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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Booth -v- Viscount (En desastre) [2016] JRC 049 (25 February 2016)
URL: http://www.bailii.org/je/cases/UR/2016/2016_049.html
Cite as: [2016] JRC 49, [2016] JRC 049

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Desastre - application requesting the Court's intervention in relation to sale of property.

[2016]JRC049

Royal Court

(Samedi)

25 February 2016

Before     :

J. A. Clyde-Smith, Esq., Commissioner and Jurats Crill and Ramsden

Between

Alan Paul Booth

Representor

 

And

The Viscount

Respondent

 

IN THE MATTER OF THE REPRESENTATION OF ALAN PAUL BOOTH (EN DESASTRE)

Advocate N. D. E. Addis for the Representor.

The Viscount appeared in person.

judgment

the commissioner:

1.        The representor, who was declared en désastre on 16th October, 2015, applies by way of representation for the Court to intervene in the Viscount's conduct of the désastre in three areas, one of which related to the proposed sale by the Viscount of Beaumont Hill House, Le Vieux Beaumont in the Parish of St Peter.  Because it was by its nature urgent, this part of the application was dealt with separately at a hearing on 12th February, 2016, with the remaining applications being dealt with at a later date.  The Court dismissed this part of the representor's application and we now give our reasons. 

2.        The general background to the désastre can be found in the judgement of the Court of Appeal in Investec v Booth [2016] JCA 025. 

3.        In his representation, the representor sought an investigation regarding the proper value of Beaumont Hill House which he asserted was being sold by the Viscount at a considerable under-value.  He filed the following evidence:-

(i)        A letter from Reynolds, Chartered Surveyors, of 30th January, 2012, assessing its market value in its then poor overall condition of £1.3M. 

(ii)       A letter from NSP, Chartered Surveyors, of 29th April, 2012, valuing it at in its present condition at £1.38M and on completion of works of refurbishment at £1.75M. 

(iii)      A report from Reynolds, Chartered Surveyors, of 4th March, 2013, valuing the property in its then condition at £1.5M, and on completion of refurbishment works £1.8M. 

4.        Since that time, the representor submitted that the average price for properties in Jersey had, pursuant to the Jersey House Price Index, increased and there had been no events occurring either to the property or the market in general to lead to a substantial reduction in its value. 

5.        He further argued that estate agents, through whom the Viscount had marketed the property, have a vested interest in a quick sale and were not governed by any code of conduct in regard to their property valuations.  They were likely, he said, to simply market the property at a price that was agreed by the vendor with little regard to whether the price is correct.  On the other hand, chartered surveyors are governed by the strict "Red Book" rules and have no vested interest in the value they reach.  They are entirely independent and for this reason more weight should be attributed to their valuations as opposed to estate agents' valuations.  The representor therefore sought the following specific orders:-

(i)        That an independent surveyor (agreed by both parties) be instructed to produce a valuation of Beaumont Hill House within 14 days. 

(ii)       The parties agree that this valuation will stand and that should this valuation be higher than the current estate agent's valuation (accepted by the Viscount) of £825,000 the property will be re-marketed forthwith in accordance with the new valuation. 

(iii)      If the property does not achieve a sale within such period as the Court deems appropriate, there shall be liberty for either party to apply for further directions. 

6.        It can be seen from the orders being sought by the representor that he was seeking to be actively involved in the work being carried out by the Viscount under the désastre. 

7.        The representor explained that if Beaumont Hill House was re-valued by an independent chartered surveyor, and was found to be worth £1.5M, and assuming a sale of the other property which had been vested in the Viscount pursuant to his désastre namely King's Oak, La Dimerie, in the Parish of St Peter at the value his chartered surveyors had placed upon it, then it was possible that the secured creditors could be repaid in full, with a surplus for the unsecured creditors or a surplus which would assist his wife's application in respect of King's Oak under Article 12 of the Bankruptcy (Désastre)(Jersey) Law 1990 ("the Bankruptcy Law"). 

8.        In his representation, he had stated that if correctly valued, these two properties would be capable of bringing the désastre to an end earlier than the prescribed four year period. 

