Jersey Unreported Judgments

Court of Appeal - Saisie Judiciaire - appeal against decision of the Royal Court judgment dated 18th June, 2019.

[2019]JCA207

Court of Appeal

28 October 2019

Before     :

James W. McNeill (President), John V. Martin, Q.C., and Sir Wyn Williams

 

IN THE MATTER OF SAISIES JUDICIAIRES IN RESPECT OF THE REALISABLE PROPERTY OF ROBERT TANTULAR

Advocate T. V. R. Hanson for the Appellants.

Advocate A. J. Belhomme for the First Respondent.

The Viscount for herself.

Advocate M. W. Cook for the Third Respondent.

judgment of the court

williams JA:

 

Background

1.        In September 2005 the company known as Jonzelle Limited ("Jonzelle") purchased a flat which is situated at Cuscaden Residences, 26 Cuscaden Road, Singapore ("the Property").  The purchase price of SGD 7.1m was obtained from two sources. 80% came from funds obtained by a loan from the United Overseas Bank, Singapore.  The remaining 20% was provided from funds held in a trust known as the Jasmine Investment Trust ("Jasmine").  

2.        The funds loaned by United Overseas Bank were secured by a mortgage over the Property which was governed by the law of Singapore.  The evidence suggests that this loan was repaid in June 2008 and that on 9 June 2008 a substantial credit facility was afforded to Jonzelle by Credit

Suisse AG ("the Bank") which, in due course, was secured by another mortgage governed by the law of Singapore.  We assume (although it matters not) that this credit facility was used to discharge the debt to United Overseas Bank.   

3.        It is common ground in these proceedings that Jonzelle has failed to comply with its obligations to the Bank under the terms of its mortgage.  As at June 2019, Jonzelle owed the Bank some US$4.6m.  The Bank has commenced proceedings against Jonzelle in Singapore.  We will return to the nature of those proceedings later in this judgment.  

4.        Jasmine was constituted as a discretionary trust on 17 June 2004 by Mr Robert Tantular as settlor and ING Trust Company (Jersey) Limited as trustee.  It still subsists although over time the identity of the trustee has changed.  The trust is governed by the law of Jersey and the current trustee is the Third Respondent in these proceedings. In the remainder of this judgment the expression "the Third Respondent" will be used not just to describe the trustee who is party to these proceedings but all predecessor trustees.  Jasmine's class of potential beneficiaries includes Mr Tantular and all the Appellants.  

5.        Jonzelle was incorporated on 19 August 2004 in the British Virgin Islands.  The shares in Jonzelle have always been held by the Third Respondent.  

6.        The Property has been occupied by the Appellants for many years.  They are all related to Mr Robert Tantular and they occupy the Property as their home.  

7.        Mr Robert Tantular has been prosecuted and convicted of serious criminal offences in Indonesia in two sets of proceedings.  The first set of proceedings is known as proceedings 1631.  The second set of proceedings, known as 210, relates to conduct which was alleged (and proved) to have occurred prior to the conduct which was the subject of proceedings 1631.  Mr Tantular has been sentenced to terms of imprisonment in respect of his offending and, currently, he is on parole.  He has also been made the subject of confiscation orders by the court in Indonesia.  

8.        By application dated 6 August 2013, the First Respondent, acting upon a request by the Government of Indonesia, applied to the Royal Court for a saisie judiciaire in respect of "the realisable property situate in Jersey of Robert Tantular (whether moveable or immoveable, vested or contingent)".  The application followed Mr Tantular's conviction in proceedings 1631.  The saisie was granted by Act of Court dated 9 August 2013.  At that stage no confiscation order had been made but such an order was anticipated.  Subsequently, the Appellants and Mr Tantular challenged the saisie but that challenge was dismissed by the Royal Court.  The judgment of the court is reported at Fang, J.R. Tantular, S. Tantular and M Tantular v Attorney General [2014] (2) JLR 26.  At a subsequent hearing the Royal Court determined that the realisable property which was the subject of the saisie was limited to US$ 1,605,898.07 - see Tantular v AG [2014] JRC 243.  

9.        On 3 September 2014, the First Respondent obtained a second saisie (on an interim basis) following an application to the Royal Court on behalf of the Government of Indonesia.  This saisie followed Mr Tantular's conviction in proceedings 210.  A challenge to the making and/or continuation of this saisie failed.  The reserved judgment of the Royal Court is reported at Attorney General v Bos Trust Company (Jersey) Limited and Six Others 2015 (1) JLR 98.  This saisie is not limited to a specific amount.  

10.      The terms of each saisie are crucial to the resolution of the points which the Appellants wish to pursue on this appeal.  To an extent, the terms have already been considered in the decisions made by the Royal Court in the decisions identified above.  

11.      In September 2018 the Royal Court considered an application by the Bank for a variation of the terms of the two saisies judiciaires so as to permit the Bank to exercise the power of sale over the Property which it enjoyed by virtue of its mortgage.  The Royal Court approved the variation as appears from the Act of Court dated 6 August 2018.  The judgment of the Court, Representation of Credit Suisse re Jasmine Investment Trust [2018] JRC 161, is said to be of importance in understanding the decision under appeal before us and we will consider its impact in due course.  

12.      Notwithstanding the Act of Court permitting the variation sought, the Bank did not, immediately, seek to exercise its power of sale.  Rather, it decided to explore the possibility of assigning its interest in the mortgage over the Property.  In due course, the proceedings which have given rise to this appeal were initiated by the Appellants.  

