Jersey Unreported Judgments

Loan - appeal against decision of the Commissioner dated 16th October 2015.

[2016]JCA025

Court of Appeal

27 January 2016

Before     :		Sir David Calvert-Smith, President; George Bompass, QC Sir Michael Birt
Between	Investec Bank (Channel Islands) Limited		Appellant
And	Alan Paul Booth		Respondent

Advocate M. L. A Pallot for the Appellant.

Advocate A. Clarke for the Respondent.

The Viscount appeared in person.

judgment

Sir Michael birt ja:

This is the judgment of the Court.

1.        This is an appeal by Investec Bank (Channel Islands) Limited ("Investec") against a decision of the Royal Court (Clyde-Smith, Commissioner sitting with Jurats Fisher and Ramsden) dated 16th October, 2015.  On that occasion the Royal Court granted the application of the Respondent ("Mr Booth") to be declared en désastre and, as a result, held that the application of Investec for an order that Mr Booth's property be adjudicated renounced fell away.  Investec submits that the Royal Court should have granted the application for an adjudication of renunciation with the result that it would have had no jurisdiction to grant a désastre. 

The factual background

2.        On 25th July, 2011, Mr Booth entered into a loan facility agreement with Investec for a maximum amount of £2,950,000.  As security for the loan, on 2nd September, 2011, Investec obtained a first judicial hypothec secured over Mr Booth's property known as King's Oak, St Mary ("King's Oak"). 

3.        Mr Booth subsequently failed to repay the loan and on 20th February, 2015, Investec obtained judgment against him in the sum of £2,910,358.32, together with continuing contractual interest until date of repayment and costs. 

4.        On 27th March, Investec obtained an Acte Vicomte chargé d'écrire which was served on Mr Booth on 2nd April.  This gave formal notice that Mr Booth had two months within which to satisfy the debt owed to Investec failing which the Court could order an adjudication of renunciation.  Mr Booth failed to satisfy the judgment within that period. 

5.        On 2nd June, 2015, Investec gave notice to Mr Booth in accordance with Practice Direction RC 15/02 that it would be applying for an adjudication of renunciation. 

6.        On 3rd July, 2015, Mr Booth presented an application to the Royal Court seeking a remise de biens.  The Court appointed two Jurats to investigate and report in accordance with the provisions of Article 2 of the Loi (1839) sur le Remise de Biens.  The Jurats duly presented a report summarising the assets and liabilities of Mr Booth.  Because his financial position is relevant to the submissions on this appeal, we set out a summary as taken from the Jurats' report. 

7.        As to assets, Mr Booth owned King's Oak valued at £2,675,000 and a second property Beaumont Hill House, St Peter valued at £825,000, making a total value of £3,500,000 in respect of immovable property.  His movable property was valued at £186,478 and comprised chattels, goodwill of his business as a surveyor and work in progress and fees in relation to the business.  The Jurats attributed no value to certain litigation which Mr Booth was undertaking as plaintiff because the results were too uncertain.  After allowance for selling costs the total value of the assets available for distribution was £3,576,809.25. 

8.        As to liabilities, there were secured claims totalling £5,309,671.24.  These comprised the sum of £2,982,748.71 owed to Investec (the sum had presumably increased due to accruing interest) and £2,326,922.53 owed to a Mr and Mrs Le Cornu.  The unsecured claims came to £376,634.49. 

9.        As can be seen, therefore, the secured claims of £5,309,671.24 greatly exceeded the amount available for distribution of £3,576,809.25.  The Court only has jurisdiction to grant a remise where the available information suggests that there is sufficient property to pay all the secured creditors and provide some dividend (no matter how small) to the unsecured creditors.  Accordingly, having received the Jurats' report, the Royal Court on 17th July 2015 rejected Mr Booth's application for a remise. 

10.      Following the rejection of the application for a remise, Investec presented a representation seeking an adjudication of renunciation and the appointment of two partners of Collas Crill  as attournés to conduct the dégrèvement and réalisation (if the latter was necessary).  The representation came before the Royal Court on 24th July.  Mr Booth appeared in person and objected to the fact that Collas Crill were acting for Investec and were being proposed as attournés because he had instituted a claim against that firm alleging that it was their negligence in the conduct of his affairs which had caused his financial difficulties in the first place.  There was therefore, he submitted, a clear conflict of interest. 

11.      The Court decided to adjourn Investec's application to a date to be fixed and in the meantime appointed an amicus to assist the Court in respect of the identity of the attournés to be appointed and to assist with an analysis of what would happen to Mr Booth's various claims in the context of the bankruptcy. 

12.      The matter came back before the Royal Court on 9th October when an amended representation was presented by Investec.  Investec was now represented by Carey Olsen and the amended representation sought the appointment of Advocates Pallot and Garrood of that firm as attournés to conduct the dégrèvement and réalisation in place of the two partners of Collas Crill originally proposed.  Having heard the parties and the amicus, the Court released the amicus and adjourned the matter for one week in order to allow Mr Booth to obtain legal advice. 

13.      On the Wednesday of the following week, namely 14th October, Advocate Tremoceiro was appointed on legal aid to represent Mr Booth.  The following morning, he spoke to Advocate Garrood and requested an adjournment given the volume of papers he had just been presented with.  By e-mail timed at 13:01 that day (i.e. Thursday 15th October) Advocate Garrood advised Advocate Tremoceiro that Investec was not agreeable to an adjournment and that his instructions were to proceed to seek a final order on 16th October (i.e. the next day).  

14.      By e-mail timed at 14:17 that day, Advocate Tremoceiro replied to say that in the light of Investec's response, Mr Booth would be applying for a désastre at the earliest practical opportunity.  The relevant demande and affidavit in support of the application for a désastre are dated 16th October and appear to have been filed on that date.  It appears from Mr Booth's affidavit that notice of the application for a désastre was formally given to the Viscount's Department early that Friday morning.  Although an application for a désastre, being ex parte, is normally heard before the adjourned and listed cases on the 'table', it was agreed by exchange of e-mails between the advocates for Investec and Mr Booth shortly before the hearing that Friday afternoon that the désastre application (and by implication Investec's application) would be heard at the end of the list.  

The hearing of 16th October

15.      Accordingly, at the hearing on 16th October, the Court was faced with two separate and conflicting applications, one by Investec for an adjudication of renunciation and one by Mr Booth for a declaration of désastre.  We have been provided with a transcript of the hearing, which took place during the usual Friday afternoon sitting of the Samedi court. 

16.      Advocate Pallot, who was appearing for Investec, indicated to the Court that he had been informed by Advocate Tremoceiro that Mr Booth would be applying for a désastre but submitted that Investec was entitled in law to the adjudication of renunciation and referred to the decision of the Court of Appeal in Eves v Hambros Bank (Jersey) Limited 1995/082,1st May 1995.  He argued that the Court had no discretion not to make the order which he was requesting unless the underlying debt was flawed or that there had been a defect in the procedure, neither of which was suggested. 

