2002/169
COURT OF APPEAL
13th September, 2002 .
Before: |
R.C. Southwell, Esq., Q.C., President, Sir John Nutting, Bt., Q.C., M.G .Tugendhat, Esq, Q.C. |
Between |
Michael Adrian Riley |
Plaintiff/RESPONDENT |
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And |
Barry Keith Pickersgill and |
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David Eldon Le Cornu |
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practising as Pickersgill and Le Cornu |
Defendants/APPELLANTS |
Appeal by the Defendants/APPELLANTS from the Judgment of the Royal Court of 26th July, 2001, whereby it was adjudged that the Defendants/APPELLANTS are liable in damages to the Plaintiff.
Advocate A.D. Robinson for the Defendants/APPELLANTS.
Advocate M.J. Thompson for the Plaintiff/RESPONDENT.
judgment
TUGENDHAT ja:
1. This is an appeal from the judgment of the Royal Court in July 2001 awarding damages in a claim for professional negligence by Mr Riley against Mr Barry Keith Pickersgill.
2. Mr Riley is a retired company director. His business at the relevant time was the publication of 'flyers' or free business newspapers. One of these was 'The Jersey Journal'. He did this through a company called Magnet Publications Ltd ('Magnet'). Number One Peter Street, St Helier, was a property owned by Hyams Realty Ltd ('Hyams'). It was let to a company called Travelcare (Europe) Limited ('Travelcare'). In 1987 Magnet wanted to take over the lease. The position reached by late 1987 was that Magnet would take a new 28 year lease, together with a personal guarantee to Hyams to be given by Mr Riley. The lease proposed was a full repairing lease, and a survey showed that the cost of the future repair and maintenance of the premises could be very high. Nevertheless, Mr Riley was willing to undertake this, and the lease was in due course passed before the Court on 27 May 1988. Mr Riley considered that Magnet required the lease if it was to carry on its business.
3. Mr Pickersgill is a partner in the firm of Pickersgill and Le Cornu. He was not initially involved in the negotiations for the lease, but he had been retained by Mr Riley by November 1987. He had known Mr Riley from about a year earlier and his firm had acted for Mr Riley in his divorce proceedings and in the purchase of property. On 26 November 1987 Mr Pickersgill sent Mr Riley a copy of a draft lease and personal guarantee which he advised were in conventional terms. On 28th April 1988 Mr Pickersgill made a note to the effect that he had discussed the lease and guarantee and that he was to proceed with the lease.
4. Meanwhile, Mr Riley's health gave him cause for concern, and he decided to sell his interest in Magnet. He approached a firm in Dorset called MRT Consultants Limited. They were 'Newspaper Brokers and Publishing Consultants'. They found a potential purchaser of the shares in Magnet, namely a Mr Doel and an associate who were initially negotiating to buy for 'themselves or their companies' 75% of the share equity in Magnet. After some interruptions in the negotiations, Mr Doel (by now without his associate) and Mr Riley reached agreement on the main terms of a deal by which Mr Riley was to sell the whole of his interest. Mr Pickersgill was retained on this matter too, and on 19 May 1988 he made a short diary note of his instructions from Mr Riley. It noted that the purchaser was Mr Brian Doel and there follow the words 'they may wish to substitute him as guarantor.... Complete 27.5.88'. That was a reference to substituting Mr Doel for Mr Riley as the personal guarantor of the 28 year lease that Magnet were proposing to take from Hyams on 27 May 1988.
5. On 20 May 1988 Foot & Bowden, English solicitors, wrote to Mr Pickersgill a letter which included:
'We understand that our client, West of England Newspapers Limited, has agreed to purchase the entire issued share capital of Magnet Publications Limited in the sum of £125,000.... we will put in hand the drafting of the appropriate contract. We understand that there is a personal guarantee to be given in relation to the lease, a copy of which has been sent to us, on Friday 27th May. It is not possible for this transaction to have been completed by then, and it would therefore seem appropriate for Mr Riley to give the personal guarantee required, and if the transaction then proceeds to completion our client will consider as part of that process adopting the guarantee from your client'.
