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Cite as: [2018] JRC 071B, [2018] JRC 71B

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Hearing (Civil) - appeal by the Appellant against a judgment and order of the Master of 21st July, 2017.

[2018]JRC071B

Royal Court

(Samedi)

17 April 2018

Before     :

T. J. Le Cocq, Esq., Deputy Bailiff, and Jurats Thomas and Fisher

Between

Shane Michael Holmes

Appellant

 

And

Harry James Lingard

First Respondent

 

 

HJL Holdings Limited

Second Respondent

 

 

Angel Fish Limited

Third Respondent

 

Mr S. M. Holmes appeared in person.

Mr H. J. Lingard appeared on his own behalf and on behalf of the Second and Third Respondents.

Advocate H. J. Heath appeared as Amicus Curiae.

judgment

the deputy bailiff:

1.        This is an appeal by Shane Michael Holmes ("Mr Holmes or 'the Appellant') against a judgment and order of the Master of 21st July, 2017, ("the Judgment" and "the Order" respectively).  In the Judgment reference to "the Plaintiff" is a reference to Mr Holmes.  Harry James Lingard ("Mr Lingard") is the First Respondent and "the First Defendant" in the Judgment. 

2.        In his Judgment the Master gave decisions in respect of:-

(i)        Mr Lingard's applications to strike out Mr Holmes' Order of Justice and for summary judgment that Mr Holmes has no claim against Mr Lingard and the other defendants; and

(ii)       Mr Holmes' application to amend his Order of Justice and to strike out or for summary judgment that Mr Lingard has no counter-claim against him. 

3.        It is not necessary to set out the background in detail.  This is adequately set out in Holmes-v-Lingard & Others [2015] JRC 172.  In the Judgment the Master also gives a summary at paragraph 6:-

"2.      In his Order of Justice Mr Holmes alleged that he and the First Defendant (Mr Lingard) had entered into an agreement in June 2011 to develop Hotel La Tour          which was owned by the Third Defendant Angel Fish Limited ("Angel Fish"), a subsidiary of the Second Defendant HJL Holdings Limited ("HJL") which was in           turn beneficially owned by Mr Lingard.  As part of that alleged agreement Mr Holmes asserted that HJL was to make available what Mr Holmes described as "side funding" to enable certain project works to be undertaken on the hotel site.  This funding would be secured over a separate development Mr Holmes was undertaking through his company Home Farm Developments Limited ("Home Farm").

3.        The Order of Justice alleges that Mr Lingard breached and repudiated this agreement in the autumn of 2012.  The allegations included complaints that Mr Lingard made representations to induce Investec Bank to foreclose a loan facility made to Home Farm and to various estate agents "with the deliberate intent to scupper the Home Farm purchase offers" (paragraph 43).

4.        As a result of these breaches Mr Holmes claims the following:-

(i)        the sum of £190,000 in respect of the direct costs and expenses incurred by Mr Holmes in the development;

(ii)       the sum of £900,000 being the uplift in value of Hotel La Tour brought about by Mr Holmes as a consequence of his involvement in the development; and

(iii)      the sum of £686,000 being losses in expected sales values in the units being separately developed by Home Farm."

4.        In the various procedural stages leading up to the Judgment and Order the Master repeatedly notified the parties of the areas on which he wished to be addressed.  These may be summarised as follows:-

(i)        What the Plaintiff stated he agreed with the Defendants and when that agreement was concluded;

(ii)       Was there a claim in unjust enrichment;

(iii)      What losses might flow from any breach of such an agreement or from a claim based on unjust enrichment; and

(iv)      Whether any losses claimed were those of the Plaintiff or Home Farm. 

5.        In the Judgment the Master, at paragraphs 258 - 261, summarised his conclusions as follows:-

"258.   In conclusion, for the reasons set out in this judgment the defendant's [Mr Lingard's] application for summary judgment is granted in respect of:

(i)        the plaintiff's [Mr Holmes'] claim that he reached agreement with the First Defendant [Mr Lingard] in June 2011; and

(ii)       losses claimed in respect of the development of Home Farm which the Plaintiff [Mr Holmes] cannot pursue.

259.    In the alternative the Plaintiff's [Mr Holmes'] claim that he reached agreement with the First Defendant [Mr Lingard] in June 2011 is struck out as an abuse of process.

260.    The Plaintiff's [Mr Holmes'] application to strike out the Defendant's [Mr Lingard's] counterclaim or for summary judgment in respect of the        Defendant's counterclaim is refused.

261.    The Plaintiff [Mr Holmes] is permitted to bring a claim in unjust enrichment for the objective market value of services rendered, save that no uplift in value may be claimed and provided such a claim is pleaded within 28 days in accordance with the directions contained in this judgment."

6.        In essence the Master determined, on his consideration of the evidence available to him, that Mr Holmes' claim that he reached agreement with Mr Lingard in June 2011 was unsustainable because the terms were never sufficiently identified to be certain and an agreement reached; and that certain claims which Mr Holmes made in his own name were irrecoverable as, to the extent that they were claims capable of being brought at all, they were claims that could only be brought by Mr Holmes' company Home Farm Limited which had been struck off.  Furthermore, the Master took the view that Mr Holmes may have a claim in unjust enrichment but that such a claim was limited in that it could not include an element for the uplift in value to Hotel La Tour which had been claimed by him. 

7.        Mr Holmes appeals against the Master's Order to strike out and/or to refuse amendment of parts of his Order of Justice and wishes to re-instate parts of the Order of Justice so struck out which Mr Holmes lists as:-

(i)        Breach and repudiation of agreement;

(ii)       The estimated losses arising from unjust enrichment;

(iii)      Dol, dol reticence, misrepresentation and/or fraudulent misrepresentation;

(iv)      Breach of good faith, trust and fiduciary duty; and

(v)       Interference by unlawful means. 

8.        Mr Holmes also seeks to set aside the Master's decision at paragraphs 258 and 259 of the Judgment set out above.

The Legal Principles

9.        The test for an appeal from a decision of the Master, who is a Greffier substitute, as that set out in the case of Murphy-v-Collins [2000] JLR 276, namely that the Court should exercise its own discretion and give such weight as it thinks fit to the Master's exercise of discretion.  Accordingly, other than allowing due weight to the Master's decision, we are required to approach the matter de novo. 

10.      In his judgment the Master referred at length to the principles relating to striking out, to summary judgment and to amendment.  It is not argued before us that the Master misdirected himself on those principles.  The principles appear to us to be as follows.

Striking Out

11.      An application to strike out may be granted to the Royal Court pursuant to Rule 6/13 of the Royal Court Rules 2004 as amended.  Rule 6/13 provides:-

"(1)     The Court may at any stage of the proceedings order to be struck out or            amended any claim or pleading, or anything in any claim or pleading, on the ground that -

(a)       it discloses no reasonable cause of action or defence, as the case may be;

(b)      it is scandalous, frivolous or vexatious;

(c)       it may prejudice, embarrass or delay the fair trial of the action; or

(d)      it is otherwise an abuse of the process of the Court,

And may make such consequential order as the justice of the case may require.

(2)       No evidence shall be admissible on an application under paragraph (1)(a)."

12.      In the recent judgment of Home Farm Developments Limited v Le Sueur [2015] JCA 242 the Court of Appeal, at paragraph 25, said this:-

"The decision of the Royal Court in Channel Islands and International Law Trust Company Limited v Pike which was referred to by Mr Holmes, addressed the situation where an application to strike out had been made by particular defendants upon the basis of Rule 6/13 of the Royal Court Rules 1982.  Those defendants relied on grounds which are equivalent to those now specified in paragraphs 1(b), 1(c) and 1(d) of Rule 6/13 of the 2004 Rules.  In the course of argument Tomes DB was referred to the position in England by reference to what was then Order 18, Rule 19 of the Rules of the Supreme Court which was said to be very similar to the then Rule 6/13.  He was also referred to the Supreme Court Practice 1998 (referred to as the White Book).  In giving the reasons of the Royal Court, the Deputy Bailiff said (at [1990] JLR 37) by reference to paragraphs 18/19/1 of the White Book at p 312:

"In applying this rule it must be remembered that it is "not the practice of the civil administration of our courts to have a preliminary hearing, as it is in crime"...it is only in plain and obvious cases that recourse should be had to the summary process under this rule.... the summary procedure under this rule can only be adopted where it can be clearly seen that a claim or an answer is on the face of it "obviously unsustainable"... the summary remedy under this Rule is only applied in plain and obvious cases when the action is one which cannot succeed or is in some way an abuse of process or the case is unarguable....the powers conferred by this Rule will only be exercised where the case is clear and beyond doubt.."."