17.      The Court then heard from Advocate Tremoceiro in support of Mr Booth's application for a désastre.  Advocate Tremoceiro explained that he had only been instructed on the Wednesday and that he had advised Mr Booth that the appropriate course was to apply for a declaration of désastre.  He said that he had asked Investec for an adjournment in order to give him more time to consider the position but this had been refused.  He accepted that he had not given the required 48 hours' notice to the Viscount (formal notice had been given that morning and informal notice had been given the previous day) but it appeared that the Viscount was not taking any point on this and there was a Viscount's representative present in Court.  Having explained the background to Mr Booth's financial predicament, Advocate Tremoceiro submitted that there were two reasons for suggesting that a désastre was preferable to a dégrèvement.  The first was that a désastre would lead to equality amongst creditors which would not be the case in a dégrèvement; and the second was that, at the end of a désastre, Mr Booth could be discharged from his debts whereas there would be no such discharge following a dégrèvement. 

18.      The Viscount's representative stated that, having been involved with the application for the remise, the Department was reasonably familiar with Mr Booth's affairs and confirmed that the Viscount had no observations to make and would leave the matter to the Court.  The Viscount would support a désastre if the Court thought that was the best option.  

19.      The Commissioner then invited Advocate Pallot to reply to Advocate Tremoceiro's submissions although pointing out that an application for a désastre was technically an ex parte application.  Advocate Pallot pointed out that in circumstances such as this where one party held the entire economic interest in a property, he would have expected that such an application for désastre would be ex parte on notice.  He had not seen the papers in support of the application for désastre.  As to the two points relied upon by Advocate Tremoceiro, Advocate Pallot did not accept the first point.  It was clear, he submitted, that there would be no surplus assets after payment of the two secured creditors (Investec and Mr and Mrs Le Cornu) and that to the extent there was a réalisation of movable property, all the unsecured creditors would be treated equally, being paid pro rata according to their claims.  As to the second point, he accepted that the debts would not be discharged following a dégrèvement whereas they would be following discharge from a désastre.  But, he submitted, this was yet another attempt to delay matters and he referred to what he termed the 'hopeless' application for a remise.  Mr Booth had had ample opportunity to take advice and to make an earlier application for a désastre.  Further delay would not be in the interests of Investec which already would not recover its full debt.  A dégrèvement would result in a speedier recovery for Investec than a désastre. 

20.      There was then a short discussion about the security over the immovable property from which it appeared that Investec had a hypothec only over King's Oak whereas Mr and Mrs Le Cornu had a hypothec over all the immovable property of Mr Booth.  However in relation to King's Oak, their hypothec ranked behind that of Investec. 

21.      The Court then retired to consider the matter.  It returned and said simply that it granted the application for désastre.  It gave no reasons. 

Standing to appeal

22.      A preliminary procedural issue arises in relation to this appeal.  The Notice of Appeal filed by Investec refers only to appealing against the decision of the Royal Court reflected in its Act dated 16th October ("the Adjudication Act") that the application for an adjudication of renunciation 'fell away' following the grant of the désastre.  The Notice of Appeal did not appeal specifically against the grant of the désastre, which was recorded in a separate Act of the same date ("the Désastre Act").  The Royal Court was correct to issue two Acts because there were two separate proceedings.  The first was the application of Investec for an adjudication of renunciation pursuant to its representation and the second was the ex parte application of Mr Booth for a declaration of désastre.  The two Acts correctly had different file numbers allocated to them. 

23.      When this point was raised with Investec prior to the hearing, it sought to file a further Notice of Appeal which appealed against the decision to grant the désastre as well as the decision that the application for adjudication of renunciation fell away.  In other words, it appealed against the decisions recorded both in the Adjudication Act and the Désastre Act.  It is of course necessary for Investec to seek leave to appeal out of time against the grant of the désastre.  In his accompanying affidavit, Advocate Garrood explained that his firm was never sent the Désastre Act because it was mistakenly sent to the firm of Ogier instead.  They were therefore not aware that there was a separate Act.  His firm had assumed and understood that the Adjudication Act (which referred in passing to the grant of the désastre) was the only Act and dealt with both decisions of the Royal Court.  

24.      In our judgment, this is a reasonable explanation for the failure to appeal against the Désastre Act within time and alongside the appeal against the Adjudication Act.  Furthermore, there would be no prejudice to Mr Booth if Investec were now permitted to appeal against the grant of désastre.  It is clear from the contentions submitted on Mr Booth's behalf that Advocate Clarke always envisaged that the Court would be able to consider both decisions and decide whether to uphold the grant of désastre or order an adjudication of renunciation in its place. 

25.      An additional matter to be considered is whether Investec has the necessary locus to appeal against a grant of désastre made on the application of the debtor.  Such applications are made ex parte and a creditor would not normally have the ability to appeal against a decision to which he was not party.  However, we consider that, where the Court is in reality being asked to decide whether to grant a désastre or allow a dégrèvement to proceed, the judgment creditor applying for the adjudication of renunciation has sufficient standing and connection with the application for a désastre to be able to appeal against the grant of désastre and submit that the Royal Court ought to have granted an adjudication of renunciation. 

26.      It is important in our judgment that this Court is able to consider the matter on its merits when deciding whether to uphold the decision of the Royal Court or not. In the circumstances we give leave for Investec to appeal out of time against the decision contained in the Désastre Act. 

Dégrèvement and désastre

27.      Before turning to consider the submissions on this appeal, we think it would be helpful to recall very briefly the general nature of a désastre and a dégrèvement so far as is relevant to the arguments put forward on this appeal.  The position was more fully described in Super Seconds Limited v Sparta Investments Limited [1997] JLR 112 in the judgment of Sumption JA at 115-117. 

28.      A désastre is the modern method of insolvency which is now contained in the Bankruptcy (Désastre) (Jersey) Law 1990 ("the 1990 Law").  Upon a declaration of désastre, all the debtor's property (both movable and immovable) vests in the Viscount.  The Viscount is charged with gathering in the assets, advertising for creditors, adjudicating on claims, realising the assets, distributing the assets pro-rata amongst the creditors and accounting for any surplus to the debtor.  In the case of immovable property subject to a hypothec, the Viscount applies the proceeds of sale of such a property in paying the amounts owed to any secured creditors.  Any surplus is then available for distribution amongst the ordinary creditors.  Should the proceeds be insufficient to pay the secured creditor, any balance of the debt remaining unpaid will rank pari passu with ordinary debts. 

29.      Article 40(1) of the 1990 Law states that, where the debtor is an individual, following the expiry of four years from the date of declaration, the Viscount shall apply to the Court for an order discharging the debtor.  The Viscount, the debtor or a creditor may apply for the period to be reduced or extended.  The Court has a discretion.  An order for discharge releases the debtor from all the debts provable in the désastre (subject to certain exceptions). 

