise, the exercise of those powers is where it is "necessary or expedient". Necessity or expediency can only be by reference to the needs of the interdict and a failure to act where it was necessary or expedient to do so could therefore place a curator in breach of duty.
43. In relation to the obligations of a curator, it is right also to refer to paragraph 50(1) of the Mental Health (Jersey) Law 1969 which provides that an interdict cannot be held liable for breach of the law "unless the act was done in bad faith or without reasonable care". The plaintiff's case is that the defendant acted without reasonable care. There is no allegation of bad faith.
44. The rival contentions argued for were three years by the defendant and ten years by the plaintiff.
45. The defendant contended that the duties of the curator were statutory. The claims brought were therefore claims for breach of statutory duty in respect of which the relevant limitation period was three years. As the order of justice was served on 11th February, 2013, only a cause of action which existed on 12th February, 2010, prior to Advocate Kelleher's retirement on that day would not be prescribed.
46. A claim for breach of statutory duty is clearly a claim in tort (see Cole v Postal Administration & Anor [2003] JLR 460, Dobson v Public Services Committee [2003] JLR 446, Syvret v Chief Minister [2011] JLR 343 and Classic Herd Limited v JMMB [2014] JRC 127.
47. The plaintiff argued by reference to the Gale v Rockhampton decision, that a claim against a curator for breach of duty was a claim in quasi-contract and therefore the applicable limitation period was ten years and not three years.
48. At paragraph 168 of Gale the Court of Appeal cited paragraphs 113 and 114 of Pothier as follows:-
49. Paragraph 115 of Pothier, following on from the extract cited by the Court of Appeal, treats obligations between a curator and interdict as quasi-contractual in nature. Paragraph 115 of Pothier states as follows:-
50. However, Article 43(2) of the Mental Health (Jersey) Law 1969 provides that, from the date the Mental Health Law came into effect, "the law, whether customary or enacted, relating to curatelles shall cease to have effect, except insofar as expressly provided by this law".
51. The Mental Health Law does not contain any express limitation period whether in Article 43 or elsewhere within which period of time curators must be pursued for breach of duty.
52. In view of the clear language of Article 43(2), the effect of the Mental Health Law coming into force, made the obligations of a curator statutory although they were previously quasi-contractual. The previous customary rules were clearly abolished. As the obligations have become statutory in nature, I consider I am bound by the previous decisions of the Royal Court cited above which provide that a claim for breach of statutory duty is a claim in tort. Accordingly, the applicable limitation period is three years.
53. In relation to Advocate Young's reliance on Gale, when the Court of Appeal in Gale was considering the writings of Pothier in relation to whether or not a claim in voisinage was a claim in quasi-contract, the Court of Appeal was not asked to consider whether a claim against a curator was quasi-contractual in nature. Rather, the Court of Appeal, in evaluating the nature of a claim in voisinage, proceeded on the assumption that duties owed by a curator were also quasi contractual, without deciding the point and without considering the effect of Article 43(2) of the Mental Health Law. Gale in my view does not therefore assist the plaintiff because the duties owed by a curator now arise from a statute, unlike a claim in voisinage.
54. Subsequent to all argument and in the course of preparing this judgment, the Deputy Bailiff handed down his decision in Classic Herd Limited v Jersey Milk Marketing Board [2014] JRC 217 dated 11th November, 2014. In the course of argument, the appellant contended that the relationship between the appellant and the respondent pursuant to the Milk Marketing Scheme under the Agricultural Marketing (Jersey) Law 1945 was a quasi contract. At paragraph 21 of his judgment Bailhache, Deputy Bailiff stated:-
55. I have referred to the above because it is consistent with the conclusion I have reached that a claim for breach of duty by a curator is now a claim for breach of statutory duty and is no longer a claim in quasi contract. Accordingly, a claim in quasi contract is not necessary to prevent injustice or to provide a remedy where one already exists.