13.      The Court then went on to say at paragraph 28:-

"The test in an application to strike out was considered further by this court in the case of Trant (see Trant v Attorney General and others 2007 JLR 231) to which we have already referred.  In the course of his judgment, Beloff JA said this:-

"22.    The test on an application to strike out is well established.  It is only when it is plain and obvious that the claim cannot succeed that recourse should be had to the Court's summary jurisdiction to strike out.  Particular caution is required in a developing field of law.  Provided that a pleading discloses some course of action or raises some question fit to be decided by a Judge, Jurats or Jury, the mere fact that a case is weak is not a ground for striking it out.  These propositions are vouched for by a wealth of Jersey authority embracing principles deployed by the Courts of the United Kingdom, see eg in Re Esteem Settlement .... [2000] JLR 127 (we note en passant that a new regime, arguably more favourable to an application to strike out, has been introduced in England and Wales by the civil procedure rules).

23.      On an application to strike out under sub-para (a) of R16/13(1) (that there is no reasonable cause of action) evidence is not admissible.  The facts alleged in the        Order of Justice must be taken as correct.  However, where an application is made under sub-para (b) (scandalous, frivolous, or vexatious) or sub-para (d) (abuse of process), or where an application to strike out is made out under the inherent jurisdiction of the Court, evidence is admissible and may be considered by the Court.  It follows that on this application, evidence was and is admissible."

Amendment and Summary Judgment

14.      As to the other appropriate principles, the Master set these out at paragraphs 156 et seq of his judgment which it is convenient to repeat as follows:-

"The law on applications to amend

156.    As with a strike out application, the applicable principles on an application to       amend are well known. 

157.    At paragraph 27 of MacFirbhisigh and Ching v CI Trustees and Others [2014] 1     JLR 244 I therefore stated as follows:-

"27.    The applicable legal principles on a strike-out application and        an application to amend are generally well known. In particular, I was referred to the decision of Birt, then Deputy Bailiff, in Cunningham v. Cunningham (2) and the following passages (2009 JLR 227, at paras.17-19):

"'.-‰.-‰. Today in England and Wales the courts will take account of the following (amongst other) factors-the strains which           litigation imposes on personal litigants, and on particular            individuals in litigating companies and other bodies; the expectation that all the issues have already been fully defined; the efficient disposal of the particular case in ways proportionate to the sums involved, its importance, its complexity, and the parties' respective financial positions; the effects on the efficient disposal of other cases; the use of an   appropriate share of the court's resources; and similar matters covered by Part 1 of the CPR, in which an 'overriding objective' is encapsulated.

Jersey civil procedure has not been taken down the same route as the CPR. But the statement of principle in Esteem Settlement quoted in para. 4 above and the other observations, in that and subsequent Jersey cases show, that by judicial decisions rather than wholesale rewriting of rules, Jersey civil procedure is moving in a similar direction, though with material differences. For example, in a smaller jurisdiction such as Jersey with a relatively small number of fought civil actions, and a reasonable number of permanent Judges and part-time Commissioners, it is less likely that any impact on the progress of other actions will prove to be strongly relevant in a case such as the present.

Where there is a late application for an amendment to the order of justice (or to the answer or reply) the Jersey courts       have to strike a balance which is primarily between the parties to the instant case. The burden on the applicant is a heavy one to show, for example, (1) why the matters now sought to be pleaded were not pleaded before; (2) what is the strength of the new case; (3) why an adjournment should be granted, if one is necessary; (4) how any adverse effects on the other party including the effects of any adjournment, any additional discovery, witness statements or experts reports, or other preparation for trial can be remedied; and (5) why the balance of justice should come down in favour of the party seeking to           change its case at a late stage of the proceedings.'

Another convenient summary of the relevant considerations can be found in Charlesworth v. Relay Roads Ltd. .-‰.-‰. where Neuberger, J. said this ([1999] 4 All E.R. at 401-402):

'As is so often the case where a party applies to amend a pleading or to call evidence for which permission is needed, the justice of the case can be said to involve two competing factors. The first factor is that it is desirable that every point which a party reasonably wants to put forward in the proceedings is aired: a party prevented from advancing evidence and/or argument on a point (other than a hopeless one) will understandably feel that an injustice has been perpetrated on him, at least if he loses and has reason to believe that he may have won if he had been allowed to plead, call evidence on, and/or argue the point. Particularly where the other party can be compensated in costs for any damage suffered as a result of a late application being granted, there is obviously a powerful case to be made out that justice indicates that the amendment should be permitted.-‰.-‰.

On the other hand, even where, in purely financial terms, the other party can be said to be compensated for a late amendment or late evidence by an appropriate award of costs, it can often be unfair in terms of the strain of litigation, legitimate expectation, the efficient conduct of the case in question, and the interests of other litigants whose cases are waiting to be heard, if such an application succeeds.'

The application in that case was made after the hearing and after judgment had been handed down, although before the order had been drawn up.

It is, furthermore, well established that the court will not permit amendments which infringe the rules of pleading or introduce a claim which is so hopeless that it would be liable to be struck out under the Royal Court Rules 2004, r.6/13.""

158.    It is also well-known that a Court will not normally strike out a claim if it can be rescued by an amendment to a pleading.  In Cunningham v Cunningham      [2009] JLR 227 (referred to in the extract set out above) at paragraph 43, the Royal Court also noted that it was not right to refuse leave to amend altogether if the draft submitted to the Court was deficient but any deficiencies could be cured by further change. 

159.    While I set out the applicable principles on a summary judgment application below, I also consider that the principles as to when a strike out application may be rescued by an amendment to a pleading including correcting any deficient draft also apply to an application for summary judgment.  In other words if an amendment to a pleading or a proposed amendment would permit the Court to conclude that there was a matter necessary to be determined at trial then the Court should allow such amendments and not      enter summary judgment.  This observation is subject however to one qualification which is that any exercise of discretion to allow an amendment to take place must take into account the overriding objective introduced by Rule 1/6 of the Rules.  The overriding objective might mean on a case by case basis that a proposed amendment may not in future save the day in every case. 

The legal principles on a summary judgment application

160.    This is the first occasion upon which Rule 7 introduced by Royal Court            (Amendment No.20) Rules 2017 has been considered.  The wording of Rule 7 is based extensively on Rule 24 of the Civil Procedure Rules ("CPR").  As there is no material difference between the wording of Rule 7 of the Royal Court Rules and Rule 24 of the CPR, I have followed the relevant English jurisprudence as to how the power contained in Rule 7 should be interpreted and applied. 

161.    Paragraph 24.2.3 of the White Book 2017 for the CPR sets out what is meant by there being no real possibility of succeeding on a claim or successfully defending a claim as follows:-

"In order to defeat the application for summary judgment it is sufficient for the respondent to show some "prospect" i.e. some chance of success.  That prospect must be "real", the court will disregard prospects which are false, fanciful or imaginary.  The inclusion of the word "real" means that the respondent has to have a case which is better than merely arguable.  The respondent is not required to show that their case will probably succeed at trial.  A case may be held to have a 'real prospect' of success even if it is improbable."

162.    By contrast under the former Rule 7, if a party was able to show they had an arguable defence then summary judgment would not have been granted (see for example Toothill v HSBC Bank Plc [2008] JLR 77 at paragraph 29).  The new Rule 7 therefore means that more is required from a party facing a summary judgment application than before to satisfy the Court that there is an issue which ought to be tried.  Simply showing an arguable case will no longer be sufficient. 

163.    Paragraph 24.2.3 of the 2017 White Book also contains the following useful  guidance:-

"The hearing of an application for summary judgment is not a summary trial.  The Court at the summary judgment application will consider the merits of the respondent's case only to the extent necessary to determine whether it has sufficient merit to proceed to trial.  The proper disposal of an issue under Pt 24 does not involve the court conducting a mini-trial... 

At a trial, the criterion to be applied by the court is probability; victory goes to the party whose case is the more probable (taking into account the burden of proof).  This is not true of a summary judgment application.  The criterion which the judge has to apply under CPR Pt 24 is not one of probability; it is absence of reality.

Conversely, an application for summary judgment is not appropriate to resolve a complex question of law and fact, the determination of which necessitates a trial of the issues having regard to all of the evidence."

164.    Paragraph 24.2.5, of the 2017 White Book also contains the following statement:-

"If the applicant for summary judgment adduces credible evidence in support of their application the respondent becomes subject to an evidential burden of proving some real prospect of success or some other reason for a trial.  The standard of proof required of the respondent is not high.  It suffices merely to rebut the applicant's statement of belief.  The language of r.24.2 ("no real prospect...no other reason...") indicates that, in determining the question, the court must apply a negative test.  The      respondent's case must carry some degree of conviction: the court is not required to accept without analysis everything said by a party in his statements before the court.  In evaluating    the prospects of success of a claim or defence judges are not required to abandon their critical faculties.  However, the proper disposal of an issue Pt 24 does not involve the judge in conducting a mini-trial."

