Jersey Home Loans Ltd v Stephen Hill

CourtCourt of Appeal
JudgeGeorge Bompas,David Perry,Sir Wyn Williams
Judgment Date07 June 2019
Neutral Citation[2019] JCA 101
Date07 June 2019

[2019] JCA 101

Court of Appeal


George Bompas, Q.C., President;

David Perry, Q.C., and

Sir Wyn Williams

In the Matter of the Representation Brought by Oliver Passmore and Julia Melia

And in the Matter of the Dégrèvement of the Immoveable Property of Caroline Beverley Elizabeth Powell (Nee Chambers)

Jersey Home Loans Limited
Stephen Hill

Advocate J. Harvey-Hills for the Appellant.

Advocate M. L. A. Pallot for the Respondent.


Degrevement of the Immovable Property of Mrs Powell [2019] JRC 004.

Loi (1880) sur la propriété foncière.

Loi (1839) sur la remise de biens.

Bankruptcy (Désastre) (Jersey) Law 1990.

Parker Tweedale v Dunbar Bank [1991] Ch 26.

Law of Mortgage” 14th Edn (2014).

Loi (2000) (Amendment No.4) sur la propriété foncière.

Loi (1904) (Amendment No.2) sur la propriété foncière.

Re the Remise de Biens of Super Seconds Ltd [1996] JLR 117.

HSBC v Ansbacher (Channel Islands) Ltd [2007] JRC 167.

Asnbacher v HSBC Bank Plc [2007] JCA 228.

Bradshaw v McCluskey [1976] JJ 335.

Loi (1832) sur les décrets.

Re the dégrèvement of Walton, Syvret v De La Haye [2015] (1) JLR 129.

Loi (2018) (Amendment No.6) sur la propriété foncière.

Royal Court Rules 2004.

Stamp Duties and Fees (Jersey) Law 1998.

Stamp Duties and Fees (Jersey) Amendment Law 2018.

Investec Bank (Channel Islands) Ltd v Booth [2016] JCA 025

Investec v Booth [2016] (1) JLR 101.

Re Gibbins [2011] JRC 033.

Re Reva Holdings Ltd [2013] JRC 208.

Property — appeal against the judgment of the Royal Court dated 17th January, 2019.


This is the judgment of the Court


This appeal is from the judgment of the Royal Court ( Dégrèvement of the Immovable Property of Mrs Powell [2019] JRC 004) given on 17 th January, 2019, by the Deputy Bailiff (Mr T.J. Le Cocq, sitting alone).


The specific question for determination concerns the costs of a creditor with a judicial hypothec over certain land, or “ biens-fonds” in the terminology of the Loi (1880) sur la propriété foncière (“the 1880 Law”), in circumstances where there is to be a dégrèvement of that property. Is the junior creditor who has, at a dégrèvement hearing, elected to take the debtor's land upon discharging obligations of a senior creditor secured by a judicial hypothec, obliged to pay to a senior creditor not only principal and arrears of interest (if any, and subject to a limit discussed below), but also costs incurred by the senior creditor?


In the present case the Appellant, Jersey Home Loans Ltd (“JHL”), is a creditor with the benefit of a judicial hypothec in respect of the Debtor's St Brelade lands (“the Property”). A little time ago proceedings were started before the Royal Court by another such creditor (Acorn Finance Limited (“Acorn”)) seeking a dégrèvement of property of the Debtor. The Debtor then applied for an order that her property be placed into the hands of the Court in accordance with the provisions of the Loi (1839) sur la remise de biens. On that application an order was made for a remise de biens which had the effect of staying the dégrèvement application.


As the Deputy Bailiff explained in his judgment, the proceedings in relation to the remise de biens were much more involved than such proceedings would normally be, with the result that JHL incurred significant costs in the course of those proceedings.


The remise de biens was unsuccessful and on 20 th April, 2018, the Debtor was deemed as a matter of law to have made a cession of all her property, moveable and immoveable, and the stay on the dégrèvement was automatically lifted. At the dégrèvement hearing the Respondent, Mr Stephen Hill, as assignee of an unsecured creditor of the Debtor, declared that he accepted a tenancy of the Property.


On this appeal no attention has been given to the precise costs which the Respondent might, in principle, be required to pay to JHL, save that JHL's costs are said to arise out of proceedings brought by the Debtor concerning the Property and affecting JHL. JHL, as it would seem, characterises the costs as being legal costs of vindicating and recovering their debt. An assumption which underlies this appeal, and is accepted by both parties, is that at least some of JHL's costs of the remise de biens proceedings were properly incurred by JHL and would ordinarily have been payable by the Debtor to JHL. There has not so far been any determination of the amount (or indeed existence) of any such costs.