56. In light of this conclusion, it is not necessary for me to deal with the alternative and interesting arguments about the ratio of Gale in particular, the arguments advanced by Advocate Langlois that firstly, a claim in quasi-contract is a claim in restitution only, and alternatively that Gale was about the interrelationship between the law of negligence and the law of nuisance (see paragraph 151 of the court's decision) and so does not help the plaintiff. These are complex arguments as can be seen from the decision of the Court of Appeal in Reg's Skips v Yates [2008] JLR 191, subsequent to Gale, where the Court of Appeal at paragraph 32 declined to identify the precise jurisdictional basis upon which the right of action in Reg's Skips case rested and whether it was a claim in voisinage or a nuisance. The complexities of this area can also be seen from an article by Rebecca MacLeod 'Voisinage in Nuisance' Jersey and Guernsey Law Review 2009 274. Had it been necessary for these arguments to be resolved, in any event they would be beyond the scope of a strike out application as they involve serious and complex points of law which would have been matters for the Royal Court to determine.
57. The defendant alleges that time starts to run from the date upon which the plaintiff suffered a loss following on from any act said to amount to a breach of duty. The plaintiff in response argued that the breaches complained of were continuing breaches and therefore time did not start to run until the defendant ceased to be curator. In my judgment, when a breach of duty occurs and therefore when a loss may arise depends on the nature of the breach. If the breach is said to be that the defendant took a step in breach of duty, the breach and therefore a loss occurred on the date of the step complained about. If on the other hand the breach is a failure to act, a failure to act is an ongoing breach which continues until a curator is no longer able to address any failure to act when a loss is incurred.
58. In the present case it is accepted by the defendant that time does not run against an interdict where no curator is appointed. This is because an interdict is under an empêchment. The empêchment is an empêchment de droit (see Public Services Committee v Maynard [1996] JLR 343 at 351 lines 14-17 approving the judgment of Lieutenant Bailiff, La Cras in Maynard v Public Services Committee [1995] JLR 65 at page 79 line 44-to page 80, line 27 and page 85 lines 13-16. I accept that such an empêchement may not apply to claim where an interdict has acted through a curator or third parties have claims against the interdict; however as far as the curator is concerned, the interdict is still under an empêchement in relation to the curator as he or she has no power or ability to act against the curator. It does not therefore matter whether time starts to run from the date loss is suffered or whether a breach is a continuing breach, as far as an interdict is concerned. For so long as any interdict is subject to the regime of a curatelle they are under an empêchment de droit i.e. a legal impediment preventing time from running against them as against their own curator.
59. In light of Mr Neal being under an empêchement de droit since 1999, I do not consider that the doctrine of an empêchment de fait is relevant. To accede to the argument that the plaintiff had the possibility of replacing the defendant as curator earlier, in my judgment cuts across the clear principle that an interdict is under an empêchment de droit as against a curator for so long as the curatorship is in place. I agree with Advocate Young that to hold otherwise would make Mrs Neal a shadow curator. I also do not regard the position as analogous with Walker v Egerton Vernon. The position of a close relative where someone is under a curatorship is different from the position of beneficiaries under a trust. Beneficiaries have rights to information and can bring an action against trustees for a failure to produce information as well as for breach of duty. The plaintiff as the spouse of Mr Neal does not have the same rights until she was appointed as curator. To accept the defendant's argument would mean that anyone who is a relative of someone under an interdict would have to monitor constantly the affairs of a curator to avoid the risk of time running for limitation purposes should an alleged breach of duty giving rise to a loss occurred. A family member should not be placed in that position when having to work with a curator. Even if a relative becomes aware of matters that might lead to a curator being replaced, the legal regime applicable to interdicts is clear; it is only a successor curator or principal heir/personal representative who can act to protect the interests of an interdict so that the empêchment de droit no longer applies.
60. The view I have reached therefore is that the three year limitation period only starts to run at the earliest once a curator is replaced by another curator or the curatorship ceases by virtue of an interdict either recovering his/her faculties or the death of a interdict. In this case time does not therefore start to run until the plaintiff was appointed as curator.
61. In light of my conclusion that the applicable limitation period is three years and that time only started to run when the plaintiff was appointed as curator in place of the defendant, it is necessary to consider the test set out in Freeman and whether what is proposed in the draft amended order of justice are new causes of action or whether they are causes of action which are substantially the same as those relied upon with only minor differences not requiring major investigation or facts collateral to the main substance of the claim.
62. Advocate Langlois contends that an allegation that Chateau Vermont should have been sold in 2000 is new and does require major investigation. The claim, as put in the order of justice, is that Chateau Vermont should have been sold in 2006 rather than 2005, at which point in time the defendant would have received an additional £1.5 million for the benefit of the curatorship. I accept that, if the amendment is allowed, what the defendant is now required to investigate is an entirely different argument. The new assertion would require the defendant to investigate the value of Chateau Vermont in 2000 and what sale price might have achieved had it been sold at that time.
