Case Summaries - Jersey Law Documents/JLR1506... · CASE SUMMARIES The following key indicates the court to which the case reference refers: JRC Royal Court of Jersey GRC Royal Court

THE JERSEY & GUERNSEY LAW REVIEW 2015

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CASE SUMMARIES

The following key indicates the court to which the case reference refers:

JRC Royal Court of Jersey GRC Royal Court of Guernsey

JCA Jersey Court of Appeal GCA Guernsey Court of Appeal

JPC Privy Council, on appeal from Jersey GPC Privy Council, on appeal from Guernsey

CONSTITUTIONAL LAW

Elections

Le Cornu and Risoli v Att Gen and others [2014] JRC 256 (Royal Ct: Clyde-Smith Commr, and Jurats Clapham and Fisher)

Mr Le Cornu, Mr Risoli and the Attorney General appeared in person; SM Baker for the third respondent.

Article 20(4) of the Public Elections (Jersey) Law 2002 (“the Elections Law”) provides—

“(4) The nomination of a candidate for a public election shall be made by the production to a nomination meeting of a document, in such form as the States may prescribe by Regulations, subscribed by a proposer and 9 seconders, all 10 of whom shall be persons entitled under Article 2(1), (1A), (2) or (3) to vote for that candidate in any poll held for the election.”

The representors argued that the election of Scott Wickenden as Deputy in St Helier No 1 District was invalid by reason of the fact that, as a result of inadvertence, one of signatories to his nomination paper did not, at the time of signing, live within the District.

Held: The case could be distinguished from Att Gen v Pearce,1 where the name of the candidate was deliberately left entirely blank and the form was then handed over to Mr Pearce who knew that the seconders intended to second another person. In the present case, Mr Wickenden had acted responsibly and his nomination form had been

1 [2007] JRC 223A.

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declared in order by the electoral officer. More importantly, both Att Gen v Pearce and Re Pearce2 were also distinguishable as in the present case the poll had taken place and the electorate had therefore exercised its right to vote under Part 2 of the Elections Law and its right under the European Convention on Human Rights (art 3 of the First Protocol—right to free elections) freely to express its opinion. Notwithstanding art 3 being phrased in terms of contracting states, it guaranteed individual rights including the right to vote and stand for election (see Kovach v Ukraine).3 After a poll, the right of the electorate to vote and thereby freely express its choice is brought into play and this was a right which weighed heavily in the balance.

Each case turned on its own particular facts. The court did not wish to diminish in any way the need for candidates to comply with the requirements of the Elections Law and to be responsible for the validity of their nomination forms.

In the present case, the candidate, who was eligible, had completed the requisite nomination form in a responsible manner and had it confirmed by the electoral officer (at the latter’s invitation) that it was in order. The candidate had then been admitted as a candidate at the nomination meeting and was thus presented to the electorate as such. He had subsequently been elected in a general election as Deputy. There was no criticism of the way that he had conducted himself in his election campaign. Taking into account the fact that the electorate had spoken, the inadvertent and technical defect in his nomination form could not be regarded as a matter of substance. Furthermore, because it was not a matter of substance, it did not affect the result of the election. There was no evidence that the signatory’s name on the nomination form had in any way affected any of the electorate. Taken in the round, the reality was that the electorate had expressed its choice freely. It would be disproportionate for the court to have interfered with that free choice as a consequence of this inadvertent technical error.

CRIMINAL LAW

Appeals—errors by defendant’s advocate

Bennett v Att Gen [2015] JCA 019 (CA: McNeill, J Martin and Perry, JJA)

C Hall for the appellant; MT Jowitt, Crown Advocate.

2 [2007] JRC 180A. 3 7 February, 2008; Application No. 39424/02.


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The Court of Appeal reviewed the principles to be applied on appeal against conviction based on allegations of errors on the part of the defendant’s advocate.

