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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Sheyko v Consolidated Minerals Limited 07-Jul_21 [2021] JRC 186 (07 July 2021) URL: http://www.bailii.org/je/cases/UR/2021/2021_186.html Cite as: [2021] JRC 186 |
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Dispute - reasons in respect of an application by the plaintiff for summary judgment.
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Before : |
Advocate Matthew John Thompson, Master of the Royal Court. |
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Between |
Oleg Sheyko |
Plaintiff |
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And |
Consolidated Minerals Limited |
Defendant |
Advocate W. A. F. Redgrave for the Plaintiff.
Advocate M. C. Seddon for the Defendant.
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Paras |
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1. |
Introduction |
1 |
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2. |
Background |
2-8 |
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3. |
The plaintiff's application to amend its order of justice |
9-20 |
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4. |
The application for an adjournment |
21-23 |
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5. |
The effect of certain admissions by the Defendant in respect of the quantum of the Plaintiff's claim |
24-29 |
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6. |
The rate of interest |
30-50 |
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7. |
The question of a stay of execution |
51-72 |
judgment
the master:
1. This judgment contains my written reasons in respect of an application by the plaintiff for summary judgment. These written reasons address the following issues which arose out of the written submissions filed by the parties and/or in argument: -
(i) Whether the plaintiff should be permitted to amend its order of justice;
(ii) The defendant's application for an adjournment;
(iii) The effect of certain admissions by the defendant in respect of the quantum of the plaintiff's claim;
(iv) The rate of interest; and
(v) The question of a stay.
2. This judgment follows a series of judgments issued by me in relation to these proceedings. The general background to this dispute is summarised in my judgment dated 16th April 2020 Sheyko v Consolidated Minerals [2020] JRC 061 at paragraphs 2 and 3 as follows: -
3. On 13th January 2021, reported at Sheyko v Consolidated Minerals Limited [2021] JRC 006, I struck out the defendant's case on liability because I was satisfied that a fair trial could not take place on issues of liability including in respect of the defendant's counterclaim. This decision is under appeal and the appeal is due to be heard between 26th and 28th July 2021.
4. In respect of the quantum of the plaintiff's claim, although I struck out the plaintiff's case on liability, I reached the following conclusions in respect of quantum at paragraph 243 of my judgment as follows: -
5. In the same judgment at paragraph at 244 I noted the defendant had denied that the sums claimed were due without specifying the reasons why. I therefore indicated that I wanted to be addressed on this topic in terms of what directions I should make when judgment was handed down.
6. Accordingly, on 13thJanuary 2021, in respect of quantum I made the following orders at paragraphs 6, 9 and 10.
7. In accordance with my directions the defendant filed its case on quantum. Paragraph 3 contained the following admissions:-
"3. The Defendant admits the following claims:
(1) The Defendant admits, as alleged at paragraph 34(a) that, if the Plaintiff was wrongfully dismissed, he is entitled to the gross sum of US$12,410,958.90 subject to deduction of tax and national insurance pursuant to clause 9.1.
(2) The Defendant admits, as alleged at paragraphs 34(b), that if the Plaintiff was wrongfully dismissed, the Plaintiff is entitled to the sum of $905,666.67.
(3) The Defendant admits, in respect of paragraph 34(d), that if the Plaintiff was wrongfully dismissed, the Plaintiff is entitled to his reasonable legal costs in respect of his claim for payment under clause 3.4 only (but not otherwise)."
8. These admissions led to the plaintiff's summons seeking the following relief: -
"1. Summary Judgment be entered in favour of the Plaintiff in respect of the following matters:
a) The sum of US$12,410,958.90 claimed at paragraph 1 of the prayer to the Order of Justice.
b) The sum of US$905,666.67 claimed at paragraph 2 of the prayer to the Order of Justice.
c) The payment by the Defendant of the Plaintiff's costs of and incidental to the above-named action and the proceedings under case heading 2018/193 on the indemnity basis in accordance with paragraph 3.4 of the Service Agreement to be taxed if not agreed.
