 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
Jersey Unreported Judgments |
||
|
You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Holmes -v- Lingard and Others [2018] JRC 071B (17 April 2018) URL: http://www.bailii.org/je/cases/UR/2018/2018_071B.html Cite as: [2018] JRC 071B, [2018] JRC 71B |
||
[New search] [Help]
|
Before : |
T. J. Le Cocq, Esq., Deputy Bailiff, and Jurats Thomas and Fisher |
|||
|
Between |
Shane Michael Holmes |
Appellant |
|
|
|
And |
Harry James Lingard |
First Respondent |
|
|
|
|
HJL Holdings Limited |
Second Respondent |
|
|
|
|
Angel Fish Limited |
Third Respondent |
|
|
Mr S. M. Holmes appeared in person.
Mr H. J. Lingard appeared on his own behalf and on behalf of the Second and Third Respondents.
Advocate H. J. Heath appeared as Amicus Curiae.
judgment
the deputy bailiff:
1. This is an appeal by Shane Michael Holmes ("Mr Holmes or 'the Appellant') against a judgment and order of the Master of 21st July, 2017, ("the Judgment" and "the Order" respectively). In the Judgment reference to "the Plaintiff" is a reference to Mr Holmes. Harry James Lingard ("Mr Lingard") is the First Respondent and "the First Defendant" in the Judgment.
2. In his Judgment the Master gave decisions in respect of:-
(i) Mr Lingard's applications to strike out Mr Holmes' Order of Justice and for summary judgment that Mr Holmes has no claim against Mr Lingard and the other defendants; and
(ii) Mr Holmes' application to amend his Order of Justice and to strike out or for summary judgment that Mr Lingard has no counter-claim against him.
3. It is not necessary to set out the background in detail. This is adequately set out in Holmes-v-Lingard & Others [2015] JRC 172. In the Judgment the Master also gives a summary at paragraph 6:-
4. In the various procedural stages leading up to the Judgment and Order the Master repeatedly notified the parties of the areas on which he wished to be addressed. These may be summarised as follows:-
(i) What the Plaintiff stated he agreed with the Defendants and when that agreement was concluded;
(ii) Was there a claim in unjust enrichment;
(iii) What losses might flow from any breach of such an agreement or from a claim based on unjust enrichment; and
(iv) Whether any losses claimed were those of the Plaintiff or Home Farm.
5. In the Judgment the Master, at paragraphs 258 - 261, summarised his conclusions as follows:-
6. In essence the Master determined, on his consideration of the evidence available to him, that Mr Holmes' claim that he reached agreement with Mr Lingard in June 2011 was unsustainable because the terms were never sufficiently identified to be certain and an agreement reached; and that certain claims which Mr Holmes made in his own name were irrecoverable as, to the extent that they were claims capable of being brought at all, they were claims that could only be brought by Mr Holmes' company Home Farm Limited which had been struck off. Furthermore, the Master took the view that Mr Holmes may have a claim in unjust enrichment but that such a claim was limited in that it could not include an element for the uplift in value to Hotel La Tour which had been claimed by him.
7. Mr Holmes appeals against the Master's Order to strike out and/or to refuse amendment of parts of his Order of Justice and wishes to re-instate parts of the Order of Justice so struck out which Mr Holmes lists as:-
(i) Breach and repudiation of agreement;
(ii) The estimated losses arising from unjust enrichment;
(iii) Dol, dol reticence, misrepresentation and/or fraudulent misrepresentation;
(iv) Breach of good faith, trust and fiduciary duty; and
(v) Interference by unlawful means.
8. Mr Holmes also seeks to set aside the Master's decision at paragraphs 258 and 259 of the Judgment set out above.
9. The test for an appeal from a decision of the Master, who is a Greffier substitute, as that set out in the case of Murphy-v-Collins [2000] JLR 276, namely that the Court should exercise its own discretion and give such weight as it thinks fit to the Master's exercise of discretion. Accordingly, other than allowing due weight to the Master's decision, we are required to approach the matter de novo.
10. In his judgment the Master referred at length to the principles relating to striking out, to summary judgment and to amendment. It is not argued before us that the Master misdirected himself on those principles. The principles appear to us to be as follows.
11. An application to strike out may be granted to the Royal Court pursuant to Rule 6/13 of the Royal Court Rules 2004 as amended. Rule 6/13 provides:-
12. In the recent judgment of Home Farm Developments Limited v Le Sueur [2015] JCA 242 the Court of Appeal, at paragraph 25, said this:-
13. The Court then went on to say at paragraph 28:-
14. As to the other appropriate principles, the Master set these out at paragraphs 156 et seq of his judgment which it is convenient to repeat as follows:-
15. We agree, and proceed on the basis of these principles. As we have said, it was not suggested that the Master identified the wrong principles.