That was the first Mr Pickersgill had heard of the purchaser being a company, rather than Mr Doel personally, and he knew nothing of the company referred to. Unfortunately, and unknown to either Mr Riley or Mr Pickersgill, as a result of various transactions within the group of which West of England Newspapers Ltd ('WEN') was a part, that company was a shell with no assets. The intra group transactions were effected for valid commercial reasons, but the result was that a guarantee from WEN was of little, if any, value in May 1988.
6. By a letter of 25 May 1988 to Foot & Bowden, Mr Pickersgill replied to the letter of 20th May. As to the guarantee he wrote:
'.... (3) The personal guarantee given by Mr Riley in respect of the Company's lease which is expected to be passed before Court on Friday of this week must be replaced by the formal guarantee (which will involve the passing of a further contract) of some third party at no expense to our client and as soon as is practical after the completion of the transfer of the shares. In the event where the lessor company declines to accept the substitution of a non-resident guarantor and no suitable alternative candidate can be found then your client company will provide an indemnity to Mr Riley in respect of any liability which may arise under his guarantee. We believe that each of these provisions has been agreed...' (emphasis added)
The draft Agreement, which Foot & Bowden prepared and sent, included an undertaking by the purchaser to 'procure the release of [Mr] Riley from the Guarantee or if it shall after using its best endeavours be unable to do so the Purchaser shall keep [Mr] Riley indemnified against all claims liabilities and costs arising thereunder'.
7. Mr Pickersgill clearly directed his attention to that clause, because there is a copy of the draft with annotations and a note referring to it. No check was made on the financial standing of WEN, or the availability of any other person to give the indemnity. No attempt was made to find a possible 'third party' guarantor, other than the purchaser, as proposed by Foot & Bowden. Obvious alternatives might have been to provide for an indemnity from Mr Doel, or from some other company in the same group as WEN, but which did have assets.
8. And as mentioned above, the lease was duly passed on 27 May 1988. The agreement for the purchase of the shares was entered into shortly afterwards, on 16 June 1988. The agreement included the provision cited above. Hyams were not willing to accept Mr Doel as guarantor in substitution for Mr Riley because he was a non -resident. No alternative was found. So thereafter the sole protection afforded to Mr Riley for his liability under the guarantee was the indemnity of WEN. Mr Riley's involvement in the business of Magnet ceased shortly after the sale of the shares.
9. Some four years later Mr Riley happened to notice that the premises were vacant. On 14 October 1992 he telephoned Mr Pickersgill in some alarm, and spoke to his secretary. Her note reads:
'Michael Riley ... about 4 years ago, Magnet Publications was bought by Jersey Journal, Peter Street lease. Landlord kept Mr Riley as guarantor of lease as he was the only Jersey resident. Then the company West of England Newspapers gave him a binding guarantee. He said that the premises are vacant and he wants BKP to check the guarantee because he says he doesn't want to be responsible for paying rental'
A subsequent note on Mr Pickersgill's file dated 19 or 20 October 1992 reads:
'advised Riley that they do have a claim BUT then the guarantee [he] has from West of England he claims so therefore will be refunded'.
10. In November 1995 the Viscount's officers attended at Mr Riley's home with a Summons, and then he realised for the first time the problem he faced. He was being sued by Hyams under his guarantee for arrears of rent, insurance premium and rates amounting to £32,007.92. That was the liability as at that date, not the total potential liability under the guarantee. Mr Pickersgill wrote a letter addressed to WEN on 15 November 1995 claiming under the indemnity. As a result, the position of WEN was revealed, as was the fact that Mr Doel was no longer associated with it, following disposals of the business and shares made since 1988.
11. Mr Riley was able to compromise the claim of Hyams and obtain a release from his guarantee. He had to borrow money in order to pay £47,204.23 due, which would with interest and costs amount to £50,276.53. He brought legal proceedings in England. Magnet was put en désastre on 22 March 1996. Eventually lawyers acting for WEN (by this time called West of England Publications Limited) made an offer of £10,000 which would reduce at the rate of £1,000 per week if it was not accepted by 3 July 1997. These funds were to have been provided by another company associated with WEN. Mr Riley's evidence was that he considered the offer to be an insult and that he was advised by English solicitors not accept it. WEN was the subject of a winding up order made on 26 November 1997. Mr Riley's solicitors were paid but no funds have been received by him from any source.
