Arya Holdings Ltd v Minories Finance Ltd

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: Hamon, Deputy Bailiff:,Le Quesne, Frossard and Southwell, JJ.A.:
• Judgment Date: 10 July 1995
• Date: 10 July 1995

ROYAL COURT

Hamon, Deputy Bailiff:

R. J. Michel for the plaintiff;

A.J. Dessain for the defendant.

Cases cited:

(1) Business Computers Intl. Ltd. v. Registrar of Companies, [1988] Ch. 229; [1987] 3 All E.R. 465; 1988 PCC 16; [1987] BCC 395; [1987] BCLC 621; (1987), 131 Sol. Jo. 1626, considered.

(2) D'Allain v. De Gruchy (1890), 214 Ex. 196; 1889-93 T.D. 50, unreported, considered.

(3) Digital Equipment Corp. v. Darkcrest Ltd., [1984] Ch. 512; [1984] 3 All E.R. 381; (1984), 128 Sol. Jo. 581, not followed.

(4) Guernsey States Ins. Auth. v. E. Farley & Son Ltd., 1953 J.J. 47, considered.

(5) Instantbuild Overseas Ltd., In re (1977), 264 Ex. 466; 1964-78 T.D. 19, unreported, considered.

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

(7) Royco Inv. Co. Ltd., In re, Royal Ct., June 1st, 1989, unreported, considered.

(8) Watson v. Priddy, 1977 J.J. 145, considered.

Additional cases cited by counsel:

Chapman v. Pickersgill (1762), 95 E.R. 734.

Fletcher Sutcliffe Wild Ltd. v. Burch, [1982] F.S.R. 64.

Grainger v. Hill (1838), 132 E.R. 769.

Griffiths v. Blake (1884), 27 Ch. D. 474.

Quartz Hill Consol. Gold Mining Co. v. Eyre (1883), 11 Q.B.D. 674.

Rylands v. Fletcher (1866), L.R. 1 Ex. 265.

Seldon v. Davidson, [1968] 1 W.L.R. 1083.

Smith v. Day (1882), 21 Ch. D. 421.

Speed Seal Prods. Ltd. v. Paddington, [1986] 1 All E.R. 91.

Legislation construed:

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."

art. 5: The relevant terms of this article are set out at page 214, lines 12-13.

Royal Court (General) (Jersey) Rules 1963 (R. & O. 4450), r.9: The relevant terms of this rule are set out at page 216, lines 17-20.

Texts cited:

American Law Insitute, Second Restatement of the Law of Torts, § 682, at 474 (1977).

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

Bankruptcy—désastre—damages for 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

The plaintiff brought an action for damages in respect of the defendant's wrongful application for a déclaration en désastre in respect of the plaintiff's property.

The plaintiff company owed the defendant a large sum of money and the defendant 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 plaintiff's shareholders.

The plaintiff brought an action against the defendant more than three years after the déclaration had been made and claimed, inter alia, that at that time it had had sufficient funds to meet its liabilities. The defendant brought an action to strike out the plaintiff'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 plaintiff's claim for damages for wrongful déclaration 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 before the Judicial Greffier the defendant made the present application for the remaining claim to be struck out and the matter was brought before the Royal Court. The defendant submitted that (a) the action for wrongful déclaration was clearly tortious in character, since it involved a claim that the defendant had breached its duty to act with care toward the plaintiff regarding its conduct of the désastre application and it was clearly more than a mere application that the court remedy a wrongful use of its procedure, since the plaintiff was claiming substantial damages; (b) in Jersey, the English concept of "tort" rather than the French was applicable; and (c) since the action had been commenced more than three years after the déclaration had been made, it was prescribed by virtue of art. 2 of the Law Reform (Miscellaneous Provisions) (Jersey) Law 1960.