16. This appeal took a somewhat unusual course in that Mr Holmes was concerned that the Master had proceeded on the basis of the contents of certain affidavits, the accuracy of which Mr Holmes did not accept. Mr Holmes argued that he should be able to cross-examine on those affidavits and, with some hesitation, and in the light of the fact that Mr Lingard did not in the event finally object, we acceded to the request. Accordingly Mr Holmes gave evidence before us as did Mr Lingard and as did Mr Daniel Young, solicitor, who had made an affidavit dated the 24th February, 2015, to which the Master made reference. If there is a material dispute on the relevant facts this would of course impact on this judgment and in the light of Mr Holmes' application we wished to test any dispute to determine that. In the event, Mr Holmes' made no submissions on the live evidence given and, indeed, relied on the Skeleton Argument.
17. In this judgment the Master went to some pains to set out the procedural history leading up to the application before him. It was clear from a perusal of paragraphs 74-78 that the Master strove to bring procedural order to what appears to have been a somewhat challenging procedural history characterised by an apparent difficulty on the part of Mr Holmes in meeting the procedural deadlines set by the court. On the morning of the hearing before him, on Monday 19th June, Mr Holmes applied for an adjournment by summons and affidavit. This application is characterised at paragraph 80 of the Master's judgment and his reasons for refusal are set out at length in the sub-paragraphs of paragraph 81. We do not repeat those reasons other than to observe that we agree that it was appropriate for the Master to refuse an adjournment and with his reasons set out in paragraph 81 for doing so.
18. The view that the Master took of the procedural difficulties which have beset this case and the application under consideration are reflected in his statement at paragraph 82 of the Judgment:-
19. From paragraph 83 of the Judgment onwards the Master set out a detailed chronology relying on the cases as pleaded or affidavit evidence and drawing on the chronology prepared for the assistance of the court by the Amicus Curiae. We do not repeat herein all of that chronology. However, at paragraph 89, the Master characterises the claims made in Mr Holmes' draft Amended Order of Justice as:-
20. At paragraph 90 the Master set out what the heads of terms attached to Mr Holmes' original Order of Justice state:-
21. Thereafter in his chronology the Master set out the sequence of correspondence that passed between Mr Holmes, Mr Lingard, Mr Young and others relating to what appeared to be an evolving understanding of what might if anything been agreed between Mr Holmes and Mr Lingard.
22. At paragraph 114 of the Judgment, the Master makes reference to advice procured from Advocate Mark Renouf who was acting for Mr Holmes at the time (Mr Holmes alleges that he was acting for both parties). This advice, which headed up a subsequent version of the heads of terms provided on the 16th November, 2011, contained the following as a preamble:-
23. The Master's chronology also reflects that those heads of terms were not endorsed by either party. In his draft Amended Order of Justice Mr Holmes wished to allege that the contract between himself and Mr Lingard had been created by conduct. At paragraph 185 of the judgment the Master said:-
24. In the Judgment the Master cited certain cases in English Contract Law which had been placed before him by Mr Holmes. We do not think it necessary to set out the full extracts cited by the Master. However, in Reveille Independent LLC v Anotech International UK Limited [2016] EWCA Civ 4
25. The Reveille decision was referred to in RTS Flexible Systems Limited v Molkerei Alois Muller Gmbh [2010] UKSC 14 in which the Supreme Court said as follows:-
26. Of course as the Master correctly recognised these cases deal with English Contract Law and are not necessarily statements of all of the principles applicable in Jersey. He made reference to Selby v Romeril [1996] JLR 210 in which the Court said:-
27. Accordingly, as the Master also recognised, both English case law and, more importantly, Jersey case law emphasises the requirement for certainty. It is on this basis that the Master approached the analysis of the evidentiary position in connection with this case.
28. The Master at paragraph 186 of the Judgment characterised what he understood to be Mr Holmes' case. He describes it in the following terms:-
29. It is fair to say that this characterisation by the Master is a generalised statement of Mr Holmes' case which is stated in greater detail in both the Order of Justice and the draft Amended Order of Justice. In the latter document, at paragraph 11, Mr Holmes pleads:-
"11. Despite agreeing the Operative Terms incorporated in the Agreement, events took over between the parties and the Agreement was not signed. It is the case, however, as set forth hereinafter, that the parties consent to undertake the Agreement was formed by their mutual (i) conduct, (ii) performance of the Operative Terms and / or the Cause and (iii) commencement of the development works."
