Jersey Unreported Judgments

Companies - decision in relation to an application by the second and third defendants to join certain individuals as third parties to the present dispute.

[2017]JRC014A

Royal Court

(Samedi)

17 January 2017

Before     :		Advocate Matthew John Thompson, Master of the Royal Court
Between	CMC Holdings Limited		First Plaintiff
	CMC Motors Group Limited		Second Plaintiff
And	Martin Henry Forster		First Defendant
	RBC Trust Company (International) Limited		Second Defendant
	The Regent Trust Company Limited		Third Defendant

Advocate S. C. Thomas for the First and Second Plaintiffs.

Advocate J. M. Dann for the First Defendant.

Advocate J. P. Speck for the Second and Third Defendants.

CONTENTS OF THE JUDGMENT

		Paras
1.	Introduction	1-11
2.	Joinder of third parties - the law	12-16
3.	The third parties are joint tortfeasors	17-29
4.	A claim in conspiracy	30-43
5.	A claim based on unjust enrichment	44-99

judgment

the master:

Introduction

1.        This judgment represents my decision in relation to an application by the second and third defendants to join certain individuals including the first defendant as third parties and an application by the first defendant to join the second and third defendants as third parties to the present dispute. 

2.        The general background to this dispute is set out at paragraphs 2 to 6 of my previous decision in this matter reported at CMC-v-Forster, RBC and Regent [2016] JRC 149 in this matter where I refused to order a preliminary issue.  I adopt paragraphs 2 to 6 of my earlier judgment for ease of reference. 

3.        The individuals whom the second and third defendants seek to join as third parties are those individuals described at paragraphs 17 to 22 of the order of justice and referred to in summary in paragraph 22 as the "Core Defaulting Directors".  For ease of reference I have adopted this definition although in doing so I should not be taken to have concluded in any way that any of the five individuals have acted in breach of their duties as directors. 

4.        I have also specifically reminded myself that the claim against the second and third defendants for dishonest assistance is in respect of what is described in the order of justice as phase 1 of the scheme, whereas the claim against the first defendant is in respect of the entirety of the scheme. 

5.        Subsequent to my previous judgment in this matter, both the first defendant, represented by Appleby, and the second and third defendants, represented by Mourant Ozannes, have filed substantive answers to the order of justice. 

6.        A summary of the first plaintiff's defence is found at paragraphs 6 to 11 of his answer as follows:-

"6. From 1977 until 2011, the Plaintiffs made and operated arrangements whereby:

(a) Overseas suppliers of motor vehicles invoiced CMC Motors for amounts greater than the true price, the difference usually being 1% to 2%;

(b) CMC Motors paid the inflated invoice price and the overseas supplier paid the extra amounts to bank accounts in Jersey in the names of entities established at the request of the Plaintiffs; and

(c) At the direction or request of the Plaintiffs, Scheme funds and the investment accumulations of those funds were used to top up the salaries of CMC officers and employees by payments of hard currency made outside Kenya. These payments, which were typically semi-annual, were made in lieu of the Plaintiffs paying similar amounts by way of salary, salary increments, pension contributions performance bonuses and terminal payments inside Kenya in Kenyan shillings.

These arrangements, entities and payments will be referred to as the "Scheme" (without adopting the tendentious elements of the definition in paragraph 2).

7. From the beginning of his employment in 1978 until 2011, Mr Forster himself received periodic payments out of the Scheme. These payments were an element of Mr Forster's compensation to which he was legitimately entitled.

8. Mr Forster's knowledge of and involvement in the Scheme from time to time, which was more limited than the Plaintiffs allege, is set out in paragraph 32 below.

9. Although Mr Forster was aware of certain general features of the Scheme from 1979, he had no knowledge of or involvement in most of the payments the Plaintiffs allege were made before 1996. Jack Benzimra was the principal figure operating the Scheme during that period. He was the CMC group's Group Managing Director and then CEO and he was the chairman of CMC Holdings from 1978. Mr Forster had no reason to doubt Jack Benzimra's honesty or fidelity. Mr Forster makes no admissions in relation to the propriety of payments the Plaintiffs allege were made for Jack Benzimra's personal benefit and made to his companies. Mr Forster did not know of these alleged payments and he is not responsible for them.

10. Excepting alleged payments of the type identified in the preceding paragraph:

(a) The Scheme was always known about and authorised by the CMC group's senior executive officer and (from at least 1978) by the chairman of CMC Holdings as well as by other senior directors of the Plaintiffs, including at least those identified in paragraph 26 below. As such, the Scheme was known about and authorised by the Plaintiffs. Far from being kept secret from the Plaintiffs, the Scheme was set up and operated by them;

(b) The funds passing through the Scheme were used for a proper purpose connected with the furtherance of the Plaintiffs' business, being the remuneration of the Plaintiffs' officers and employees;

(c) The Scheme was in the best interests of the Plaintiffs because it enabled them to pay their directors and senior employees in hard currency outside Kenya. This was an important inducement to expatriates because they often had hard currency obligations overseas such as school fees, medical insurance premiums and mortgage payments. Local directors and senior employees also often wanted to receive a portion of their compensation in hard currency outside Kenya; and

(d) The Plaintiffs' directors involved in creating and operating the Scheme, and those who merely knew about the Scheme and/or received salary top-up payments, did not breach their fiduciary duties or any duties they may have incurred as trustees of Scheme assets.

11. In any case, Mr Forster believed all of the facts and matters set out in the preceding paragraph to be true. Mr Forster always did what he considered in good faith would be most likely to promote the success of the Plaintiffs for the benefit of their respective members as a whole."

7.        In relation to the second and third defendants, in summary the second and third defendants deny all allegations of dishonesty and otherwise put the plaintiffs to proof of all the allegations made save in respect of certain matters that are admitted which matters it is not necessary to set out. 

8.        Paragraph 72 of the answer states "the relevant partners, agents, employees and servants of RBC reasonably believed at all times that they were acting in the interest of the plaintiffs and that their actions were authorised by the plaintiffs". 

9.        The first defendant's third party claim is set out at paragraphs 148 to 151 as follows:-

"148. Mr Forster repeats his Answer and makes a third party claim against RBC and Regent.

149. If, which Mr Forster denies for the reasons set out in his Answer, he is held liable to the Plaintiffs, his liability was contributed to by the acts of RBC and Regent as alleged by the Plaintiffs in the Order of Justice.

150. In particular, in those circumstances to the extent that the court holds that RBC and Regent have dishonestly assisted the breaches of fiduciary duty and breaches of trust alleged by the Plaintiffs to have been committed by Mr Forster, they will be liable to the Plaintiffs alongside Mr Forster in respect of the same losses. For this purpose, Mr Forster will rely on the facts and matters alleged against RBC and Regent in the Order Of Justice.

151. Mr Forster accordingly invokes the inherent jurisdiction of the court and claims from RBC and Regent contribution to such an extent as may be held to be just.

In the premises, the Third Party Plaintiff, Martin Forster, prays for the following relief:

(l) An order convening RBC and Regent as third parties to these proceedings;

(2) An order that RBC and Regent pay Mr Forster such contribution as the court thinks just towards the sums, if any, that Mr Forster is ordered to pay to the Plaintiffs;

(3) Further or other relief: and

(4) Costs."

10.      The second and third defendants' third party claim is set out at paragraphs 86 to 93 of their answer as follows:-

"86.     This is the third party claim by RBC and Regent against:

a.        Martin Forster, the First Defendant in the present proceedings

b.        The Estate of Jack Mordejay Benzimra

c.        The Estate of Prahlai Kalyani Jani

d.        Charles Njonjo

e.        Jeremiah Kiereini

(together, the "Third Parties" or "Core Defaulting Directors")

87.      The Third Parties are the individuals named in paragraphs 17 to 21 of the Order of Justice and defined collectively in paragraph 22 thereof as "the Core Defaulting Directors".

