The Désastre of Blue Horizon Holidays Ltd

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: Hamon, Commr. and Jurats Orchard and Herbert:
• Judgment Date: 19 May 1994
• Date: 19 May 1994

ROYAL COURT

Hamon, Commr. and Jurats Orchard and Herbert:

The applicant appeared by Mr. D. Eves, a director.

The Viscount appeared in person.

J.G.P. Wheeler appeared as amicus curiae.

Cases cited:

(1) Barker, In re, Royal Ct., September 6th, 1984, unreported, distinguished.

(2) Incat (Jersey) Ltd., In re, Royal Ct., February 20th, 1987, unreported, distinguished.

(3) Seale St. Devs. Ltd. v. Chapman, 1992 JLR 243, considered.

(4) Vidamour, In re, Royal Ct., February 26th, 1993, unreported, distinguished.

(5) Walkers Advertising Associates Ltd., In re, Royal Ct., November 20th, 1992, unreported, distinguished.

Additional cases cited by counsel:

Barker, In re, 1987-88 JLR 4.

Polini v. Gray (1879), 12 Ch. D. 438.

Wilson v. Church (No. 2) (1879), 12 Ch. D. 454.

Legislation construed:

Court of Appeal (Civil) (Jersey) Rules 1964 (R. & O. 4561), r.15: The relevant terms of this rule are set out at page 175, lines 3-8.

Civil Procedure—stay of proceedings—stay pending appeal—if (a) reasonable ground of appeal exists; and (b) appeal nugatory if no stay granted, exceptional circumstances to be shown to justify refusal of stay

Bankruptcy—désastre—stay of proceedings—stay pending appeal—not to be stayed to allow resumption of trading pending appeal if has effect of improperly raising désastre—creditors to have opportunity of raising désastre

The applicant sought a stay of proceedings pending appeal, having been declared en désastre.

The applicant company was unable to meet its liabilities and at the instance of a creditor was declared en désastre and its assets vested in the Viscount. It subsequently applied unsuccessfully to the Royal Court on several occasions for the désastre to be raised since it was still apparently not able to meet its liabilities and some of its creditors therefore opposed its applications, as did the Viscount.

The applicant appealed against those decisions to the Court of Appeal on the ground, inter alia, that the désastre had been obtained wrongfully. It then made the present application for a stay of the désastre pending the outcome of the appeal, submitting, inter alia, that unless the désastre were stayed so that it could continue trading, its appeal would be rendered nugatory and it would be substantially prejudiced, as would its creditors.

The court considered (a) the principles upon which a stay of proceedings pending appeal could be ordered; (b) the fact that some of the creditors and the Viscount opposed the raising of the désastre; and (c) the fact that the applicant remained unable to meet its ongoing liabilities and would almost certainly remain so even if it resumed trading at this stage.

Held, dismissing the application:

(1) Where, as here, it appeared that a reasonable ground of appeal existed, if it were shown that if no stay were granted the applicant's right of appeal would be rendered nugatory, then exceptional circumstances would have to be shown to justify the refusal of a stay (page 177, lines 24-28; page 181, lines 3-5).

(2) Nevertheless, the désastre proceedings would not be stayed so as to allow the applicant to resume trading, in effect raising the désastre, in circumstances in which it would be inappropriate to do so and in which the court had already refused to raise the désastre. Were the Viscount to return the assets currently vested in him (which were insufficient to meet the applicant's liabilities) to the applicant, those creditors opposing the raising of the désastre would have no opportunity to be heard and there would be no incentive to the applicant to proceed with its appeal quickly. In these circumstances, the désastre would remain and the applicant should therefore ensure that its appeal proceeded as quickly as possible to minimize any adverse effects that might be caused by the continuation of the désastre (page 178, line 5 - page 179, line 10; page 180, line 42 - page 181, line 8).

HAMON, COMMR.: In a judgment delivered earlier in this case we decided, somewhat hesitantly, that we have the power to grant a stay because there appears to be a right of appeal to the Court of Appeal. We feel that this must be so because there is a right for a person aggrieved to appeal under the Court of Appeal (Jersey) Law 1961 in any civil cause or matter.

Having made that decision, we must now proceed to decide whether we should in fact exercise our discretion to grant a stay as requested by the applicant. Rule 15 of the Court of Appeal (Civil) (Jersey) Rules 1964 simply states:

"(1) Except so far as the court below or the Court may otherwise direct—

(a) an appeal shall not operate as a stay of execution or of proceedings under the decision of the court below;

(b) no intermediate act or proceeding shall be invalidated by an appeal."

Fortunately, the principles governing the power of this court to grant a stay of execution were set out by the Court of Appeal in Seale St. Devs. Ltd. v. Chapman (3). Because the matter is so germane to...