30. The Master then analysed what appears in the documentation produced after June, 2011 in paragraphs 187 to 193 of the judgment. He identified different versions of the heads of terms and then characterised his view at paragraph 194 in the following terms:-
31. The Judgment (at paragraph 195) then reflected Mr Holmes' explanation (and made comments on that explanation) as to why there were different versions in the following terms:-
32. In his Order of Justice and in his draft Amended Order of Justice, Mr Holmes sets out the events which he asserts lead to the conclusion that an agreement had been reached including the actions that he had taken. At paragraph 21 of the draft Amended Order of Justice Mr Holmes pleads as follows:-
"21. In reliance of the agreement and the parties forgoing conduct, performance and assent thereof, Holmes and Lingard attended meetings at Messrs Hanson Renouf in and around October 2011, to jointly convey their expectation from the agreement and seek legal advice in relation to stamp duty and land transaction tax in respect of the deposit payment in Home Farm shares to Lingard and the equity stake in Angelfish shares to Holmes, inter alia. Advocate Mark Renouf ('Advocate Renouf') provided the parties his advice in writing on the 16th November 2011, a copy of which is attached hereto marked as exhibit "SMH8". Such advice, reflects the parties' mutual expectations from the agreement. Notably, paragraph 17 of the said advice reflects the parties' agreement to apply the date of the 31st March 2012 to the operative terms at paragraph 6(3)(ii) with such date to coincide with the expiry of the secured charges."
33. The reference to the draft produced by Advocate Mark Renouf is a reference to the draft quoted at paragraph 22 hereof.
34. In paragraphs 187 to 192 of the Judgment the Master set out in general the contents of each of the documents which purported to refer to contractual terms between Mr Holmes and Mr Lingard. He then set out his conclusions on those documents at paragraph 193 in the following terms:-
35. The Master concluded his analysis of the documentation, at paragraph 196 of the judgment:-
36. Thereafter, at paragraph 197, the Master pointed to additional elements which he took as showing that there was no real issue to be tried on the allegation that Mr Holmes and Mr Lingard had entered into a contract in June 2011 as follows:-
37. There is no suggestion that Mr Holmes challenged the statement referred to at paragraphs 23 and 37(vi) above at the time it was made. It was, as indicated, made some five months after Mr Holmes now alleges that the Plaintiffs had reached agreement on essential or 'operating' terms.
38. The Master clearly took each and a combination of these matters as supporting his view that no certain terms had been agreed between Mr Holmes and Mr Lingard and therefore that no contract had been established between them either in June of 2011 or at any time subsequently.
39. The Master did, however, accept that there was evidence from Mr Holmes that he had carried out certain assistance to Mr Lingard and the other defendants in connection with the development of Hotel La Tour. The Master accepted that those items, which he set out at paragraph 198 of the Judgment, could amount to factual matters relied upon as to why Mr Holmes might argue that the defendant had agreed terms. However as the Master said "they are not an answer to the conclusions that I have reached, namely that there is no realistic prospect with the Plaintiff establishing what terms he agreed in June with the First Defendant at trial. The Plaintiff's problem is not therefore that a contract cannot be agreed by conduct. His problem is that there is no realistic prospect of him demonstrating what the terms of that contract were......" (paragraph 199 of the Judgment).
40. The Judgment then states, with regard to Mr Holmes' proposed amendments:-
41. At paragraph 203 of the Judgment the Master reflects the observations of the Amicus Curiae in the following terms:-
42. We might observe at this point that the submissions of the Amicus Curiae before us were similarly pithy. She made no observations about the evidence from Mr Holmes and Mr Lingard but characterised the evidence of Mr Young as "categoric" and that in reliance on that evidence it would be an abuse to go further. She indicated, in her view, that Mr Holmes had simply not indicated where the Master had gone wrong or why his reason was flawed or what he got wrong in law. Mr Holmes' appeal in her submission really was simply a repetition of Mr Holmes' case before the Master.
43. As we have said, Mr Daniel Young ("Mr Young") gave evidence before us. He identified his affidavit of the 24th February, 2015, and adopted it for the purposes of this hearing. He had understood that a question had been raised in part about Mr Holmes' desire to borrow £25,000 and how this was to be borrowed from Mr Lingard. The sum repaid to Mr Lingard was to be £37,000. He had received these instructions and Mr Lingard and referred them to Mr Holmes to ask if it was in fact agreed. Mr Holmes had confirmed his agreement to Mr Young.
