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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> O'Keefe & Anor (In Their Capacity As Joint Liquidators of Level One Residential (Jersey) Ltd and Special Opportunity Holdings Ltd) v Caner & Ors  EWHC 1105 (Ch) (15 May 2017)
Cite as:  EWHC 1105 (Ch)
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IN THE MATTER OF LEVEL ONE RESIDENTIAL (JERSEY) LIMITED
AND IN THE MATTER OF SPECIAL OPPORTUNITY HOLDINGS LIMITED
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
Fetter Lane, London, EC4A 1NL
B e f o r e :
sitting as a Judge of the High Court
| (1) ANNE O'KEEFE
(2) PAUL BEVERIDGE
(in their capacity as joint liquidators of Level One Residential (Jersey) Limited and Special Opportunity Holdings Limited)
|- and -
|(1) CEVDET CANER
(2) CHRISTOPHER HENRY LOVELL
(3) RICHARD BOLEAT
(4) LESLIE NORMAN
(5) TOBIAS MATTHEWS
(6) CAPITA TRUSTEES LIMITED
Lord Goldsmith PC, QC and Kathryn Purkis (instructed by Debevoise & Plimpton LLP) for the First Respondent
Terence Mowschenson QC and Nicole Langlois and Hugh Miall (instructed by Enyo Law LLP) for the Second, Third, Fourth and Fifth Respondents
Hearing dates: 8, 9, 10, 13, 14 and 15 March 2017
Crown Copyright ©
H.H. Judge Keyser Q.C. :
"A director, in exercising the director's powers and discharging the director's duties, shall—
(a) act honestly and in good faith with a view to the best interests of the company; and
(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances."
The applicants contend that the directors also owed fiduciary duties to creditors of the Companies. The respondents deny that any such distinct fiduciary duties existed, but they acknowledge that in the case of an insolvent company the interests of the creditors are interests of the company for the purposes of Article 74(1)(a). Further, it was common ground before me that the limitation or prescription period applicable to the fiduciary duty under Article 74(1)(a) would also be applicable to any fiduciary duty owed by the first to fifth respondents to creditors of the Companies. I was not asked to, and do not, give separate consideration to any duty other than those under Article 74.
"1. The following preliminary issue will be tried between the Applicants and the First to Fifth Respondents:
Are, as pleaded at paragraph 201 of the Second to Fifth Respondents' Defence and paragraphs 3 to 6 of the First Respondent's Defence, the claims made by the Applicants against each of the First to Fifth Respondents time barred as a matter of Jersey law (the Preliminary Issue)?
2. If the answer to the Preliminary Issue is yes, the Applications brought pursuant to s. 212 Insolvency Act 1986 as against the First Respondent and the Second to Fifth Respondents shall be dismissed."
The nature of the preliminary issue
"13. … Sometimes the foreign law, apart from being in a foreign language, may involve principles and concepts which are unfamiliar to an English lawyer. The English judge's training and experience in English law, therefore, can only make a limited contribution to his decision on the issue of foreign law. But the foreign law may be written in the English language; and its concepts may not be so different from English law. Then the English judge's knowledge of the common law and of the rules of statutory construction cannot be left out of account. He is entitled and indeed bound to bring that part of his qualifications to bear on the issue which he has to decide, notwithstanding that it is an issue of foreign law. There is a legal input from him, in addition to the judicial task of assessing the weight of the evidence given. …"
"17. … The judgment [of the Court of Appeal in Bumper Development Corpn v Commissioner of Police of the Metropolis  WLR 1362] also approved the following further passages from Dicey & Morris [The Conflict of Laws (12th edition)]:
'(1) An English court will not conduct its own researches into foreign law ....
(2) If the evidence of several expert witnesses conflicts as to the effect of foreign sources, the Court is entitled, and indeed bound, to look at those sources in order itself to decide between the conflicting testimony ...'"
"19. … [The judge] is entitled, indeed bound, to contribute his own legal skill and experience in reaching his conclusion, so much so that he may, in a suitable case, form his own view of the meaning of a statute which the expert witness tells him is the governing foreign law, even if the expert's opinion as to its meaning is different from his own …. This is supported by the following dictum of Scrutton LJ: 'I can see no reason why a court is bound to accept the evidence of an expert witness as to fact, when he supports it by a document the plain words of which render his opinion impossible' (Buerger v New York Life Assurance Co (1927) 96 LJKB 930 at 937).
20. The question then arises, whether the judge is only entitled to reject the expert's opinion evidence as to the meaning of the statute when the witness has put forward an 'impossible' view… [I]n our judgment, the trial judge's powers are not so limited … in a case where the English Court interprets the statute in accordance with English rules of construction, there being no evidence that different rules would govern the foreign court's interpretation, and where there is no suggestion that any of the words of the statute has a special meaning, different from its ordinary meaning, in the foreign context. Then, the trial judge's finding as to the meaning of the statute, which is distinct from his finding that the statute governs the issue before the court, is his interpretation of the words used. He was influenced, of course, by the factual 'matrix' as he found it to be … In the background throughout is the rule that, unless the evidence shows that the foreign rules of construction are different, the English Court interprets the statute according to the English rules. To that extent, the trial judge's 'finding' is essentially a conclusion as to statutory interpretation, and as such it should properly be regarded as an issue of law."
"23. In our judgment, the function of the expert witness on foreign law can be summarised as follows:
1) to inform the Court of the relevant contents of the foreign law, identifying statutes or other legislation and explaining where necessary the foreign Court's approach to their construction;
2) to identify judgments or other authorities, explaining what status they have as sources of the foreign law; and
3) where there is no authority directly in point, to assist the English judge in making a finding as to what the foreign Court's ruling would be if the issue was to arise for decision there.
24. The first and second of these require the exercise of judgment in deciding what the issues are and what statutes or precedents are relevant to them, but it is only the third which gives much scope in practice for opinion evidence, which is the basic role of the expert witness. And it is important, in our judgment, to note the purpose for which the evidence is given. This is to predict the likely decision of a foreign court, not to press upon the English judge the witness's personal views as to what the foreign law might be. Thus, in G & H Montage GmbH v Irvani  1 WLR 667 (C.A.), Mustill LJ said this:
'The fact that the plaintiffs' expert was not able to do more than assert, in this novel situation, his own view on how the German court would react when faced with a similar problem does not disqualify his evidence from being relied upon. There are many fields of law in which the books provide no direct answer and where the skill of the lawyer lies precisely in predicting what answer should be given. If the judge concludes that the expert's prediction is reliable, he is fully entitled to give effect to it' (684G).
This passage emphasised that the expert witness is entitled to give opinion evidence in the absence of direct authority, but we would underline the restrictions which it places upon him. His role is to 'predict' what the foreign court would decide, and only in this sense should he say 'what answer should be given'."
