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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Mucky Mutz Limited v Hightide Investments Limited [2024] JRC 268 (05 December 2024) URL: http://www.bailii.org/je/cases/UR/2024/2024_268.html Cite as: [2024] JRC 268 |
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Before : |
A.R. Binnington, Esq., Commissioner, and Jurats Averty and Berry |
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Between |
Mucky Mutz Limited |
Appellant |
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And |
Hightide Investments Limited |
Respondent |
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And |
The Law Society of Jersey |
Intervenor |
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And |
Skyfall Collections Limited |
Interested Party |
Advocate A. English for the Appellant.
The Respondent was not represented.
Advocate R. Holden for the Intervenor.
Mr. L. Beghin for the Interested Party.
judgment
the COMMISSIONER:
1. On 27 September 2024, we heard an appeal by Mucky Mutz Limited against a decision of the Magistrate, sitting as Judge of the Petty Debts Court, to allow Mr L Beghin, a director of the Interested Party, to appear on behalf of the Respondent in relation to a claim by the Respondent for arrears of rent.
2. At the conclusion of the hearing, we reserved our decision, which we now give.
3. The Appellant operates a dog-grooming business from premises known as Unit 2, Quennevais Precinct, St Brelade, which it leases from the Respondent.
4. On 2 February 2024, a summons was issued in the name of the Respondent actioning the Appellant to pay the sum of £5,821.32, which was claimed to be due in respect of Quarterly Rental due in advance from the 25th day of December 2023 to the 24th day of March 2024, buildings insurance and loss of rental insurance, interest and costs. The Appellant disputes the claim, saying that the premises have become unfit for occupation due to, inter alia, water ingress, which had led to the growth of mould and has rendered the electrical system unsafe to operate and that they are in such a hazardous state that it amounts to a fundamental / repudiatory breach of the lease.
5. The summons was signed by Mr Beghin as "Credit Control Manager for the Plaintiff" and the Plaintiff's postal address was given as "SkyFall Collections Limited, PO Box 611, St Helier, JE4 5XD". The summons stated that to prevent the matter going to Court, payment in respect of the amount claimed, interest and costs, should be made to Skyfall Collections Limited (to whom we shall refer as "Skyfall") and gave Skyfall's bank account details.
6. On 13 February 2024, Advocate English wrote to Skyfall, copying the letter to the Petty Debts Court, disputing the claim on the basis that the Respondent had fundamentally breached the terms of the lease. In addition, he queried the ability of Skyfall to bring the claim given that "you are not the debtor (sic), or a Jersey qualified lawyer, or a law firm".
7. Mr Beghin responded by email on the following day asserting that the claim had been properly brought and adding "Appearing in the Courts as mandataire has been accepted for over 30 years, with SkyFall Collections Limited having operated for 10 years".
8. When the matter came before the Petty Debts Court on the morning of 14 February, Advocate English addressed the Magistrate and challenged Mr Beghin's standing to bring the action given that he was not a director of the claimant company, and the purported debt had not been assigned. He pointed out that under Rule 4/2A of the Royal Court Rules 2004 a person appearing in the Royal Court would need to be a director of the company in order to bring a claim if not represented by a Jersey Advocate. He suggested that the question arose therefore whether there would be any reason for the Petty Debts Court not to apply the same rule as the Royal Court. He added that if the Petty Debts Court were to apply the Royal Court Rule, then the action had not been properly served.
9. On being asked by the Magistrate what his standing was to bring the claim Mr Beghin said "As is common practice, Ma'am, we're mandated or I am mandated as the credit control manager for Hightide Investments Ltd", to which the Magistrate responded "the Court has long accepted the practice that a credit control manager may bring an action on behalf of a company in the Petty Debts Court. I don't think you're going to get very far with that argument, Mr English". She went on to say, "Well I'm ruling against you at the moment unless there are any further steps you wish to take in that regard and this matter is disputed and so I shall refer the matter to mediation".
10. Advocate English subsequently sought leave from this Court to appeal the decision of the Magistrate and accordingly on 3 May 2024 the Magistrate gave written reasons for her decision "to accept Mr Louis Beghin as having standing, as Plaintiff, to bring these proceedings".
