Mayo Associates SA v Cantrade Private Bank Switzerland (CI) Ltd

• Jurisdiction: Jersey
• Court: Court of Appeal
• Judge: Lord Carlisle of Bucklow, Nutting and Smith, JJ.A.:
• Judgment Date: 28 May 1998
• Neutral Citation: [1998] J.Unrep 69
• Date: 28 May 1998

COURT OF APPEAL

Lord Carlisle of Bucklow, Nutting and Smith, JJ.A.:

P.C. Sinel for the first and second plaintiffs;

A.R. Binnington for the defendants;

F.J. Benest for the Viscount.

Cases cited:

(1) Bekhor (A.J.) & Co. Ltd. v. Bilton, [1981] Q.B. 923; [1981] 2 All E.R. 565; [1981] 1 Lloyd's Rep. 491; [1981] Com LR 50; (1981), 125 Sol. Jo. 203.

(2) Bordeaux Vineries Ltd. v. States Admin. Bd. (1993), 16 Guernsey Law Journal 33, applied.

(3) Bremer Vulkan Schiffbau & Maschinenfabrik v. South India Shipping Corp. Ltd., [1981] A.C. 909; [1981] 1 All E.R. 289; [1981] 1 Lloyd's Rep. 253; [1981] Com LR 19; (1981), 125 Sol. Jo. 114, dictum of Lord Diplock applied.

(4) Bristol & W. Bldg. Socy. v. Mothew, [1996] 4 All E.R. 698.

(5) Cox v. Bankside Members Agency, English Court of Appeal, November 29th, 1994, unreported.

(6) Ewing v. Orr Ewing, (1883), 9 App. Cas. 34.

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

(8) Gouriet v. Union of Post Office Workers, [1978] A.C. 435; [1977] 3 All E.R. 70; (1977), 121 Sol. Jo. 543, dictum of Lord Diplock applied.

(9) International Credit & Inv. Co. (Overseas) Ltd. v. Adham, English Court of Appeal, October 28th, 1997, unreported, considered.

(10) Le Masurier (C.) Ltd. v. Alker, 1992 JLR 123, dictum of Blom-Cooper, J.A. considered.

(11) Ladd v. Marshall, [1954] 1 W.L.R. 1489; [1954] 3 All E.R. 745; (1954), 98 Sol. Jo. 870, followed.

(12) Moore v. Assignment Courier Ltd., [1977] 1 W.L.R. 638; [1977] 2 All E.R. 842; (1977), 35 P. & C.R. 400; 125 Sol. Jo. 155.

(13) Norwich Pharmacal Co. v. Customs & Excise Commrs., [1974] A.C. 133; [1973] 2 All E.R. 943; [1973] F.S.R. 365; [1974] R.P.C. 101; (1973), 117 Sol. Jo. 567, distinguished.

(14) Panayiotou v. Sony Music Entertainment (UK) Ltd., [1994] Ch. 142; [1994] 1 All E.R. 755, distinguished.

(15) Planning & Environment Cttee. v. Lesquende Ltd., 1998 JLR 1.

(16) R. v. Gough, [1993] A.C. 646; [1993] 2 All E.R. 724; [1993] Crim. L.R. 886; (1993), 97 Cr. App. R. 188; 157 J.P. 612; 157 J.P. Jo. 394; 137 Sol. Jo. (L.B.) 168, followed.

(17) Siskina (Cargo Owners) v. Distos Cia. Naviera S.A., [1979] A.C. 210; [1977] 3 All E.R. 803; [1978] 1 C.M.L.R. 190; (1977), 121 Sol. Jo. 744; sub nom. Ibrahim Shanker & Co. v. Distos Cia. Naviera S.A., [1978] 1 Lloyd's Rep. 1.

Additional cases cited by counsel:

Castro v. Murray (1875), 10 Ex. 213.

R. v. Sussex JJ., ex p. McCartney, [1924] 1 K.B. 256.

Legislation construed:

Court of Appeal (Civil) (Jersey) Rules 1964 (R. & O. 4561), r.12(1): The relevant terms of this sub-rule are set out at page 184, lines 29-37.

Texts cited:

Cardozo, The Nature of the Judicial Process, at 141 (1921).

Dockray, The Inherent Jurisdiction to Regulate Civil Proceedings, 113 Law Quarterly Review, at 130 (1997).

Halsbury's Laws of England, 4th ed., vol. 37, para. 14, at 23.

Jacob, The Inherent Jurisdiction of the Court, 23 Current Legal Problems, at 27; at 52 (1970).

Underhill & Hayton, Law of Trusts & Trustees, 15th ed., at 16 (1995).