Jersey law: background
"The Jersey law of torts derives primarily from the Jersey common law which has its origins in the Norman law of the ancienne coȗtume. In relation to the tort of negligence, Jersey follows the law of England (T.A. Picot (C.I.) Ltd v Crills 1995 JLR 33) except as regards any point on which a different rule has been established in Jersey. In relation to other torts or other aspects of the law of tort, although careful attention is paid to decisions on English common law, the courts of Jersey have to found themselves on the common law of Jersey. Thus there may be causes of action in tort which are available in England but not in Jersey, and vice versa. …
We were referred to the definition of tortious liability in English law formulated by Sir Percy Winfield in The Law of Tort, at 32 (1931) and quoted in Clerk & Lindsell on Torts, 17th ed., para 1-01, at 1 (1995): 'Tortious liability arises from the breach of a duty primarily fixed by the law: such duty is towards persons generally and its breach is redressible [sic] by an action for unliquidated damages.' This definition was cited with some measure of approval as applying to torts in Jersey law by Ereaut, Bailiff, in Watson v Priddy 1977 J.J. at 152-154. This definition is, however, even as applied to English law, not without difficulties. There are duties 'fixed by the law' which give rise to liability outside the law of torts, the meaning of the adverb 'primarily' is wholly unclear and there are tortious duties owed to particular persons and not to 'persons generally.' But this definition is of some use in deciding whether a right of action under Jersey law gives rise to tortious liability rather than some other form of liability."
In Jersey Financial Services Commission v A.P. Black (Jersey) Ltd 2002 JLR 443 ("Black") Southwell JA in the Jersey Court of Appeal said:
"20. The essentials of a right of action in tort, and therefore of an action 'founded on tort' for the purposes of Article 2(1) of the 1960 Law, were considered by me when delivering the judgment of the Court of Appeal in Arya Holdings Ltd v Minories Finance Ltd (1997) JLR 176 ("Arya"). Those essentials include a duty owed to the plaintiff by the defendant otherwise than by virtue of a contract or trust, and whether pursuant to Jersey common law or statute, a breach of this duty by the defendant, and actual or threatened damage caused by and flowing from the breach (which in some torts may be assumed), giving rise accordingly to a right of action which the plaintiff can require the Court to uphold.
21. Arguments have been advanced as to the extent to which 'tort' (in French) as part of Jersey common law may differ from 'tort' (in English) as part of English common law. One example of a difference between Jersey law and English law in this regard can be seen in Arya, where a Jersey right of action described as a 'D'Allain claim', unknown to English law, was held to be a right of action in tort in Jersey law. What is significant for the present case is that a D'Allain right of action involves, just as much as other rights of action in tort in Jersey law, the three essentials of duty, breach of duty and damage. Whatever differences there may be between Jersey law and English law as to the range of torts on which reliance may be placed under either legal system, torts under each system involve the existence of those three essentials."
"252. The Jersey law of prescription is, by and large, based upon judicial precedent and it is hard to find a consistent theme or principle which underlies the various prescriptive periods. But where there is no precedent, it is helpful to have regard to the nature of the action.
257. … We think that the time has come to hold that the 10-year period … is a general period which should be taken to apply to all personal actions and all actions concerning movables, save to the extent that they have already been held to be subject to a different period, e.g. tort, actions concerning estates etc, or that some other period is, by analogy, clearly more applicable."
That dictum has been followed in other Jersey cases, has not been doubted or disapproved or overruled in any Jersey case, and is agreed to be a correct statement of Jersey law. (Cf. for approval by the Jersey Court of Appeal, Rockhampton Apartments Ltd v Gale 2007 JLR 332 ("Rockhampton") at paras 177-8.) It follows that the applicable prescription period is 10 years unless either (a) some other period is directly applied by statute or case-law or (b) "some other period is, by analogy, clearly more applicable".
"The rationale is not far to seek. Beneficiaries are entitled to expect that those who become trustees will fulfil their obligations. They are also entitled to expect, and this is only a short step further, that those who become trustees will be permitted to fulfil their obligations without deliberate intervention from third parties. They are entitled to expect that third parties will refrain from intentionally intruding in the trustee-beneficiary relationship and thereby hindering a beneficiary from receiving his entitlement in accordance with the terms of the trust instrument. There is here a close analogy with breach of contract. A person who knowingly procures a breach of contract, or knowingly interferes with the due performance of a contract, is liable to the innocent party. The underlying rationale is the same."
The Royal Court in Nolan accepted the defendant's argument. At para 501 Hunt, Commr, said:
"Jersey law does not have the historical divide between equity and the common law which arose in England. Accordingly analogies based on that historical divide are, we think, unhelpful in the context of the test in Esteem that 'some other period is, by analogy, clearly more applicable'. In particular we reject the [plaintiffs'] argument that there can only be an analogy if two causes of action are based on the same facts and give rise to concurrent remedies. According to Esteem, what has to be analogous is the period, not the cause of action. In applying the Esteem test, we find the observations of Mr Sheldon Q.C. in Cattley, the judgment of the Privy Council in Royal Brunei and the decision in Peconic Ind. Dev. Ltd v Lau Kwok Fai (2009) 11 ITELR 844 compelling. Conversely we do not find the case of In re Northwind Yachts Ltd 2005 JLR 137 to be of any assistance in this context. Accordingly we accept [the defendant's] submission that as a matter of Jersey law the prescriptive period applicable to actions for dishonest assistance in a breach of trust is, by analogy with economic torts, three years, not ten."
"Many directors are employed by companies. Some breaches of a director's duty will be a breach of contract and others will be a breach of his fiduciary duty in the special sense described [that is, by Millett LJ in Bristol and West Building Society v Mothew  Ch 1; see paragraph 48 below]. If [the Advocate for the respondent] is right, the former will have a 10-year prescriptive period, whereas the latter will have a 3-year prescriptive period. This does not seem very logical or convenient as there will then be endless argument as to whether a particular breach falls within one category or the other. For these reasons, we incline to the view—but, as we say, we make no decision because it is not necessary—that, as set out in Esteem, the 10-year period should apply to all breaches of duty by a director, whether being described as breaches of contract or breaches of fiduciary duty."
"There was, as one can see, no specific reference here to a company director's duty of care, diligence and skill—as opposed to fiduciary and contractual duties. But the considerations of logic and convenience that evidently weighed heavily with the court in this passage, coupled with the observations from Esteem cited above, suggest that the court would have expressed the same view about claims on that basis. … The result is that if I had to decide the matter here and now, I would follow that view and rule that the relevant limitation period for a claim of the kind sought to be pleaded is, as with other forms of personal claim against company directors, 10 years."
"337. … In the circumstances of the present case it seems to us that some other period, namely the three year period in respect of claims in tort, is clearly more applicable. The claim against Mr Gidley and Mr Killmister for breach of fiduciary duty was a personal claim; it alleged a duty which was, in effect, simply a duty of care, hence the reliance by the Plaintiffs on the same facts in support of their claims both in negligent misstatement and for breach of fiduciary duty. It would, in our view, do a disservice to the law of Jersey for the limitation period in respect of the negligent misstatement claim to be three years, and for that in respect of the identical fiduciary duty claim to be ten years. In this context we do not find the decision in Northwind, where the alleged fiduciary duty was very different from that alleged in the present case, to be of any assistance.