165.    .....

166.    In Swain v Hillman [2001] 1 All ER 91 at page 92 line J the English Court of Appeal in relation to CPR 24 stated "under r.24.2 the court now has a very salutary power, both to the exercise in a claimant's favour or, where appropriate, in a defendant's favour.  It enables the court to dispose summarily of either claims or defences which have no real prospect of being successful.  The words "no real prospect of succeeding" do not need any amplification, they speak for            themselves.  The word "real" distinguishes fanciable possibility of success or, as Mr Bidder Q.C. submits, they direct the court to the need to see whether there is a realistic as opposed to a fanciable prospect of success."

167.    In ED&F Man Liquid Products Ltd v Patel & Anor [2003] CP Rep 51 the Court of Appeal stated as follows:-

"8.      I regard the distinction between a realistic and fanciful prospect of success as appropriately reflecting the observation in the Saudi Eagle that the defence sought to be argued must carry some degree of conviction. Both approaches require the defendant to have a case which is better than merely arguable, as was formerly the case under R.S.C. Order 14."

168.    The Court also stated at paragraph 10 as follows:-

"It is certainly the case that under both rules, where there are significant differences between the parties so far as factual issues are concerned, the court is in no position to conduct a mini-trial: see per Lord Woolf MR in Swain v Hillman             [2001] 1 All ER 91 at 95 in relation to CPR 24. However, that does not mean that the court has to accept without analysis everything said by a party in his statements before the court.  In some cases it may be clear that there is no real substance       in factual assertions made, particularly if contradicted by contemporary documents. If so, issues which are dependent upon those factual assertions may be susceptible of disposal at an early stage so as to save the cost and delay of trying an issue the outcome of which is inevitable: see the note at 24.2.3 in Civil Procedure (Autumn 2002) Vol 1 p.467 and Three Rivers DC v Bank of England (No.3) [2001] UKHL/16, [2001] 2 All ER 513 per Lord Hope of             Craighead at paragraph [95]."

15.      We agree, and proceed on the basis of these principles.  As we have said, it was not suggested that the Master identified the wrong principles.  

16.      This appeal took a somewhat unusual course in that Mr Holmes was concerned that the Master had proceeded on the basis of the contents of certain affidavits, the accuracy of which Mr Holmes did not accept.  Mr Holmes argued that he should be able to cross-examine on those affidavits and, with some hesitation, and in the light of the fact that Mr Lingard did not in the event finally object, we acceded to the request.  Accordingly Mr Holmes gave evidence before us as did Mr Lingard and as did Mr Daniel Young, solicitor, who had made an affidavit dated the 24th February, 2015, to which the Master made reference.  If there is a material dispute on the relevant facts this would of course impact on this judgment and in the light of Mr Holmes' application we wished to test any dispute to determine that.  In the event, Mr Holmes' made no submissions on the live evidence given and, indeed, relied on the Skeleton Argument. 

Aspects of the Master's Judgment

17.      In this judgment the Master went to some pains to set out the procedural history leading up to the application before him.  It was clear from a perusal of paragraphs 74-78 that the Master strove to bring procedural order to what appears to have been a somewhat challenging procedural history characterised by an apparent difficulty on the part of Mr Holmes in meeting the procedural deadlines set by the court.  On the morning of the hearing before him, on Monday 19th June, Mr Holmes applied for an adjournment by summons and affidavit.  This application is characterised at paragraph 80 of the Master's judgment and his reasons for refusal are set out at length in the sub-paragraphs of paragraph 81.  We do not repeat those reasons other than to observe that we agree that it was appropriate for the Master to refuse an adjournment and with his reasons set out in paragraph 81 for doing so. 

18.      The view that the Master took of the procedural difficulties which have beset this case and the application under consideration are reflected in his statement at paragraph 82 of the Judgment:-

"Finally, in this part of my judgement I must make the following more general observation.  I consider the above chronology shows that the court has attempted to accommodate the Plaintiff to allow him reasonable time to present his arguments.  Yet the extent of the email correspondence sent by the Plaintiff exceeds significantly the normal level of communications normally sent from parties to the court including litigants in person.  If the Plaintiff had spent less time raising procedural challenges and instead had focused on the merits of the application brought by him and against him, I consider it is more than likely than not that he could have set out arguments both written and orally on all the issues raised by the summons.  Rather however I am left with the impression that the Plaintiff's focus was trying to exploit any advantage he could by raising procedural challenges.  The Royal Court has not regarded such practices as acceptable for many years; the introduction of the overriding principle on the 1st June 2017 has simply underlined this point."

19.      From paragraph 83 of the Judgment onwards the Master set out a detailed chronology relying on the cases as pleaded or affidavit evidence and drawing on the chronology prepared for the assistance of the court by the Amicus Curiae.  We do not repeat herein all of that chronology.  However, at paragraph 89, the Master characterises the claims made in Mr Holmes' draft Amended Order of Justice as:-

"In or around June 2011 the Plaintiff and the First Defendant agreed what he described as 'operative' terms for a part-exchange plus a profit share agreement in relation to two different schemes to develop Hotel La Tour.  The Plaintiff still relied on the agreement annexed in the order of justice.  In his order of justice he had described these as 'key' terms....."

20.      At paragraph 90 the Master set out what the heads of terms attached to Mr Holmes' original Order of Justice state:-

"The heads of terms attached to the order of justice were for the Plaintiff to purchase the Third Defendant as owner of Hotel La Tour.  This purchase was for a price of £5 million based on predictive sale costs of developed units of £9.6 million.  A deposit of £2.1 million was to be provided based on 'execution of option / bank funding' including £900000 within three months of execution of the option from the sale proceeds of units 1, 2 and 5 of Home Farm.  The balance of the purchase price was to be paid from the sale proceeds of the five units developed.  The defendants were to receive 30% of any sales proceeds achieved over £9.6 million.  There was also an option        fee of £200000.  The amount to be borrowed was to be capped at £4.6 million.  The agreement also referred to 'side loan / equity release; £250k all monies loaned from HL to SH secured against HFD'.  The proposed amendments to the order of justice did not alter these terms."

21.      Thereafter in his chronology the Master set out the sequence of correspondence that passed between Mr Holmes, Mr Lingard, Mr Young and others relating to what appeared to be an evolving understanding of what might if anything been agreed between Mr Holmes and Mr Lingard. 

22.      At paragraph 114 of the Judgment, the Master makes reference to advice procured from Advocate Mark Renouf who was acting for Mr Holmes at the time (Mr Holmes alleges that he was acting for both parties).  This advice, which headed up a subsequent version of the heads of terms provided on the 16th November, 2011, contained the following as a preamble:-

"These heads of terms set out the principles agreed between the parties.  Both parties have to be separately advised by different firms and consequently these heads of terms either need to be endorsed as a final agreement after such independent advice has received or replaced by more specific agreements as it is not possible to have an 'agreement to agree' under Jersey Law.  These heads of terms do not initially form a binding agreement."

23.      The Master's chronology also reflects that those heads of terms were not endorsed by either party.  In his draft Amended Order of Justice Mr Holmes wished to allege that the contract between himself and Mr Lingard had been created by conduct.  At paragraph 185 of the judgment the Master said:-

"The starting point for my decision is that I accept as a matter of law that parties can agree a contract by conduct.  I also accept that terms set out in a draft agreement but never signed can be accepted by clear unequivocal words or conduct to waive the requirement to sign.  I further accept that a draft agreement can have contractual force if all the essential terms have been agreed and the subsequent conduct of the parties indicates that they intended the essential terms to have legal effect.  Subsequent conduct of the parties is therefore admissible to prove the existence of a contract, although not to interpret it.  I am accordingly satisfied there are relevant legal principals which would permit the Plaintiff to argue his case as pleaded.  However that is not the end of the matter.  I also have to consider all the material before me to decide whether the claim as pleaded by the Plaintiff is one where there is a real as distinct from a fanciful prospect of success applying the English authorities referred to at paragraphs 160-169 above."

24.      In the Judgment the Master cited certain cases in English Contract Law which had been placed before him by Mr Holmes.  We do not think it necessary to set out the full extracts cited by the Master.  However, in Reveille Independent LLC v Anotech International UK Limited [2016] EWCA Civ 4

"40.    There are a number of rules of English Contract Law which, in combination, bear on the resolution of this appeal.  First, classical analysis finds the parties consent to a contract in the acceptance of an offer, and it is well accepted that exceptions can be made by the conduct of the offeree as long as the conduct, as a matter of objective analysis, is intended to constitute acceptance......  Acceptance can be of an offer of the terms set out in a draft agreement drawn up between the parties but never signed..... If a party has a right to sign a contract before being bound, it is open to it by clear and unequivocal words or conduct to waive the requirement and to conclude the contract without insisting on its signature....

