[2011]JRC033
royal court
(Samedi Division)
8th February 2011
Before : |
M. C. St. J. Birt, Esq., Bailiff, and Jurats de veulle and Nicolle. |
IN THE MATTER OF A REPRESENTATION BY KEITH STANLEY GIBBINS AND DESIREE JOY GIBBINS (NEE KNIGHTS)
AND IN THE MATTER OF THE LOI (1839) SUR LES REMISES DE BIENS
Mr and Mrs Gibbins in person.
Advocate L. J. Springate for Jersey Home Loans Limited.
judgment
the bailiff:
1. This is an application by Mr and Mrs Gibbins ("the applicants") for a Remise de Biens. The Court rejected the application on 4th February and now gives its reasons.
Background
2. On 3rd April, 2008, the applicants purchased the property known as Maison la Plage, Court Drive, St Lawrence ("the Property"). They executed a bond in the capital sum of £370,000 in favour of Jersey Home Loans Limited ("JHL") ("the first loan"). Subsequently, on 26th September, 2008, they executed a second bond in the capital sum of £61,570 in favour of JHL ("the second loan" and together "the loans"). The loans were secured by judicial hypotheque.
3. The applicants soon fell into arrears, no doubt because, as Mr Gibbins says in the application, he was the subject of a criminal investigation and had difficulty in finding work. On 20th August, 2009, Mr Gibbins was sentenced to 12 months imprisonment by the Royal Court for eight offences of fraud or attempted fraud carried out over a period of 5 years. The offences involved untruthful statements made when completing various forms for the taking out of insurance, the opening of bank accounts, the obtaining of a mortgage, applying for employment, the granting of legal aid and the claiming of welfare benefits.
4. On 5th March, 2010, JHL obtained judgment for the sum of £15,543.78 in respect of arrears under the loans.
5. On 27th August, 2010, the Court granted an Acte Vicomte chargé d'écrire in respect of the judgment of 5th March. By then Mr Gibbins had served his sentence and the applicants had left Jersey and rented out the Property.
6. On 7th January, 2011, the Court granted the adjudication of the renunciation of all the property of the applicants and ordered a dégrèvement of the immoveable property and a réalisation of the moveable property. Advocate Le Sueur and Advocate Taylor of Bedell Cristin were appointed as Attournés. The dégrèvement was fixed for 8th February and the appropriate notices published in the Jersey Gazette.
7. On 20th January the applicants presented a Representation seeking a Remise de Biens and this came before the Court on the 21st January. In accordance with Article 2 of the Loi (1839) sur les Remises de Biens ("the 1839 Law") the Court appointed Jurats Morgan and Fisher to enquire into the position and report back to the Court by 4th February with their opinion as to whether it would be appropriate to grant a Remise. This they have duly done.
The financial position
8. According to the affidavit filed by Mr Gibbins in support of the application, their financial position was as follows:-
Assets |
|
Immoveable Property |
|
The Property |
£575,000 |
Moveable Property |
|
(i) 3 antique sofas (one at the property and 2 in the UK) |
£1,500 |
(ii) 2 Rocking horses (in the UK) |
£2,000 |
(iii) 3 antique chairs (in the UK) |
£1,000 |
(iv) TV (in the UK) |
£500 |
(v) 6 antique chairs (in storage at Le Gallais) |
£500 |
(vi) 1 Rossetti drawing (at Sothebys in London) |
£12,000 |
(vii) 1 car (1998 Mercedes A Class in the UK) |
£1,500 |
(viii) 1 AGA cooker (in storage at Le Gallais) |
£3,000 |
|
£22,000 |
|
£597,000 |
Liabilities |
|
(i) Secured creditors (of which £2,823.36 was in respect of a judgment debt obtained by RB Heating Limited and the balance was owed to JHL). |
£459,793.54 |
(ii) Unsecured creditors |
£8,898.72 |
|
£468,692.26 |
In addition, the affidavit pointed out that the Royal Court had on 21st August, 2009, made a compensation order for £19,313.11 against Mr Gibbins and that this had to be paid within one month of the sale of the Property or within one year of Mr Gibbins' release from prison, in default of which he would have to serve a further six months' imprisonment. Mr Gibbins was released from prison on 20th April, 2010, with the result that this sum is due by 20th April, 2011.
9. The report of the Jurats shows a somewhat different financial position:-
(i) Through the Viscount's Department, the Jurats have obtained two valuations for the Property. Gaudin and Co valued it at £485,000 and Thompson Estates would expect to achieve in excess of £480,000. The Jurats have taken a figure of £485,000, which is of course very much less than the figure of £575,000 in Mr Gibbins' affidavit, which was based upon a valuation in April 2010 by ABA Chartered Surveyors.
(ii) As set out above, the applicants had valued their Jersey moveable property at £4,000, comprising the AGA cooker at Le Gallais (£3,000), six antique chairs at Le Gallais (£500) and one of the antique sofas (£500). It transpired on investigation by the Jurats that Le Gallais had sold the assets stored with them because of non-payment of storage charges and that, far from achieving an aggregate price of £3,500, the assets had realised only £76.50, which was less than the storage charges. As to the antique sofa, the furniture in the Property has been valued at the Jurats' request by Simon Drieu and Co Limited whose opinion is that the value of the chattels in the property amount to only £395. The only sofa found in the property is estimated to have no sale value.