338. Accordingly we conclude that all of the causes of action relied on by the Plaintiffs are subject to a three year limitation period."
Article 74(1)(a): Direct application of a prescription period
a) Mr Harvey-Hills: the default 10-year period for an action personnelle mobilière applies; no other period applies directly or by analogy.
b) Mr Kelleher: the claim lies in tort, either because it is founded on breach of statutory duty, which is ipso facto a claim in tort, or because the nature of the wrong is essentially tortious; alternatively, the 3-year tort period applies by analogy. If a Jersey court rejected that position, it would hold that the 3-year period for breach of trust applies directly or by analogy.
c) Mr Gleeson: the 3-year period for breach of trust applies by analogy or (less probably) directly.
Direct application of the period for tort
"(1) The period within which actions founded on tort may be brought is extended to 3 years from the date on which the cause of action accrued.
(2) The provisions of this Article shall be without prejudice to any rule of law allowing for the extension of such period as aforesaid.
(3) Nothing in this Article shall revive any right of action which was barred by prescription before the commencement of this Law.
(4) This Article shall not apply to any action for which a period of prescription is provided by any other enactment."
1) The primary argument ("the Statutory Duty Argument") is that any such breach of duty "is a breach of statutory duty which is deemed to be a tort under Jersey law": first report, para 15. It is important to understand that the Statutory Duty Argument does not rely on showing that the duty in question is essentially tortious in nature; see first report, para 75. It is simply to the effect that, where there is a private right of action for damages for breach of a duty that exists by virtue of a statutory provision, the right of action is ipso facto in tort.
2) The secondary argument ("the Tortious Nature Argument") is that the claims would have lain in tort in customary law before they were given a statutory basis and are therefore intrinsically tortious in nature. Mr Kelleher's reasoning in that regard is more obviously applicable to the duty of skill and care than to the duty of good faith (as made clear by the terms of para 16 of his first report), though he seeks to maintain it in respect of the duty of good faith by reference to the supposedly broad concept of tort in Jersey law.
"This leaves those duties which are special to fiduciaries and which attract those remedies which are peculiar to the equitable jurisdiction and are primarily restitutionary or restorative rather than compensatory. A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary. As Dr. Finn pointed out in his classic work Fiduciary Obligations (1977), p. 2, he is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary.
The nature of the obligation determines the nature of the breach. The various obligations of a fiduciary merely reflect different aspects of his core duties of loyalty and fidelity. Breach of fiduciary obligation, therefore, connotes disloyalty or infidelity. Mere incompetence is not enough. A servant who loyally does his incompetent best for his master is not unfaithful and is not guilty of a breach of fiduciary duty."
"[I]t is helpful to remind oneself of the nature of a fiduciary duty. A convenient summary of certain key aspects of such a duty is to be found in the judgment of Millett LJ in Bristol & West Building Society v Mothew  4 All ER 698. The passage at 710 – 715 repays reading in full. The following summary is drawn from Millett LJ's observations which, in our judgment, are equally applicable under the law of Jersey.
(i) The expression 'fiduciary duty' is properly confined to those duties which are peculiar to fiduciaries and the breach of which attracts legal consequences differing from those consequent upon the breach of other duties. For example, the obligation of a trustee (who is undoubtedly a fiduciary) to use proper skill and care in the discharge of his duties is not a fiduciary duty nor is the duty of a director (who undoubtedly owes fiduciary obligations to his company) to exercise skill and care in the performance of his duties.
(ii) A fiduciary duty is one which is special to fiduciaries which attracts those remedies which are peculiar to the equitable jurisdiction and are primarily restitutionary or restorative rather than compensatory. A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.
(iii) The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary.
(iv) This duty of loyalty gives rise to certain specific obligations:-
(a) A fiduciary who acts for two principals with potentially conflicting interests without the informed consent of both is in breach of the obligation of undivided loyalty; he puts himself in a position where his duty to one principal may conflict with his duty to the other. This is sometimes described as the 'double employment rule'. Breach of the rule automatically constitutes a breach of fiduciary duty.
(b) Even if a fiduciary is properly acting for two principals with potentially conflicting interests (i.e. because he has their consent) he must act in good faith in the interests of each and must not act with the intention of furthering the interests of one principal to the prejudice of those of the other. This is 'the duty of good faith'. But it goes further than that. He must not allow the performance of his obligations to one principal to be influenced by his relationship with the other. He must serve each as faithfully and loyally as if he were his only principal. Conduct which is in breach of this duty need not be dishonest but it must be intentional. An unconscious omission which happens to benefit one principal at the expense of the other does not constitute a breach of fiduciary duty, though it may constitute a breach of the duty of skill and care. This is because the principle which is in play is that the fiduciary must not be inhibited by the existence of his other employment from serving the interests of his principal as faithfully and effectively as if he were the only employer. Millett LJ referred to this as the 'no inhibition principle'.
(c) The fiduciary must take care not to find himself in a position where there is an actual conflict of duty so that he cannot fulfil his obligations to one principal without failing in his obligations to the other. If he does, he may have no alternative but to cease to act for at least one and preferably both. The fact that he cannot fulfil his obligations to one principal without being in breach of his obligations to the other will not absolve him from liability. This can be referred to as 'the actual conflict rule'."
"87. It is trite law that a director owes to his company a fiduciary duty to exercise his powers (i) in what he (not the court) honestly believes to be the company's best interests and (ii) for the proper purposes for which those powers have been conferred on him. Mere incompetence is not a breach of fiduciary duty: it might give rise to a claim for breach of a tortious or contractual duty of care, but the claim in this case was based entirely on alleged breaches of fiduciary duty."
"89. … Fiduciary duties are not less onerous than the common law duty of care: they are of a different quality. Fiduciary duties are concerned with concepts of honesty and loyalty, not with competence. In my view, the law draws a clear distinction between fiduciary duties and other duties that may be owed by a person in a fiduciary position. The fiduciary may also owe tortious and contractual duties to the cestui que trust: but that does not mean that those duties are fiduciary duties. Bearing all that in mind, I find nothing surprising in the proposition that crass incompetence might give rise to a claim for breach of duty of care, or for breach of contract, but not for a breach of fiduciary duty."
"It is certainly true that it is difficult to shoe-horn the right of action under Article 20(7) of the CIF Law into the Winfield definition. The principal difficulty arises from the requirement that the breach of duty should be redressable by an action for unliquidated damages. Mr Binnington argued that tort in Jersey was a wrong-based concept with less emphasis on the remedy. He referred to Pothier, Introduction Générale aux Coûtumes, Chap IV, para 116, at 61 (1821 ed): 'On appelle délits et quasi-délits les faits illicites qui ont causé quelque tort à quelqu'un, d'où naît l'obligation de le réparer.' In my judgment this submission is correct. In determining whether a right of action is 'founded on tort' it is necessary to ascertain whether the cause of action is based upon wrong-doing of some kind. The precise remedy available to the victim or to the body representing the victim is not of significance. The important factor is that the cause of action gives rise to a remedy of some kind – it is not essential that the remedy should be what English law would describe as 'damages'. In support of this submission counsel referred to Hamon v Mourant (1852) 173 Ex 425. The Court held (173 Ex at 426):
'Attendu que la présente action est instituée dans la vue d'obtenir du défendeur un dédommagement pour un tort que l'actrice pretend avoir éprouvé par sa faute ou négligence …. [L]a Cour a jugé que le défendeur n'est maintenant actionnable et l'a déchargé de l'action.'