63. In my judgment, when faced with an amended pleading, amendments broadly take one of three forms. Firstly, a party may abandon part of its case. Secondly a party may provide further and better particulars of its case. While particulars can be provided separately, they may also be provided by way of amendment so that a party's pleaded case is contained in one composite document. Thirdly, amendments can add new causes of action. Amendment can cover one or all of these possibilities. What I have to decide in this case is whether what is proposed is, as Advocate Young contends, the provision of further and better particulars and the putting of his case in a clear way helpful to the court and the defendant or whether there is a new cause of action.
64. In my judgment, the answer to the defendant's complaint about the amendments lies in an analysis of the order of justice, the material parts of which I have set out earlier in this judgment. The starting point of the plaintiff's claim is paragraph 12 where it was set out that the obligation of the curator was to ensure that the assets of Mr Neal were identified and preserved and ensuring that there was sufficient capital for him and his family to live on and to pay for his continuing care. A complaint is then made about the lack of accurate information in relation to investments in Spain and JCN being run by Simon Neal. At paragraph 31 the allegation is made that it was unnecessary to sell Chateau Vermont in 2005. The clear implication from this paragraph is therefore that Chateau Vermont should have been sold at some later date. This was developed in the second and third sentences of paragraph 33 where it is pleaded that the house could have been sold for a further £1.5 million in 2006. Paragraph 35(11) also appears to allege that a sale of Chateau Vermont was unnecessary although this could be read as meaning that a sale in 2005 was unnecessary.
65. However, the second sentence of paragraph 33 states as follows:-
"Whilst it might have been appropriate to sell the house at some time as part of the management strategy for Mr Neal, it should have been undertaken so as to achieve best price and not, in effect, a forced sale to benefit JCN or the companies."
66. At paragraph 35(2), the plaintiff complains that the defendant failed to devise any suitable strategies designed to protect and enhance the assets of Mr Neal including a "consideration of the sale of Chateau Vermont and La Corona". Paragraph 35 does not define an appropriate time for consideration of the sale of Chateau Vermont. Complaint is also made at paragraph 35(8)(v) that the defendant failed to take any or any sufficient or expeditious steps to ensure and or procure that Chateau Vermont was sold at an appropriate time and not in a forced sale. Again this subparagraph did not state when a sale should have occurred.
67. I have referred to these parts of the original pleading because in it I consider the plaintiff has advanced two cases which are in parts inconsistent and in part are not fully particularised. The first is that, if Chateau Vermont had been sold in 2006 rather than 2005, an additional £1.5 million would have been recovered. The second is a more general allegation that the plaintiff failed to sell Chateau Vermont at an appropriate time. While the order of justice could be read as contending that the appropriate time was a sale in 2006, I consider that some of the allegations being raised by the plaintiff are broader. The context of an allegation of a failure to sell Chateau Vermont at an appropriate time is that the defendant is also said to have failed to have planned for the needs of Mr Neal (see paragraph 12 of the order of justice). I therefore consider that the effect of the draft amended order of justice is firstly to abandon an allegation that Chateau Vermont should have been sold in 2006 as set out in paragraphs 32, the latter part of paragraph 33 and possibly paragraph 35(11) of the order of justice as well as the damages sought in consequence. What the draft amended order of justice then does in my judgment is to provide further and better particulars of the broader allegation that Chateau Vermont should have been sold at an appropriate time having regards to the needs of Mr Neal. That time is now defined as being in 2000. While that is an allegation that I accept will require the defendant to investigate matters he did not need to investigate in relation to answering the order of justice, what I consider the defendant is facing is a particularised allegation of what is the appropriate time for selling Chateau Vermont, having regards to the needs of Mr Neal.
68. I observe that in Freeman, that Birt, Deputy Bailiff cited Paragon Finance Plc v D.B. Thakerar & Co [1999] 1 All ER 400 where Millet L.J. stated:-
69. Advocate Young also referred to paragraph 20-8-6 of the Rules of the Supreme Court Practice 1999 Edition ("the White" Book"). The commentary in that paragraph is on the former English equivalent to Rule 6/12 of the Royal Court Rules 2004, as amended. The extract notes that first amendments ought to be allowed to correct any defect or error in the proceedings, secondly the parties should not be punished for mistakes they made in the conduct of their cases and thirdly if an amendment can be made to allow a decision of the real matter in controversy to be determined, that should occur if that can be done without injustice. I have had regard to these principles in reaching my decision.