2. The sum at paragraph 1(a) shall be paid gross of tax and national insurance. All appropriate deductions in accordance with paragraph 9.1 of the Service Agreement shall be made before any part of the aforementioned sum is paid to the Plaintiff by his Advocates or the Court (as the case may be) following determination of the Defendant's Appeal pursuant to paragraphs 8 and 9 below.
3. The Defendant shall within 14 days of the date of this Act make an interim payment of US$750,000 or such other sum as the Court deems appropriate on account of the Plaintiff's costs payable pursuant to paragraph 1(c) above.
4. The Defendant shall pay interest on the sums claimed above from 4 June 2018 to the date of this Act at such rate as the Court deems appropriate.
5. The Defendant shall pay judgment interest on the sums claimed above from the date of this Act until the date of payment in accordance with Royal Court Practice Direction 05/06.
6. The sum of U$10,000,000 held in Court pursuant to the Act of Court dated 3 October 2018 shall be paid to the Plaintiff's Advocates within 2 working days after the date of this Act in partial satisfaction of the sums due to the Plaintiff pursuant to this Act.
7. Save for the balance of the costs due pursuant to paragraph 1(c) above (which are to be taxed if not agreed), the balance of the sums due pursuant to this Act shall be paid to the Plaintiff's Advocates no later than 14 days after the date of this Act.
8. The Plaintiff's Advocates shall provide a written undertaking to the Defendant and to the Court to repay the sums paid pursuant to this Act, if and to the extent that the outcome of the Defendant's appeal against the Master's judgment of 13 January 2021 ("the Defendant's Appeal") necessitates such repayment.
9. Alternatively, all sums payable pursuant to this Act (save for the US$10,000,000 described at paragraph 6 above) shall be paid into an account of the Royal Court pending the determination of the Defendant's Appeal and/or further order of the Royal Court.
10. The Defendant shall pay the Plaintiff's costs of the present summons on the indemnity basis in accordance with paragraph 1(c) above.
11. Paragraph 10 of the Act of Court dated 13 January 2021 is hereby varied as set out herein.
12. Such further or other relief as the Court deems appropriate.
13. Liberty to apply."
9. Also, before me was a second summons issued by the plaintiff seeking to amend his order of justice. The amendment sought was as follows: -
"2. The Plaintiff shall be permitted to amend paragraph 34(e) of his Order of Justice dated 27 July 2018 as follows:
"Interest from the date
of judgment on such sum or sums as may be awarded pursuant to the Interest
on Debts and Damages (Jersey) Law 1996, at such rate or rates and for such
period or periods as the court deems appropriate""
10. What led to this application was that, in the defendant's skeleton argument filed on 19th May 2021, the defendant argued that because the plaintiff's order of justice only sought post judgment interest, the part of the plaintiff's summons seeking pre-judgment interest should be dismissed as the claim for any pre-judgment interest had not been pleaded.
11. The plaintiff's order of justice pleaded the following at paragraph 34e): -
"34. Accordingly, the Plaintiff is entitled to claim as a debt from the Plaintiff:
e) Interest from the date of judgment on such sum or sums as may be awarded pursuant the Interest on Debts and Damages (Jersey) Law 1996, at such rate or rates and for such period or periods as the court deems appropriate."
12. The prayer to the order of justice simply sought interest.
13. The general power vested in the Court to award interest is contained in Article 2(1) of the Interest on Debts and Damages (Jersey) Law 1996 (the "Interest Law"). Article 2(1) of the Interest Law provides as follows: -
14. It is clear that Article 2(1) gives the Court a very broad discretion in terms of what rate of interest it may award and for what period. In particular, interest can be awarded from the date upon which a cause of action arose. In Pell Frischmann v Bow Valley [2007] JRC 155A, to which both parties referred me, the issue for the Court was when interest was to start to run from and at what rate. At paragraph 6 Commissioner Page stated the following: -
15. I address later in this judgment the parties' submissions on the rate of interest which was also explored in Bow Valley. In terms of the actual decision, interest was awarded against the second and third defendants from the point when they first enjoyed the benefit of the sum awarded to the plaintiffs. In respect of the other defendants the court deferred the issue of what the starting date should be pending further argument between the parties if agreement could not be reached. To the extent that the defendant argued that the plaintiff could not have interest prior to the date of judgment, this approach was inconsistent with Bow Valley and with the rationale summarised by Commissioner Page set out above as to why interest is payable. However, Bow Valley is clear, and I am bound by the decision, that interest ordinarily accrues from the date a cause of action arises. In the present case the date on which the plaintiff's cause of action arose was not in dispute, if the claim was established.
