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Cite as: [1999] UR 8

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Court of Appeal

 

18 January 1999

(Judgment reserved: 25 November 1998)

 

 

Margaret Beadle Defendant

 

Appeal by the Defendant/Appellant against the Order of the Royal Court of 4 February 1998 [1998.022a], whereby: (1) it was adjudged that a written agreement to allow the Plaintiff/Respondent to exercise vehicular rights across the strip of land separating the Plaintiffs two properties, ‘Abalone’ and ‘Broadlands’, was freely entered into by the Defendant/Appellant; and (2) the Defendant/Appellant was ordered to pay the costs of the Plaintiff of and incidental to the action, after taxation by the Judicial Greffier.

 

 

Advocate J D Kelleher for the Defendant/Appellant

Advocate N M C Santos Costa for the Plaintiff/Respondent

 

JUDGMENT

THE PRESIDENT: In 1994 Anthony John Snell, the Plaintiff in these proceedings and the Respondent to this appeal, was the owner of two properties in St. Clement in this Island. Taken together they were bounded on the one side by a private road owned by Mrs Beadle, the Defendant in the action and Appellant in this appeal, which road ran along the margin of the shingle and sand seashore and on the other side by a public road called Grève d’Azette. The two properties lay side by side on an axis which was at right angles to those two boundary features, and, although in the same ownership as each other, were separated by a strip of land which was the property of the Defendant/Appellant, Mrs Margaret Beadle. "Broadlands", which was the property nearer to the public road, had no vehicular access to it, the boundary wall along that road being a feature which at that time was considered as important by the Island Development Committee, and the way otherwise being barred by Mrs Beadles strip of land. The other property, "Abalone", was nearer to Mrs Beadles private road and enjoyed a right of access for vehicles along that private road to the point at which it joined the public road.

The two properties had been inherited by Mr Snell and had been allowed to become somewhat dilapidated after an unsuccessful effort to run a guest house business. Each property was burdened with a substantial mortgage; the term of the one on "Broadlands" had expired and the mortgagee in respect of that property required repayment of the capital. Mr Snells solicitors in a letter to Mrs Beadle dated 26 January 1994, never in fact received by Mrs Beadle, referred to an immediate prospect of judgment being entered for the capital and outstanding interest.

No response having been received in these circumstances to the letter of 26 January 1994, a meeting was arranged at "Abalone", the other of the two properties, and this took place on the afternoon of 1 February, 1994. It was attended by Mr Snell and his adviser, Mr Cole, and by Mrs Beadle. Mr Cole is described on his writing paper as a business consultant and project manager.

There was virtually no dispute as to what occurred at this meeting, the only issue (which is of no importance) being as to whether it was Mr Cole or Mrs Beadle who suggested that something should be put in writing.

No complaint is made in this appeal as to the passage in the Judgment of the Deputy Bailiff and Jurats Gruchy and Tibbo in the Samedi Division of the Royal Court of 4 February 1998, in which they set out the effect of the evidence as to what occurred at the meeting and on the following day, and I can do no better than to repeat it in this judgment. Further, no criticism is levelled at the finding that Mrs Beadles evidence had not come up to proof on the pleaded case to the effect that she had been pressed to enter the agreement, that she had entered into it in consequence of a false representation by Mr Snell or by Mr Cole on his behalf, or that the whole affair had amounted to no more than a preliminary discussion. As appears below, this amounted in effect to a rejection of Mrs Beadles case as originally pleaded, and indeed of the prime case put forward on her behalf at the hearing.

The passage in the Judgment as to the events of 1^st and 2^nd February, 1994, reads as follows:-

On 3 February 1994, Mr Snells solicitors sent a copy of the agreement to Mrs Beadles solicitors requesting them to peruse the same and confirm that it was satisfactory, whereupon they would have it engrossed. It was contemplated that either Mrs Beadle or her solicitor would be present at the Samedi Court in order to pass the contract. To this letter there was a somewhat choleric reply from Mrs Beadle’s solicitors, claiming not to know who Mr Cole was, and doubting his "qualification, colour or description". It was contended that he had purported to bind Mrs Beadle to give her consent for a derisory consideration and that the agreement was put to her without any opportunity for reflection or the taking of legal advice.

