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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Degrevement of the Immovable Property of Mrs Powell [2019] JRC 004 (17 January 2019) URL: http://www.bailii.org/je/cases/UR/2019/2018_004.html Cite as: [2019] JRC 004, [2019] JRC 4 |
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Property - representation seeking a number of determinations in connection with the dégrèvement
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Before : |
T. J. Le Cocq, Esq., Deputy Bailiff, sitting alone. |
IN THE MATTER OF A REPRESENTATION BROUGHT BY OLIVER PASSMORE AND JULIE MELIA
AND IN THE MATTER OF THE DÉGRÈVEMENT OF THE IMMOVABLE PROPERTY OF CAROLINE BEVERLEY ELIZABETH POWELL (NÉE CHAMBERS)
Advocate O. J. P. Passmore for the Representors.
Advocate J. Harvey-Hills for Jersey Home Loans Limited.
Advocate M. L. A. Pallot for Stephen Hill.
judgment
the deputy bailiff:
1. On 16th August, 2018, Oliver Passmore and Julie Melia ("the Representors") issued a representation seeking a number of determinations in connection with the dégrèvement of the immovable property of Caroline Beverley Elizabeth Powell (née Chambers) ("Mrs Powell"). The Representors were, on 22nd April, 2016, appointed by the Court as Attournés in order to conduct the dégrèvement.
2. It is not necessary to set out at length the background to the dégrèvement. There have been a number of judgments of this Court in connection with it which have sufficiently set out the background in detail. In brief, however, the matter may be summarised for these purposes as follows:-
(i) The immovable property of Mrs Powell in Jersey was known as La Vallette, Parcq De L'Oeilliere, Le Mont de la Pulente, St Brelade ("the Property").
(ii) Mrs Powell defaulted on various debts secured against the Property and after a significant period of indulgence an application was made for an adjudication of renunciation and thence dégrèvement.
(iii) The hearing was due to take place on 6th June, 2016, but prior to that hearing Mrs Powell applied for an order that her property be placed into the hands of the Court in accordance with the provisions of the Loi 1839 sur la Remise de Biens and the dégrèvement proceedings were accordingly stayed.
(iv) On 31st January, 2017, the Court granted Mrs Powell's application for a remise de biens and on 8th August, 2017, the Court extended the remise de biens by a period of up to six months.
(v) The remise de biens was unsuccessful and on 20th April, 2018, Mrs Powell was deemed as a matter of law to have made cession of all her property movable and immovable and a stay on the dégrèvement proceedings was automatically lifted.
(vi) A date was fixed for the dégrèvement hearing, namely 1st June, 2018, which was then adjourned to 26th June, 2018.
(vii) At the dégrèvement hearing Stephen Hill trading as "Highbury Collection Services" ("the Intended Tenant") as assignee of James Gray trading as James Gray Electrics declared that he accepted the tenancy of the Property.
3. The charges over the Property and those who held them were:-
(i) Acorn Finance Limited ("Acorn") pursuant to an Act of Court dated 21st December, 2012, in the sum of £223,846.34 together with interest thereon;
(ii) Charles Thacker and others practicing as Viberts pursuant to an Act of Court dated 25th January, 2012, in the sum of £21,794.81 with interest thereon;
(iii) Jersey Home Loans ("JHL") pursuant to an Act of Court dated 14th March, 2008, in the sum of £500,000 with interest thereon.
4. In addition, a declaration of privilege claim dated 22nd May, 2018 was lodged by the Representors in the sum of £16,071.10 for costs and £4,141.20 for disbursements.
5. A number of issues have arisen relating to the discharge by the Intended Tenant as tenant après dégrèvement of the various charges and the questions for me to determine are whether the Intended Tenant is:-
(i) Required to pay the legal costs incurred by JHL and Acorn as part of their secured debts over the Property;
(ii) Only required to pay three years interest and the basis on which that interest may be charged; and
(iii) Required to pay the amounts due prior to confirmation of his tenancy and whether a failure on the part of the Intended Tenant to pay those amounts requires the Attournés to summon the Intendant Tenant to appear before the Court to witness confirmation of the tenancy or whether, instead, the Intended Tenant should be treated as having renounced his acceptance of tenancy of the Property and the next secured creditor be asked whether it wishes to accept tenancy of the Property instead.