The current proceedings and the appeal and cross-appeal

13.      By summons dated 16 April 2019 (in its amended form) the Appellants sought the following relief from the Royal Court:-

"(i) a declaration that the two saisies judiciaires imposed upon the realisable property of Mr Robert Tantular do not prevent Credit Suisse AG assigning to a third party its rights under the credit facility dated 9 June 2009 and a legal mortgage dated 24 November 2008 secured on the property located at Cuscaden Residences, 26 Cuscaden Road, Singapore; or alternatively.  

(ii)          In the event that the Court declines to grant such declaration, to make such orders and give such directions as may be required so as to permit the proposed assignment or transfer, including the variation of the saisies as may be required."

14.      The summons was supported by an affidavit made by the Second Appellant and dated 23 April 2019.  In his affidavit, the Second Appellant deposed that following an approach from members of Mr Tantular's family, Mr Herman Koswara, a family friend, indicated his willingness to satisfy the debt of Jonzelle to the Bank in return for taking an assignment of the Bank's interest in the mortgage over the Property.  The First Respondent opposed the grant of any relief and following a contested hearing the Royal Court, by Act of Court dated 18 June 2019, declined to grant the declaration and it declined to vary the saisies.  

15.      By separate Act of Court dated 26 June 2019, the Royal Court directed that the Appellants and the First Respondent should recover their costs of and incidental to the application from the trust property held in the Jasmine Investment Trust.  

16.      With the permission of the Royal Court, the Appellants appeal against the Court's refusal to grant the declaration and the Court's refusal to vary the saisies.  By their Notice of Appeal, the Appellants invite this Court to:-

"(i) Grant the declaration sought in the Appellants' summons dated 16 April 2019 (as amended);

(ii)          Alternatively, vary the saisies judiciaires so as to permit [the proposed] assignment;

(iii)         set aside the order for costs in favour of the [First Respondent] (acting on behalf of the Indonesian Government) and ordered to be paid out of the Trust on the indemnity basis;

(iv)         order that the [First Respondent] do pay the costs of all parties, alternatively, pay an amount so as to indemnify the Trust for costs borne by it."   

17.      By a Respondent's Notice dated 18 July 2019 the First Respondent appeals against the orders for costs made by the Royal Court as they relate to the Appellants and the First Respondent.  He invites us to quash the orders for costs made by the Royal Court and to direct that:-

"(1) The Appellants be ordered to pay the costs of the First and Third Respondents of and incidental to the application on the standard basis;

and in so far as this does not indemnify the Third Respondent for its costs, the Third Respondent be awarded its costs of and incidental to the application on the trustee indemnity basis to be paid out of the funds remitted to the Viscount: and

                                  (2)       The Appellants not be awarded costs."

It is to be noted that the First Respondent has not obtained the permission of the Royal Court to appeal against the order for costs and he has made no formal application to this Court for permission to appeal against the costs orders.  

18.      In the Contentions filed on behalf of the First Respondent dated 4 September 2019 it is submitted that if the First Respondent is unsuccessful in the Court of Appeal i.e. if the appeal is allowed, he is, nonetheless, protected from an adverse costs order by the International Co-operation (Protection from Liability) (Jersey) Law 2019.  In response, the Appellants served a Supplementary Notice of Appeal dated 9 September 2019.  In it they contend that if their appeal is successful but the First Respondent cannot be directed to pay their costs by virtue of the 2019 Law, this Court should direct that the Appellants' costs be paid by the Government of Indonesia at whose behest the saisies had been obtained.  This issue will be dealt with in accordance with directions set out at the conclusion of this judgment.  

Recent Events

19.      By email dated 16 September 2019, the legal representatives of the Bank notified the parties that it had commenced enforcement proceedings in Singapore in respect of its mortgage and that it was no longer willing to assign the mortgage to any third party.  At a directions hearing which was held on 17 September 2019 the court directed that the Appellants and the First Respondent should file written submissions upon whether, in the light of the email, the appeal had become academic and should be dismissed on that basis.  Both the Appellants and First Respondent provided detailed and helpful written submissions upon that issue in advance of the hearing and in accordance with the timetable which had been laid down.  

20.      We should also record for completeness that at the directions hearing there was still a live issue about whether the Appellants should be permitted to adduce "fresh" expert evidence at the hearing of the appeal.  By the time of the hearing, however, the Appellants had decided to withdraw their application for permission to adduce such evidence and, therefore, we need say nothing further about it.  

Is the appeal academic?

21.      Crown Advocate Belhomme, for the First Respondent, argues that the appeal was rendered academic once the Bank notified the parties that it would not assign its interest in the mortgage over the Property.  He submits that the issues before the Royal Court upon which it had adjudicated were (a) whether the proposed transaction between the Bank and Mr Koswara needed approval and, if so, (b) whether approval should be granted.  Crown Advocate Belhomme submits that since the proposed transaction is no longer a realistic possibility the appeal should be dismissed as being of academic interest only.  

22.      Advocate Hanson, for the Appellants, accepts that this Court will be slow to entertain an appeal which is of academic interest only.  However, he submits, first, that the appeal is not academic and second, even if it is, this Court should entertain it because it raises at least one issue which can be categorised as being of general public importance, namely whether a mortgagee, in the position of the Bank in this case, has the right to assign its interest in its mortgage without any prior approval of the Court notwithstanding the existence of saisies judiciaires in terms as exist in this case (which are said to be standard) and without the need for the terms of the saisies to be varied by the Court.  