70. The view I have reached is that the issue of when Chateau Vermont should have been sold was always an issue in the original order of justice albeit it was confused with an allegation that Chateau Vermont should have been sold in 2006 rather than under a forced sale 2005. That latter allegation having been abandoned, the order of justice then leaves an unparticularised allegation that Chateau Vermont should have been sold at an appropriate time. What the amended order of justice in my judgment therefore does is to provide further and better particulars of when Chateau Vermont should have been sold and also resolves the previous ambiguity in the order of justice.
71. I accept that the defendant may have spent time investigating the now abandoned allegation that Chateau Vermont should have been sold in 2006 rather than the forced sale in 2005. In my judgment, the defendant is entitled to the wasted costs of such an exercise. Any amendment should also be on the usual term as to costs so that the defendant would also be paid the costs of preparing an amended answer.
72. I have reached the same conclusion in relation to a sale of La Corona. In relation to La Corona, the order of justice does not assert at paragraph 35(2) by what date La Corona should have been sold. Just as with Chateau Vermont the allegation was unparticularised. The draft amended order of justice now provides those particulars. I should add that it would be inconsistent for me to conclude that an allegation in respect of the sale of La Corona can proceed because that is raised albeit in a unparticularised fashion in the original order of justice but an allegation in respect of a sale of Chateau Vermont cannot proceed, when the same allegation is made in the same paragraph for both properties.
73. In relation to the claims in respect of the loans, it was accepted the way the matter was put in the draft amended order of justice was not a new cause of action and therefore I was not invited to strike out the allegations in respect of the EHL loans or the AEIL loans on this basis. I deal with the basis on which I was invited to strike out the allegations in respect of the EHL and AEIL loans later in this judgment.
74. In respect of the mortgage on Chateau Vermont, I consider the essence of the allegation in the order of justice namely that the mortgage should not have been borne by Mr Neal and the plaintiff in some way but should ultimately have been borne directly or indirectly by the JCN Group or the Trust is sufficiently clear to enable this allegation to be pursued in the draft amended order of justice. In reaching this view I accept that the plaintiff and Mr Neal granted a mortgage over Chateau Vermont and therefore the borrower was entitled to repayment of that mortgage out of the proceeds of sale. The real complaint, which I consider is sufficiently clear in the order of justice and the draft amended order of justice, is that ultimately either the lender should have been reimbursed directly by the JCN Group or the Trust or alternatively the plaintiff and Mr Neal should have been reimbursed. The allegation in essence at its heart is the same - that the plaintiff and Mr Neal should not have had to have paid the lender without being reimbursed in one way or another by the JCN Group or the Trust. I consider these allegations are sufficiently pleaded so the defendant knows the case it has to meet as set out at paragraph 121 of the draft amended order of justice. These amendments in my view however are not drafting a new cause of action but are rather providing clarification of the plaintiff's complaint.
75. Advocate Langlois also raised the alternative argument that the EHL loans were in any event time barred before the defendant was appointed as curator. The basis of this allegation is that in 1984 the EHL loans became repayable on demand. Advocate Langlois contended that the effect of the loans becoming repayable on demand is that, as a matter of English law, time started to run for the purposes of limitation, as soon as the loan was said to be repayable on demand i.e. in 1984. Accordingly, any claim for repayment of EHL loans was time barred ten years after the loans became repayable on demand and some five years before the defendant was appointed. The authorities relied upon are as follows:-
(i) By reference to Chitty on Contracts 31st Edition Volume 1 paragraph 28-36, at common law, where no time for the loan payment is specified in a contract of loan, or where the loan is expressed to be repayable on demand, the lender's cause of action in general accrued when the loan was made and time began to run from that moment.