6. In essence, therefore, I am asked to determine what a tenant après dégrèvement must pay when he takes the tenancy and when he must pay it. This is of some substance, as the costs incurred by JHL and Acorn in and around the disputes before the Court over the dégrèvement of Mrs Powell are substantial sums. If it falls to the Intended Tenant to pay them, this will significantly increase the sum payable by the Intended Tenant over and above the figure specified as the debt in the various Acts of Court granting JHL and Acorn their charges over the Property.
7. JHL and Acorn argue, amongst other things, that they are entitled to their legal costs in full of vindicating and recovering their debt whereas the Intended Tenant maintains that he does not have to meet any of the costs of recovery incurred by JHL and Acorn but merely has to pay the capital outstanding of their charges, together with up to three years of interest.
8. Furthermore, the Representors seek confirmation from the Court that they are entitled to recover their costs of discharging their functions of Attournés from the Intended Tenant. In order to save unnecessary costs in the hearing before me, it was agreed that I would hear the question of the Attournés fees and costs first and that the Representors would thereafter withdraw from the proceedings remaining neutral on the other issues to be determined as between JHL and Acorn on the one part and the Intended Tenant on the other. Furthermore, whilst Acorn filed a skeleton argument they agreed with the submissions on the law advanced by JHL and they were not represented.
9. JHL lent £500,000 to Mrs Powell to assist with the refinancing of the Property. It did so pursuant to a Facility Letter dated 4th December, 2007.
10. The Facility Letter contained a number of provisions and provided essentially that the sum outstanding was available at JHL's discretion and repayable upon demand but otherwise repayable over a maximum term of 25 years with interest only payments in the meanwhile. There were provisions relating to the interest rate and confirmation that the outstanding interest would be debited to the mortgage account quarterly in arrears.
11. Clause 5 of the Facility letter states:-
"5. As security for repayment of the advance and interest JHL Limited will require:-
5.1 A £500,000 first registered charge over the property..."
12. And, at clause 8, the Facility letter provides:-
"8. All legal costs, stamp duties and registry fees and other costs and expenses of whatever kind incurred by JHL Limited or JHL Limited's agents and the preparation, execution and operation of the advanced or any other documentation connected with the advance including the costs of any proceedings taken by us hereunder shall be for the account of and payable by you on demand."
13. There was, thereafter, a bond executed between Mrs Powell and JHL which contains a proviso in the following terms:-
"Provided always that if any such capital or interest which term shall be deemed in this bond to include any interest payable on arrears of interest capitalised under the present proviso shall remain unpaid after the day on which the same ought to be paid then and in every case the interest so in arrears shall be capitalised and added for all purposes to the said capital hereby secured and shall henceforth bear interest at the highest rate specified in schedule 2 hereto..."
14. Nothing in the Facility letter or in the bond expressly states that any costs, which are expressed to be payable by the debtor, form part of the hypothecated sum. There is reference to capitalisation of interest and a number of references to the repayment of capital and interest but there are no references to the repayment of costs as part of the secured sum. On the surface of this documentation, it is not therefore clear to me that costs could be considered as part of the secured sum even between the lender JHL and Mrs Powell although they are clearly for her account. However the relationship between the tenant après dégrèvement and JHL (the former not being a party to the Facility letter or bond) is not governed by the loan documentation as such.
15. The statute governing dégrèvement is, of course, the Loi (1880) sur la Propriétè Foncière ("the 1880 Law"). For ease of reference I will add an unofficial translation to the relevant Articles.
16. I start first by looking at the preamble to the 1880 Law which is in the following terms:-
17. At Article 2 of the 1880 Law under the heading "Des Hypotheques" the following definition appears:-
18. Article 13 of the 1880 Law provides as follows:-
19. This version of Article 13 was introduced by the Loi (2000) (Amendement No. 4) sur la Propriété Foncière ("the 2000 Law"). It also repealed Article 14. I have been shown extracts from the projet that supported this amendment. In Part 3 the projet says:-
There is no express reference to Article 14 and the new Article 13 was, it appears, intended to replace it as well.