41.      ....Fifthly, a draft agreement can have contractual force, although the parties do not comply with the requirement that to be binding it must be signed, if essentially all the terms have been agreed and their subsequent conduct indicates this, albeit a Court will not reach this conclusion lightly.....  Finally, the subsequent conduct of the parties is admissible to prove the existence of a contract, and its terms, although not as an aid to interpretation....

42.      These rules take effect against the background of legal policies recognised in case law.  One such policy is the need for certainty in commercial contracts, a policy which since Lord Mansfield's time has run as a thread through the jurisprudence.  That need for certainty applies as well in commercial negotiations and to the question of          whether a contract has come into existence......"

25.      The Reveille decision was referred to in RTS Flexible Systems Limited v Molkerei Alois Muller Gmbh [2010] UKSC 14 in which the Supreme Court said as follows:-

"45.    The general principles are not in doubt.  Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed.  It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law required as essential for the formation of legally binding relations....."

26.      Of course as the Master correctly recognised these cases deal with English Contract Law and are not necessarily statements of all of the principles applicable in Jersey.  He made reference to Selby v Romeril [1996] JLR 210 in which the Court said:-

"In our judgment it may not be asserted that by the Law of Jersey, there are four requirements for the creation of a valid contract namely (a) consent; (b) capacity; (c) 'an objet' and (d) a 'cause'.  Counsel for the defendant submitted that there was no objet.  He referred us again to Pothier.... In essence the object of a contract (or more precisely the obligation which the contract creates) is the content of what the party undertakes.  As to the content of the undertaking, it is the rule that it must be sufficiently certain."

27.      Accordingly, as the Master also recognised, both English case law and, more importantly, Jersey case law emphasises the requirement for certainty.  It is on this basis that the Master approached the analysis of the evidentiary position in connection with this case. 

28.      The Master at paragraph 186 of the Judgment characterised what he understood to be Mr Holmes' case.  He describes it in the following terms:-

"In this case it is important to record the Plaintiff's case.  His case is that he reached agreement with the defendants in or around June 2011 as follows:

(i)        An option fee was payable secured against property owned by Home Farm of £200000;

(ii)      The agreement was based on a total projected sales of £9.6 million;

(iii)     The First Defendant was to receive £5 million with a deposit of £1.2 million based on bank funding and £900,000 payable out of the sales of units at Home Farm;

(iv)     30% of any sales proceeds over and above the projected sales price would also be paid to the First Defendant; and

(v)       There were conditions of precedent for obtaining planning permission and the Plaintiff obtaining bank finance up to £4.6 million.

(vi)     A side loan was       to be made by the First Defendant to Home Farm which appears to be an early release of equity to the Plaintiff in the Hotel La Tour development."

29.      It is fair to say that this characterisation by the Master is a generalised statement of Mr Holmes' case which is stated in greater detail in both the Order of Justice and the draft Amended Order of Justice.  In the latter document, at paragraph 11, Mr Holmes pleads:-

"11.     Despite agreeing the Operative Terms incorporated in the Agreement, events took over between the parties and the Agreement was not signed.  It is the case, however, as set forth hereinafter, that the parties consent to undertake the Agreement was formed by their mutual (i) conduct, (ii) performance of the Operative     Terms and / or the Cause and (iii) commencement of the development works."

30.      The Master then analysed what appears in the documentation produced after June, 2011 in paragraphs 187 to 193 of the judgment.  He identified different versions of the heads of terms and then characterised his view at paragraph 194 in the following terms:-

"Just looking at these different versions alone, the certainty required by Selby and Reveille is simply not there.  In my judgment the Plaintiff therefore has no real prospect of showing that essentially all the terms are agreed given the different versions that post-date his case that agreement on the essential or objective terms was reached in June 2011.  The documents in July, September, October, and November 2011 are all inconsistent where there being certainty of terms.  The question has to be posed why such documents would exist at all if there were certainty of terms.  These differences also go far beyond certain terms of economic significance not being agreed.  Rather they are at the very heart of what the bargain was between the parties."

31.      The Judgment (at paragraph 195) then reflected Mr Holmes' explanation (and made comments on that explanation) as to why there were different versions in the following terms:-

"The Plaintiff contends that different versions existed because they were drafts that were being amended and updated as matters progressed.  However matters progressing is inconsistent with an agreement already having been reached in or about June 2011 which is how the Plaintiff puts his case.  Furthermore the different versions are not updates of a project in progress but are both sides setting out different positions on what they are prepared to agree.  There is no point in time when it can be said with any degree of conviction that the certainty of terms required for there to be a contract was clear."

32.      In his Order of Justice and in his draft Amended Order of Justice, Mr Holmes sets out the events which he asserts lead to the conclusion that an agreement had been reached including the actions that he had taken.  At paragraph 21 of the draft Amended Order of Justice Mr Holmes pleads as follows:-

"21.     In reliance of the agreement and the parties forgoing conduct, performance and assent thereof, Holmes and Lingard attended meetings at Messrs Hanson Renouf in and around October 2011, to jointly convey their expectation from the agreement and seek legal advice in relation to stamp duty and land transaction tax in respect of the deposit payment in Home Farm shares to Lingard and the equity stake in Angelfish shares to Holmes, inter alia.  Advocate Mark Renouf ('Advocate Renouf') provided the parties his advice in writing on the 16th November 2011, a copy of which is attached hereto marked as exhibit "SMH8".  Such advice, reflects the parties' mutual expectations from the agreement.  Notably, paragraph 17 of the said advice reflects the parties' agreement to apply the date of the 31st March 2012 to the operative terms at paragraph 6(3)(ii) with such date to coincide with the expiry of the secured charges."

33.      The reference to the draft produced by Advocate Mark Renouf is a reference to the draft quoted at paragraph 22 hereof.

34.      In paragraphs 187 to 192 of the Judgment the Master set out in general the contents of each of the documents which purported to refer to contractual terms between Mr Holmes and Mr Lingard.  He then set out his conclusions on those documents at paragraph 193 in the following terms:-

"193.     I have set out these different versions of Heads of Terms and the agreements because I am not satisfied that there was certainty in respect of the following terms between the Plaintiff and the First Defendant:-

(i)        There was no certainty between the different documents as to what the Plaintiff was going to pay the First Defendant i.e. was it £5 million or £5.3 million?

(ii)      There was no certainty as to the total value of projected sales expected, was it £9.6 million or £10.6 million?

(iii)     There was no certainty as to how any profit over a projected sales figure could be split.  The Plaintiff was looking for 30% and the First Defendant 50%;

(iv)     here was no certainty as to how the First Defendant was going to be paid.  The       Plaintiff's case is based on a deposit of £1.25 million from financing and £900,000 secured over property owned by Home Farm; the First Defendant's last proposal was that he wanted £2 million secured by properties and owned by Home Farm a cash balance.

(v)       The First Defendant further would not agree to borrowing beyond £3 million; the Plaintiff wanted to borrow up to £4.6 million.

(vi)     What were the terms in respect of any side loan and how much was it for?"

35.      The Master concluded his analysis of the documentation, at paragraph 196 of the judgment:-

"In conclusion, while I accept there was 'volonté' in the sense of a willingness to by both sides to want to enter into an agreement, and there was no suggestion that either party lacked capacity to do so, that is not the central question for this application.  The question is whether an issue to be tried that the terms of the agreement between the parties was sufficiently certain in June 2011.  The lack of clarity on the terms set out in paragraph 193 above mean that I am not satisfied that there is a case that requires a trial."