The solicitors said that they would visit the site and then give advice to Mrs Beadle. Thereafter an offer was made to sell the strip of land for £15,000.

The effect was that the development which had been planned with its consequent beneficial effect on Mr Snells affairs did not go forward and it was necessary for him to protect himself by entering on a remise des biens.

A further consequence was the institution of the proceedings now before this Court.

The action was started by an Order of Justice dated 16 June 1994, by which Mr Snell sought both relief by way of specific performance (which was not pursued as an available remedy) and damages for breach of the contract entered into as above.

The Answer initially served on behalf of Mrs Beadle alleged that she was "pressed" by Mr Cole to sell her rights for £100, that she was "urgently pressed" to sign a form of agreement, and that the value of the right was "falsely represented by the Plaintiff directly and/or through the agency of Mr Cole to be worth no more than £50". In consequence it was alleged that she was not bound by the agreement or was entitled to repudiate it.

It was only two years later that by a consent Order of 2 October 1996, leave was obtained to amend the Answer. The undated Amended Answer which followed raised for the first time the case which now brings this matter before this Court.

In addition to certain other amendments this amendment raised the following new case:-

Two further amendments followed in each of which this further case was preserved unamended. The transcript of the evidence indicates that in cross-examination the advocate for Mrs Beadle persevered in the criticisms of Mr Snell and Mr Cole foreshadowed in the pleadings, although we were assured that the issue of "déception d’outre moitié" as pleaded was kept alive; however that may be, it would appear from the Judgment that the case as presented had at the forefront such allegations as an allegation of an intention to entrap and of deception in the ordinary meaning of the word.

In summary the effect of the Judgment was that the defence based on the ancient principle of "déception d’outre moitié" (to which I refer for convenience as "the cause of action") failed on the ground that such a cause of action required something more than a finding that the price which was less than one half of the juste prix and that it was not available in the absence of dol. Further, the evidence that Mrs Beadle had said that she was happy with the agreement was stressed and the specific criticisms of Mr Snell and Mr Cole as described above were held not to have been made out. Attention was called to the fact that the expert witnesses were not agreed as to valuation but no finding was made such as would resolve that issue.

The Notice of Appeal was in very wide form, but the Appellants case very helpfully identified the comparatively narrow grounds on which the appeal was based.

Those grounds were encapsulated in the following issues:-

In the course of argument attention focused on two principal questions, one to do with the requirement for "dol" or something like it, and the other to do with the ascertainment of the "juste prix".

The general nature of the cause of action stems originally from Roman Law and appears still to have its place in the Code Civil in France, and under the title "lésion ultradimidiare" exists in Guernsey. It finds no equivalent in the Law of England although it is believed that at a comparatively remote time an equivalent may have existed in the Law of Scotland.

Evidence of the cause of action is to be found in the Ancienne Coûtume of Normandy, the application of which extends back to 1204, the year when continental Normandy was lost to the Crown of England, and is to be found reflected in the Coûtume Réformée, dating from about 1585, and in later writers. It has been described in the decision of the Privy Council in Godfray -v- Godfray (1865) Privy Council Cases p.316. More recently it has been discussed and applied in a case of duress in the Royal Court in Jersey in the matrimonial case of Ferbrache -v- Bisson (1981) JJ p.103.

The cause of action being one which forms a part of Jersey Law, and affecting property rights, it is not legitimate to import into it concepts derived from the Law of England; Godfray (above) per Turner LJ at p.344. Thus, the jurisprudential nature of the cause of action is to be "derived from the custom of the people and from its earlier Norman sources", per Sir Peter Crill when Deputy Bailiff in Romeril -v- Davis (1977) JJ 135 at p.138, quoting passages from Le Gros: "Le Droit Coûtumer d’Ile de Jersey", as to which writer I make reference later in detail.