'Dédommagement' may be translated as 'compensation'. The wrong in that case was an alleged failure to comply with a statutory obligation. This approach seems to me also consistent with Chapter 51 of the Grand Coutumier, to which I have referred above."
The Bailiff's conclusion was then set out:
"36. The failure to comply with a statutory obligation with the result either that profits accrue to that person or that losses are suffered by investors must surely be an example of wrongdoing. … Is it significant that the Commission is not the party suffering loss? It seems to me that no significance attaches to that fact. The statute empowers the Commission to bring what is in effect a representative action. … Finally, counsel for the Commission objected that the discretion conferred on the Court as to the making of an order was inconsistent with a right of action founded on tort. This argument seems to me again to place undue emphasis on the remedy provided by the statute. … In my view the courteous use of the permissive form does not deprive the Commission of its legal right to a remedy on the assumption that the statutory preconditions to its cause of action are made out.
38. I conclude that the right of action created by Article 20(7) of the CIF Law is founded on tort and that it is subject to a prescription period of three years pursuant to Article 2(1) of the 1960 Law."
"24. Mr Binnington argued (at length in his written submissions) that 'tort' (in French) in Jersey law has a much wider scope than the English law of tort, citing for this purpose many texts and cases. I will not lengthen this judgment by extended reference to those texts or cases, for these reasons: first, Article 20(7) can by no stretch of imaginative licence be forced into the mould of 'tort' (in French) in Jersey law even if all the texts and earlier cases are read in the way that Mr Binnington seeks to read them (which is in my judgment much overstated); and secondly, in Arya this Court has, after detailed examination of the Jersey law of tort, reached the conclusion which I have already stated, that the three essential elements of tort are substantially the same in Jersey law and in English law."
"The leading authority on the principles to be applied in determining whether a breach of a statutory duty confers a private law cause of action on a person who has suffered loss as a result of such a breach is X (minors) v Bedfordshire County Council  3 WLR 152. See in particular the comments of Lord Browne-Wilkinson at 166 where he said –
'The principles applicable in determining whether such statutory cause of action exists are now well established. Although the application of those principles in any particular case remains difficult, the basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action. However a private law cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of the duty. There is no general rule by reference to which it can be decided whether a statute does create a right of action, but there are a number of indicators. If the statute provides no other remedy for its breach and the Parliamentary intention to protect a limited class is shown, that indicates that there may be a private right of action since otherwise there is no method of securing the protection that the statute was intended to confer. If the statute does provide some other means of enforcing the duty that will normally indicate that the statutory right was intended to be enforceable by those means and not by private right of action; Cutler v Wandsworth Stadium Limited  AC 398; Lonrho Limited v Shell Petroleum Co. Limited (No 2)  AC 173. The mere existence of some other statutory remedy is not necessarily decisive. It is still possible to show that on the true construction of the statute the protected class was intended by Parliament to have a private remedy. Thus the specific duties imposed on employers in relation to factory premises are enforceable by an action for damages, notwithstanding the imposition by the statutes of criminal penalties for any breach; See Groves v Wimborne (Lord)  2QB 402.'"
"53. Secondly, it has been held ever since Gorris v Scott (1874) LR 9 Ex. 125 that any right of action for breach of a statutory duty will be limited to claims in respect of loss of a type which it was the object of the statute to prevent. This principle, which was once regarded as a particular feature of actions for breach of statutory duty, can now been seen as illustrating a more general principle that an action in tort lies only to recover loss which it was the object of the relevant duty to prevent: Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5)  2 AC 883 at  (Lord Hoffmann). The limitation has been applied to actions in negligence (South Australia Asset Management v. York Montagu Ltd  AC 191); to actions in torts of strict liability, such as conversion (as in the Kuwait Airways case); and to intentional torts such as misfeasance in public office (Three Rivers DC v. Bank of England (No. 3)  2 AC 1, 195)."
Mr Kelleher says that para 53 establishes that actionable breach of duty contained in a statute is a tort. Although he states that conclusion as an opinion regarding Jersey law, the Commissioner's remarks were based entirely on English law; if the conclusion is correct as regards Jersey law, it results, at least so far as this dictum is concerned, from acceptance of English law on this point.
"46. A claim for breach of statutory duty is clearly a claim in tort (see Cole v Postal Administration & Anor  JLR 460, Dobson v Public Services Committee  JLR 446, Syvret v Chief Minister  JLR 343 and Classic Herd Limited v JMMB  JRC 127."
"52. In view of the clear language of Article 43(2), the effect of the Mental Health Law coming into force made the obligations of a curator statutory although they were previously quasi-contractual. The previous customary rules were clearly abolished. As the obligations have become statutory in nature, I consider I am bound by the previous decisions of the Royal Court cited above which provide that a claim for breach of statutory duty is a claim in tort. Accordingly, the applicable limitation period is three years."
1) The conclusion is unsupported either by judicial authority or by any learned literature. Lord Goldsmith QC submitted that the absence of support for the conclusion was unsurprising: as the trustee's duties are clearly established by statute and have their own particular prescription period, there would be no point in raising the question whether they were tortious duties. There is some force in that point, but it is only a partial answer. The scope and sources of tortious obligation and the taxonomy of legal obligations generally are a matter of obvious concern for any modern legal system; it is surprising that the incorporation of part of trust law into tort law has gone unremarked for more than 30 years.
2) As has already been mentioned, trusts were recognised in Jersey law before the enactment of the Trusts Law 1984, and the Trusts Law 1984 is not a codification of the law of trusts in Jersey—cf. Article 1(2); customary law remains relevant. Trusts are recognised as a source of obligations quite distinct from duties that sound in tort: see the dictum of Southwell JA in Black at para 20. If Mr Kelleher is right, non-tortious duties have been replaced by tortious duties simply by being placed on a statutory footing, even though the nature of the duties is not said to have altered and trusts law is not codified. The Trusts Law 1984 makes provision in respect of liability for breach of trust (Article 30) and defines breach of trust as "a breach of any duty imposed on a trustee by this Law or by the terms of the trust"; no distinction is made as to the nature of the liability by reference to whether it is tortious or non-tortious.
3) Some of the duties in the Trusts Law 1984 are clearly fiduciary in nature: see in particular Article 21(4). The Jersey law of fiduciary duty does not materially differ from the English law; see paragraphs 50 and 51 above. Equitable compensation for breach of fiduciary duty is not awarded on the same principles as equitable compensation for breach of an equitable duty of care and skill; see paragraph 49 above. Mr Kelleher's analysis would necessarily involve modification of either the equitable or the common law remedies as they now applied to some but not all breaches of trust, in each case without statutory warrant. This is unnecessary; one can simply recognise that the statutory duty is fiduciary rather than tortious in nature.