44. Mr Young's understanding was that Mr Holmes needed to pay money for a share transfer to complete a purchase. There was a shortfall between his borrowing and what needed to be paid and the money that he was borrowing was to meet that shortfall. It was short-term funding to enable the transaction to complete on a specific day.
45. In paragraph 4 of Mr Young's affidavit he confirms that he had been informed that there were discussions between Mr Holmes and Mr Lingard about Mr Holmes or his development company Strata Developments Limited ("Strata") buying a hotel which was owned by a holding company called Angel Fish Limited owned by Mr Lingard. Mr Young was copied in on various documents that had been produced in relation to a purchase of the holding company by Strata. Mr Young says in his affidavit that the documents lacked clarity and had been produced by Mr Holmes and were not suitable to Mr Lingard. Mr Young had therefore prepared a document which he had circulated as a discussion document, with blanks, where the parties needed to reach agreement on significant matters such as the price and amount to be borrowed. As far as Mr Young was concerned, no final agreement had ever been concluded and material terms were left undecided. He recalled numerous meetings but at no stage was an agreement reached.
46. At paragraph 6 of his affidavit Mr Young says as follows:-
"I have read the Order of Justice in this matter and I have no hesitation in saying there was no agreement concluded in respect of La Tour Hotel as stated by Mr Holmes or at all. This does not surprise me, as stated above stating to Mr Lingard that what was being put forward by Mr Holmes effectively meant that Mr Lingard was using his own company to pay himself. I have acted for Mr Lingard for nine years and would not expect him to enter into a binding agreement of significant value in relation to Jersey property without asking me to prepare the necessary documentation..."
47. Mr Young was involved in preparing documentation for securing a number of loans made by Mr Lingard or his companies to Mr Holmes or Home Farm Limited. These documents gave rise to the secured charges. At paragraph 9 of his affidavit Mr Young says:=
"At paragraph 17 of the Order of Justice, Mr Holmes has tried to dress up his request for finance for Home Farm Development Limited as some sort of option agreement. I was not aware of any option agreement. The reason for the funding was as I have set out above."
48. He also says, at paragraph 20:-
"On the 27th September, 2012, Mr Holmes emailed me.... stating that he had agreed to transfer the shares in Home Farm Development to HJL Holdings Limited. I asked for the detail of the houses to seek the formal approval of the Housing Department for the transfer of shares. The reference at paragraph 26 of the Order of Justice as he was waiting for housing consent in spring / summer 2012 would be more accurately described as autumn 2012. On my instructions this was solely for repayment of the loans rather than part of an agreement."
49. Mr Young was cross-examined by Mr Holmes who put to him various documents, challenged him about authorship of those documents and some of the dating. Mr Young's evidence did not change in any material sense from that set out in his affidavit. On occasion Mr Young was not able to recollect the answers such as who authored which particular document and whether or not certain meetings took place. What he did say, however, in response to a question from Mr Holmes was that at no point was there a sense of 'we have a deal'. He said:-
"As far as I am concerned - no deal was done."
50. Mr Young's affidavit summarises his understanding of the position at the end of his explanation of the various loans in the following terms:-
"At paragraph 29/31 of the Order of Justice Mr Holmes refers to the secure charges. He maintains it was wrong to claim that they were connected to Home Farm Developments Limited and not connected to any agreement. This is simply not accurate. I do not recall that the secure charges were part of some separate agreement that concern La Tour Hotel. Loans and the security were as I have set out in this affidavit."
51. It is not in our view necessary to go into more detail of the evidence given by Mr Young beyond saying that in our view none of the questions put to him or the -nswers he gave departed from the final paragraph of his affidavit which is in the following terms:
"My recollection is clear. Mr Holmes needed funding for his Home Farm site. Mr Lingard provided that funding. Mr Holmes and Mr Lingard discussed various deals re the La Tour site but they never came to fruition and over the discussions lacked enough clarity or meaningful negotiations to take place."
52. Having heard Mr Young, the Court was satisfied that his evidence was reliable.
53. As we have said, we also gave leave for Mr Holmes to give evidence and for Mr Lingard to give evidence and each to cross-examine the other.
54. Both brought into evidence their affidavits that were before the Master and although each were cross-examined by the other we did not feel able to detect anything meaningful from that cross-examination that took us beyond the terms of the documentation reviewed by the Master.