11. In her written reasons the Magistrate referred to Advocate English's reference to Royal Court Rule 4/2A and went on to say:
12. The Magistrate noted that having accepted Mr Beghin's standing she had referred the matter to mediation and if mediation was unsuccessful, the matter would be returned to the Petty Debts Courts and all matters outstanding would be determined by court after further hearing or at a full trial.
13. At a hearing before the Bailiff on 6 March 2024, leave was granted to the Appellant to appeal. The Law Society of Jersey sought leave to intervene, which was granted, on the basis that the appeal raised points of general public interest and of specific interest to the legal profession, namely the extent to which persons who are not qualified in Jersey law and members of the Law Society could be heard in the Petty Debts Court.
14. At the hearing for leave the Bailiff noted that there would be a potential difficulty for Mr Beghin in arguing the case on appeal in that although the matter was not subject to Rules in the Petty Debts Court, Rule 4/2A of the Royal Court Rules made clear that if not represented by an Advocate a company could only be represented by a director, and Mr Beghin was not a director of Hightide Investments, albeit that Hightide had a contractual relationship with SkyFall. The Court therefore ordered that Skyfall be joined to the appeal in order to enable Mr Beghin to advance the necessary arguments, noting that it was not joined, nor at risk, more generally.
15. Although the Magistrate did not hear detailed argument on the question as to Mr Beghin's standing, we were satisfied that her decision to accept Mr Beghin's representation of the Respondent as its Credit Control Manager was a "decision" for the purposes of Article 3(1) of the Petty Debts Court (Miscellaneous Provisions) (Jersey) Law 2000 and therefore capable of appeal to this Court.
16. At the hearing before us, Mr Beghin explained that debt collection companies have operated in the Courts, both the Petty Debts Court and the Royal Court, for approximately thirty-seven years by way of "mandate", which he described as an authority to act given by one party to another. Although there were now only two companies carrying on this business on a regular basis, he identified a number of companies that had appeared in this manner over the years.
17. Mr Beghin referred us to the Loi (1861) sur les Sociétés avec Responsabilité Limitée, which was the predecessor to the Companies (Jersey) Law 1991 ("the 1991 Law"), Article 9 of which (in translation) stated that a company incorporated under that Law:
18. Whilst he accepted that the 1991 Law did not contain a similar provision and also accepted that the Respondent was an English, rather than Jersey, company, he nevertheless argued that the 1861 Law recognised the ability of a company to appear before a court by a "manager", "authorised by mandate".
19. Mr Beghin also referred us to the Companies (Standard Table) (Jersey) Order 1992, paragraph 6 of which states that: "The directors may, by power of attorney or otherwise, appoint any person to be the agent of the company for such purposes and on such conditions as they determine, including authority for the agent to delegate all or any of the agent's powers". We were not shown the Articles of Association of the Respondent, which as we have already noted is in any event an English company, and we are therefore not aware whether its articles contain a similar provision. We do however accept that such a provision is commonly found in the Articles of Association of Jersey companies.
20. Whilst we accept that there may be a number of ways in which an individual may be authorised to act on behalf of a company, and thus bind it, this does not mean that any person authorised by a company necessarily has a right of audience on its behalf before a Court. The right to appear before the Court is determined by the rules applicable to rights of audience before the particular Court, which may be the subject of statutory provisions or rules of Court.
21. In the Royal Court, representation of a company is dealt with by Rule 4/2A of the Royal Court Rules 2004, which provides:
22. There is no equivalent to Rule 4/2A in the Petty Debt Court Rules 2018. Mr Beghin argued that a company is therefore not limited to appearing through an authorised director and can appear through a duly authorised manager or officer of the company, in this case a Credit Control Manager.
23. For the Law Society, as Intervenor, Advocate Holden made clear that the Society's intervention was pursuant to the Society's statutory objectives, including to make representations on any matter affecting the administration of the law, the judicial system or the legal profession. He further made clear that his submissions on behalf of the Society were not in any way intended as a personal criticism of Mr Beghin or others who conducted similar businesses.
24. Advocate Holden submitted that the statutory position is clear, in that only Advocates and Ecrivains (and the Law Officers) may conduct litigation in the Courts of Jersey, including the Petty Debts Court and that it is an offence for anyone who is not an Advocate, Ecrivain or a Law Officer to conduct litigation or appear in any Jersey Court on behalf of another.