Direct application of the period for breach of trust
"(1) No period of limitation or prescription shall apply to an action brought against a trustee—(a) in respect of any fraud to which the trustee was a party or to which the trustee was privy; or (b) to recover from the trustee trust property (i) in the trustee's possession, (ii) under the trustee's control, or (iii) previously received by the trustee and converted to the trustee's use.
(2) Where paragraph (1) does not apply, the period within which an action founded on breach of trust may be brought against a trustee by a beneficiary is 3 years from—(a) the date of delivery of the final accounts to the beneficiary; or (b) the date on which the beneficiary first has knowledge of the breach of trust, whichever is earlier.
(3) Where paragraph (1) does not apply but, when the breach occurs, the beneficiary (a) is a minor, (b) is an interdict or (c) is under any other legal disability, the period to which paragraph (2) refers shall not begin to run before the beneficiary ceases to be a minor or interdict or under that other legal disability (as the case may be), or sooner dies.
(3A) Where paragraph (1) does not apply, the period within which an action founded on breach of trust may be brought against a trustee by an enforcer is 3 years from—(a) the date of delivery of the final accounts to the enforcer; or (b) the date on which the enforcer first has knowledge of the breach, whichever is earlier.
(3B) Where paragraph (1) does not apply, the period within which an action founded on breach of trust may be brought against a former trustee by a trustee is 3 years from the date on which the former trustee ceased to be a trustee.
(3C) Where paragraph (1) does not apply, no action founded on breach of trust may in any event be brought against a trustee by any person after the expiry of the period of 21 years following the occurrence of the breach.
(4) This Article does not apply to a foreign trust whose proper law is the law of a jurisdiction to which the Convention on the law applicable to trusts and on their recognition, signed at The Hague on 20th October 1984, for the time being extends."
"(1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action—(a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or (b) to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use."
"(3) Subject to the preceding provisions of this section, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provisions of this Act, shall not be brought after the expiration of six years from the date on which the right of action accrued. For the purposes of this subsection, the right of action shall not be treated as having accrued to any beneficiary entitled to a future interest in the trust property until the interest fell into possession."
"There is ample authority, spanning well over a century, establishing that although company directors are not strictly speaking trustees, they are in a closely analogous position because of the fiduciary duties which they owe to the company. Lord Porter put the matter succinctly in Regal (Hastings) Ltd v Gulliver (1942)  2 AC 134n, 159: 'Directors, no doubt, are not trustees, but they occupy a fiduciary position towards the company whose board they form.'"
In J J Harrison (Properties) Ltd v Harrison  EWCA Civ 1467,  1 BCLC 162, Chadwick LJ, with whom Laws LJ and Sir Anthony Evans agreed, said:
"25. I start with four propositions which may be regarded as beyond argument: (i) that a company incorporated under the Companies Acts is not trustee of its own property; it is both legal and beneficial owner of that property; (ii) that the property of a company so incorporated cannot lawfully be disposed of other than in accordance with the provisions of its memorandum and articles of association; (iii) that the powers to dispose of the company's property, conferred upon the directors by the articles of association, must be exercised by the directors for the purposes, and in the interests, of the company; and (iv) that, in that sense, the directors owe fiduciary duties to the company in relation to those powers and a breach of those duties is treated as a breach of trust. ...
26. It follows from the principle that directors who dispose of the company's property in breach of their fiduciary duties are treated as having committed a breach of trust that a person who receives that property with knowledge of the breach of duty is treated as holding it upon trust for the company. He is said to be a constructive trustee of the property. …
27. It follows, also, from the principle that directors who dispose of the company's property in breach of their fiduciary duties are treated as having committed a breach of trust, that a director who is, himself, the recipient of the property holds it upon a trust for the company. He, also, is described as a constructive trustee. But, as Lord Justice Millett explained in Paragon Finance plc v D B Thakerar & Co  1 All ER 400, at page 408g-409g, his trusteeship is different in character from that of the stranger. He falls into the category of persons who, in the words of Lord Justice Millett (at  1 All ER 400, 408j) ... 'though not strictly trustees, were in an analogous position and who abused the trust and confidence reposed in them to obtain their principal's property for themselves.'
29. There is no doubt that Lord Justice Millett regarded it as beyond dispute that a director who obtained the company's property for himself by misuse of the powers with which he had been entrusted as a director was a constructive trustee within the first category. He referred to 'directors and other fiduciaries' in that context – at  1 All ER 400, 408h-j. There is also no doubt, if I may say so, that he was correct to do so – see In re Sharpe, In re Bennett, Masonic and General Life Assurance Company v Sharpe  1 Ch 154, 172, Soar v Ashwell  2 QB 390, 398. The reason is that a director, on appointment to that office, assumes the duties of a trustee in relation to the company's property. If, thereafter, he takes possession of that property, his possession 'is coloured from the first by the trust and confidence by means of which he obtained it'. His obligations as a trustee in relation to that property do not arise out of the transaction by which he obtained it for himself. The true analysis is that his obligations as a trustee in relation to that property predate the transaction by which it was conveyed to him. The conveyance of the property to himself by the exercise of his powers in breach of trust does not release him from those obligations. He is trustee of the property because it has become vested in him; but his obligations to deal with the property as a trustee arise out of his pre-existing duties as a director; not out of the circumstances in which the property was conveyed."
In Gwembe Valley Development Co Ltd (in receivership) v Koshy (No. 3)  EWCA Civ 1048,  1 BCLC 131, the director had made a personal profit by reason both of his breach of the "no-profit rule" and of his dishonest breach of fiduciary duty involving the misapplication of the company's assets; the profit belonged in equity to the company (cf. paras 6, 31 and 43-44). Delivering the judgment of the Court of Appeal, Mummery LJ said:
"83. The trustee-like nature of directors' duties has always been recognised as very relevant to the statutory limitation periods for actions by beneficiaries against express trustees for breach of trust and for the recovery of trust property, whether those periods are applied directly or by analogy: Re Lands Allotment Company  1 Ch 616 at 631-632, 638-639 and 643 (a case of a company director being treated as a trustee within the limitation provisions of ss1(3) and 8(1) of the Trustee Act 1888 in respect of a claim that unauthorised investments had caused loss to the company); Re Sharpe  1 Ch 154 at 166-167 (misapplication of company money in the form of ultra vires payments of interest to shareholders treated as breach of trust by the directors); Bairstow v. Queen's Moat Houses  2 BCLC 531 at 548c-549f paragraphs 49-54 (accountability of directors for unlawfully paid dividend); and JJ Harrison v. Harrison  BCLC 162 at 173 (insufficient disclosure by director on purchase of property from the company).