30.      A dégrèvement has a very different objective.  It is in essence a method for a judgment creditor who has a hypothec over immovable property to realise that property in order to discharge his debt.  It is not intended as a general procedure for gathering in assets and discharging debts pro-rata amongst creditors.  A judgment creditor who wishes to proceed to dégrèvement must first obtain an Acte Vicomte chargé d'écrire and if the debt is not paid within two months of the Viscount writing to the debtor, the creditor may then apply for an adjudication of renunciation.  When the Court makes an order of adjudication of renunciation, it orders a dégrèvement in respect of the immovable property and a réalisation in respect of the movable property and appoints attournés to conduct both processes.  An adjudication of renunciation is therefore effectively the beginning of the dégrèvement process.  Unsecured creditors are notified of the date of the dégrèvement and all secured creditors are convened by the attournés.  The dégrèvement itself is conducted by the Judicial Greffier and each corps de biens-fonds is dealt with separately.  The unsecured creditors are called first and offered the opportunity of taking the immovable property as a body subject to paying off all hypothecs.  Assuming the unsecured creditors do not take, those holding hypothecs are then called in turn in reverse order (i.e. the most recent being called first).  Each is given the opportunity of taking the property, subject to paying off all prior hypothecs or of declining to take the property (renouncing), in which event his hypothec is cancelled.  A creditor who agrees to become 'tenant après dégrèvement' is subsequently registered by the Court and then becomes the full owner of the relevant immovable property.  There is no duty to account for any surplus to the debtor.  In the case of a dégrèvement which follows an adjudication of renunciation (unlike where it follows a voluntary cession), the debts of creditors who have renounced when called or who have not participated are not discharged; see Birbeck v Midland Bank Limited [1981] JJ 121.  Accordingly the debtor remains liable in respect of those debts. 

31.      We have not been referred to any statutory provision or authority which deals with the effect of a distribution in a réalisation but it seems to us that the position is likely to be the same.  Thus the debt would be discharged pro tanto to the extent of any distribution in the réalisation but liability for the balance would remain outstanding after the conclusion of the réalisation.  However we have not heard detailed argument on this point. 

32.      For reasons which will become apparent, when deciding in this case whether to order a désastre or a dégrèvement, it is necessary to consider whether the debt owed to a creditor who takes a property as tenant après dégrèvement is discharged.  This point was raised with counsel shortly before the hearing but neither counsel was able to refer us to any statutory provision, judicial authority or commentator on whether the debt owed to a tenant après dégrèvement is discharged or not; nor have our own limited researches unearthed any guidance. 

33.      Advocate Pallot submitted that such a debt was discharged.  Advocate Clarke was generally of the same view although he did refer us to the following passage from the judgment of the Court of Appeal in Birbeck at 125:-

"Mr Clapham on the other hand says that the words of Article 94 must be construed in the context of the provisions of the 1880 Law as a whole and the objects of the institution of "dégrèvement" in particular.  A "dégrèvement", as its name suggests, was concerned with relieving particular parcels of property from the burden of hypothecs.  A hypothec is defined by Article 2 of the 1880 Law as "un droit réel attaché a une rente ou autre reclamation".  The object of the "dégrèvement" is to destroy any "droit réel" of a hypothecary nature inferior to that of the tenant, so that he may obtain a good title in the same way as he did by virtue of a "décret" in the old law.  It is not at all concerned with the enforceability against the debtor personally of the debt to which the "droit réel" is attached.  Whether or not this debt is discharged without payment in full depends upon the operation of other rules, such as whether the debtor has been "reçu à faire cession genérale" or has been allowed to make "remise de biens".  It follows, says Mr Clapham, that the words "contrats et autres pièces" in Article 94 are confined in their context to instruments which create hypothecs over the property in question and they become null and void so far as they created such hypothecs but not otherwise".   [emphasis added]

The Court went on in the next paragraph to say that it considered Mr Clapham's submissions to be correct. 

34.      Advocate Clarke, while not resiling from his initial view, raised the question of whether this passage was equally applicable to the debt of a tenant après dégrèvement and that therefore, unless the dégrèvement followed a voluntary cession, the debt remained. 

35.      On the basis of the submissions and materials put before us, we are of the view that the debt of a tenant après dégrèvement is discharged.  Our reasons are as follows:-

(i)        Article 94 of the Loi (1880) sur la Propriété Foncière ("the 1880 Law") specifically deals with the positon of creditors who renounce but says nothing about the debt owed to the tenant après dégrèvement.

(ii)       The tenant après dégrèvement is under no obligation to account for any surplus in the property.  Thus if the value of the property greatly exceeds the debt, he keeps the property and therefore makes a profit.  It would be surprising if the tenant après dégrèvement was not obliged to account for any surplus but could nevertheless pursue the debtor for any deficit in the value of the property as compared with the debt. 

(iii)      Most significantly, we have not been referred to any provision in any of the statutory provisions or procedures dealing with a décret (where the tenant took all the property of the debtor) or a dégrèvement which contains any mechanism or provision for an accounting to enable a comparison to be made between the value of the property taken by the tenant and the debt.  The tenant simply takes the property.  He may choose not to sell it.  Indeed as Advocate Pallot submitted, he might knock it down, develop it or sell it for £1 or some other undervalue.  There is simply no provision at any stage in the dégrèvement process for valuing the property taken.  In these circumstances it would not be possible to ascertain what proportion of the debt remained unpaid (just as it is impossible to ascertain what if any surplus there may be).  The inference must be that the tenant après dégrèvement makes a commercial choice.  He either takes the property in discharge of his debt or he renounces and retains his claim. 

(iv)      We do not consider that the observation in the emphasised passage in Birbeck referred to above can carry the weight placed on it by Advocate Clarke.  The discussion in that case concerned the position of creditors who renounced in a dégrèvement.  Did they lose their whole claim or just their security by way of hypothec ?  The case turned on the meaning to be attributed to the wording in Article 94 having regard to the nature and history of the process of dégrèvement.  The court was not considering and would not have had in its mind the position of the tenant après dégrèvement, who is of course not dealt with in Article 94.  Accordingly we do not think that the emphasised passage from that case referred to above assists us in determining whether the debt owed to a tenant après dégrèvement is discharged. 

36.      The modern approach of the Court is generally to prefer a désastre as being the most appropriate form of procedure where a debtor is unable to pay his debts.  The matter was authoritatively set out in Super Seconds Limited by Sumption JA in the following passages. 

At 117:-

"The advantages of dégrèvement are that it is cheap and fast.  And the fact that the tenant après dégrèvement may keep any surplus will not matter in a simple case where there is a substantial net deficiency and the debtor would lose the whole of his property under any method of realising his assets. It can, however, work serious injustice where the value of the property exceeds the debt or might do so if carefully sold on the open market. Moreover, its technicality and crudeness can work capricious results in a more complex case ..."

And at 119:-

"The Law of 1990 is a modern statutory code offering a flexible means of dealing with an insolvent estate in the interests of both debtors and creditors, without the more technical and unsatisfactory features of the old procedures of which the facts of this case are a striking example. The Law also enables the court to deal much more comprehensively than the older statutes allowed with the more complex rights of creditors against an insolvent's property which arise from modern commercial practice. In the ordinary course of events, where a court has a discretion to make a declaration treating a debtor's property as being en désastre, that course will be preferable to authorising one of the older procedures, unless it is shown to be in the interests of justice that the latter should be used. The court is unlikely to be satisfied of this save in the simplest cases."