From these sources I derive the following principles:-

First, that where in the case of héritage (but not in the case of moveables) a vendor receives less than one half of the juste prix he may within thirty years rescind the contract, which by reason of such a shortfall and perte becomes a contrat vicieux.

Le Rouillé sur Le Grand Coustumier du Pays et Duché de Normandie etc (including the Nouveau Style, the Style of 1519 and the Glose) (2^nd Ed’n) of 1539:

Terrien Du Droict Civil tant public que privé, observé au pays & Duché de Normandie (1574):-

It is to be observed that Terrien was recognised as a highly authoritative source by the Privy Council in La Cloche -v- La Cloche (1870) LR Vol.III Privy Council Appeal Cases p.125 at 136, per Lord Westbury.

Secondly, that such a shortfall in the price amounts to a dol réel or to use the oldest phrase used by the writers dolus ipsa. Thus where such a shortfall is established it is not necessary to establish a dol personnel, that is to say some trick or fraud or conduct of that nature.

The words dolus ipsa are to be found in a later passage in Terrien and clearly import a situation in which the dolus is inherent in the nature of the transaction itself.

The clearest definition of the distinction between dol réel and dol personnel is to be found in a later source, namely Houards Dictionnaire Analytique de la Coûtume de Normandie (Rouen: 1780) at p.549:-

While this dictionary dates from long after the preparation of the Coûtume Réformée under letters patent of Henry III of France of 14 October 1585, as do other later writers to be referred to, the Privy Council in La Cloche (above) has laid down that the nature of the sources of Jersey Law, which are not written laws but collections of customs, makes it legitimate to look at the Coûtume Reformée as evidence of what were the terms of the old law.

One of such more recent writings was Basnages Oeuvres contenant ses Commentaires de Normandie of 1778: from the very lengthy treatment of the subject of La Clameur Révocatoire (another and perhaps more formal title for the cause of action) which is too long to set out at length, I draw attention to the following passage:-

Other writers to whose works we were referred were Bérault: Coustume Reformée du Pays et Duché de Normandie (1614); Le Geyt: Les Manuscrits … sur la constitution, les lois et les usages de cette Isle and Privileges Loix et Coustumes de l’Isle de Jersey (early manuscripts later printed in the nineteenth century) and Pesnelle: Coûtume de Normandie (1771). None of these writers suggested that there was a need for some further element other than the shortfall in price, such as was argued on behalf of Mr Snell and such as was accepted by the Royal Court. The sole author to suggest otherwise was Le Gros: Traité de Droit Coûtumier de l’Ile de Jersey (1943). Further reference will be made to the relevant passage in this work and to its adoption by the Royal Court in Ferbrache -v- Bisson (above) later in this judgment.

Le Geyt, who deals with the cause of action in Article XIX of Tome IV of the work first mentioned above and in Title IV Article 4 of the second work so mentioned was treated as of high authority by the Privy Council in Godfray (above) at p.338; he was the Lieutenant Bailiff and then Jurat for many years from the end of the seventeenth century; he makes no mention of any such extra element as is alleged.

Thirdly, that there are certain circumstances attending the sale of a héritage which may put the transaction into a class in which the value is too uncertain for the principle to operate, and that it does not operate where there has been a public sale at law.

This has been recognised from the earliest times and further by the Privy Council in Godfray (above) at p.343. Thus Terrien recognises that the cause of action does not apply in the case of the form of lease known as a "bail à ferme d’heritage" by reason of its short duration or to a "heritage decretez & vendus par justice".

The Privy Council in Godfray (above) at p344, the opinion being delivered by Turner LJ, held that sales of "uncertain" or "doubtful" value do not fall within the rule. This statement was based on the following quotation from Bérault (op.cit.), which makes it clear that the limitation has regard not to valuations which may be difficult to make or open to argument but rather to the class in which the héritage in question belongs. The passage reads as follows (taken from Godfray p.344):-

Reference is also made by Turner LJ to Pothier but without quotation; an English translation of Pothier: Treatise on the Law of Obligations or Contracts etc has been supplied to the Court together with the French text of the 1806 edition. It is clear from this source that in France a sale of a right of succession or of an aleatory nature or of life annuities and the like was not regarded as sufficiently certain as to attract the remedy.