Held:

(1) Test on appeals based on the conduct of advocate. There was no doubt that an error, or errors, on the part of an advocate may lead to the quashing of a conviction, provided that the error has resulted in a miscarriage of justice (to use the language of the Court of Appeal (Jersey) Law 1961). A number of formulations of the test could be found in the authorities—that the advocate’s conduct must be “flagrantly incompetent” (R v Ensor)4 or there must be “Wednesbury unreasonableness” (R v Richards5). In R v Clinton,6 the English Court of Appeal recognised the difficulties associated with such tests and stressed that what mattered was not the extent or quality of the advocate’s error, but whether the conduct affected the safety of the conviction. To put this another way, the issue is whether the conduct of the advocate has rendered the trial unfair; see Boodran v State of Trinidad and Tobago.7 Transposed to Jersey, it would be necessary to consider whether the advocate’s error was such as to have led to a miscarriage of justice. In Clinton it was stated that if the decision of an advocate is taken in good faith, having weighed the competing considerations and having consulted his client when appropriate, the Court of Appeal is much less likely to interfere than where the decision is taken in defiance of instructions and without reference to the client.

(2) Procedure to be followed. The procedure on such an appeal was well established. In short, the convicted defendant is required to waive legal professional privilege and the advocate whose conduct is the subject of criticism is entitled to have notice of that criticism and respond to it without being impeded or hampered by considerations of client confidentiality. In R v Achogbuo,8 Thomas, LJ stated (at para 16)—

“Before applications are made to [the Court of Appeal] alleging incompetent representation which is based upon an account given by a convicted criminal, we expect lawyers to take proper steps to ascertain by independent means, including contacting the

4 [1989] 2 All ER 586. 5 [2000] All ER (D) 900. 6 [1993] 2 All ER 998. 7 [2002] 1 Cr App R 103. 8 [2014] 2 Cr App R 94 (7).

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previous lawyers, as to whether there is any objective and independent basis for the grounds of appeal.”

The same process of careful consideration is to be followed in Jersey.

CRIMINAL PROCEDURE

Production of special material

In re an Order for Production of Special Material, GRC [2015] Judgment 03 (Royal Ct: McMahon, Deputy Bailiff)

CG Dunford, Crown Advocate for the applicant; the respondent advocate appeared at the first hearing but was excused attendance subsequently.

The Royal Court considered an application, pursuant to the Police Powers and Criminal Evidence (Bailiwick of Guernsey) Law 2003 (“the 2003 Law”), by a police officer for production of special material held by an advocate. The application was made in the context of an ongoing investigation into possible offences of perjury. It was suspected that the client of the advocate holding the material sought had instructed that advocate to make an application in the context of family proceedings before the Magistrate’s Court based on evidence that the client had concocted. That evidence was in the form of a signed witness statement lodged in support of the client’s application, which had been signed by the advocate. Ultimately, leave to withdraw the application before the Magistrate’s Court was given, as was leave to disclose to the Guernsey police information filed in the proceedings that had been withdrawn. The police were subsequently provided with information which suggested that the advocate possessed material which could assist in the investigation. Crown Advocate Dunford wrote to the advocate requesting copies of documentation created around the time of the application in the Magistrate’s Court and believed to be in the advocate’s possession. A dispute arose as to whether legal professional privilege could vest in those documents. The advocate’s position was that his duty of confidentiality to his client must prevail unless and until the court made an order or the client gave his informed consent to disclosure. The latter could not be forthcoming as the advocate’s retainer by the client had been terminated. Crown Advocate Dunford argued that, by s 24(2) of the 2003 Law, items held with the intention of furthering a criminal purpose are not items subject to legal professional privilege.

Held: The greatest care must be taken when considering an application for a production order under s 9 and para 4 of Schedule 1 of the 2003 Law in respect of special material. A police officer may obtain access to special material or such material may be produced for the purposes of a criminal investigation where the so-called “access