23.      We deal first with the submissions made by Advocate Hanson to the effect that the appeal is not academic.  Basing himself upon the decision of the House of Lords in R (Bushell) v Newcastle upon Tyne Licensing Justices [2006] 1 WLR 496, he submits that an appeal under the law of England and Wales is not categorised as academic unless it can be clearly demonstrated that its outcome can have no practical consequences for the parties to the appeal.  That, he submits, is the clear principle to be derived from paragraph 5 of the speech of Lord Hoffmann with whom the other Law Lords agreed.  He invites us to the view that this statement of principle is equally applicable in Jersey.  

24.      Upon the assumption that we accept his starting point he next submits that the evidence demonstrates that the appeal still has very real consequences for the Appellants.  Primarily, he supports that submission by reference to the evidence filed on behalf of the Appellants relating to the proceedings in Singapore brought by the Bank.  The evidence filed on behalf of the Appellant consists of  (a) a letter from their lawyers in Singapore, (b) a copy of the originating summons dated 5 July 2019 by which the Bank commenced proceedings against Jonzelle in which it claims payment of large sums of money, possession of the Property and a declaration that it is entitled to sell the Property under the terms of its mortgage and (c) a copy of the summons (and affidavit in support) by virtue of which the Appellants have been given leave to intervene as Defendants in the proceedings brought by the Bank.  Advocate Hanson submits that this evidence demonstrates that the Appellants are pursuing a proper (as opposed to a fanciful) defence to the proceedings in Singapore along the lines that a possession order should not be made in favour of the Bank in the event that it refuses to assign its interest in the mortgage to an assignee who is prepared to discharge its money claim in full as the price for the assignment.  He submits, further, that if such a defence is successful it will have the effect of preserving the Appellants' home at least for a further, perhaps substantial, period of time.  If this appeal succeeds, submits Advocate Hanson, the defence to the Singaporean proceedings will be assisted.  

25.      The second way in which the Appellants seek to demonstrate that the appeal has very real consequences for them relates to the substantial costs already incurred in preparing for this appeal and the costs incurred below.  Although the Appellants accept that the Bank has been indicating an intention to start proceedings against Jonzelle over a significant period of time, it only issued those proceedings quite recently (5 July 2019) i.e. after the decision of the Royal Court now under appeal. Further, the notification by the Bank to the parties that it would refuse to assign its interest in the mortgage was given just  a few days before this appeal was due to be heard.  Inevitably, in these circumstances, very significant costs have been incurred in launching and preparing for this appeal.  Advocate Hanson submits, that to dismiss the appeal as being without practical consequences for the Appellants would be to ignore the reality that they might be burdened with the First Respondent's costs as well as their own both in the Royal Court and in relation to the appeal when, so it is said, they have a meritorious appeal.  

26.      At paragraph 5 of his speech in Bushell, Lord Hoffmann expressly recognised that costs of an appeal (and, for that matter, the costs orders made below) could amount to "practical consequences" for an appellant which could have the effect of preventing the appeal being regarded as academic.  Advocate Hanson invites this court to take the same approach and to proceed on the basis that the law in Jersey is identical to the law of England and Wales when it is determining whether or not an appeal is to be characterised as academic.  

27.      Advocate Belhomme points out that Lord Brown of Eaton-under-Heywood specifically chose to express different views upon the issue of whether costs consequences could be a factor to be taken into account when assessing whether an appeal was academic.  In summary, he doubted whether such costs consequences could ever be a relevant factor (see paragraphs 23 to 28 of the decision).  

28.      It is to be noted, however, that Lord Brown's view as to whether costs could ever be a proper factor to be taken into account when assessing whether an appeal is academic was very much the minority view.  Lords Scott, Rodger and Walker made no speeches of their own but expressly agreed with the speech of Lord Hoffmann.  They made no reference of any kind to the speech of Lord Brown.  It seems to us to be clear that the majority view in Bushell was that costs could be a relevant factor in determining whether or not an appeal was academic.  

29.      Should we follow the approach of the majority in Bushell?  It does not seem to us that any good reason exists for the courts in Jersey to take a different view from that which was taken by the majority in the House of Lords. In our judgment, an inflexible rule to the effect that the costs consequences of an appeal should never be regarded as relevant when determining whether an appeal is academic cannot be justified.  Such a rule would, we consider, lead to significant injustice in some cases.  When it is asserted that an appeal is of academic interest only and should be dismissed on that basis we consider that the Jersey courts should determine that issue by the application of the principle formulated at paragraph 5 Bushell - see paragraph 23 above.  The principle should be applied with a degree of rigour, no doubt, but essentially the determination will be dependent upon an assessment of all the factors said to be relevant in a particular case which may include the costs consequences of dismissing appeal.  

30.      In the light of our conclusions upon the issues of principle we have reached the conclusion that

Advocate Hanson is correct in his submission that this appeal is not to be regarded as academic.  First and foremost, we accept that the result of this appeal may have an impact upon the outcome of the proceedings brought by the Bank in Singapore.  It seems to us that save in those cases where it is clear and obvious that the points raised in an appeal cannot have an impact upon proceedings in another jurisdiction it is not for the appellate court in this jurisdiction to attempt to assess the merits of the issues to be argued and determined in those proceedings. In our judgment, this court is in no proper position to judge whether or not the proposed defence of the Appellants in the Singaporean proceedings has a realistic prospect of success.  There is no obvious reason for us to doubt that the Appellants' lawyers in Singapore are proposing to advance a defence in the Singaporean proceedings which they regard as properly arguable.  However, it is plain and obvious that such a defence to those proceedings can only be advanced with any prospect of success if the Appellants' appeal in these proceedings succeeds.  In these circumstances, we accept that the pursuit of the appeal has real practical consequences for the Appellants.  

