Jersey Unreported Judgments

Saisie judiciaire - application in respect of realisable property of Arne Rosenlund.

[2015]JRC190

Royal Court

(Samedi)

16 September 2015

Before     :		J. A. Clyde-Smith, Esq., Commissioner, sitting alone.
Between	Her Majesty's Attorney General		Applicant
And	Arne Rosenlund		First Respondent
And	FNB International Trustees Limited		Second Respondent

IN THE MATTER OF THE PROCEEDS OF CRIME (JERSEY) LAW 1999 AS MODIFIED AND INCLUDED IN THE SECOND SCHEDULE TO THE PROCEEDS OF CRIME (ENFORCEMENT OF CONFISCATION ORDERS)(JERSEY) REGULATIONS 2008

AND IN THE MATTER OF AN APPLICATION FOR A SAISIE JUDICIAIRE IN RESPECT OF THE REALISABLE PROPERTY OF ARNE ROSENLUND

A. J. Belhomme, Esq., Crown Advocate for the Applicant.

Advocate J. Harvey-Hills for the First Respondent.

Advocate A. Kistler for the Second Respondent.

judgment

the commissioner:

1.        In handing down my judgment of 9^th September, 2015, (AG-v-Rosenlund and FNB International Trustees Ltd [2015] JRC 186), in which I found in favour of the Attorney General on a preliminary point of law, a number of consequential issues arose upon which I am now giving my decision. 

2.        The respondents wish to preserve their ability to appeal my judgment until after the final hearing, but do not wish to further delay the final hearing.  They submit that they should be allowed to await the outcome of the final hearing which, depending on the outcome, might make an appeal against my judgment otiose.  They say it would not be an effective use of time both for the Royal Court and the Court of Appeal for there to be an appeal on the preliminary issue now, with the potentially substantial delays that would give rise to.  If my judgment is to be regarded as a final judgment, then no leave is required, but the respondents would still need an extension of time in which to file their application to appeal 28 days following the final hearing.  If it is not to be regarded as a final judgment, but as an interlocutory judgment, then an application for leave must be made within 28 days of my judgment either to me or to the Court of Appeal, unless I again extend time for the making of that application.  I have power to extend time under Rule 16(2) of the Court of Appeal (Civil) Rules 1964. 

Interlocutory or final

3.        The first issue, therefore, is whether my judgment is to be regarded as an interlocutory judgment or a final judgment. 

4.        In Planning and Environment Committee v Lesquende [2003] JLR 15, the Royal Court considered the distinction between interlocutory and final orders.  Birt, then Deputy Bailiff, stated at paragraph 8 that it was preferable for this Court to look to English law on matters of procedural law and approved the judgment of Fry LJ in Salman v Warner [1891] 1 QB 734 where he said at page 736:-

"I conceive that an order is 'final' only where it is made upon an application or other proceeding which must, whether such application or other proceeding fail or succeed, determine the action.  Conversely, I think that an order is 'interlocutory' where it cannot be affirmed that in either event the action will be determined."

5.        Crown Advocate Belhomme, for the Attorney General, argues that on this basis my judgment was interlocutory, because it would not have determined the issue whichever way my decision went.  However, Advocate Harvey-Hills, for the first respondent, supported by Advocate Kistler for the second respondent, submitted that Lesquende was not concerned with whether the determination of a preliminary issue is interlocutory or final, a matter upon which English law (and the law of other Commonwealth jurisdictions) which we follow in this area, is clear. 

6.        The matter was first considered by the English Court of Appeal in White v Brunton [1984] 1 QB 570, where an issue of construction, which would not have determined the whole case, whichever way the decision went, was taken as a preliminary issue.  Referring to the "obscurity of what is and what is not an interlocutory order or judgment", Sir John Donaldson MR said this at page 573:-

"If the two parts of the final hearing of the case had been tried together, there would have been an unfettered right of appeal, even if the judgment had been that there was no liability and that accordingly no question arose as to damages.  It is plainly in the interests of the more efficient administration of justice that there should be split trials in appropriate cases, as even where the decision on the first part of a split trial is such that there will have to be a second part, it may be desirable that the decision shall be appealed before incurring the possibly unnecessary expense of the second part.  If we were to hold that the division of a final hearing into parts deprived the parties of an unfettered right of appeal, we should be placing an indirect fetter upon the ability of the court to order split trials.  I would therefore hold that where there is a split trial or more accurately, in relation to a non-jury case, a split hearing, any party may appeal without leave against an order made at the end of one part if he could have appealed against such an order without leave if both parties had been heard together and the order had been made at the end of the complete hearing."

