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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> 1998/106 - Mayo Associates v Cantrade Private Bank [1998] UR 106 (28 May 1998) URL: http://www.bailii.org/je/cases/UR/1998/106.html Cite as: [1998] UR 106 |
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COURT OF APPEAL
Decision given : 3rd April
Reasoned Judgment : 28th May, 1998
| Before: | Lord Carlisle, Q.C., (President); J.G. Nutting, Esq., Q.C.; and P.D. Smith, Esq., Q.C. |
| Between | Mayo Associates SA, Troy Associates, Limited, TTS International, |Limited. | First Plaintiff Second Plaintiff Third Plaintiff |
| And | Cantrade Private Bank Switzerland (C.I.) Limited, Touche Ross, Limited. | First Defendant Second Defendant |
Application for leave to appeal and appeal by the Plaintiffs against:
1. the decision of the Royal Court on 1st December, 1997, that the Bailiff would sit at the hearing of the Plaintiffs’ submission that the Bailiff should recuse himself from the hearing of the substantive matter, namely the Judgment delivered on 18th December, 1997;
2. the decision of the Royal Court of 1st December, 1997, that the Bailiff would not recuse himself from the hearing of the substantive matter; and
3. the decision of the Royal Court of 18th December, 1997, that:
the Viscount shall send, under cover of a letter from him, a letter from the First Defendant setting out their offer to the investors, and further that the Plaintiffs shall supply the Viscount in confidence with the names and addresses of the investors with whom they have been or are in negotiation; the Viscount to send a copy of the Judgment of the Royal Court of 18th December, 1997, with the offer letter, but no other
Advocate P.C. Sinel for the First and Second Plaintiffs/Appellants;
Advocate A.R. Binnington for the First and Second Defendants/Respondents;
Advocate F.J. Benest for the Viscount.
judgment
Smith, JA:
This is the judgment of the Court. We have already stated our decisions on the various matters before us. We undertook to give reasons at a later date. This we now do.
The Background
In September 1994 this action was commenced in the Royal Court (Samedi Division) by the three plaintiffs (“the plaintiffs”) who at all material times traded as “the Troy Trust Service” against the first-named Defendant (“Cantrade”) and the second-named Defendant Touche Ross & Co., the latter not being involved in any of the various applications to the Royal Court from which these appeals have been brought. The plaintiffs’ amended Order of Justice alleges that funds provided to them by investors (“the investors”) were deposited with Cantrade for the purposes of investment in foreign exchange dealings on the instructions of certain persons appointed by the plaintiffs. Substantial losses were incurred and the plaintiffs allege that Cantrade is liable for losses sustained by the investors (who are not parties to this action) and also for the plaintiffs’ own alleged losses of commissions, profits etc. Cantrade denies liability to the plaintiffs.
By a Representation dated 7th March, 1997, Cantrade sought an Order of the Royal Court appointing the Viscount to communicate an open offer made by Cantrade to the investors. Prior to the hearing of the Representation the plaintiffs objected to the Bailiff presiding on the ground of appearance of bias. The plaintiffs also objected to the Bailiff hearing the application that he recuse himself. The Bailiff overruled the latter objection, heard the recusal application, refused it and set out his reasons in a judgment dated 1st December, 1997. The Royal Court, the Bailiff presiding, then proceeded to hear the Representation. Among other things the Royal Court ordered the plaintiffs by their advocates to provide the Viscount in confidence with a written list comprising the names, addresses and telephone numbers of the investors and ordered the Viscount to send each investor Cantrade’s offer applicable to that investor and the judgment of the Royal Court delivered on 12th December, 1997.
From all three of these decisions the plaintiffs sought to appeal. In each instance leave was refused by the Royal Court but we granted leave as we believe that each of the decisions involves issues of principle of some importance. Advocate P.C. Sinel appeared before us for the plaintiffs. Advocate A.R. Binnington appeared for Cantrade.
The application that the Bailiff Recuse Himself from Hearing
Cantrade’s Representation
Our decisions in relation to the récusation issues are easier to explain if we take them out of the order in which they were argued before us. We begin with the récusation application proper.
The plaintiff put forward two arguments. The first has two limbs, both based on the alleged rôle of the Bailiff. The two limbs may be summarised as follows:
(a) The effect of the plaintiffs winning this action would be to demonstrate that the authority responsible for regulating financial institutions (the Finance and Economics Committee of the States) and the authority responsible for prosecuting such institutions (the Attorney General) had failed to perform their functions properly in relation to Cantrade. The Bailiff is responsible for these authorities in the due performance of their functions. Cantrade’s Representation was designed to achieve an outcome to the action favourable to Cantrade. Therefore, in hearing the Representation the Bailiff was adjudicating on a matter which, if it resulted in a decision favourable to Cantrade, would also benefit, or appear to benefit the Bailiff.