88.      Paragraphs 1 to 85 above are repeated.

89.      Without prejudice to RBC and Regent's case as set out in their Answer denying that they are liable to the Plaintiffs or either of them, if, which is not admitted, the Plaintiffs or either of them is entitled to the relief sought or to any relief against RBC and/or Regent on the basis that RBC and/or Regent dishonestly assisted the Core Defaulting Directors in breaches of duty or breaches of trust, the Core Defaulting Directors are the persons primarily liable for the said breaches of duty (which are not admitted).

90.      In the premises, if and insofar as any liability is established by the Plaintiffs against RBC and/or Regent, the Core Defaulting Directors are likewise liable to the Plaintiffs in respect of the same losses.

91.      Further or alternatively, any payments received individually by each of the Core Defaulting Directors pursuant to the alleged Scheme are held by such director on constructive trust for the Plaintiffs.

92.      By reason of the above, each of the Core Defaulting Directors is liable to account for any sums actually received by him pursuant to the alleged Scheme, and to repay the same to the Plaintiffs, with compound or alternatively with simple interest calculated for the date of each payment.

93.      By reason of the above, RBC and Regent jointly and severally claim an indemnity from the Core Defaulting Directors and each of them, or alternatively a contribution to be assessed by the court. RBC and Regent rely on the inherent jurisdiction of the court.

IN THE PREMISES THE THIRD PARTY PLAINTIFFS, RBC AND REGENT, HAVE SUFFERED A WRONG

IN THE CIRCUMSTANCES, THE THIRD PARTY PLAINTIFFS, RBC AND REGENT, PRAY FOR THE FOLLOWING RELIEF AGAINST THE THIRD PARTIES:

(1)       An order permitting service out of the jurisdiction on the Third Parties, such service to be effected personally in accordance with Jersey law and that they be convened to these proceedings;

(2)       An order that the Third Parties jointly and severally indemnify RBC and/or Regent in respect of such sums, if any, as RBC and/or Regent are ordered to pay to the Plaintiffs;

(3)       Alternatively an order that the Third Parties pay RBC and/or Regent such contribution as the court thinks just towards the sums, if any, that RBC and/or Regent are ordered to pay to the Plaintiffs;

(4)       Further or other relief;

(5)       Costs."

11.      As part of its application, the second and third defendants issued a summons seeking to amend their answer to include the following additional paragraph:-

"In the alternative and without prejudice to the foregoing, if, which is denied, the Second and Third Defendants are liable as alleged in the Order of Justice, they would, on the same facts also be jointly liable with the Third Parties for tortiously conspiring to injure the Plaintiffs, and accordingly the Second and Third Defendants are entitled to claim a contribution or indemnity from the Third Parties under Article 3 of the Law Reform (Miscellaneous Provisions) (Jersey) Law 1960."

Joinder of third parties - the law

12.      There was no particular dispute between the parties of the power to join any third party which I addressed in the judgment of Davey & Chawke v Tredant [2015] JRC 182 at paragraphs 9 to 13 as follows:-

"9.      The power to join an individual as a third party by a defendant is found in Rule 6/10(1) of the Royal Court Rules 2004, as amended, ("the Rules").  Rule 6/10(1) states as follows:-

"(1)     If a defendant in an answer to an action which has been placed on the pending list -

(a)       claims against a person not already a party to the action any contribution or indemnity;

(b)       claims against such a person any relief or remedy relating to or connected with the original subject-matter of the action and substantially the same as some relief or remedy claimed by the plaintiff; or

(c)       requires that any question or issue relating to or connected with the original subject-matter of the action should be determined not only as between the plaintiff and the defendant, but also as between either or both of them and a person not already a party to the action,

the Court may, after hearing the parties, make an order that such person be convened as a third party."

10.      In Foley & Foley (née McLaughlan) v Hamon & Ors [1985-6] JLR N3b, Fauvel, Deputy Judicial Greffier stated "the purpose of Rule 6/10(1) was to prevent a multiplicity of actions and enable the court to resolve the dispute between all the parties in a single suit, thereby avoiding the possibility of different results and separate proceedings.  To allow the joinder would not cause delay and, although the plaintiffs alleged that they were losing business by the restrictions on the use of the premises, they would not be prejudiced or embarrassed in the claim against the defendants to any marked extent."

11.      In Cummins v Howlands (Furniture) Ltd & Anor [2014] JRC 242, I also considered the basis on which a defendant could join a third party albeit Foley v Hamon was not referred to me.  Nevertheless, I reached the same conclusion and at paragraph 11 stated as follows:-

"11.    I was also referred to paragraph 16/2/5 of the 1999 Supreme Court Practice ("the White Book") which provides as follows:-

"Discretionary power to grant leave - The court has under r.2 a general discretion in all cases whether or not to allow a third party notice to issue.  The practice is that if a prima facie case is made out which would bring the matter within any paragraph of rule 1(1) leave will be granted to issue the notice.  And the court will not, in granting leave, consider the merits of the claim but will leave these matters and objections by the plaintiff to be dealt with upon the application for directions under r.4.

The procedure will not be allowed where the result will be to embarrass or delay the plaintiff, nor where the question at issue cannot be completely disposed of in the action.  Unless the prejudice to the plaintiff is obviously great, when issue of a summons will be ordered these matters will be considered on the application for directions under r.4, not on the application for leave to issue.""

12.      I also stated at paragraph 13 as follows:-

"Ordinarily I agree with the third party that where a prima facie case is shown on a pleading then leave ought to be granted and that evidence is not required.  The sort of case I have in mind is one where a plaintiff has issued proceedings against the defendant, an answer is filed within the relevant time limit permitted by the Rules and at that time or shortly thereafter the defendant seeks to issue a third party notice.  At that stage the entire case of all the parties is set out in pleadings only and no discovery or exchange of witness statements has taken place.  The whole matter is at an early stage."

13       On the facts of Cummins v Howlands, I refused to allow the first third party in that claim to join the plaintiff as a second third party because without affidavit evidence I was not satisfied there was a prima facie case."

13.      The key issue I consider arising out of this application is whether or not the second and third defendants have made out a prima facie case to convene third parties.  If a prima facie case is made out then I should grant leave.  If one is not made out then leave should be refused. 

14.      It was also suggested that I possessed an inherent jurisdiction to convene third parties.  I address those arguments later in this judgment, to the extent necessary to do so. 

15.      In summary, however the second and third defendants advanced three grounds as to why they said there was a prima facie case to convene the Core Defaulting Directors as third parties.  These grounds were as follows:-

(i)        The Core Defaulting Directors are joint tortfeasors and therefore the second and third parties are entitled to seek a contribution and indemnity pursuant to Article 3(1) of the Law Reform (Miscellaneous Provisions)(Jersey) Law 1960 "(the 1960 Law");

(ii)       The plaintiffs' claim could equally have been formulated as a claim in tort for conspiracy to injure.  At paragraph 17 of the second and thirds defendants' skeleton argument this case was summarised as being "the allegation would be that the directors of the plaintiff companies conspired with one another, and for the trustees from time to time, to injure the companies"; and

(iii)      The second and third defendants were entitled to an indemnity or contribution by reference to the doctrine of unjust enrichment.  At paragraph 27 of the second and third defendants' skeleton, reliance on unjust enrichment was justified to safeguard "fairness amongst debtors who are subject to a common liability where one debtor must pay more than his or her share by permitting that debtor to bring a claim of contribution or indemnity in respect of the excess amount against the co-debtors who were not sued".

