Jersey Unreported Judgments

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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> 1999/213 - Mayo v Bank Cantrade [1999] UR 213 (15 December 1999)
URL: http://www.bailii.org/je/cases/UR/1999/213.html
Cite as: [1999] UR 213

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Court of Appeal

15 December 1999

Before R C Southwell QC, President

Sir John Nutting QC and P D Smith QC

 

Action 94/6

Between:Mayo Associates SA

Troy Associates Ltd.

TTS International SA

Plaintiffs

And:Anagram (Bermuda) Limited

Robert Young

Maureen Young

Defendants

And:Lionrock Limited

Edgefield Properties Limited

Box Limited

Starshield Limited

Cantrade Private Bank Switzerland (CI) Limited

TSB Bank Channel Islands Limited

Parties Cited

Action 94/254

Between:Mayo Associates SA

Troy Associates Limited

TTS International SA

Plaintiffs

And:Cantrade Private Bank Switzerland (C.I.) Limited

Touche Ross & Co

(Being the person listed in Exhibit A to the Order of Justice)

Defendants

And:Robert John Young

(joined at the instance of the First Defendant)

Anagram (Bermuda) Limited

(joined at the instance of the First Defendant)

Myles Tweedale Stott

(joined at the instance of the First Defendant)

Michael Gordon Marsh

(joined at the instance of the First Defendant)

Monica Gabrielli

(joined at the instance of the First Defendant)

Touche Ross & Co

(joined at the instance of the First Defendant)

Cantrade Private Bank Switzerland (C.I.) Limited

(joined at the instance of the Second Defendant)

The Attorney General

(joined at the instance of the Plaintiffs)

Third Parties

 

Application for leave to appeal by the Plaintiffs in Action 94/254 against the Order of the Royal Court of 5 May 1999, that:

Advocate P C Sinel for the Plaintiffs in Action 94/254

Advocate D R Wilson for the Defendants in Action 94/254

Advocate N F Journeaux for the 6^th Third Party in Action 94/254

JUDGMENT

SMITH, JA: The Applicants seek leave to appeal against two of a number of orders made by Sir Godfray Le Quesne QC, sitting as a Commissioner in the Royal Court.

Before us Advocate PC Sinel appeared for the Applicants, Advocate DR Wilson for the first-named Respondent and Advocate NF Journeaux for the second-named Respondents. What follows is the judgment of this Court.

By the first order Sir Godfray allowed an application by the Applicants to further amend their re-amended Order of Justice in this action and in doing so he made it conditional upon the Applicants furnishing certain particulars. The application for leave to appeal against the first order relates to one of those particulars.

The proposed amendment (which would become paragraph 84(2A) of the Order of Justice) alleges that "the Plaintiffs (ie the Applicants) made payments to investors of supposed profits or by way of refund of investments" and complains that "but for the … breach of duty and/or negligence (of the second-named Respondents]the said payments would not have been made …".

The particular in controversy is: "The identity of the investor and the amount and terms of the investment". It was contended before the learned Commissioner that instead of the identity of the investor the Applicants should merely give an account number attributed to that investor by them. Sir Godfray Le Quesne concluded that "(the second-named Respondents] ought in my judgment to be given particulars which will enable them to check, if they wish to do so, whether the alleged repayments were made. I do not see how that can effectively be done unless the identity of the investor is provided".

Before us Mr. Sinel argued:

(i)that the identity of the investors was in no way relevant; and

(ii)that by requiring the disclosure of the identity of the investors as a condition of leave to amend being granted the learned Commissioner was in effect compelling the Applicants to chose between breaching their duty of confidentiality to the investors or respecting that duty and, as a result, being unable to raise all of the substantial questions between the parties to the action; and

(iii)that the learned Commissioner had failed to give any or sufficient weight to the possibility that the second-named Respondents’ demand for the provision of the identity of the investors was motivated by a collateral purpose - viz an attempt "to do a deal" directly with the investors behind the Applicants’ back or enabling the first-named Respondent to do so thereby preventing the Applicants from pursuing a legitimate claim by asking for irrelevant particulars which they know the Applicants are not in a position to produce; and

(iv)that the documents disclosed on discovery, including bank records etc provide sufficient material to enable adequate checks to be made notwithstanding that the relevant documents did not name the investors.