25. Authority for this proposition is to be found in the Loi (1961) sur l'exercice de la profession de droit à Jersey ("the 1961 Law"). This Law draws a distinction between a "personne diplômée" and a "personne non diplômée", the former being the Attorney General, the Solicitor General, an Advocate of the Bar or an Ecrivain [Solicitor] of the Royal Court, and the latter being a person other than a "personne diplômée".
26. Article 2 of the 1961 Law provides:
In translation:
27. Article 2(1) makes clear that there is a distinction between a person acting in his or her own right and a person acting on behalf of another. There is therefore nothing to prevent a litigant acting in person.
28. Article 2 is concerned with the institution of proceedings and we must therefore also consider the conduct of proceedings before the Court, in other words, who may appear.
29. In relation to the Petty Debts Court rights of audience are governed by the Loi (1891) sur la Cour pour le Recouvrement de Menues Dettes ("the 1891 Law"), Article 17 of which provides:
"Nul ne sera tenu d'employer un Avocat pour plaider devant cette Cour. Nul ne pourra plaider la cause d'un autre devant cette Cour, excepté le Procureur Général du Roi, l'Avocat Général du Roi, les Avocats et les Écrivains de la Cour Royale."
In translation:
"No-one shall be required to employ an Advocate to appear before this Court. No-one shall be able to appear on behalf of another before this Court, except HM Attorney General, HM Solicitor General, the Advocates and Ecrivains of the Royal Court."
30. It is worth noting that, in granting Jersey Solicitors rights of audience in the Petty Debts Court, the 1891 Law granted them rights of audience that they did not enjoy in the Royal Court. In the Royal Court, Royal Court Rule 20/5 permits an Advocate or Solicitor to sign an Order of Justice commencing an action (consistent with Articles 1 and 2 of the 1861 Law), but on condition that they undertake to instruct an Advocate to appear. No doubt in 1891 it was regarded as expedient to widen the rights of audience in the court that dealt with small claims given that there were likely to be a larger number of small claims in the Petty Debts Court than claims for debt dealt with by the Royal Court and the number of Advocates at that time was very limited.
31. To some extent this expediency is echoed in the Magistrate's written reasons where she stated that "In the Court's experience over many years, the role of Credit Control Manager has enabled the efficient and economic collection of debts by many limited companies through the Petty Debts Court".
32. Nevertheless, Advocate Holden submitted that however useful the practice of allowing "credit control managers" to appear on behalf of companies may be, the practice cannot be adopted in contravention of the applicable statutes. He referred us to the decision of the Superior Number of the Royal Court in Re Harbours and Airport Committee [1991] JLR 316, in which the Court cited and approved a statement in an article by Sir Jack Jacob, entitled "The Inherent Jurisdiction of the Court" that: "the court may exercise its inherent jurisdiction even in respect of matters which are regulated by statue or by rule of court, so long as it can do so without contravening any statutory provision".
33. In the Harbours and Airport decision, the Superior Number held that as the Petty Debts Court was a creature of statute the Judge's discretion was prescribed by the Rules made by the Superior Number.
34. In relation to the institution of proceedings it is clear that proceedings may only be issued and a summons signed, by a "Personne diplômée" or by the claimant (Article 2 of the 1961 Law).
35. The position in relation to rights of audience of natural persons appearing before the Petty Debts Court as plaintiffs or defendants is also clear: they may appear in person but if someone is appearing on their behalf then that person must be the Attorney General, the Solicitor General, an Advocate or an Ecrivain (see Article 17 of the 1891 Law). It is therefore necessary to go on to consider the rules relating to a legal entity that is not a natural person, namely a company.
36. Advocate Holden referred us to a decision of the Jersey Court of Appeal in Allscot Limited v A C Mauger and Sons Limited [2012] JCA 103. The issue in that case was the meaning of the words "litigant in person" in Rule 12/6 of the Royal Court Rules 2004 which provided that: "Subject to this Rule, on a taxation of the costs of a litigant in person, there shall be allowed such costs as would have been allowed if the work and disbursements to which the costs relate had been done or made by an advocate on the litigant's behalf". The Court held that a company was not a "litigant in person" for the purposes of Rule 12/6, Bennett JA agreeing with the Bailiff's summary of the position in the court below where he had stated "the Rule is clearly drafted on the basis that a litigant in person is a natural person".