7.        He went on to say:-

"In effect that is the position in the present case for in directing a preliminary issue on a point of construction, the district registrar was seeking to divide the final hearing into two parts in the justified belief that it was possible that by adopting this course the expense of part of the hearing might be avoided.  That the division may not have run exactly along the line dividing liability from quantum is, I think, immaterial.  The decisive feature is that the 'preliminary issue' was not, when analysed, an issue preliminary to a final hearing, but the first part of a final hearing."

8.        In the case of Holmes v Bangladesh Binman Corp [1988] 2 Lloyds LR 120, the English Court of Appeal followed White v Brunton.  On the application of the test, Bingham LJ said as follows at page 124:-

"Instead, a broad common sense test should be applied, asking whether (if not tried separately) the issue would have formed a substantive part of the final trial.  Judged by that test this judgment was plainly final, even though it did not give the plaintiff a money judgment and would not, even if in the airline's favour, have ended the action."

9.        The doctrine was reflected in the 1988 White Book at paragraph 59/1/25 and the position was subsequently clarified in the Rules of the Supreme Court White Book 1999.  Order 59 Rule 1A(3) provides that:-

"A judgment or order shall be treated as final if the entire cause or matter would (subject only to any possible appeal) have been finally determined whichever way the court below had decided the issues before it."

10.      This is qualified by Order 59 Rule 1A(4) which states that:-

"For the purposes of paragraph (3), where the final hearing or the trial of a cause or matter is divided into parts, a judgment or order made at the end of any part shall be treated as if made at the end of the complete hearing or trial."

11.      Rule 1A(4) is said at paragraph 59/IA/4 to apply to preliminary issues if "the circumstances are such that the determination of the preliminary issue is equivalent to a split trial (i.e. the issue is not an antecedent procedural point which falls to be determined in advance of the final trial, but is a preliminary issue which forms part of the final trial or hearing)."

12.      The reasoning of the Court of Appeal in White v Brunton was cited with approval by the Judicial Committee of the Privy Council (on appeal from the Court of Appeal of New Zealand) in Strathmore Group Limited v Fraser [1992] 2 AC 172 (per Lord Templeman at pages 178 to 179).  In that case, the petitioner alleged breach of fiduciary duty.  The respondents denied any such breach, but contended that there had been a compromise whereby the petitioner had agreed to abandon those claims or alternatively, they be cancelled.  The compromise issue was taken as a preliminary issue, but again would not have disposed of the entirety of the matter whichever way the decision went.  Adopting the words of Sir John Donaldson in White v Brunton, the Judicial Committee held that it would have been unfair to deny an appellant an automatic right of appeal that he would otherwise have had if the matter had not been taken as a preliminary issue, but had been determined at trial. 

13.      More recently, the question has come before the Court of Appeal of the Bahamas in Crawford & Company International Inc v Crawford (Bahamas) Limited [2010] Civ App No 97, where the Court of Appeal followed White v Brunton and Strathmore v Fraser.  It noted that these principles had also been applied by the Court of Final Appeal in Hong Kong in the case of Shell Hong Kong Ltd v Yeung Wai Man Kiu Yip [2003] HKCU 757 at paragraphs 26 to 33. 

14.      The clear principle to be drawn from these cases is that, where a matter that would otherwise have formed part of the trial is decided as a preliminary issue, the order is to be treated as final, and not as interlocutory.  It would self-evidently be unfair for a party to be denied an automatic right of appeal that it would otherwise have had, simply because a matter for trial that would normally be decided at trial was decided as a preliminary issue. 

15.      In my view, this principle should be followed in Jersey, partly because (as per Lesquende), it is preferable to follow the English approach in such matters, so as to be consistent, but also because fairness dictates that this principle should be followed. 

16.      In the case before me, was this issue of law preliminary to a final hearing (an antecedent procedural point) or the first part of a final hearing?  The answer is clear.  This was an issue of law which fell to be dealt with as part of the final hearing, and which, as agreed by the Attorney General, could usefully be determined by the Court as a preliminary issue, because if the Attorney General lost the argument, it would dispose of the matter entirely.  My judgement on this preliminary point of law is final and it would be wrong to deprive the respondents of their right of appeal, because it has been taken as a preliminary issue. 

17.      The respondents would still, however, have to file their notice of appeal within 28 days of my judgment and, unless agreed or ordered otherwise, pursue it before the Court of Appeal, effectively staying the substantive proceedings, which brings me to the second issue of whether an extension of time should be granted.  