(b) The Bailiff as Civic Head of the Island has an interest in preserving “the well-being and welfare of the Island as a whole.” The economic well-being and welfare of Jersey would or might be gravely imperilled if the plaintiffs were to win this action as it would, or might, result in unfavourable publicity adversely affecting the very important financial sector. The Bailiff has, or is perceived to have, a duty to defend Jersey against bad publicity. He has, or would be perceived as having, an interest in avoiding bad publicity for Jersey and, therefore, an interest in an outcome to this action favourable to Cantrade.
In our judgment the plaintiffs’ first argument comprises some fundamental
misconceptions. The Bailiff has no function in relation to prosecutions. The Attorney General is completely independent of the Bailiff and, for that matter, the States and is answerable only to the Crown. Although the Bailiff has duties in the States these do not extend to responsibility for the regulation of financial institutions or for the performance by committees or agencies of the States of their functions.
In the decision of the Guernsey Court of Appeal in Bordeaux Vineries Limited -v- States Board of Administration (1993) 16 G.L.J. 33 Le Quesne V.-P., delivering the judgment of the Court, summarised the relationship between the Bailiff of Guernsey’s duties in the Royal Court and the States as follows (at p. 39C):
“He can properly discharge both responsibilities because although he is a member of the States his special position there means he is not responsible for the decisions of the States or acts of its agencies, nor has he any pecuniary interest, or indeed other interest, in those decisions or those acts.”
In our judgment these remarks are also apt to describe the position of the
Bailiff of Jersey and we respectfully adopt them as applicable to this Island.
Turning to the “well-being and welfare of the Island” limb it occurs to us that the vast majority of right-thinking people in Jersey and many beyond would share this interest. Even if the Bailiff were not Civic Head of the Island it would hardly be surprising if he shared it. However, the suggestion that such an interest would cause the Bailiff (or cause him to be perceived) as unconsciously favouring the alleged wrongdoer in litigation is in our view untenable. Thus, if a Jersey man is accused of a heinous crime against the person in Jersey is the Bailiff to be regarded as having the appearance of bias in favour of the defence because a conviction may have an adverse impact on the tourist trade? Or is he to be regarded as having the appearance of bias in favour of the prosecution because an acquittal may have the same impact?
It is quite apparent from the leading case on appearance of bias of judicial tribunals that this kind of vague and ambiguous insinuation falls far short of what is required to disqualify a judge from acting. In R. -v- Gough [1993] AC 646 Lord Goff of Chieveley stated the test to be applied by an appellate court as follows (at p. 670E):
“… having ascertained the relevant circumstances, the Court should ask itself whether, having regard to those circumstances, there was a real danger of bias on the part of the relevant member of the tribunal in question, in the sense that he might unfairly regard (or have unfairly regarded) with favour, or disfavour, the case of a party to the issue under consideration by him.”
Although at first blush this test may appear to be directed to ascertaining actual bias it is clear from Lord Goff’s preceding remarks that this is the test for apparent bias. Applying it to the plaintiffs’ first argument we have no hesitation in rejecting that argument in both of its limbs. The second argument was founded on a letter from the Bailiff’s secretary of 8th August, 1997, to Mr. Sinel in which it was stated:
“…following the Order of Justice which you have taken out against the Bailiff and the Deputy Bailiff, in the interests of justice and to avoid any suggestion of prejudice, both the Bailiff and the Deputy Bailiff have asked that I avoid setting them down to preside over any case in which you appear as Counsel.”
However, this letter was followed on 21st August, 1997, by another letter from the Bailiff’s secretary which contained the following:
“The Bailiff has asked me to say that contrary to the views expressed in [the letter of 8th August], he will continue to preside over cases, as appropriate, in which you appear as counsel.”
The discrepancy between these letters was unfortunate. However, the Bailiff was on holiday for part of this period and when he learned of the existence of the first letter he caused the second letter to be sent. In our judgment the short time which elapsed between them can only be as interpreted as clearly signifying that the first letter did not represent the Bailiff’s settled attitude to hearing cases in which Mr. Sinel appeared as counsel. Furthermore, we do not consider that the fact that an advocate is acting for a plaintiff in litigation against the Bailiff even begins to meet the test for appearance of bias set out in R. -v- Gough in respect of other litigation in which that advocate is acting.
Accordingly, in our view, the Bailiff was right not to recuse himself from hearing Cantrade’s Representation and the plaintiffs’ appeal on this point must therefore be dismissed.
The Bailiff’s Decision to hear the Recusal Application
We now turn to the Bailiff’s decision to hear the plaintiffs’ application that he recuse himself.
There does not appear to be any Jersey authority in point but we refer again to the decision of the Guernsey Court of Appeal Bordeaux Vineries -v- States Board of Administration. In that case also there was an objection to the Bailiff hearing the application that he recuse himself. After a detailed analysis of relevant passages from the works of commentators on the customary law of Normandy and consideration of modern circumstances Le Quesne V.-P., expressed the following conclusions on behalf of the Court (at p. 37D):
“A new practice must therefore be established. In view of the modern distribution of authority in the Royal Court and the modern system of appeal, the decision upon a submission that the Bailiff, or the Deputy Bailiff if he is presiding, is disqualified by interest from hearing any matter should in the first place be made by the Bailiff, or the Deputy Bailiff as the case may be. From that decision an appeal lies to this Court.”