Dealing with each of these points in turn we have come to the following conclusions:

(i)the identity of the investors is obviously relevant for the very reasons stated by Sir Godfray Le Quesne;

(ii)there is no legally recognised doctrine of confidentiality protecting disclosure of the identity of investors whether they are characterised as beneficiaries, or clients, or customers or whatever. Mr. Sinel identified no such doctrine in his written contentions and he did not point to one in the course of his oral submissions;

(iii)there is no basis on which we could conclude that the second-named Respondents are motivated by a collateral purpose. In our judgment the discussion of the motives of the first-named Respondent in attempting to communicate with the investors referred to in the judgment of this court in Mayo Associates SA & Ors -v- Cantrade Private Bank Switzerland (CI) Ltd & Anor (1998) JLR 173 CofA has nothing to say as to the motivation of the second-named Respondents. Furthermore even the most cursory scrutiny of that judgment will reveal that the context of the Representation in question and consequently the reaction of this Court was very different from the present case;

(iv)whatever may be gleaned from discovered documents it would not enable the second-named Respondents to check the accuracy of what these documents appeared to disclose or, consequently, take such steps as they might be advised, whether by the identification and calling of witnesses or otherwise, to challenge the relevant part of the Applicants’ case.

By the second order against which the Applicants seek leave to appeal Sir Godfray Le Quesne ordered that subparagraphs (1) and (2) of paragraph 84 of the re-amended Order of Justice be struck out under Rule 6/13(1) of the Royal Court Rules (1992), as amended, on the basis that the claims pleaded in those subparagraphs each comprised "an impossible basis for the establishment of loss".

The background to the claims in the subparagraphs comprises allegations that the second-named Respondents audited dealings on the Applicants’ behalf; that they produced certificates showing amounts standing to the Applicants’ credit in certain accounts very substantially in excess of the true figures; that they owed the Applicants a duty of care; that they were in breach of that duty and they acted negligently; and that as a result the Applicants took actions they would not otherwise have taken or did not take actions they would have taken had they known the truth. In paragraph 84(1) and (2) the Applicants sought to claim the difference between the amounts certified and the true amounts as their loss.

Before us the Applicants attempted to sustain the appeal on two grounds. Firstly the subparagraphs (1) and (2) of paragraph 84 are merely a part of the whole case against the second-named Respondents and that it would be inappropriate to strike out a potential method of approaching the quantification of damages particularly as the alternative method pleaded would produce much higher figures and it would operate in ease of the second-named Respondents if the Applicants simply chose to go no further than to rely on the figures comprised in paragraph 84(1) and (2).

In our judgment this ground fails to address the problem of the apparent absence of a causal relationship, as far as the case against the second-named Respondents is concerned, between what they did or did not do and the difference between the figures certified and the amounts in the accounts. Furthermore, this problem is not addressed by the assertion (which may or may not be right) that it would be better for all concerned if the Applicants’ loss were to be measured on the basis of the allegedly lower figures comprised in the subparagraphs.

The Applicants’ second ground was to the effect that each of the second-named Respondents’ certificates constituted an estoppel against the second-named Respondents so that they are not entitled to deny that such sums were in the accounts.