111. … [I]t is possible to simplify the court's task when considering the application of the 1980 Act to claims against fiduciaries. The starting assumption should be that a six year limitation period will apply – under one or other provision of the Act, applied directly or by analogy – unless it is specifically excluded by the Act or established case-law. Personal claims against fiduciaries will normally be subject to limits by analogy with claims in tort or contract (1980 Act s 2, 5; see Seguros). By contrast, claims for breach of fiduciary duty, in the special sense explained in Mothew, will normally be covered by section 21. The six-year time-limit under section 21(3), will apply, directly or by analogy, unless excluded by subsection 21(1)(a) (fraud) or (b) (Class 1 trust).
112. In the present case, it is clear that these principles were applicable to a director in Mr Koshy's position. He had 'trustee-like responsibilities' in the exercise of the powers of management of the property of GVDC and in dealing with the application of its property for the purposes, and in the interests, of the company and of all its members. In our view, accordingly, the claim for an account, if it was based on a failure in the exercise of those responsibilities, was within the scope of section 21. It was in principle subject to a six-year time-limit under section 21(3). The question is whether it was excluded under either of the two statutory exceptions in section 21(1)(a) and (b)."
"'breach of trust' means a breach of any duty imposed on a trustee by this Law or by the terms of the trust;"
"'terms of a trust' means the written or oral terms of a trust, and also means any other terms made applicable by the proper law;
'trust' includes—(a) the trust property; and (b) the rights, powers, duties, interests, relationships and obligations under a trust;
'trust property' means the property for the time being held in a trust".
Article 2, headed "Existence of a trust", provides:
"A trust exists where a person (known as a trustee) holds or has vested in him or is deemed to hold or have vested in him property (of which he is not the owner in his own right)—
(a) for the benefit of any person (known as a beneficiary) whether or not yet ascertained or in existence;
(b) for any purpose which is not for the benefit only of the trustee; or
(c) for such benefit as is mentioned in sub-paragraph (a) and also for any such purpose as is mentioned in sub-paragraph (b)."
"30. In our judgment, Article 53 cannot apply directly to breaches of fiduciary duty by a director. This is because of the particular definition of various terms in the 1984 Law which do not find a parallel in the English statute. Thus:
(i) The limitation period of three years only applies to an action founded on 'breach of trust' brought against a 'trustee' by a 'beneficiary'.
(ii) The expression 'trustee' is defined in Article 2 as follows: [see above].
(iii) Similarly, breach of trust is defined in Article 1 as meaning 'a breach of any duty imposed on a trustee by this Law or by the terms of the trust'.
31. It seems to us that it is very difficult to read these provisions as applying directly to a director of a company. A company's property is not vested in its directors. The 1984 Law is clearly dealing with conventional trusts as they are commonly understood and not the fiduciary obligations owed by a director to his company."
I respectfully agree with that reasoning.
"In our judgment, that definition [viz. the definition of a trust in Article 2] is wide enough to encompass constructive trusts and we see nothing in its terms to suggest that the legislature intended to exclude such trusts from the provisions of the Law. Indeed, the contrary intention is manifest from the terms of Articles 7 and 33. Article 7 provides that a trust may come into existence in any manner and, in particular, may arise by conduct. A constructive trust is one which may arise by conduct. Article 33 makes express provision for the liability of constructive trustees. In particular, para (1) provides that, where a person (referred to in the article as a 'constructive trustee') makes or receives any profit, gain or advantage from a breach of trust, that person 'shall be deemed to be a trustee of that profit, gain or advantage.' Paragraph (3) provides that a constructive trustee 'shall deliver up the property of which the person is a constructive trustee to the person properly entitled to it.' Since Article 2 provides that a trust exists not only where a person actually holds or has vested in him property for the benefit of any person but also where he is deemed to do so, it is clear, in our view, that a constructive trust is a trust within the meaning of Article 5 [which makes provision in respect of the Royal Court's jurisdiction over trusts]."
The logic of the passage as a whole, and in particular the final sentence, indicates to me that the Court understood the deeming provision in Article 2 in the same way that Birt DB understood it in Northwind.
Article 74(1)(b): Direct application of a prescription period
a) Mr Harvey-Hills: the default 10-year period for an action personnelle mobilière applies. If, on the contrary, any other period were to apply by analogy, it would be the 10-year period for quasi-contractual claims; before 1991 a claim based on the director's duty of care would have been quasi-contractual.
b) Mr Gleeson: the claim is tortious and the 3-year period for tort in Article 2 of the Reform Law 1960 applies directly.
c) Mr Kelleher: the claim is founded on breach of statutory duty and is therefore a claim in tort; the 3-year period in Article 2(1) of the Reform Law 1960 applies directly. Alternatively, if the claim is not one for breach of statutory duty, the cause of action nevertheless is tortious and Article 2(1) applies directly. Alternatively, the limitation period for claims in tort is to be applied by analogy.
"A contractual obligation is by its very nature one which is voluntarily assumed by agreement. Terms may be implied into that agreement, but that is because they are necessary to make what has been agreed work and so this does not undermine the fact that the obligation is consensual. There is nothing consensual about the imposition of a tortious or equitable duty of care. It arises from a voluntary assumption of responsibility, but that is a state of affairs which is not dependent upon agreement."
However, the discussion at paras 42 to 58 showed that the different conclusions reached as to the applicable law for the tort claim and the equitable claim rested on a difference in the natures of the two duties, as expressed in Tuckey LJ's conclusion:
"56. … The equitable duty arises from and only from the director's relationship with the company. If it does not relate to the constitution of the company, it must I think relate to its internal management. A director's duties to his company are inextricably bound up with these matters and must therefore be governed by the place of the company's incorporation. Any other result would create huge uncertainty and hamper the requirement for good corporate governance and proper regulatory control. …
57. I also agree with Arden LJ's additional reasons for reaching this conclusion. But, I have reached it reluctantly because I do think it is unfortunate that our choice of law rules enable the existence of what was, for present purposes, precisely the same duty of care to be determined by different laws. … As long as English law permits a choice of choice of law anomalies will occur. The anomaly in this case is perhaps not so great when one considers that the duty of care in tort is not company specific, whereas the equitable duty is. The company provides the context in which the director assumes responsibility but is not crucial to the existence of the common law duty."
In agreeing with Tuckey LJ regarding the applicable law, Arden LJ said this in respect of a director's equitable duty of care:
"69. In my judgment, the law of the place of incorporation applies to the duties inherent in the office of director and it is irrelevant that the alleged breach of duty was committed, or the loss incurred, in some other jurisdiction. Accordingly, these duties can only be modified by contract to the extent that the law of the place of incorporation allows. It is not open to the company and the director to contend that they have contractually varied the liabilities imposed by the law of the place of incorporation by the terms of a contract for the appointment of the director governed by some other law, unless it is also shown that the law of the place of incorporation would allow this. In the matter of directors' duties - which are essential to good corporate governance and to any effective system of law regulating companies - party autonomy is the exception not the rule, and its scope is always a matter for the law of the place of incorporation."