16.      I address each of these grounds in turn. 

The third parties are joint tortfeasors

17.      The starting point for this ground is Article 3(1) of the 1960 Law which provides as follows:-

"(1)     Where damage is suffered by any person as a result of a tort (whether a crime or not) -

(a)       judgment recovered against any tortfeasor liable in respect of that damage shall not be a bar to an action against any other person who would, if sued, have been liable as a joint tortfeasor in respect of the same damage;

(b)       if more than one action is brought in respect of that damage by or on behalf of the person by whom it was suffered, or for the benefit of the estate, or of the dependants of that person, against tortfeasors liable in respect of the damage (whether as joint tortfeasors or otherwise) the sums recoverable under the judgments given in those actions by way of damages shall not in the aggregate exceed the amount of the damages awarded by the judgment first given; and in any of those actions, other than that in which judgment is first given, the plaintiff shall not be entitled to costs unless the court is of opinion that there was reasonable ground for bringing the action;

(c)       any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage, whether the joint tortfeasor or otherwise, so however that no person shall be entitled to recover contribution under this Article from any person entitled to be indemnified by the person in respect of the liability in respect of which the contribution is sought."

18.      The question this ground gives rise to is what is the nature of a claim in dishonest assistance?

19.      It was common ground between the parties that a contribution could only be sought under Article 3(1)(c) of the 1960 Law "if the third party could be liable in tort to the plaintiff if sued in respect of the damage which is the subject of the claim in the order of justice" see Jersey Electricity Company Limited v Brocken & Fitzpatrick Limited [2004] JLR 289 at paragraph 8. 

20.      It does not matter that the defendant who seeks to join a third party may also have remedies other than in tort so long as the liability in tort has not been limited or excluded - see the discussion at paragraphs 9 to 11 of JEC v Brocken. 

21.      Advocate Speck contended that a claim in dishonest assistance is analogous to an economic tort and therefore falls within Article 3(1) of the 1960 Law.  In support of his submission he relied on the analysis in Nolan v Minerva Trust & Ors [2014] (2) JLR 117 at paragraphs 498 to 500 where the Royal Court considered the applicable limitation period for a claim in dishonest assistance under article 2(1) of the 1960 Law. 

22.      Advocate Thomas argued in response that Nolan was not considering whether or not a claim in dishonest assistance was a tort but only what was the applicable limitation period for a dishonest assistance claim.  The analysis found in Nolan simply held that the applicable limitation period was three years because a claim in dishonest assistance was analogous to a tort.  However, merely because the claim was analogous to a tort did not make the claim of dishonest assistance a claim that amounted to a tort.  He cited Metal & Rohstoff v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 at page 474 where the Court of Appeal at lines C to F stated as follows:-

"In our judgment, it is clear beyond argument that a claim which is founded on any of the three categories of constructive trust which we have mentioned cannot be said to be "founded on a tort" within the meaning of R.S.C., Ord. 11, r. 1(1)(f) . The law of tort has nothing whatever to do with any such claim. In all such cases the wrongful conduct of the defendant occurs against the background of a pre-existing trust and the claim is founded on that trust. As is stated in Salmond & Heuston on Torts, 19th ed., p. 14, under the heading "Tort and Equity:

No civil injury is to be classed as a tort if it is only a breach of trust or some other merely equitable obligation. The reason for this exclusion is historical only. The law of torts is in its origin a part of the common law, as distinguished from equity, and it was unknown to the Court of Chancery.

Our ultimate conclusion will be that each of the relevant paragraphs of M. & R.'s points of claim is founded on one or more of these three well recognised categories of constructive trust and accordingly does not fall within Ord. 11, r. 1(1)(f). We now turn to these paragraphs."

23.      In my judgment the reasoning of Advocate Thomas is to be preferred.  It is clear from Metal & Rohstoff that a claim of dishonest assistance is not a claim founded in tort. 

24.      Furthermore, Nolan v Minerva was simply considering the applicable limitation period under Article 2 of the 1960 Law and was not considering Article 3.  Nolan v Minerva does not support the proposition therefore that a dishonest assistance claim amounts to a tort. 

25.      The reference to the word analogous comes from the Royal Court's decision in Re Esteem Settlement [2002] JLR 53 at paragraph 257 which states as follows:-

"257  ...We think that the time has come to hold that the 10-year period referred to by Le Geyt is a general period which should be taken to apply to all personal actions and all actions concerning movables, save to the extent that they have already been held to be subject to a different period, e.g. tort, actions concerning estates etc., or that some other period is, by analogy, clearly more applicable..." (emphasis added).

26.      Paragraph 257 was cited with approval in Nolan at paragraph 499, where the Royal Court rejected a submission by the plaintiffs that there was no other prescriptive period which was clearly more applicable than ten years.  Instead, Commissioner Hunt accepted the defendants' submission that an action for dishonest assistance was analogous to an economic tort (see paragraph 500) and so applied a three year limitation period.  He did not however say that a claim in dishonest assistance was a claim in tort. 

27.      I also agree with Advocate Thomas that a claim of dishonest assistance does not fall within the definition of a tort as determined by the Court of Appeal in JFSC v A.P. Black & Ors [2002] JLR 443 at paragraph 20 as follows:-

"20     The essentials of a right of action in tort, and therefore of an action "founded on tort" for the purposes of art. 2(1) of the 1960 Law, were considered by me when delivering the judgment of the Court of Appeal in Arya Holdings Ltd. v. Minories Fin. Ltd. (1). Those essentials include a duty owed to the plaintiff by the defendant otherwise than by virtue of a contract or trust, whether pursuant to Jersey common law or statute, a breach of this duty by the defendant, and actual or threatened damage caused by and flowing from the breach (which in some torts may be assumed), giving rise, accordingly, to a right of action which the plaintiff can require the court to uphold."

28.      The liability of a dishonest assister derives from assisting a person who has acted in breach of fiduciary duty or trust and has acted dishonestly.  The accessory is liable as if he were a trustee.  This was described by Lord Nicholls in the case of Royal Brunei Airlines v Tan [1995] 2 AC 378 at pages 382 lines D to F as follows:-

"The second limb is concerned with what, for want of a better compendious description, can be called the liability of an accessory to a trustee's breach of trust. Liability as an accessory is not dependent upon receipt of trust property. It arises even though no trust property has reached the hands of the accessory. It is a form of secondary liability in the sense that it only arises where there has been a breach of trust. In the present case the plaintiff airline relies on the accessory limb. The particular point in issue arises from the expression "a dishonest and fraudulent design on the part of the trustees.""

29.      The liability does not arise from a duty owed otherwise as a result of a contract or trust but is consequent upon a breach of trust.  Accordingly I am not persuaded that a prima facie case exists that the second and third defendants are joint tortfeasors.  They are not therefore entitled to invoke Article 3(1) of the 1960 Law to convene the Core Defaulting Directors as third parties on this basis. 

A claim in conspiracy

30.      I now turn to deal with next argument advanced by the second and third defendants as justification for joining the Core Defaulting Directors as third parties.  This justification was that, on the same facts pleaded in the order of justice, the plaintiffs' claim could be characterised as a claim in conspiracy. 

