WOODMAN and ARTHURS v VISCOUNT [CA (Jersey)]

JurisdictionJersey
CourtCourt of Appeal
Judge(Settle, P., Le Quesne and Davies, JJ. A.):
Judgment Date18 September 1975
Date18 September 1975
COURT OF APPEAL
(Settle, P., Le Quesne and Davies, JJ. A.):

Bankruptcydsastrecreditorsfraudulent preferenceuncertain whether rules of fraudulent preference part of Jersey common law, since arguable that only statute can invalidate payment made by debtor to creditor in discharge of debt

Companiesdirectorsbreach of fiduciary dutyno breach if no loss to companyno loss if director transfers funds from company's suspense account to frozen account for purpose of discharging own guarantee of frozen account

LE QUESNE,J.A.: The judgment which I am about to read is the judgment of the Court. The relevant facts of this case may be shortly stated, as follows:

1. At all material times the Company, Le Val Construction Company Limited, had two accounts with Barclays Bank Limited, namely, a suspense account, which the Company was free to operate, and a frozen account, which was in debit to the extent of 30,000, in respect of which the Bank held three several guarantees, each for 10,000 given by the two defendants and a former director. The two defendants were, in 1971, the sole directors of the Company.

2. Consequent upon a certificate dated the 20th June, 1971, given by Mr. W.G. Nixey, a Quantity and Building Surveyor, in respect of work done by the Company on the new Prison at La Moye, the Company, shortly before the 20th July, 1971, received from the States of Jersey a cheque for 20,693, which it paid into its suspense account at the Bank.

3. On the 20th July, 1971, the two defendants drew two cheques, each for 10,444.06, on the Company's suspense account, in favour of the Bank and each of the defendants presented one of the said cheques to the Bank, in purported fulfilment of his guarantee. The element of 444.06 in each cheque was in respect of interest.

4. The total sum of 20,888.12 represented by the two said cheques was credited to the frozen account, which then remained in debit to the extent of 10,000, and the two several guarantees of the two defendants were cancelled and returned to them.

5. The Company was, on the 20th July, 1971, insolvent, in the sense that it could not pay its debts as and when they fell due, and it ceased to trade on that date.

6. On the 27th July, 1971, the Company was declared "en dsastre".

In these circumstances the Viscount, suing on behalf of the Company, claimed 20,888.12 from the defendants; the basis of the claim is to be found in paragraph 5 of the Order of Justice, from which we quote:

"5 . . . That on the 20th...

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  • Tucker
    • Jersey
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    ...20 Q.B.D. 518. Tournier v. National Provl. & Union Bank of England, [1923] All E.R. Rep. 550. Woodman v. Viscount of Royal Ct., 1975 J.J. 263. X AG v. A Bank, [1983] 2 All E.R. 464. Legislation construed: Bankruptcy Act 1914 (4 & 5 Geo. V. c.59), s.122: "The High Court . . . an......

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