31.      We are also of the view that the costs incurred by the Appellants in this appeal  and the orders for costs made in the court below constitute a factor which prevents this appeal from being regarded as academic.  We stress that costs consequences may not be sufficient, of themselves, in many cases to justify the continuation of an appeal.  We should certainly not be understood as giving the "green light" in all circumstances for the pursuit of appeals which have been rendered academic but for the issue of costs.  However, in this case, we regard both the costs incurred in this appeal and the orders for costs which were made below to be factors which support the conclusion that this appeal is not academic.  A large proportion of all parties' costs were incurred before the Bank altered its stance upon the issue of an assignment of its interest in the mortgage.  The Bank is not a party to the current proceedings but its actions have caused very substantial legal costs to be incurred.  In the circumstances prevailing in this case we consider that the dismissal of the appeal, with all the costs consequences which would ordinarily flow for the Appellants, would constitute considerable injustice.  The dismissal of the appeal would, without doubt, have the practical consequence for the Appellants that they would be very substantially out of pocket by virtue of this litigation.  

32.      In the light of our conclusion that the appeal is not academic, it is, strictly, unnecessary to consider whether even if this appeal is considered to be academic it should, nonetheless, be permitted to proceed.  However, since we received full oral and written argument on that issue, too, we express our views upon it, albeit quite shortly.  

33.      There is no provision within the Court of Appeal (Jersey) Law 1961 which precludes this Court from entertaining an appeal which is of academic interest only.  Similarly, the procedural rules which govern this Court do not preclude such an appeal being considered.  There is, however, a recent decision of this Court which is very much in point.  

34.      In Viscount v Attorney General and Others [2017] 1 JLR 133 the Court of Appeal was prepared to and did entertain an appeal from the Royal Court by the Viscount notwithstanding that none of the other original parties before the Court participated in the appeal because, as between those parties and the Viscount, there was no issue left to be determined.  By her Notice of Appeal in that case, the Viscount was challenging a number of conclusions reached by the Royal Court as to the extent and scope of her duties and powers when exercising her power of sale of a property which had been vested in her as a consequence of the making of a saisie judiciaire.  In the appeal, an amicus curiae had been appointed (given the absence of the other parties who/which had been involved in the case in the Royal Court) and one of the points taken by the amicus was that this Court should decline jurisdiction to hear the appeal because the Viscount was not seeking to appeal any judgment or order of the court below.  

35.      In its judgment the Court characterised the issue to be determined as whether the Court had jurisdiction to hear an appeal when "no lis remains between the parties" and, if so, in what circumstances should it exercise its discretion to hear such an appeal.  Its analysis of that issue (undertaken on behalf of the court by Pleming JA) is to be found at paragraphs 10 to 33 of the judgment.  

36.      Between paragraphs 13 and 26 Pleming JA analysed a number of pertinent authorities.  They included Attorney General v Holley [2005] JLR 275, an appeal to the Privy Council from the Courts in Jersey; Barker v Barclays Bank plc [1989] JLR Note 5a, a decision of this Court; a number of decisions of the English Court of Appeal including Hutcheson v Popdog Limited [2012] 1 WLR 782 and a decision of the House of Lords R (The Secretary of State for the Home Department) ex parte Salem [1999] 1 AC 450.  

37.      In Salem Lord Slynn of Hadley, with whom the other Law Lords agreed, said:-

"My Lords, I accept, as both counsel agree, that in a cause where there is an issue involving a public authority as to a question of public law, your Lordships have a discretion to hear the appeal, even if by the time the appeal reaches the House there is no longer a lis to be decided which will directly affect the rights and obligations of the parties inter se. ... The discretion to hear disputes, even in the area of public law, must, however, be exercised with caution and appeals which are academic between the parties should not be heard unless there is a good reason in the public interest for doing so, as for example (but only by way of example) when a discrete point of statutory construction arises which does not involve detailed consideration of facts and where a large number of similar cases exist or are anticipated so that the issue will most likely need to be resolved in the near future."

See page 456G-457B.  

38.      Having considered the authorities, Pleming JA next analysed (between paragraphs 29 and 32) whether or not the court had jurisdiction to entertain an appeal which was of academic interest only as between the original parties.  He concluded that it did. He then when on to stress at paragraph 33:-

"In reaching this conclusion we would like to emphasise these points... Secondly, we agree with the approach taken in Salem that the discretion to hear disputes, even in the area of public law, must be exercised with caution and appeals which are academic should not be heard unless there is good reason in the public interest to hear them."

39.      It seems to us that the approach which this Court should take when determining whether appeals which are academic as between the parties should be permitted to proceed has been laid down in Viscount v Attorney General.  The approach approved in Viscount is very similar to that adopted by the House of Lords in Salem.  We use the phrase "very similar" as opposed to the word "identical" because Pleming JA's formulation of the criteria to be applied, i.e. that the case must involve public law, that the discretion must be exercised with caution and that there should be a good reason in the public interest to justify determining the appeal, seems somewhat less restrictive than the formulation of the relevant criteria set out by Lord Slynn in Salem.  We acknowledge that earlier in the judgment (at paragraph 28) Pleming JA seemed to be suggesting that a more restrictive approach, in line with the decisions of the Court of Appeal of England and Wales identified at paragraph 36 above, should be adopted.  However, upon a close analysis of his reasoning in Viscount we are satisfied that the passage set out at paragraph 38 above sets out the criteria to be applied in Jersey.  

