Jersey Financial Services Commission v A.P. Black (Jersey) Ltd, Cater Allen Trust Company (Jersey) Ltd, Langton and Black

JurisdictionJersey
CourtRoyal Court
JudgeBailhache, Bailiff
Judgment Date11 April 2002
Date11 April 2002
ROYAL COURT
Bailhache, Bailiff

J.D. Kelleher for the representor;

Miss D. Gilbert for the first and fourth respondents;

A.R. Binnington for the second respondent;

W. Grace for the third respondent.

Cases cited:

(1) Arya Holdings Ltd. v. Minories Fin. Ltd., 1997 JLR 176, followed.

(2) Biss v. Lambeth, Southwark & Lewisham Health Auth., [1978] 1 W.L.R. 382; [1978] 2 All E.R. 125, considered.

(3) Curry v. Horman, Royal Ct. (1889), 213 Ex. 511, unreported, considered.

(4) Dale v. Dunell's Ltd., 1976 J.J. 291, not followed.

(5) Filliastre v. Harbours & Airport Cttee., 1970 J.J. 1511, not followed.

(6) Foster v. Att. Gen., 1992 JLR 6, dicta of Le Quesne, J.A. considered.

(7) Gallaher v. Dauny, 2001 JLR 302, dictum of Birt, D.B. considered.

(8) Guernsey States Ins. Auth. v. Ernest Farley & Son Ltd., 1953 J.J. 47, dicta of Le Quesne, Lieut. Bailiff considered.

(9) Hamon v. Mourant, Royal Ct. (1852), 173 Ex. 425, unreported, considered.

(10) Hands v. Sweeney, Royal Ct. (1956), 250 Ex. 173, 252, unreported, considered.

(11) Key (née Shaw) v. Regal, 1962 J.J. 189, considered.

(12) Le Roux v. Agnes, Royal Ct. (1891), 214 Ex. 517, unreported, considered.

(13) Louis v. E. Troy Ltd., 1970 J.J. 1371, not followed.

(14) Public Servs. Cttee. v. Maynard, 1996 JLR 343, considered.

(15) Watson v. Priddy, 1977 J.J. 145, referred to.

Legislation construed:

Collective Investment Funds (Jersey) Law 1988, art. 20(7), as amended by the Financial Services Commission (Jersey) Law 1998: The relevant terms of this paragraph are set out at para. 1.

Law Reform (Miscellaneous Provisions) (Jersey) Law 1960, art. 1: The relevant terms of this article are set out at para. 16.

art. 2(1): The relevant terms of this paragraph are set out at para. 16.

Loi (1843) sur la Prescription des Poursuites: The relevant terms of this Law are set out at para. 26.

Code Civil, art. 1382: The relevant terms of this article are set out at para. 25.

Texts cited:

de Gruchy, Ancienne Coutume de Normandie, ch. 51, at 131 (1881).

Nicholas, Introduction to Roman Law, at 215-216 (1962).

Nicolle, The Origin and Development of Jersey Law, paras. 15.23-15.24 (1999).

Poingdestre, Les Lois et Coutumes de Jersey, at 36 (1928).

Poingdestre, Remarques et animadversions sur la Coutume Réformée de Normandie ... pratiquable dans les iles de Jersey et Guernsey, art. 522, at 357-359 (Ms., c.1680).

Pothier, Introduction Générale aux Coutumes, ch. IV, para. 116, at 61 (1821 ed.).

Financial Services—investor protection—proceedings for compensation by financial services providers—action by Jersey Financial Services Commission under art. 20(7) of Collective Investment Funds (Jersey) Law 1998 requiring payment to compensate investors is tort action—action prescribed after three years

The Commission sought an order under art. 20(7) of the Collective Investment Funds (Jersey) Law 1988 requiring the respondents to make a payment for the compensation of investors.

The Commission alleged that the respondents had been involved in a collective investment fund which had been used to perpetrate a major fraud, and that their conduct in connection with that scheme had failed to comply with the requirements of the 1988 Law. The Commission commenced proceedings against the respondents on June 30th, 2000. As part of those proceedings, the Commission sought an order under art. 20(7) of the 1988 Law, that the respondents pay a sum into court for distribution to those who had suffered loss as a consequence of their investment in the scheme. The court considered as a preliminary point of law whether the action brought by the Commission was prescribed. It was agreed that the cause of action in the proceedings accrued on September 27th, 1993 and therefore that, if it were a tort action, it was prescribed by art. 2(1) of the Law Reform (Miscellaneous Provisions) (Jersey) Law 1960.