In my judgment the fact that there may be two or more opinions as to the correct valuation does not make the juste prix uncertain for these purposes, and I can see no reason why the sale of a right of way should be added to those classes which have been regarded as unsuitable by reason of uncertainty for the application of the cause of action.

Fourthly, the principle has no application to a gift, or, I apprehend, to a sale at a deliberately bargain price; in neither of these cases could it be said that there is a perte or a contrat vicieux.

In the case of a gift there is no sale and the cause of action cannot arise. There may, however, be transactions which fall short of a gift but which can be described as sales at a bargain price or at a specially reduced price, this being known to both parties. It was argued that the claimant in such a case would not come to the Court with clean hands if this were to be the case. I would prefer to base my conclusion on a more fundamental consideration. In my judgment where both parties, with adequate knowledge of the market price, intend that the sale shall be made at some exceptionally favourable price, the intention of the parties must be taken to have departed from any such concept as the juste prix and to have withdrawn their transaction from the terms of a law which is intended to do a (possibly abstract and formalised) form of justice between the parties but which would be leading by its very operation to an unjust result. While Mrs Beadle was concerned to assist Mr Snell there is no evidence that she intended either a gift or a sale at an undervalue.

Fifthly, the most appropriate means of ascertaining the value of a héritage is for the Court to instruct the Viscount to appoint one or more individual valuers to value the property and report to the Court as to the juste prix at the date of the transaction in question, this being then open to the cross-examination of the parties, who shall also be able to call expert witnesses, whose evidence is to be directed to the same end.

It has by now become normal practice for each party in a case where value is in dispute to call an expert witness and for the Court to decide on the evidence of the experts, and on such other evidence as is relevant, what is the true value without the assistance of Court experts and without the assistance, in most cases, of an expert appointed by the Court. The Court was told also that it is not yet the practice to exchange experts reports prior to trial. The application of this practice in the instant case has proved unsatisfactory in the respects to which I refer in some detail below.

Cases of an alleged déception d’outre moitié are rare and there is no recent case in which the appropriate means for the ascertainment of the juste prix has been considered.

The matter is not free from comment in the old writers.

Thus, Bérault (op. cit.) at p22 refers to the need for separate valuations for buildings by "experts dont les parties conuiendroit".

Thus, too, Basnage (op. cit.) at p.34 states:-

If this stood on its own it could be said to be insufficient to justify the course which I consider should be taken, in that the procedure at least involved a French Royal Ordinance.

However, there is a relevant passage in Le Gros (op. cit.) at p353:

He then cites a case which came before the Court in October 1796 in which:-

Clearly the parties cannot be deprived of the right to instruct their own expert valuers and rely on their evidence; however, in order to ensure that the Court has sufficient evidence from a source under the control of the judicial system I consider that it will be desirable in the future for the Viscount to be involved in the way which I have described. I would encourage the making of orders for the exchange of experts reports in any such cases, and I hope that if an amendment to the Royal Court Rules is necessary to bring this about, this will be considered by the relevant authority.

Sixthly, it is the duty of the valuers to arrive at the juste prix, that is the reasonable and appropriate price in the market, of the héritage in the particular situation in which the parties found themselves, that is to say not looking to these particular parties but rather to parties circumstanced as these parties were, with all the likely motivations on the part of vendor and purchaser suggested by those circumstances. In that sense only is it right to say that the valuation is objective. Thus the objective approach inevitably takes into account the development or "marriage" value of the right in such a case as the present.