(ii) The common law authorities relied upon are Norton v Ellam [1837] 2 M.&.W. 461, Re Brown's Estate [1893] 2 Ch 300, Bradford Old Bank v Sutcliffe [1918] 2 K.B. 833 and Boot v Boot [1996] 2 FLR 713. In Boot v Boot Waite L.JJ. at page 138 as follows:-
76. The decision I have reached in relation to this argument is that it is not an argument that is appropriate to determine on a strike out application. Firstly, no authorities were produced to me to show that the position under Jersey law is the same as under English law. Secondly, I have taken judicial notice of the fact that many loans made in the financial services industry are said to be repayable on demand. I do not consider it appropriate to consider whether Jersey custom and practice in respect of such loans is the same as the position as it appears to be under English law. This would also appear to require expert evidence possibly from an accountant as to how such loans are treated from an accounting perspective and also possibly any taxation consequences should the court rule that loans said to be repayable on demand were repayable immediately. Thirdly, the EHL loans were continually recorded in the accounts of EHL after 1994 as still being repayable. I therefore also consider it is a factual issue requiring evidence at a trial as to whether EHL regarded such loans as being repayable during the time the defendant was curator.
77. In relation to the AIEL loan, by reference to the AIEL accounts for the year ended 31st December, 2005, the AIEL accounts showed a nil balance. Accordingly, it was argued by the defendant that claims in respect of the AIEL loans should be struck out. The defendant's complaint in respect of the AIEL loans was that there was no justification for the plaintiff relying on the 1999 accounts whilst at the same time disavowing all of the accounts for the periods which followed including the 2005 accounts.
78. In my judgment, this again is a matter for evidence and for trial. Ultimately, at trial the plaintiff will need to establish why the 2005 accounts cannot be relied upon. To the extent that the defendant in due course pleads a case relying on the 2005 accounts, the plaintiff may well need by way of reply to plead why the 2005 accounts should not be relied upon. However I do not consider this issue is capable of being resolved on a strike out application. In my judgment the plaintiff's claim discloses a reasonable cause of action. The fact that the defendant may have a defence by reference to the 2005 accounts, does not mean that either the plaintiff does not have a reasonable cause of action or that the plaintiff's complaint is scandalous, frivolous, vexatious or an abuse of process.
79. The draft amended order of justice at paragraph 27.2 contends that in carrying out his functions as curator the defendant owed fiduciary duties to Mr Neal. The expression fiduciary duty refers to those duties which are peculiar to fiduciaries as defined in the well-known judgment of Bristol and West Building Society v Mothew [1998] Ch 1, approved in Jersey in the decision In the Matter of the E, L, O and R Trusts [2008] JLR 360.
80. The key obligation of a fiduciary as noted in the Bristol and West and E, L, O and R Trusts decisions is the obligation of loyalty. The complaint about the defendant is at paragraph 118.24 of the draft amended order of justice which contends that he:-
"failed to identify the conflicts of interest he had in appointing himself a trustee of the Trusts and his benefitting from the fees charged by his firm to the Trust and Companies subsequent to his appointment as a curator which would have caused any reasonable curator to have resigned in favour of a competent professional willing to undertake the role of curator of Mr Neal."
There is no allegation of a breach of fiduciary duty in the order of justice.
81. In the draft amended order of justice, no actual conflicts of interest are pleaded. At best what is identified is a potential conflict of interest. In E, L, O and R Trusts, an actual conflict of interest had arisen because the trustee was trustee of two groups of family trusts where the interests of those trusts were obviously adverse with each group of family trusts likely to be on opposite sides of a dispute. The plaintiff in this case has not identified why an actual conflict arose between the defendant's duties as curator and his position as trustee. The plaintiff was of course co-trustee with the defendant; she may also have been a beneficiary of the trusts. In either case she was and is able to identify any actual conflict of interest that had arisen. What is made here is therefore a bare assertion. There are no material averments identifying the conflict of interest pleaded. The allegation is also made for the first time after the three year limitation period for breach of statutory duty had expired.
82. The way the plaintiff put its case in respect of this claim is that it did not need to be separately pleaded because the facts relied upon seeking equitable compensation are exactly the same as those relied upon to claim damages. I accept the defendant's submission however that more is required. Any such allegation should set out why it is that Mr Neal has suffered loss caused by an actual conflict of interest. In this case neither any actual conflict is pleaded nor is any loss identified flowing from an actual conflict. Accordingly, I refuse to allow an allegation for breach of fiduciary duty to be made as the material facts in respect of any such claim were not pleaded in the order of justice and are not pleaded in the draft amended order of justice beyond a bare assertion. Even if they had been pleaded in the draft amended order of justice, they are time barred because any failure to act due to a conflict would be a breach of the duties owed by a curator which are statutory in nature and subject to a three limitation period as I have found above.