12. On 12 June 1988 the present Order of Justice was served in its original form on Pickersgill and le Cornu.
13. The Royal Court held that
(i) Mr Pickersgill owed a duty to Mr Riley in both contract and tort, and that the duty was essentially in each case to use reasonable care and skill. The judgment notes that in Jersey a solicitor is an 'homme d'affaires' (paras 32 and 38). Mr Pickersgill had a duty either to investigate WEN or to advise his client of the risk that he was running by not having the financial standing of the company investigated (para 39). He also had a duty towards Mr Riley to explain to him the potential consequences of entering into the lease and guarantee with no alternative guarantor in place and no guarantee agreed (para 42).
(ii) The Court found that he did not alert Mr Riley to the potential problems because he did not, as he told the Court, consider that the financial standing of WEN was his concern (para 41). He could also have advised Mr Riley to delay passing the contract while he investigated the standing of an alternative guarantor, or found a suitable form of indemnity, or advised Mr Riley in writing of the dangers that might befall him in guaranteeing a twenty-eight year lease for a company over which he would have no control whatsoever.
(iii) The cause of action in contract arose when Mr Riley gave the guarantee on 27 May 1988 (para 43), but was not complete on that date, and so was prescribed neither in contract nor in tort (para 47). When in 1992 Mr Riley received the further advice from Mr Pickersgill cited above, which was positive comfort and assurance, Mr Riley acted reasonably in relying on Mr Pickersgill and not himself making further enquiries. Mr Pickersgill was under a continuing duty to advise, and did advise on 28 March 1996 (paras 45-46, 48)
(iv) The cause of the loss was the failure of the indemnity. If Mr Riley had been advised on the risk before he sold Magnet to WEN on 16 June 1988, Mr Riley had alternatives open to him (para 49).
(v) Mr Riley did not fail to mitigate his damage. He persuaded Hyams to cancel the lease and the guarantee (para 55). Damages were assessed by the Judicial Greffier in the sum of £61,152.98 by Order dated 25 February 2002.
(vi) Interest was awarded from the date of judgment (para 56)
(vii) A counterclaim in the sum of £4,503.74 for fees and disbursements was dismissed.
14. Five issues arise in this appeal. By their Notice of Appeal dated 23 August 2001 the Appellants contend that the Royal Court erred in holding that (1) the claim was not prescribed, (2) Mr Pickersgill owed a duty of care to Mr Riley, (3) all or any of the loss was caused by the alleged breach of duty, and (4) in failing to uphold the Appellants' contention that Mr Riley failed to mitigate his loss by declining the settlement offer of £10,000. By his Respondents' Notice dated 5 September 2001, Mr Riley asked this court to affirm the judgment of the Royal Court but (5) to order interest from the date the damages were suffered, or alternatively, from the date the action was started, namely 12 June 1998.
15. Advocate Robinson appeared for the Appellants, and Advocate Thompson for the Respondent. I am indebted to both for their help.
16. I approach these issues in a different order.
17. Advocate Robinson contends that the Royal Court rightly stated that a solicitor is not generally under a duty to advise whether a transaction is a prudent one, that Mr Riley was well versed in business and familiar with guarantees, that he had conducted the negotiations for the sale of Magnet himself, and that he did not instruct Mr Pickersgill to investigate the financial standing of WEN. He refers to Carradine Properties Ltd v DJ Freeman and Co (1989) Const LJ 267, where solicitors were held not to be in breach of duty when they omitted to ask an experienced client whether he had insurance.