31.      The basis of this submission was that, in order to convene a third party, it was not necessary that a defendant had in fact been sued in tort.  Rather the requirement was that the third party could be liable in tort.  In support of his argument the second and third defendants relied on Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 to suggest that the present case was another example of a dispute which "caused different labels to be stuck on different manifestations of the duty" see page 205 line G -H where Lord Browne-Wilkinson states as follows:-

"...Although the historical development of the rules of law and equity have, in the past, caused different labels to be stuck on different manifestations of the duty, in truth the duty of care imposed on baillees, carriers, trustees, directors, agents and others is the same duty: it arises from the circumstances in which the defendants were acting, not from their status or description. It is the fact that they have all assumed responsibility for the property or affairs of others which renders them liable for the careless performance of what they have undertaken to do, not the description of the trade or position which they hold."

32.      Advocate Thomas in response argued that essential elements of a cause of action of conspiracy to injure were not found in the order of justice which elements were quite distinct from those required for a claim of dishonest assistance.  In particular, the necessary elements included:-

(i)        a combination or agreement between two or more individuals;

(ii)       an intention which was the sole or predominate purpose of the combination to injure the plaintiffs; and

(iii)      acts carried out that caused loss or damage to the plaintiffs pursuant to the combination or agreement and with the requisite intention. 

33.      He cited paragraph 59-02 of Bullen, Leake & Jacob's Precedents of Pleadings (18th edition) which in turn referred to Kuwait Oil Tanker Co. & Sak v Al Bader & Ors [2000] WL 571379. Paragraph 108 of Bader in relation to what is required to found an action in conspiracy states as follows:-

"108 We shall treat them as different torts, although, as it seems to us, they are better regarded as species of the same tort. It matters not. For present purposes we would define them as follows:

-� A conspiracy to injure by lawful means is actionable where the claimant proves that he has suffered loss or damage as a result of action taken pursuant to a combination or agreement between the defendant and another person or persons to injure him, where the predominant purpose of the defendant is to injure the claimant.

-� A conspiracy to injure by unlawful means is actionable where the claimant proves that he has suffered loss or damage as a result of unlawful action taken pursuant to a combination or agreement between the defendant and another person or persons to injure him by unlawful means, whether or not it is the predominant purpose of the defendant to do so."

34.      Advocate Thomas was also critical of the proposed third party claim because nowhere did it plead the combination or agreement, who were the parties to it, what was their intention and who held the requisite intent.  The proposed amendment also came nowhere near what was required for a case of conspiracy to be made out. 

35.      In respect of this part of the second and third defendants' application, again I agree with Advocate Thomas.  What is required for dishonest assistance is for the plaintiffs to establish:-

(i)        A trust or a fiduciary relationship;

(ii)       A breach of that trust or fiduciary duty;

(iii)      A cause between the breach and the loss to the beneficiaries;

(iv)      Assistance by the defendant;

(v)       A dishonest state of mind on the part of the defendant (see Weavering Capital (UK) Ltd (In Liquidation) v ULF Magnus Michael Peterson [2012] EWHC 1480 (Ch) followed in MacFirbisigh & Ors v (CI) Trustees & Ors [2014] 1 JLR 244 at paragraph 63. 

36.      While the tort of conspiracy was recognised as forming part of the law of Jersey in Pell Frischman v Bow Valley & Ors [2008] JLR 311 at paragraph 45 and in Haden-Taylor v Canopius Underwriting Ltd & Ors [2015] JLR 224 at paragraph 231, a claim in conspiracy requires the elements to be pleaded that are referred to in Bullen, Leake & Jacob's Precedents of Pleadings and Kuwait v Al Bader set out above. 

37.      I therefore agree that the claim in conspiracy is different from a claim in dishonest assistance and that there are additional elements required to be pleaded to formulate a claim in conspiracy which are not necessary in order to plead dishonest assistance.  I do not therefore agree with Advocate Speck that the plaintiffs' claim in dishonest assistance can therefore simply be re-characterised as a claim in conspiracy because essential elements are missing.  Neither the order of justice nor the third party claim contain any of the required elements.  There is no reference to any conspiracy, any intent to injure, who held the requisite intent, or when any conspiracy was formulated. 

38.      Had such a claim been formulated without pleading precisely who on behalf of the second and third defendants had conspired with one or more of the Core Defaulting Directors, it does not take a great deal of imagination to envisage the howls of protest about an allegation of conspiracy made without the requisite particulars against a financial institution.  The second and third defendants would have wanted to know exactly when, through whom and with whom it was alleged that the second and third defendants had conspired and why it was said that the sole or predominant purpose of the conspiracy was to injure the plaintiffs. 

39.      These matters are absent entirely from the order of justice because they are not necessary for a dishonest assistance claim.  They are also absent from both answers and the proposed third party notices.  Furthermore, they are also absent from the proposed amendment to the second and third defendants' answer and third party notice. 

40.      On this basis, again I am not satisfied that a prima facie case exists in the  answer of the second and third defendants as presently drafted to convene the Core Defaulting Directors as third parties. 

41.      The question that then arises is whether I should allow the second and third defendants an opportunity to amend its third party notice to seek a contribution on the basis of a conspiracy.  This is because, as a matter of general principle and by analogy with applications to strike out all or part of a pleading, if a pleading that would ordinarily be struck out could be saved by an amendment, the same approach should be taken to a proposed third party notice where the court is not satisfied that a prima facie case has been pleaded but one might be capable of being pleaded. 

42.      The difficulty with this approach in this case is that a proposed claim in conspiracy to form the basis of a third party notice contradicts the approach taken by the second and third defendants in their answer to the claim of dishonest assistance.  The answer, as noted above, puts the plaintiffs to proof of all the facts relied upon, save in respect of a few admissions and denies dishonesty.  The answer also expressly pleads a reasonable belief that at all times the second and third defendants were acting in the interests of the plaintiffs and that their actions were authorised by the plaintiffs. 

43.      At present I cannot see on the one hand how the second and third defendants, in light of their current answer, can seek a contribution on the basis of an alleged conspiracy.  How could the second and third defendants on the one hand advance a case and give evidence denying dishonesty and on the other plead a case with the level of detailed required and advance evidence that they and the Core Defaulting Directors conspired together with the dominant intention of injuring the plaintiffs.  Such a case would be much more than an alternative case; it would also be an entirely inconsistent and contradictory case.  Accordingly, at present I am not satisfied that it is appropriate to allow the second and third defendants to seek to further amend their answer to plead a case on the basis of conspiracy because I am not satisfied that such a case could ever properly be formulated in light of the answer already filed. 

A claim based on unjust enrichment

44.      The final ground relied upon by the second and third defendants to convene the Core Defaulting Directors concerned the doctrine of unjust enrichment on the basis that, if dishonest assistance was established, it would be unjust to allow the entirety of any loss found to have arisen, which necessarily had to be predicated on a breach of fiduciary duty by one or more of the Core Defaulting Directors, to be borne by the second and third defendants as dishonest assisters, if such were found to be the case. 

45.      The first issue this argument gave rise to was whether the Royal Court in Jersey Electricity Company Limited v Brocken & Fitzpatrick Limited had decided that a defendant may only seek a contribution if the third party could be liable in tort.  Initially the plaintiffs contended in their original skeleton argument that this was the case by reference to paragraph 8 of the JEC v Brocken & Fitzpatrick decision. 

46.      However both parties in written submissions filed subsequent to oral argument accepted that the observations in Brocken & Fitzpatrick at paragraph 8 may not necessarily be correct.  This was because it appeared that the purpose of the Law Reform (Married Women & Tortfeasors) Act 1935 upon which Article 3 of the 1960 Law was based was simply to allow contributions for claims between tortfeasors.  Both parties further agreed that there were other rights to contribution in equity   

47.      Where the parties parted company was the extent of the Royal Court's powers to order a contribution other than between tortfeasors. 

48.      The second and third defendants argued that claims of contribution in equity such as claims between trustees had always been recognised as a matter of English law and there was no reason why the position in Jersey should be any different. 