16. In any event, as I consider the defendant must have appreciated, the pleaded claim for interest in paragraph 34e) of the order of justice is ambiguous because, while it refers to interest from the date of judgment, it also seeks interest "at such a rate or rates and for such period or periods as the court deems appropriate". The prayer also leads to further ambiguity when read against paragraph 34e) in that the prayer simply sought interest. The prayer when read on its own is not ambiguous and does not contain any limitation on the claim for interest.
17. In my judgment, applying the rationale set out in Bow Valley, the defendant must have appreciated that the Court was never going to allow its discretion to be fettered on the basis of an ambiguous pleading.
18. Had the defendant been right in its approach, this would have procured an unfair result because the plaintiff's entitlement to interest would be governed by how long the proceedings took to conclude, rather than how long the plaintiff had been out of his money. There is no justification for such an approach. Such an approach also runs the risk of tactical game playing and delay because such delay, at least in high value cases, leads to a plaintiff losing significant sums.
19. Finally, there was no other reason to refuse the amendment. The proposed amendment was clear on its face and there was no other question arising or limitation argument that might preclude the amendment.
20. I therefore granted the amendment to the claim for interest.
21. The defendant applied for an adjournment partly to be able to respond to the plaintiff's claim for interest if I was minded to allow the amendment and also in support of its submission that the plaintiff's application should be stayed pending any appeal. The defendant in the alternative argued, if I was minded to grant summary judgment, that enforcement of any judgment should be stayed. I will deal with this aspect of the defendant's submissions in the section dealing with the question of a stay.
22. In relation to adjourning the application to allow the defendant an opportunity to file evidence in respect of the plaintiff's claim for interest, I refused this application. What the plaintiff was seeking was clear and the plaintiff filed evidence in support of his claim justifying the rate sought at 3 per cent over base rate. The defendant had plenty of opportunity to file substantive evidence in response as an alternative to its primary case that the claim for interest was precluded by the plaintiff's order of justice. Advocate Seddon also made it clear that he was able to argue the principle of what approach I should take to interest, and the authorities relied upon by the plaintiff. Adjourning the claim for interest (on the assumption that some form of judgment was granted in favour of the plaintiff) was also unattractive because the application to adjourn was predicated upon an argument about the plaintiff's pleading, which was never going to prevail. Having allowed the amendment, there was also no compelling answer to Bow Valley and the principle that interest should start to run from the date the plaintiff's cause of action arose.
23. The defendant otherwise argued that I should stay matters because nothing had changed since the stay granted by paragraph 10 of the Act of Court of 13th January 2021. In my judgment, for the reasons set out in the next section of this judgment, certain matters had changed because of the contents of the defendant's case on quantum set out at paragraph 4 to which I now turn. I was not therefore prepared to stay matters because nothing had changed since the Act of Court of 13th January 2021.
24. In the defendant's case on quantum, the defendant admitted that, if the plaintiff was wrongfully dismissed, he was entitled to the gross sum of US$12,410,958.90 subject to deduction of any tax and national insurance payable and the further sum of US$905,666.67. In respect this latter sum, it emerged during argument this was also subject to the question of what tax might be payable on this sum. These amounts were the sums for which the plaintiff sought summary judgment because judgment had been entered on liability.
25. The conclusion I reached was that, whatever the outcome of the appeal against my decision of 13th January 2021, the defendant admitted that certain sums were due, if the plaintiff was wrongfully dismissed. This admission applies whether the defendant's appeal is successful or not. If the appeal is successful, but the defendant does not prevail at a later trial, then by its case on quantum the defendant has admitted certain significant sums are due. The same analysis applies if the appeal is unsuccessful because judgment on liability has already been entered. This analysis led to the conclusion that a trial on the question of whether the sums claimed by the plaintiff in paragraphs 34a) and b) of his order of justice were due was not necessary because the amount of these sums was not disputed.