Given the common origin of the legal systems of Guernsey and Jersey and the similarities in the structure of the courts in the two jurisdictions we consider that the same procedure should be followed in Jersey as that laid down for Guernsey in the excerpt quoted from the judgment in the Bordeaux Vineries case.
In our judgment the fact that it may fall initially to the judge at first instance to consider allegations pertaining to himself qualifies him for rather than disqualifies him from hearing the recusal application and that judge must be trusted to make a fair and balanced assessment. He is in a good position to know whether objections as to his constitutional, judicial or personal circumstances are valid or not or whether they may be perceived to be valid. When the Bailiff or Deputy Bailiff perceives a real controversy he may, in his discretion, judge it prudent not to preside on the recusal application. But we anticipate that such exceptional circumstances will rarely arise. An appeal lies to the Court of Appeal from a decision by a judge at first instance not to recuse himself and on appeal that decision will be carefully scrutinised by this Court.
The test propounded in R. -v- Gough and stated above requires some adaptation to make it suitable for use by a judge considering an application to recuse himself. In Gough’s case Lord Goff regarded as unnecessary a requirement that the court considering apparent bias should look at the matter through the eyes of the reasonable man. But this ruling was made in the context of a court considering the appearance of bias of a member of another tribunal. When a judge is considering an allegation of apparent bias made against himself we consider that he should ask himself the following questions: Would a reasonable man or woman, aware of and having regard to all the circumstances, consider that there is real danger of bias on my part in the sense that I might unfairly regard with favour, or disfavour, the case of a party to the issue to be considered by me?
As far as the present case is concerned the Bailiff was clearly the right person to adjudicate on objections based on his constitutional and judicial roles as he is the person most familiar with them and he was therefore best equipped to make the requisite legal rulings. As far as the correspondence to which we have been referred is concerned we regard the interpretation of it as a straightforward task which the Bailiff was perfectly entitled to undertake. Accordingly, we dismiss the plaintiffs’ appeal against the Bailiff’s decision to hear the récusation application.
We wish to take this opportunity of endorsing certain remarks of the Bailiff as to the practice to be followed if a party wishes to object to a particular judge presiding. These are to be found at the end of his judgment on a further recusal application made in respect of other matters on 21st January, 1998. We share the Bailiff’s view that the traditional practice of initially taking the objection by way of an informal approach by counsel to the judge in chambers should continue to be followed. This does not preclude an application being made in open court if the objector remains dissatisfied.
The Plaintiffs’ Application to Introduce Fresh Evidence
As a prelude to arguing the issues in relation to récusation the plaintiffs sought leave to introduce further evidence under Rule 12(1) of the Court of Appeal (Civil) (Jersey) Rules, 1964, which reads:
“The Court shall have full discretionary power to receive further evidence on questions of fact, either by oral examination in court, by affidavit, or by deposition taken before the Viscount or on commission:
Provided that in the case of an appeal from a judgment after hearing of any cause or matter on the merits, no such further evidence (other than evidence as to matters which have occurred after the date of the trial or hearing) shall be admitted except on special grounds.”
The further material comprises the text of a speech delivered by the Bailiff to the Jersey Society of Chartered and Certified Accountants on 16th November, 1996, a report of that speech in the edition of the “The Jersey Evening Post” of 18th November, 1996, and an article in the edition of the “Wall Street Journal” of 17th September, 1996, an article in the edition of “The Observer” newspaper of 22nd September, 1996, and a transcript of the BBC “Close Up” programme broadcast on 14th November, 1996. In addition Mr. Sinel sought leave to introduce reports relating to the Home Secretary’s review of control of financial services in Jersey, Guernsey and the Isle of Man in various editions of the “Jersey Evening Post” in January, 1998.
Mr. Sinel informed us and we accept that neither he nor his clients were aware of the Bailiff’s speech until after his decisions on the matters before us. He stated that his clients had been aware of the newspaper articles and the television programme but these only became relevant to the question of recusal through the medium of the speech in which the Bailiff commented on them.
Mr. Sinel argued that there had been no trial or hearing of any cause or matter and therefore special grounds were not required to permit admission of the material in question.
We do not accept this submission. The phrase “cause or matter” is very wide in its ambit. It encompasses both the recusal application and the application that the Bailiff should not hear it. Both were heard on the merits. Therefore, in our judgment special grounds would be required and the plaintiffs would have to show that all three conditions set out in Ladd -v- Marshall [1954] 1 WLR 1489 (a decision of the English Court of Appeal on what is now Order 59 Rule 10 of the Rules of the Supreme Court) had been met; viz., that the evidence could not have been obtained with reasonable diligence for use at the hearing, that it would probably have an important influence albeit not a decisive one on the result of the case and that the evidence is credible.