40.      That being so, we turn to consider the proper application of the criteria in this case.  First, we are satisfied that this appeal involves public law.  The crucial issue in this appeal is concerned with the proper scope of the two saisies judiciaires made by the Royal Court.  In our judgment, the resolution of that issue involves an analysis of the statutory provisions permitting the making of the saisies and the interpretation of their terms.  Such an exercise is properly to be regarded as being within the realms of public law especially when the context for the making of such orders is taken into account.  Crown Advocate Belhomme does not seek to dissuade us from that view.  Second, we keep firmly in mind that the discretion to hear this appeal should be exercised cautiously.  Finally, we consider whether there is a good reason in the public interest to hear the appeal.  On this issue there are a number of conflicting factors to be assessed.  In support of his submission that we should hear the appeal even if academic as between the parties, Advocate Hanson attaches particular significance to the short judgment of the Royal Court justifying the grant of permission to appeal to this Court.  Commissioner Clyde-Smith expressed himself to be satisfied that the primary point to be raised on appeal was "important" and that a decision of the

Court of Appeal upon it would be "to the public advantage" given Jersey's position as an international finance centre.  Further, the central issue in this appeal does raise a point of law which is likely to be of general application whenever a charge or mortgage exists over property which is said to be subject to a saisie judiciaire.  However, we have no evidence upon which to assess whether a substantial number of similar cases are likely to arise in the near future or at all.  Unlike the Viscount case, this appeal is not concerned specifically with powers which the Viscount must exercise routinely whenever a saisie is in being.  

41.      On balance, just, we are satisfied that there is a genuine public interest in the appeal being determined and we would have been prepared to hear this appeal even if we had concluded that it was academic as between the parties.  

42.      In reaching this conclusion we have considered the submission of Crown Advocate Belhomme to the effect that the resolution of the underlying facts in this case is of considerable importance to the outcome of the appeal. By "underlying facts" he means those facts which bear upon whether the court was correct to refuse to sanction an assignment to Mr Koswara.  We cannot accept that submission.  We have no doubt that the underlying facts were of crucial importance to the issue of whether the Royal Court should have given its approval to a variation of the saisies so as to permit the Bank to assign to Mr Koswara.  However, it does not seem to us that the facts relating to that issue play any part in determining whether or not a mortgagee has the right to assign its interest in a mortgage over a property subject to a saisie without first seeking the approval of the court and/or the variation of a saisie.  

The grounds of appeal 

43.      The Appellants contend that the Royal Court was wrong to have refused the declaration for which they applied.  On their behalf, Advocate Hanson submits that the saisies judiciaires, properly interpreted, do not prevent the Bank from assigning its interest in the mortgage over the Property.  His core submission is that the saisies restrain any dealing with the property which they specify as being "realisable property" but that the Bank's interest in the mortgage cannot be so regarded.  Accordingly, submits Advocate Hanson, the declaration sought should have been granted.  In the alternative, he submits that if the Bank's interest in the mortgage constitutes "realisable property" which is subject to the saisies the Court should have exercised its discretion to vary the terms of the saisies so as to permit the proposed assignment to take place.  The Court was wrong to have refused the variation.  

44.      Crown Advocate Belhomme disagrees.  He relies upon the reasoning of the Royal Court which is to be found at paragraphs 34 and 35 of its judgment.  In summary, he submits that the Royal

Court was correct to conclude as it did in those paragraphs which are in the following terms:-

"34. In its judgment of the 4th September 2018 the Court found, and the parties agreed, that the saisies extended to the whole of the Property and that for the Bank to exercise its power of sale over the Property would be to deal with it; hence the need for a variation.  In our view any assignment of the Mortgage, which brings with it the power to sell the Property, is equally to deal with it.  We agree with Crown Advocate Belhomme's submission that to take any action which will or may materially affect the realisable property held under restraint is to deal with the same.  Accordingly the saisies do prevent the assignment of the Mortgage and we are unable to make the declaration sought.

35. Turning to variation, the Court felt able in the 4th September 2018 judgment to vary the saisies so as to allow the Bank to exercise that power, because it was a bona fide arm's length third party, and indeed, ... a regulated global financial institution that would be acting at arm's length to the Settlor and the Applicants.  What is now proposed is that this same power will be assigned to Mr Koswara, an old friend of the Settlor, who resides in Indonesia (where the Settlor also resides) outside the jurisdiction of both this Court and the courts of Singapore. There has been no disclosure of the communications between the Settlor and Mr Koswara, or between Mr Koswara and the Applicants, or as to the source of the $4.6m that would be used to acquire the Mortgage.  The Court has no confidence that it knows the full terms of the arrangements and it is manifest that placing Mr Koswara into that position of power over the Property could be highly prejudicial; Crown Advocate Belhomme described such a possibility as "unconscionable"."

45.      There can be no doubt that these paragraphs are, indeed, crucial to the decision of the Royal Court.  In order to understand them in their proper context, however, it is necessary to bear closely in mind (a) the legislation underpinning the power to make saisies judiciaires, (b) the terms of the saisies and (c) the previous decisions of the Royal Court referred to at paragraphs 8, 9 and 11 above.  