Courts—récusation—apparent bias—test for apparent bias: whether, in circumstances, reasonable person would consider real danger of bias on part of judge in relation to party before him

Courts—récusation—application for récusation—party alleging apparent bias to approach judge informally before making formal application for récusation—application to be heard by judge himself—appeal lies to Court of Appeal against that decision

Courts—Court of Appeal—fresh evidence—fresh evidence admissible under Court of Appeal (Civil) (Jersey) Rules 1964, r.12(2) if unobtainable at trial with reasonable diligence; probably important, although not necessarily decisive; and credible—if irrelevant, material may not be "evidence"

Courts—Royal Court—jurisdiction—inherent jurisdiction—no precise boundaries, but derives from necessity, i.e. court has powers necessary to make it effective as a court, vis-à-vis parties then before it—jurisdiction not available to create new remedies—whether particular power exists depends on traditional legal reasoning

Civil Procedure—settlement of proceedings—pre-trial negotiations—court has no power to order Viscount to supervise transmission of offer to settle proceedings from one party to non-parties investing with another party, financing litigation and with interest in outcome—their interest irrelevant to matter at issue between parties—court not to appear to endorse either party to litigation

Financial Services—investment consultant—duty of care—investment professional owes fiduciary duty to client if fiduciary relationship exists under Jersey law, even if no duty arises under foreign law governing agreement—if client able to sue to recover loss suffered through fiduciary's breach of duty, third party, e.g. bank through which investment conducted, has no locus standi

The defendant-respondents sought to enter into negotiations to settle proceedings brought against them in the Royal Court by the plaintiff-appellants.

The plaintiffs were investment managers who arranged the investment of funds in foreign exchange dealings, through the medium of the first defendant bank. It was alleged that certain persons for whose actions the first defendant was responsible committed or facilitated large-scale fraud by taking secret commissions from the funds, or allowing them to be taken, so that substantial losses were suffered by the plaintiffs and their investors (it was alleged that the relationship between the plaintiffs and their investors was governed by Swiss law). They accordingly brought proceedings, purportedly both on their own behalf and on behalf of the investors, against the defendants and also brought other proceeedings relating to the alleged financial malpractice. The proceedings were financially supported by the investors.

Among the allegations made in the course of these and the related proceedings were allegations that the Financial Services Department and the Finance & Economics Committee failed to use their regulatory powers to prevent the malpractice. The Attorney General also instituted criminal proceedings against certain parties to the plaintiffs' actions.

The first defendant sought to enter into negotiations with the investors to settle their claims, but did not offer to settle the plaintiffs' own alleged losses. It asked the plaintiffs to put the terms of its offer to the investors: the plaintiffs did so, accompanied by their own commentary to the effect that it was inadequate and that the investors' interests were best served by continuing to support the action. The plaintiffs refused the first defendant's request that they disclose the names of the investors, arguing that to do so would be a breach of its duty of confidentiality.

The first defendant then made a representation to the Royal Court, seeking the appointment of the Viscount to oversee the putting of the offer fairly to the investors; it later tacitly admitted that it was partly motivated in doing so by a desire to restore its reputation with them, although it claimed that it was in their interests to accept the offer and that the plaintiffs were failing in their fiduciary duty towards them. Prior to the hearing of the representation, which was to be heard by the Bailiff, the plaintiffs made an application in which they invited the Bailiff to recuse himself from hearing the defendants' representation on the ground that as civic head of the Island and as President of the States, he was ultimately responsible for the actions of the Financial Services Department, the Finance & Economics Committee and the Attorney General and was therefore apparently interested in the outcome of the proceedings; furthermore, neither the Bailiff nor the Deputy Bailiff should in future hear any actions in which the plaintiffs' advocate appeared, to avoid the appearance of bias, since he also acted for a plaintiff in other, unrelated proceedings who had brought an action against them. The plaintiffs also argued that the Bailiff should not himself hear the récusation application.

The Royal Court (Bailhache, Bailiff and Jurats Myles and Potter) dismissed the plaintiffs' application, on the ground that the Bailiff had no control over decisions of the States or its Committees, the Financial Services Department or the Attorney General; furthermore, there was no connection between the present proceedings and the other proceedings in which the plaintiffs' advocate appeared, so no question of apparent bias could arise. These proceedings are reported at 1997 JLR 304.

The court then went on to grant the defendants' representation, on the ground that although the investors were not parties to the action, their interests were best protected by allowing them the opportunity to respond to the offer independently of the plaintiffs and the court had the power, in the exercise of its inherent jurisdiction over its own procedure, to make the order sought. It also ordered that a copy of its judgment (which contained statements critical of the plaintiffs) be enclosed with the offer, stressing that the court was in no way endorsing it or pre-judging the outcome of the plaintiffs' action (in proceedings reported at 1997 JLR 326).

The plaintiffs subsequently made an application that the Bailiff should recuse himself in relation to the hearing of two further applications in the course of the litigation, this time on the basis that in a public speech, he referred to certain matters which it was alleged had a bearing on the present proceedings. The Royal Court (Bailhache, Bailiff and Jurats Gruchy and Tibbo) held that although on an objective view there was no question of apparent bias, in the exercise of his discretion the Bailiff would recuse himself to avoid any party retaining a sense of grievance; however, in future, any party seeking to challenge the propriety of a judge's sitting in any matter on the ground of apparent bias...