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conditions” (at para 2 of Schedule 1 of the 2003 Law) are fulfilled. The Bailiff must take the greatest care in satisfying himself personally that the statutory requirements have been fulfilled and it is not simply querying whether the police officer holds reasonable grounds for believing that the access conditions have been met. It was quite clear, through a combination of s 25(1) and s 25(2) of the 2003 Law, that in principle the material contained in an advocate’s file created in the course of his profession fell within the definition of “special material”. A recognised exception to legal privilege, codified into s 10(2) of the 1984 Act and s 24(2) of the 2003 Law, derives from R v Cox9 and operates as a matter of Guernsey law in the same way as it forms part of the English common law. Accordingly, where the client has that criminal object in view, the communications with the advocate do not even attract legal privilege. Legal professional privilege is an important aspect of the administration of justice and must, when it operates, be respected. However, there may be circumstances where the privilege does not attach to communications between an advocate and his client, for example, where the client is abusing the otherwise professional relationship by seeking advice on how to commit an offence or giving instructions to be acted upon where the advocate will unwittingly assist in the potential commission of an offence. Such circumstances need to be investigated fully and it would be quite inappropriate for the proper investigation of a potential offence to be thwarted by reference to privilege applying. The question for the Bailiff is whether there is freestanding and independent evidence supporting the assertion that there was an underlying intent to further a criminal purpose. If there is, the legal professional privilege that might otherwise be recognised as defeating an application for the production of special material simply does not exist. The consequence, however, is that the material in question still needs to be sought through the route of s 9 and Schedule 1 of the 2003 Law because it remains “special material” (see reference in s 25 to the advocate’s undertaking to hold the material in confidence). Where the evidence in support of an application for a production order establishes satisfactorily that the material held in confidence is not subject to legal professional privilege, it will fall within the definition of “special material”. The principle also applies where legal privilege is lost in respect of communications after the commission of an offence where there is evidence of specific agreement to pervert the course of justice. Whilst legal professional privilege could not be invoked in relation to the material in the advocate’s file relating to the matters under investigation by the police because that material fell outside the ambit

9 [1884] 14 QBD 153, at 168.

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of such privilege under the common law principle derived from R v Cox, that material did fall within the definition of “special material” in s 25 of the 2003 Law. The public interest arguments in favour of overriding the duty of confidentiality are likely to be strong when the investigation being conducted goes to the heart of the fair administration of justice. Ultimately, consideration of this element involves a balancing exercise in which the more serious the nature of the allegation being investigated, the greater the likelihood that the public interest will be demonstrated. Providing access to the material sought for the police investigation in this case would provide benefits either supporting the allegations being investigated or pointing away from any criminality. Either way, the material sought would allow the investigation to progress. The guidance in Blackstones Criminal Law 2014, which explains the process as a matter of English law, is equally applicable to an application under the 2003 Law. It is good practice to resolve questions of what might or might not be covered by legal professional privilege through the appointment of an independent advocate to be present at the time of the handing over of material under a production order. This acts as a procedural safeguard to ensure that no item to which legal professional privilege attaches would be produced under the order sought.

Application granted and material to be produced within seven days.

EVIDENCE

Court’s finding as to credibility

CSS Ltd v Nautech Servs Ltd [2015] JCA 021 (CA: McNeill, J Martin and Perry, JJA)

OA Blakeley for the appellants; E Moran for the respondent.

The appellants sought to appeal against a decision of the Royal Court by which the second appellant had been held to be in contempt of an order for interim relief restraining infringement of copyright in confidential information pending trial, and the first appellant was held vicariously liable for that contempt. The appeal turned on the evidence before the Royal Court that the second appellant had used confidential contact information belonging to the respondent, rather than another source, to send five emails. The Royal Court’s finding of contempt depended on its finding that the evidence of the second appellant had not been credible. The question was therefore raised as to the proper approach that should be followed by the Royal Court when it finds a witness’s evidence not to be credible.


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Held:

(1) The limitations which face an appellate court asked to interfere with findings of fact reached by the court of first instance have been indicated by the Court of Appeal on numerous occasions, particularly when that court has had the opportunity to consider oral testimony, the terms in which that testimony is couched and the demeanour of witnesses. On an appeal on matters of fact, the appellate court must not only be convinced that the decision of the court below is wrong but also clear that there was no evidence which could have supported the relevant findings of the Royal Court. In carrying out this task, it may be that occasions arise where it appears that there was simply no primary evidence to support a particular finding in fact. But, where the finding is one based on inference from ascertained primary facts, the court must accord a very high degree of respect to the findings of the Jurats.

(2) In certain jurisdictions it is incumbent upon fact-finding tribunals to give express reasons for a finding of lack of credibility or lack of reliability. In Jersey, very significant weight is allowed to the findings made by the Jurats. In Att Gen v Edmond-O’Brien,10 the Privy Council specifically stated that, at least in criminal matters, questions of credibility were a matter for the Jurats.