However, in our judgment the plaintiff’s application in respect of the speech and related material fails at a more fundamental level. To be evidence the material must be relevant to the R. -v- Gough test set out above. Scrutiny of the material, particularly the Bailiff’s speech, reveals that it is not relevant; therefore it cannot be regarded as evidence.
In his speech the Bailiff dealt with four matters. First, the proposed new limited partnership law. Second, co-operation between the authorities in Jersey and those in other countries. Third, the laundering of the proceeds of crime. Fourth, the suggestion in a television programme (it is not clear which) that Barlow Clowes, a failed financial institution, had been based or operated in Jersey.
It was not suggested to us that any of these matters are relevant to the issues in this action. Further, although this litigation was referred to in the BBC “Close Up” programme and the newspaper articles the Bailiff made no reference to this action in his speech.
In the plaintiffs’ written contentions it was argued some of the Bailiff’s remarks in his speech could be perceived as reflecting his views of the merits of the plaintiffs’ case. It was asserted, for example, that his remark about “the distorted vision of a small group of protesters” extended to one of the investors who appeared on the BBC “Close Up” programme. In the course of his oral argument on this issue Mr. Sinel, referring to the Bailiff’s use of irony in the course of his speech, accused him of making jokes about the plight of the investors.
In our judgment the plaintiffs’ interpretation of the speech and the arguments constructed upon it are without foundation. It is clear to us that in addressing specific issues the Bailiff was being careful to avoid any reference to this litigation or any aspect of it. All of the Bailiff’s remarks must be read and understood in their context. In our opinion no reasonable person could deduce from the speech that the Bailiff had any view as to the merits of the plaintiffs’ claim never mind a view hostile to the plaintiffs. It is apparent that the Bailiff was not referring to any investor when he mentioned protesters and his ironic remarks were equally obviously not directed at any investor.
We think it is important to state for the benefit of those who may read this judgment but not the Bailiff’s speech that rather than seeking in the speech to condone laxity in the control of financial institutions the Bailiff was clearly at pains to emphasize the commitment of Jersey to financial probity and co-operation with other countries in combating wrongdoing - things which we think the chief judge in any jurisdiction is quite entitled to emphasize publicly without becoming the object of criticism.
The report of the Bailiff’s speech in the “Jersey Evening Post” added nothing to it and it follows from our view that there was nothing in the speech relevant to the issues in this action that there was nothing of this sort in the newspaper report. As the speech forms a vital link in the chain necessary to enable the plaintiffs to argue that the transcript of the television programme and the newspaper articles constitute fresh evidence our interpretation of the speech means that these materials cannot fulfil the essential requirement of relevance to the récusation issue. Furthermore, we think it important to emphasize that none of these publications purports to quote the Bailiff and we consider that mere allegations in the communications media, without more, do not of themselves tend to fulfil the requirements of the test in R. -v- Gough.
The reports in the “Jersey Evening Post” in January, 1998, also fall at the hurdle of relevance. They refer to the alleged lack of consultation by the Home Secretary with the Island authorities and describe the Bailiff performing the aspect of his constitutional functions germane to that issue. Nothing in the “Jersey Evening Post” reports has any material bearing on the issues between the parties in this action and there is nothing which reveals or purports to reveal the Bailiff’s attitude (if he has one) to the plaintiffs or the defendants in this action or to the merits of their respective cases.
As a footnote to this issue we would add that in the further recusal application on 21st January, 1998, to which we have already referred and which related to the hearing of interlocutory matters in the present action and another action brought by the same plaintiffs the Bailiff considered his speech of 16th November, 1996, and in his judgment commented on it as follows:
“Taken in the round I am not satisfied that on any objective view the comments which I made in that speech could be fairly construed as giving the appearance of bias in relation to the issues which have to be tried in these proceedings.”
We agreed with this statement. The Bailiff then exercised the discretion which he clearly has to disqualify himself from hearing the matters before him. The Bailiff was entitled to exercise his discretion in that way and comment by us would be inappropriate.
Cantrade’s Representation
The legal basis for the Order made by the Royal Court on the Representation is set out in two passages in the Bailiff’s judgment of 18th December, 1997. These are as follows:
“This action has a long and convoluted history. The investors are not parties to it, but they have an interest in its outcome. They have rights which are worthy of protection. If we are satisfied that the protection of those rights can be advanced by an order of the kind sought by Cantrade, and we are satisfied that the balance of fairness tips in favour of making such an order, then in our judgment we have the
power, pursuant to our inherent jurisdiction, to make it.” (page 9).