18. Advocate Thompson contends that the Royal Court was right to direct itself by reference to the citations at paras 35 to 38 of the judgment which read as follows:
"34. In Jackson and Powell on Professional Negligence (Fourth Edition) the authors say this at 4-116
"A solicitor is often called upon to give practical advice in which legal considerations are only one factor. In such a situation, a mere error of judgment by the solicitor is less likely to amount to negligence. Where, however, the solicitor advises a course of action which is plainly wrong, then he will be liable".
35. The authors go on to say (at 4-133) that a solicitor is "not a general adviser on matters of business (unless he specifically agrees to act in that capacity). Thus he is not generally under a duty to advise whether legal considerations apart, the transaction which he is instructed to carry out is a prudent one".
36. In Blacklock v. Perrier & Labesse (1980) JJ 197 at 206, the Court said:-
"The duty is to give all the relevant information to the client so that he can make up his own mind. In cases of doubt, the duty of a practitioner is to make sure that the client has sufficient information knows that he has it and what it means. A corollary to this duty is that when a solicitor is not sure that his client has appreciated the problem he ought not to act in any way so as to prejudice the client's interests".
37. The Court said as much in Torrell v. Pickersgill & Le Cornu (1987-88) JLR 702 at 708.
"In Stannard v. Ullithorne (1834) 10 Bing at 503-504:
"It may be assumed as a general principle that an attorney, by reason of the emolument he derives from the business in which he is employed, undertakes and is bound to take care, that his client does not enter into any covenant or stipulation that may expose him to a greater degree of responsibility than is ordinarily attached to the business in hand, or at all events, that he does not do so till the consequences have been explained to him".
38. It is clear that a client may well have high expectations of his solicitor, particularly when, as in Jersey, he is an "homme d'affaires"".
Advocate Thompson contends that the Royal Court was correct.
19. I agree with the judgment of the Royal Court that, for the reasons given in the judgment, Mr Pickersgill had a duty either to investigate WEN or to advise his client of the risk that he was running by not having the financial standing of the company investigated (para 39). He also had a duty towards Mr Riley to explain to him the potential consequences of entering into the lease and guarantee with no alternative guarantor in place and no guarantee agreed (para 42). The duty arose in respect of the drafting of a contract of sale on which Mr Pickersgill was advising. It is not suggested that Mr Pickersgill was in breach of duty by omitting to raise the question whether or not Mr Riley had insurance, as in the DJ Freeman case. Accordingly I conclude that Mr Pickersgill was under the duty found by the Royal Court and was in breach of that duty.
20. Advocate Robinson contends that the breach of duty found by the Royal Court is one of omission, and so it is necessary to consider what the Plaintiff would have done had he been given the appropriate advice: Allied Maples v Simmons & Simmons [1995] 4 All ER 907, 915G. Advocate Robinson notes that the possibilities canvassed in the evidence were wider than those referred to in the judgment, and included obtaining the indemnity from another company in the group, or from Mr Doel, or retaining control of the company, indefinitely, or until another buyer could be found. But he contends that there is no relevant finding of fact in relation to them.
21. Advocate Thompson contends that Allied Maples is authority for the proposition that it is necessary to distinguish causation and quantum, and that the judgment contains findings of fact in his favour on both points. Para 49 refers to the possibility of his not accepting WEN's indemnity, and finding another purchaser. It does not refer to the possibility of his not accepting the WEN indemnity, but obtaining one from Mr Doel or from a more substantial company in the group. But, the inference drawn by the Royal Court is, Advocate Thompson says, that if he had refused WEN's indemnity, he would have avoided the loss.
22. Both Advocates candidly accepted that Allied Maples was not cited to the Royal Court. The contentions before that Court were, for Mr Riley, that the loss was the whole amount which he should have recovered under the indemnity. For Mr Pickersgill the contention was that Mr Riley's 1988 position was hopeless and that he could not show that a breach of duty caused any loss at all. The Royal Court were not asked to assess the loss of a chance. So given the choice between all or nothing, the Royal Court found that the loss was the whole sum claimed by Mr Riley.
23. I agree that Allied Maples requires a distinction to be made between causation and quantum as Advocate Thompson contends.