9.        For the purposes of the désastre, the Viscount had proceeded on the basis of the advice given to the Jurats in July 2015 in relation to the representor's application for a remise des biens which, as per the Act of Court of 17th July, 2015, failed on the basis that the secured claims could not be discharged in full and there would be no surplus to meet the needs of the unsecured creditors.  Of the two agents Gaudin & Co advised that Beaumont Hill House had a value of £850,000 with a fire sale value of £750,000 and Le Gallais advised that it had a value of £800,000 and suggested an asking price of £925,000 to allow for negotiation. 

10.      Both agents referred to the amount of work that was needed to complete the property as a family home; quoting from the Le Gallais report:-

"Condition

The property is currently in a poor state of semi-construction and is a building site, parts of which are exposed to the elements.  A redundant liner swimming pool has been back filled with rubble and all of the gardens and surrounding land is very overgrown.  It appears that some wiring and plumbing work has been first fixed but it is difficult to accurately see to what extent."

The property's poor state was more than evidenced in the set of photographs provided to us by the Viscount.

11.      The Viscount marketed Beaumont Hill House through Le Gallais at an asking price of £925,000 with the property first being advertised in the Jersey Evening Post on 4th December, 2015, but viewings had commenced in the week of 23rd November, 2015. 

12.      On 10th December, 2015, the Viscount received an offer of £850,000 (negotiated up by Le Gallais from an initial offer of £800,000).  It was a cash offer, not subject to any survey, with early completion.  Le Gallais advised the unfinished nature of the project had made it difficult for other interested parties to take on or secure a mortgage.  There was now quite a lot of water ingress from the flat roofs coming down and through the unfinished areas of the floor coming up and they were not confident that any of the major lenders would allow a mortgage on a property in this condition.  A sale at this price had been agreed by the secured creditors, who had a first charge over the property in the sum of some £2.3M. 

13.      On the day of the hearing, the proposed purchaser revised his offer down to £800,000, citing issues with the boundaries of the property, the cost of connecting the property to the main drains (estimated at between £39,000 and £45,000) and problems with the Planning and Building Control Departments who apparently have little record or knowledge of the semi constructed extensions on the site.  Modifications may therefore be required both in relation to these extensions and to the main property.  The agent was concerned that the longer the sale was delayed the more chance of further issues with the property coming to light.  The representor submitted that these problems were exaggerated. 

Legal Test

14.      The Viscount is the Chief Executive Officer of the Court and, as Dessain and Wilkins say at paragraph 5.12 Note 103 of Jersey Insolvency and Asset Tracking, the Court clearly had a supervisory jurisdiction as to the activities of its Chief Executive Officer in a désastre.  There are many examples of the Court giving directions to the Viscount on matters arising in the course of a désastre (see paragraph 5.12 of Dessain and Wilkins). 

15.      The basis upon which the Court will interfere in decisions of the Viscount was considered by the Court of Appeal in Eves v the Viscount [1998] JLR N2 (CA) ([24th September 1998] Jersey Unreported 192), In that case, Mr Eves had applied by way of representation for an order requiring the Viscount to assign to him, as principal shareholder of Blue Horizon Holidays Limited which had been declared en désastre, a cause of action against the creditor company that had made the application for the désastre.  Accepting the Viscount had the power to assign any such right of action, had he seen fit to do so under the powers conferred on him by Articles 26 and 27 of the Bankruptcy Law, Sir David Calcutt, President, giving the judgment of the Court of Appeal said this:-

"In my view the Viscount has a complete discretion to carry out his statutory functions as he sees fit, having regard to all the various interests which he must both have in mind and seek to balance; and, proven fraud and bad faith apart, the Court will only interfere if the Viscount, as liquidator, has done something to utterly unreasonable and absurd that no reasonable man would have done it; see In re Edennote, Ltd "The Times" 3 June 1996."

16.      The case referred to by the Court of Appeal, Edennote, concerned an application by an unsecured creditor to set aside a decision by the liquidator of a company to assign a cause of action to its shareholder.  Under s.168(5) of the Insolvency Act 1986, an unsecured creditor who was aggrieved by an act or decision of the liquidator had a right to seek the directions of the Court so as to impugn the transaction entered into between the liquidator and third parties. 