20. Prior to amendment Article 13 of the 1880 Law stated:
21. And Article 14 of the 1880 Law, prior to its repeal, read as follows:-
22. Articles 95 and 96 of the 1880 Law state:-
23. The main argument of the Intended Tenant is that he is not liable to pay any of the legal costs incurred by JHL and/or Acorn because those costs are claimed in addition to the maximum capital sum covered by the hypothec judiciarie that each of those secured creditors has.
24. To take JHL by way of an example, the Billet dated 14th March, 2008, ("the Billet") by reason of which Mrs Powell acknowledged her indebtedness to JHL, expresses that she acknowledges that indebtedness "in the capital sum of five hundred thousand pounds (£500,000) bearing interest....". The Billet goes on to say, by reference to Mrs Powell, that "the defendant, by her signature hereto acknowledges her indebtedness to the plaintiff in the said sum and consents to the immediate registration of this acknowledgement in the public registry." The Billet, dated 21st December, 2012, with regard to the indebtedness by Mrs Powell to Acorn Finance Limited is in similar standard terms.
25. The Intended Tenant says, in essence, that it is unnecessary to look any further because it is quite clear from the Billet precisely what was hypothecated, namely the capital sum and interest. There was no suggestion that there were any ancillary sums thereby hypothecated in addition to the capital sum.
26. The Intended Tenant points to Article 95 of the 1880 Law which requires that the person accepting the tenancy "hold good all contracts, and to pay all rents and hypothec, of an earlier date which relate to the hereditament on dégrèvement." The Intended Tenant further argues that Article 13 makes it clear that a judicial hypothec arises in circumstances when "Any act or judgment of the Royal Court ... given ... in an action for the payment or acknowledgment of an obligation ... confers, subject to the provisions of this Article, upon the person obtaining it in respect of the amount ... acknowledged by the defendant to be due to him...a judicial hypothec." Furthermore, so the Intended Tenant points out, the act or judgment referred to in Article 13 must be registered in the public registry for the hypothec resulting from it to take any effect.
27. Therefore, so it is argued, it is clear from Article 13 that the judicial hypothec, once registered, secures only those sums set out in the act or judgment of the Royal Court which, in the case of JHL and Acorn, are the capital sums plus interest set out in the respective Billets. It cannot be argued that Article 13 confers a wider right. It might be observed that the only sum that Mrs Powell "acknowledged as being due or potentially due" by her is the sum set out in the Billet.
28. The Intended Tenant does not seek to argue that contingent liabilities such as costs cannot be hypothecated but merely that such sums in total cannot exceed the specific amount set out in the Billet and acknowledged as being due by the debtor. Stamp duty is payable on the capital sum and, so it is argued, a creditor cannot add in effect further capital sums by large claims in costs.
29. There are, so the Intended Tenant submits, a number of means by which costs could be secured. They could be capitalised and added to the capital debt outstanding and provided they did not exceed the stated sum on the Billet in total then the complete amount would be secured; the creditor could build in more headroom in the capital amount in the Billet by registering it for a larger sum than the actual debt so that any costs would be secured; or he could obtain a costs judgment and register it separately creating a further judicial hypothec.
30. Article 101 of the 1880 Law states:
31. It is clear, so the Intended Tenant says, that Article 101 of the 1880 Law limits the claim in interest and is silent on the question of the payment of secured creditors legal costs and therefore, given that the amount of indebtedness is express on the terms of the Billet and interest is specifically provided for under Article 101 of the 1880 Law, there is no basis for requiring a tenant après dégrèvement to discharge the legal costs of secured creditors to the extent that these exceed the express capital sum secured.
32. The Intended Tenant further argues that there needs to be a somme certaine.
33. JHL, however, argues that the repeal of Article 14 of the 1880 Law by the 2000 Law and the amendment to Article 13 by that same statute effectively made any reference to the concept of "somme certaine" as limiting what may be secured as no longer being the law. JHL goes on to argue that the lack of any exclusion for costs must mean that the customary law position that it identifies remains in place - namely that costs are included within the secured sum.
34. I do not see anything in the projet (set out at paragraph 19 above) which suggests to me that the intention of the amendments to the 1880 Law were to provide that costs were to be secured. The 2000 Law was concerned to crystallise the position with regard to the claims in interest. It would have been very easy had that been the intention of the legislature to extend the wording of Article 13 to ensure that costs also fell to be covered, to do so in express terms.