24. As to causation, in my judgment no damage was suffered by Mr Riley merely from the fact of his entering into the guarantee of Magnet's new lease. The lease itself was a benefit to Magnet, since it needed premises from which to conduct its business. So long as Magnet continued to meet its obligations, there was no loss. There is an analogy with claims against valuers. As Lord Nicholls said in Nycredit plc v Edward Erdman [1997] 1 WLR 1627, 1632B-D:
'The basic comparison gives rise to issues of fact. The moment at which the comparison first reveals a loss will depend on the facts of each case. Such difficulties as there may be are evidential and practical difficulties, not difficulties in principle.
Ascribing a value to the borrower's covenant should not be unduly troublesome. A comparable exercise regarding lessees' covenants is a routine matter when valuing property. Sometimes the comparison will reveal a loss from the inception of the loan transaction. The borrower may be a company with no other assets, its sole business may comprise redeveloping and reselling the property, and for repayment the lender may be looking solely to his security. In such a case, if the property is worth less than the amount of the loan, relevant and measurable loss will be sustained at once. In other cases the borrower's covenant may have value, and until there is default the lender may presently sustain no loss even though the security is worth less than the amount of the loan'.
25. The cause of the loss that occurred was not the giving of the guarantee. The cause of the loss was the failure of WEN to honour its indemnity. That resulted directly from Mr Riley entering into the sale agreement with WEN without an indemnity from a person with the means to honour it. The loss did not occur immediately. The covenant of Magnet had a value for some time. It did not default immediately.
26. The quantum of the loss is the difference between Mr Riley's position as it would have been if the advice had been given, and his position as it was in fact. This is necessarily a matter of inference (Allied p915d). Applying Allied it is for Mr Riley to prove on the balance of probability that he would have taken action to avoid the risk. Here the necessary action depends partly on proving what he would have done, and partly on what third parties would have done. As to Mr Riley the question is whether he would have looked for a substitute for WEN, either as the giver of the indemnity, or as the purchaser, or whether he would have soldiered on as owner of Magnet. As to a third party, the question is whether a substitute for WEN would have come forward, either as the giver of the indemnity, or, if not, as purchaser and if so whether that substitute would have had the funds to honour the indemnity.
27. Since the Royal Court was not asked to assess the lost chance the questions arose whether this Court can itself make findings, or whether we must remit the matter to the Royal Court. Both parties agreed that there should be no new trial by the Royal Court and that we should make any findings of fact that are required on the basis of the transcript and the documents before us.
28. Advocate Robinson submitted to the Royal Court that there was no loss. The argument was that if Mr Riley had known of the true position about WEN he would still have proceeded with the sale. Alternatively, if he had decided not to sell Magnet the effect of the negligence was that it deprived Mr Riley of an opportunity to retain control of a hopeless situation. The judgment rejects this submission. In para 49 it states: '... he could have soldiered on ... We do not know but we cannot accept that the situation would have been as negative as was suggested by counsel'. The judgment goes on to award damages in the full amount claimed.
29. The judgment makes clear that in the view of the Royal Court there was at least a substantial chance that Mr Riley would have acted differently. That is a finding of fact implicit in the Royal Court's judgment. It is to be noted that the Court of Appeal in England made a similar interpretation of the judge's finding of fact in Allied p914d. That court pointed out that such an inference is not difficult to draw. As Stuart-Smith LJ said in Allied at p 915d:
'In the ordinary way, where the action required of the plaintiff is clearly for his benefit, the court has little difficulty in concluding that he would have taken it'.
The Royal Court was fully entitled to take this view. I would take the same view myself.
30. Would Mr Riley have avoided the loss if he had acted differently? Advocate Robinson submits that the words 'we do not know' mean that damage has not been established. As I read those words, the Royal Court is saying that there were a number of means by which the loss could have been avoided, and they do not know which means would have been adopted. Advocate Robinson submits that if Mr Riley had soldiered on without a substitute purchaser he would have been liable for the rent. But that misses the point. In those circumstances Mr Riley would have been in control of Magnet and the premises. He would not have been liable for the rent if Magnet could pay. And even if Magnet could not pay, he could have arranged through Magnet for sub-tenants or assignees to pay for the occupation of the premises. After Hyams had released Mr Riley from his guarantee, a new lease was granted to the occupants of the premises.