“At no stage … on the evidence before us, has Cantrade’s offer been conveyed dispassionately to the investors. It may be, of course, that some or all of the investors would not wish to treat with Cantrade. We make no observations upon the adequacy of the offer which is clearly a matter for each individual investor. The investors ought, however, in our judgment, to have the opportunity of considering the offer without accompanying rhetoric. It has not been made clear to the investors that their interests and those of the plaintiffs might not coincide. On the contrary in TTS Bulletin No. 17 the investors were told that “your, and our, strength lies in a unified approach.” If, however, the plaintiffs’ arguments as to the nature of their relationship with the investors are upheld, the investors will at the end of the day be unsecured creditors of the plaintiffs so far as the recovery of any damages is concerned. The mounting costs of the litigation and the merits of the opposing arguments in relation to the offer are matters upon which, in our judgment, the investors need advice independent of the advice received from the plaintiffs. We emphasize again that we do not wish to appear to endorse the offer. Its adequacy and the terms and conditions to which it is subject are matters for the investors. In our judgment it is however fair that they should have the opportunity of considering Cantrade’s offer dispassionately, of taking advice if they see fit, and of deciding without pressure whether or not to enter negotiations for settlement with Cantrade.” (page 10).
Thus, in order to ascertain whether the Royal Court was entitled to make the Order in question we must first examine the concept of inherent jurisdiction. This task is greatly simplified by the existence of two articles in learned journals - “The Inherent Jurisdiction of the Court” by Mr. I. H. (later Sir Jack) Jacob (23 Current Legal Problems, 1970, p.23 - actually the text of a lecture) and “The Inherent Jurisdiction to Regulate Civil Proceedings” by Professor M.S. Dockray (113 Law Quarterly Review, January, 1997, p.120). However, it emerges from even the most cursory scrutiny of these articles and the authorities that not only is there no agreement as to the aspects of the court’s jurisdiction which may be properly called inherent but also that there is no unifying principle from which the boundaries of inherent jurisdiction may be divined. Rather, there is an area demarcated by principle and, in addition, an assortment of powers exercised by the courts and which have been described as forming part of inherent jurisdiction but which lack a common theme.
Unfortunately, determining the precise extent of the demarcated area is complicated by the absence of an authoritative statement of the unifying principle. However, it clearly forms part of procedural law and is derived from the need for a court to have and exercise powers to make it effective as a court. As Sir Jack Jacob put it in his article (at p.27):
“… the essential character of a superior court of law necessarily involves that it should be invested with a power to maintain its authority and to prevent its process being obstructed and abused. Such a power is intrinsic in a superior court; it is its very life-blood, its very essence, its immanent attribute. Without such a power, the court would have form but would lack substance. The jurisdiction which is inherent in a superior court of law is that which enables it to fulfil itself as a court of law. The juridical basis of this jurisdiction is therefore the authority of the judiciary to uphold, to protect and fulfil the judicial function of administering justice according to law in a regular, orderly and effective manner.”
These remarks were echoed by Lord Diplock in Bremer Vulkan -v- South India Shipping [1981] A.C. 909 when he said (at p. 977G):
“It would I think be conducive to legal clarity if the use of these two expressions [i.e., inherent power and inherent jurisdiction] were confined to the doing by the court of acts which it needs must have power to do in order to maintain its character as a court of justice.”
In our view the vital clue to the nature of inherent jurisdiction in its procedural setting, and revealed in the two passages quoted, is necessity. The court has a particular procedural power because it has to have it to be a court in any meaningful sense. On this basis the power to require the attendance of witnesses whether to testify or produce documents, the power to control abuse of the process of the court, the power to dismiss claims for want of prosecution, the power to issue practice directions, the power to decide who may or may not appear before the court, the power to correct errors in its own orders, and many other powers may all be recognised as derived from a single pool not of powers but of power drawn upon as necessity dictates.
It will be observed that this approach is antithetical to a definition of inherent jurisdiction based simply on fairness or by reference to what is perceived in a particular situation to be just. If inherent jurisdiction exists to enable a court to order that a thing be done fairness and justice will obviously be major factors to be taken into account when the court is deciding whether or not to exercise its discretion to so order; but the conclusion that it would be fair or just to order that that thing be done does not determine whether there is inherent jurisdiction to order it.
That what may be apparently fair or just is not the criterion by which the existence of inherent jurisdiction is to be determined is made clear in authorities such as The Siskina [1979] A.C. 210 (per Lord Hailsham at p. 262A) and A.J. Bekhor & Co. Ltd. -v- Belton [1981] 1 Q.B. 923 (per Ackner L.J. at p. 942F) and is consistent with the attitude of this Court in C. Le Masurier Ltd. and Another -v- Alker and Another [1992] JLR 123. In that case Blom-Cooper J.A. referred to “… the limited function of the inherent jurisdiction - namely to allow a court within its own jurisdiction to regulate its own practice and procedure…” (at p. 131).
In its Skeleton Argument, Cantrade sought to support the Royal Court’s Order on the basis that it fell within the scope of a passage in Volume 37 of Halsbury’s Laws of England, 4th Edition, at para. 14 which this Court cited with approval in Finance & Economics Committee -v- Bastion Offshore Trust Co. Ltd. (9th October, 1991) Jersey Unreported and which defines inherent jurisdiction as being:
“… the reserve or fund of powers, a residual source of powers, which the court may draw upon as necessary whenever it is just or equitable to do so, in particular to ensure the observance of the due process of law, to prevent improper vexation or oppression, to do justice between the parties and to secure a fair trial between them.”