(3) Nevertheless, when a finding depends upon a determination as to credibility or reliability, the court of first instance ought, however succinctly, to indicate the basis upon which it finds the evidence of a particular witness either to be unreliable or not entitled to be found credible. Without such assistance in this case, and given the necessary inference as to the view below on reliability or credibility, there was no basis upon which the Court of Appeal could express a view as to the credibility or reliability of the second appellant. Even when working to the criminal standard of proof, there may be a sufficiency of evidence to convict where an inference can be drawn in the event of the defendant not explaining the existence of an alternative source: Att Gen v Evans.11

In the present case, the absence of a specific finding by the Royal Court that the contact details for the emails in question were taken from an injuncted source resulted in that question being remitted to the Royal Court and the appeal was therefore successful to that extent.

10 2006 JLR 133. 11 1965 JJ 527, at 530.

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Without prejudice negotiations

Kilbey v Grafters Ltd [2014] JRC 227 (Royal Ct: Birt, B sitting alone)

MP Renouf for the representor; OA Blakeley for respondents.

The respondents sought leave to adduce at trial evidence of what was said during an unsuccessful mediation. The court was therefore required to consider the circumstances under which material that is privileged because it arises out of without prejudice meetings or correspondence can nevertheless be admitted in evidence.

Held:

Persuasive authority of English law in this area. In the absence of any Jersey authority, the court referred to English case law: the general nature of litigation in Jersey is very similar to that in England and it followed that the policy considerations which gave rise to the rule concerning without prejudice negotiations in England were likely to be similar in Jersey.

General rule. The general rule is that anything said or written in the course of without prejudice negotiations is not admissible in evidence at the trial of the action. The reason is essentially one of public policy in encouraging parties to settle litigation: Cutts v Head.12 But there are some exceptions. In the case of Unilever PLC v Proctor & Gamble Co,13 Robert Walker LJ listed some of the most important exceptions. One of these is that one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other unambiguous impropriety; but, as Robert Walker LJ further observed, “it is an exception that should be applied only in the clearest cases of abuse of a privileged occasion”.

Impropriety exception. The present case concerned the extent of this exception. In the tension between two powerful public interests—encouraging the settlement of disputes and discouraging perjury—the protection of the privilege of without prejudice discussions holds sway unless the privilege is itself abused on the occasion of its exercise: Savings & Investment Bank Ltd (in liquidation) v Fincken.14 The unambiguous impropriety exception had to be narrowly construed for the reasons described in the various cases, including Fincken.

12 1984] Ch 290. 13 [2000] 1 WLR 2436. 14 [2003] EWCA Civ 1630.


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Disposal. In the present case, it was argued for the respondents that the statements by the representor had not been made in an honest attempt to settle the issues between the parties but amounted to simple point scoring and therefore could not benefit from the privilege. The court did not accept this. It would be completely contrary to the public policy behind the privilege for particular comments to be identified and for it then to be argued that those particular comments were not made for the purposes of seeking to achieve a settlement and are therefore not subject to the privilege. It is “quite wrong for the tape-recorded words of a layman, who has used colourful or even exaggerated language, to be picked over in order to support an argument that he intends to raise defences which he does not really believe to be true”: per Hoffmann LJ in Forster v Friedland.15 The general rule, “if not ‘sacred’, has a wide and compelling effect” and this is particularly so where the settlement discussions take place during a meeting, so that (per Robert Walker LJ in Unilever) the—

“discussions between the parties’ representatives may contain a mixture of admissions and half-admissions against a party’s interest, more or less confident assertions of a party’s case, offers, counter-offers and statements (which might be characterised as threats or thinking aloud) about future plans and possibilities . . . Partial disclosure of the minutes of such a meeting may be . . . a concept as implausible as the curate’s egg (which was good in parts).”

In the present case there was no evidence of misuse or abuse of the privilege itself. The application was accordingly rejected.