Estoppel is not pleaded by the Applicants in the Order of Justice but is raised by way of reply to the second-named Respondents’ Answer. The explanation for this set out in the Applicants’ written contentions is that estoppel is properly raised by way of defence and not claim. Thus, estoppel does not, of itself, constitute a cause of action. According to Spencer Bower & Turner (The Law Relating to Estoppel by Representation (3^rd Ed’n) p.7) estoppel by representation is "… not a cause of action in itself, nor does it create one, though the application of this, as of any other rule of evidence in the course of litigation, may well result in a total or partial establishment, or disestablishment, of the case made by one or other of the parties". And Wilken & Villiers (Waiver Variation, & Estoppel; para 8.016) say that: "The doctrine does not, in itself, amount to a cause of action. Once the constituent elements of the estoppel are established, the court will now allow the representor to adduce evidence which contradicts the truth of the representation which it has made. The legal relationship of the parties is then assessed according (to] the fact as represented and not according to the true state of affairs".

It follows from the above that one must examine the causes of action raised by the Applicants in the Order of Justice to determine how, if at all, estoppel might operate. When this is attempted the Applicants’ difficulties become apparent. The pleaded causes of action are described as breach of duty of care and negligence. Whether these words describe one tort or two we consider they do not afford an entitlement to damages until loss is shown to have been caused. The difference between the amounts certified and the amounts in the accounts can be described as a loss to the Applicants in the sense that they do not have what they may have thought they had. But it is an abuse of language to suggest that this alleged loss, as calculated, was caused by the second-named Respondents.

In England in recent years there has been a large number of claims alleging professional negligence against, amongst others, accountants and valuers. If the thesis advanced by the Applicants in the present case was tenable one might have expected to find some authority, derived from these claims, to support it. There must, after all, have been many cases in which it would have been attractive, or even just prudent, to present a plaintiff’s claim on the basis of the difference between an exaggerated valuation and a true value in an attempt to fix the professional in question with liability for the difference by means of estoppel. But no such authority has been cited to us, nor are we aware of any.

The cases relied on by the Applicants are, in our judgment, clearly distinguishable from the present case. In re Exchange Securities & Commodities Ltd [1988] Ch. 46 concerned companies that had accepted monies from the public for the purpose of speculating in commodities and stocks and shares and which issued monthly reports showing fictitious profits. Harman J had to consider how these representations fell to be treated in the liquidations of the companies. He clearly accepted that had the liquidation not intervened the companies would have been estopped from disputing the profits shown in the monthly reports. But the case was not a breach of duty of care/negligence case. Harman J was visualising the application of estoppel in the context of a claim for a debt. In that case the companies had received and purported to make money out of money furnished by investors - a completely different setting from the factual - and, therefore, legal - matrix pertaining to the second-named Respondents in the present case.

In Holland -v- Manchester & Liverpool District Banking Co (1909) 25 TLR 386 the bank accidentally credited a customer with more money than he actually had and he acted on this false representation by drawing a cheque for an amount greater than his true credit. But in that case the application of the doctrine of estoppel did not serve to determine the measure of the bank’s liability to the plaintiff - he recovered damages for breach of contract for the damage to his business caused by the bank dishonouring the cheque.

In Avon County Council -v- Howlett [1983] 1 WLR 605 a schoolteacher was overpaid sick pay part of which he spent on a suit and a second-hand car and, because of the overpayment, he did not claim Social Security benefit to which he would have been entitled. The English Court of Appeal applied the doctrine estoppel by representation to bar the employer’s claim to recover the overpayment.

In that case estoppel operated to preclude recovery, a situation quite different from the present case. The reasoning of the learned judges has no bearing on the assessment of damages in tort. The case does not support the proposition that a possible approach to the calculation of loss incurred by the victim of a breach of duty of care or negligence is, or may be, by means of the application of the doctrine of estoppel.

It is interesting to note (although not necessarily determinative) that none of the three authorities which we have mentioned and relied on by the Applicants is referred,to in the most up-to-date editions of McGregor on Damages, Clerk and Lindsell on Torts; Jackson and Powell on Professional Negligence; or Charlesworth and Percy on Negligence nor, as far as we can see, is the use of estoppel to fix the measure of damages in the manner contended for by the Applicants in the present case supported by any passage in any of these authoritative textbooks.