36.      Thereafter, at paragraph 197, the Master pointed to additional elements which he took as showing that there was no real issue to be tried on the allegation that Mr Holmes and Mr Lingard had entered into a contract in June 2011 as follows:-

"i.       Advocate Young set out an agreement in August 2011, the email was headed 'Re La Tour Hotel', the Plaintiff forwarded this email to the First Defendant indicating he was going to review it the next day and then call the First Defendant.

ii.        The Plaintiff and the First Defendant were clearly having further discussions at September 2011....

iii.       On the 9th October 2011 as highlighted in paragraph 109 above the First Defendant's email to the Plaintiff stated 'must finish this deal before Thursday as I will be away for 2 weeks', again this begs the question as to why the deal would need to be finished if the parties had already agreed the essential terms in June 2011.

iv.       The Plaintiff's ultimate response to this email chain at paragraph 112 above is illustrative.  He forwarded a copy of the heads of terms last prepared together.  What he did not say was that agreement had already been reached.

v.        The First Defendant's response of the 2nd October...requiring any agreement to be approved by Bois Bois.

vi The Plaintiff's case is also inconsistent with the advice from Advocate Renouf relied upon.  Advocate Renouf was the Plaintiff's own advisor and he stated in November 2011 that the heads of terms recorded in this document set out 'the principles agreed between the parties'.  The same advice also stated 'consequentially these heads of terms either need to be endorsed as a final agreement after such independent advice was received or replaced by more specific agreements as it is not possible to have an 'agreement to agree' in Jersey Law, these heads of terms do not initially form a binding agreement'.

vii.      When the parties finally fell out in November 2012, the Plaintiff in complaining about the First Defendant's approach described the benefits             he had provided to the defendants as being 'all for free so far'; again the Plaintiff did not state at that stage that agreement had already been reached....

viii.     The Plaintiff does not explain why he or Strata made two proposals for providing consultancy services.  This is relevant because, if the Plaintiff had agreed terms to acquire the First Defendant's interest in Hotel La Tour in June 2011, an agreement to provide consultancy services for developing the project would not have been necessary.  The two offers made..... are therefore also inconsistent with any agreement being reached in June 2011.

viiii.    Likewise the attempts by the Plaintiff in January 2012 to raise funds and Mr Sobey's advice to the First Defendants.... are also inconsistent with an agreement having been reached the previous June.  Neither the approaches nor the observations of Mr Sobey would have been necessary had an agreement already been concluded. 

x.        In February 2012, the Plaintiff, when asking for details of what monies were owed to the First Defendant, did not say that these monies were side loans payable out of his share of the profits of the development of Hotel La Tour.

xi.       The loans made to Home Farm totalling £282,000 did not contain any provision linking repayment to the development of Hotel La Tour and repayment out of any equity payable to the Plaintiff.

xii.2012... makes no mention of any agreement concerning an acquisition of an interest in Hotel La Tour by the Plaintiff."

37.      There is no suggestion that Mr Holmes challenged the statement referred to at paragraphs 23 and 37(vi) above at the time it was made.  It was, as indicated, made some five months after Mr Holmes now alleges that the Plaintiffs had reached agreement on essential or 'operating' terms. 

38.      The Master clearly took each and a combination of these matters as supporting his view that no certain terms had been agreed between Mr Holmes and Mr Lingard and therefore that no contract had been established between them either in June of 2011 or at any time subsequently. 

39.      The Master did, however, accept that there was evidence from Mr Holmes that he had carried out certain assistance to Mr Lingard and the other defendants in connection with the development of Hotel La Tour.  The Master accepted that those items, which he set out at paragraph 198 of the Judgment, could amount to factual matters relied upon as to why Mr Holmes might argue that the defendant had agreed terms.  However as the Master said "they are not an answer to the conclusions that I have reached, namely that there is no realistic prospect with the Plaintiff establishing what terms he agreed in June with the First Defendant at trial.  The Plaintiff's problem is not therefore that a contract cannot be agreed by conduct.  His problem is that there is no realistic prospect of him demonstrating what the terms of that contract were......" (paragraph 199 of the Judgment). 

40.      The Judgment then states, with regard to Mr Holmes' proposed amendments:-

"200.   The Plaintiff's claim is not saved by the amendments proposed.  Those amendments, although clarify that his case is that an agreement was reached by conduct, still do not plead a case to show why there is       certainty in respect of the operative terms in light of the documents I have referred to above.  The use of the phrase 'operative terms' instead of 'key terms' adds nothing and does not produce the certainty required."

41.      At paragraph 203 of the Judgment the Master reflects the observations of the Amicus Curiae in the following terms:-

"Finally, I note that the Amicus had written observations which I am grateful expresses the view at paragraph 27 'in summary the court has before it no evidence as to when the agreement was reached or in what precise circumstances.  The evidence before the court is that of unsuccessful negotiations between the parties which never came to a conclusion'.  I can do no more than agree."

42.      We might observe at this point that the submissions of the Amicus Curiae before us were similarly pithy. She made no observations about the evidence from Mr Holmes and Mr Lingard but characterised the evidence of Mr Young as "categoric" and that in reliance on that evidence it would be an abuse to go further.  She indicated, in her view, that Mr Holmes had simply not indicated where the Master had gone wrong or why his reason was flawed or what he got wrong in law.  Mr Holmes' appeal in her submission really was simply a repetition of Mr Holmes' case before the Master. 

Evidence of Mr Daniel Young

43.      As we have said, Mr Daniel Young ("Mr Young") gave evidence before us.  He identified his affidavit of the 24th February, 2015, and adopted it for the purposes of this hearing.  He had understood that a question had been raised in part about Mr Holmes' desire to borrow £25,000 and how this was to be borrowed from Mr Lingard.  The sum repaid to Mr Lingard was to be £37,000.  He had received these instructions and Mr Lingard and referred them to Mr Holmes to ask if it was in fact agreed.  Mr Holmes had confirmed his agreement to Mr Young. 

44.      Mr Young's understanding was that Mr Holmes needed to pay money for a share transfer to complete a purchase.  There was a shortfall between his borrowing and what needed to be paid and the money that he was borrowing was to meet that shortfall.  It was short-term funding to enable the transaction to complete on a specific day. 

45.      In paragraph 4 of Mr Young's affidavit he confirms that he had been informed that there were discussions between Mr Holmes and Mr Lingard about Mr Holmes or his development company Strata Developments Limited ("Strata") buying a hotel which was owned by a holding company called Angel Fish Limited owned by Mr Lingard.  Mr Young was copied in on various documents that had been produced in relation to a purchase of the holding company by Strata.  Mr Young says in his affidavit that the documents lacked clarity and had been produced by Mr Holmes and were not suitable to Mr Lingard.  Mr Young had therefore prepared a document which he had circulated as a discussion document, with blanks, where the parties needed to reach agreement on significant matters such as the price and amount to be borrowed.  As far as Mr Young was concerned, no final agreement had ever been concluded and material terms were left undecided.  He recalled numerous meetings but at no stage was an agreement reached. 

46.      At paragraph 6 of his affidavit Mr Young says as follows:-

"I have read the Order of Justice in this matter and I have no hesitation in saying there was no agreement concluded in respect of La Tour Hotel as stated by Mr Holmes or at all.  This does not surprise me, as stated above stating to Mr Lingard that what was being put forward by Mr Holmes effectively meant that Mr Lingard was using his own company to pay himself.  I have acted for Mr Lingard for nine years and would not expect him to enter into a binding agreement of significant value in relation to Jersey property without asking me to prepare the necessary documentation..."

47.      Mr Young was involved in preparing documentation for securing a number of loans made by Mr Lingard or his companies to Mr Holmes or Home Farm Limited.  These documents gave rise to the secured charges.  At paragraph 9 of his affidavit Mr Young says:=

"At paragraph 17 of the Order of Justice, Mr Holmes has tried to dress up his request for finance for Home Farm Development Limited as some sort of option agreement.  I was not aware of any option agreement.  The reason for the funding was as I have set out above."

48.      He also says, at paragraph 20:-

"On the 27th September, 2012, Mr Holmes emailed me.... stating that he had agreed to transfer the shares in Home Farm Development to HJL Holdings Limited.  I asked for the detail of the houses to seek the formal approval of the Housing Department for the transfer of shares.  The reference at paragraph 26 of the Order of Justice as he was waiting for housing consent in spring / summer 2012 would be more accurately described as autumn 2012.  On my instructions this was solely for repayment of the loans rather than part of an agreement."

49.      Mr Young was cross-examined by Mr Holmes who put to him various documents, challenged him about authorship of those documents and some of the dating.  Mr Young's evidence did not change in any material sense from that set out in his affidavit.  On occasion Mr Young was not able to recollect the answers such as who authored which particular document and whether or not certain meetings took place.  What he did say, however, in response to a question from Mr Holmes was that at no point was there a sense of 'we have a deal'.  He said:-

"As far as I am concerned - no deal was done."

50.      Mr Young's affidavit summarises his understanding of the position at the end of his explanation of the various loans in the following terms:-

"At paragraph 29/31 of the Order of Justice Mr Holmes refers to the secure charges.  He maintains it was wrong to claim that they were connected to Home Farm Developments Limited and not connected to any agreement.  This is simply not accurate.  I do not recall that the secure charges were part of some separate agreement that concern La Tour Hotel.  Loans and the security were as I have set out in this affidavit."

51.      It is not in our view necessary to go into more detail of the evidence given by Mr Young beyond saying that in our view none of the questions put to him or the -nswers he gave departed from the final paragraph of his affidavit which is in the following terms:

"My recollection is clear.  Mr Holmes needed funding for his Home Farm site.  Mr Lingard provided that funding.  Mr Holmes and Mr Lingard discussed various deals re the La Tour site but they never came to fruition and over the discussions lacked enough clarity or meaningful negotiations to take place."