LAND LAW

Ownership en indivis—dégrèvement

In re Walton Dégrèvement [2015] JRC 003 (Royal Ct: Birt, B and Jurats Kerley and Grime)

P Syvret appeared in person; SCK Pallot on behalf of the Attorney General

The question was raised as to whether an undivided share of immovable property owned in common can be the subject of a hypothec and therefore can in turn be the subject of a dégrèvement. There had long been uncertainty over this question.

15 10 November 1992, Court of Appeal (Civil Division) Transcript No 1052

of 1992.

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Held:

Customary law. Although it was the Loi (1880) sur la Propriété Foncière which introduced dégrèvement, that Law built on the principles of customary law. It was therefore convenient to begin by looking at the customary law.

An essential principle of the customary law was that, in order to be capable of hypothecation, an interest in property must be capable of alienation: Le Gros;16 this was also Pothier’s view.17

There was no doubt that an owner in common may dispose of his undivided share in immovable property both by inter vivos transaction and by will: Re Dégrèvement Bonn18 and Le Sueur (née Luce) v Le Sueur19 where the difference between ‘joint ownership and ownership in common was explained.20 Furthermore, the court could take judicial notice that disposal of an undivided share is a transaction which regularly occurs in contracts passed before the Samedi Court on a Friday afternoon.

In Bonn, the court held that the interest of a joint owner (as opposed to an owner in common) in immovable property could not be hypothecated and therefore could not be made the subject of dégrèvement for two reasons, neither of which applied to ownership in common.

It was also of interest that systems of law with which Jersey customary law had much in common appeared to permit hypothecation of an undivided share of immovable property owned in common; the court referred to Domat,21 Planiol & Ripert,22 and In re LF Morgan Ltd,23 where reference was made to Dalloz.24

16 Traité du Droit Coutumier de l’Ile de Jersey (1943), at 455 (“Il faut être

capable d’aliéner pour pouvoir hypothéquer”). 17 Traité de l’Hypothèque (1821 ed), chap 1, sect 2, at 194; and 537 (1827

ed). 18 1971 JJ 1771, at 1774. 19 1968 JJ 889. 20 Para 14.4 of the Law Commission paper; Matthews & Nicolle, The Jersey

Law of Property, at 1.18. 21 Les Loix Civiles dans leur Ordre Naturel—Livre III, Titre I, sect I—alinéa

XV. 22 Traité Elémentaire de Droit Civil Tome II (1923 ed) chap 1, sect 4, at para

2653. 23 1987–88 JLR 336, at 340. 24 Nouveau Répertoire, para 380, at 886 (1964 ed).


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In addition there were strong practical reasons for thinking that an owner of an undivided share should be able to hypothecate his share.

(2) The 1880 Law. There was nothing in the 1880 Law that prevented the conclusion that an undivided share in immovable property was hypothecable. Article 3 provides: “A l’avenir, les biens-fonds seront seuls susceptibles d’être hypothéqués”. The expression biens fonds is not defined in the 1880 Law. The draftsman of the 1880 Law seemed to have used bien-fonds and héritage fairly interchangeably, suggesting that there is no real distinction between the two terms. Héritage was also not defined in the 1880 Law. The natural translation into English is “hereditament”, the meaning of which appeared wide enough to include an undivided share of property owned in common. An owner of land can grant a hypothec over the land which he owns. It is a bien-fonds. It was hard to see why an owner of an undivided share of land should not be able to grant a hypothec over that share of the land. A share of land is equally a bien-fonds which is capable of being hypothecated. The only argument against such a construction was to be found in art 21 of the 1880 Law which deals with the creation of conventional hypothecs and states that they must be created on a “corps de bien-fonds spécial et déterminé”. But the arguments in favour of construing a bien-fonds as including an undivided share of land owned in common greatly outweighed the arguments against). The court agreed in particular with the Study Guide of the Institute of Law that art 21 is complied with in relation to an undivided share if the property in which the share is held is fully described as required by that article.

(3) Disposal. It followed that the 1880 Law permits hypothecs to be taken over an undivided share of land owned in common and that such a share can therefore be the subject of dégrèvement. It followed, in relation to the dégrèvement at issue, that the court could register the respondent as tenant après dégrèvement of the debtor’s one third undivided share in the land.