37.      To similar effect are the observations of Clyde-Smith, Commissioner in Re Pitman [2014] JRC 008 at paras 17 - 19 although it is important to note that the Court there was comparing a désastre with a remise rather than with a dégrèvement:-

"18. It must be right, therefore, that as the Court of Appeal said in Super Seconds Limited, the Court should endeavour to order a désastre even if it is more costly as a procedure, unless it can be shown to be in the interests of justice that the older remise procedure should be used, or as the Deputy Bailiff put it in Jersey Home Loans Limited there were some good or sound reason to do so.

19. Furthermore, it seems to us that in promulgating the 1990 Law, our legislature has considered carefully how in modern times to balance the competing interests of debtors and creditors.  That balance has been struck by allowing a period of time to elapse (ordinarily four years) after a declaration and before the debtor can be discharged his debts, during which time the creditors can benefit from the comprehensive powers vested in the Viscount (and the Court) and from the possibility of sharing in any property acquired after the declaration and before the discharge. This modern and balanced regime governs the great majority of bankruptcies and we can see no reason why those insolvent debtors who happen to own real property in Jersey and might therefore qualify for a remise should be treated any differently, unless it was to avoid the real injustices that can flow from a dégrèvement which is, after all, the rationale for the [Loi (1839) sur les Remises de Biens].

20. It was not realistic to suggest that in considering this application, the Court should put out of its mind the alternative of a désastre, an application which we were told would in any event now follow.  No good reason was put forward on behalf of the applicants for a remise other than that is what they wanted. The interests of justice did not dictate that they should be allowed to gain the benefits of a remise and avoid the disadvantages (but not unjust disadvantages) of a désastre. We therefore refused the application for a remise."

38.      We respectfully agree with the observations in both those cases. 

39.      The 1990 Law imposes certain restrictions on when a désastre or the essential preliminary step to a dégrèvement can be ordered.  Thus Article 5(1) provides (as far as relevant) as follows:-

"5 (1)  The court shall refuse to make a declaration -

...

(c)       if the debtor's property has been adjudged renounced (adjugée renoncée)."

40.      Article 10(1), on the other hand provides (so far as relevant):-

"10 (1)             With effect from the date of the declaration a creditor to whom the debtor is indebted in respect of a debt provable in the "désastre" shall not -

(a)       have any other remedy against the property or person of the debtor in respect of the debt;

..."

41.      It follows that on 16th October, the Court was faced with conflicting options.  If it granted a declaration of désastre, it could no longer order an adjudication of renunciation.  Conversely, if it granted the application for an adjudication of renunciation, it could no longer order a désastre.  

The contentions on appeal

42.      Although Investec set matters out under rather different headings in both its notice of appeal and contentions, we would prefer to summarise its submissions under the following headings, which we think fairly reflect the points which it seeks to make:-

(i)        An adjudication of renunciation is an administrative procedure.  A debtor has no right to oppose it.  The application for the adjudication of renunciation was in existing proceedings and predated the désastre.  The Court had no discretion to refuse it and it should have been granted.  The Court was wrong to consider the désastre application first. 

(ii)       Alternatively, the Royal Court should have adjourned both applications to be heard together so as to give Investec the opportunity to put in such evidence and arguments as it wished.  By proceeding as it did in a summary fashion, the Court infringed the Article 6 ECHR rights of Investec. 

(iii)      On the merits, the Royal Court reached a decision which was plainly wrong.  As a result of the short notice and its failure to adjourn, it was not aware of the prejudice which would be suffered by Investec and the unsecured creditors if a désastre were ordered instead of a dégrèvement.  In the light of the evidence, the correct order was now to grant an adjudication of renunciation so as to allow a dégrèvement to proceed and cancel the declaration of désastre.

We shall consider each of these in turn. 

Ground (i)

43.      Advocate Pallot submitted that the granting of an adjudication of renunciation is a purely ministerial act.  The Court has no discretion to refuse it and a debtor has no right of appeal against the granting of such an order.  Indeed the application was traditionally made ex parte.  In support of his submission he referred to the decision of Bailhache Bailiff, sitting as a single judge of the Court of Appeal in Eves v Hambros Bank (Jersey) Limited (supra) where Mr Eves sought to appeal against an order of the Royal Court pronouncing the adjudication of the renunciation of his property and the appointment of attournés to conduct the dégrèvement.  We would cite the following passage:-

"The first point which I have to consider is whether there is a right of appeal against the order of the Royal Court of 31st March 1995. Mr Speck for the second respondent submits that there is not. He argues that the adjudication of the renunciation of a debtor's property is a purely ministerial act in which the Court has no discretion in deciding what order to make. As a matter of law, therefore, no appeal can generally lie from that decision. ...

In my judgment Mr Speck's submission is well founded. The procedure of dégrèvement is a process whereby a judgment creditor obtains execution of his judgment. There are various stages in the procedure which require the intervention of the Court, of which examples are the Acte Vicomte chargé d'écrire and the act of the adjudication of the renunciation of the property of the debtor. But these orders are obtained ex parte without prior notice being required to be given to the judgment debtor. There are, no doubt, exceptional circumstances which would entitle the court to intervene where, for example, there had been a procedural irregularity. If, however, the underlying debt is not flawed in some way, a creditor is entitled to take the various procedural steps to proceed to execution without having each step challenged along the way. ...

Mr Eves has no right of appeal in respect of the order pronouncing the adjudication of the renunciation of his property and accordingly his application for leave to appeal must fail."

44.      Advocate Pallot referred also to an extract from the judgment of Lord Hoffmann delivering the judgment of the Privy Council in Eves v Hambros Bank (Jersey) Limited [1995] JLR 344 at 347:-

"On that date, the next stage in the process took place. This was an application by the judgment creditor, again ex parte, for an order adjudging the debtor's property renounced and appointing two advocates as attorneys to conduct the dégrèvement. The order is made on production of the Viscount's record of service of the acte Vicomte chargé d'écrire and an affidavit on behalf of the creditor stating that the debt has not been satisfied.  ..."

45.      We accept that, where a debt remains unpaid after the expiry of the two month period following service of the Acte Vicomte chargé d'écrire, a debtor is not entitled to oppose the grant of an adjudication of renunciation because, for example, he will shortly be able to pay the debt.  In the ordinary course, a creditor is entitled to proceed to enforce his judgment without hindrance. 

46.      However, this does not prevent a debtor from bringing any other application which he is entitled in law to bring. Article 5 of the 1990 Law states that the court may not grant a désastre if the debtor's property has been adjudged renounced.  Advocate Pallot argued that, even if there was jurisdiction to grant a désastre at the time when an application for adjudication of renunciation is first heard (i.e. 9th October in the present case), it would be an abuse of process for the court to allow an application for désastre to be made thereafter.  Investec had presented its application on 9th October and it was an application which, as per the decision in Eves, the court had no alternative but to grant.  The court was entitled to adjourn for the limited purpose of establishing whether either of the two defences mentioned in Eves (i.e. procedural defects or a challenge to the underlying debt) existed but for no other purpose.  The court could not in those circumstances accept and grant an application for a désastre made during that adjournment period. 