46.      The relevant Articles of the Proceeds of Crime (Jersey) Law 1999 (as modified) ("the 1999 Law") are as follows:

"2. Meanings of expressions relating to realisable property

                                                (1)         In this Law, "realisable property" means-

(a)           in relation to an external confiscation order in respect of specified property, the property that is specified in the order; and

(b)           in any other case-

                                                                (i)          any property held by the defendant,

(ii)           any property held by a person to whom the defendant has directly or indirectly made a gift caught by this Law, and

(iii)          any       property           to         which   the       defendant         is beneficially entitled.

15. Cases in which saisies judiciaires may be made

(1)       The powers conferred on the Court by Article 16 are exercisable where -

(a)            proceedings have been instituted in a country or territory outside Jersey and have not been concluded, and

(i)            an external confiscation order has been made in the proceedings, or

(ii)           it appears to the Court that there are reasonable grounds for believing that such an order will be made in the proceedings; or

(b)           it appears to the Court that the proceedings are to be instituted against the defendant in a country or territory outside Jersey, and that there are reasonable grounds for believing that an external confiscation order will be made in those proceedings.

(2)       Where the Court has made an order under Article 16 by virtue of paragraph (1) (b), the Court shall discharge the Order if the proceedings have not been instituted within such time as the Court considers reasonable.

16. Saisies judiciaires

(1)         The Court may, subject to such conditions and exceptions as may be specified in it, make an order (in this Part referred to as a saisie judiciaire) on an application made by or on behalf of the Attorney General on behalf of the government of a country or territory outside Jersey.

(2)         An application for a saisie judiciaire may be made ex parte to the Bailiff in chambers.

(3)         A saisie judiciaire shall provide for notice to be given to any person affected by the order.

(4)         Subject to paragraph (5), on the making of a saisie judiciaire -

(a)           all the realisable property held by the defendant in Jersey shall vest in the Viscount;

(b)           any specified person may be prohibited from dealing with any realisable property held by that person whether the property is described in the order or not;

(c)           any specified person may be prohibited from dealing with any realisable property transferred to the person after the making of the order,

and the Viscount shall have the duty to take possession of and, in accordance with the Court's directions, to manage or otherwise deal with any such realisable property; and any specified person having possession of any realisable property may be required to give possession of it to the Viscount.

(5)         Any property vesting in the Viscount pursuant to paragraph (4)(a) shall so vest subject to all hypothecs and security interests with which such property was burdened prior to the vesting.

(6)         A saisie judiciaire -

(a)           may be discharged or varied in relation to any property; and

(b)           shall be discharged when the proceedings in relation to which it was made are concluded.

(7)         An application for the discharge or variation of a saisie judiciaire may be made to the Bailiff in chambers by any person affected by it and the Bailiff may rule upon the application or may, at the Bailiff's discretion, refer it to the Court for adjudication."

47.      We turn next to the relevant operative parts of the saisie judiciaire made on 9 August 2013.  The

Court ordered:-

"(1) that pursuant to paragraph 1 of Article 16 of the 1999 Law as modified ... a saisie judiciaire  be granted in respect of the realisable property situate in Jersey of Robert Tantular .... (whether movable or immovable, vested or contingent) which, without prejudice to the generality of the foregoing, is known to include assets held by [the Third Respondent] ... as trustee of the Jasmine Investment Trust and its underlying companies ...; 

(2)         that, save to the extent envisaged by paragraph (4) below, [the Third Respondent] be prohibited from dealing with any realisable property of Tantular at present held by it or transferred to it after the making of the present Order;

(3)         thereafter, in view of the statutory duties placed upon him by paragraph (4) of Article 16 of the modified 1999 Law, the Viscount be directed to take possession of all realisable property situate in Jersey of Tantular and to manage or otherwise deal with the same in accordance with the Court's directions;

(4)         that [the Third Respondent] be permitted to manage or otherwise deal with the assets of the Jasmine Investment Trust under the direction of the Viscount ...."

The wording of the second saisie, so far as material, is identical to that set out above and need not be repeated.  

48.      In Re the Realisable Property of Tantular [2014] (2) JLR 25 the Royal Court dismissed a challenge made to the first of the two saisies which was brought on the basis that the First Respondent had failed to establish that any of the property held by Jasmine was realisable property within Art.2 of the 1999 Law. The Court concluded that was not correct; potentially, at least, some of the property was realisable since it fell within Art.2(1)(b)(ii) of the 1999 Law. Subsequently, as we have said, the Royal Court concluded that property held by Jasmine to the value of US$1.6m approx. was realisable property and subject to the saisie - see paragraph 8 above.  When the second saisie was the subject of litigation the Court on the grounds, primarily, that it continuation would constitute an abuse of process the Royal Court dismissed the challenge, holding, too, that it applied to property held by the Third Respondent with no specific limitation as to amount - see paragraph 9 above. Again the Court proceeded on the basis that Art. 2(1)(b)(ii) was satisfied and that property held by Jasmine constituted realisable property.  However, while those decisions determined that the saisies had been made validly and that Jasmine held realisable property which was subject to the saisies they did not definitively determine the ambit the "realisable property" which was subject to the terms of each of the saisies.  