TRUSTS

Breach of trust/conspiracy

Jefcoate v Spread Trustee Co Ltd GRC Judgment 42/2014 (Royal Ct: Marshall, Lieut Bailiff)

A Lund and P Richardson for the plaintiffs; J Greenfield for the first to fifth defendants; P Ferbrache for the sixth and seventh defendants.

The plaintiff’s father, Sidney Jefcoate (Mr Jefcoate) had been involved in various property ventures with the sixth defendant (Mr Nicholson) since the mid-1980s. In each of their dealings, Mr Nicholson would spot an opportunity and Mr Jefcoate would fund the acquisition of the

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relevant property. The proceedings were originally brought by Mr Jefcoate and his son Stuart Jefcoate (Stuart). However, Mr Jefcoate died in 2012 and Stuart became the sole plaintiff.

The proceedings concerned transactions that took place between September 2005 and March 2007, relating to plots in Wales. At the material times, the plots were owned by Holborn Investments Ltd (HIL), a Guernsey company. The shares in HIL were held for the first defendant (STC), a company providing trustee and trust administration services. The ultimate beneficial owners of HIL were three Guernsey discretionary trusts of which STC was, in each case, the trustee. The beneficiaries of the three trusts were the Jefcoate family, the Nicholson family, and the Piper family respectively, and the trusts were entitled to 47.5%, 47.5%, and 5% respectively of HIL. The seventh defendant, Mr Field, was a property developer and a business associate of Mr Nicholson. Stuart claimed that certain plots formed part of a group of property assets which were subject to an agreement or arrangement between Mr Jefcoate and Mr Nicholson, which the latter breached. Mr Nicholson was the principal beneficiary of a trust owned by Carnation Holdings Ltd.

In December 2005, one of the plots was sold by HIL to Carnation Holdings Ltd for £500,000. The venture involved those properties, amongst others, being acquired in order to be later realised to advantage, in general by adding value through obtaining planning permission for development, with the net profits then to be shared in the proportions mentioned above. Stuart claimed that these sites were transferred out from under the umbrella structure of the arrangement at a significant undervalue, to entities owned by, or connected with, Mr Nicholson or his interests or associates (Mr Field being one), to the financial detriment of the Jefcoate interests. It was claimed, inter alia, that the dispositions were at an undervalue and effected in breach, amounting to gross negligence, of the fiduciary duties owed to the plaintiff by STC as trustee.

The complaints of breach of duty were that STC failed to take any proper steps to consider en bon père de famille how to ascertain the true value of the properties at the time of their disposal so as to safeguard the interests of the Jefcoate trust and its beneficiaries. STC, it was alleged, effectively acted solely on the instructions of Mr Nicholson whilst at the same time failing (in breach of trust but also of express actual agreement with Mr Jefcoate) to keep Mr Jefcoate adequately informed. The aggregate undervalue of the transactions was asserted to have been £4,085,000. Stuart therefore claimed that the defendants should pay back 47.5% of this sum (£1,940,375) either as restitutionary compensation or as damages for breach of trust. It was pleaded, in the alternative, that the defendants conspired together with


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the intention of causing loss to the beneficiaries of the Jefcoate trust by unlawful means, namely by effecting the transfer of properties out of HIL at an undervalue in breach of trust or duty.

All of the defendants denied that the disposals were in fact at an undervalue at all. If any breach of trust were shown, STC denied that it was either fraudulent or amounted to “gross negligence” and it claimed the benefit of an exoneration clause in the trust deeds. The defendants further argued that even if the plaintiff succeeded in establishing his claims, the loss in respect of which he claimed (i.e. the alleged loss to the Jefcoate trust) was merely reflective of loss to HIL, and the claim was therefore barred from any remedy by the doctrine of “no recovery for reflective loss”. All defendants denied any conspiracy and they denied that the facts alleged by Stuart were capable of amounting to the required elements of an “unlawful means” conspiracy at all.

Held: The initial basic intention between Mr Jefcoate and Mr Nicholson in respect of the Welsh venture was simply to apply the same broad terms as had previously applied to the parties’ collaborative projects. Seven valuable properties within the Welsh portfolio were identified as candidates for “value enhancement” treatment. The default position, in the absence of consensus between the parties, was that the properties remaining in the venture would have to be sold for (obviously) the best price/best terms reasonably obtainable at the time in the market. This constituted the underlying arrangements between Mr Nicholson and Mr Jefcoate which STC understood itself to be furthering and facilitating in the provision of its trustee and trust administration services.