47.      We cannot accept this argument.  The wording of Article 5 of the 1990 Law could not be clearer.  It is only following the grant of an adjudication of renunciation that a désastre may not be granted.  To accede to Advocate Pallot's argument would be to re-write Article 5 so as to prevent the court from granting a désastre in circumstances where the legislature has said that it can.  In our judgment, a debtor has a right to bring an application for a désastre, and the court has jurisdiction to grant the application, at any time until the court grants an adjudication of renunciation. 

48.      Furthermore, there has been a change of approach since the two decisions in Eves referred to above.  Thus Practice Direction RC15/02 provides as follows:-

"Applications for a Dégrèvement

After a judgment debtor ("debtor") has received formal notification from the Viscount, (following an Acte Vicomte chargé d'écrire) to satisfy a judgment debt, a judgment creditor ("creditor") may, after a period of two months ... apply to the Royal Court for an act declaring the debtor's immoveable property renounced with a consequential order for a  dégrèvement.  Such applications have historically been made without notice to the debtor.

With effect from the date of this Practice Direction when making such an application, the creditor must be able to demonstrate to the Court that all reasonable steps have been taken to give notice to the debtor of the creditor's intention to make an application at that time on that day.  Notice to the debtor should be given substantially in the form set out in the attached schedule.  Personal service is not necessary.

At least 4 working days must elapse between the date on which notice of the intended application is given to the debtor and the date for the hearing of the application.  All supporting evidence to be relied upon at the hearing shall also be provided to the debtor at the same time as the notice of the intended application is delivered.

The Viscount is to be given written notice of the application (and all evidence relied upon) at the same time as notice of the application is provided to the debtor.

This Practice Direction shall take effect from 5th January, 2015."

49.      The Schedule referred to in the Practice Direction is in the form of a draft letter from the advocates for the creditor and in effect makes clear to the debtor that a dégrèvement may have harsh results for him and that he should consider carefully whether to apply for some alternative procedure such as a désastre or a remise de biens.  We would quote the following extracts from the draft letter contained in the Schedule:-

"Unless payment in full is received by [date] our client has instructed us to make an application for renunciation at the next Royal Court sitting on [date]. This letter constitutes formal notice that this application will be made; for any land or buildings you own the application will be for a process known as dégrèvement.  For all your other possessions or property which is not land the application will be for a process known as réalisation.

The purpose of this letter is also to warn you of the effect of a successful application for dégrèvement/ réalisation,  so that you may take immediate legal advice in relation to this matter, as there may be alternative options available to you that the Royal Court may order, in particular a declaration of désastre (bankruptcy) or a remise de biens. The Viscount's Department have published guides on Désastre, Remise and Dégrèvement, explaining the concepts and how to apply for them, copies of which are available on their website ... or on request in writing to the Viscount.   You should consider whether these alternatives may be more appropriate for your financial situation.  Notice is given of the date and time we will be making this application so that you can attend Court if you wish to make such representations as you think fit."

The letter goes on then to point out the consequences of a dégrèvement and ends by stating "You are urged to take legal advice on your position as soon as possible."

50.      It follows that the Practice Direction therefore specifically envisages that, on the date upon which the creditor will be seeking an adjudication of renunciation, the debtor may attend to apply for a désastre or a remise. 

51.      We therefore reject Advocate Pallot's first submission, namely that the Royal Court should have considered his application first and granted it, thereby preventing the application for désastre being granted.  Mr Booth was entitled to apply for a désastre unless and until an adjudication of renunciation was actually ordered.  The Royal Court was faced with two conflicting applications and it therefore had to consider them both. 

Ground (ii)

52.      If his first argument is rejected, Advocate Pallot next argues that the Royal Court should have adjourned both applications so as to give Investec an opportunity to produce evidence and submissions as to why the application for an adjudication of renunciation should be preferred to that of the debtor for a désastre.  He points out that Mr Booth's application was brought on less than the required 48 hours' notice, and that when he appeared for Investec in the Royal Court he had not seen the papers filed in support of the application for désastre.  He had accordingly simply not been in a position fully to develop the reasons as to why a dégrèvement should be proceeded with rather than a désastre.  

53.      In connection with how to proceed when a court is faced with two conflicting application, he referred to the decision of the English Court of Appeal in Costellow v Somerset County Council [1993] 1 WLR 256.  In that case the defendant applied to strike out the proceedings on the grounds of the plaintiff's failure to comply with the requirement to serve certain documents within the time specified by the rules of court and for want of prosecution, whereas the plaintiff applied for an extension of time for service of the documents.  Clearly if the extension of time was granted, the case could no longer be struck out for failure to comply with the rules whereas if it was struck out, the plaintiff could no longer be granted an extension of time.  The applications were thus conflicting.  Having reviewed a number of authorities, the Court of Appeal in a judgment delivered by Sir Thomas Bingham MR said this at 264:-

"The resolution of problems such as the present cannot in my view be governed by a single universally applicable rule of thumb. A rigid, mechanistic approach is inappropriate. Where, as here, the defendant seeks to dismiss and the plaintiff seeks an extension of time, there can be no general rule that the plaintiff's application should be heard first, with dismissal of his action as an inevitable consequence if he fails to show a good reason for his procedural default. In the great mass of cases, it is appropriate for the court to hear both summonses together, since in considering what justice requires the court is concerned to do justice to both parties, the plaintiff as well as the defendant, and the case is best viewed in the round."

54.      We respectfully agree with those comments.  We appreciate that they were made in the context of competing summonses in the same proceedings whereas the Royal Court was here concerned with applications in two separate proceedings.  Nevertheless, it seems to us that the course which was recommended in Costellow is equally applicable to the present case.  The Royal Court was faced with two conflicting applications, one effectively for a dégrèvement and one for a désastre.  In our judgment, in order to do justice to both applications, it had to consider both and decide which application to grant.  

55.      Advocate Pallot submits that the Royal Court did not follow that approach.  He submits that it in effect decided to consider Mr Booth's application for a désastre first.  We do not accept that.  On a fair reading of the transcript, the Court was indeed considering both applications.  Advocate Pallot began by making his submission for an adjudication of renunciation.  The Court then heard from Advocate Tremoceiro as to why a désastre would be preferable and it then heard again from Advocate Pallot as to why that was not so.  In our judgment the Royal Court was clearly considering both applications before deciding which one to grant.  

56.      As to the question of whether Investec had a fair opportunity to put forward its case, Advocate Pallot referred to Dombo Beheer BV v The Netherlands [1993] ECHR 49 where at paragraph 33, when considering the application of Article 6 of the ECHR to civil cases the Strasbourg Court said this:-

"33. Nevertheless, certain principles concerning the notion of a 'fair hearing' in cases concerning civil rights and obligations emerge from the Court's case-law. Most significantly for the present case, it is clear that the requirement of 'equality of arms' in the sense of a 'fair balance' between the parties, applies in principle to such cases as well as to criminal cases...  The Court agrees with the Commission that as regards litigation involving opposing private interests 'equality of arms' implies that such party must be afforded a reasonable opportunity to present his case - including his evidence - under conditions that do not place him at a substantial disadvantage vis-à-vis his opponent."

Advocate Pallot submitted that the failure to adjourn the case to give Investec an opportunity to produce evidence and arguments was a breach of Article 6. 

