Arya Holdings Ltd v Minories Finance Ltd

• Jurisdiction: Jersey
• Court: Court of Appeal
• Judge: Calcutt, Harman and Southwell, JJ.A.:
• Judgment Date: 11 July 1997
• Date: 11 July 1997

COURT OF APPEAL

Calcutt, Harman and Southwell, JJ.A.:

R.J. Michel for the appellant;

A.J. Dessain for the respondent.

Cases cited:

(1) D'Allain v. De Gruchy (1890), 214 Ex. 196; 1889-93 T.D. 50; previous proceedings, sub nom. De Gruchy v. D'Allain (1890), 214 Ex. 108; 1889-93 T.D. 49, applied.

(2) Debtor, In re a (Order in Aid No. 1 of 1979), ex p. Viscount,, [1981] Ch. 384; (1980), 124 Sol. Jo. 811; sub nom. Re a Debtor, ex p. Viscount, [1980] 3 All E.R. 665.

(3) Hughes v. Clewley, 1996 JLR 24; on appeal, 1997 JLR N-11, considered.

(4) Overseas Ins. Brokers Ltd., Re, 1966 J.J. 547, considered.

(5) Picot (T.A.) (C.I.) Ltd. v. Crills, 1995 JLR 33, considered.

(6) Royco Inv. Co. Ltd., In re, 1991 JLR N-6.

(7) Watson v. Priddy, 1977 J.J. 145.

Additional cases cited by counsel:

Blue Horizon Holidays Ltd., In re, 1997 JLR 124.

Digital Equipment Corp. v. Darkcrest Ltd., [1984] Ch. 512.

Finance & Econ. Cttee. v. Bastion Offshore Trust Co. Ltd., 1994 JLR 370.

Hoffmann-La Roche (F.) & Co. A.G. v. Trade & Indus. Secy., [1975] A.C. 295.

Public Servs. Cttee. v. Maynard, 1996 JLR 343.

Legislation construed:

Bankruptcy (Désastre) (Jersey) Law 1990, art. 1(1): The relevant terms of this paragraph are set out at page 185, lines 26-27.

art. 6: "(3) Where, as a result of an application made by a creditor a declaration is made and the person in respect of whose property it is made is, notwithstanding the declaration, at the date of the declaration not insolvent, that person shall have a right of action against the applicant to recover damages for or in respect of any loss sustained by him as a consequence of the declaration, unless the applicant, in making the application, acted reasonably and in good faith.

(4) Any action brought pursuant to paragraph (3) shall be commenced within twelve months from the date of declaration."

Law Reform (Miscellaneous Provisions) (Jersey) Law 1960, art. 2(1):

"The period within which actions founded on tort may be brought is hereby extended to three years from the date on which the cause of action accrued."

Texts cited:

Clerk & Lindsell on Torts, 17th ed., para. 1-01, at 1; para. 15-42, at 762-763 (1995).

Le Gros, Droit Coutumier de Jersey, at 145-150 (1943).

Matthews & Nicolle, Jersey Law of Property, paras. 7.52-7.72, at 78-82; paras. 7.80-7.84, at 85-85 (1991).

Winfield, Law of Tort, at 32 (1931).

Bankruptcy—désastre—wrongful déclaration—action for damages for wrongful déclaration is tort action, not mere request for court to remedy abuse of procedure—action prescribed three years from date of déclaration—co-exists with statutory right under Bankruptcy (Désastre) (Jersey) Law 1990, art. 6(3)

The appellant brought an action in the Royal Court for damages in respect of the respondents' wrongful application for a déclaration en désastre in respect of the appellants' property.

The appellant company owed the respondent a large sum of money and the respondent obtained a déclaration en désastre (prior to the enactment of the Bankruptcy (Désastre) (Jersey) Law 1990) in respect of its movable property. The désastre was subsequently lifted at the instance of the appellant's shareholders.

The appellant brought an action against the respondent more than three years after the déclaration ha been made and claimed, inter alia, that at that time it had had sufficient funds to meet its liabilities. The respondent sought to strike out the appellant's claim but the Royal Court refused to do so. On appeal, the Court of Appeal (Le Quesne, Frossard and Southwell, JJ.A.) struck out the action in part; in particular, certain aspects of the action were held to be tort claims which, by virtue of art. 2 of the Law Reform (Miscellaneous Provisions) (Jersey) Law 1960, were prescribed after the lapse of three years. However, the court did not strike out the appellant's claim, based on the case of D'Allain v. De Gruchy (1), for damages for wrongful déclaration (a "D'Allain" claim) on the ground that it was arguably not a tort claim but a claim sui generis and might not therefore be prescribed. These proceedings are reported at 1994 JLR 149.

At the continued hearing, the respondent made the present application for the remaining claim to be struck out on the ground that it was indeed a tort claim and as such prescribed. The Royal Court (Hamon, Deputy Bailiff) struck out the appellant's claim on that ground, holding in particular that a D'Allain claim could not be regarded as an application for the court to award damages in the exercise of its inherent jurisdiction to control abuses of its procedure (which would not be subject to the three-year prescription period). Those proceedings are reported at 1995 JLR 208.

On appeal, the appellant submitted, inter alia, that (a) a D'Allain claim was a right of action sui generis and could not properly be described as a claim based on tort; accordingly, the three-year prescription period in art. 2 of the 1960 Law did not apply; (b) alternatively, it was effectively an application for the court to exercise its inherent jurisdiction to punish abuses of its procedure, in this case the wrongful obtaining of a déclaration, by an award of damages (even though on an application for a déclaration no undertaking in damages was required), to which no prescription period applied.

The respondent submitted in reply that (a) the appellant's action was clearly either a claim in tort for abus de droit, or a tort claim analogous to abuse of process or malicious prosecution, meeting as it did all the requirements of an action in tort, namely (i) it alleged a breach of a duty fixed by law, in this case a duty of care towards persons made the subject of déclarations en désastre; (ii) that duty was owed to all such persons; and (iii) breach of that duty was punishable by an award of unliquidated damages; (b) the claim could not properly be described as one requesting the court to exercise its discretion to award damages, under its inherent jurisdiction; rather, it was a right of action which, if established, entitled the appellant to damages as of right; and (c) that right of action was now additional to the statutory right of action for wrongful déclaration under art. 6(3) of the Bankruptcy (Désastre) (Jersey) Law 1990, which had not replaced it: there now existed two forms of proceeding, the common law action with a prescription period of three years under the 1960 Law and the statutory action with a prescription period of 12 months, under art. 6(4) of the 1990 Law.

Held, dismissing the appeal:

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