37. It should be noted that one of the factors that influenced the Court of Appeal in reaching this conclusion was that the rule had clearly been drafted with a natural person in mind, for example it refers to "the litigant's normal working hours". Rule 12/6(2) provided that:
38. In Allscot, the President of the Court of Appeal, Beloff JA, delivered a concurring judgment in which he made further comments on the issue of corporate personality. He said (at para 26):
39. In Allscot, the Court of Appeal made refence to its decision in Leeds United Association Football Club Limited and Others v Phone-In Trading Post Limited (trading as Admatch) [2009] JLR 186 where the Court had said (at para 28):
40. As we have already noted, the Allscot and Admatch decisions concerned the question as to whether a company, appearing by a director, could be regarded as a "litigant in person" for the purposes of a costs claim under Rule 12/6(2) and the Court of Appeal was clearly influenced by the context in which the phrase appears in the Rule. However, the decisions make clear that a company is incapable of appearing without a representative and thus Rule 4/2A makes provision for it to appear and be represented in proceedings before the Royal Court by a duly authorised director.
41. Mr Beghin's position was that he was entitled to appear on behalf of the Appellant as its "mandataire". This, he said, arose from his appointment by the Appellant as its "Credit Control Manager". In support he exhibited to his affidavit sworn on 20 September 2024, a copy of a letter dated 3 March 2014 under the heading of the Appellant's name and address, and signed by a person whose name did not appear on the letter but had the word "Director" beneath his signature.
42. The letter stated:
"Dear Sir/Madam,
I hereby wish to confirm that Mr Louis C. Beghin, Director of Skyfall Holdings Ltd t/a Skyfall Collections has been appointed as the Credit Control Manager for the above-named Company and is therefore able to represent the interests of the company in any Court proceedings relating to Credit Control matters. The appointment will remain in force until such time that I cancel it in writing."
43. We were referred by Advocate Holden to the Dictionnaire de l'Academie Française, 9th edition, where "mandataire" is defined in the following terms:
In translation:
44. In the same work the word "Mandat" is defined as:
In translation:
45. Pothier, in his Traite du Contrat de Mandat, 1821 Thomine & Fortec edition, at paragraph 124, had this to say in relation to mandats in respect of litigation:
In translation:
46. Pothier was of course writing about a different jurisdiction but the conclusion that we draw from the above is that a "mandataire" is no more than someone who is appointed to act on behalf of another, in other words an agent. The agent must act within the limits of their authority and, when doing so, may bind their principal. In the case of a company, it is common for a director to act as the company's agent and the director's authority may derive from a specific authority, a general authority granted by the company's articles or may be implied by company law. Whilst the director may, in so acting, bind the company the director is not the company itself but is the company's agent. He or she is acting on behalf of the company. Similarly, a company may appoint someone other than a director to act on its behalf, an example being the appointment of a lawyer to act on its behalf in court. Again, that lawyer is not the company but is its agent or "mandataire".
47. In our view, "mandataire", in the sense used by Mr Beghin, connotes no more than a person authorised to act on behalf of another.
48. As has been seen from the Court of Appeal decision in Allscott, it had for some years been the practice in Jersey to allow companies to appear as of right by their directors or other officers. In the Royal Court, the validity of this practice was placed beyond doubt by the changes made to Rule 4/2 of the Royal Court Rules on 15 February 2012 by the insertion of a new Rule 4/2A.
49. The position in the Petty Debts Court is less clear. As a creature of statute, it is arguable that the recognition of wider rights of audience is a matter for Rules of Court made by the Superior Number.
50. In Forster [1991] JLR 316, the Superior Number held (at page 339, line 20) that:
51. Notwithstanding that the current Petty Debts Court Rules were enacted in 2018, some six years after Rule 4/2A was introduced in the Royal Court, they make no provision for a company to appear by a director or other officer. However, we recognise that, limited as it may be, the Petty Debts Court has some inherent jurisdiction to control its own process, in particular where it is necessary to ensure the observance of due process of law. We regard the recognition of a director appearing on behalf of a company, which was the practice of the Royal Court prior to the introduction of Rule 4/2A and continues to be the practice of the Petty Debts Court today, as an appropriate exercise of the court's inherent jurisdiction. Without such recognition a company would not be able to appear before the court without an Advocate or Solicitor despite Article 17 of the 1891 Law making clear that no-one is required to employ an Advocate. The company is thus put in the same position as a natural person: it can in effect appear in person and therefore legally unrepresented, by means of a director acting on its behalf, or it can appoint an advocate or solicitor to act on its behalf. We regard it as reasonable for the Petty Debts Court, not having rules that deal with this issue, to have followed the practice in the Royal Court in recognising a director as having standing to represent his company.