If the Court were faced with a simple issue as to whether the contract can be avoided, and if all the experts were of the view that the price paid was less than half of the juste prix, it would not be necessary to choose between them. However, should the purchaser choose to exercise his option to purchase at the juste prix (see below) a precise figure would have to be arrived at by the Court.

Seventhly and finally, it is open to the purchaser to offer the difference between the price paid and the juste prix.

This is supported by Terrien (op. cit.) at p329 as follows:-

And by Basnage (op. cit.) at p32 as follows:-

It is also recognised by Le Gros (op. cit.) in the passage to which I am about to refer, although in doing so he fell into error in one limited but important respect, as I find.

In seeking to uphold the Royal Court’s decision that the claim to a déception d’outre moitié entitled Mrs. Beadle to rescind the contract and thus to defeat the claim, Mr Santos Costa relied on that part of the text of Le Gros (op. cit.) which was applied by the Royal Court in Ferbrache -v- Bisson (1981) JJ 103.

In order to evaluate the weight of the passage in question it is necessary to place it in the context not only of the earlier writers but also of its own text. The chapter is headed "De la clameur révocatoire ou déception d’outre-moitié du juste prix" and in the first two paragraphs correctly describes the nature of the remedy and quotes the passage from Basnage as to the twenty livres and ten sols as against ten livres which I have already adverted to.

Having referred to the need for "sincerité sans voile" and to the voidability of contracts where "toute espèce d’artifice" deceives another, he then continues in these terms:-

The requirement for a further element "tel que le dol" in order to succeed in annulling the contract and the difference in this respect between the right to have the contract annulled and the right to claim the difference in the price is totally unsupported by the writers to whom he refers, as can be seen from the passages quoted above and from a full study of the texts which have been presented to this Court but which do not appear to have been before the Royal Court either in Ferbrache -v- Bisson (above) or in this present case. It was contended by Mr Santos Costa that there may have been a change in the usage of the Courts between the last of the texts which preceded Le Gros, whose work, it will be remembered, was published in 1943, well over one hundred years since the older texts to which the Court was referred. However, it is to be noted that where some specific case is relied on by him, Le Gros cites it in his text, as has been seen in the case of the procedure for valuation quoted above, and that he himself relies on the very same old texts for his propositions as have already been considered and quoted from in this judgment.

It could very well be that at this particular point of an otherwise valuable work, Le Gros confused the references to dol réel in the old writers with dol personnel.

I further look for support to the fact that neither Pothier nor the Code Civil nor the Guernsey authority of Watson and Watson -v- Trouteaud (1987) 5 GLJ suggests that any such further requirement is required either as a matter of French Law or Guernsey Law.

The Royal Court in Ferbrache -v- Bisson (above) referred to the well-established Jersey principle, as restated in Wallis -v- Taylor (1965) JJ 455 that "la convention fait la loi des parties", which authority also referred to Pothier; however, I do not find the nature of the déception d’outre moitié, based as it is on equality of treatment and a particular form of dol to be inconsistent with the principle; it is to be noted also that Pothier himself recognised the nature of the wrong done to the seller and in so doing stated:-

The Royal Court in giving judgment in the instant case referred also to the description of dol in West -v- Lazard Bros (1993) JLR 165 at 130, with its reference to Pothier; this is, however, again to confuse dol réel with dol personnel and to ignore Pothier’s own treatment of la déception d’outre moitié.

Mr Santos Costa sought to persuade us that our rejection of the additional requirement of a dol personelle would cause considerable inconvenience to the banking and property world in Jersey. I am doubtful as to whether this is so; it has already been observed that a similar principle is apparently contained in the Code Civil in France and certainly in the Law of Guernsey to that which I have found for my part to be the basis of law in Jersey. It can only be rarely that property of this nature is sold at such an under-value as to fall within the rule as to déception d’outre moitié and there will no doubt be ways in which an anxious vendor can protect himself by specific agreement in doubtful cases.