The ingredients of the tort of unlawful means conspiracy were (i) an agreement or combination between two or more persons (to combine to do the relevant acts causing damage); (ii) the commission of overt acts referable to that agreement or combination; (iii) the fact of injury or loss; (iv) the requisite intention to injure the plaintiff; and (v) the use of unlawful means. The agreement or combination element was essential, as it was the element of scheming to cause injury which was of the essence of conspiracy as a separate tort. The evidence must demonstrate an actual common plan, mutually discussed and agreed (at least implicitly), so as to show a shared purpose. There was no evidence of any agreement or combination formed between STC and/or its relevant subsidiaries and Mr Nicholson, or Mr Nicholson and Mr Field, to injure the beneficiaries of the Jefcoate trust by unlawful means. There was no evidence of a concerted and deliberate plan to make disposals at an undervalue at all. Although the facts of each transaction plainly involved an agreement or arrangement between STC, the second or third defendants and Mr Nicholson or Mr Field, those facts evidenced only the agreement for the individual

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transaction and its being effected. The mere fact of several such allegedly tainted transactions was not enough. More was required to convert this to evidence of a systematic plan, such as, at least, the clear knowledge and intention of all parties that each transaction was indeed at an undervalue. There was no sufficient evidence of that in this case. The conspiracy claim would fail on the grounds of absence of any actual combination and also for absence of the required intention to injure on the part of all of the alleged conspirators STC was in breach of trust in transferring Plot 13 to Carnation for £500,000, there was consequent loss, and that this was caused by STC’s gross negligence, in all the circumstances. There was no fraud or deliberate breach of duty by STC but merely a failure to carry out the duties of skill and care required of them as trustee. The Welsh portfolio was not the only aspect of the interests of Mr Jefcoate’s companies and trust which they were administering, and must be seen in context. The obviousness of the danger of conflict of interest, and the simplicity of steps needed to obviate it (ie, to obtain an independent confirmatory valuation or, at least, to obtain clear concurrence from Mr Jefcoate) was so clear that the failure to do either was both very surprising and really very serious. Whilst it could be seen how in all the circumstances, starting simply to look to Mr Nicholson and to accept his information, advice and recommendations pretty well as a matter of course could be said to have been an easy mistake for Mr Schreibke of STC to slip into, because of the relationship which had developed between him and Mr Nicholson. However, that, and its potential for disadvantage to the Jefcoate trust was the very thing which was part of STC’s duty as trustee of LS to guard against. This was the more so given the evidence that Mr Jefcoate had previously raised questions about self-interested actions by Mr Nicholson (regarding expenses) even if this were in relation to another matter. STC was not entitled to rely on an exoneration clause in the trust deed in this respect. Although Mr Schreibke was conscientious and had acted honestly, the degree of negligence involved in not ensuring that the disposal by HIL was at a proper current open market value was sufficiently serious as to amount to gross negligence. In those circumstances, it was impossible to find that the trustee acted reasonably. Even insofar as the rule of “no recovery for reflective loss” may be held to be a part of Guernsey law—and the court was far from entirely satisfied that it needs or ought to be—that did not require it to be applied in this case, and the court would not do so. STC was in negligent breach of trust with regard to authorising the disposals of three of the six plots. They were excused liability through the operation of an exoneration clause in the trust deed in respect of two of those plots. However, as regards Plot 13, the fault was gross negligence in all the circumstances and they were not entitled to rely on the exoneration clause, nor could or should they be excused under the court’s statutory powers to grant relief to


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trustees. The damage sustained by the Jefcoate trust in consequence of this was assessed at £55,000.

Comment [Natasha Newell]: This case is significant in that it marks a rare instance of a finding of gross negligence against a trust company. The decision also provides welcome judicial clarification on the tort of unlawful means conspiracy, an uncommon tort in Channel Islands case law. The judge’s remarks that the no reflective loss rule did not apply and “will not be applied on the facts of a case such as this” are also noteworthy.