49.      Advocate Speck therefore contended that if the plaintiffs were successful against his clients the third parties would be enriched to the detriment of the second and third defendants because the second and third defendants would assume responsibility for all of the plaintiffs' losses in respect of Phase 1 of the scheme notwithstanding that third parties were responsible for those losses.  The third parties were responsible for those losses because liability could only be established against the second and third defendants consequent upon a finding of breach of duty by the third parties. 

50.      This enrichment would be unjust because the third parties orchestrated the scheme and were the primary beneficiaries of it with the result that it would be therefore be inequitable not to hold such individuals to account. 

51.      A case in unjust enrichment also met the requirements of both Rule 6/10(1)(b) and Rule 6/10(1)(c) of the Royal Court Rules 2004, as amended. 

52.      In addition the claim against the third parties on the basis of unjust enrichment could in the alternative proceed under the court's inherent jurisdiction. 

53.      In support of these submissions Advocate Speck referred me to a Canadian case Peterson Pontiac Buick GMC Ltd v Campbell and Isfeld [2013] ABCA 251.  The case concerned an apportionment of liability between two co-defendants, one of whom had acted in breach of contract and a duty of care owed in tort; the other against whom an indemnity was sought had only acted in breach of contract.  As in Jersey, the ability to seek a contribution by statute was limited to liability between tortfeasors.  Nevertheless, the Alberta Court of Appeal firstly held that where two parties had acted in breach of contract it was open to the courts to apportion liability between two parties each of whom had a separate contract with the plaintiff, where that plaintiff had suffered the same damage from concurrent breaches of two different contracts.  On the facts the court apportioned damages equally. 

54.      The relevant part of the decision is that at paragraph 54 the court reached the same conclusion on the basis of the law of unjust enrichment and stated. 

"54     I consider that this result can also be justified on the basis of equitable principles.  According to Charles Mitchell, Paul Mitchell & Stephen Watterson, eds, Goff & Jones The Law of Unjust Enrichment, 8th ed (Common Law Library, Sweet & Maxwell, 2011) at para 20-1, a claimant for contribution must show:

(1)       the claimant and the defendant were both liable to the third party;

(2)       who was forbidden to accumulate full recoveries from both of them, but

(3)       who could choose to recover in full from either of them, and that

(4)       some or all of the burden of paying him should ultimately be borne by the defendant."

55.      Advocate Speck therefore contended that if his clients were found liable as dishonest assisters the conditions referred to in Peterson were met.  It did not matter that the apportionment was between individuals who had acted in breach of trust and someone found to be a dishonest assister.  The approach taken in Canada was a way in which the law of unjust enrichment in Jersey could develop to allow for a fair apportionment to be ordered by the Royal Court. 

56.      Advocate Thomas contended that the court did not have inherent jurisdiction to fashion a remedy to seek a contribution or indemnity from a third party.  He cited Syvret v AG [2012] JLR 132RC 022 which at paragraph 11 adopted the observations of Lord Phillips M.R.in Taylor v Lawrence [2003] QB 518 on the Court's inherent jurisdiction found at paragraphs 51 to 53 as follows:-

"51. As to these powers, Lord Diplock, who perhaps speaks on a subject of this nature with the greatest authority of any judge, has dealt with the inherent power conferred on a court, whether appellate or not, to control its own procedure so as to prevent it being used to achieve injustice.

52. We would give an illustration of Lord Diplock's approach. It is taken from his speech in Bremer Vulcan v South India Shipping [1981] AC 909 at p.977C-H:

"The High Court's power to dismiss a pending action for want of prosecution is but an instance of a general power to control its own procedure so as to prevent its being used to achieve injustice. Such a power is inherent in its constitutional function as a court of justice. Every civilised system of government requires that the state should make available to all its citizens a means for the just and peaceful settlement of disputes between them as to their respective legal rights. The means provided are courts of justice to which every citizen has a constitutional right of access in the role of plaintiff to obtain the remedy to which he claims to be entitled in consequence of an alleged breach of his legal or equitable rights by some other citizen, the defendant. Whether or not to avail himself of this right of access to the court lies exclusively within the plaintiff's choice; if he chooses to do so, the defendant has no option in the matter; his subjection to the jurisdiction of the court is compulsory. So, it would stultify the constitutional role of the High Court as a court of justice if it were not armed with power to prevent its process being misused in such a way as to diminish its capability of arriving at a just decision of the dispute.-�The power to dismiss a pending action for want of prosecution in cases where to allow the action to continue would involve a substantial risk that justice could not be done is thus properly described as an "inherent power" the exercise of which is within the "inherent jurisdiction" of the High Court. It would I think be conducive to legal clarity if the use of these two expressions were confined to the doing by the court of acts which it needs must have power to do in order to maintain its character as a court of justice."

53. In our judgment the final words of Lord Diplock, "the doing by the courts of acts which it needs must have power to do in order to maintain its character as a court of justice" express the situation here under consideration exactly. ....."

57.      He therefore relied on these paragraphs to argue that the inherent jurisdiction of the court could not be invoked to generate substantive new rights and remedies for parties on the basis of what a party considered fair or just in the particular circumstances. 

58.      Advocate Thomas also cited Crociani v Crociani [2014] (1) JLR 503 at paragraphs 12 to 13 where the Court of Appeal declined to use the court's inherent jurisdiction to justify a power to order an interim costs payment on account of costs and stated as follows:-

"12     The Royal Court and the Court of Appeal have an inherent jurisdiction to regulate their own practice and procedure concurrent with rules of court, but not inconsistent with them (C. Le Masurier Ltd. v. Alker (1) (1992 JLR at 130-132); Finance & Econ. Cttee. v. Bastion Offshore Trust Co. Ltd. (6) (1994 JLR at 381-384); and Mayo Associates S.A. v. Cantrade Private Bank Switzerland C.I. Ltd. (9) (1998 JLR at 190-192)).

13       I would not, however, deploy the concept of inherent jurisdiction of the court to justify my conclusion that the power to order an interim costs payment exists in Jersey. In Connelly v. D.P.P. (4), Lord Devlin said classically ([1964] A.C. at 1347):

"[T]he judges of the High Court have in their inherent jurisdiction, both in civil and in criminal matters, power (subject of course to any statutory rules) to make and enforce rules of practice in order to ensure that the court's process is used fairly and conveniently by both sides."

Whereas I have found the statutory rules themselves provide the relevant power, resort to the inherent jurisdiction is not required, even if available. Moreover, it can never be the source of orders which could not otherwise be made. In Mayo, the court said (1998 JLR at 189)-"the conclusion that it would be fair or just to order that that thing be done does not determine whether there is inherent jurisdiction to order it." The utilization of an inherent jurisdiction is better reserved within its appropriate but not well-defined limits (ibid., at 187) for circumstances not embraced by legislation primary or secondary."

59.      More generally, the plaintiffs argued firstly that equitable restitutionary rules developed in the Courts in England did not form part of Jersey law because Jersey has nothing like the same history of equity as the Chancery Division of the High Court. 

60.      Secondly, even if the Royal Court did possess a power to apportion liability, the plaintiffs argued that any liability of the second and third defendants and any liability of the Core Defaulting Directors was not a basis for apportionment because any liability of the second and third defendants would not be on the same basis as any liability that might be found against the Core Defaulting Directors.  The present position was therefore different from any apportionment of liability between co-trustees or co-directors.  The claims against the second and third defendants and the Core Defaulting Directors were separate causes of action with different constituent elements.  These differences led the plaintiffs to suggest it was misleading to describe the Core Defaulting Directors as being primarily liable and the second and third defendants as being secondarily liable. 