26. I therefore concluded that I was able to make an order that no trial was required in respect of these issues and that the admitted sums will be due to the plaintiff, either because the defendant's appeal is unsuccessful and the current judgment on liability is upheld or because the defendant's arguments on liability do not prevail at any trial following a successful appeal.
27. Although a trial on quantum is necessary in respect of the plaintiff's claim for a bonus (subject to any other arguments that may be raised in the future, to which the plaintiff has reserved its position) it is not necessary to expand such a trial to deal with sums admitted to be due if the defendant is found to be liable to the plaintiff. I should add that at present, if the appeal is successful, there will be one trial dealing with liability issues and the bonus question. If the appeal fails, the only remaining issue is the claim for a bonus.
28. In reaching this conclusion I must clarify that the question of making an order that a trial on the amounts claimed in paragraphs 34a) and 34b) of the order of justice is not required is a separate question from whether enforcement of any such sums should be permitted at this stage. The fact that there is a question about whether enforcement should occur does not prevent me from declaring what is in dispute between the parties (and what is not) and whether or not a trial on sums admitted to be due is required. My approach falls squarely within the case management responsibilities vested in me.
29. For completeness, the power to make an order declaring that a trial was not required on the amounts admitted to be due either exists in Rule 7 of the Royal Court Rules 2004, as amended, which permits me to give summary judgment on any particular issue (see Rule 7/1(1)) or alternatively under Rule 6/19(4) which allows me to make an order on any admissions without waiting for the determination of any other questions between the parties.
30. In relation to the plaintiff's claim for interest, having ruled that the plaintiff was entitled to declarations setting out what was due if the plaintiff was found to have been wrongfully dismissed, the next logical question to consider was what interest rate should apply in relation to such admitted sums. This was because if, as I had concluded, I was entitled to rule on what sums were due to the plaintiff either if the current judgment on liability was upheld or following any trial, I was equally entitled to rule what interest should be payable on such sums.
31. The claims for interest cover two periods: -
(i) from the date of the cause of action arose until judgment; and
(ii) from the date of judgment until payment.
32. In respect of the latter category the plaintiff did not seek to argue that the rate of interest applicable should be different from the rate set out in Practice Direction RC05/06 (i.e. 2 per cent over base). Therefore, if the judgment on liability dated 13th January 2021 is upheld, the plaintiff is entitled to judgment debt interest at 2 per cent over base until payment on the sums I have declared are due and admitted as being due. This interest rate applies from the date of the declarations. If the appeal is successful but the defendant does not prevail at trial, interest is due from the date of the Court's judgment following such a trial.
33. The argument therefore focused on pre-judgment interest and the rate of interest for pre-judgment interest.
34. The plaintiff argued that a rate of 3 percent over base should apply for the period from 4th June 2018 to the date of the present court hearing.
35. In terms of the Court's ability to order interest the plaintiff noted there was limited authority in Jersey. The plaintiff observed that in Bow Valley the Royal Court approved a pre-judgment interest rate of base rate plus 1 per cent which reflected the general practice in England and Wales at that time. However, the Bow Valley case was decided in 2007 prior to the 2008 financial crash when the base rate was 5.75 per cent. After 2008 the base rate has been at significantly lower levels than previous rates. When the plaintiff's claim was issued the base rate was 0.5 per cent; it has since decreased to 0.1 percent.
36. The historically low levels of interest since 2008, in particular since issue of the present proceedings, led the plaintiff to submit that a figure of 1 per cent over base was no longer appropriate.
37. In support of this position the plaintiff relied on various authorities where the courts in England and Wales had taken into account the changes to base rates since the 2008 crash when considering the appropriate rate to apply and invited the Royal Court to do the same.
38. The current Commercial Court Guide 10th Edition 2017 states: -
39. The most helpful authority on what rate of interest to set to which I was referred was the decision of Challinor v Juliet Bellis & Co [2013] EWCH 620 (Ch). Paragraphs 31 to 34 of that decision states as follows: -
40. The plaintiff's argument was that he fell within that third category. He had not had to borrow money because he had not received what he argued was due to him from the defendant. Nor would he have merely placed the money on bank deposit, given the low rates of return available. He therefore sought a rate higher than a deposit rate but lower than any cost of borrowing or return he might have achieved.