55. A number of complaints were raised by Mr Holmes in his Notice of Appeal about certain procedural decisions taken by the Master. These included whether or not the Master erred in permitting the Amicus Curiae to act outside the bounds of the order of the Royal Court on the 17th February, 2017, and/or generally the jurisdiction of an Amicus; whether various directions given by the Master which visited consequences upon Mr Holmes for his failure to meet orders of the court were justified or prejudicial; the Master's criticism of Mr Holmes' conduct of the litigation; and a failure to give sufficient import to the burden upon Mr Lingard to prove the applications to strike or for summary judgment.
56. We do not consider that there is any merit in these procedural points. In our view, the Master was entitled to seek to bring procedural order to these proceedings and it is clear that as a significant amount of leeway had already been afforded by him to Mr Holmes in light of the fact that Mr Holmes was and is a litigant in person, albeit an experienced one. There comes a time, however, where the court must make it clear that its orders are to be respected and obeyed and visit appropriate consequences on parties who do not obey them. In our view, the Master's directions were neither unfair or incompatible, as Mr Holmes alleges, with Article 6(1) of the European Convention of Human Rights. It was open to the Master to determine that the interests of a fair trial for all parties meant that it was necessary to impose procedural sanctions upon one or more of them.
57. Also as part of his procedural complaint, Mr Holmes complained that the Master was wrong in compiling what Mr Holmes terms as an 'alleged factual chronology from scant and disputed evidence'. We do not see that the chronology produced by the Master can be justifiably characterised in this way. It was inevitable, in considering the various applications that the Master needed to understand the sequence of events. Some, as we have said, he took from Mr Holmes' own pleadings and affidavits and other from what appeared to be incontrovertible documents in the sense that they existed and passed between the parties. Furthermore, as we have said, rather than resting his argument on the uncertainty of the documentation, Mr Holmes asked to cross-examine both Mr Lingard and Mr Young on their affidavits. This inevitably involved a cross-examination on and challenge to some of the documentation which was set out in the chronology. In our view, none of that cross-examination undermined the accuracy of the Master's chronology on which he relied in formulating his decision.
58. Accordingly we do not think the procedural points that Mr Holmes raised assist him in his appeal.
59. Mr Holmes claims that the Master erred in ruling on whether the parties had reached agreement in June 2011 as opposed to entering into an agreement which had been formed by conduct which was Mr Holmes' case.
60. Moreover Mr Holmes argued that the Master failed to give sufficient weight to his affidavit evidence in respect of a supplemental agreement in April 2012 in which it is alleged the respondents agreed to pay the appellant 10% of the proceeds in the event that La Tour was sold as a development site with a particular scheme only.
61. Mr Holmes makes the point that he had pleaded or intended to plead the agreement had been formed by conduct and or performance and that in his affidavit he had disputed the source and authenticity of the various other versions of the so-called agreements. The chronology relied upon the Master, so Mr Holmes alleges, excludes the fact that the parties had conducted themselves between October 2011 and October 2012 in a way which supported the existence of an agreement specifically including performance of works specified in the quote of November 2011 and advancing the development pursuant to a supplemental agreement of April 2012 as set out above.
62. Furthermore, Mr Holmes alleges that at no point did the First Respondent email him to confirm there was no agreement subsisting or to suggest that the First Respondent had changed his mind in spite of his "express unequivocal 'volonté'" to be bound or to warn the appellant that the work he was doing was for his own account.
63. On this last point it is not clear to us that there was any obligation on Mr Lingard to notify Mr Holmes that no agreement was subsisting. Either there was an agreement which was known to both of them or there was none. It is difficult to see why Mr Lingard should have asserted that there was no agreement at any particular point if, as in his case, no agreement was reached.
64. We have attempted above to give a relatively brief synopsis of the main points made by Mr Holmes on appeal. The points were, however, addressed in more detail within his notice of appeal and were not always easy to follow.
65. In essence, it seems to us, that Mr Holmes' case can be summarised as follows:-
(i) The Master should not have relied on disputed evidence in determining the chronology on which he based his decision;
(ii) Various matters were in dispute that were material and could only be resolved by a hearing before the court;
(iii) Although stating that in principle an agreement could be reached by conduct the Master erred by not giving this sufficient weight and looking for crystallisation of such an agreement in June 2011.
(iv) The Master did not give sufficient weight to the further agreements set out above as showing that clearly an agreement existed between the parties on which Mr Lingard relied;
(v) The Master was wrong in his application of the principles relating to reflective loss but even if he were not wrong in those principles it was unfair of him to apply them because Mr Holmes had not been given a sufficient chance to plead his case.