52. The question then arises as to whether it was permissible for the Petty Debts Court, using its inherent jurisdiction, to go further and recognise wider rights of audience on behalf of companies such as, in the present case, a Credit Control Manager. In our view it was not. Without criticising Mr Beghin for using what appears to have become common practice, we regard his appointment as "Credit Control Manager" as no more than a device to avoid the strictures of the 1891 Law. Had a natural person appointed him in the same manner it is unlikely that the Court would have recognised his authority to act. We also note that despite signing the summons as Credit Control Manager of the Respondent the summons required the Appellant to pay the sum due to the account of Mr Beghin's company, Skyfall, rather than to the Respondent. This suggests that rather than being an officer of the Respondent the reality was that he was acting as a director of Skyfall, which had been engaged by the Respondent to collect the debt.
53. Should a company wish neither to be represented by a director nor by an Advocate or Solicitor then there is an alternative method of proceeding which has been recognised by the courts, which is to assign the debt to another person, which is in practice likely to be a debt collection company. The assignee is then able to claim the debt and issue the summons in its own right, being represented in court by a director or by a Jersey qualified lawyer.
54. If wider rights of representation are thought appropriate, for example to enable companies to appear through an officer or employee other than a director, then in our view changes will need to be considered by means of appropriate Rules of Court.
The wider issue and possible need for regulation
55. We are mindful of the comments made by the Magistrate in her written reasons that, "for many companies it is efficient and economical to turn to specialist debt collection companies who appear regularly in the Petty Debts Court and who have the experience to deal with such claims....... In the Court's experience over many years, the role of Credit Control Manager has enabled the efficient and economic collection of debts by many limited companies through the Petty Debts Court".
56. That recognition of the contribution made by the debt collection companies is echoed in a decision of the then Master of the Royal Court, now Commissioner, Advocate Thompson, in Hill v Meyer [2016] JRC 60. Although the decision was in relation to an application by the plaintiff in Royal Court litigation to amend its particulars of claim and reply and answer to counterclaim it necessitated a consideration of the validity of an assignment of a debt to a debt collection agency for collection and its subsequent re-assignment.
57. In his judgment the Master said:
58. He went on to say:
59. Some eight years have elapsed since those comments were made and we have seen no evidence that any steps have been taken to put the services of the debt collect agencies on "a proper legal footing". However, we were advised by Mr Beghin that both of the principal debt collection agencies operating in the island subscribe to a Code of Conduct for Jersey Debt Collection, which is a voluntary code that is promoted and administered by the Trading Standards Service.
60. We recognise that in advancing the arguments that it did it might be suggested that the Law Society was promoting the interests of its members over the interests of other users of the Petty Debts Court, a point that Advocate Holden accepted when it was put to him by the Court. However, in response he reminded the Court of the comments of the Master in Hill v Meyer to the effect that any right to represent others before the courts in relation to the collection of debts carried with it a significant responsibility.
61. If a litigant appears in person, as they are entitled to do, they have only themselves to blame if they suffer loss as a result of any mistake that they might make in the conduct of the proceedings. Where a creditor is represented by an Advocate or Jersey Solicitor, they will be represented by someone whose qualification for that role requires the passing of rigorous examinations in a number of subjects, the demonstration of a certain period of practical experience and a requirement for continuing professional development after qualification. Furthermore, there is a legal obligation to adhere to the Law Society's Code of Conduct, breach of which may result in disciplinary sanctions ranging from public or private reprimands through to fines, suspensions or removal from the roll by the Royal Court. In addition, members of the Law Society are required to maintain a specified minimum level of professional indemnity insurance cover. All of these measures have the objective of protecting the client.