35. Equally, it does not seem to me that the amendments were intended to remove any requirement for a somme certaine. They appear to be directed to ensuring that interest could be claimed and, possibly, as argued by the Intended Tenant, that a fluctuating balance such as a standard overdraft could be secured.
36. The Intended Tenant argues that to hold that the security could exceed the sum stated in the Billet would lead to a number of potential difficulties. In particular it is argued that any potential creditors would simply be unable to ascertain the extent of an existing creditors' interest if figures relating to costs could be notionally added to the secured sum set out in the Billet. A potential creditor should be able simply to look at the public registry, work out what the maximum indebtedness currently secured was, and then form his own judgement as to whether he could be confident to make a loan. That would not be the case if to the indebtedness reflected in the public registry any number of unascertained additional figures could be added by way of costs or otherwise.
37. There is some support for this proposition in case law. In HSBC -v- Ansbacher (Channel Islands) Limited [2007] JRC 167 the Court considered whether a lender who has the benefit of a hypothec judiciaire and subsequently takes a judgment against the borrower to repay that amount, destroys the original hypothec on registering the later judgment. Birt Deputy Bailiff as he then was said, at paragraph 24:-
38. It seems to me that the observations of the Court at (vi) and (vii) above are equally applicable to the matter before me and supportive of the Intended Tenant's argument.
39. It is further argued by the Intended Tenant that the tenant après dégrèvement is not standing in the shoes of the debtor. The relationship between the tenant après dégrèvement and the secured creditors is governed by the 1880 Law and is not, in the words of the Intended Tenant, a "subrogation of all rights and liabilities by the tenant après dégrèvement towards the secured creditors". This seems to me to be a correct analysis. The rights and duties of the tenant après dégrèvement are set out in the 1880 Law and do not reflect, other than to the extent they are incorporated by reference in the 1880 Law, the obligation between the debtor and creditor in the loan documentation.
40. In addition, the Intended Tenant argues that were the secured creditors to be able to add any figure by way of costs to their hypothecated claims then that effectively would obviate any involvement of or oversight by the Court in whatever amounts might be claimed by way of costs. It is not clear that there is any basis for example for a tenant après dégrèvement to stand in the shoes of a debtor and challenge any claims in costs nor is there a process for doing so.
41. In general terms, so it is argued, the process of dégrèvement is intended to be a simple one in which the tenant après dégrèvement attends the dégrèvement meeting, takes the property and then pays off the maximum amount secured plus three years arrears of interest for each of the prior secured creditors.
42. JHL refers to the position under English law which appears to be summarised by Halsbury's Law Vol 77, Mortgages, at paragraph 743 where the learned author says:-
43. It must be remembered, of course, that the law in the United Kingdom with regard to mortgages is very different indeed from that relating to hypothec in Jersey. The statutory regime is different as are the obligations of the mortgager and mortgagee.
44. This view is supported by the judgment of the Court of Appeal in Ansbacher Channel Islands Limited -v- HSBC Bank Plc [2007] JCA 228 in which the Court upheld the decision of the Deputy Bailiff in the Court below. In his judgment Vos JA made the following points with regard to the 1880 Law. At paragraphs 33 to 36, he said this:-
45. It seems to me that these observations, insofar as they refer to the importance of clarity in the public registry or indeed the position in English law, are of equal force in the instant case.
46. The Intended Tenant also argues that the secured creditors of this case are barred from claiming their costs by reason of the late notification of the amounts that they are claiming. In the light of the conclusion that I have reached on the arguments in the main I do not think it is necessary to consider that argument further.
47. Both the Intended Tenant and JHL agree that the 1880 Law is silent on the matter of costs. There has been some argument in case law with regard to the inclusion of costs as part of a secured claim although the matter does not appear to have been argued in full. In re Gibbons -v- Gibbons [2011] JRC 033 Birt, Bailiff, in considering whether or not the financial position of the debtor justified a remise de biens said this, at paragraphs 12 and 13:-
48. On the other hand, in Re Reva Holdings Limited [2013] JRC 208 also before the same judge, the Court appeared to include legal costs as part of a secured debt in considering an application for a remise de biens where at paragraph 30 et seq it says:
49. That there is on the surface two apparently conflicting approaches from the same judge is to my mind support for the proposition that the matter was not in terms argued before him. He was considering the test for a remise de biens and whether or not the court had a discretion to grant one. That is very different from a determination of whether costs of a secured creditor are secured if they exceed the secured sum stated in the Billet.