57.      The difficulty with Advocate Pallot's argument is that his firm had been aware since lunchtime the previous day that an application for désastre was to be made but did not apply for an adjournment either before or during the course of the hearing before the Royal Court.  Indeed Investec had refused Advocate Tremoceiro's request for an adjournment the day before the hearing.  Although he commented to the Royal Court on the fact that there had been very short notice and that he had not seen the papers in support of the application for the désastre - and of course a creditor would not normally see such papers as such an application is made ex parte - he did not suggest to the Court that he was not in a position to do justice to Investec's case and that the matter should therefore be adjourned.  In those circumstances, we do not think that the Royal Court can be criticised for proceeding to hear the case and there has been no infringement of Investec's Article 6 rights. 

Ground (iii)

58.      Finally, Advocate Pallot argued that the Court had reached what was plainly the wrong decision.  The correct decision was to grant the adjudication of renunciation and allow the dégrèvement to proceed. 

59.      The Royal Court did not give any reasons for its decision.  We fully recognise of course that the Royal Court has to deal with numerous matters and applications on a Friday afternoon sitting of the Samedi Division and that for most of the decisions which it is called upon to make at such sitting, it is not necessary to give reasons.  However, in this case, where the Court was making a significant decision on whether there should be a désastre or a dégrèvement and had heard competing arguments, we think that it should have given some reasons, even if brief.  A few sentences explaining in outline why the Court had exercised its discretion to grant a désastre rather than to allow the dégrèvement to proceed would be sufficient and would enable this Court then to assess the exercise of discretion by the Royal Court. 

60.      Where the Royal Court gives reasons for a discretionary decision - which this was - this Court may only intervene on certain well established and limited grounds. 

61.      However, In the absence of any reasons and therefore of knowing why the Royal Court preferred a désastre to a dégrèvement, we have concluded that the right course is to consider the matter afresh in the light of the arguments presented to us and exercise our own discretion. 

62.      In those circumstances, both counsel agreed that we should deal with the matter on the evidence available to us and that therefore we should admit an affidavit sworn since the hearing before the Royal Court by Mr Stephen Houchen, a member of the lending team of Investec, who sets out the extra expense which, he says, would be caused to Investec by reason of a désastre rather than a dégrèvement. 

63.      Before considering the submissions, we think it would be helpful to summarise the financial position.  In his affidavit in support of his application for a désastre Mr Booth (subject to an issue on the value of the immovable properties to which we refer below) accepted the figures in the Jurats' report, although he updated the unsecured liabilities and also appears to have removed any amount for goodwill of his business.  Thus the figures (rounded to the nearest pound) are as follows:-

Assets		£
Immovable Property
Kings Oak		2,675,000
Beaumont Hill House		825,000
	Total	3,500,000
Movable Property
Chattels		47,833
Overdue business fees		22,095
Work in progress		1,100
	Total	71,028
	Gross Assets	3,571,028
Less administrative and selling expenses		-109,669
	Net Assets	3,461,359
Liabilities
Secured
Investec		2,982,749
Mr and Mrs Le Cornu		2,326,922
	Total	5,309,671
Unsecured		386,929
	Total liabilities	5,696,600
(This varies from the figure in the affidavit by £360 as there appears to be a mathematical error in the affidavit)
	Overall deficit	2,235,241

64.      In relation to the secured creditors, Investec has a first hypothec on King's Oak and Mr and Mrs Le Cornu have a hypothec over both properties but their hypothec on King's Oak ranks behind that of Investec.   

65.      On the basis of the above figures, on a dégrèvement of King's Oak, the unsecured creditors and Mr and Mrs Le Cornu would undoubtedly renounce as the secured debt owed to Investec exceeds the value of King's Oak.  Thus Investec would take King's Oak as tenant après dégrèvement.  In a dégrèvement of Beaumont Hill House, the unsecured creditors would again renounce as the secured amount owed to Mr and Mrs Le Cornu exceeds the value of that property.  Mr and Mrs Le Cornu would therefore take that property as tenants après dégrèvement.  As discussed earlier at paragraph 35, the claims of Investec and Mr and Mrs Le Cornu would therefore be discharged.  Accordingly, in a réalisation the movable property of £71,028 would, after deduction of the expenses of the réalisation, be shared amongst the ordinary creditors of £386,929 with the result that the unsecured creditors would receive a modest dividend pro rata their claims.  

66.      In the event of a désastre, the Viscount would sell the two immovable properties.  On the assumption that this would be for the valuations given in the Jurats' report, the result would be that all the net sale proceeds of King's Oak would go towards reducing the secured claim of Investec and all the net sale proceeds of Beaumont Hill House would go towards reducing the secured claim of Mr and Mrs Le Cornu.  Accordingly, even in a désastre, none of the sale proceeds would benefit the unsecured creditors and there would of course be no equity for Mr Booth.  Indeed, the balance of the claims of Investec and Mr and Mrs Le Cornu after deduction of the receipts from the sale of the respective properties would be provable as unsecured debts and would therefore reduce substantially the distributions to the ordinary creditors. 

67.      Mr Booth accepts that the two independent valuations of both properties obtained by the Jurats in July 2015 would have this result.  However, he exhibits to his affidavit a valuation obtained in August 2011 which was produced for Investec at the time of the original loan.  This valued King's Oak at £4 million.  He asserts that that is its correct value, although he gave a figure of £3,500,000 in his affidavit in support of the application for a remise.  We were also referred to an earlier valuation dated May 2011 by Reynolds Chartered Surveyors prepared for another proposed lender which gave a valuation of £4.4 million.  He also asserts that Beaumont Hill House is worth more than the figure of £825,000 given to the Jurats.  In his affidavit accompanying his application for remise, he valued Beaumont Hill House at £1,700,000 but no valuation has been produced in support of that assertion.  

68.      Even if the figure of £4 million for King's Oak is correct, it does not appear to us that it alters the position materially.  It would increase the combined value of the two immovable properties from £3,500,000 to £4,825,000.  However, this has to be set against the secured liabilities of £5,309,671 as at July 2015 and they are no doubt greater now because of accruing interest.  Mr Houchen's affidavit states that as at 16th October, 2015, the debt to Investec stood at £3,027,243, ie an increase of £44,494.  The debt to Mr and Mrs Le Cornu is also presumably increasing.  In a dégrèvement, Mr and Mrs Le Cornu would no doubt still take Beaumont Hill House but they would also presumably agree to take King's Oak as tenants après dégrèvement because its value of £4 million would exceed the sum owed to Investec.  However, they would still not have recovered the full amount owing to them with the result that there would be no question of the unsecured creditors agreeing to take King's Oak. 

69.      In a désastre, the sale proceeds of Beaumont Hill House would be applied wholly towards the reduction of the debt owed to Mr and Mrs Le Cornu and the sale proceeds of King's Oak would be applied first in paying off Investec in full with any balance being used to reduce the outstanding amount to Mr and Mrs Le Cornu as holding the second hypothec.  There would again be nothing for the unsecured creditors let alone any equity. 

70.      It is only if Mr Booth is also correct in attaching a value of £1,700,000 (or something approaching it) to Beaumont Hill House (so that the total gross value of the immovable property would amount to £5,700,000) that there would be any possibility of a surplus over the secured debts of £5.3 million.  

