1999/106 - Giles v Forrest [1999] UR 106 (11 June 1999)

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Application by Linda Mary Giles, former wife of Michael William Forrest, under Rule 2 of the Bankruptcy (Désastre) (Jersey) Rules, 1991, to declare the said Michael William Forrest en désastre.

THE DEPUTY BAILIFF: This is an application for a déclaration en désastre under Article 3 of the Bankruptcy (Désastre) (Jersey) Law, 1990. The application is made by Linda Mary Giles, the former wife of Michael William Forrest against Mr. Forrest. In support of her application Mrs. Giles has sworn an affidavit to the effect that she believes Mr. Forrest to be insolvent, but to have realisable assets. She verifies in that affidavit the statement prepared by her legal advisers under Rule 2(3)(a) of the Bankruptcy (Désastre) (Jersey) Rules, 1991. She confirms the affidavit filed by Advocate Marian Whittaker in support. She has given proper notice to the Viscount and she formally undertakes to indemnify the Viscount, should the Court so order, against the costs of the declaration in accordance with Article 5(2) of the Law.

The application comes about because this Court, on 27 April 1999, [1999.073a]declined to raise or vary the terms of a consent order made between the parties on 4 June 1997, and 4 July 1997. Mrs. Giles' claim totals £677,661.26 but this includes the balance of the sum made pursuant to those consent orders of £627,989.86. The balance is made up of costs and interest on those costs awarded during the hearing.

It can be inferred from Advocate Whittaker's affidavit that Mr. Forrest has made no serious proposals to settle his debt since this Court's judgment on 27 April. In that judgment the Court said of Mr. Forrest that:

One matter caused us surprise. Following the judgment of 27 April, Advocate Renouf wrote to Advocate Begg for proposals. None were forthcoming. On 6 May, Advocate Renouf fired a warning shot. He stated that he had advised his client of her rights in the désastre procedure. He fired a further warning shot on 26 May. Advocate Begg was able to take his client's instructions and to reply in a two page letter dated 27^th May. Mr. Forrest was not in Court on Wednesday. Advocate Begg informed us that Mr. Forrest returned to Jersey from a wedding in France on 1^st June, but immediately set off on a family holiday. The flights were booked. He was on a boat, but his mobile telephone did not function there. He was aware of the application.

It must be said that in a facsimile letter sent by Advocate Begg to Advocate Renouf on 27 May there was a reiteration of the fact that Mr. Forrest "simply does not have the money (or assets)". The letter goes on to say this: ..."as you will be aware from his affidavit and from what was said at the hearing, my client is in the course of launching a new business which, if successful, should generate sufficient income to enable him either to pay maintenance to your client (if notwithstanding the judgment given by the Royal Court on 26^th April, your client is prepared to accept that the terms of the consent order of July, 1997 should be ignored for practical purposes) or to pay off the capital sum ordered by the consent order of July, 1997 (plus costs) by instalments, over a period of time. I am afraid that that is the best my client can offer".

Advocate Renouf regarded the suggestion as 'laughable' particularly as Mr. Forrest had stated to us at the earlier hearing that he was in such a parlous financial position that he was contemplating placing himself en désastre.

We will not rehearse here the careful trawling by Advocate Renouf of the many affidavits sworn by Mr. Forrest. These do not give us any impression other than Mr. Forrest is fully in control of the trusts and companies that he has set up, in his own words, "to protect me against potential negligence suits, such litigation being very much against the 'flavour of the month' at the time".

Advocate Begg made only two points at the hearing, having failed to obtain an adjournment. They were:

2.There are only the personal assets given in the affidavit of Mr. Forrest on 29 March, 1999. They are:

1.We have dealt with the first point in some detail in In Re: Rosedale -v- (JW) Investments Ltd (1995) JLR 123, where the headnote reads in part:

The fact that there was only one creditor, the applicant, and that only one debt was due provided sufficient evidence that the respondent was unable to "pay his debts as they (fell] due" as required by art. 1(1) of the Bankruptcy (Désastre) (Jersey) Law 1990. Although the Law was intended to provide mechanisms to treat multiple creditors with equality, its provisions nevertheless operated in the present circumstances since by art. 2(b) of the Interpretation (Jersey) Law 1954 all references to the plural included the singular."

2.It is said that Mr. Forrest has no assets. We will not dwell on his many affidavits where he seems to say the opposite, particularly where he talks of 'transparent' companies and trusts. We will not dwell on the correspondence with an estate agent concerning the proposed sale of "La Sergenté" which is owned, apparently, by one of those 'transparent' companies. We will look at one matter only. Mr. Forrest appears to own a 'Porsche' motorcar. It is registered in his name. Mr. Begg pointed out that it is "highly likely that the actual ownership lies elsewhere".

On 26^th May Advocate Begg claimed that the car was now Mrs. Forrest's car and that she wanted to take it to France. On 27^th May Advocate Begg wrote to say that the 'Porsche' had no roof, as it was being repaired. The garage had the keys but they would be returned to the Viscount's officer and the 'Porsche' could be impounded, although, he said, without a claim of right.

On 28^th May - this is following a seizure application for this asset by Advocate Renouf - Viscount's officers attended at "La Sergenté". Mr. and Mrs. Forrest had left for France that morning. Two Portuguese staff employed by Mr. Forrest attempted to help but they had been told to say that the car was the property of Mrs. Forrest. A white 'Metro' belonging to a neighbour was parked and locked across the garage entrance. The neighbour was not in the Island.

We have no proof that the 'Porsche' does not belong to Mr. Forrest and that in itself is sufficient in our view to found a désastre.

We also have details, up to 1997, of the substantial tax paid by Mr. Forrest on his declared income. These are contained in an affidavit sworn by him on 29^th March, 1999.

We must also cite paragraph 10 of Advocate Whittaker's affidavit of 2^nd June, 1999. She says this:

"I have reason to believe that the debtor's current income may be greater than the 1997 figure declared by him. On 27^th November, 1998, the debtor represented himself at a hearing before the Greffier Substitute, Advocate B.I. Le Marquand, at which I represented the applicant. At that hearing he declared that he received annual income by way of consultancy fees amounting to £130,000. In addition, the respondent receives annual interest on the loans due to him by the Langtry financial services group of companies following the sale of his financial services businesses and he has the use of income arising from the letting of dwelling accommodation, agricultural land and stables at 'La Sergenté'. He also has his own accountancy practice".

The consequences of a désastre are severe and may be doubly severe as we saw in the case of In re the Désastre of Delaney (1996) JLR 96 where the debtor is a professional man.

Under Article 24 of the Law, a debtor is prohibited, during the course of his désastre, from accepting appointment as "(i) an administrateur, (ii) a curator, (iii) a director of a company, (iv) an electeur, (v) a liquidator of a company, (vi) a trustee, or (vii) a tuteur". He cannot hold any public office. He cannot sit on a jury. And any debtor who at the date of the declaration holds any appointment or office referred to in the list I have cited above must submit his resignation forthwith. He is liable to a criminal penalty, of course, if he abuses that article.

We are minded to allow the désastre but only because we take the view that the requirements of the law have been met. We have given the clearest intention of what we intend to do but we are going to adjourn this matter for three weeks to enable Advocate Begg to advise his client face to face and to see what transpires. The sword of Damocles therefore is hanging still but we shall revisit it on Wednesday, 7^th July, at 9.00 a.m.

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Jersey Unreported Judgments