Lapidus v Le Blancq, Voisin and Seven Others (Practising as Voisin & Company)

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: Master Thompson
• Judgment Date: 16 September 2013
• Date: 16 September 2013

ROYAL COURT

Master Thompson

D.S. Steenson for the plaintiff;

R.A. Leeuwenburg for the first defendant;

M.T. Jowitt for the second defendant.

Cases cited:

(1) Bell v. Peter Browne & Co., [1990] 2 Q.B. 495; [1990] 3 W.L.R. 510; [1990] 3 All E.R. 124, considered.

(2) Nykredit Mortgage Bank plc v. Edward Erdman Group Ltd., [1997] 1 W.L.R. 1627; [1998] 1 All E.R. 305; [1998] C.L.C. 116; [1998] 1 Costs L.R. 108; [1998] P.N.L.R. 197, dicta of Lord Nicholls of Birkenhead followed.

(3) Pickersgill & Le Cornu v. Riley, 2002 JLR 459, referred to.

Legislation construed:

Royal Court Rules 2004 (Revised Edition, ch.07.770.72, 2013 ed.), r.6/13(1):

"The Court may at any stage of the proceedings order to be struck out or amended any claim or pleading, or anything in any claim or pleading, on the ground that -

(a) it discloses no reasonable cause of action or defence, as the case may be .?.?."

Text cited:

Supreme Court Practice 1999, vol. 1, paras. 18/19/1 18/19/39, at 347 355.

Contract — breach — cause of action — arises at time of breach, whether or not actual loss or damage — arguable claim not struck out as disclosing no reasonable cause of action because only nominal damages likely

Tort - negligence - loss or damage - transfer, in breach of advocate's duty of care, of plaintiff's beneficial interest in property to partner in return for unsecured covenant causes immediate loss (albeit difficult to quantify), not mere risk of future loss if not retransferred in accordance with agreement - cause of action against advocate reasonable and not struck out - quantification of damages against advocate may be postponed pending determination of liability and assessment of damages against partner

The plaintiff brought proceedings against the defendants concerning the transfer to the first defendant of his interest in a property.

In 2000, the plaintiff and the first defendant jointly purchased a property. Under a cohabitation agreement, the ownership of the property was divided between them (40% to the plaintiff and 60% to the first defendant). In 2001, the plaintiff wished to borrow funds to invest in a business. He alleged that the first defendant offered to lend him £20,000. With the legal assistance of a partner in the second defendant firm, the parties signed a loan agreement. The plaintiff claimed that he was told that the agreement would give the first defendant a second charge over his interest in the property, which interest he would forfeit if he failed to repay the £20,000, plus £5,000 interest, within two years. In fact, the plaintiff's interest in the property was immediately transferred to the first defendant and she was only required to transfer it back to him if he paid the £25,000 by the due date. A few years later, the plaintiff made payments to the first defendant of £10,000 and £15,000, but the first defendant disputed that the payments were repayments of the loan or were made pursuant to any agreed variation of the loan agreement. She accordingly refused to retransfer any interest in the property to the plaintiff.

The plaintiff brought proceedings against the defendants. As against the first defendant, he sought inter alia to set aside the loan agreement and a declaration that she was obliged to retransfer to him a 40% interest in the property. As against the second defendant, the plaintiff sought inter alia damages for breach of contract and negligence.

The second defendant applied under r.6/13(1)(a) of the Royal Court Rules 2004 to strike out the order of justice insofar as it contained allegations against the firm. The second defendant conceded that the plaintiff had an arguable claim for breach of contract but submitted that it should be struck out because the most he could expect to recover were nominal damages. With respect to the claim for negligence, the second defendant submitted that the plaintiff had not suffered any loss or damage: before entering into the loan agreement the plaintiff had a 40% interest in the property; after the agreement the plaintiff still had a 40% interest in the property by virtue of his contract with the first defendant. Loss could only arise when the action against the first defendant was concluded.