52.      Having heard Mr Young, the Court was satisfied that his evidence was reliable. 

Evidence of Other Witnesses

53.      As we have said, we also gave leave for Mr Holmes to give evidence and for Mr Lingard to give evidence and each to cross-examine the other. 

54.      Both brought into evidence their affidavits that were before the Master and although each were cross-examined by the other we did not feel able to detect anything meaningful from that cross-examination that took us beyond the terms of the documentation reviewed by the Master. 

Mr Holmes' Arguments

Procedural Arguments

55.      A number of complaints were raised by Mr Holmes in his Notice of Appeal about certain procedural decisions taken by the Master.  These included whether or not the Master erred in permitting the Amicus Curiae to act outside the bounds of the order of the Royal Court on the 17th February, 2017, and/or generally the jurisdiction of an Amicus; whether various directions given by the Master which visited consequences upon Mr Holmes for his failure to meet orders of the court were justified or prejudicial; the Master's criticism of Mr Holmes' conduct of the litigation; and a failure to give sufficient import to the burden upon Mr Lingard to prove the applications to strike or for summary judgment. 

56.      We do not consider that there is any merit in these procedural points.  In our view, the Master was entitled to seek to bring procedural order to these proceedings and it is clear that as a significant amount of leeway had already been afforded by him to Mr Holmes in light of the fact that Mr Holmes was and is a litigant in person, albeit an experienced one.  There comes a time, however, where the court must make it clear that its orders are to be respected and obeyed and visit appropriate consequences on parties who do not obey them.  In our view, the Master's directions were neither unfair or incompatible, as Mr Holmes alleges, with Article 6(1) of the European Convention of Human Rights.  It was open to the Master to determine that the interests of a fair trial for all parties meant that it was necessary to impose procedural sanctions upon one or more of them. 

57.      Also as part of his procedural complaint, Mr Holmes complained that the Master was wrong in compiling what Mr Holmes terms as an 'alleged factual chronology from scant and disputed evidence'.  We do not see that the chronology produced by the Master can be justifiably characterised in this way.  It was inevitable, in considering the various applications that the Master needed to understand the sequence of events.  Some, as we have said, he took from Mr Holmes' own pleadings and affidavits and other from what appeared to be incontrovertible documents in the sense that they existed and passed between the parties.  Furthermore, as we have said, rather than resting his argument on the uncertainty of the documentation, Mr Holmes asked to cross-examine both Mr Lingard and Mr Young on their affidavits.  This inevitably involved a cross-examination on and challenge to some of the documentation which was set out in the chronology.  In our view, none of that cross-examination undermined the accuracy of the Master's chronology on which he relied in formulating his decision. 

58.      Accordingly we do not think the procedural points that Mr Holmes raised assist him in his appeal. 

Substantive Arguments

59.      Mr Holmes claims that the Master erred in ruling on whether the parties had reached agreement in June 2011 as opposed to entering into an agreement which had been formed by conduct which was Mr Holmes' case. 

60.      Moreover Mr Holmes argued that the Master failed to give sufficient weight to his affidavit evidence in respect of a supplemental agreement in April 2012 in which it is alleged the respondents agreed to pay the appellant 10% of the proceeds in the event that La Tour was sold as a development site with a particular scheme only. 

61.      Mr Holmes makes the point that he had pleaded or intended to plead the agreement had been formed by conduct and or performance and that in his affidavit he had disputed the source and authenticity of the various other versions of the so-called agreements.  The chronology relied upon the Master, so Mr Holmes alleges, excludes the fact that the parties had conducted themselves between October 2011 and October 2012 in a way which supported the existence of an agreement specifically including performance of works specified in the quote of November 2011 and advancing the development pursuant to a supplemental agreement of April 2012 as set out above. 

62.      Furthermore, Mr Holmes alleges that at no point did the First Respondent email him to confirm there was no agreement subsisting or to suggest that the First Respondent had changed his mind in spite of his "express unequivocal 'volonté'" to be bound or to warn the appellant that the work he was doing was for his own account. 

63.      On this last point it is not clear to us that there was any obligation on Mr Lingard to notify Mr Holmes that no agreement was subsisting.  Either there was an agreement which was known to both of them or there was none.  It is difficult to see why Mr Lingard should have asserted that there was no agreement at any particular point if, as in his case, no agreement was reached. 

64.      We have attempted above to give a relatively brief synopsis of the main points made by Mr Holmes on appeal.  The points were, however, addressed in more detail within his notice of appeal and were not always easy to follow. 

65.      In essence, it seems to us, that Mr Holmes' case can be summarised as follows:-

(i)        The Master should not have relied on disputed evidence in determining the chronology on which he based his decision;

(ii)       Various matters were in dispute that were material and could only be resolved by a hearing before the court;

(iii)      Although stating that in principle an agreement could be reached by conduct the Master erred by not giving this sufficient weight and looking for crystallisation of such an agreement in June 2011.

(iv)      The Master did not give sufficient weight to the further agreements set out above as showing that clearly an agreement existed between the parties on which Mr Lingard relied;

(v)       The Master was wrong in his application of the principles relating to reflective loss but even if      he were not wrong in those principles it was unfair of him to apply them because Mr Holmes had not been given a sufficient chance to plead his case. 

66.      In our view the Master was correct in his assessment of the evidentiary picture.  On any impartial review of all of the documentation it seems to us that it is impossible to say with regard to Mr Holmes' assertion that an agreement was reached between himself and Mr Lingard as to when such an agreement was reached and what its terms were.  We agree that the evidence supports the fact that there was a very serious consideration given to an agreement and that its thrust was an arrangement for the development of La Tour.  We do not, however, think that there is evidence to support the fact that an agreement in any of the terms specifically alleged by Mr Holmes was ever reached and accordingly we agree with the Master's view. 

67.      In our view for these reasons it was appropriate to grant summary judgment to Mr Lingard on this issue and indeed to strike out Mr Holmes' pleading to the contrary as the Master did. 

68.      It is further argued that the Master failed to give sufficient weight to Mr Holmes' affidavits and pleadings that various charges secured against Home Farm in the sum of £282,500 remain in dispute. 

69.      Mr Holmes' assertion that he disputes that this sum is outstanding does not of itself amount to a sufficient evidentiary basis for the finding that he has a case on this point.  The Master was entitled to and did give weight to the evidentiary position as he understood it but that it appears from the documentation and, specifically, Mr Young's affidavit which as we have said was not in our view undermined in any way in cross-examination. 

70.      Mr Holmes further sets out his case concerning the loans secured against Home Farm.  Amongst other things he alleges that the secure charges were given by him in reliance on the unequivocal 'volonté' to be bound by the agreement given my Mr Lingard which is specifically expressed in October 2011 or immediately prior to Mr Holme's proposed giving of the second charge.  Mr Holmes suggests the evidence depicts that never at any time were the secure charges intended or performed as standalone loans - rather they reflected part-performance of a deposit to which the First Respondent, Mr Lingard, expressed an 'unequivocal volonté' to be bound by. 

71.      Once again, the Master had before him the documentation relating to the secured loans which make no reference to them being part of any broad agreement and indeed, in their simplicity and silence on this, support the case that they were stand alone in their nature. 

72.      Mr Holmes therefore argues that a judicial hypothec relationship existed between HJL Holdings Limited and Home Farm and he accordingly argues that Mr Lingard as directing mind of HJL Holdings Limited owed a fiduciary duty in duties of good faith and trust to Home Farm and to Mr Holmes himself.  He suggests that such a relationship, the judicial hypothec relationship, ought to be treated by the court as being on a par with a contract of uberrima fides.  He concludes that all of the issues relating to the security of loans against Home Farm are all issues that could only be properly determined by a trial court following all of the evidence.   

73.      We do not see that this argument has substance.  Firstly it is far from clear to us that it can be said that a relationship which involves a judicial hypothec, which this one clearly did in the sense that such was used to secure the loans advanced by HJL Holdings Limited to Home Farm Limited, carries with it any form of fiduciary obligation.  It is simply on its surface a loan and securitisation arrangement. 

74.      As to the question of treating such an arrangement as one of uberrima fides and as both Mr Holmes and Mr Lingard were unrepresented before us we have directed ourselves to the case of Sutton v Insurance Corporation of the Channel Islands [2011] JRC 027 in which Bailhache Deputy Bailiff (as he then was) considered an insurance contract and made the following observations about implied terms of good faith at paragraph 14 et seq of that judgment:-

"14.    It is often said - and indeed said by this defendant - that insurance contracts are uberrima vides - of the utmost good faith.  The adoption of uberrima vides imposes a very high duty on a person and renders him liable for any concealment or deception however slight.  Any material misrepresentation made by the insured to the insurer at the time of entering into the contract will entitle the insurer to avoid liability under the contract.