66. In our view the Master was correct in his assessment of the evidentiary picture. On any impartial review of all of the documentation it seems to us that it is impossible to say with regard to Mr Holmes' assertion that an agreement was reached between himself and Mr Lingard as to when such an agreement was reached and what its terms were. We agree that the evidence supports the fact that there was a very serious consideration given to an agreement and that its thrust was an arrangement for the development of La Tour. We do not, however, think that there is evidence to support the fact that an agreement in any of the terms specifically alleged by Mr Holmes was ever reached and accordingly we agree with the Master's view.
67. In our view for these reasons it was appropriate to grant summary judgment to Mr Lingard on this issue and indeed to strike out Mr Holmes' pleading to the contrary as the Master did.
68. It is further argued that the Master failed to give sufficient weight to Mr Holmes' affidavits and pleadings that various charges secured against Home Farm in the sum of £282,500 remain in dispute.
69. Mr Holmes' assertion that he disputes that this sum is outstanding does not of itself amount to a sufficient evidentiary basis for the finding that he has a case on this point. The Master was entitled to and did give weight to the evidentiary position as he understood it but that it appears from the documentation and, specifically, Mr Young's affidavit which as we have said was not in our view undermined in any way in cross-examination.
70. Mr Holmes further sets out his case concerning the loans secured against Home Farm. Amongst other things he alleges that the secure charges were given by him in reliance on the unequivocal 'volonté' to be bound by the agreement given my Mr Lingard which is specifically expressed in October 2011 or immediately prior to Mr Holme's proposed giving of the second charge. Mr Holmes suggests the evidence depicts that never at any time were the secure charges intended or performed as standalone loans - rather they reflected part-performance of a deposit to which the First Respondent, Mr Lingard, expressed an 'unequivocal volonté' to be bound by.
71. Once again, the Master had before him the documentation relating to the secured loans which make no reference to them being part of any broad agreement and indeed, in their simplicity and silence on this, support the case that they were stand alone in their nature.
72. Mr Holmes therefore argues that a judicial hypothec relationship existed between HJL Holdings Limited and Home Farm and he accordingly argues that Mr Lingard as directing mind of HJL Holdings Limited owed a fiduciary duty in duties of good faith and trust to Home Farm and to Mr Holmes himself. He suggests that such a relationship, the judicial hypothec relationship, ought to be treated by the court as being on a par with a contract of uberrima fides. He concludes that all of the issues relating to the security of loans against Home Farm are all issues that could only be properly determined by a trial court following all of the evidence.
73. We do not see that this argument has substance. Firstly it is far from clear to us that it can be said that a relationship which involves a judicial hypothec, which this one clearly did in the sense that such was used to secure the loans advanced by HJL Holdings Limited to Home Farm Limited, carries with it any form of fiduciary obligation. It is simply on its surface a loan and securitisation arrangement.
74. As to the question of treating such an arrangement as one of uberrima fides and as both Mr Holmes and Mr Lingard were unrepresented before us we have directed ourselves to the case of Sutton v Insurance Corporation of the Channel Islands [2011] JRC 027 in which Bailhache Deputy Bailiff (as he then was) considered an insurance contract and made the following observations about implied terms of good faith at paragraph 14 et seq of that judgment:-
75. It seems to us that absent any clear wording that a contract should be subject to the principal of uberrima fides we should not seek to view any particular contract through that prism.
76. As to the arguments for a duty of trust it seems to us that this is entirely foreign to the law relating to commercial contracts and no trust or indeed fiduciary relationship exists. Lastly with regard to the suggestion that this matter is concerned with duties of good faith they are said to arise out of the judicial hypothec relationship. The first point to make about this is that the judicial hypotec relationship was not between Mr Holmes or Mr Lingard. It was between HJL Holdings Limited and Home Farm Developments Limited. Home Farm is of course not a party to the proceedings. Secondly, however, there is no sustainable allegation that any party acted other than in good faith where the judicial hypothec arrangements were concerned. The lack of good faith that Mr Holmes wishes to assert is an allegation that Mr Lingard in effect failed to honour the terms of the agreement between himself and Mr Holmes. That, of course, can only have any kind of force if there was in fact an agreement between Mr Holmes and Mr Lingard. Lastly, on this aspect of Mr Holmes' case, it appears to us far from clear that a duty of good faith should be read into a purely commercial contract in the way that Mr Holmes seeks to assert although this to us is a secondary potential impediment to Mr Holmes' claim.