49.      With the benefit of hindsight, an opportunity to determine the nature and extent of the realisable property which was the subject of each saisie presented itself upon the Bank's application in 2018 to vary the terms thereof so as to permit it to exercise its power of sale over the Property.  However, it seems clear to us that far from determining the nature and extent of the realisable property which was the subject of the two saisies the Royal Court proceeded upon an assumption that the property which was subject to those orders was the Property including the mortgage over it. In the words of the Royal Court "we assume for present purposes that the whole of the

Property is caught by the saisies" - see paragraph 17 of the judgement and the preceding paragraphs which provide the context upon which the assumption and phrase "whole of the Property" are based.  That said, paragraph 17 also makes clear that the court had not heard full argument upon the proper scope and interpretation of the saisies.   

50.      Against all this background we turn to consider the judgment under appeal.  At paragraphs 13 to 21 the Court summarised the arguments put forward by Advocate Hanson in support of both limbs of the application dated 16 April 2019.  t is worth stressing that although Advocate Hanson made it clear that he did not consider that an assignment of the interest in the mortgage could constitute dealing with the realisable property which was the subject of the saisies he appears to have accepted that the Bank's application in 2018 to vary the saisies so as to permit the Bank to exercise its power of sale over the Property was "required" because "the Property did form part of the realisable property of [Mr Tantular]" - see paragraph 14 of the judgment.  

51.      Between paragraphs 22 and 31 the Court recorded the submissions of Crown Advocate Belhomme as to why variation of the saisies was necessary prior to an assignment of the interest in the mortgage and why, on the facts of this case, variation should not be permitted.  It seems to us (from the summary contained in the judgment) that Crown Advocate Belhomme submitted the variation was necessary prior to assignment because that was the logical consequence of the previous acceptance before the Royal Court that variation was a necessary pre-requisite to the exercise of the power of sale.  

52.      Advocate Hanson submits that the Royal Court did not deal, in terms, with his arguments as to why an assignment of the interest in the mortgage did not constitute dealing with realisable property.  He submits that the only reasoning in support of the contrary conclusion reached by the court is to be found in paragraph 34 of the judgment - see paragraph 44 above. Crown Advocate Belhomme, realistically, does not disagree with that proposition.  

53.      What then is the purport of paragraph 34 of the judgment?  In our judgment, the finding of the Royal Court is that the realisable property which is the subject of the saisies comprises not just the Property itself but also the mortgage to which it is subject.  It seems to us that this is the only proper conclusion to be reached from the language used in paragraph 34.  No doubt, too, this conclusion flowed from the Court's understanding of what had occurred before the Royal Court on the Bank's application to vary in 2018.  It seems clear, in our judgment, that the Court proceeded on the basis that in 2018 the stance of all parties before the Royal Court had been that a variation of the saisies was necessary prior to the exercise of the power of sale.  From that spring-board the Court felt able to conclude that variation of the saisies was also a necessary step prior to an assignment of the interest in the mortgage.  

54.      We find ourselves unable to agree with the reasoning of the Royal Court.  In our judgment, its reasoning conflates the ownership of the legal estate in the mortgaged property with the legal interest which a mortgagee enjoys in the mortgage over the property.  In the instant case the legal estate in the Property is held by Jonzelle; the interest in the mortgage over the Property is held by the Bank.  In the absence of very clear words within the saisies themselves together with a statutory basis founded in the 1999 Law we cannot conclude that both the legal estate in the Property and the Bank's interest in the mortgage together constitute "the realisable property" which is subject to the saisies.  We say that not least because if both together comprise the "realisable property" it would mean that in many cases both the property itself and any encumbrances over it would vest in the Second Defendant by virtue of Art.16(4)(i) of the 1999 Law.  That would put her in the very difficult position of having to juggle her duties and powers as the Viscount with the duties and powers of a mortgagee.  That juggling act is avoided by Art.16(5) of the 1999 Law for hypothecs and security interests governed by the law of Jersey but, as we see it, would arise in respect of mortgages or other securities governed by the laws of other jurisdictions if property and mortgages over it are treated as if they were one and the same.  We do not accept that is what the 1999 Law intended.  

55.      At paragraph 33 of its judgment the Royal Court set out the approach which should be adopted to the interpretation of the saisies in this case.  The paragraph reads:-

"Whilst acknowledging the differences between a Mareva injunction and a saisie judiciaire as explained in [Representation of O'Brien [2003] JLR 1], we agree that the prohibition against dealing addressed to the Trustee, and which is binding on those with notice of it such as the Bank, should be construed strictly as per JSC BTA Bank v Ablyazov ....., because that part of the process (which is separate from the vesting of the property in the Viscount) does constitute an order of the Court issued against third parties analogous to an injunction in its effect upon them.  There would be a risk of oppression if it were to be otherwise.  However, as Lord Clarke said in JSC BTA Bank v Ablyazov....., at paragraph [17] the question is what is meant by that prohibition."

56.      We agree with that approach. Specifically we agree that the approach to interpretation advocated in JSC BTA Bank v Ablyazov [2016] 1ALL ER 608 should be followed in Jersey. In our judgment, it is important that those called upon to interpret a saisie judiciaire must guard against an interpretation of its terms which does not accord strictly with the normal meaning of the language used in the order.  Given the terms in which the saisie is drafted, we cannot accept that the Bank's interest in the mortgage over the Property constitutes either the realisable property of Mr Tantular or assets of Jasmine.  In our judgment, the mortgage over the Property is an encumbrance over realisable property, but does not, itself, constitute any part of the realisable property.  