41. His argument was supported by his sixth affidavit where he deposed that he was a highly experienced investor (see paragraph 22). His affidavit exhibited a breakdown of his personal investment portfolio until April 2021 showing that he had received significant returns. The same affidavit as well as the sixth affidavit of Phillip Brown, a solicitor employed by Baker & Partners advocates for the plaintiff, indicated that the current rate for borrowing funds was between 4 and 6 per cent.
42. Returning to Challinor, there were over 20 claimants in that case. This led the High Court to set out how to assess such an interest rate for a multitude of claimants leading to the following observations at paragraphs 37 and 38:-
43. This led to the court fixing a proxy rate for all the claimants.
44. However, in my judgment the observations made by the judge also apply to setting a rate for an individual such as the plaintiff. The court in Challinor therefore continued at paragraphs 39 to 41 as follows: -
45. The court therefore concluded the following at paragraph 42 as follows: -
46. The court then awarded the plaintiffs 3 per cent above base rate, which is the rate now claimed by the plaintiff in the present proceedings.
47. The approach of the English High Court in the various first instance decisions I was referred to including Challinor were reviewed by the English Court of Appeal in Carrasco v Johnson, 2018 EWCA Civ 87 which contained a concise summary at paragraph 17 as follows: -
48. This is the approach I have applied in this case. I also cannot see any reason why this approach should not be adopted and applied in this jurisdiction. Therefore, where a defendant's breach has caused a plaintiff to borrow money to have access to funds lost or wrongfully detained for that plaintiff's business, the rate of interest awarded is likely to be the borrowing rate. In personal injury and similar claims on the other hand the rate is likely to be a rate reflecting the funds having been placed on deposit from the date the cause of action accrued, or damage was suffered, if later. For financially sophisticated individuals who are wrongfully kept out of money due to them, the applicable rate is a figure somewhere between the cost of borrowing and money being on deposit. I stress however this approach will very much be the exception and for most individuals a fair rate will be the deposit rate for claims involving an addition to a plaintiff's assets.
49. Advocate Seddon argued that there was not enough evidence for me to be satisfied that the plaintiff was a sophisticated investor. I disagree. The plaintiff's description of his portfolio attached to his sixth affidavit is far removed from placing funds on deposit and far removed from the sort of investments the average individual might make. To award interest at 1 per cent over base would not provide fair compensation to the plaintiff. The nature of the investments held and the levels of return he has achieved (which he does not seek to claim) are clearly significant. Such returns require a certain degree of risk to be taken and an appreciation of the risks of losses that can occur applying an investment strategy of the kind the plaintiff adopted. It is only individuals in such a category who have sufficient surplus funds to be invested and who can demonstrate a track record of making more complex investments who should be entitled to recover a higher rate of interest than monies on deposit. The plaintiff falls within this category. I also do not need to go further and be satisfied what returns the plaintiff would have achieved, had he received the funds admitted to be due. It is enough for him to satisfy me, as his affidavit does, that he is within the category of a sophisticated investor and so should receive more than a rate of interest reflecting monies held on deposit. The plaintiff, by an award of interest at the rate of 3 per cent, is also not receiving any windfall or return based on speculation or a high-risk strategy which would not be appropriate or justifiable. The rate he seeks is also less than available rates set out in the evidence before me in terms of applicable borrowing rates.
50. Accordingly, for all these reasons, I declared that the plaintiff in respect of any sums found to be due to him is entitled to interest at the rate of 3 per cent over base from the date his cause of action accrued until the date of my declaration. Thereafter he is entitled to interest at the court rate of 2 per cent over base until payment.