Further on, she continued:
"74. In all the circumstances, I disagree with the judge's conclusion that to apply the law of the place of incorporation to the equitable duty of care is 'mechanistic'. ... The equitable duty is not a mere mirror image of the common law duty of care, whose content the parties can control, and thus to be treated, as the judge thought, as of no independent significance. I appreciate that the judge did not have the advantage of having section 310 [of the Companies Act 1985] drawn to his attention but, insofar as the assumption underlying the judge's conclusions here is that in this context there is in substance only one stream of law, that assumption would have been in contradiction of the passage from the judgment of Millett LJ in Bristol & West v Mothew (with which Otton LJ agreed) and the judge may have strayed into the area that has, perhaps somewhat unkindly, been referred to as the 'fusion fallacy' (Meagher, Gummow & Lehane, Equity: Doctrines and Remedies, 4 ed (2003), paras 2-100 to 2-320).
76. As a matter of English substantive law, the duties of a director arise as a matter of law and do not depend on the content of any agreement between the company on the one hand and the director on the other hand. The duties would have been imposed even if there had been no contract of employment conferring executive functions on Mr Shamurin. That the duties are imposed as a matter of law is supported by section 310 of the Companies Act 1985, set out above. That section applies to liabilities arising 'by virtue of any rule of law' in respect of negligence and other matters. Furthermore, the effect of that section is that it is not open to the company and the director to agree to lower the standards that the law imposes.
77. My Lord's conclusion is further supported by the fact that when a person agrees to accept an appointment as a director he does so (in the absence of contrary agreement) on the terms of the articles of association of the company (Re New British Iron  1 Ch 324; see generally Buckley on the Companies Acts (May 2004 update) para T/A82.3)."
"Although the remedy which equity makes available for breach of the equitable duty of skill and care is equitable compensation rather than damages, this is merely the product of history and in this context is in my opinion a distinction without a difference. Equitable compensation for breach of the duty of skill and care resembles common law damages in that it is awarded by way of compensation to the plaintiff for his loss. There is no reason in principle why the common law rules of causation, remoteness of damage and measure of damages should not be applied by analogy in such a case. It should not be confused with equitable compensation for breach of fiduciary duty, which may be awarded in lieu of rescission or specific restitution."
"Equitable compensation and common law damages are remedies based on separate legal obligations. What has to be identified in each case is the content of any relevant obligation and the consequences of its breach. On the facts of the present case, the cost of restoring what the bank lost as a result of the solicitors' breach of trust comes to the same as the loss caused by the solicitors' breach of contract and negligence."
Lord Reed's judgment contained detailed and appreciative discussion of McLachlin J's influential judgment in Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129, which had focused on equitable principles. At paras 93 and 94 Lord Reed, to similar effect to Lord Toulson, said:
"93. The rules appropriate to a breach of duty by a trustee similarly have to be determined in the light of the characteristics of the obligation in question. This focus upon the trustee's obligations is the third and most important point. Putting the matter very broadly, compensation for the breach of an obligation generally seeks to place the claimant in the position he would have been in if the obligation had been performed. Equitable compensation for breach of trust is no different in principle: again putting the matter broadly, it aims to provide the pecuniary equivalent of performance of the trust.
94. Some of the typical obligations of the trustee of a fund are strict: for example, the duty to distribute the fund in accordance with the purposes of the trust. Others are obligations of reasonable care: for example, the duty to exercise reasonable care and skill in the management of the fund. Since these equitable obligations relate to a fund held for trust purposes, the trustee's liability for a breach of trust will, again putting the matter broadly, depend upon its effect upon the fund: the measure of compensation will generally be based upon the diminution in the value of the fund caused by the trustee's default."
This passage confirms that Lord Reed was considering not only fiduciary duties stricto sensu but the other obligations owed by fiduciaries. At para 119, with reference to Millett LJ's dictum in Mothew, he said:
"First, Millett LJ was not considering the liability of a trustee. Secondly, as McLachlin J pointed out in Canson Enterprises, the application by analogy of 'the common law rules' is complicated by the fact that there is no single set of common law rules. It is necessary to consider the specific characteristics of the obligation in question (such as the duty to exercise care in the management of a trust fund), and the respects in which it resembles or differs from obligations arising in other areas of the law (such as duties of care in contract or in tort), in order for the law governing liability for the breach of these various obligations to be coherent."
The potential importance of observing the distinctions between the various duties was emphasised by Lord Reed at the end of his statement of general conclusions:
"136. It follows that the liability of a trustee for breach of trust, even where the trust arises in the context of a commercial transaction which is otherwise regulated by contract, is not generally the same as a liability in damages for tort or breach of contract. Of course, the aim of equitable compensation is to compensate: that is to say, to provide a monetary equivalent of what has been lost as a result of a breach of duty. At that level of generality, it has the same aim as most awards of damages for tort or breach of contract. Equally, since the concept of loss necessarily involves the concept of causation, and that concept in turn inevitably involves a consideration of the necessary connection between the breach of duty and a postulated consequence (and therefore of such questions as whether a consequence flows 'directly' from the breach of duty, and whether loss should be attributed to the conduct of third parties, or to the conduct of the person to whom the duty was owed), there are some structural similarities between the assessment of equitable compensation and the assessment of common law damages.
137. Those structural similarities do not however entail that the relevant rules are identical: as in mathematics, isomorphism is not the same as equality. As courts around the world have accepted, a trust imposes different obligations from a contractual or tortious relationship, in the setting of a different kind of relationship. The law responds to those differences by allowing a measure of compensation for breach of trust causing loss to the trust fund which reflects the nature of the obligation breached and the relationship between the parties. …
138. This does not mean that the law is clinging atavistically to differences which are explicable only in terms of the historical origin of the relevant rules. The classification of claims as arising in equity or at common law generally reflects the nature of the relationship between the parties and their respective rights and obligations, and is therefore of more than merely historical significance. As the case law on equitable compensation develops, however, the reasoning supporting the assessment of compensation can be seen more clearly to reflect an analysis of the characteristics of the particular obligation breached. This increase in transparency permits greater scope for developing rules which are coherent with those adopted in the common law. To the extent that the same underlying principles apply, the rules should be consistent. To the extent that the underlying principles are different, the rules should be understandably different."
"45. The starting point for Mr Speck's argument was the contention that the limitation period for actions based on breach of a director's statutory duty to exercise 'care, diligence and skill' (Article 74(1)(b)) is three years. He based this on the submission that breach of a duty such as this is essentially tortious in nature, citing observations of Southwell J.A. giving the judgment of the Court of Appeal in Jersey Financial Services Commission v A.P. Black (Jersey) Ltd (2002 JLR 443 at para 20) in which he summarized the essentials of a cause of action in tort as including—
'… a duty owed to he plaintiff by the defendant otherwise than by virtue of a contract or trust, whether pursuant to Jersey common law or statute, a breach of this duty by the defendant, and actual or threatened damage …' [Emphasis supplied]
Taking these criteria as the touchstone of what constitutes a tort, and noting in particular the words in italics, it was submitted that the statutory company law duty alleged can only be tortious in nature.
