Jersey Unreported Judgments

[2003]JRC078

royal court

(Samedi Division)

13^th May 2003 

Application by the Defendant/Plaintiff by Counterclaim for leave to re-amend the Amended Answer and Counterclaim and to join Auray Limited as Second Plaintiff to the Action by Counterclaim.

Advocate R.G.S. Fielding for the Plaintiff/Defendant by Counterclaim.

Advocate M.J. Thompson for the Defendant/Plaintiff by Counterclaim.

judgment

the deputy bailiff:

1.        This is an application by the defendant, Mr Milborn, for leave to amend his counterclaim by joining a company called Auray Limited as co-plaintiff.  The brief background is that the plaintiff in the proceedings, Britannia, is an English Building Society.  In August 1989 it lent £3 million to Mr Milborn secured on certain English real property.  Mr Milborn admits that from August 1991 onwards he failed to pay interest on the loan and by 1^st October 1993 the amount due was said to be just over £4 million.  On 21^st October 1993 Britannia issued a summons in this Court against Mr Milborn, who lived in Jersey, for the sum of £4,033,065.20.  The matter was placed on the pending list.

2.        In March 1994 Mr Milborn filed an answer and counterclaim.  No real defence was put in to Britannia's claim for repayment of the loan but the real defence was by way of counterclaim.  In essence Mr Milborn alleged that he had been badly advised by a firm of estate agents, Messrs Hall Payne and Foster, who had made certain representations in connection with various properties owned by Mr Milborn in the UK; that Hill Payne and Foster as a subsidiary of Britannia was to be considered as an agent of Britannia in making the representations; that the representations were to be considered as having been incorporated in the contract of August 1989,  whereby Britannia loaned £3 million to Mr Milborn, and the representations were false, as a result of which Mr Milborn has said he had suffered a loss which exceeded the amount of Britannia's claim against him.

3.        In May 1996 Mr Milborn was declared bankrupt in England, on the application of a creditor.  After being declared bankrupt he completed a statement of assets in which he again declared that the benefit of the counterclaim against Britannia was part of his estate.  This was consistent with an affidavit and a statement which he had made in 1994 in connection with the petition by Britannia to declare him bankrupt. 

4.        It has to be said that the proceedings in this Court have limped along.  Britannia filed a reply and answer to counterclaim on 6^th April 1994.  On 24^th June 1994 Mr Milborn was ordered to file further and better particulars of the counterclaim within six weeks.  On 17^th October an 'unless' order was made against him in respect of the filing of those particulars.  On 30^th January 1995 Mr Milborn was given leave to amend his counterclaim.  On 24^th July 1995 the matter was set down for hearing and mutual discovery ordered.  On 21^st November 1995 an 'unless' order was made against Britannia in respect of discovery and on 1^st March and 30^th April 1996 orders for security for costs were made against Mr Milborn.  In 1998, out of the blue, Britannia were informed that in fact Mr Milborn had assigned the benefit of the counterclaim against Britannia to a Mr King in March 1992 and that Mr King had, in turn, assigned the benefit of the counterclaim in 1998 to a company with which he was associated or interested namely Auray Limited.  Affidavits have been filed setting out the detailed circumstances of that but in the light of what has happened during the course of this hearing we do not think it necessary to deal with that.

5.        Nothing further happened after 1998, save that in 1999 there was some contact between Mr Milborn's trustee in bankruptcy and Mr Milborn and Mr King in order to ascertain the trustee in bankruptcy's attitude to the alleged assignment.  Nothing much came of that.  Advocate Thompson was instructed in the place of Mr Milborn's previous lawyers at the end of 2001 and, having thought about the matter, he issued a summons in August 2002 to join Auray as co-plaintiff to the counterclaim on the basis that it had title to the counterclaim because of the assignment. 

6.        We have to say that this matter should have been dealt with before the Deputy Judicial Greffier.  We understand the Master could not sit, but matters of amendment of pleadings really should be dealt with at that level before they trouble the Royal Court unless there are particular reasons for bringing it straight to the Royal Court.  The Court's timetable is full and these matters on the whole should be dealt with at the Greffier level. 

7.        So it was in these circumstances that Mr Thompson now applies for leave to amend.  He says that it is to guard against any allegation that Mr Milborn does not have title to bring the counterclaim.  It appeared at one stage that the assignment might be a device to deprive Britannia of its ability to set off the outstanding amount under its claim, apparently some £3 million plus interest, against any liability on the counterclaim.  But Mr Thompson made it absolutely clear that this was not so.  He accepted that Auray could only step into the shoes of Mr Milborn, so far as set off was concerned, and could not be in a better position than Mr Milborn.  The set off would therefore apply equally as between Britannia and Auray as it would have between Britannia and Mr Milborn.