I have referred in general terms to the evidence as to the value of the property as given before the Court. I observe that the Court made no finding as to the juste prix and I am not surprised. Not only was it unnecessary to do so in view of the finding as to the effect of an absence of dol, as the same was understood by the Court, but also in the absence of an offer to sell at the enhanced price it was only necessary for the Court to have found that the juste prix exceeded twice the price agreed. However, the matter does not stop there, because in my view there was no sufficient evidence upon which the Court could have determined a positive figure by way of the juste prix. The expert called on behalf of Mr Snell was a Mr Marriot, a chartered surveyor; he confined himself to a valuation of the strip of land, measuring as it did some 65 square feet, coming to £65 at £1 per spare foot or £195 at £3 per square foot. He took no account in his approach to the valuation of the fact that the right of way of the strip of land had a value to potential developers of the two properties and in particular of "Broadlands". I have to say that I consider such an approach to be totally at variance with reality and of no value in reaching the juste prix. However, when cross-examined and asked for his views as to value in order to open up the property for development he said in general terms that the value would be "in thousands". The expert called on behalf of Mrs Beadle was a Mr Trower who had advised the Jurats in the context of the remise des biens that the value was £10,000, whereas his partner had put a value on it of £10,000 to £15,000. His evidence was not considered as independent by the Royal Court, and both figures (which cannot both be right) appear to have been plucked from the air.

If the situation were that Mr Snell was seeking to exercise his option to purchase at le juste prix, it would have been necessary to return the proceedings to the Royal Court to re-hear the evidence as to value in order to be able to ascertain that value. Indeed the Court has considered carefully whether to do so in any event. However, in view of such evidence as there is, I do not consider that to do so would be in the interests of justice or of the parties.

Mr Marriot having accepted that with the element of development value thrown in the price would be in "thousands" and the purchase price having been £100, there is sufficient evidence to satisfy me that Mrs Beadle was entitled to annul the contract as she did by her solicitor’s letter of 4 February 1994, by reason of the operation of déception d’outre moitié.

For these reasons I would allow this appeal

Authorities

Le Geyt: Manuscripts (1846) Vol. I "Du Dol Personnel" p. 297

Le Geyt: Manuscripts (1847) Vol IV "Des Lézions" pp.419-422

Godfray -v- Godfray [1865] Privy Council p.316

La Cloche -v- La Cloche [1870] 3 AC 125 p.136

Le Gros: Traité du Droit Coûtumer d’Ile de Jersey (1943) pp.350-355: "De la Clameur Révocatoire ou Déception d’outre moitié du juste prix"

Le Geyt: Privileges Loix & Coustumes (1953): pp.71-72: "Des Restitutions"

Ferbrache -v- Bisson [1981] JJ 103

Terrien: du Droict Civil (1^st Ed’n) [1574]: "De Clameur Revocatoire": pp.329-333

Bérault: La Coûtume Reformée Du Pays et Duché de Normandie (1614): "De Clameur Révocatoire"

Pesnelle: Coûtume de Normandie (4^th Ed’n) (1771) Tome 1: pp.12-13

Basnage: Commentaire sur La Coûtume de Normandie (4^th Ed’n) (1778): Tome 1: pp.31-34 "De la Clameur Révocatoire"

Pothier: Traités De Droit Civil et de Jurisprudence (1781) Tome 1

Thornton -v- Robin (1837) Before the Privy Council 439

Houard: Dictionnaire Analytique de la Coûtume de Normandie (Rouen: 1780)

Bescherelle: Dictionnaire National (Paris, 1877): Decéption

Romeril -v- Davis (1977) JJ 135

Matthews & Nicolle: Jersey Property Law: p.8

Le Rouillé: "Le Grand Coustumier du Pays et Duché de Normandie" (1539 Ed’n): Du pais de Normandie: de clameur revocatoire ou de Déception: Fo.80

Kwanza Hotels -v- Sogeo (1981) JJ 59

Kwanza Hotels -v- Sogeo (1983) JJ 105 CofA

Watson & Watson -v- Trouteaud (1987) 5 Guernsey Law Journal

Wallis -v- Taylor (1965) JJ 455