The Commission submitted that (a) the right of action conferred upon it by art. 20(7) was not a tort action, as no duty was owed to it, it was not entitled to damages, and the court had no discretion to enforce the right of action; (b) the art. 20(7) action was an action sui generis established by the 1988 Law and, as no prescription period had been provided by the statute, it could bring an action at any time; (c) moreover, there were no public policy considerations which justified the imposition of a prescription period; and (d) if that were not the case, the action was an action personnelle mobilière under the coûtume reformée, and the appropriate prescription period was therefore 30 years under customary law.

The respondents submitted that (a) the right of action conferred upon the Commission by art. 20(7) was a tort action as, in Jersey, an action was founded on tort if liability arose from a wrong committed by a person against whom relief was sought; (b) the remedy available to the victim of a tort in Jersey was not significant in classifying the action; (c) the applicable prescription period was therefore three years, pursuant to art. 2(1) of the Law Reform (Miscellaneous Provisions) (Jersey) Law 1960; and (d) if the 1960 Law did not apply, the applicable prescription period was a year and a day.

Held, dismissing the action:

(1) In Jersey, any civil action, other than in contract and property, in which liability arose from a wrong committed by a person against whom relief was sought, was an action founded on tort. The Commission's cause of action under art. 20(7) was therefore a tort action as it arose as a consequence of the respondents' failure to act in accordance with their statutory obligations under the 1988 Law. Moreover, although the Jersey law of tort had been influenced by developments in English tort law, it had developed independently and remained distinct from the law in England. It was therefore not an essential element of a Jersey tort action that the available remedy was that which English law described as "damages," if some other remedy were provided ( paras. 34-35).

(2) As the right of action created by art. 20(7) was founded on tort, it was subject to a prescription period of three years pursuant to art. 2(1) of the 1960 Law. The action brought by the Commission was therefore already prescribed at the time the Order of Justice was served ( para. 37).

(3) Although it was not necessary to decide the matter, there were, in any event, sufficient public policy considerations to require the imposition of a limitation period. An imprescriptible right of action vested in the Commission was inappropriate in the context of the modern trend towards fair, swift and cost-effective civil litigation. Moreover, the interests of the Commission and investors were protected by the doctrine of empêchement d'agir, i.e. prescription was suspended while it was practically impossible for the plaintiff, or potential plaintiff, to commence or continue legal proceedings ( para. 15; para. 36).

(4) Furthermore, the 30-year prescriptive period for an action personnelle mobilière under the coûtume reformée had never been applied in Jersey ( para. 10).

1 BAILHACHE, BAILIFF: In these proceedings, the Jersey Financial Services Commission ("the Commission") applies to the court for an order under art. 20(7) of the Collective Investment Funds (Jersey) Law 1988 ("the CIF Law"), as amended by the Financial Services Commission (Jersey) Law 1998. Article 20(7) provides:

"(7) If on the application of the Commission the court is satisfied—

(a) that profits have accrued to a person as a result of his failure to comply with any provision of this Law, or of any Regulation or Order made, or permit granted, or with any direction given, under this Law; or

(b) that one or more investors have suffered loss or been otherwise adversely affected as a result of that failure;

the court may make an order requiring the person concerned to pay into court for distribution as the court may direct such sum as appears to the court to be just having regard to the profits appearing to the court to have accrued and to the extent of the loss or other adverse affect."

2 There are four respondents to the application. In outline, the proceedings concern a number of schemes and arrangements which are collectively described in the representation as "the Delta Scheme." It is alleged that the Delta Scheme was a collective investment fund. It is further alleged that the first and second respondents were or held themselves out as being "functionaries" of the alleged collective investment fund and that the third and fourth respondents consented to, connived in and/or aided and abetted the alleged failures to comply with the CIF Law by the first and second respondents. The Commission has described the Delta Scheme as being the instrument of a major fraud perpetrated by an American citizen and others as a result of which investors have lost significant sums of money. It is alleged that all the respondents have been guilty of misconduct of one kind or another and are liable, pursuant to art. 20(7) of the CIF Law, to pay into court such sum as appears to be just. All these allegations made by the Commission are contested.

The preliminary issue

3 It is unnecessary, for the purposes of this judgment, to describe the background in any more detail. It is common ground that the cause of action in the present proceedings accrued at the latest on or before September 27th, 1993. The alleged contraventions of the CIF Law, and any alleged accrual of profit or alleged loss by investors as a result of the alleged contraventions, occurred at the latest by that date. These proceedings were not commenced until June 30th, 2000.

4 The preliminary issue raises an important point of law. What (if any) is the prescription period applying to proceedings under art. 20(7) of the CIF Law

Rival contentions

5 For practical purposes, the arguments advanced by the different respondents in...

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