71.      We would add that we were informed by the Viscount at the hearing that, as a result of steps taken in the désastre so far, she considered that the value of the chattels was approximately £11,000 rather than the figure of £47,833 referred to at paragraph 63 above.  Therefore, even assuming the overdue fees to be recoverable, it seems to us that, in the absence of any recovery from the litigation proposed by Mr Booth, it is highly unlikely that, after deduction of the costs of the désastre, there would be any material dividend for the unsecured creditors.  This is so even if one takes the secured creditors out of the picture. 

72.      The Viscount also informed us that she has obtained an offer for Beaumont Hill House at the sum of £850,000 which she was minded to accept and with which Mr and Mrs Le Cornu were content. 

73.      Against that background, we turn to summarise the arguments put forward by Investec and Mr Booth respectively. 

74.      On behalf of Investec, Advocate Pallot submitted that a dégrèvement was the more appropriate course in this case for the following reasons:-

(i)        A dégrèvement would be cheaper and quicker and therefore result in Investec recovering a greater percentage of its judgment debt.  The expenses of attournés were never as great as the fees of the Viscount.  Furthermore, a dégrèvement takes only a matter of weeks after an adjudication of renunciation (see Article 91 of the 1880 Law which provides that the dégrèvement must be fixed for a date not less than 4 and no more than 6 weeks after the Act giving permission for a dégrèvement i.e. the adjudication of renunciation).  Conversely a désastre takes much longer with the consequence that Investec would remain out of its money until the Viscount was able to sell King's Oak. 

(ii)       Any delay as a result of a désastre would be increased in the light of the application which had now been brought by Mr Booth's wife under Article 12 of the 1990 Law, which allows the spouse of a debtor who has been declared en désastre to make an application in respect of the matrimonial home and allows the court to order the transfer of the property to the spouse subject to any hypothecs, to order a payment to her or to give her a life interest.  There would therefore be delay until the matter (possibly after appeal) was resolved.  Such an application was not possible in the case of a dégrèvement.  Furthermore, on the facts of this case, given the level of secured debts in relation to the value of the two properties, there was no realistic possibility of the court making an order in her favour.  Accordingly, what might otherwise be an argument in favour of a désastre as opposed to a dégrèvement carried no weight in this case. 

(iii)      It was the view of Investec as expressed in the affidavit of Mr Houchen that Investec would recover a greater percentage of its debt if it was able to undertake certain work to King's Oak in order to enhance its value before selling it.  This would be straightforward if it were to become tenant après dégrèvement.  But if there were a désastre, Investec would have to buy King's Oak from the Viscount for its market value (to be effected by reduction of its debt).  On such a purchase it would have to pay stamp duty and this would be in the sum of £107,500 assuming a market value of £2,675,000.  This would eat into the amount recovered and would accordingly increase the amount by which Investec remained out of pocket at the end of the process. 

(iv)      As the figures showed, this was not a case where there was any equity in the immovable property.  It followed that a dégrèvement would cause no prejudice to Mr Booth in this respect as compared with a désastre.  Furthermore, in the unlikely event of the sale proceeds of King's Oak exceeding the value of Investec's debt, Investec was willing to undertake to account for any surplus to the debtor's estate. 

(v)       Most significantly, he submitted, the figures showed that the unsecured creditors would be better off under a dégrèvement than a désastre.  This was because the secured debts of Investec and Mr and Mrs Le Cornu would be discharged by their taking the respective properties as tenants après dégrèvement.  The movable property would therefore fall to be distributed solely amongst the unsecured creditors.  Conversely, in a désastre, Investec and Mr and Mrs Le Cornu would be able to prove for the balance of their claims against the moveable property and would thereby swamp the ordinary creditors.  So, for example, if the two properties were sold at the valuation of £3,500,000, the balance of the secured debts which remained unpaid would be approximately £1.8 million.  Claims of that scale would undoubtedly prejudice the unsecured creditors.  Even if Mr Booth was correct and a value of £4 million could be obtained for Kings Oak, there would still be a sum of approximately £475,000 of the secured debt which would not be discharged and would be provable alongside the unsecured creditors. 

(vi)      As to the point that under a désastre Mr Booth would ultimately obtain a discharge from all his debts whereas this would not be the case in a dégrèvement, Advocate Pallot submitted that Mr Booth could overcome this by applying for a social désastre after the conclusion of the dégrèvement and réalisation.  If granted, that would eventually lead to a discharge of all the debts and the only prejudice to him would be a possible delay in that occurring. 

(vii)     As to Mr Booth's concern that recovery under the three pieces of litigation would be prejudiced if there were a réalisation rather than a désastre, Advocate Pallot submitted that the attournés would be just as well placed as the Viscount to pursue the litigation if so advised.  It was their duty to take reasonable steps to gather in the assets in a réalisation in the same way as the Viscount in a désastre. 

In summary, Advocate Pallot submitted that there would be considerable prejudice to Investec and the unsecured creditors if there were to be a désastre rather than a dégrèvement. 

75.      Advocate Clarke, on the other hand, submitted on behalf of Mr Booth that a désastre was the better and fairer course for the following reasons:-

(i)        A désastre was generally the most appropriate form of bankruptcy for the reasons summarised in Super Seconds Limited and Pitman as set out above.  

(ii)       In the case of a désastre, Mr Booth would be discharged from his debts following the expiry of the requisite period and this would enable him to make a fresh start.  That would not be so in a dégrèvement as the debts of those who renounced in the dégrèvement would remain outstanding.  The suggestion of applying for a désastre immediately after the conclusion of a dégrèvement and réalisation purely in order to obtain a discharge was not a realistic possibility. 

(iii)      A désastre would allow Mr Booth's wife to make an application under Article 12 of the 1990 Law.  This reflected the legislature's view of striking a fair balance between the interests of the spouse and family of a debtor and the interests of creditors.  Such an application would not be possible in a dégrèvement.  

(iv)      In a désastre, the Viscount could choose to continue the three pieces of litigation begun by Mr Booth.  If successful, these would benefit the creditors and conceivably Mr Booth if sufficient sums were recovered.  If there was a dégrèvement and réalisation, Mr Booth was unlikely to be able to continue with the litigation.  Advocate Clarke accepted however that the strength of this point was somewhat reduced by the fact that the Viscount had decided by notice dated 29th December, 2015, not to proceed with any of the three actions.  Nevertheless Mr Booth had applied to the court to challenge the Viscount's decision which was something he could do in a désastre.  It was not at all clear that he would have a similar ability to challenge any decision of the attournés in a réalisation not to pursue the litigation. 

(v)       If Mr Booth's estimate of the market value of King's Oak and Beaumont Hill House was correct, a sale by the Viscount would enable a surplus to be available for unsecured creditors.  That would not be so in a dégrèvement.  The largest unsecured creditor was Mr Booth's wife and this was therefore an important aspect for the family.  In a désastre, Mr Booth could challenge any decision by the Viscount to sell at what he, Mr Booth, considered to be an undervalue.  In a dégrèvement the secured creditors would take the properties and there would be no benefit for the unsecured creditors even if the true values of the properties exceeded the secured claims. 