62. Advocate English, who associated himself with and adopted the arguments advanced by the Law Society pointed out that if Mr Beghin's argument that he was entitled to represent the Respondent as its mandataire was correct, then there would be nothing to prevent a Jersey Advocate, who had been struck off for misconduct, acting as mandataire for third parties, but this time with no ability for the Courts to control their behaviour, no regulator, nor regulation, and no professional indemnity insurance, to protect the public and the administration of justice.
63. We acknowledge that the lack of regulation of debt collection agencies is not the fault of the agencies themselves and we were impressed by Mr Beghin's explanation of his practice of encouraging clients to employ a qualified lawyer to represent them in cases where the debt was disputed, and the matter could not be resolved by mediation. Any reform that may be considered will need to balance measures enabling the efficient and economical collection of debts against the need for protection of the public.
64. We find that the signing of the summons by Mr Beghin as Credit Control Manager of the Respondent did not comply with the provisions of Article 2 of the 1961 Law and we therefore find the summons to have been invalid. We also find that Mr Beghin's purported representation of the Respondent as its Credit Control Manager did not comply with the provisions of Article 17 of the 1891 Law and the Magistrate was therefore wrong to accept that he was able to represent the Respondent in that capacity. We therefore strike out the claim, without prejudice to the Respondent's ability to re-issue it in the appropriate manner.
65. Our provisional view in relation to costs is that the Respondent should pay the Appellant's costs of the appeal and in the Court below on the standard basis rather than, as claimed by the Appellant, on the indemnity basis. Our reason for doing would be that whilst the summons has been found to be invalid, the procedure followed was one that had been followed for some time in the Petty Debts Court without challenge. We are not minded to make any order in respect of the Interested Party, the Bailiff having made clear that it was joined solely for the purpose of enabling Mr Beghin to advance arguments on behalf of the Appellant and that it was not joined, or at risk, more generally. Similarly, we are not minded to make any order in favour of the Law Society. In intervening it was exercising its statutory function and assisted the Court in drawing to its attention relevant authorities and wider policy considerations. This is however only a provisional view, and we leave it open to the parties to make written submissions to us within fourteen days of the handing down of this judgment should they disagree.
66. Subsequent to the handing down of the draft judgment, the parties made written submissions in respect of the Court's provisional view as to costs. The Law Society accepted the Court's provisional view, as did the Interested Party.
67. Whilst the Appellant accepted the Court's provisional view, it sought to argue that the Respondent should pay costs on the indemnity basis throughout, alternatively i) from 28 February 2024 when an offer to settle was not accepted, ii) from 6 March 2024 when the leave to appeal hearing was heard, iii) there should be a summary assessment of costs.
68. The Interested Party made submissions on behalf of the Respondent to the effect that the parties should bear their own costs or, if costs were to be ordered against the Respondent, they should be on the Petty Debts Court fixed scale. Those submissions were principally on the basis that the "offer" of the Appellant to settle was in fact the Appellant's Position Statement for the mediation hearing (which in the event did not take place) and that had the Appellant participated in the mediation rather than pursue the appeal the matter might have been resolved by agreement. In relation to the Appellant's claim for indemnity costs, the Interested Party submitted that the defence in relation to the appeal was based on the practice of the Petty Debts Court over many years.
69. The usual basis upon which indemnity costs are rewarded is where the conduct of the paying party has been unreasonable to a high degree or where the paying party has pursued a hopeless claim (or one which the paying party should have realised was hopeless). As the Court said when expressing its provisional view, the procedure being challenged was one which had been followed for some time in the Petty Debts Court and in those circumstances the Court does not find that pursuit of the appeal was unreasonable to the extent required to justify an award of indemnity costs.
70. In relation to the Appellant's open offer of 28 February 2024, the Court notes that the offer was made in terms that the Respondent was to agree i) to withdraw its claim for unpaid rent; ii) to pay the Appellant's costs on an indemnity basis; iii) to release the Appellant from the lease forthwith without any further payment from it, subject to all of which, in the event of the offer being accepted, no counter-claim would be brought by the Appellant. The Appellant was not thereby making an offer to settle the discrete issue of the lawfulness of the Respondent's representation before the Petty Debts Court but was seeking the Respondent's withdrawal of the entire claim, the merits of which have yet to be determined.
71. The Court is not persuaded that this is an appropriate case in which to make a summary assessment of costs and accordingly an order for costs is made in terms of the Court's previously expressed provisional view.