61.      The plaintiffs further argued that care had to be taken in relation to the use of the law of unjust enrichment to avoid it degenerating into an exercise of "idiosyncratic discretion" - see paragraph 29 of the plaintiffs' supplemental submissions.

62.      The plaintiffs therefore argued that there was no enrichment because any liability of the second and third defendants was not secondary but rather it was a separate basis of liability; this meant that if the second and third defendants were found liable, the Core Defaulting Directors would not have been enriched and their position would not have been improved by any payment the second and third defendants might make in respect of their own crystallised liability.  Any compulsion on the second and third defendants to pay arose because of the necessary finding that the second and third defendants had acted dishonestly. 

63.      In relation to Rule 6/10(1)(b) of the Rules, Advocate Thomas submitted that there was no relief or remedy that the second or third defendants could claim against any of the Core Defaulting Directors.  The Core Defaulting Directors did not owe either of the second or third defendants any actionable duty.  Rather the second and third defendants had chosen to assist the Core Defaulting Directors.  The second and third defendants were not under a common obligation with the Core Defaulting Directors because they did not have the same relations with the plaintiffs and were subject to separate causes of action with different constituent elements.  Again he emphasised that, if the second and third defendants were found to have acted dishonestly, they had to bear the consequences. 

64.      He further contended that joining the Core Defaulting Directors was not necessary to determine the plaintiffs' claims against the second or third defendants.  The presence of the Core Defaulting Directors was not necessary for the court to be equipped with all the factual matters relevant to determination of the dispute.  If what was sought was documents or oral testimony where available, the court had sufficient powers to make orders to obtain such testimony. 

65.      Finally, he argued that even if any enrichment could be shown to be unjust, any action enrichment could only arise once the plaintiffs succeeded in their claims against the second and third defendants. 

66.      To address these rival contentions decisions it is firstly necessary to consider how far the law of unjust enrichment has become part of the law of Jersey.  In Re Esteem Settlement [2002] JLR 053 at paragraph 156, Sir Michael Birt, then Deputy Bailiff, stated:-

"Any principle of restitutionary recovery against a fault-free recipient can only be based on the principle of unjust enrichment."

67.      It is therefore clear that from at least this decision, if not before, that the law of unjust enrichment forms part of the law of Jersey. 

68.      However it is appropriate to bear in mind the warning at paragraph 157 of Esteem as follows:-

"157    This is a complex area. We are conscious that many ramifications may flow from a decision to allow such a claim. Accordingly, we deliberately express our decision in terms that are no wider than is strictly necessary for the present case, without wishing to be taken to suggest that a remedy would not also be available in other analogous situations. We hold that, under the law of Jersey, where property in respect of which a person (a beneficiary) has an equitable proprietary interest (because the property has been taken from the beneficiary by a person who is in a fiduciary position towards that beneficiary) is received by an innocent volunteer, the beneficiary has a personal claim in restitution against the recipient even where the recipient has not been guilty of any "fault" in receiving the property. In other words, the state of mind required for a "knowing receipt" claim under English law is not required in Jersey. It is a strict restitutionary liability. However, the claim is based upon unjust enrichment and, accordingly, the beneficiary can only succeed to the extent that the recipient remains unjustly enriched. A defence of change of position is therefore available. We emphasize that the liability is a personal one; the recipient is not a constructive trustee for the beneficiary."

69.      The Esteem judgment was therefore very much a first step in recognising a claim based on unjust enrichment but clearly leaving it for another day as to the extent of the doctrine. 

70.      The next significant case which considered the doctrine of unjust enrichment is Flynn v Reid [2012] (1) JLR 370 at paragraphs 93 to 108.  Firstly, having cited paragraphs 156 and 157 of Esteem, WJ Bailhache, Deputy Bailiff ( as he then was) at paragraph 99 stated as follows:-

"99     For the purposes of this case, two principles arise out of that extract. The first is that the doctrine of unjust enrichment is one which the Royal Court is prepared to recognize in principle. The second is that the Royal Court deliberately refrained from setting out the limits of a claim of unjust enrichment and specifically expressed its decision in terms that were no wider than was strictly necessary for the purposes of that case."

71.      Secondly, at  paragraph 107 and 108 he continued as follows:-

"107    So there we have a reference from Lord Hope to two Scottish cases where the law of unjust enrichment has been applied. In Mckenzie v. Nutter (14), Sheriff Principal Lockhart, having summarized the relevant law, described his approach as follows (2007 S.L.T. (Sh. Ct.) 17, at para. 33):

    "On the basis of the law which I have set out it is clear that the court may allow an equitable remedy in circumstances where one party has been unjustly enriched at the expense of another party. I propose to deal with this matter under four headings:

a. Has the appellant been enriched at the expense of the respondent and what is the nature of that enrichment?

b. If so, was that enrichment unjust?

c. If so, what remedy, in the particular circumstances of this case, is open to the respondent?

d. Is that remedy equitable?"

108     In our view, this approach to the questions of unjust enrichment is one which is not inconsistent with such slender authority as can be ascertained in Jersey law from the cases and is consistent with principle. It also provides a modern statement of an approach currently adopted by French courts to questions of enrichissement sans cause. The starting point is the legal interest. The court then looks at whether there has been enrichment which benefits the legal owner or owners or perhaps some of them at the expense of the claimant in a way that is unjustifiable. We also think that approaching the problem in this way will enable the court to consider enrichment problems holistically, rather than in separate compartments. We apply these principles to the facts of the instant case."

72.      The result in that case is entirely understandable because without use of the doctrine of unjust enrichment, the plaintiff would have been left without a remedy.  However both the factual situation in Esteem which is a claim brought by a victim of fraud and the position of Miss Flynn are very far removed from the present case.  There is therefore attraction to Advocate Thomas's argument that unjust enrichment should not be a remedy available to someone on the basis of a finding of dishonesty to invite the court to apportion responsibility with other wrongdoer. 

73.      In addition Jersey's statutory legislation as recognised at paragraph 8 of JEC v Brocken referred to above in that under the 1960 Law, is not as extensive as the position in the United Kingdom, where a contribution can be sought where one or other of the parties could be liable to a plaintiff for the breach of contract, breach of trust or other breach of duty under the Civil Liability (Contribution) Act 1978 ("the 1978 Act").  

74.      However the general recognition of the law of unjust enrichment forming part of the law of Jersey initially in Esteem and confirmed as a matter of general principle by Flynn v Reid which should be developed holistically is consistent with the general observations found in Goff & Jones at paragraphs 1-07 and 1-08 which state as follows:-

"1-07

It has been alleged that unjust enrichment is a vague principle of justice of no practical value However, the search for principle should not be confused with the definition of concepts. Unjust enrichment is not a high-level notion lacking in substantive content, "an indefinable idea in the same way that justice is an indefinable idea". Rather, as Deane J held in the High Court of Australia, unjust enrichment is a".

"... unifying legal concept, which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of the defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case.

1-08

Whatever may be the underlying moral justifications for the award of restitution in these cases the "unjust' element in "unjust enrichment" is simply a "generalisation of all the factors which the law recognises as calling for restitution. In other words, unjust enrichment is not an abstract moral principle to which the courts refer when deciding cases; it is an organising concept that groups decided cases on the basis that they share a set of common features, namely that in all of them the defendant has been enriched by the receipt of a benefit gained at the claimants expense in circumstances that the law deems to be unjust. The reasons why the courts have held a defendant's enrichment to be unjust vary from one set of cases to another, and for this reason the law of unjust enrichment more closely resembles the law of torts (recognising a variety of reasons why a defendant must compensate a claimant for harm) than it does the law of contract 'embodying a single principle that expectations engendered by binding promises must be fulfilled). In this respect, "English law does not have a unified theory of restitution"

75.      Paragraph 1-08 of was cited with approval in Barnes v EastEnders Cash & Carry Plc [2014] UKSC 26 at paragraph 102.  