While we accept the validity of this description it must be understood, and therefore confined, within the context of the principles and authorities to which we refer in this judgment.
But if necessity is the touchstone the question still remains as to the legitimate area of exercise of inherent jurisdiction. In our judgment this question falls to be answered in a civil case by reference to the function of the court in civil proceedings. That function has been succinctly expressed by Lord Diplock in Gouriet -v- Union of Post Office Workers [1978] AC 435 at p. 510 as follows:
“The only kind of rights which courts of justice are concerned with are legal rights; and a court of civil jurisdiction is concerned with legal rights only when the aid of the court is invoked by one party claiming a right against another party, to protect or enforce the right or to provide a remedy against that other part for infringement of it, or is invoked by either party to settle a dispute between them as to the existence or nature of the right claimed.”
Thus, necessity is to be judged in the light of the objectives the parties have sought to achieve through invocation of the court’s function. By definition, therefore, the court has no wider rôle in, for example, taking cognizance of issues not raised by the parties and seeking to resolve them or (save in particular circumstances not alleged to exist in the present case) in identifying persons whose interests may be affected by the litigation and taking or facilitating measures protective of their interests.
So in the present case we ask ourselves whether it is necessary to enable the Royal Court to deal with any issue properly raised between the parties in this action for it to make the Order it made in Cantrade’s favour. In our judgment the answer is an emphatic: “No.” Whether or not the investors are informed of Cantrade’s offer unaccompanied by critical comment from the plaintiffs; whether or not that comment is accurate; whether or not the investors are parties to this action; whether or not the investors may suffer if they are not encouraged to take independent advice on Cantrade’s offer: None of these matters has any bearing one way or the other on the Royal Court’s capacity to act as an effective court of justice in resolving the issues placed before it by the parties or in effectively enforcing such final Order as it may see fit to make in due course.
It occurred to us prior to the hearing of this appeal that it might be arguable that as the court has an interest in the settlement of civil litigation (“Interest reipublicae componere lites”) it may therefore have jurisdiction, in appropriate circumstances, to make orders designed to achieve this end and we drew this to the attention of the parties. However, Mr. Binnington did not seek to support the Order of the Royal Court on this ground. He made it clear to us in the course of argument that compromise of this litigation is not the objective of the Order sought. We return to the significance of this below.
We now turn to that assortment of powers exercised by courts which have been described as forming part of inherent jurisdiction but which lack a common theme. It is unnecessary for the purpose of this judgment to list these powers but we mention by way of example the protection of minors and persons incapable of managing their own affairs and the control of inferior courts and tribunals. Sir Jack Jacob thought that inherent jurisdiction was part of procedural and not of substantive law (see p. 24 of his article) . We do not believe that this limitation is tenable (see the judgment of this Court in Lesquende Ltd. -v- The Planning and Environment Committee (26th September, 1997) Jersey Unreported C.ofA. at p. 121 of Professor Dockray’s article and the remarks of Megaw L.J. concerning the word “procedure” in Moore -v- Assignment Courier [1977] 1 W.L.R. 638 at p.645G). However, we regard debate as to whether a particular power forms part of the court’s general or inherent jurisdiction as for the most part sterile and we do not intend to address it in this case.
In considering these assorted powers we accept that it may not be necessary for Cantrade to point to authority in which a court has made an order similar to that which the Royal Court made in the present case. We endorse Sir Jack Jacob’s statement that inherent jurisdiction is “a virile and viable doctrine.” But in doing so we also endorse Professor Dockray’s reminder that recent decisions (see, for example, Cox -v- Bankside Members Agency, unreported decision of the English Court of Appeal, 29th November, 1994) are, as he puts it at p. 130 of his article:
“ … quite inconsistent with the idea that the inherent jurisdiction is an unlimited reservoir from which new powers can be fashioned at will.”
and his statement (again at p. 130) that:
“ … the general approach adopted in dealing with arguments about the existence of particular inherent powers is much the same as the approach to any other question of common law. That is, the cases recognise or reject claims after argument in a conventional form about precedents which relate to the power in question and about the merits, consequences and alternatives to the particular power which it is claimed the court possesses.”
Reminds us of Justice Cardozo’s admonition at p. 141 of “the Nature of the Judicial Process” (1921):
“ … the judge, even where he is free, is till not wholly free. He is not to innovate at pleasure. He is not a knight-errant roaming at will in pursuit of his own ideal of beauty or of goodness. He is to draw his inspiration from consecrated principles. He is not to yield to spasmodic sentiment, to vague and unrelated benevolence. He is to exercise a discretion informed by tradition, methodized by analogy, disciplined by system and subordinated to ‘the primordial necessity of order in the social life’.”