50. As said, JHL accepts that the 1880 Law is silent on the matter of costs. However, it argues that it is necessary as a result to look to the customary law position. In Bradshaw -v- McClusky [1976] JJ 335 at page 341, the court says "For a statute to alter the common or customary law its provisions must be clear and unambiguous".
51. JHL refers to In the matter of the remise de biens of Super Seconds Limited and others [1996] JLR 117 in which Le Cras, Lieutenant Bailiff, considered amongst other things the extent to which the 1880 Law had amended the customary law position with regard to the securing of interest on a secured capital sum. The case was of course dealing with the 1880 Law prior to the amendments to it by the 2000 Law. The headnote encapsulates his determination in that regard and it says:-
52. And again, at page 127 the learned Lieutenant Bailiff states:-
53. It is argued by JHL that whilst the passages in Super Seconds Limited deal with interest, the same logic obtains with regard to costs, that is if the customary law position includes costs as part of the secured debt, that has not been altered by the 1880 Law.
54. The Intended Tenant submits however that Super Seconds is simply not on point. It does not assist in determining the point as to whether costs can be added to a capital amount outstanding such that when added, the combined amount is in excess of the amount stated on the Billet and, that being the case, that the excess amount is both secured and payable by the tenant après dégrèvement. In addition, Super Seconds concerns a remise de biens and not a dégrèvement, the latter of which is a creature entirely of the 1880 Law.
55. I was referred by JHL to a number of commentators on the customary law. Basnage in the (Traite des Hypotèques 3rd edition 1709) says:-
56. Pothier in his treatise on the Coutume d'Orléans deals with the matter of costs. At Titre XX at paragraphs 45 and 46 he says:-
57. Domat in the Loix Civiles Livre III Titre 1 Des Gages et Hypothèques, Section III at IV says this:-
58. I have included some of the extracts cited to me by JHL. In my view, however, to the extent that they may reflect the customary law position in Jersey they appear to be dealing with what needs to be paid by a debtor to a creditor in order to release the security that the creditor has over the debtor's property. This does not, it seems to me, on its face assist in determining what is secured under the statutory regime introduced by the 1880 Law or the obligations of a tenant après dégrèvement. For that I must first consider the 1880 Law itself.
59. Before its consideration and enactment by the States, because, presumably of the substantial changes it introduced to the long established system, the 1880 Law was explained in some detail by its author, Robert Pipon Marrett in a letter of 21st December, 1878, to the editor of the "Nouvelle Chronique de Jersey", known as the "Lettre Explicative". The author in the Lettre Explicative explains the failings of the old system and what is intended by the new. He first comments on the old law and comments on the hypothec used to secure the execution of clauses and conditions in contracts generally. He describes some of the problems associated with those hypothecs in the following terms:-
"Cette hypothèque a tous les défauts qu'une hypothèque puisse avoir. A. Elle est indéterminée quant à sa durée. Nous avons vu des exemples fréquents de décrets qui ont remonté à bien au-delà de quarante ans. B. Elle est indèterminée quant à sa quotité, surtout lorsqu'il s'agit de la garantie d'un bail ou vente de biens-fonds. Tout alors dépend du hazard, si, venant à être exigible, elle se trouve être de cinquante ou de cinq mille livres sterling, et C. elle ne peut être éteinte, soit par la prescription, soit par un pairment de deniers."
60. He goes on to say, having identified some of the failings in the existing law, the following:-
"En réfléchissant sur les faits énumères ci-dessus, on se convaincra que le système de propriété foncière existant dans cette île est, au point de vue des principles et de la théorie, très défectueux."
