Jersey Unreported Judgments

Lease - appeal

[2023]JRC091

Royal Court

(Samedi)

1 June 2023

Before     :

Sir Timothy Le Cocq, Bailiff, and Jurats Cornish and Entwistle

 

File No:2022/059

Mr D. J. Pearce for the Appellant.

Advocate J. Rondel for the Respondent.

ex tempore judgment

the bailiff:

1.        I reserve the right to add to these ex tempore remarks, should I think it appropriate to do so.

2.        This is an appeal in the name of Jersey Online Traders Limited ("the Company") against a decision of the Assistant Magistrate of 24 February 2021.  At all times the interests of that Company have been represented before us by Mr Darius Pearce ("Mr Pearce"), although it appears that the Company has been struck off and has not yet been reinstated.  

3.        The appeal had taken an unusual course.  The decision of the Assistant Magistrate was made on the basis of a breach of clause 6.40 of the lease, to which I will make reference shortly, which is to the effect that the Company had suffered illegal activity to take place.  There was a cross-appeal brought by the Respondent that the decision should also have been made on the basis of a failure by the Company to pay the rent, and in connection with that latter cross-appeal we felt it appropriate to adjourn matters to enable Mr Pearce to apply to reinstate the Company.  He issued a Representation to that effect and presented it to the Court but although the Act of Court required service on the Attorney General he did not procure service explaining to us that he did not realise that this was necessary for him to do so and that previously documents that he had presented had been served by the Court itself.

4.        On enquiry over the adjournment period we did not find any material to support this latter point but we think it is moot in light of the fact that the Respondent has abandoned, for the purposes of this argument, the cross-appeal on the basis of failure to pay the rent.  The need to reinstate the Company in those circumstances becomes significantly less pressing.

5.        We do not agree with the Respondent that we should dismiss this appeal summarily on the basis that the Company at present does not exist.  It seems to us that whatever the failings were in the application to reinstate the Company we should at least give proper consideration to the merits of the argument that remains rather than summarily dismiss it.  

6.        The test that we apply is that contained in the case of Carey v Wellum and Wellum [2021] (2) JLR  Note 3. in which the Court established the test on appeal in the following terms

"An appeal to the Royal Court against a finding of fact by a judge of the Petty Debts Court will not be allowed simply because the members of the Royal Court consider that they would have reached a different conclusion. An appeal against a finding of fact will only succeed if the decision under appeal is one that no reasonable judge could have reached".

7.        The contractual position that calls for our consideration is that contained in the Lease Agreement, and specifically at clause 6.40, which for these purposes states that the Lessee is "Not to carry on or permit or suffer the Unit to be used for any illegal or immoral purposes...".  A breach of that provision entitles the Lessor to cancel the lease and for eviction proceedings to go forward.  It seems to me that a clear interpretation of clause 6.40 does not mean that the Lessee needs to be the perpetrator of illegal activity but merely to permit or suffer the premises to be used for illegal activity which is, of course, a different thing.

8.        The factual position is that at the material time Mr Pearce was a director of the Company and was participating, to put it at its least, in the business of the Company from the premises in question.  He was also convicted and sentenced to 7½ years imprisonment for three counts of money laundering; those convictions have been appealed by him to the Court of Appeal, which dismissed that appeal and he has informed us that he has an outstanding application for leave to appeal to the Judicial Committee of the Privy Council but that indeed has been outstanding for many months, if not more than a year.

9.        The information before the Assistant Magistrate may be summarised in the decision that he made which is in the following terms, and I take this from page 31 of the transcript.  He says this:-

"However, with regard to the second basis upon which the proceeds are brought, namely, breach by using the premises for illegal purposes (I separate out illegal from immoral) according to Clause 6.40 of the Agreement, as a matter of fact Mr Pearce acknowledges receiving cash sums on three occasions. That was agreed before the Royal Court and the Royal Court then made a finding that he was guilty of money laundering in that regard. That in my mind is using the premises for illegal purposes and, therefore, the company is in breach of the Lease by virtue of that breach of Clause 6.40."

He goes on to describe the consequences that flow from that.  In saying that it was acknowledged by Mr Pearce that he received cash sums there were, as we understand it, admissions before the Royal Court at trial to that effect, which coupled with the subsequent conviction of Mr Pearce underpin the decision of the Assistant Magistrate.  Although the decision of the sentencing Court in Mr Pearce's case was not at that point handed down nonetheless there is de facto support for the characterisation given to the matter by the Assistant Magistrate at paragraphs 4 and 5 of the judgment of that Court (AG v Pearce [2021] JRC 203)in which the Court says:-

"4. The Defendant's involvement came to the attention of the authorities when members of the enterprise were seen going into his shop in the market, from where he conducted a jewellery and gold bullion business through his company. He facilitated the movement of cash in the following way:

(i) A sum of cash would be handed to him in his shop by a member of the enterprise.

(ii) The Defendant would deposit that cash in his personal and business bank accounts.

(iii) The Defendant would purchase gold bullion from a dealer in London.

(iv) The gold or its proceeds of sale would be made available to members of the enterprise in the UK.

5. The Defendant was convicted of laundering money in this way on three separate occasions, namely on 13th March 2019, 24th April 2019 and 1st May 2019. Whilst the precise amount of money received by the Defendant for laundering is unknown, the prosecution put its case on the basis that the gold bullion purchased from the London dealers (for a combined sum of £63,917) was funded using criminal  property on behalf of the criminal enterprise."

10.      Although that particular extract was not of course before the Assistant Magistrate it seems to us to characterise what the Royal Court had found and to underpin the decisions and conclusions made at the time on the information before him by the Assistant Magistrate.  

11.      Mr Pearce says in argument that there is a conflation between him as a person and the Company, which of course is not the same thing, and he argues that there has been an error made in as much as there has been "a looking through of the corporate veil" without proper argument and which was to his mind wholly unjustified.  The Company, he says, has never been convicted of committing any crime and therefore the clause 6.40 of the lease does not obtain.

12.      That seems to us to overlook the reality of the situation.  Firstly, at the material time he was a director of the Company; secondly, the shop was used, in the way the Court has said in the judgments to which we have just made reference, as was indeed a business account; and thirdly, clause 6.40 does not require the Company to have perpetrated any criminal act but merely to have suffered it or permitted it.

13.      It seems to us that the fact that Mr Pearce was one at least of the governing minds, he was present in the shop on the occasions, as the Court has found and the Assistant Magistrate found as well, is more than sufficient material on which the Assistant Magistrate could reasonably conclude that the provisions of clause 6.40 have been met.  Accordingly applying the test in Carey v Wellum and Wellum we dismiss the appeal.

14.      We note that the Company's lease has in any event expired and there is no suggestion that it will be voluntarily renewed, indeed the material before us suggests entirely to the contrary.

Authorities

Carey v Wellum and Wellum [2021] (2) JLR Note 3. 

AG v Pearce [2021] JRC 203.