The question on this appeal may be viewed as one concerned only with the principles applicable in a dégrèvement. But it may also be viewed more broadly as being directed at a creditor's security: can a judicial hypothec in respect of land secure for the hypothecary creditor anything more than principal and interest (and in particular can it secure an obligation to pay appropriate legal costs)? By way of example, in the waterfall of payments provided for by Article 32 of the Bankruptcy (Désastre) (Jersey) Law 1990 will the “ claim of a hypothecary creditor” referred to in Article 32(6), at any rate in the case of a creditor with a judicial hypothec, include costs properly incurred which will, in consequence, attract the preference for the creditor provided for by Article 32(4)? A similar question might arise in the event of a remise de biens. It might also arise, say, in the event of a debtor seeking to discharge a judicial hypothec: can the debtor clear his or her land of a judicial hypothec by tendering the principal and interest, while still disputing costs and asserting that any obligation to pay costs is purely personal?


The Royal Court's conclusion, in the Deputy Bailiff's judgment, was that ordinarily there was no obligation on the part of the tenant après dégrèvement to pay anything more than principal and arrears of interest.


Before us Advocate J. Harvey-Hills, representing JHL as the hypothecary creditor with a judicial hypothec in respect of the Property, argued that the Royal Court's conclusion does not represent the law of this Island. On the other side Advocate M.L.A. Pallot, representing Mr Hill as the tenant après dégrèvement of the Property, submitted that the Royal Court's conclusion was correct for all the reasons stated by the Deputy Bailiff.


The present appeal arises out of an application by the Representors, Oliver Passmore and Julie Melia, as the Attournés appointed as long ago as 22 nd April, 2016, to conduct the dégrèvement of the Debtor's immoveable property. JHL is not the only hypothecary creditor in respect of the Property. Ranking junior to JHL, with a hypothec of later date than JHL's, is Acorn. This company, like JHL, had incurred costs in the course of the Debtor's remise de biens proceedings. The Attournés' application was prompted by the dispute between JHL, and indeed Acorn, on the one side and the Respondent on the other concerning the position of JHL's and Acorn's costs in the dégrèvement, and was an application for directions. However, neither the Attournés nor Acorn have taken any part in this appeal, being content for the issues to be argued by JHL and the Respondent, and to be bound by the Court of Appeal's decision on those issues.

The facts

The facts giving rise to this appeal have been summarised above. Further detail can be found in the judgment of the Royal Court, in addition to what is set out below.


As appears from the Royal Court's judgment, the Property is the subject of three judicial hypothecs. There is JHL's created on 14 th March, 2008. This is described in greater detail below. Next in point of time is one, created on 25 th January, 2012, in favour of various individuals practising as Viberts. Finally there is Acorn's, created on 21 st December, 2012. Besides these, the Representors lodged a declaration of privilege dated 22 nd May, 2018.


The origin of JHL's hypothec lies in the Facility Letter dated 4 th December, 2007, sent by JHL to the Debtor at the Property offering a loan of £500,000 to refinance the Property. This the Debtor signed as agreed, but subject to an email exchange of a day or two later concerning certain aspects of the offer.


The material parts of the facility letter were as follows:

“Following our recent discussions we … are pleased to confirm that we are prepared to offer you … a mortgage to assist you with the refinancing of [the Property] in the sum of :—£500,000 … upon the following terms and conditions:-

1. All amounts outstanding under the advance are at all times available at JHL Ltd's discretion and repayable on demand.

2. Subject as herein before provided the advance is repayable over a maximum of 25 years by monthly interest only instalments …

3. Interest on all amounts outstanding will be charged at the buy to let variable tracker mortgage rate of 7.5% pa (ie 1.5% above the Bank of England base rate), which may from time to time fluctuate, …

4. If the amount payable by you to JHL Ltd or any part thereof remains unpaid after it becomes due … you shall be liable to pay to JLH Ltd … interest on the total debt from the date when payment becomes due until the receipt thereof, such interest being at the rate of two per cent (2%) per annum above JHL Ltd's Standard Variable Rate from time to time.

5. As security for repayment of the advance and interest JHL Ltd will require:-

a. A £500,000 First Registered Charge over [the Property] executed by way of a Bond subscribed by yourself.

b. Completion of Buildings Insurance cover in respect of the property, with the interest of JLH Ltd as Mortgagees to be duly noted. The original policy to be lodged with JHL Ltd for the duration of the extant term.

c. Any other such security as may be deemed appropriate by JHL Ltd from time to time.

d. Confirmation that the existing mortgage with HSBC has been repaid in full.


8. All legal costs, stamp duties and...

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