10. For the purposes of their report, the Jurats valued the property at £485,000, from which the selling costs, the costs of their enquiries so far, the Remise costs and the costs of the Dégrèvement so far would have to be deducted. As to the moveable property, the Jersey property was valued at £395. The UK property was taken at the values suggested by the applicants save for the Rossetti picture. The Sotheby's valuation produced by the applicants suggests a figure of between £8,000 - £12,000. The applicants had taken the maximum value but the Jurats thought it prudent to take the minimum value of £8,000. Thus the UK moveable property as a whole came to £14,000. The gross assets therefore came to £499,395 and the net assets to £476,413.75. The secured claims were put at £493,416.33 leading to a shortfall of assets (as compared with secured creditors) of £17,002.58.
The law
11. The Court was referred to the decision of this Court in Re Mickhael [2010] JRC 166A where Bailhache, Deputy Bailiff set out at paragraph 3 a number of matters likely to be relevant to the exercise of the Court's discretion as to whether to grant a Remise. We endorse those observations and have applied them in this case.
12. The starting point is that the Court has no jurisdiction to grant a Remise unless it considers there will be a surplus, however small, available for distribution amongst the unsecured creditors, see Re Shield Investments (Jersey) Limited [1993] JLR N 3. Thus the assets must exceed the secured liabilities. On the figures contained in the report of the Jurats, that test is not met and accordingly, if the report is accepted, the Court would have no jurisdiction to grant a Remise.
13. However, it transpired that, included in the secured amount given in the report as being owed to JHL was the sum of £33,294.16, which are legal fees incurred by JHL in connection with the various enforcement actions it has had to take against the applicants. There is no doubt that, under the terms of the facility letter which led to the granting of the bond, such sums are recoverable by JHL from the applicants but, having reviewed the terms of the bond and the facility letter, we think it very doubtful that such sums fall within the amount which is secured by the hypothèque. Accordingly, we have proceeded on the basis that the secured claims are reduced from the total figure of £493,416.33 to a figure of £460,122.17. That turns a deficit of £17,002.58 into an anticipated surplus of assets over secured liabilities of £16,291.58. Our decision therefore becomes one of discretion rather than one of jurisdiction.
Decision
14. The applicants did not appear at the hearing on 4th February nor were they legally represented. However we have carefully considered the material set out in the representation and in various e-mails which they have sent to the Court. Having done so, we have no hesitation in concluding that this is not a case in which we should grant a Remise. We would summarise our reasons as follows:-
(i) On the figures which we have given above, there is a very marginal surplus. Even if these figures are achieved, there will be no equity to be returned to the applicants. This is because the figures take no account of the unsecured creditors who, according to the Jurats' report, total £35,141.51 (including the compensation order payable in April).
(ii) In the present economic climate, there must be some question mark over whether a sale price of £485,000 would be achieved in respect of the property.
(iii) We are very dubious about attributing any material value to the moveable property in the UK. In the first place, given the Jurats' experience of the valuations put forward by the applicants in respect of their Jersey moveable property, it is probable that the movables in the UK are over-valued. Secondly, there is in fact no proof of ownership of the picture. There is a valuation but the picture has only been mentioned comparatively recently and no proof of title is exhibited. Given that assertions by the applicants in respect of ownership of property at Le Gallais have turned out to be inaccurate, the Court is unwilling to place weight on the value of the picture without more satisfactory evidence of title. Thirdly, even if various moveable property in the UK does exist and has some value, it will in practice be difficult for the Attournés to realise that value. The amounts involved are modest and the property is situated out of the jurisdiction. All in all, we are not inclined to place much weight on the value of the UK moveable property. If that is discounted, it virtually eradicates the anticipated surplus of £16,291.
(iv) The figures take no account of accruing interest on the secured sums. The evidence before us suggests that, if the property is not sold until the lease expires on 20th August, 2011, the secured amount owed to JHL will have increased by £18,174.23 after allowance for such rent as JHL expects to receive. That figure alone would turn the anticipated surplus into a deficit.
(v) An applicant seeking a Remise must make full, frank and accurate disclosure. He or she must show the utmost candour with the Court. We are not satisfied that that has been the case here. Thus the position in relation to the Jersey moveable and immoveable property turned out to be very different from that put forward by the applicants as described in paragraphs 9(i) and (ii) above. Furthermore, the figure given by the applicants for unsecured creditors (exclusive of the compensation order) was £8,898.72 whereas the figure ascertained by the Jurats was £15,828.40. The Court accordingly had little confidence in the figures put forward by the applicants.
(vi) We have taken note of the points put forward by the applicants. In particular, they do not feel that they have always been kept informed by JHL of what is occurring. However, the fact remains that there is no alternative to the sale of the property; that it is doubtful whether, if a Remise were granted, there would be any surplus of assets over the secured debts by the time the property was sold; and that in any event, there is no prospect of the sale proceeds of the property and the moveable property exceeding the aggregate of the secured and unsecured liabilities, and thus accordingly no prospect of any equity in the property being returned to the applicants.
15. For all these reasons, we rejected the application and the Dégrèvement will therefore proceed.
Authorities
Loi (1839) sur les Remises de Biens.
Re Shield Investments (Jersey) Limited [1993] JLR N 3.