51. The defendant, in its skeleton argument at paragraph 44.6, rejected the suggestion that its appeal against my decision striking out its answer and counterclaim would not be rendered nugatory if the defendant was required to pay over the sums I have declared to be due to the plaintiff directly. Furthermore, the defendant argued that any such payment, whether to the plaintiff or to Baker and Partners for the plaintiff or by way of a payment into Court, would be contrary to the overriding objective (Rule 1/6 of the Royal Court Rules 2004) and, in particular, the requirements at sub-rule (2) for the Court to deal with a case in a manner which saves expense, is proportionate to the amount of money involved and allocates to it an appropriate share - but no more than an appropriate share - of the Court's limited resources. This was because, if the appeal was successful, the defendant would have to seek to recover any monies I had ordered to be transferred. The context of this was the relief sought by the plaintiff, which sought at its highest the transfer of the sum of US$10 million plus accrued interest already paid into court, plus an additional sum representing the remaining balance of the defendant's admitted case on quantum again plus interest. To undo any such orders would involve the defendant incurring significant costs and expense as well as the risk of not being able to recover sums paid over.
52. In addition, if monies were paid to the plaintiff and/or to Baker and Partners as the plaintiff's agent, the defendant argued that such payments also gave rise to an income tax liability because under Article 62D(1) of The Income Tax (Jersey) Law 1961 (the "Income Tax Law"), tax is chargeable in respect of any payment made by or on behalf of an employer to an employee in consequence of the termination of that employee's employment. This is regardless of whether the payment arises from a contractual or statutory entitlement, an order by a court or tribunal, or as a voluntary covenant.
53. The obligation to pay was one that applied to an employer who was obliged by Article 41B of the Income Tax Law to deduct tax at the appropriate rate from any sums payable to an employee including any payments under Article 62D. This obligation applied to the defendant as a Jersey company. The amount of tax to be deducted was also in dispute. The defendant argued that it was 22 per cent; the plaintiff argued that the rate was 3 per cent. The defendant did not know therefore what tax it had to deduct and account for to the Comptroller of Income Tax in Jersey.
54. Further difficulties arose according to the defendant concerning how interest was to be treated if a payment was made to the plaintiff, to Baker and Partners or into court. What rate of interest would apply and how was this to be returned to the defendant if the appeal was successful?
55. The plaintiff in response argued that what was meant by an appeal being rendered nugatory was a "state of affairs in which the appeal would be rendered of no or very little purpose." (see In the Matter of Saisie Judiciaire of the Realisable Property of Robert Tantular [2019] JRC 222).
56. The plaintiff further argued that he had both undertaken to return funds and had provided an affidavit which had not been challenged explaining the strength of his connections to this jurisdiction and why there was no risk of him not honouring the undertaking or promise he was offering. To give comfort to the court, if the monies were paid over to him, the plaintiff offered during the hearing to keep the funds within Jersey. As a second alternative, the plaintiff argued that Baker and Partners would provide an undertaking to return the monies. The practical effect of giving such an undertaking is that any monies paid out of court or ordered to be paid by the defendant would be held in Baker and Partners' client account.
57. The final position argued for by the plaintiff was that if neither a payment to the plaintiff nor a payment to Baker and Partners' client account were acceptable to the Court, an additional sum should be paid into court over and above the sum of US$10 million already paid into court as security.
58. It is right to record that the undertakings offered were qualified to the extent that the plaintiff and/or Baker and Partners would return the funds if ordered to do so. This obviously preserved an opportunity for to the plaintiff to argue, even if the appeal was unsuccessful, that funds should not necessarily be returned.
59. In respect of tax an opinion was produced by the plaintiff from the accountancy firm Rawlinson & Hunter which suggested that a charge to tax would arise if monies were paid over either to the plaintiff or Baker and Partners but would not arise if monies were paid into court. The opinion concluded that a rate of tax payable of 3 per cent was reasonable, albeit the rate had not yet been agreed with the Comptroller of Income Tax. Rawlinson & Hunter also noted that they would need to contact Revenue Jersey to request an ITIS rate for the plaintiff, and explained that if they did not obtain this then the defendant would be obliged to deduct income tax at a rate of 22 per cent.
60. In relation to interest this would simply accrue and so any accrued interest could be calculated based on whatever steps or sum the Royal Court ordered should occur for funds to be returned.