15.      Whatever may be the position elsewhere, it appears to us that if an insurer in relation to a contract which is governed by Jersey Law, as this one is, wishes to assert the principal uberrima vides applies, there must be either   some specific language in the contract which shows that this is what the parties agreed or some other feature from which that agreement can be necessarily inferred.  Such feature may arise out of established market practice....."

75.      It seems to us that absent any clear wording that a contract should be subject to the principal of uberrima fides we should not seek to view any particular contract through that prism. 

76.      As to the arguments for a duty of trust it seems to us that this is entirely foreign to the law relating to commercial contracts and no trust or indeed fiduciary relationship exists.  Lastly with regard to the suggestion that this matter is concerned with duties of good faith they are said to arise out of the judicial hypothec relationship.  The first point to make about this is that the judicial hypotec relationship was not between Mr Holmes or Mr Lingard.  It was between HJL Holdings Limited and Home Farm Developments Limited.  Home Farm is of course not a party to the proceedings.  Secondly, however, there is no sustainable allegation that any party acted other than in good faith where the judicial hypothec arrangements were concerned.  The lack of good faith that Mr Holmes wishes to assert is an allegation that Mr Lingard in effect failed to honour the terms of the agreement between himself and Mr Holmes.  That, of course, can only have any kind of force if there was in fact an agreement between Mr Holmes and Mr Lingard.  Lastly, on this aspect of Mr Holmes' case, it appears to us far from clear that a duty of good faith should be read into a purely commercial contract in the way that Mr Holmes seeks to assert although this to us is a secondary potential impediment to Mr Holmes' claim. 

Unjust Enrichment

77.      We agree with the Master that there is evidence to suggest that Mr Holmes took actions which may have been of value to Mr Lingard which undoubtedly were taken in the hope and possibly expectation that an agreement between himself and Mr Lingard would be reached (which we have found did not happen).  It seems to us as it did to the Master that these are matters that Mr Holmes should be entitled to pursue to trial under a claim in unjust enrichment. 

78.      The Master in the Judgment considered the law of unjust enrichment and expressed the view that there is evidence that the Plaintiff provided services to the defendants and that accordingly the Plaintiff had some chance of establishing at trial that he provided such services.  There was an issue as to whether those services were of benefit and the Master determined, with which we agree, that those issues could not be resolved on a summary judgment application and needed to be left over for trial.  The Master did, however, go on and deal with one aspect of Mr Holmes' claim in unjust enrichment - specifically the claim for an uplift in the value of Hotel La Tour as a result of any services that he had provided.  

79.      The Master based this analysis on two judgments of the Supreme Court/House of Lords. 

80.      In Benedetti v Sawiris [2014] AC 938 at trial the judge ruled that the plaintiff was entitled to an award of damages based on quantum meruit for his services provided in expectation of reward under a contract which was not ultimately entered into.  The case went to the Supreme Court and, as quoted in the Master's Judgment, the Court, at paragraphs 13-16 made certain statements as follows:-

"13.    The basic principle is that a claim for unjust enrichment is 'not a claim for compensation for loss, but for recovery of a benefit unjustly gained...at the expense of the claimant'....Given that Mr Benedetti's other claims have fallen away, the concern in the present case is not the value of Mr Benedetti's loss but for Mr Sawiris' gain.  The question is whether an objective or subjective approach should be adopted when calculating that gain.

14.      Whichever approach is adopted, it is clear that the enrichment is to be valued at the time that it was received by Mr Sawiris.... as appears at paragraph 52 below, in the present case, the services rendered were completed for all practical purposes by the 26th May 2005, by which time there was no possibility, or need for, further services from Mr Benedetti.  Similarly, it is clear that, whether an objective or a subjective approach is taken to the evaluation of the benefit, the question is what is the value of the services themselves, not of any-product or subsequent profit made by the defendant: e.g. Cobbe v Yeomans Row Management Limited [2008] 1 WLR 1752, paras 41-42, per Lord Scott of Foscote.

15.      In my view, the starting point in valuing the enrichment is the objective market value, or market price, of the services performed by Mr Benedetti....."

81.      In the rest of the sections quoted in the Master's Judgment the Court there went on to express the view that an objective test should apply to the issue of the market value of the services provided and not the subjective test - namely the benefit the claimant believed that he had conferred. 

82.      In Cobbe v Yeomans Row Management Limited [2008] 1 WLR 1752, (cited in Benedetti above) a claim for the imposition of a constructive trust in a development property failed even though the value of the property had been increased by the grant, obtained by the claimant, of planning permission.  At paragraph 41 of the judgment Lord Scott of Foscote said this:-

"It is not, in my opinion, the difference in market value between the property without the planning permission and the property with it.  The planning permission did not create the development potential of the property; it unlocked it.  The defendant company was unjustly enriched because it obtained the value of Mr Cobb's services without having to pay for them."

83.      It was on the basis of this authority that the Master determined that Mr Holmes could not, within his claim for unjust enrichment claim a share in any uplift in the value of Hotel La Tour assuming that his actions have produced such an uplift.  He was entitled to claim for the market value of his services together with expenses he had incurred. 

84.      In effect, other than for that single point, the Master left all other issues relating to the claim in unjust enrichment for subsequent trial. 

85.      Mr Holmes argues in his Notice of Appeal that the authorities on which the Master relied did not address loss arising from performance or part performance of an agreement or dol reticence (where, as he expresses it, a party is found to have led another to act in the belief that an agreement is subsisting in respect of an uplift and/or profit share).  He therefore asserts that these issues should be left for the trial. 

86.      We do not agree.  It appears to us that the Master's assessment of the matter is based clearly upon authority which is persuasive insofar as it relates to unjust enrichment.  Reference to an agreement of course depends upon there being an agreement that can be expressed in settled terms.  Although clearly both Mr Holmes and Mr Lingard were anticipating that an agreement might be entered into there does not appear to us to be a basis for saying that at any point Mr Lingard asserted that there was such an agreement.  In our view the Master's analysis is correct and the claim for an unjust enrichment cannot include a claim for an uplift. 

87.      These arguments, have, it seems to us, to depend upon an assertion that the contract was as Mr Holmes has alleged and pleaded.  The Master's finding that no contract subsisted was based on his determination that there was insufficient certainty about the terms of the contract.  There is no suggestion, as we understand it, that the Master made any determination to the effect that there was an understanding that there would be an uplift and/or profit share nor, on an analysis of the documentation that we have seen, could it be said that such terms ever materialised with sufficient certainty to form a contractual arrangement. 

Reflective Loss/The Prudential Principle

88.      The Plaintiff's Order of Justice and indeed the Amended Order of Justice contained claims for losses which are based on the allegations that Mr Lingard persuaded Investec to commence foreclosure proceedings against Home Farm Limited.  The Master accepted that such a claim was capable of being made and damages based on the tort of causing loss by unlawful means might be claimed (see paragraph 228 of the Judgment).  He rejected, however, the claim by Mr Holmes that those losses were based on fraudulent misrepresentation because, as he said, a fraudulent misrepresentation claim is ultimately a claim to set aside a contract.  He makes the observation in his Judgment that the representations allegedly made by Mr Lingard to Investec were long after the loans were made to Home Farm.  Accordingly the Master restricted his analysis to the tort of causing loss by unlawful means.  We agree with this approach. 

89.      Furthermore, insofar as the Plaintiff's claim amounted to an allegation of fraud, the defendant received no benefit as a result.  In the words of the Master at paragraph 236:-

"Ultimately the First Defendant neither obtained ownership of Home Farm or any of the properties.  He simply obtained repayment of monies lent by him which was always secured over properties owned by Home Farm...."

90.      The Master then went on to identify what he viewed as the real difficulty with Mr Holmes' claim.  He expressed that difficulty as being claims which Mr Holmes was not entitled to bring because they belonged to Home Farm Limited being the owner of the properties at all material times.  The Master observed that Mr Holmes' justification as to why he was entitled to claim those losses is based upon the breach of an agreement allegedly reached in June 2011 which, as the Master said, was not sufficiently certain as to its terms.  Mr Holmes' claim was as a shareholder in Home Farm Limited. 

91.      This was an argument made on what is called the 'Prudential Principle', namely that a shareholder cannot sue to recover damages personally in relation to wrongs done to the company.  It was established by the English Court of Appeal in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204. 

92.      The Master cited Freeman v Ansbacher Trustees (Jersey) Limited [2009] JLR 001 where at paragraphs 76 the Court approved Johnson v Gore-Wood and Co. [2002] 2 AC 1 which said:-

"Accordingly, where a company suffers loss as a result of an actionable wrong done to it, the cause of action is vested in the company and the company alone can sue.  No action lies at the suit of a shareholder suing as such, although exceptionally he may be permitted to bring a derivative action in right of the company and recover damages on its behalf...."