In the present case not only was Mr. Binnington unable to point to an instance of a court on any previous occasion making an order similar to the present one but he was unable to identify any analogous case or any which might have been used as a stepping stone supporting a process of reasoning which would enable us to endorse the Royal Court’s Order. Mr. Binnington did suggest analogies with great eloquence and ingenuity but, as we shall demonstrate, none of them withstood scrutiny.
It was argued that Cantrade was entitled to the names and addresses of the investors by way of discovery (which, of course, strictly speaking includes interrogatories) because the plaintiffs have asserted by way of particulars that “Troy’s clients no longer have the ability or confidence to invest such sums with Troy” and this forms part of the plaintiffs’ claim for damages. However in Cantrade’s Skeleton Argument produced for the Representation hearing before the Royal Court it is conceded that:
“ … an application to obtain the investors’ names and addresses by way of discovery would be open to the objection that its real motive in seeking the information was to enable it to communicate directly with the investors on the subject of the offer.”
Before us, Mr. Binnington made no bones about it; his client’s real motive remains as stated. Accordingly, the anticipated objection remains valid and, in our view, insurmountable.
Mr. Binnington also relied upon Norwich Pharmacal Co. -v- Customs and Excise Commissioners [1974] A.C. 113. But that case dealt with discovery of information identifying wrongdoers from a person who, through no fault of his own, had been involved in the wrongful acts so as to facilitate the wrongdoing. In the case before us the investors are not alleged to have been involved in any wrongful acts and the Norwich Pharmacal case has no relevance to the issues before us.
It was argued that support for Cantrade’s Representation could be found in Panayioutou -v- Sony Music Ltd. [1994] Ch. 142, a decision concerning the issue of a letter of request to a court in New York in order to obtain production of certain documents from a company carrying on business there. But that case has no analogy with the present case, the point there being that although the English court could not and would not facilitate the obtaining of discovery of documents from a stranger to the litigation by way of a letter of request it did have jurisdiction to request production of particular documents which that person, if within the English court’s jurisdiction, could be required to produce on foot of a subpoena duces tecum.
Reliance was also placed on an unreported decision of the English Court of Appeal (delivered on 28th October, 1997) in International Credit and Investment Co. (Overseas) Ltd. and Another -v- Adham and Others. That case reasserts the principle that “a person against whom the jurisdiction of the court is being activated should know who and where the activator is.” It is true that the investors have an interest in the outcome of these proceedings and that they are supporting the action by contributing towards the costs. However, the causes of action asserted in the amended Order of Justice are alleged to be vested in the plaintiffs and not the investors and we cannot accept that the investors may properly be viewed as, or as the equivalent of, “activators” of this litigation.
Mr. Binnington moved to superficially firmer ground when he argued that the plaintiffs are fiduciaries vis-à-vis the investors and the court should therefore be vigilant to ensure that the plaintiffs properly perform their fiduciary responsibilities. He referred us to Underhill and Hayton’s Law Relating to Trusts and Trustees (15th Ed’n), and, in particular the following passage (at p.16):
“A fiduciary relationship exists as Ford and Lee indicate where
(a) one person, the fiduciary, has undertaken to act in the interests of another person, the principal, or in the interests of the fiduciary and another person;
(b) as part of the arrangement between the fiduciary and the principal the fiduciary has a power or discretion capable of being used to affect the interests of the principal in a legal or practical sense;
(c) the principal is vulnerable to abuse by the fiduciary of his of her position; and
(d) the principal has not agreed as a person of full capacity who is fully informed, to allow the fiduciary to use the power or discretion solely in his or her own interests.”
Mr. Binnington reinforced his argument that a fiduciary relationship existed between the plaintiffs and the investors by drawing attention to the number of acknowledgements by the plaintiffs themselves that they acted as trustees for the investors including the Troy Trust Service Terms and Conditions in which Mayo Associates S.A. is explicitly described as “Trustee” and include the following words: “The [investor] further irrevocably appoints MAYO (and MAYO accepts such appointment) as Trustee…”
Mr. Sinel on behalf of the plaintiffs conceded that the Underhill and Hayton criteria were fulfilled as far as the plaintiffs and the investors are concerned. However, the plaintiff’s case is that their relationship with the investors is explicitly governed by the laws of the Swiss Confederation and the Canton of Geneva, that the term “trustee” is unknown in Swiss law, that the deposit of funds by the investors with the plaintiffs constitute a form of Mandate and that the rights of the investors vis-à-vis the plaintiffs are contractual in their nature.
It is not for us to resolve these issues at this interlocutory stage but we cannot be taken as accepting, at any rate without further and more detailed argument, that if the plaintiffs’ contentions are right it follows that they cannot be regarded as fiduciaries by the Courts of Jersey. As presently advised we are inclined to the view that once a person, human or legal, within this jurisdiction is found to have the requisite characteristics he is a fiduciary and will be treated as such irrespective of whether or not the parties to the relationship in question have decided that the law of another country should govern their relationship. Fiduciary obligations arise by operation of law and the public interest requires their recognition and, when appropriate, their enforcement.
