ROYAL COURT
(Samedi Division)
3 November 1999
Before: Sir Peter Crill, K.E, Commissioner,
and Jurats Le Breton and Allo
In re Shane Robert McDermott, en désastre.
Representation of Carol Angela Hales (wife of Shane Robert McDermott), seeking an Order under Article 12 of the Bankruptcy (Désastre) (Jersey) Law, 1990, vesting the interest in the McDermott property, to which the Viscount is beneficially entitled, subject to registered charges, in the Representor
The Viscount, party joined
Advocate A P Roscouet for the Representor
Advocate R J Renouf for the Viscount
JUDGMENT
THE COMMISSIONER: This is an application by Mrs Carol Angela McDermott, née Hales for an order under Article 12 of the Bankruptcy (Désastre) (Jersey) Law, 1990, to vest in her the half-share at present vested in the Viscount in respect of the property, 15 Bellozanne Avenue, which she owned jointly with her husband, who was declared en désastre on 16 October 1998. By that declaration the title to the property was converted into a tenancy in common in equal shares under the provisions of Article 11(4) of the Bankruptcy (Désastre) (Jersey) Law, 1990.
At the moment there are two charges registered on the property, one of £85,800, due to HSBC, and another charge in respect of a guarantee, also due to HSBC, but that amount (£24,600) is disputed by Mrs. McDermott, who said that it should be £10,000 and that she has in any case repaid it.
Since the désastre Mrs McDermott has continued to reside in the property and has paid something like £8,000 towards servicing the two charges. She also paid some £5,000 by way of deposit when she and her husband bought the property.
There have been two valuations, each prepared by the well-known firm of Hamptons, one as at the date of the désastre and the second more recently. The later valuation has increased the value of the property from around approximately £140,000 to between £148,000 and £154,000. However, the parties have agreed that the proper figure to take is the mean of £151,000. The question first has to be asked whether it is the former valuation as at the declaration of the désastre, or the more recent valuation which this Court should use for the purpose of arriving at the proper figure.
Advocate Roscouet, on behalf of the applicant, has pointed out two things to us: first, the applicant has suffered considerable hardship and emotional distress because of the circumstances in which she has found herself; and secondly she was not involved in the business which was declared "en désastre". With both of those matters, Mr. Renouf for the Viscount’s Department, does not disagree.
There is a slight problem in relation to the valuation: there has been some subsidence in or near the property which might affect its value but Hamptons in their second valuation have assured the parties that it has taken that possibility fully into account. There has been no independent valuation in the sense of one commissioned by Mrs McDermott because she does not have the means to pay for it. Accordingly the Court has to limit itself to the valuation by Hamptons. It seems to us a matter of common sense that the valuation to work on is the one that is the nearest to the order being sought today. To do otherwise would be to create artificial figures which would be difficult to substantiate.
Advocate Roscouet has suggested that if the property were to be sold for less than the valuation figure, whichever one were to take - but from her point of view it would obviously be better to take the higher amount - then her client could come back to the Court. We disagree. We think that that would not be a proper way to do it. It would cause difficulties about certainty; and the creditors are entitled to have some kind of firm idea when they may receive some money.
It is quite true, of course, that as regards any conflict between the interests of the creditors and Mrs McDermott, the Court’s duty is laid down in paragraph (8) of Article 12 as follows:
"It shall be the duty of the Court in deciding in what manner to exercise its powers under paragraph (5) to give first consideration to the desirability of preserving the matrimonial home for the occupation of the spouse and any dependants of the debtor having regard to all the circumstances of the "désastre" including the interests of creditors."
Therefore it is clear that this is what we should seek to do.
Under all the circumstances we have come to the conclusion that, taking the figures which have been produced to us and given the valuation at mid-range of £151,000 after deducting the mortgage indebtedness as it was on 28 October and the guarantee indebtedness on the same date of £85,800 and £24,600 respectively, that would leave a net equity in the property of £40,600 of which the Viscount would - without any deduction - be entitled to some £20,300.
Advocate Roscouet urged us to make some allowance for the two matters I have mentioned, namely that Mrs McDermott has paid £8,000 or so in respect of servicing the loans and also provided the deposit for the purchase of the house. We have done this and we think that in round figures it would be appropriate, given the figures which we have in front of us, with an equity of £40,600, if we were to order that there should be a third charge at the same time as the vesting order, in favour of the Viscount, of £15,000. This figure is dependent on Mrs. McDermott’s claim which, we are told, she is bringing independently of this application against HSBC, claiming that in fact she does not owe them £24,600, having paid back the £10,000 which she said was the proper amount. If her claim fails, the proper figure would then be £15,000. If, however, she were to be successful then that would remove £24,600 from money owed to creditors and in that event there would be added to the £15,000 we are minded to order under the present circumstances a further figure of £12,300 being half of the £24,600. Therefore we make a vesting Order in the property of the applicant as requested, subject to a third charge in favour of the Viscount, with these additional provisions: the hypothèque conventionnelle simple, which will be registered, will bear no interest to the date of repayment. Nevertheless it will be payable on a) the sale of the property; b) the death of the applicant; c) any other cessation of the applicant’s 100% interest in the property; or d) if the applicant should cease to occupy the property.
Once the sum is paid to the Viscount it shall be disposed of in accordance with Article 2 of the Law and the Act of this Court will be registered in the Public Registry. There will be no order for costs.
No authorities