77. We agree with the Master that there is evidence to suggest that Mr Holmes took actions which may have been of value to Mr Lingard which undoubtedly were taken in the hope and possibly expectation that an agreement between himself and Mr Lingard would be reached (which we have found did not happen). It seems to us as it did to the Master that these are matters that Mr Holmes should be entitled to pursue to trial under a claim in unjust enrichment.
78. The Master in the Judgment considered the law of unjust enrichment and expressed the view that there is evidence that the Plaintiff provided services to the defendants and that accordingly the Plaintiff had some chance of establishing at trial that he provided such services. There was an issue as to whether those services were of benefit and the Master determined, with which we agree, that those issues could not be resolved on a summary judgment application and needed to be left over for trial. The Master did, however, go on and deal with one aspect of Mr Holmes' claim in unjust enrichment - specifically the claim for an uplift in the value of Hotel La Tour as a result of any services that he had provided.
79. The Master based this analysis on two judgments of the Supreme Court/House of Lords.
80. In Benedetti v Sawiris [2014] AC 938 at trial the judge ruled that the plaintiff was entitled to an award of damages based on quantum meruit for his services provided in expectation of reward under a contract which was not ultimately entered into. The case went to the Supreme Court and, as quoted in the Master's Judgment, the Court, at paragraphs 13-16 made certain statements as follows:-
81. In the rest of the sections quoted in the Master's Judgment the Court there went on to express the view that an objective test should apply to the issue of the market value of the services provided and not the subjective test - namely the benefit the claimant believed that he had conferred.
82. In Cobbe v Yeomans Row Management Limited [2008] 1 WLR 1752, (cited in Benedetti above) a claim for the imposition of a constructive trust in a development property failed even though the value of the property had been increased by the grant, obtained by the claimant, of planning permission. At paragraph 41 of the judgment Lord Scott of Foscote said this:-
83. It was on the basis of this authority that the Master determined that Mr Holmes could not, within his claim for unjust enrichment claim a share in any uplift in the value of Hotel La Tour assuming that his actions have produced such an uplift. He was entitled to claim for the market value of his services together with expenses he had incurred.
84. In effect, other than for that single point, the Master left all other issues relating to the claim in unjust enrichment for subsequent trial.
85. Mr Holmes argues in his Notice of Appeal that the authorities on which the Master relied did not address loss arising from performance or part performance of an agreement or dol reticence (where, as he expresses it, a party is found to have led another to act in the belief that an agreement is subsisting in respect of an uplift and/or profit share). He therefore asserts that these issues should be left for the trial.
86. We do not agree. It appears to us that the Master's assessment of the matter is based clearly upon authority which is persuasive insofar as it relates to unjust enrichment. Reference to an agreement of course depends upon there being an agreement that can be expressed in settled terms. Although clearly both Mr Holmes and Mr Lingard were anticipating that an agreement might be entered into there does not appear to us to be a basis for saying that at any point Mr Lingard asserted that there was such an agreement. In our view the Master's analysis is correct and the claim for an unjust enrichment cannot include a claim for an uplift.
87. These arguments, have, it seems to us, to depend upon an assertion that the contract was as Mr Holmes has alleged and pleaded. The Master's finding that no contract subsisted was based on his determination that there was insufficient certainty about the terms of the contract. There is no suggestion, as we understand it, that the Master made any determination to the effect that there was an understanding that there would be an uplift and/or profit share nor, on an analysis of the documentation that we have seen, could it be said that such terms ever materialised with sufficient certainty to form a contractual arrangement.
88. The Plaintiff's Order of Justice and indeed the Amended Order of Justice contained claims for losses which are based on the allegations that Mr Lingard persuaded Investec to commence foreclosure proceedings against Home Farm Limited. The Master accepted that such a claim was capable of being made and damages based on the tort of causing loss by unlawful means might be claimed (see paragraph 228 of the Judgment). He rejected, however, the claim by Mr Holmes that those losses were based on fraudulent misrepresentation because, as he said, a fraudulent misrepresentation claim is ultimately a claim to set aside a contract. He makes the observation in his Judgment that the representations allegedly made by Mr Lingard to Investec were long after the loans were made to Home Farm. Accordingly the Master restricted his analysis to the tort of causing loss by unlawful means. We agree with this approach.
89. Furthermore, insofar as the Plaintiff's claim amounted to an allegation of fraud, the defendant received no benefit as a result. In the words of the Master at paragraph 236:-
90. The Master then went on to identify what he viewed as the real difficulty with Mr Holmes' claim. He expressed that difficulty as being claims which Mr Holmes was not entitled to bring because they belonged to Home Farm Limited being the owner of the properties at all material times. The Master observed that Mr Holmes' justification as to why he was entitled to claim those losses is based upon the breach of an agreement allegedly reached in June 2011 which, as the Master said, was not sufficiently certain as to its terms. Mr Holmes' claim was as a shareholder in Home Farm Limited.