61. The starting point for my decision on whether to grant a stay, is the applicable legal principles. I was referred to the Tantular matter by both parties above and paragraphs 7 and 8 which state as follows: -
62. The Court of Appeal also considered what approach to take in relation to stays pending appeal in Crociani v Crociani [2017] JCA 162 where the Court of Appeal stated the following at paragraphs 30 to 32: -
63. I found this passage helpful in deciding what decision to take. Otherwise I was facing rival arguments about whether or not a payment of some kind made the defendant's appeal pointless.
64. The starting point I adopted is that a person who has the benefit of a judgment should not be deprived of the fruits of that judgment lightly. Ultimately what the rival submissions of the parties required me to do was to evaluate whether there were good reasons or some balance of advantage or some exceptional circumstances that meant that the plaintiff should not have the benefit of sums representing the quantification of his judgment.
65. The decision I reached firstly was that it was not appropriate to pay the sums over to the plaintiff. While I have no reason to doubt the assurances he gave and the factual matters in support of those assurances which were not challenged, if the plaintiff were to choose not to abide by his assurances then the defendant runs the risk of facing serious disadvantages in having to recover any sums the court order the plaintiff to repay. This risk was illustrated by the fact that during the hearing the plaintiff offered not to remove funds from Jersey. The very fact, however, that he had to make such an offer illustrated the potential difficulty the defendant might face if any funds paid over were removed from Jersey and held elsewhere. The defendant would have to find out where those funds were and to take steps to recover them if the plaintiff chose not to cooperate. In expressing this risk, I am not concluding that the plaintiff would choose not to cooperate; rather my concern is the difficulties the defendant would face should the plaintiff choose not to cooperate.
66. Such difficulties do not arise if funds were held in the client account of Baker and Partners. However, the difficulty that does arise then (and also arises if a payment was made to the plaintiff) is that a charge to tax arises. At present the rate of tax payable is not agreed. The plaintiff argues 3 per cent. The defendant says as matters stand unless the Comptroller of Income Tax agrees otherwise, the applicable rate of deduction is 22 per cent. On the sums I have declared to be due, this is a significant figure. The defendant understandably did not want to find itself in a position where it was in breach of obligations it owed to the Jersey Income Tax authorities.
67. Nor was it clear to me how funds might be recovered from the Comptroller if monies were paid to the plaintiff or to Baker and Partners and then the Court ordered the return of those funds. Would the tax be repaid? What steps would the defendant have to take to recover such tax if the Comptroller would not return voluntarily tax paid over that was no longer due?
68. It appeared from the rival submissions that a charge to tax would not however arise if monies were paid into court. However, as the position was not certain, when I gave my decision, I ordered a payment into court so long as the Comptroller confirmed that a payment into court would not give rise to a charge under Article 62D. Subsequent to my decision and before giving these reasons, the Comptroller provided such a confirmation.
69. The amount I ordered to be paid into court was the difference between sums already in court plus accrued interest and the amounts that I declared to be due to the plaintiff, plus accrued interest at the rates that I had also declared were appropriate.
70. I did not consider that the question of returning interest was a problem in respect of a payment into court. Monies currently in court were accruing interest at the rate secured by the Court. The additional payment I ordered would accrue interest at the same rate and, if funds were to be returned, the accrued interest on sums to be returned would also be returned to the defendant. Unlike the difficulties I have described in respect of a payment to the plaintiff or the difficulties on tax, I concluded that the question of a payment of interest, should sums be ordered to be returned to the defendant, was not a sufficient basis to deprive the plaintiff of the benefit of the judgment it currently enjoys.
71. Finally, to be clear I ordered that, if the appeal was successful, the funds paid into court pursuant to this decision would have to be returned unless the Royal Court ordered otherwise. In other words, if the appeal was successful, unless the plaintiff could persuade the Royal Court that monies paid into court pursuant to this decision should remain in court, they had to be returned. I made this order because the plaintiff was reserving his position as to whether funds should be returned as depending on an order by the Royal Court at a later date. While the plaintiff is always entitled to ask the Royal Court not to return funds, I did not consider it appropriate for the payment into court to remain in Court should the defendant's appeal prove successful. The view I reached therefore was that there had to be some other reason which justified the funds remaining in court.
72. For these reasons I therefore ordered a payment into court but refused the plaintiff's application for a payment to the plaintiff or alternatively to Baker and Partners notwithstanding the undertakings offered.