83. The defendant complains about the allegation at paragraph 113 of the draft amended order of justice that the defendant failed to file a complete and accurate inventory. The contention is that no loss is said to flow from such a complaint. In my judgment, an allegation that an inaccurate inventory was filed is part of the factual matrix underpinning the assertion that the defendant acted in breach of duty as set out at paragraph 118 of the draft amended order of justice. I do not therefore regard it as appropriate to strike out the allegations at paragraph 113. It is an arguable complaint that can be made forming part of the claim for breach of duty against the defendant.
84. In relation to the allegation that the defendant failed to take action in relation to the Trust or Companies in the JCN Group, the only particularised complaint made in the original order of justice which might lead to a recoverable loss relates to a failure to take steps to procure the sale of 44 The Esplanade to Dandara (see paragraph 37 of the order of justice). I consider this is an arguable claim. However, this assertion is the only assertion in the order of justice advanced by the plaintiff where it is said that the defendant failed to act in relation to the Trust or the Companies and caused a potential loss. The other allegations of breach of duty made in the order of justice are much more general in nature and criticise the defendant for failing to appoint an independent director or control Simon's actions in relation to the JCN Group. However the pleading does not define what steps or actions may have been prevented or what loss might have been avoided if such steps or actions had not occurred. In my judgment to add such facts now falls foul of the test in Freeman as it requires too many new matters to be raised in order to formulate a claim for the defendant to answer. This is different from defining a date by which a property should have been sold and for how much. To allow the plaintiff to add such new facts now would permit her to review the entire period of the trusteeship and potentially complain about a whole series of events between 1999 and 2010. For much of this time as with the claim for breach of fiduciary duty the plaintiff was co-trustee and therefore had the wherewithal to formulate a claim. It is now too late to do so and so any such claims are time barred as any facts that might be relied on occurred more than three years ago. The only relevance of a failure to act in respect of the Trust or Companies is the defendant's failure to recover the loans or payment for the mortgage on Chateau Vermont. The position of the Trust or the Companies may be part of the factual matrix relevant to these parts of the claim. This does not however justify new and wholly different claims.
85. Advocate Langlois complained in relation to the EHL loan that the draft amended order of justice did not plead that the EHL loan became irrecoverable prior to the defendant's retirement as curator or that the defendant should have foreseen the irrecoverably of the EHL loan, assuming it was irrecoverable.
86. At paragraph 26 of the skeleton the plaintiff suggested additional wording to address this point to the extent it was necessary to do so. I consider these amendments are sufficient to meet the defendant's objection and accordingly I approve the draft amended order of justice with these additions.
87. The defendant complained that the complaint in the original order of justice to sell Chateau Vermont in 2005 is unsustainable in law because it amounts to a collateral attack on a previous decision of the Royal Court. In view of my decision that the plaintiff has now abandoned this allegation, it is not strictly necessary for me to decide this point. However I do so briefly. The essence of the argument was that, as court approval of the sale of Chateau Vermont was obtained pursuant to Article 43(17) of the Mental Health (Jersey) Law 1969, by analogy with the basis upon which the court blesses a trustee's course of conduct, beneficiaries cannot then challenge the particular step taken by the trustee as a breach of trust.
88. In my judgment there is a difference between applications by trustees and curators. In relation to curators under Article 43(17), it is the curator who applies to court and two Jurats are then appointed to consider the application. The basis of the Jurats' consideration therefore depends on what information is provided to them by the curator. No other party is involved. By contrast on applications for directions, in many cases adult beneficiaries are either convened or notified of the application; a representative for minors and unborn beneficiaries may also be appointed. Adult and minor beneficiaries accordingly have an opportunity to address the court on how it might exercise its discretion or alternatively how it might approve a trustee's exercise of discretion. Accordingly, I accept it is arguable that approval by the court of the sale of a property by a curator does not prevent a subsequent curator or principal heir or personal representative from challenging the act complained of as being in breach of duty. Clearly any such allegation would need to plead why it is said that any court approval did not protect a curator.
89. It is also argued by the defendant that any allegations that Chateau Vermont and La Corona should have been sold in 2000 are hopeless and bound to fail. This is by reference to the affidavit evidence filed by the defendant who deposed that the plaintiff (who was joint owner of both properties) did not wish to sell the properties in 2000. It is therefore argued that the plaintiff has no prospect of persuading the court that the defendant should be blamed for failing to sell the properties in 2000.