76.      In my judgment the argument in this case is whether any of the Core Defaulting Directors would be said to be enriched on the assumption they were found to have acted in breach of duty, assuming the second and third defendants are have found to have acted dishonestly.  If this were to happen and the consequent judgment was then enforced against the second and third defendants, the question is whether this means that the Core Defaulting Directors have been enriched at the expense of the second and third defendants.  If they have the next question that arises is whether the Court considers that such enrichment has arisen in circumstances that the law deems to be unjust.  There are no obvious answers to these questions. 

77.      I also regard it as significant that both parties agreed that the lack of an equivalent to the 1978 Act did not mean that the English High Court prior to its enactment did not possession power in equity to apportion responsibility damages and therefore the Royal Court, whether as a court of equity or equite, possessed a similar power to the courts in England.  This is despite paragraph 8 of Brocken suggesting that a contribution could only be sought if an equivalent to the 1978 Act was passed by the States.  

78.      In view of the detailed history of the 1978 Act and earlier legislation on which the 1960 Law was based as set out in Goff & Jones at paragraphs 19-08 to 19-21, this concession in my view was an  appropriate one to make.  As Goff & Jones observe at paragraph 19-21, "These broad statements of principle indicate that the categories of those who can recover reimbursement at common law or in equity are not closed".

79.      I also note that the 1978 Act was used as a basis for contribution proceedings between a dishonest assister and fraudsters in Dubai Aluminium Co. Ltd v Salaam & Ors [2003] 2 AC 366.  In that decision, one of the issues the House of Lords had to consider was whether the Court was correct in deciding that the dishonest assister (a firm of solicitors vicariously liable for the acts of a (former) partner) should be entitled to an indemnity from the principal wrongdoers when the latter had not returned their full receipts from the fraud.  The trial judge had decided that it would not be just and equitable to require one party to contribute in a way which would leave another party in possession of the spoils of the fraud.  The fraudsters challenged this approach albeit under the 1978 Act.  This led Lord Nicholls to state the following at paragraphs 51 and 52:-

"51 Mr Salaam and Mr Al Tajir submitted that this approach is impermissible. Under section 2(1) of the Contribution Act the court is required to assess the amount of contribution recoverable from a person which is just and equitable "having regard to the extent of that person's responsibility for the damage". "Responsibility" includes both blameworthiness and causative potency. However elastically interpreted, "responsibility" does not embrace receipts.

52 I cannot accept this submission. It is based on a misconception of the essential nature of contribution proceedings. The object of contribution proceedings under the Contribution Act is to ensure that each party responsible for the damage makes an appropriate contribution to the cost of compensating the plaintiff, regardless of where that cost has fallen in the first instance. The burden of liability is being redistributed. But, of necessity, the extent to which it is just and equitable to redistribute this financial burden cannot be decided without seeing where the burden already lies. The court needs to have regard to the known or likely financial consequences of orders already made and to the likely financial consequences of any contribution order the court may make. For example, if one of three defendants equally responsible is insolvent, the court will have regard to this fact when directing contribution between the two solvent defendants. The court will do so, even though insolvency has nothing to do with responsibility. An instance of this everyday situation can be found in Fisher v C H T Ltd (No 2) [1966] 2 QB 475, 481, per Lord Denning MR."

80.      He also stated at paragraph 60 in respect of the 1978 Act that it "casts upon the court the task of adjudicating upon a just and equitable distribution of the burden of liability between all manner of wrongdoers. In the present case equality of burden among thieves can hardly be thought an exceptional approach".

81.      Although the Dubai Aluminium case has at its starting point the 1978 Act, I consider the observations to which I have just referred are statements of general principle which could apply to a claim based on unjust enrichment. 

82.      I also refer to certain statements of principle found in Niru Battery Manufacturing Co v Milestone Trading Ltd(No.2) [2004] EWCA Civ 487. These proceedings concerned an apportionment of liability between a bank (CAI) and SGS.  The claim against CAI succeeded on the basis that the circumstances in which it paid money away did not afford a defence to the claimants claim and accordingly it was liable in restitution.  The claim in SGS succeeded on the basis it had been in breach of a duty of care owed to the claimants.  Judgment was entered against both by the claimants on a joint and several basis.  SGS then paid the judgment and sought to recover the same in the contribution proceedings. 

83.      At paragraph 59 the Court of Appeal concluded that CAI would be unjustly enriched if SGS could not recover the amount it had paid to the claimant under the judgment and stated:-

"In short, if CAI retained the monies there can be no doubt that continued retention of them would leave it unjustly enriched. It paid them away on the instructions of Mr Mahdavi in bad faith. I have already expressed my view that CAI should not be in any better position by paying the monies away in bad faith than if it had retained them. It would be unjustly enriched in either case."

84.      At paragraph 61 Clarke L J stated as follows:-

"61. In my opinion there are no reasons of public policy to deny SGS a remedy. Mr Bloch relies upon the rule in Merryweather v Nixan (1799) 8 TR 186, as subsequently developed in the cases, namely that contribution was not permitted between tortfeasors. However, as the judge observed, that rule did not apply as between a tortfeasor on the one hand and a person liable in equity on the other. I can see no reason of public policy why the court should not afford SGS a remedy in equity in order to achieve what I regard as the just result. I would accept Miss Andrews' submission that, as the judge held in paragraph 54, if SGS is not subrogated to Niru's rights, CAI will remain unjustly enriched, the only difference between that position and the position before the judge's first judgment being that it will be unjustly enriched at SGS' expense instead of at the expense of Niru. In short, far from being contrary to public policy, it would, as I see it, be unconscionable for CAI to keep any of the money which it received by mistake and which it paid away otherwise than in good faith."

85.      Although Niru was a decision on subrogation and left over the question of whether a contribution could be sought under the 1978 Act, the above extracts are again a recognition that the law of unjust enrichment can be used to assist one party who has paid a claimant in full to recover moneys paid to a plaintiff from another party.  Significantly, as in the present case the liabilities of CAI and SGS were quite different in nature.  Yet the Court of Appeal was prepared to decide who was ultimately liable to pay the plaintiff (see paragraphs 69-72) to allow SGS to recover moneys paid on the basis of recoupment as well as under rights of subrogation.  

86.      These observations therefore also lead me to conclude that the second and third defendants have a prima facie case for a contribution in the sense that their claim is one that is arguable and may represent how the law of unjust enrichment might develop.  

87.      In addition, looking at the issue from the opposite perspective, the arguments advanced by the plaintiffs are not ones that justify striking out the third party claim at this stage.  The issues raised by the second and third defendants on the basis of unjust enrichment are complex and developing areas of law which justify a full argument at trial. 

88.       I also refer to paragraph 20 -82 of Goff & Jones which states as follows:

"20-82 Several principles emerge from the cases in which the courts have decided how much of the burden of paying a third party should ultimately be borne by the defendant. First, where the claimant and the defendant's relationship is governed by a contract that allocates responsibility for paying the third party, effect is usually given to this allocation. Secondly, where there is no contractual allocation, the courts have adopted a default rule of equal apportionment. But, thirdly, this rule may be departed from, and an unequal apportionment made, where the causative potency of the parties' actions was unequal. Fourthly, the same result follows where the moral blameworthiness of the parties' actions was unequal.  Fifthly, the same result follows where one party gains a larger benefit than the other from the transactions which gave rise to their respective liabilities."