61. He goes on to say:-
"L'objet du Projet de Loi qui a été soumis aux Etat est de faire disparaître de notre système de propriété foncière les défauts que je viens de signaler sans froisser les intérêts existants, d'arreter la marche de l'ancien système en laissant au temps la tâche d'en accomplir l'extinction graduelle, - et d'inaugurer un système nouveau, basé sure des principles plus vrais et plus en harmonie avec les besoins et les idées du temps actuel, - un système pouvant exister à côté de l'ancien sans en augmenter les complications, et susceptible de perfectionnement à mesure que le temps aura déblayé les restes du passé, et que l'expérience en aura reconnu les erreurs et les défectuosités." [My emphasis]
62. The author then goes on to say:-
"1. Le jour de l'entrée en vigueur de la nouvelle loi servira de limite et de ligne de demarcation entre l'ancien système et le nouveau. La nouvelle legislation, sauf qu'elle rend les anciennes rentes rachetables et abolit les assignations pour l'avenir, ne touche et rien, quant au passé, au système existant avant ledit jour. Elle laisse les guaranties anciennes telles qu'elles étaient; elle laisse aux rentes anciennes leur nature et leurs qualités actuelles par rapport à toute transaction antérieure à l'entrée en vigueur de la nouvelle loi, en un mot elle respecte et maintient les droits acquis avant cette loi aussi complètement que possible. Voir les Art. 28, 36, 37, 38, 46, 47, 49, 53, 54, 67, 82, 88, 89. ..." [My emphasis]
63. Lastly, after referring to the old system for disposing of immovable property in the case of bankruptcy he says:-
"La nouvelle Loi substitue à ces procedures deux autres, qui sous des noms différents (pour éviter la confusion dans les terms) n'en sont que des modifications où les principes et la plupart des formalités sont essentiellement les mêmes. La Liquidation et le Dégrèvement." [My emphasis]
64. It appears, therefore, on its surface and supported by the Lettre Explicative, that the 1880 Law was enacted to change the pre-existing law to address defaults in it with regard to the ownership of land. It made substantial changes and introduced a system of hypothecation which, although it may have been similar in some respects to what existed prior to the 1880 Law, was different and was comprehensive and included definitions both of hypothecs in general and the types of hypothec which could then be said to arise under the 1880 Law.
65. Similarly, it introduced a hitherto unknown process called dégrèvement to replace the pre-existing system and set out at length the rules and processes for the new dégrèvement procedure.
66. The essence of that procedure is that it provides for the discumberment of immovable property of all charges secured upon it during the process of bankruptcy. It may be said to be similar to other processes but to my mind its comprehensive incorporation into statute creates a statutory system which from that time applied to the exclusion of any pre-existing system.
67. It also creates the position of "tenant après dégrèvement" which describes the individual who takes the ownership of the property thus being discumbered through the dégrèvement procedure and identifies the obligations of the tenant après dégrèvement. The tenant is not simply subrogated to the debtor for all purposes but has the rights and obligations provided within the 1880 Law.
68. The purpose of the 1880 Law, whether amended or otherwise was, amongst other things, to provide certainty so that a potential creditor of a person holding immoveable property in Jersey could consult the Public Registry in order to form an informed view as to whether or not he might safely lend and that any creditor would know, in lending, the level of indebtedness that they may need to clear were they to take the property as tenant apres dégrèvement. They would have been fixed with the repayment of the capital sum on the face of the loan documentation (at the most) together with a maximum of three years arrears of interest. In addition they would have been notified of the costs of the attorney or have been able to anticipate in general terms what they might have been.
69. What the Public Registry would not show, if the arguments of JHL and Acorn are correct, is a very substantial further debt by way of legal costs incurred by the secured creditors in the various arguments that have taken place before the Court. In my view, and there is nothing in the statute which persuades me otherwise, those costs are not secured unless they form part of a separate judgment of the Court and are secured against the property separately.
70. There is, however, it seems to me one potential exception to this principle as I understand it. To the extent that the face value of the debt is more than the actual debt (either because the debtor has not drawn down the entirety of the facility that has been secured or because the debtor has paid an element of it back) it seems to me that all or an element of the costs incurred by the creditor, provided that there is an obligation to pay those costs within the loan documentation, may also be claimed as part of the secured debt up to the face value of the capital sum. This would not embarrass or prejudice a tenant apres dégrèvement who would have already had the expectation of paying the entirety of the face value of the capital sum and it would be of no concern to them whether or not that was made up of original capital advance or costs. As I say, it seems to me that those costs could be rolled into the capital sum provided the total claimed, capital plus costs, does not exceed the face value of the sum secured.