31. It is also significant that in the letter of 25 May 1988 Mr Pickersgill contemplates the substitution of 'some third party' as guarantor, before referring to the purchaser giving the indemnity. Mr Pickersgill himself was not, at the time of the events in question, under the impression that Mr Riley's options were limited to WEN's indemnity.
32. I agree that there is no reason to suppose that Mr Riley's options were so limited. Having read the transcript of the evidence, I find that it does not suggest that Mr Riley was under urgent pressure to sell, or that WEN were unwilling to negotiate. On the contrary, the evidence is that the negotiations proceeded without urgency, and with interruptions, and when they reached a conclusion the position was that, in Mr Pickersgill's words, 'the parties are all apparently eager to proceed'. The difficulty in finding a guarantor to take Mr Riley's place arose from Hyams' unwillingness to accept a non-resident of Jersey. It is not a case where a search for a substitute was conducted and no volunteer was found at all.
33. On the evidence, it would not be difficult to draw the inference that Mr Riley had a very good chance of obtaining either an indemnity from a more substantial third party than WEN (whether Mr Doel or another company in the group) particularly because Mr Doel had already volunteered to be substituted as guarantor, or a different and more substantial purchaser. The offer by Foot & Bowden of an indemnity from a shell company has all the appearance of an oversight on the part of all concerned. The judgment includes (para 17): '[WEN] was a shell company ... the intra group transaction was effected for valid commercial reasons'. There was no suggestion that Mr Doel or WEN were attempting to trick Mr Riley. It was obvious that if the purchase of Magnet was to proceed it would be necessary for Mr Riley to be released from the risk he had undertaken on 27 May 1988.
34. Advocate Robinson points out that there was no direct evidence before the Royal Court of the financial standing of Mr Doel, or of the parent company of WEN. The position of WEN and its associated companies was investigated in 1996; and Mr Riley gave evidence of his conversations with Mr Doel at that time. The burden of proof is of course on Mr Riley. In my judgment the evidence (limited though it is) suffices to discharge the burden of showing that Mr Doel or one of the companies associated with WEN would have been very likely to agree to give the indemnity and would have had the resources to meet its obligations under the indemnity. The evidential burden passed to Mr Pickersgill. While he has put Mr Riley to proof of the loss, he has adduced no evidence which casts any doubt on the good faith or financial standing of Mr Doel or the parent company of WEN. Nor did Mr Pickersgill adduce any evidence to contradict the inference I draw that the lease of the premises was a valuable asset which could have been assigned to a new lessee in circumstances which released Mr Riley from any liability or practical risk of loss. Accordingly, I find that no discount is to be applied to the loss claimed.
35. Advocate Robinson contends that the Royal Court did not identify a breach of contract occurring less than ten years before the issue of proceedings. He submits that any breach of contract occurred on or before Mr Riley gave the guarantee on 27 May 1988, which was more than ten years before the date of the Order of Justice. He points to para 47 of the judgment as holding that the breach occurred when Mr Riley entered into the guarantee of Magnet's 28 year lease on 27 May 1988.
36. The prescription period in contract is ten years. The Order of Justice was dated 12 June 1998. The judgment of the Royal Court (at paras 39, 41) is that Mr Pickersgill had a duty either to investigate WEN or to advise his client of the risk that he was running by not having the financial standing of the company investigated and that he failed to do either. The judgment holds, correctly in my view, that there was a continuing duty to advise on the financial adequacy of WEN. Mr Pickersgill's failure was a breach of contract not only on 27 May 1988, but also on 16 June 1988, when WEN's indemnity was accepted. Advocate Robinson's contention that the Royal Court does not clearly distinguish between the breaches of contract that it held occurred has some force. The breach of contract found at paras 42 and 47 relates to a failure to advise (and so to a breach) which occurred on 27 May 1988. However, at para 46, the Royal Court reject Advocate Robinson's submission that the cause of action was complete on 27 May 1988, and hold (at para 47) that the action is prescribed neither in contract nor in tort.