17.      Save for where the Bankruptcy Law provides for an appeal (see for example Article 31 in relation to the examination of proofs), there is no general right conferred by the Bankruptcy Law on the creditors of the debtor, let alone the debtor him or herself, to seek directions from the Court so as to impugn decisions made by the Viscount in the course of her dealings with the property of the debtor.  Article 28 (which comes under the section dealing with the administration of the debtor's estate) requires the Viscount to report to creditors from time to time on the progress of a désastre but there is no requirement to report to the debtor.  Indeed, the debtor's duty under Article 18 is to aid the Viscount "to the utmost of the debtor's power" in the realisation of the debtor's property. 

18.      No point was taken by the Viscount as to the locus of the representor in bringing this application seeking to interfere in her administration of his estate and whether, for example, his application should be treated as an application for judicial review, and subject, therefore, to the requirement for leave.  In the absence of any such point being taken and given the supervisory jurisdiction of the Court, we were prepared to accept that the representor had sufficient standing to invoke that jurisdiction, given his interest (admittedly very remote in this case) in any possible surplus that might arise following the realisation of his assets. 

19.      What is clear is the very high hurdle that any application seeking to invoke the Court's supervisory jurisdiction must surmount before the Court will interfere in decisions made by the Viscount, as laid down by the Court of Appeal in Eves v The Viscount.  That test seems to us to equate to Wednesbury unreasonableness, namely decisions which are not just unreasonable but which no reasonable Viscount could have made (see Clear Mobitel (Jersey) Limited v Jersey Competition Regulatory Authority [2011] JLR 718 at Paragraphs 70-72). 

Decision

20.      In our view, it was perfectly reasonable for the Viscount to market the property through estate agents and no other form of marketing was suggested by Advocate Addis.  It was not suggested, for example, that the property should be sold by public auction or public tender as permitted under Article 27(1) of the Bankruptcy Law.  The Viscount has been advised that a sale through such a public process was less likely to achieve the best price for the creditors and Advocate Addis did not demur from that. 

21.      The complaint of the representor relates to the Viscount accepting the advice of those agents as to the market value of the property and this in the light of the earlier advice he had received from chartered surveyors as to the property's market value in 2012 and 2013. 

22.      There was no explanation as to why the value of the property had apparently come down so substantially in the intervening period, if it had, but the Viscount has to deal with the situation as it arises today.  There was no evidence to support the notion that estate agents have little regard to whether the price they agree with the owner is correct, or that they have a vested interest in a quick sale and by implication, selling at less than the market value.  The agent in this case is remunerated by way of commission on the sale price achieved, and therefore, it is equally arguable that it has a vested interest in achieving the best price possible.  It may be that estate agents are not governed by the "Red Book" rules, which we were not shown, but unlike the chartered surveyors who advised earlier, they do have the responsibility of selling the property in the market as it is today.  

23.      The estate agents (who are long established and well known) had given consistent advice as to the value of the property and it was reasonable of the Viscount to accept their advice and to market the property through one of them.  The secured creditors, who have the greatest interest in the matter, had no issue with the way the Viscount was dealing with the realisation of the property. 

24.      In effect, the representor was inviting the Court to micro-manage the sale process in his interests through directions given to the Viscount and to give him an active role in that process.  We rejected that invitation and question whether it is consistent with his duties to do his utmost to assist the Viscount, pursuant to Article 18 of the Bankruptcy Law. 

25.      The representor had come nowhere near the hurdle required of persuading the Court that in marketing Beaumont Hill House in this way and accepting the advice of the estate agents as to the value of the property in the current market, the Viscount was acting in a way that no reasonable Viscount would act.  On the contrary we could see no criticism in the way the Viscount was dealing with the sale of the property. 

26.      The Court would not, therefore, interfere with the process, leaving the Viscount free to accept the now reduced offer of £800,000 or such other offer as she is advised is reasonable in the current market. 

Authorities

Investec v Booth [2016] JCA 025.

Bankruptcy (Désastre)(Jersey) Law 1990.

Dessain and Wilkins Jersey Insolvency and Asset Tracking.

Eves v the Viscount [1998] JLR N2 (CA).

Insolvency Act 1986.

Clear Mobitel (Jersey) Limited v Jersey Competition Regulatory Authority [2011] JLR 718.


Page Last Updated: 29 Mar 2016


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