Litigation Review - No. 19 - Ogier

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April 2008Litigation Review - No. 19Case SummaryPrescriptionPell Frischmann Engineering Limited v BowValley Iran Limited & Ors [2007] JRC 105AThis case is the first in which the Royal Court dealt withissues of limitation in relation to the cause of action ofbreach of confidence and offered a view as to whetherthe equitable doctrine of laches applies in Jersey.The Court held that issues of limitation are treated asbeing procedural under Jersey and English law andtherefore governed by the lex fori (in this case, Jerseylaw). It went on to clarify the law on limitation in relationto actions for breach of confidence in Jersey, holding thatthe limitation period for such a cause of action is tenyears.The Court also accepted that the doctrine of laches or itsequivalent could operate in Jersey so that in certaincircumstances, a plaintiff may be refused some particularform of relief notwithstanding that his claim is not timebarred,but declined to express any precise formulation ofthe principle (as it had not been fully argued).Strike Out - DelayLescroel v Le Vesconte [2007] JRC 091Rule 6/26(13) provides that if two months have elapsedfrom the time limited for filing pleadings and no summonsfor directions has been issued, the Court may, of its ownvolition, having given not less than 28 days notice inwriting to all parties, order the dismissal of the action.The Court held that when considering whether to dismissan action pursuant to this rule, the Master shouldconsider the following.• Has the plaintiff satisfied him that, apart from the failureto issue a summons for directions as required by Rule6/26, he (including his advisers) has prosecuted hiscase with at least reasonable diligence, so that overallhe is innocent of any significant failure to conduct thecase with expedition?• Has the plaintiff satisfied him that, in all thecircumstances, his failure to apply for a summons fordirections is excusable and should be forgiven?• Has the plaintiff satisfied him that the balance of justiceindicates that the action should be allowed to continue?If the answer to any of these three questions is no, thiswill point towards dismissal of the action.As the Royal Court Rules are currently drafted, a decisiontaken by the Master to dismiss an action under Rule6/12(13) is a judicial act even in those cases where nosummons in response to the circular has been issued bythe plaintiff with the consequence that the Master hadheard no argument on the question of whether the actionshould be permitted to continue. This means that anADMIN-14369297-2appeal to the Court is currently the only available route forthe strike out to be reviewed. The Court held that thiswas undesirable and necessitated a change in the Rules.Strike Out - no reasonable cause ofaction/frivolous or vexatious/abuse ofprocessTrant v A.G. [2006] JRC 172The Attorney General made an application to strike outthe order of justice of the plaintiffs pursuant to Rule6/13(1)(a) and/or (b) and/or (d) of the Royal Court Rules(as amended) on the grounds that it disclosed noreasonable cause of action, was frivolous or vexations orotherwise an abuse of process. The plaintiffs soughtdeclaratory relief to the effect that inter alia they could notbe compelled to attend or give evidence in and couldvalidly claim the privilege against self-incrimination inrespect of criminal proceedings in Jersey which had beencommenced by the Attorney General against two otherparties who were accused of laundering money resultingfrom the criminal conduct of the plaintiffs.The court emphasised that on an application to strike outon the ground that there is no reasonable cause of actionevidence is not admissible, whereas on an applicationbased on the ground that the order of justice isscandalous, frivolous or vexatious or an abuse of processor where the application to strike out is made out underthe inherent jurisdiction of the court, evidence isadmissible and may be considered by the court.It struck out all claims made in the order of justice otherthan the plaintiffs’ claim that the statements obtained fromthem were obtained unlawfully as a result ofmisrepresentation on behalf of those representing theAttorney General and that, as a result, they had a claimagainst the Attorney General for misuse of privateinformation, breach of confidence and/or abuse of power.It did so even though the plaintiffs had failed to put inevidence dealing with this key aspect of the claim.Trusts - foreign orders re Jersey trustsIn the matter of the B Trust [2006] JRC 185This decision was the first decision of the Royal Court inrelation to the new Article 9 of the Trusts (Jersey) Law1984 (as amended) (“the TJL”). The trustees of the BTrust applied to the Royal Court for directions in relationto the administration of the B Trust following an order ofthe Family Division of the High Court in England inmatrimonial proceedings between two beneficiaries of thetrust, varying the terms of the trust as a post-nuptialsettlement in the wife’s favour. The trustee had submittedto the jurisdiction in the English proceedings and it soughtdirections as to how it should respond to the Englishorder.The trustee argued that the Court should give effect to theEnglish order. The husband resisted this on two grounds:
April 2008Litigation Review - No. 19Case Summaryfirst, he submitted that the effect of Article 9 (asamended) was to render the English order unenforceableon the basis that the finding that the B Trust was a postnuptialsettlement was inconsistent with Jersey law.Secondly, he argued that the jurisdiction to enforce aforeign judgment on the basis of comity had beenremoved on a proper interpretation of the new Article9(4), which provided that no foreign judgment withrespect to a trust would be enforceable to the extent thatit was inconsistent with the TJL irrespective of anyapplicable law relating to conflicts of law.The Court rejected both arguments of the husband. Itinclined to the view that the B Trust was not a post-nuptialsettlement under Jersey law but found that in the contextof the provisions of the B Trust, it was clear that questionsrelating to the exercise of the trustee’s powers ofadministration and appointment were to be governed byEnglish law. It was not concerned with the questionwhether the B Trust was a post-nuptial settlement, norwas it being asked to vary the trusts of the B Trust. It wassimply exercising a jurisdiction under Article 51 of the TJLto give directions to a trustee which had sought theassistance of the court. Its function was to decidewhether and if so, to what extent, to give effect to theconclusions at which the English court arrived and indoing so, it would apply Jersey law.should be the normal costs order in a case where atrustee fails in its fiduciary duty in this way, so that theloss should not fall on the beneficiaries.Trusts - recognition of English constructivetrustsPlane v Jones [2006] JCA 127This case involved a claim by a beneficiary of a trust foran order that the trust fund be distributed and terminatedas to part, to reflect her claim that she had in fact held abeneficial interest in three properties prior to theirsettlement into the trust by her partner.The Court of Appeal considered the nature of the interestthe claimant had in the properties as a matter of Englishlaw (as the trust property was located in England) andconfirmed, following English authority (Lloyds BankLimited v Rosset [1991] 1 AC 107 and Grant v Edwards[1986] Ch 638) that a constructive trust in property mayarise where there was express agreement of the relevantparties and an act by the claiming party to its detriment,or alternatively, where a common intention can beinferred by conduct (which would typically arise wherethere had been a contribution to the purchase price orpayment of mortgage instalments).The Court also rejected the argument that a properinterpretation of Article 9(4) dispensed with the jurisdictionto enforce a foreign judgment on the basis of comity. TheBailiff held that although the meaning of Article 9(3)(which provides that the law of Jersey relating to … (b)conflicts of law shall not apply to the determination of anyquestion mentioned in paragraph (1) [including, e.g. theadministration by a trustee of a trust] unless the settlorwas domiciled in Jersey), when read in conjunction withArticle 9(4), was unclear, he was quite sure that neitherparagraph excluded the application of the doctrine ofcomity, which was after all simply a question of goodjudicial manners.In exercising its discretion under Article 51 of the TJL, theCourt had regard to the interests of all the beneficiaries ofthe B Trust and decided to give effect to the Englishorder.Trusts - handover of trust documents onretirementOgier Trustees Limited v CI Law TrusteesLimited & Ors [2006] JRC 158In circumstances where the defendant, as outgoingtrustee, had failed to provide a full and proper handoverof trust documents to enable the incoming trustee toidentify and gather in the assets of the trust,notwithstanding that the documents were eventuallyprovided, the failure to provide documents by way of atimely handover would amount to a breach of fiduciaryduty and indemnity costs were awarded against theoutgoing trustee. The Deputy Bailiff commented that thisTrusts - removal of trusteeEiro v Equinox Trustees Limited [2006] JRC119One set of beneficiaries applied to remove the Defendantas trustee of a trust on the ground that they had lost faithin the trustee and that it had behaved incompetently tosuch an extent that its removal from office was justified.The Court held that the legal test for the removal of atrustee was the same as that under English law: thegeneral principle guiding the court in the exercise of itsjurisdiction is the welfare of the beneficiaries and thecompetent administration of the trust in their favour.Although positive misconduct will always justify theremoval of the trustee who has abused his trust, it is notevery mistake or neglect of duty or inaccuracy of conducton the part of the trustee which will do so: subject to thegeneral guiding principle the act or omission must besuch as to endanger the trust property or to show a wantof honesty, or a want of proper capacity to execute theduties, or a want of reasonable fidelity.The allegations of incompetence on the facts amountedto a suggestion that during a certain period the Defendanthad not taken sufficiently active steps to remedy thedefects of administration on the part of their predecessor.However, the evidence showed that in fact the Defendanthad taken steps to investigate and remedy the defects atits own expense (as the trust had no liquid assets). Thus,the Court was satisfied that the Defendant had performedits duties competently.ADMIN-14369297-2
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Litigation Review - No. 19 - Ogier

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