89.      The observations I set out have led me to conclude that the second and third defendants do have a prima facie case in the sense that they have a case which is arguable to seek a contribution or an indemnity on the basis of unjust enrichment.  Again by analogy with cases on strike out, if the second and third defendant's claims for contribution and indemnity were made in stand-alone proceedings, and the Core Defaulting Directors sought to strike out those claims, this would not be a case where it would be appropriate to exercise such a jurisdiction.  In particular, the rival arguments represent a complex and developing area of law which justify a full argument at trial. 

90.      I also do not consider that the fact that the 1960 Law is limited to contributions between joint tortfeasors should prevent the Royal Court from fashioning a remedy on the basis of unjust enrichment to give effect to the principles I have referred to. 

91.      I also note the approach taken by the Court of Appeal of Alberta in the Peterson case.  Although unjust enrichment was only an alternative ground, in my judgment that does not matter; the decision is still supportive of an arguable case for a contribution or indemnity based on the principles of unjust enrichment. 

92.      It follows from the above that I am also satisfied that a claim for a contribution or indemnity falls within Rule 6/10(1)(b) & (c) of the Rules. 

93.      In relation to sub-rule (b), the relief or remedy based on unjust enrichment in my judgment is connected to the original subject matter of the action namely the losses suffered by the plaintiffs and who was responsible for them.  The requirements of sub-rule (c) are also fulfilled because the contribution or indemnity claim would have to be determined at trial.  Indeed, in both Dubai Aluminium and Niru the contribution claims were issued as part of the proceedings and were determined at trial.  It would clearly be both an inefficient use of court time and could also lead to inconsistent findings if the third party claims were kept separate from any issues between the plaintiffs and the defendants.  Whether the trial court would be allocating moral blameworthiness or causative potency between the defendants and third parties (if persuaded it is possible to do so as a matter of law), the jurats would be looking at the same written and oral evidence as they would be considering to determine whether the defendants were liable to the plaintiffs. 

94.      In relation to the arguments on inherent jurisdiction, if I am wrong that a claim on the basis of unjust enrichment falls within Rule 6/10(1)(b) or (c) for the reasons I have given, I consider that it is arguable that the court can use its inherent jurisdiction to apportion liability between the second and third defendants and the Core Defaulting Directors as third parties on the basis of unjust enrichment.  I think it is arguable that the use of such a remedy is not based simply on fairness or what is perceived in a particular situation to be just but rather the Royal Court would be using its powers in order to maintain its character as a court of justice (see Syvret v AG).  If the Court did not arguably possess such a power to apportion liability between individuals who were both in breach of some obligation other than a tortious obligation to a plaintiff, this could produce an unjust outcome in the absence of primary legislation needed to address the issue.  As a court of justice, I therefore consider it at least arguable that the Royal Court does have power to decide who is morally blameworthy or who should bear causative responsibility for a loss per Dubai Aluminium and to allocate liability to a plaintiff accordingly.  This potential power would fill a current gap in the legislative powers given to the Royal Court to apportion liability.  Any other result at this stage might be otherwise lead to responsibility for a loss ultimately falling on the entity with the deepest pockets or the best insurance cover not the ultimate wrongdoer. 

95.      It also follows that the first defendant is entitled to seek such a contribution from the second and third defendants for the same reasons that the second and third defendants may seek a contribution from the Core Defaulting Directors (which includes the first defendant).  This is so even though the allegations against the first defendant's involvement covers the entirety of the scheme and not just phase 1.  The first defendant is still entitled to argue that any allocation of liability in respect of phase 1 should not ultimately fall on him but should be borne by others including the second and third defendants.  

96.      I wish to emphasise in relation to the conclusions I have reached that they do not mean that the plaintiffs' arguments might not prevail and the plaintiffs might not be able to recover against each of the defendants in full if they establish their allegations.  This includes persuading the Royal Court as a matter of law or on the facts or both that no contribution or indemnity should be granted.  As I have noted above there is attraction to some of the arguments of the plaintiffs.  However these are matters for trial.  This decision is simply that the defendants are arguably entitled to seek a contribution on the basis of unjust enrichment for the reasons I have given and to ask the Court to allocate ultimate responsibility for any liability established between all of them and the Core Defaulting Directors.  Whether the Court will in fact be willing to do so and if so on what basis is for another day. 

97.      I appreciate that the effect of allowing the third parties to be convened will lead to a delay in dates for trial being fixed and will make the litigation more complex.  However, in my judgment these disadvantages are outweighed by the importance of having one court both decide liability between the plaintiffs and the defendants and any allocation of liability if it is established between the defendants and third parties.  The court also has available to it case management powers to avoid unnecessary delay, duplication or inefficiency where a number of parties are involved. 

98.       There is however one specific issue in relation to the convening third parties which I wish to comment on at this stage.  The second and third defendants have suggested it would take six months to convene the Core Defaulting Directors as third parties.  When this judgment is handed down I wish to be addressed further on the steps required to effect service in Kenya.  In particular, I wish to be addressed whether the only method of effecting sworn service in Kenya must be through diplomatic channels or whether service can be effected through a process agent given that Kenya is a Commonwealth Country (see Rule 11/5(3) of the former Rules of the Supreme Court 1999 Edition and the commentary at paragraph 11/6/2).  At present I am not persuaded that service cannot be effected much more quickly than the second and third defendants suggest. 

99.      Finally, in both cases, when the judgment is handed down, I would like to be addressed by both sets of defendants on the extent to which they should as part of convening each other or third parties file a statement of their case setting out why they contend in summary that an order for a contribution or indemnity should be made. 

Authorities

CMC-v-Forster, RBC and Regent [2016] JRC 149.

Davey & Chawke v Tredant [2015] JRC 182.

Law Reform (Miscellaneous Provisions)(Jersey) Law 1960.

Jersey Electricity Company Limited v Brocken & Fitzpatrick Limited [2004] JLR 289.

Nolan v Minerva Trust & Ors [2014] (2) JLR 117.

Metal & Rohstoff v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391.

Esteem Settlement [2002] JLR 53.

JFSC v A.P. Black & Ors [2002] JLR 443.

Royal Brunei Airlines v Tan [1995] 2 AC 378.

Henderson v Merrett Syndicates Ltd [1995] 2 AC 145.

Bullen, Leake & Jacob's Precedents of Pleadings (18th edition).

Kuwait Oil Tanker Co. & Sak v Al Bader & Ors [2000] WL 571379.

Weavering Capital (UK) Ltd (In Liquidation) v ULF Magnus Michael Peterson [2012] EWHC 1480 (Ch).

MacFirbisigh & Ors v (CI) Trustees & Ors [2014] (1) JLR 244.

Pell Frischman v Bow Valley & Ors [2008] JLR 311.

Haden-Taylor v Canopius Underwriting Ltd & Ors [2015] JLR 224.

Law Reform (Married Women & Tortfeasors) Act 1935.

Royal Court Rules 2004, as amended.

Peterson Pontiac Buick GMC Ltd v Campbell and Isfeld [2013] ABCA 251.

Syvret v AG [2012] JLR 132.

Taylor v Lawrence [2003] QB 518.

Crociani v Crociani [2014] (1) JLR 503.

Flynn v Reid [2012] (1) JLR 370.

Civil Liability (Contribution) Act 1978.

Banes v EastEnders Cash & Carry Plc [2014] UKSC 26.

Dubai Aluminium Co. Ltd v Salaam & Ors [2003] 2 AC 366.

Niru Battery Manufacturing Co v Milestone Trading Ltd (No.2) [2004] EWCA Civ 487.

Rules of the Supreme Court 1999 Edition.