The Applicants additionally referred us to Low -v- Bouverie [1891] 3 Ch 82 CA and Canadian & Dominion Sugar Co Ltd -v- Canadian National (West Indies) Steamship Ltd [1947] AC 46. The first of these cases comprises an extremely detailed analysis of the law on estoppel by the English Court of Appeal, particularly Kay LJ. However, none of the members of that court dealt specifically with the quantification of damages as they allowed the appeal against the decision of North J in the plaintiff’s favour. Nevertheless, it is instructive to note that that learned judge explicitly limited the amount for which the defendant was liable to "… only such damage as must be reasonably taken to have been in the contemplation of the parties when the representation was made" (at p.90). In other words without artificial distortion by the inappropriate use, or misuse, of the doctrine of estoppel.

The second case in which Lord Wright expressed the opinion of the Privy Council, has a curious feature in that his Lordship refers to the whole concept of estoppel being "… more correctly viewed as a substantive rule of law" (at p.56) whereas ten years earlier (in Evans -v- Bartlam [1937] AC 473) the same judge had asserted that "… estoppel is a rule of evidence" (at p.484). However, the judgment contains nothing to qualify the proposition that in cases involving breach of a duty of care or negligence the measure of damages is the victim’s actual loss.

We should add, for the sake of completeness, that the Canadian & Dominion Sugar Co case is not cited in any of the textbooks to which we have referred. Low -v- Bouverie is relied on in Clarke & Lindsell on Torts but not in a way which supports the Applicants’ contentions in the present application.

The Applicants relied on Henderson -v- Williams [1895] 1 QB 521 as authority for the proposition that when prejudice or damage is made out, the other circumstances being such as to create an estoppel, its consequences are not necessarily measured by the amount of prejudice or damage sustained. But in Henderson’s case the damages were actually measured on the then conventional basis pertaining to a claim in conversion or trover. The proposition as stated may be correct; but it does not serve to establish that there is a method of measurement of damages applicable to cases involving estoppel which, when applied, has the result contended for by the Applicants in the present case.

In our judgment Sir Godfray Les Quesne was right in holding that subparagraphs (1) and (2) of paragraph 84 of the Applicants’ re-amended Order of Justice comprised "impossible allegations" and, further, he was right to order that they be struck out. Accordingly, leave to appeal is refused in each instance.

SOUTHWELL, JA: This Court wishes to express the strong hope that the interlocutory skirmishes in this action will now be ended, and the action taken forward to trial at the earliest practicable date. Naturally it will be for Sir Godfray Le Quesne to decide how this is to be achieved. Mention was made of the possibility of a preliminary issue or issues being tried in advance of the main trial. We cannot express any view about this, since we have not seen the relevant material or submissions, except that the hearing of any such issues should not be allowed to delay at all the start of the trial of the action. We say this particularly because appeals to this Court could have that effect, unless a firm timetable is laid down and adhered to.

Authorities

RSC (1999 Ed’n):18/7: p.3124.

18/12/2: p.327.

18/12/50: p.336.

Royal Court Rules, 1992: Rule 6/13A.

Spencer Bower & Turner: "The Law relating to Estoppel by Representation" (Butterworths, 1977) Chapter 1: paras 1-14: pp.3-19.

Wilken & Villiers: Waiver, Variation & Estoppel: pp.113-8.

In re Exchange Securities Ltd [1988] Ch. 46.

Holland -v- Manchester & Liverpool District Banking Co Ltd (1909) 25 TLR 386.

Avon County Council -v- Howlett [1988] Ch. 46.

Henderson -v- Williams [1895] 1 QB 521 at 535.

Low -v- Bouverie [1891] 3 Ch 82 CA.

Canadian & Dominion Sugar Company Ltd -v- Canadian National West Indian Steam Ships Ltd [1947] AC 47.