91. This was an argument made on what is called the 'Prudential Principle', namely that a shareholder cannot sue to recover damages personally in relation to wrongs done to the company. It was established by the English Court of Appeal in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204.
92. The Master cited Freeman v Ansbacher Trustees (Jersey) Limited [2009] JLR 001 where at paragraphs 76 the Court approved Johnson v Gore-Wood and Co. [2002] 2 AC 1 which said:-
93. At paragraph 241 and 242 of the Judgment it is stated:-
94. The Master went on to say that in any event any claim brought by Home Farm would be prescribed. On that last point that may or may not be the case. In our view were that, but for the other points made in the Master's Judgment, to be the only issue preventing the claim for reflective loss proceeding then we would not be inclined to prevent it for that reason alone. It seems to us that it must be open in those circumstances for the Plaintiff to argue that Home Farm was effectively prevented from bringing its claim by reason that it had been struck off and that the cause of that impediment could be laid or should be laid at the door of the First Defendant. We do not, of course, make any observation as to whether that analysis is correct or would succeed but we would not, for the reason of prescription alone, have blocked that claim from proceeding further.
95. In his Notice of Appeal Mr Holmes says that the 'no reflective loss' principle established in the cases cited before the Master 'arguably does not apply to the instant case'. He sets out three reasons for this argument. They are, in summary:-
(i) That the Freeman case provided that the Prudential Principle, designed to protect the interests of company creditors, did not apply squarely to the facts of that case and they confined the function of the Prudential Principle to ways that are consistent with Mr Holmes' claim;
(ii) The Court of Appeal unanimously held that the Prudential Principle did not apply where 'the wrongdoer has disabled the company from pursuing its course of action' and 'has been forced to abandon its claim by reason of impecuniosity attributable to the wrong which has been done to it'. Again, those principles are arguably consistent with Mr Holmes' case because he pleads that Mr Lingard brought about the dissolution of of Home Farm Limited.
(iii) The Appellant's claim for damages in the sum of his personal loan falls outside the confines of the Prudential Principle.
96. It seems to us that it is arguable that the cases relied upon by the Master in connection with the reflective loss principal may not be the end of the appropriate investigation of the legal principles involved insofar as they apply to the facts of this case. If it is the case that the Court were to find, as a matter of fact, that Mr Lingard had unlawfully and tortiously interfered with the contractual relations such as to induce Investec to foreclose (and we make no observations at all about that issue) it may be that were a direct consequence to have been the striking off of Home Farm Limited that the Prudential Principle may not apply. We make no finding about that nor indeed do we intend to suggest an outcome to that question. What we do say, however, is that in our view, this is an issue that can and should proceed to trial.
97. In Freeman (cited above) the Court, after expanding the no reflective loss or Prudential Principle, the Court said at paragraph 82 et seq:-
98. We do not need to resolve the position with regard to the applicability or otherwise of the Prudential Principle. Prima facie it appears to apply in the present case because any foreclosure would be against the company and Mr Holmes' loss to that extent would not extend beyond the value of the company reflected in his shareholding.
99. However, we cannot say that there is not some argument for saying that the no reflective loss or Prudential Principle should not apply in the circumstances. We are not for a moment retreating from the full vigour of that principle in appropriate cases and it seems to us that it is much more likely to apply in this case than in Freeman but we are not convinced that that is a matter that should be disposed of either at a summary judgment or striking out stage.
100. Accordingly we allow that part of the argument to proceed for argument at trial in the light of a full understanding by the Court of the facts. It is, of course, a matter for Mr Holmes as to whether he seeks to reinstate Home Farm Limited and further seeks to join that company to the present proceedings and we make no observation on either the possibility, permissibility or effect of those courses. However Mr Holmes wishes the opportunity to argue that he has been effectively prevented from recovering loss through Home Farm Limited by reason of the fact that it was struck off and that itself was attributable to the actions of Mr Lingard. We think that it would be open to him to advance such an argument at trial without in any way expressing our view as to the strengths of such an argument or its likely outcome.
101. In summary, we dismiss the appeal save insofar as we allow the argument based on reflective loss to proceed to trial.
102. Accordingly, we uphold paragraphs 1a, 2, 3, 4, 5 to 14 inclusive of the Order. We allow Mr Holmes' appeal insofar as it relates to 1b of the Order.