37. The claim is prescribed only if the breach that caused the damage occurred more than ten years before the commencement of proceedings. Since in my judgment the breach that caused the damage was the failure to advise in relation to WEN's indemnity before the contract of 16 June 1988, it follows that the Royal Court were correct in holding that the claim is not prescribed.
38. It follows that it is unnecessary to consider separately the claim in tort, for which the period of prescription is three years.
39. Advocate Robinson points out that the Royal Court does not address the submission that the offer of £10,000 from WEN's associate company ought to have been accepted in mitigation of damage. On questions of mitigation, the burden of proof is on the defendant, and the measures which the plaintiff takes 'ought not to be weighed in nice scales at the instance of the defendant whose breach of contract has occasioned the difficulty: 12(1) Halsbury's Laws 4th ed para 1041-2.
40. The offer in question was made in a letter dated 2nd July 1997 from English solicitors. The terms of the offer include:
"The offer...will also be reduced by £1,000 per week, the first reduction to be made at close of business on Thursday 3rd July 1997."
Mr Riley's explanation is that he thought the offer was an insult and that he rejected it on the advice of his solicitors. Legal advice cannot of itself make a course of action reasonable and the grounds for the advice were not explained. However, it would, in my view, be reasonable for someone in Mr Riley's position to test the resolve of those making such offer. It was reasonable not to accept it the day after the letter was written, when the first reduction was made. Not to accept it after a further, short, period became unreasonable. I would deduct £5,000 from the claim on this account. The total damages will therefore be £61,152.98 less £5,000, which is £56,152.98.
41. The judgment concludes 'We award interest at the court rate ... from the date of judgment...'.
42. The power of the court to award interest derives from the Interest on Debts and Damages (Jersey) Law 1996 Art 2. Art 2(1)(b) provides that '... the Court may, if it thinks fit order that there shall be included in the sum for which judgment is given simple interest at such rate as it thinks fit on the whole or any part of the debt or damages in respect of which judgment is given ....for the whole or any part of the period between the date on which the cause of action arose and .... the date of judgment'. By Art 2(4) '...every judgment debt shall carry simple interest at such rate as the Court thinks fit for the whole or any part of the period from the date of judgment ....'
43. If the Royal Court addressed their minds to Article 2(1)(b) they do not say so. We were informed that the judgment was handed down in the form in which it now appears and no argument was addressed to the question of interest by either side. It follows that this Court has no choice but to approach the exercise of the discretion itself. There is no reason not to award interest for a period before judgment. The largest payment to Hyams was in the sum of £32,007.92 made on 29th January 1996. Further payments of £3,739.73 and £11,456.58 were made on 19th April and 25th June 1996. Advocate Thompson asks for interest to be awarded from 19th July 1996, and I agree that that is an appropriate starting point for a calculation of interest on the whole award of £56,152.98 at the rate of 2% over base rate. That rate is accepted as correct by Advocate Robinson.
44. Both Advocates have asked us to defer dealing with any question of costs until they have had an opportunity of considering this judgment. Accordingly, we will invite them to agree the calculation of interest and the appropriate order for costs and inform the Judicial Greffe no later than 20th September. Failing such agreement, any application to this Court shall be made by notice given no later than that date.
Nutting JA
I agree.
Southwell JA
I also agree.
Authorities.
Boyd-v-Pickersgill and Le Cornu (1999) JLR 284 CofA.
Jackson and Powell on Professional Negligence (4th Ed'n): paras 1-148 to 1-151; 4-123 to 4-139; 4-233; 4-257-8.
Nykredit Mortgage Bank plc-v-Edward Erdman Group Ltd. (1997) 1 WLR 1627.
Allied Maples Group Ltd-v-Simmons and Simmons (1995) 4 All ER 907.
4 Halsbury 12(1): paras 1041-2.
Carradine Properties Ltd v DJ Freeman and Co (1989) Const LJ 267