Extension of time

18.      Crown Advocate Belhomme argues that it would be illogical to allow the respondents to pursue their appeal on this issue of law after the final hearing.  It could lead, he said, to a position whereby the Attorney General prevails at the substantive hearing, only to find that the respondents seek to appeal the Court's finding on the preliminary issue at that stage.  A successful appeal against the preliminary issue at that stage could finally dispose of the matter.  In such circumstances, the costs incurred on all sides in preparing for the substantive hearing would have been wasted. 

19.      This can be argued both ways in that proceeding with an appeal now could involve substantial delays (bearing in mind the possibility of an ultimate appeal to the Privy Council) and the incurring of costs.  If my decision was ultimately upheld, then the parties would have to proceed to the final hearing, after a substantial delay, which the Attorney General may then lose on the facts, in which event the costs incurred on the appeal would have been wasted. 

20.      It is difficult to predict the course that litigation will follow.  As a matter of policy, I regard it as preferable to proceed to a final hearing as soon as reasonably possible and, depending on the outcome of that hearing, to see what, if any, appeals then ensue.  This is especially the case where, as here, there are factual issues that require to be determined at the final hearing.  The need to proceed in that way is enforced by the fact that the Attorney General's representation, brought at the instance of the Government of Denmark, was first made as long ago as the 4^th February, 2014, and a final hearing date has yet to be fixed. 

21.      I therefore agree that any appeal should follow the final hearing so that progress towards the final hearing is not further delayed and to that end, I am going to extend the time in which the respondents must file their appeal against my judgment to 28 days after the final judgment in the substantive proceedings is handed down. 

22.      If I am wrong in finding that this is a final judgment, then I also extend the time for the respondents to file an application for leave to appeal to 28 days after the final judgment in the substantive proceedings is handed down. 

Costs

23.      Crown Advocate Belhomme seeks the Attorney General's costs in relation to this preliminary issue, the Attorney General being the successful party.  He did so on the basis that parties were commonly awarded the costs of an interlocutory hearing in which they were successful, regardless of the eventual outcome of the case, citing Ball v King [2008] JLR Note 40. 

24.      However, I have found that this is not an interlocutory judgment.  It forms part of the final hearing and I agree with the respondents that I should leave the issue of costs to the trial judge, so that the conduct of the parties and the outcome can be looked at in the round in order for a fair order in relation to costs to be made.  I therefore reserve the costs of this preliminary issue to the trial judge.  The costs of this hearing on consequential issues arising from my judgment shall also be reserved. 

Directions

25.      Finally, it is now for the Attorney General to clarify his case in the manner indicated by me at paragraph 10 of my judgment of 13^th April, 2015, (for the file and parties only) where I said this:-

"If the Attorney General succeeds in the preliminary issue and the case proceeds, then I will, at that stage, require the Attorney General to clarify the arguments he will be advancing under paragraphs 41 and 42 of his skeleton argument, which at the moment are not clear to me. I do not believe it is being argued that a change of trustee of a validly created discretionary trust, in which the relevant powers have been exercised properly, will constitute an indirect gift for the purposes of the Modified Law by one of the members of the discretionary class.  The Court will need therefore to be clear, firstly as to the facts the Attorney General seeks to prove in relation to the Trust and, secondly, why in law those facts, if proved, render the change of trustee an indirect gift by the defendant for the purposes of Modified Law."

It is agreed by the parties that the Attorney General will provide this clarification within 21 days.  The parties feel confident that they can then agree on the directions which would need to be given to bring the matter to a final hearing, but in any event I direct them to attend upon the Bailiff's Judicial Secretary now to fix a directions hearing (I hour) shortly after the expiration of this period. 

Authorities

AG v Rosenlund and FNB International Trustees Ltd [2015] JRC 186.

Court of Appeal (Civil) Rules 1964.

Planning and Environment Committee v Lesquende [2003] JLR 15.

Salman v Warner [1891] 1 QB 734.

White v Brunton [1984] 1 QB 570.

Holmes v Bangladesh Binman Corp [1988] 2 Lloyds LR 120.

1988 White Book.

Rules of the Supreme Court.

Strathmore Group Limited v Fraser [1992] 2 AC 172.

Bahamas in Crawford & Company International Inc v Crawford (Bahamas) Limited [2010] Civ App No 97.

Shell Hong Kong Ltd v Yeung Wai Man Kiu Yip [2003] HKCU 757.

Ball v King [2008] JLR N 40.