90. The plaintiff contends in response also on affidavit that had the defendant discussed with the plaintiff the difficulty of adapting and maintaining Chateau Vermont, she would have had no hesitation in selling Chateau Vermont or La Corona. She therefore contends that any decision not to sell was a consequence of the defendant not discharging the duties he owed to Mr Neal. As is well known, merely because a case might be weak or there are difficult obstacles to overcome, does not mean that a case should be struck out. The burden on the strike out application is also a high one. In my judgment, while the plaintiff will have to give evidence about decisions she made in 2000, these are matters for trial for Jurats to conclude once they have heard the evidence of all the parties. While I accept I can look at affidavits to see if a claim is vexatious or an abuse of process, it is not for me to resolve competing accounts in such affidavits on a strike out application.
91. In summary my decision for the reasons set out in this judgment is as follows:-
(i) None of the causes of action raised in the original order of justice are prescribed.
(ii) The relevant period of limitation is three years from the date the defendant ceased to be a curator because up to that point in time Mr Neal was under an empêchement de droit.
(iii) The doctrine of empêchement de fait does not apply.
(iv) The allegation in the draft amended order of justice that the defendant acted in breach of fiduciary duty is a new allegation which is not supported by any material facts and is struck out.
(v) The allegation that the defendant failed to exercise his powers as curator to protect the interests of Mr Neal in relation to the Trusts is limited to the offer made by Dandara in 2007.
(vi) The complaint that the defendant was negligent in failing to call in certain loans is a matter for trial.
(vii) The complaint that the defendant acted in breach of duty by failing to sell Chateau Vermont or La Corona in 2000 is a matter for trial.
(viii) The claim that inventories produced by the defendant were defective is part of the factual matrix relevant to the plaintiff's complaint against the defendant and is a matter for trial.
(ix) The allegation in the order of justice challenging the sale of Chateau Vermont in 2005 is now abandoned. If it had been maintained, the allegation is not a collateral attack on a previous decision of the Royal Court.
(x) The allegation that the defendant failed to exercise his powers to protect the value of trust assets is too vague an allegation for the defendant to respond to without significant new material facts being pleaded in support of a cause of action. It is now too late to do so with the result that any such claim is time barred.
92. When the judgment is handed down I wish to be addressed by the parties on costs and a timetable for finalising the draft amended order of justice in light of this judgment.
Mental Health (Jersey) Law 1969.
Pothier 1821 Edition Articles 113, 114 and 115.
Chitty on Contracts 31st Edition Volume.
Walker & Ors v Egerton-Vernon & Ors [2014] JRC 025.
Gale v Rockhampton [2006] JRC 189A.
Gale v Rockhampton [2007] JCA 117B.
Haden-Taylor v Canopius Underwriting Limited [2014] JRC 221.
Re Woolley [1991] JLR Note 11.
Minories Finance Limited v Arya Holdings [1994] JLR 149.
Classic Herd v Jersey Milk Marketing Board [2014] JRC 217.
Matter of the E, L, O and O Trusts [2008] JLR 360.
Bagus Investments Limited v Kastening [2010] JLR 355.
Lazard Bros v BoisBois, Perry ad Labesse [1987] JLR 639.
Cooper v Resch [1987-88] JLR 428.
MacFirbhisigh & Anor v C.I. Trustees and Executors Limited [2014] JRC 033.
Alhamrani v Alhamrani [2007] JLR 44.
Freeman v Ansbacher Trustees (Jersey) Limited [2009] JLR 001.
Marriot v AG [1987-88] JLR 285.
Cole v Postal Administration & Anor [2003] JLR 460.
Dobson v Public Services Committee [2003] JLR 446.
Syvret v Chief Minister [2011] JLR 343.
Reg's Skips v Yates [2008] JLR 191.
Public Services Committee v Maynard [1996] JLR 343.
Maynard v Public Services Committee [1995] JLR 65.
Paragon Finance Plc v D.B. Thakerar & Co [1999] 1 All ER 400.
Norton v Ellam [1837] 2 M.&.W. 461.
Re Brown's Estate [1893] 2 Ch 300.
Bradford Old Bank v Sutcliffe [1918] 2 K.B. 833.
Boot v Boot [1996] 2 FLR 713.
Bristol and West Building Society v Mothew [1998] Ch 1.