However, in our judgment there are difficulties with Cantrade’s submission which ultimately prove fatal to the Representation. It is not the investors but Cantrade who are seeking to enforce the plaintiffs’ alleged fiduciary obligations. In our view Cantrade has no locus standi to seek enforcement and what is really being sought is that this Court, of its own motion, and without a request from or reference to the investors should intervene on the investors’ behalf (and, it has to be said, to the ultimate advantage of Cantrade.) Neither of the two cases to which we were referred on this issue (Ewing -v- Orr-Ewing (1883) 9 App. Cas. 34; Bristol & West Building Society -v- Mothew [1996] 4 All ER 698) is authority for the proposition that the Court has such a power - at any rate in circumstances in which, as far as we are aware, the investors are all of full age and competent to attend to their own affairs (in particular, to take independent advice if they think this necessary or desirable.) Nevertheless, we do not rule out the possibility that in an appropriate case a court might be prevailed upon to act in protection of the position of a principal whose interests might otherwise be irreparably damaged particularly in circumstances in which it is clear that the principal has no knowledge, or means of knowledge, of what is happening, as it were, behind his or her back.
In the present case Cantrade pointed to conduct on the part of the plaintiffs in relation to the claim for damages in respect of the investors’ losses which, Cantrade alleged, constituted breach of fiduciary duty. However, whatever hostages the plaintiffs and their advisers may have given to fortune and which may eventually return seeking redress (and, obviously we make no findings on these issues) we must proceed on the basis of the Royal Court’s finding of fact (which Mr. Binnington accepted was binding on his client) that each investor had been sent a summary of Cantrade’s offer in the form of a copy of an advertisement placed in the “Financial Times”. The real hub of Cantrade’s objection is that the plaintiffs made comments to the investors highly critical of Cantrade and its offer and urging that the offer be ignored. It was this factor which motivated the Royal Court to make its Order, the essence of which was that the offer be put dispassionately to the investors.
As we have already stated the Royal court ordered that the Bailiff’s judgment of 18th December, 1997, accompany the individual offer to be put to each investor. This judgment contains fairly trenchant criticisms of the plaintiffs, not only emanating from Cantrade but also from the Royal Court itself. In our view, if this course were to be followed the investors could be left with the impression that the court was seeking to convey criticisms of the plaintiffs to the investors; indeed, even the communication of the offers at the behest of the court and through the agency of a court official might well and without more give rise to the impression that the court was somehow endorsing the offers.
In order to counteract the force of these difficulties Mr. Binnington was driven to suggest that this court should draft, or at least settle, some sort of appropriately worded statement to accompany the offers. Apart from the difficulty of accurately assessing how such a statement, no matter how anodyne, might be interpreted by the investors we consider that such a step would be far beyond the proper function of this, or any, Court.
But there is yet another telling objection to the Royal Court’s Order. Cantrade has argued that it is in the interests of the investors that each should receive an offer specific to each individual, and this may be so. But this is not the only objective of what Cantrade seeks to do. In the original letter of offer sent by Mr. Binnington on behalf of Cantrade on 10th January 1997 it is stated:
“Accepting TTS investors will be required in return to release any claims which they have against Cantrade, and to assign to Cantrade by way of subrogation their rights against all other persons against whom they might claim in respect of their participation in the Troy Trust Service and the foreign exchange losses incurred by Dr. Young.”
At the time of the application to the Royal Court Cantrade had not decided whether or not to enforce such assignments. However, on 3rd February, 1998, Mourant du Feu & Jeune informed Mr. Sinel’s firm that:
“Enforcement will be sought in respect of the assignor investors’ rights against Touche Ross, and against each of the Plaintiffs and their principals, Mr. Stott, Mr. Marsh and Ms. Gabrielli …”
Mr. Binnington did not attempt to resile from the proposition that the
communciation of the offer of compensation to the investors was designed to restore somewhat his client’s battered reputation and to demonstrate to the investors Cantrade’s concern that they were the innocent victims of the affair. Indeed, he went further and submitted that Cantrade also wished to impress upon the investors that in Cantrade’s view the claims made on their behalf were inflated.
Thus, by ensuring that communication of the individual offers to the investors through the agency of the Viscount and with or without the accompaniment of the judgment of the Royal Court, or of this Court or other material, we would be facilitating not the compromise or simplification of the dispute between the parties to this action but the rearrangement of the weaponry available to them to the advantage of one of them, namely Cantrade, the improvement of its standing in the public eye and a warning to the investors that their claims may not succeed. In our judgment, these are not matters or issues in which this Court, or any court, should properly become involved, still less appear to endorse.
Accordingly, we allow the plaintiffs’ appeal against the Order made by the
Royal Court on Cantrade’s Representation.
Lord Carlisle J.A: I agree, and have nothing to add.
Nutting J.A: I agree and have nothing to add.