71. In my judgment, accordingly, the arguments of the Intended Tenant are to be preferred. In particular Article 13(1) of the 1880 Law, and those words which I have emphasised in paragraph 18 above, makes it clear that the hypothec is that sum or sums acknowledged by a debtor as due.
72. On the question of the payment of interest on its indebtedness JHL points to the proviso set out at paragraph 13 above, and that to the extent that interest has become capitalised it can be added to the capital sum and that further interest is then charged on that sum.
73. It seems to me that this argument holds good provided, of course, that the stipulated capital sum is not exceeded. In other words it is possible to capitalise interest (and indeed to reclaim costs) provided the total sum claimed does not exceed the specified maximum, in this case £500,000 in the case of JHL. To that of course is added the statutory additional three years of interest. It seems to me that the interest rate applicable to the borrowing, subject of course to the tests of reasonableness applied by the Court in Doorstop Limited -v- Gilman and others [2012] (2) JLR 297 is applicable to that three additional years.
74. The 1880 Law is also silent as to who shall pay the Attournés costs incurred after the dégrèvement hearing but up to and including the confirmation of the tenant après dégrèvement.
75. The Attournés are, of course, discharging a statutory function which they are doing for the benefit of the creditors. It is argued that they are in effect quasi trustees and indeed it is to be noted that the Representors, as Attournés, have brought this representation raising a number of concerns with the Court for determination. This is designed to facilitate the orderly dealing with the dégrèvement which, of course, is part of the Attournés obligations.
76. The Representors argue, therefore, that they should be entitled to their costs on a quasi-trustee basis.
77. Article 106 of the 1880 Law provides as follows:-
78. It seems clear from this that, as no tariff has been established by the Court, any question of the costs and expenses will fall to the Court to determine. Although the 1880 Law is otherwise silent on the matter of the Attournés costs there is undoubtedly a practice where a reservation of those costs is placed within a protêt lodged and available to creditors prior to the dégrèvement. Therefore, the figures set out in the protêt is known by anyone seeking to take as tenant après dégrèvement.
79. As a rule, the Attournés should provide as precise an assessment of their costs even allowing for a potential or provisional sum to be lodged making it clear what sum is actual costs and what sum is a potential.
80. There is no difficulty with quantifying actual costs and in my view to be entitled to those costs it is correct that they should be set out in a protêt. A failure to set out a provisional sum against future costs, however, should not in my view be fatal to the ability of the Attournés in appropriate circumstances to claim any additional cost, particularly where it would have been difficult to anticipate what additional costs may be incurred or additional issues arise.
81. In my judgment to any potential tenant après dégrèvement it should be clear that the Attournés are discharging a statutory obligation and ordinarily should receive protection from the Court in connection with costs. Provided, therefore, that the costs of the Attournés are limited to those necessary to discharge their functions including, in this case, to draw to the Court's attention and to bring before the Court any difficulties or disputes in connection with the conduct of the dégrèvement they should normally receive the costs out of the dégrèvement. I would place one caveat on that proposition, specifically that the Attournés should be pursuing a neutral position and simply seeking the orderly conclusion of the dégrèvement. To the extent that they are arguing from a position of self interest in an adversarial sense and are not in the context of any particular application maintaining a neutral stance, then the incidence of costs should fall within the wider discretion of the Court. In general, however, in my judgment the Attournés are entitled to their costs on a trustee basis of carrying out their functions under the 1880 Law. In my judgment the Attournés costs rank in those circumstances as a privileged claim within the dégrèvement.
82. This leaves the question of the timing of the payment by the tenant après dégrèvement of the various debts that arise as a result of them taking tenancy of the Property.
83. In my judgment he takes the Property subject to those obligations which there fall to be discharged after he has taken the Property and not before. There can be no argument but that he takes the Property subject to the payment of the sum set out in the Billet plus three years of interest provided for by the 1880 Law. Both sums are fixed with the certainty that the public registry requires and accords with the tenant après dégrèvement's understanding and should accordingly be discharged forthwith upon taking the tenancy. It seems to me that the payment of the sums due is analogous to the payment of a consideration for the transaction and should, absent agreement between the tenant après dégrèvement and the secured creditors, be dealt with in that manner.
84. In my judgment, the Attournés costs should be discharged once quantified. The sum in the protêt can be paid as for the secured debts. Any future sum, subject to any other order by the Court should be paid once quantified.