57.      We have already referred to Art. 16(5) of the 1999 Law at paragraph 54 above.  Advocate Hanson submits the construction of the saisies which we are disposed to accept is wholly consistent with Article 16(5) of the 1999 Law.  We agree.  It seems to us that this provision is a clear statutory recognition of the distinction between realisable property on the one hand and legal interests which burden that property on the other.  

58.      In our judgment, therefore, an assignment of the Bank's interest in the mortgage over the Property would not constitute dealing with any realisable property which is the subject of either saisie judiciaire.  

59.      When Crown Advocate Belhomme was pressed in oral argument upon the thrust of our reasoning set out above he appeared to us to accept that there was a proper distinction to be drawn between dealing with realisable property on the one hand and dealing with a legal interest over such property on the other.  No doubt it was that recognition on his part which led to his submission that the saisies judiciaires prohibited any dealing with any interest over the Property, such as a mortgage, which "put at risk" the value of the realisable property itself.  That submission seems to have found favour with the Royal Court - see the penultimate sentence of paragraph 34 of the judgment of the Royal Court.  

60.      We cannot accept that contention at least in the context of a proposed assignment of an interest in a mortgage.  Such an assignment, of itself, does not "put at risk" the value of the realisable property.  The act of assigning the interest of a mortgagee under a mortgage, of itself, has no effect upon the property which is the subject of the mortgage.  We appreciate, of course, that the subsequent actions of the assignee may have an impact upon the value of the mortgaged property but we are unable to agree with the breadth of the conclusion of the Royal Court that "to take any action which will or may materially affect the realisable property held under restraint is to deal with the same".  

61.      We conclude that the Royal Court should have granted the declaration which the Appellants sought in their summons of 16 April 2019.  In so doing we make it clear that we should not be taken as deciding that the exercise of the power of sale by the Bank is also outwith the scope of the saisies in this case.  That issue was not before us.  The Bank thought it appropriate to seek the approval of the Royal Court for a variation of the saisies prior to exercising its power of sale and, so far as we are concerned, it did so because it considered that to be a necessary prerequisite to the exercise of the power.  However, in our judgment, the Bank was entitled to assign its interest in the mortgage over the Property to a third party without prior approval of the Court and without the need for a variation of the terms of the saisies judiciaires.   

62.      We propose to deal with the alternative ground of appeal summarily.  We have no doubt that if a variation of the terms of the saisies judiciaires had been necessary so as to permit the suggested assignment of the interest in the mortgage to Mr Koswara the Royal Court was correct to refuse it for the reasons which are set out in paragraph 35 of its judgment.  On the evidence before the Royal Court it would have been very surprising if it had reached a different conclusion.  

The cross-appeal

63.      In the light of our decision on the appeal, the cross-appeal cannot succeed.  That being so, we do not propose to determine whether we should decline jurisdiction to entertain the cross-appeal on the grounds that no court has granted permission for it to be brought.  It seems to us that this issue is not without some difficulty and is better resolved in a case in which it is a live issue.  

64.      We note, however, that the orders for costs which were made below and which are now the subject of the cross-appeal were orders which Crown Advocate Belhomme invited the Court to make or, at the very least, are orders which he did not oppose.  In those circumstances, we harbour very considerable doubt about whether it is open to his client to appeal against the making of the orders.  On any view, the orders made in respect of costs were orders pursuant to the exercise of a discretion invested in the Court.  It must be very rare, at the very least, for an appellate court to interfere with the exercise of such a discretion when the party complaining about its exercise in the appellate court did not oppose the making of the orders in the court below or encouraged the making of those orders.  

65.      However, given our conclusion upon the Appellant's appeal, the cross-appeal fails and must be dismissed.  

Conclusion

66.    The appeal is allowed. The declaration sought in the summons of 16 April 2019 as set out at paragraph 13 above is granted. The cross-appeal is dismissed.  

Further Directions  

67.    Within 14 days of the date of this judgment the Appellants must file and serve written submissions addressing the cost orders which they seek both in respect of this appeal and in respect of the costs before the Royal Court.  Within the same timescale, the Second and Third Respondents must file any written submissions which they wish to make about their own costs.  Within 14 days thereafter, the First Respondent must file and serve its costs submission and, within 7 days of receipt of the same, the Appellants and (if so advised) Second and Third Respondents may serve a reply.  Thereafter the Court will determine appropriate costs orders in the light of the parties' submissions.  

Authorities

Fang, J.R. Tantular, S. Tantular and M Tantular v Attorney General [2014] (2) JLR 26

Tantular v AG [2014] JRC 243

Attorney General v Bos Trust Company (Jersey) Limited and Six Others 2015 (1) JLR 98.

Representation of Credit Suisse re Jasmine Investment Trust [2018] JRC 161

International Co-operation (Protection from Liability) (Jersey) Law 2019

R (Bushell) v Newcastle upon Tyne Licensing Justices [2006] 1 WLR 496

Court of Appeal (Jersey) Law 1961

Viscount v Attorney General and Others [2017] 1 JLR 133

Attorney General v Holley [2005] JLR 275

Barker v Barclays Bank plc [1989] JLR Note 5a

Hutcheson v Popdog Limited [2012] 1 WLR 782

The Secretary of State for the Home Department) ex parte Salem [1999] 1 AC 450

Articles of the Proceeds of Crime (Jersey) Law 1999 (as modified)

Re the Realisable Property of Tantular [2014] (2) JLR 25

JSC BTA Bank v Ablyazov [2016] 1 ALL ER 608