8.        The question of the assignment raises quite complex legal issues as to the validity, both of the assignment in 1992 and that of 1998.  This can be seen from the voluminous authorities which have been cited to us.  We have also been referred to the case of Brown -v- Barclays Bank PLC (4th December 2001) Jersey Unreported; [2001/241], which sets out the principles in respect of late amendments.  It is not absolutely in point because it was concerned with cases where the trial date has been fixed and is likely to have to be vacated as a result of any adjournment, but it nevertheless has important things to say in respect of late amendments.  On any view, this is an extraordinarily late amendment.  Auray and Mr Milborn have known of this assignment since 1992 (and 1998 in respect of the second assignment) and yet, it was only mentioned in 1998.  Furthermore, the application to amend is only brought now when frankly nothing has happened in this case of any note since 1998, in other words five years ago.

9.        The onus is therefore on the applicant to show that an amendment is necessary in the interests of justice.  As the matter progressed during the hearing it became clear to the Court that it was not necessary.  At present there is no mention of this assignment in the pleadings at all.  It follows that it is simply not open to Britannia to question Mr Milborn's title to the counterclaim unless or until it seeks leave to amend its pleadings to raise the question of the assignment.  It is possible that they might have done that at some future date, I suppose, and Mr Thompson no doubt considered that it was necessary to address this issue now.

10.      During the course of the hearing, Mr Fielding, on behalf of Britannia, has undertaken that, in the event of the application for leave to amend being refused, Britannia will not raise the question of Mr Milborn's title to the counterclaim in these proceedings.  It follows that the matter can therefore proceed on the basis of the present pleadings which are concerned solely with the validity of the counterclaim - in other words, is Britannia liable for the alleged misrepresentations of the firm of estate agents and did those representations cause loss?

11.      In the circumstances, we do not think it is in the interests of justice to complicate this case which has already been going on for so long, by bringing in, unnecessarily, the question of the validity of the assignment.  If it ever comes to it, that is a matter to be sorted out between the trustee in bankruptcy, Mr Milborn and Auray.  It will only be relevant if, in fact, the counterclaim succeeds to a value which exceeds the outstanding amount due to Britannia on the main claim together, no doubt, with interest.  In the event of there being a surplus and therefore a net payment due from Britannia then, so far as these proceedings are concerned, it will be payable to Mr Milborn and it will be up to the various interested parties then to consider whether it does indeed go to him or to someone else.  That, it seems to us, is not directly relevant to these proceedings and not directly relevant to Britannia.

12.      In the circumstances we do not consider that the interests of justice require an amendment.  It seems to us that Mr Milborn is protected both by the current state of the pleadings and now by the undertaking which has been given on behalf of Britannia that his title will not be challenged in these proceedings.  There is therefore no need for Auray to be joined and for these additional complications to now come within these proceedings.  In the circumstances, Mr Thompson having accepted that there was no need for the matter to proceed in the light of the undertaking, we dismiss the application for leave to amend.

13.      I have also heard argument on costs.  As to that, Mr Fielding submits that the application to amend was unnecessary.  Conversely, Mr Thompson says that his position has only been satisfactorily protected once the undertaking was given.  I think that there is something to be said on both sides and in all the circumstances I think the right order is costs in the cause.

Authorities

Guernsey States Insurance Authority -v- Ernest Farley and Son, Ltd (1953) JJ 47.

Brown -v- Barclays Bank PLC  (4^th December 2001) Jersey Unreported; [2001/241].

Trendtex Trading Corporation and Anor -v- Credit Suisse (1982) A.C.679.

Three Rivers District Council -v- Bank of England (1995) 4 All ER 312.

Camdex International Ltd -v- Bank of Zambia (1998) QB 22.

Royal Court Rules, 1992:  Rule 6/29.

Supreme Court Practice (1999 Ed'n) Ord.15/4.

Maxwell on Interpretation of Statutes (12^th Ed'n) pp 1-2; 28-75.

Vezier -v- Bellego and ors (1996) JLR 105.

Sim -v- Thomas [2001] JLR 461.

Glegg -v- Bromley (1912) 3KB 474.

Snell's Equity (13^th Ed'n) para 5/28 to 5/30; 5/37.