Jersey Unreported Judgments

Loan - application for judgment against second and fourth defendants.

[2014]JRC065

Royal Court

(Samedi)

12 March 2014

Advocate M. H. D. Taylor for the Plaintiffs.

judgment

the commissioner:

1.        The action in which the present summons has been issued by the plaintiffs concerns a series of loans made by what was then known as the Irish National Building Society ("INBS") to the second defendant ("Stormex"), a Jersey-incorporated company which appears to be closely associated with the third defendant ("Mr. Halabi"), and a claim by INBS to recover long outstanding principal together with  interest accrued over many years (1) from Stormex as debtor and (2) from the fourth defendant ("Immofra"), a Luxembourg company, as guarantor.

2.        The proceedings were initiated in November 2010 by Order of Justice in which INBS was named as the plaintiff. Subsequently, INBS as such ceased to exist when in July 2011 it was merged with Anglo Irish Bank and in October 2011 the latter became Irish Bank Resolution Corporation Limited ("IBRC"). On 7^th February last year IBRC was placed in special liquidation pursuant to an Act of the Irish Parliament and, with the leave of the Court, the Order of Justice was amended to name the joint liquidators, Mr. Kieran Wallace and Mr. Eammon Richardson of KPMG, Dublin, as plaintiffs.  As a matter of convenience we shall, however, continue to refer to the plaintiffs as "INBS".

3.        On 26^th June last year, at the trial of the action, we gave judgment in favour of INBS against Stormex and against Immofra 

(i)        for £2,407,191-51 representing all but a small portion of INBS's claim to outstanding principal, and

(ii)       for £1,100,000 as regards interest due and owing in at least that amount as at 10^th May, 2001.

We ordered that INBS's costs of and in connection with the proceedings for recovery of the foregoing amounts (as part but not the whole of its claims) be paid by Stormex and Immofra on an indemnity basis and adjourned the balance of the claim to a hearing on a future date (to be fixed) on certain conditions.

4.        The unusual circumstances in which this came about are described in full in the Court's written judgment of 26^th June, 2013.  The fact that we limited judgment at that stage to a comparatively modest figure as regard interest (though "modest" only in the context of the present case) was not because we were satisfied that Stormex had an arguable defence or defences to the balance of the claim or anything remotely like that: on the contrary, as we observed in our written judgment, we had not seen anything that could be called persuasive evidence of a case for any major abatement of interest recoverable by INBS.  All things considered, however, we thought it right to leave the balance of INBS's claim for determination in a hearing at which Stormex and Immofra could be duly represented by another advocate in place of Advocate Hoy.

5.        The conditions that we set were as follows:-

(i)        that by 12 noon on Friday 5^th July, 2013 INBS had received payment in full of the as yet unpaid order for costs made in its favour in earlier related pleadings;

(ii)       that by 12 noon on Friday 26^th July, 2013 INBS had received payment in full of the judgment sums referred to above;

(iii)      that by 12 noon on Friday 27^th September, 2013 a sum of three million pounds (£3,000,000) had been paid into Court at the instigation of Stormex and/or Immofra pending determination of the remaining issues in the proceedings;

(iv)      that INBS's costs occasioned by such adjournment should be paid by Stormex and Immofra on an indemnity basis;

(v)       that Stormex and Immofra were to comply with any order that the Court might make on any application by INBS for an interim payment order in relation to costs or for security for costs (as regards the costs orders in INBS's favour referred to above or future costs);

(vi)      that in default of prompt fulfilment of any of the foregoing conditions INBS would have leave on 48 hours' notice to Stormex and Immofra to apply for leave to enter judgment for the full amount of the balance of its claim and for such further or other relief as the Court might think fit.

6.        In the event, although the first condition was fulfilled, neither the second nor the third was satisfied, in part or in whole, within the specified timetable or at all.  In consequence,  on 18th December last year INBS issued a summons seeking judgment for the balance of its claim, that is:-

(i)        for £4,339-65 as regards principal, and

(ii)       for £3,595,641-41 as regards interest accrued from 11th May 2001 until 30th September 2010.

7.        Following Voisins' withdrawal from representing Stormex and Immofra, the firm of Hanson Renouf appeared on the Court record as formally representing those defendants and INBS's summons was accordingly served on Hanson Renouf together with a letter saying that a date-fix had been arranged for 8^th January, 2014.  Hanson Renouf responded shortly before 8^th January saying that they had no instructions to attend the date fix but wished to be kept informed of the date for the adjourned hearing. Bedell Cristin accordingly wrote the day following the date-fix notifying Hanson Renouf that the hearing had been fixed for 10.00am on 7^th March, 2014.

8.        Nothing further was heard from Hanson Renouf or from anyone else on behalf of Stormex or Immofra until two days before the date fixed for the adjourned hearing, when Advocate Jean-Marie Renouf wrote to the Bailiff's Judicial Secretary saying that he was  not instructed to attend the hearing and was not aware that any other advocate had been so instructed. However, he enclosed two unsworn affidavits, one by Mr. Halabi the other by a Mr. Rhatigan, with a request that they be placed before the court accompanied by the following brief explanation: "The affidavits have been agreed by the deponents but they have not been able to be sworn due to travel commitments which stretch beyond the hearing date.  Mr. Halabi and Mr.  Rhatigan will swear these affidavits and copies will be filed with the Judicial Greffe at the earliest opportunity."

9.        In his draft affidavit Mr. Halabi described himself as "a representative of and adviser to his mother", who, he said was the 100% owner of Immofra. Other than that he did not say by what authority he purported to speak on behalf of Immofra. He also referred to his mother as  settlor of a trust, the Ironzar Trust, the trustee of which was Volaw Corporate Trustee Limited (the first defendant) and one of the assets of which - owned by the trustee - is Stormex. But, here too, apart from his mother's role as settlor he failed to explain by what authority he purported to speak on behalf of Stormex.

10.      In any event, the content of this affidavit consisted of little more than complaints about the circumstances in which judgment for part of INBS's claim was granted last June, about various observations contained in the Court's judgment concerning Mr. Halabi and about the conditions required by the Court to be fulfilled if Stormex and Immofra wanted to defend the balance of the claim. Most notably, it made no reference of any kind to the protracted interval of time since the June judgment and the absence of any move to appeal that judgment; nor did it contain any belated offer to satisfy the outstanding conditions set by the Court. As for Mr. Rhatigan, a business associate of Mr. Halabi, his affidavit (a sworn copy of which was supplied shortly before the hearing), was equally worthless, consisting of little more than complaints of a similar kind and an excess of hearsay.

11.      The net result is that, over eight months after the judgment given in June last year and two and a half months after Bedell Cristin wrote to Hanson Renouf enclosing the summons now before us, the second and third conditions set by the Court last June remain wholly unfulfilled and nothing has happened that would justify the Court withholding judgment for the balance of INBS's claim as now requested in accordance with the terms of paragraph 4(f) of the Act of Court of 26^th June, 2013.  As regards the amounts claimed, it is sufficient for present purposes to note that, as recounted in paragraph 13 of our previous judgment, if principal and interest are aggregated, the two expert accountants were only £1.71 apart in their respective assessments of the amounts owing to INBS as at 30^th September, 2010.

12.      INBS is accordingly entitled to judgment against each of Stormex and Immofra in the amounts referred to in paragraph 6 above together with indemnity costs. INBS's further claim for interest accrued since 30^th September, 2010 will be adjourned to a date to be fixed should the Special Liquidators consider it worthwhile pursuing the matter.

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