The plaintiff submitted in reply that (a) its claim was not a tort action but was either (i) an action sui generis; (ii) an application for the court to punish the defendant's abuse of the désastre procedure, under its inherent jurisdiction; or (iii) an application for the court to enforce an implied undertaking by the defendant that it would be responsible for any damage caused by its improper use of the court's procedure in obtaining the déclaration; on the basis of any of these alternatives, the action was analogous to an action to overturn a wrongfully obtained injunction, which in England was remedied by the use of an undertaking in damages, i.e. the court's regulation of its own procedure, and not a separate action in tort; (b) the French definition of "tort," which applied in Jersey, did not cover the present action; and (c) for these reasons the three-year prescription period did not apply and the action should therefore be allowed to continue.

Held, granting the defendant's application:

The present action was not precluded from being founded in tort merely because it might not fit the French definition of the word "tort," because in Jersey the English approach to the law of tort had supplanted the French. It was clearly an action in tort for damages for the defendant's wrongful déclaration and could not properly be described as an application for the court to remedy the abuse of its own procedure. In particular, since no undertaking in damages, either explicit or implied (which would prevent the plaintiff from bringing a tort action), was required of a party seeking a déclaration, the court would be unable to penalize a wrongdoer at this stage unless a separate action were brought. Since the plaintiff's action had been commenced more than three years from the accrual of the cause of action, as a tort claim it was prescribed and would be struck out (page 215, line 43 - page 216, line 9; page 218, line 41 - page 220, line 15; page 221, line 36 - page 222, line 12).

HAMON, DEPUTY BAILIFF: The matter before me today is a relatively compact question of law. The question that I have to answer is whether a claim based on the principle of D'Allain v. De Gruchy (2) is a cause of action founded on tort and as such is prescribed, as held by the Court of Appeal in its detailed judgment of April 28th, 1994 in this action. The defendant does not accept (except for the purpose of this hearing) that a D'Allain v. De Gruchy claim exists in Jersey law.

The chronology is set out in great detail by the Court of Appeal in its judgment but a selection of dates may be helpful to consider. On January 16th, 1986, Minories obtained judgment in England against Arya for £11,495,405 and US$833,601.67. The next day, Minories made a successful ex parte application to the Royal Court to receive the déclaration en désastre of the movable property of Arya. The déclarationen désastre was necessary because it was within 10 days of a judgment in this court for £1,783,038 plus interest obtained by Hill Street Trustees Ltd. (the shareholders of Arya) on January 10th. On March 8th, 1988 the déclaration en désastre was recalled on the representation of Hill Street.

It was there stated that "all claims in the désastre had been satisfied and/or appropriate provision had been made for the claims so that Arya was no longer insolvent and the continuation of the désastre served no useful purpose."

On February 14th, 1991, Arya commenced its action by way of Order of Justice. Some 13 months later, on March 31st, 1992, this court dismissed Minories' application to strike out the amended Order of Justice.

The English action by Arya against Minories and others was struck out in England on January 25th, 1993 and that decision was upheld by the English Court of Appeal. Minories' appeal against the refusal of this court to strike out the amended Order of Justice came before the Jersey Court of Appeal and on April 28th, 1994, the Order of Justice was struck out except for an opportunity to claim for damages on the basis of D'Allain v. De Gruchy. The amendment was made and an application to strike out followed. It is following the application to strike out the amended Order of Justice on June 15th, 1995 that the Judicial Greffier ordered the question now before me to be determined and adjourned the striking out application which had been made by summons on November 16th, 1994.

It may be useful if I hone and polish the question posed by citing the order of the Judicial Greffier of June 15th. I am to determine—

"1. the issue as to whether or not a claim based on the principle of D'Allain v. De Gruchy is a cause of action founded on tort and, as such, is prescribed as held in the judgment of the Court of Appeal dated 28th April, 1994; and

2. the issue as to whether such claim is or is not prescribed in any event."

It will be helpful at this stage to look at what the court of Appeal said relevant to this matter in its judgment of April 28th, 1994. The court set out the causes of action pleaded in the amended Order of Justice (1994 JLR at 162):

"[A] cause of action giving rise to a claim for damages for an improper déclaration en désastre arising out of the principles expressed (though mainly by implication) in D'Allain v. De Gruchy. . .. My comments on the cause of action for malicious prosecution apply similarly to this cause of action."

The court said later (ibid., at 166-167):

"However...