93.      At paragraph 241 and 242 of the Judgment it is stated:-

"241.   In the absence of any argument or evidence to the contrary, the losses claimed in respect of the sales of units 1...., 2 and 5 are claims vested in Home Farm and not the Plaintiff and accordingly are struck out as showing no reasonable cause of action.  In the alternative it would also be an abuse of process following the principles laid down by the Court of Appeal in the Home Farm Developments v Le Sueur to allow such an issue to proceed to trial.  In the further alternative there is no issue to be determined between the Plaintiff and the Defendants in respect of the sales of units           owned by Home Farm and consequential losses because any claim belongs to Home Farm and so summary judgment is also given in favour of the Defendants.

242.    I accept it is open to me to give permission to join Home Farm as a Second Plaintiff rather than strike out or give summary judgment in respect of the      Plaintiff's claims.  However I am not prepared to make such an order         because Home Farm does not exist as a legal entity and has not existed since 2015.  Nor has the Plaintiff attempted to reinstate Home Farm or applied for it to be joined as co-Plaintiff.  This is in despite of the fact that the Plaintiff has been on notice since 2015 that the losses claimed are not ones the Plaintiff can pursue (see paragraph 47 of the security for costs         judgment).  The Plaintiff was also put on notice on three occasions this year that I wished to be addressed on why these losses were those of the Plaintiff rather than Home Farm.  Yet he has not done so.  I am not therefore prepared to grant any further indulgence to the Plaintiff."

94.      The Master went on to say that in any event any claim brought by Home Farm would be prescribed.  On that last point that may or may not be the case.  In our view were that, but for the other points made in the Master's Judgment, to be the only issue preventing the claim for reflective loss proceeding then we would not be inclined to prevent it for that reason alone.  It seems to us that it must be open in those circumstances for the Plaintiff to argue that Home Farm was effectively prevented from bringing its claim by reason that it had been struck off and that the cause of that impediment could be laid or should be laid at the door of the First Defendant.  We do not, of course, make any observation as to whether that analysis is correct or would succeed but we would not, for the reason of prescription alone, have blocked that claim from proceeding further.  

95.      In his Notice of Appeal Mr Holmes says that the 'no reflective loss' principle established in the cases cited before the Master 'arguably does not apply to the instant case'.  He sets out three reasons for this argument.  They are, in summary:-

(i)        That the Freeman case provided that the Prudential Principle, designed to protect the interests of company creditors, did not apply squarely to the facts of that case and they confined the function of the Prudential Principle to ways that are consistent with Mr Holmes' claim;

(ii)       The Court of Appeal unanimously held that the Prudential Principle did not apply where 'the wrongdoer has disabled the company from pursuing its course of action' and 'has been forced to abandon its claim by reason of impecuniosity attributable to the wrong which has been done to it'.  Again, those principles are arguably consistent with Mr Holmes' case because he pleads that Mr Lingard brought about the dissolution of of Home Farm Limited. 

(iii)      The Appellant's claim for damages in the sum of his personal loan falls outside the confines of the Prudential Principle. 

96.      It seems to us that it is arguable that the cases relied upon by the Master in connection with the reflective loss principal may not be the end of the appropriate investigation of the legal principles involved insofar as they apply to the facts of this case.  If it is the case that the Court were to find, as a matter of fact, that Mr Lingard had unlawfully and tortiously interfered with the contractual relations such as to induce Investec to foreclose (and we make no observations at all about that issue) it may be that were a direct consequence to have been the striking off of Home Farm Limited that the Prudential Principle may not apply.  We make no finding about that nor indeed do we intend to suggest an outcome to that question.  What we do say, however, is that in our view, this is an issue that can and should proceed to trial. 

97.      In Freeman (cited above) the Court, after expanding the no reflective loss or Prudential Principle, the Court said at paragraph 82 et seq:-

"82.    The prudential principle is a matter of company law, where the law in Jersey is based on similar principles to that of England and Wales.  In my judgment, the prudential principle does form part of the law of Jersey.  On          the face of it, therefore, the principle would appear to be of application to the claims in this case so as to prevent Ansbacher from being liable to the Plaintiff's full losses suffered by SDR.

83.      However, despite the arguments which Mr Journeaux has put forward most persuasively, I have come to the clear conclusion that it would be wrong to strike out the claim.  My main reason for doing so is that I consider there to be considerable uncertainty as to the extent to which the prudential principle should be applied to a claim such as the present relating to a trust.  The authorities are clear that a court should be particularly careful in striking out a claim in a developing field of law on the basis of assumed facts.  It is best to consider how the law should develop with the benefit of knowing the actual facts. 

84.      I have been referred to a number of cases relating to the prudential principle and I have read them all carefully.  The majority involve a conventional position where the shareholder is seeking to sue the wrongdoer who has not only caused loss to the company by reason of his breach of duty but has also caused loss to the shareholder by reason of a diminution of the            value of the shareholder's shares in the company.  That is not the position here... and the other Plaintiffs are beneficiaries of a discretionary trust.  They are not shareholders.... Thus, the case is not on all fours with the previous cases.

.......

97.      I would summarise my reasons for concluding that it is strongly arguable that the prudential principle does not apply in the present case as follows:

i.         The principle is an exclusionary rule.  Thus, it applies where a shareholder has suffered loss (leading to diminution in the value of his shares) by reason of an actionable wrong done to him by the wrongdoer.  In normal circumstances, he would be able to recover such a loss under ordinary legal principles.  However, because the wrongdoer has also committed an actionable wrong against the company and because the shareholders loss merely reflects the loss suffered by the company, the principle operates to prevent the shareholder recovering what he has lost.  However it is an exclusionary rule which operates to prevent a shareholder recovering what he would normally be able to recover and it should therefore be confined to those circumstances where it is clearly applicable.

ii.        The two policy reasons for the existence of the rule are clear and are conveniently summarised in the passage from Lord Millett's speech in Johnson...  In the first place, there is a risk of double recovery from the defendant.  If the company can sue for the wrong done to it by the defendant then the shareholder can sue to the wrong done to him, the defendant may end up by paying twice for what is ultimately the same loss.  Secondly, if the shareholder is allowed to recover from the defendant, this may prejudice creditors of the company as the recovered monies will pass directly to the shareholder rather than returning to the company's coffers from which the creditors could be paid....."

98.      We do not need to resolve the position with regard to the applicability or otherwise of the Prudential Principle.  Prima facie it appears to apply in the present case because any foreclosure would be against the company and Mr Holmes' loss to that extent would not extend beyond the value of the company reflected in his shareholding.  

99.      However, we cannot say that there is not some argument for saying that the no reflective loss or Prudential Principle should not apply in the circumstances.  We are not for a moment retreating from the full vigour of that principle in appropriate cases and it seems to us that it is much more likely to apply in this case than in Freeman but we are not convinced that that is a matter that should be disposed of either at a summary judgment or striking out stage. 

100.   Accordingly we allow that part of the argument to proceed for argument at trial in the light of a full understanding by the Court of the facts.  It is, of course, a matter for Mr Holmes as to whether he seeks to reinstate Home Farm Limited and further seeks to join that company to the present proceedings and we make no observation on either the possibility, permissibility or effect of those courses.  However Mr Holmes wishes the opportunity to argue that he has been effectively prevented from recovering loss through Home Farm Limited by reason of the fact that it was struck off and that itself was attributable to the actions of Mr Lingard.  We think that it would be open to him to advance such an argument at trial without in any way expressing our view as to the strengths of such an argument or its likely outcome. 

Conclusion

101.   In summary, we dismiss the appeal save insofar as we allow the argument based on reflective loss to proceed to trial. 

102.   Accordingly, we uphold paragraphs 1a, 2, 3, 4, 5 to 14 inclusive of the Order.  We allow Mr Holmes' appeal insofar as it relates to 1b of the Order. 

Authorities

Holmes-v-Lingard & Others [2015] JRC 172.

Murphy-v-Collins [2000] JLR 276.

Royal Court Rules 2004 as amended.

Home Farm Developments Limited v Le Sueur [2015] JCA 242.

Reveille Independent LLC v Anotech International UK Limited [2016] EWCA Civ 443.

RTS Flexible Systems Limited v Molkerei Alois Muller Gmbh [2010] UKSC 14.

Selby v Romeril [1996] JLR 210.

Sutton v Insurance Corporation of the Channel Islands [2011] JRC 027.

Benedetti v Sawiris [2014] AC 938.

Cobbe v Yeomans Row Management Limited [2008] 1 WLR 1752.

Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204.

Freeman v Ansbacher Trustees (Jersey) Limited [2009] JLR 001.

Johnson v Gore-Wood and Co. [2002] 2 AC 1.


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