Held, refusing the application:

(1) A claim would only be struck out under r.6/13(1)(a) of the Royal Court Rules 2004 as disclosing no reasonable cause of action if it were plain and obvious that it could not succeed. As the second defendants had conceded that the plaintiff had an arguable claim against them for breach of contract, the claim would not be struck out on the basis that, at best, the plaintiff could expect to recover only nominal damages. The cause of action for breach of contract arose at the time of the alleged breach, whether or not there was actual loss or damage ( paras. 20 23; paras. 30 33).

(2) Nor would the plaintiff's claim against the second defendants for negligence be struck out. On an application to strike out an order of justice in its entirety, the court had jurisdiction to strike out only part of it, although the party seeking striking out should expressly identify the relevant part. In the present case, the plaintiff had suffered loss or damage sufficient to establish a reasonable cause of action in negligence. That loss or damage was suffered when he transferred his 40% beneficial interest in the property to the first defendant in return for an unsecured covenant. He was then an unsecured creditor with no asset in his own name and no rights in relation to the property. The transfer of his interest in the property to the first defendant did not give rise to a mere risk of forfeiture in the future should the plaintiff not repay the loan but, rather, the immediate loss of an asset. The fact that the precise amount of the loss and damage might not be completely quantifiable until questions of mitigation had been dealt with did not mean that loss and damage had not been suffered. Alternatively, if that were wrong, the loss and damage that arose when the first defendant refused to retransfer any interest in the property to the plaintiff, thus putting the plaintiff to the expense of issuing proceedings, was sufficient to found an arguable claim for negligence. It was also not necessary for the plaintiff's action against the first defendant to have been concluded for damage to arise ( paras. 34 48).

(3) Practical difficulties in relation to quantification of damages against the second defendant, assuming it were to be found liable to the plaintiff for breach of contract or for negligence, could be addressed by postponing an assessment of damages hearing against the second defendant until after the determination of liability against both defendants and assessment of damages against the first defendant ( paras. 49 50).

1 MASTER THOMPSON:

The submissions

This is an application by the second defendant to strike out the order of justice insofar as it contains allegations against the second defendant. The application is brought under r.6/13(1)(a) of the Royal Court Rules 2004, as amended, on the grounds that the order of justice discloses no reasonable cause of action against the second defendant.

2 There is also before me a summons issued by the plaintiff seeking leave to amend his order of justice against both defendants. The first defendant through her advocate has consented to the application to amend. The second defendant has not consented in light of its application under r.6/13(1)(a) but indicated at the hearing that if that application were unsuccessful it would not otherwise oppose the application to amend. I therefore elected to hear the second defendant's summons to strike out before considering the application to amend.

Background

3 I take the background to the application from the contents of the order of justice, always bearing in mind that the matters pleaded in the order of justice and the proposed amended order of justice are merely allegations at this stage. In relation to the proposed amendments to the order of justice, it was accepted by Mr. Jowitt for the second defendant that I could take those into account in considering his application. Both the first and second defendants have also filed answers to the order of justice.

4 The proceedings brought by the plaintiff relate to his relationship with the first defendant which regrettably has now broken down.

5 On September 15th, 2000, the plaintiff and the first defendant jointly purchased a property in Grouville known as No. 4 Le Grand Pré ("the property"). It appears that at all times they dealt with Mr. Kendall, a partner in the second defendant, in relation to their purchase. The property was bought by the plaintiff and the first defendant by each granting a general power of attorney in favour of the second defendant.

6 On around the same day as the plaintiff and the first defendant purchased the property they also signed a cohabitation agreement. Pursuant to the terms of that agreement, the ownership of the property was split 60% as to the first defendant and 40% as to the plaintiff. The cohabitation agreement also provided as to what should happen should the relationship between the plaintiff and the first defendant terminate.

7 At some point in early 2001, the plaintiff was looking to borrow funds to invest in a business. The plaintiff alleges that the first defendant offered to lend him £20,000 to enable him to make the proposed investment.

8 The order of justice further alleges that, on or about June 21st, 2001, the plaintiff was required at short notice to attend a meeting at the offices of the second defendant in relation to the proposed loan from the first defendant. At the meeting it is alleged that the first defendant confirmed she remained willing in principle to lend £20,000 but explained she...