Conclusion

76.      We have considered the arguments put forward by Advocate Pallot but have concluded that, on the facts of this case, a désastre is the better course.  We would summarise our reasons as follows:-

(i)        The starting point is that, as stated in Super Seconds Limited, in the ordinary course of events the grant of a désastre is to be preferred to a dégrèvement not least because the 1990 Law reflects the legislature's view of the appropriate balance in the modern day between the interests of creditors and debtors. 

(ii)       Advocate Pallot's strongest point is that, on the facts of this case, the unsecured creditors would be better off under a dégrèvement than a désastre because in a dégrèvement, the claims of the secured creditors would be discharged when they took the properties as tenants après dégrèvement whereas in a désastre the balance of their claims would be provable as an ordinary debt alongside the unsecured creditors.  If the figures suggested that this would make a material difference, we accept that this would be a powerful argument in favour of a dégrèvement rather than a désastre. 

(iii)      However, on the basis of the evidence produced to us, we are not satisfied that there will be any material benefit to unsecured creditors if there is a dégrèvement rather than a désastre.  That is because we were informed by the Viscount that the value of the chattels was in the region of £11,000 rather than the £48,000 suggested in the Jurats' report.  Even when added to the other movable property (which is essentially the outstanding fees and work in progress from his business), the total value of the movable property would be in the region of £34,000.  We have no doubt that, given the complexities of this case, the costs of a réalisation would eat up that amount with the result that there will be no material dividend for the unsecured creditors even if the secured claims are taken out of the picture.  Accordingly, on the facts of this particular case as they emerged during the hearing, we do not think that Advocate Pallot's argument avails him. 

(iv)      We do not accept Investec's argument that it would be prejudiced to the extent of over £100,000 of stamp duty if there is a désastre rather than a dégrèvement.  In the first place, the evidence that the value of King's Oak would be enhanced by a greater amount than the cost of any works is tenuous in the extreme.  Investec has not inspected the interior of the property and no specific improvements are contemplated or suggested.  There is just a vague expectation that this might be the case.  Secondly, even if it transpires that some works would improve the sale price by a greater amount than the cost of the work, there is no reason why Investec should not negotiate with the Viscount following a désastre with a view to securing her agreement that Investec should undertake and pay for the work in exchange for an increase in its debt.  As the sale proceeds would be applied entirely in reducing its debt, it would be the beneficiary of any increase in sale price.  This would not involve any purchase by Investec with the accompanying cost of stamp duty.  The Viscount is under a duty to sell for the best price reasonably obtainable and no doubt she would be happy to enter into an arrangement of this nature if satisfied that it would increase the sale price of the property.  The sole disadvantage for Investec under such a scheme would be that it would lose control of the situation and any decision would ultimately be a matter for the Viscount to decide rather than Investec.  However we do not think that in this case this would be sufficient reason to order a dégrèvement rather than a désastre. 

(v)       In our judgment, the issue of discharge from liabilities is important.  The legislature has determined in the 1990 Law that it is appropriate (subject to the Court's ability to extend or reduce the period) that a debtor should be relieved of his liabilities after a period of four years following a désastre.  In the case of a dégrèvement, a debtor is never released from unsatisfied liabilities owed to creditors who have renounced or not participated in the dégrèvement.  This will often be a powerful argument in favour of a désastre.  An exception would be where there is essentially only one creditor, namely the person holding security over the immovable property whose debt will therefore be extinguished when he takes as tenant après dégrèvement.  We do not think that Advocate Pallot's suggestion that Mr Booth could apply for a désastre immediately after the conclusion of a dégrèvement and réalisation is realistic.  The outcome of any such application would be highly uncertain. 

(vi)      The 1990 Law provides that a spouse or civil partner may make an application under Article 12 for an order conferring one or more benefits on the spouse or partner in relation to the matrimonial home or its proceeds.  This must be taken to reflect the legislature's view of striking a fair balance between the interests of creditors and those of the debtor's family.  In our judgment, the ability to make an application under Article 12 is a pointer in favour of a désastre rather than a dégrèvement.  We acknowledge that, given the probable lack of equity in the properties because of the level of secured debt, Mrs Booth's application under Article 12 may face difficulties.  However it is not for this Court to reach a firm view about the prospects of success of any Article 12 application given that the spouse is not before us and we do not have the sort of information which would no doubt be presented at the hearing of any such application.  Given that the legislature specifically envisaged the ability to bring such an application, we do not think that the delay which any such application might cause is a sufficient reason for rejecting a désastre in favour of a dégrèvement. 

(vii)     A court deciding to grant a désastre is unlikely to be influenced by mere assertions by a debtor as to the value of property.  However, in this case Mr Booth has the benefit of two valuations from 2011, in relation to King's Oak, one for £4 million and one for £4.4 million.  We accept that they are now somewhat historic but nevertheless the decline to the value of £2,675,000 suggested by the two estate agents consulted by the Jurats seems to be quite substantial.  If the values contended for by Mr Booth were to be correct, a désastre would achieve a better outcome than a dégrèvement.  On the particular facts of this case, given the existence of the previous valuations, we think that is a legitimate point in favour of a désastre. 

77.      Putting these matters together, it is our view that the balance of justice points in favour of a désastre rather than a dégrèvement in this case and we therefore dismiss the appeal. 

Postscript

78.      We wish to add one point by way of guidance for the future.  An application for désastre is normally made ex parte.  As with all ex parte applications, the person making the application owes a duty of full and frank disclosure to the Court.  Where a judgment creditor has made an application for an adjudication of renunciation, it is clearly a material factor for the Court to consider, when exercising its discretion as to whether to grant a désastre, for the Court to know that such an application by a judgment creditor has been made.  It must therefore be disclosed in the affidavit by the debtor in support of the application for a désastre.  

79.      Mr Booth's affidavit in support of his application for a désastre did not make any reference to the fact that Investec had applied for an adjudication of renunciation; indeed it did not even refer to the fact that Investec was a judgment creditor.  On the particular facts of this case, we do not criticise the affidavit.  In the first place, it was perfectly apparent that the Royal Court was aware of the application for adjudication of renunciation because it was known that it was listed to be heard on the day upon which the application for désastre was to be made.  Accordingly there was no question of the Court being misled.  Secondly, we accept that the affidavit was prepared at enormous speed on very short notice.  Nevertheless the important point of principle remains and any affidavit in support of an application for désastre must disclose the position fully and frankly. 

Authorities

Loi (1839) sur le Remise de Biens.

Eves v Hambros Bank (Jersey) Limited 1995/082.

Super Seconds Limited v Sparta Investments Limited [1997] JLR 112.

Bankruptcy (Désastre) (Jersey) Law 1990.

Birbeck v Midland Bank Limited [1981] JJ 121.

Loi (1880) sur la Propriété Foncière.

Re Pitman [2014] JRC 008.

Eves v Hambros Bank (Jersey) Limited [1995] JLR 344.

Costellow v Somerset County Council [1993] 1 WLR 256.

Dombo Beheer BV v The Netherlands [1993] ECHR 49.