1998/17 - Deputy Viscount v Shirley [1998] UR 17 (27 January 1998)

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THE DEPUTY BAILIFF: On the 4 December 1997 Mr Philip William Sewallis Shirley brought a summons for the Deputy Viscount to appear before the Court today the 27 January 1998 to show cause why he should not be ordered to give reasons or better reasons for his decision.

Two large lever arch files of documents were delivered to the Court early this morning but we feel satisfied that we have sufficient information before us - and we are very grateful to both Counsel - to reach a decision.

Just by way of background, Jerseycard is a company incorporated in Jersey on the 16 January 1989, and Mr Shirley was one of the promoters and served as the Managing Director until October 1994, and as a Director up to August 1995.

In accordance with the Article 31(4) of the Bankruptcy (Désastre) (Jersey) Law 1990 the Viscount made application to Court for a hearing on the reversal or variation of his order, by summons dated the 14 November and on Friday the 28 November the matter was adjourned sine die. The Viscount became involved because, on the 6 of March, 1996, Mr Shirley obtained a judgment before this Court against Jerseycard in the sum of £18,086.86 together with interest and costs.

On the 2 of August of the same year judgments were given, again by this Court, against Jerseycard in favour of FP Roberts & Son Limited, Ann Street Brewery Company Limited, and Mr FG Voisin trading as Voisin & Co. Now those claims were very substantial, and it is important to note that on the 9 August 1996, Jerseycard was declared en désastre at the instance of Mr Shirley, and therefore the Viscount was duly appointed.

In a letter dated the 6 June 1997, the Viscount wrote to Advocate Begg and, in a much more detailed letter, to Mr Shirley, with a copy to Advocate Begg, setting out what claims he had allowed and what claims he had not allowed. From that decision voluminous correspondence has flown and we have seen many detailed submissions made by Mr Shirley to the Viscount. Mr Begg has carried on with more of those submissions before us today but this was an ex-parte application and no evidence was brought to support the submissions.

Eventually, after considering all the replies, the letter that the Viscount wrote on the 6 June 1997, appears to us to be an entirely satisfactory one. Mr Begg has reminded us, very properly, that in Judicial Review of Administrative Actions by De Smith, Woolf and Jowell, there is very clear guidance given on the right of someone who is entitled to reasons to receive those reasons, and I am not going to cite all the matters that Mr Begg put to us but one of them says this at paragraph 9 - 042 of the work:

"The giving of reasons is widely regarded as one of the principles of good administration; it encourages a careful examination of the relevant issues, the elimination of extraneous considerations and consistency in decision making."

It is the lack of information, according to Mr Begg, that brings him before this Court today.

We eventually honed down the problem to a set of questions. Mr Begg submits that his client wants details as to why the Viscount did not apply to have the default judgments on which he has given payment set aside; why he reached a conclusion that the loan notes were not convertible; why he allowed the firm of Vibert & Valpy’s fees to be charged to the company in the désastre and not to the individuals concerned; and why he did not regard the activities of Messrs Stevens, Roberts and Voisin and the companies that they represented, as designed to obtain an advantage for their companies and not for Jerseycard.

We think that all these questions were answered, more than adequately, by the Viscount in a letter that he sent to Mr Shirley on the 15 October 1997, and our problem is - and we have to say this with no disrespect to Mr Begg - that however long we stay in this Court the only argument is that Mr Shirely feels that a preference was given, and the only argument from the Viscount is that it was not. We have some sympathy with Mr Wheeler in that it is very difficult to prove a negative.

If we take just one example: Mr Begg asked us to consider what happened at the Annual General Meeting of the company. There was an annual general meeting. Mr Shirley was perfectly entitled to be there - he was a shareholder. He did not attend and that meeting had before it the accounts of the company.Mr Begg says that it is the accounts of the company which state, at note 11, that the convertible loan stock carries no interest payment and is convertible at a future date to be determined by the company. The Directors proposed that the convertible loan stock be converted into equity.

Nobody can deny that those loans exist. They are there as clear as daylight in the accounts, but if we move on to the Annual General Meeting itself, it was chaired. It was attended by a quorum. It has this item minuted by the secretary appointed for that meeting: "As the chairman explained that the directors were seeking this authority" - that is to convert; "in order to negotiate with the convertible loan stockholders and those who provided loans to the company, if they could be persuaded to exchange their loans etc for shares then the income from Supercard could be equally divided."

Mr Hall enquired as to the total loans. He was referred to page 11 and 12 of the accounts, where the total was shown as £142,566 and £267,708, making a total of £410,274. Mr Parlett asked whether the shares would be issued at par. Mr Goss replied they would be issued at the effective rate of £410, 274 to £191,300. This was approved.

Mr Begg goes on to say that his client says that certain shareholders who were at that meeting have told him that there were those who left the meeting saying that there was no doubt in their minds that a convertible loan would be converted, but that is evidence, and evidence cannot be given in this way in the Court, and this application is not the place for such evidence to be heard.

We cannot consider that the Viscount can have done any more than he did. We surmise that Mr Shirley will never be satisfied that there has not been a preference. Mr Begg does not and will not accept that point, but because we are satisfied that there is sufficient information in the documents that we read and the information that we have had supplied today through those documents we are not going to order further information to be supplied. If Mr Shirley wishes to proceed he must take steps to revisit the Viscounts application adjourned sine die and press on with the hearing, but we cannot conceive that he has not got sufficient information in his hands at the moment to know exactly the basis upon which the Viscount has reached his decision. Therefore the application must be dismissed.

Dessain and Moon "Guidlines for Jersey Directors" - Sections 48, 53, 56, 58, 59, 60, 61,

de Smith, Woolf, and Jowell: Judicial Review of Administration Action: par 9 - 042

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Jersey Unreported Judgments