46. But it is necessary to put Southwell J.A.'s comments in context. The issue before the Court of Appeal in that case was whether the Commission's right to proceed against the defendants under Article 20(7) of the Collective Investment Funds (Jersey) Law 1988 was subject to any, and if so what, prescription period, and its conclusion was that, having regard to the (exceptional) regulatory nature of the power provided by that article, no specific period was applicable. The passage cited occurred in response to the defendants' contention that the right of action was one in tort; its purpose was to point up the fact that two of the three essential elements of a tort claim were missing in the case then under consideration …; and there was no cause to consider the particular matter of directors' statutory duties in company law. To that extent, the passage relied on may be regarded as obiter dicta rather than definitive of the question whether 'contract or trust' are the only areas in which the law recognizes non-tortious liability."
This shows that Page, Commr, regarded a claim for breach of the duty under Article 74(1)(b) as being different from a tort claim. That same view is also implicit in the final sentence of para 33 of Birt DB's judgment in Northwind (above). The reasoning in Alhamrani is also consistent with what I take to be the settled position, as mentioned above, that even if a right of action would satisfy the basic requirements of a right of action in tort, it will not be such an action if it arises under a different area of law.
"If in proceedings for negligence, default, breach of duty or breach of trust against an officer of a company or a person employed by a company as auditor it appears to the court that that officer or person is or may be liable in respect of the negligence, default, breach of duty or breach of trust, but that the person has acted honestly and that having regard to all the circumstances of the case (including those connected with his or her appointment) he or she ought fairly to be excused for the negligence, default, breach of duty or breach of trust, the court may relieve the person, either wholly or partly, from his or her liability on such terms as it thinks fit."
Mr Mowschenson and Lord Goldsmith submitted that the reference to "negligence", in addition to the other expressions, showed that the tort of negligence was intended. Article 212 was based on section 448 of the UK Companies Act 1948, to which it is in material respects closely similar. This does not mean that it is inapt for application to Jersey law, but it rather weakens the impact of any suggestion that Article 212 embodies statutory recognition of the tortious nature of the director's duty of care, whether pre-statutory or newly statutory. The Companies Law 1991 does not itself, of course, state that Article 74(1)(b) sounds in negligence; this again weakens the argument that Article 212 explains the taxonomy of the Article 74 duties. In fact, Article 212 appears designed to cover all possible non-contractual duties not only of directors but of other company officers and of auditors. In my view one cannot use it to draw inferences as to the classification of the duty in Article 74(1)(b).
"155. Before us, Miss Lawrence [the Advocate for the appellants] did not seek to challenge that part of the judgment below where the learned Bailiff indicated that quasi-contract was part of the law of Jersey (paragraphs 15 and 16). As he had indicated, the customary law of Normandy appears to be silent or brief on the meaning and extent of the term quasi-contract but Houard, 4 Dictionnaire de Droit Normand, 1st edition, at 3 (1782) contained the following (in translation):
'The name [quasi-contract] is given to the obligation which arises from equity, without the need for any agreement between the parties. Thus, for instance, a quasi-contract is formed between an absent person and one who, during his absence, does some necessary thing for him; for the absent person, by reason only of equity, will be bound to reimburse any necessary and appropriate expenditure made on his behalf.'"
However, the appellants contended that the scope of quasi-contract in modern law was significantly restricted, with much of what it had formerly encompassed now being treated as matters of tortious or fiduciary duty. The Court rejected that approach:
"160. In my view, these submissions are not well founded. On the material available to this Court, I do not see how we could take the view that, so far as the present law of Jersey was concerned, quasi-contract was an outmoded concept. Starting with Golder v. Société des Magasins 1967 JJ 721, cited above, it seems clear that the concept was treated as part of the law of Jersey and the principles as stated by Pothier (as set out in that judgment) considered to be the principles of the law of this Island. The references are to Pothier, Traite des Obligations, Chapter I (Tome I); Section II of Article 8, Section 3 of the same Article and Part 4, Chapter III, Article III: see pages 729 – 730. This can only be considered as a very strong indication, as at 1967 – and again from the then Bailiff, Sir Robert Le Masurier – that Pothier's description of the principles of quasi-contract are part of the law of Jersey."
" … The causes of Obligations are, 1. Contracts.—2. Engagements in the nature of contracts [quasi-contracts].—3. Injuries [delits].—4. Acts in the nature of injuries [quasi-delits].—Sometimes the mere authority of the law, or the mere force of natural equity."
 A Quasi contract is the act of a person permitted by the law which obliges him in favour of another, without any agreement intervening between them.
For instance, the heir's acceptance of the succession is a quasi contract in favour of the legatees; for it is a fact permitted by the law, which obliges the heir to the payment of the legacies without the intervention of any agreement between him and the legatees.
Another instance of a quasi contract is, when a person pays by mistake what he does not owe. The payment is a fact which obliges the other party to restore what he has received, although there cannot be said to be any agreement for such restitution.
The undertaking the business of a person who is absent, without a previous direction, is also a quasi contract, which obliges us to render an account of it, and obliges the absent person in certain circumstances to indemnify us from the expences [sic].
There are many other instances of quasi contracts which we pass over in silence.
 All persons, even infants, and persons destitute of reason, who are consequently incapable of consent, may be obliged by the quasi contract, which results from the act of another, and may also oblige others in their favour; for it is not consent which forms these obligations; they are contracted by the act of another, without any act on our part. The use of reason is indeed required in the person whose act forms a quasi contract, but it is not required in the person by whom, or in whose favour the obligations which result from it are contracted.
For instance, if a person undertakes the business of an infant, or a lunatic, this is a quasi contract, which obliges the infant or the lunatic to account to the person undertaking his affairs, for what he has beneficially expended, and reciprocally obliges that person to give an account of his transactions.
It is the same with respect to women who are under the power of their husbands; they may in this way be obliged towards others, or oblige others towards them, without being authorized by their husbands; for the law which prohibits their obliging themselves or doing any thing independently of their husbands, and without their authority, only annuls what is done without such authority, and not the obligations, which are formed without any act on their part."
"Of Injuries and Negligencies
 Injuries (delicta) are the third cause which produces obligations, and quasi delicta (or negligence) the fourth.
Injury (delictum) is when a person by fraud or malignity causes any damage or wrong to another.
Quasi delicta are facts by which a person causes damages to another, without malignity, but by some inexcusable imprudence.
 These differ from quasi contracts, inasmuch as the fact, which is the subject of a quasi contract, is permitted by the law, whereas the fact which forms a delictum or quasi delictum is something reprehensible."
Mr Kelleher was asked to comment on an entry on administration de tutelle in Ferriere, Dictionaire de Droit et de Pratique (1769) at p. 52; in English translation it reads:
"Administration de tutelle is a quasi-contract which creates obligations owed by the tutor to the pupil and by the pupil to the tutor without there being any contract between them. From this quasi-contract there comes into existence a reciprocal obligation and an action called actio tutelae, which is direct or contrary.
The direct claim is afforded to the pupil against the tutor, which results in the tutor being required to render an account of his administration and to make good any wrong that he may have caused, even by minor fault
The contrary claim is afforded to the tutor against his pupil; and in this action it results in the pupil being required to reimburse the expenses incurred by the tutor in managing his affairs and to indemnify him against all damage that he has suffered in relation to that and to pay him the costs of the administration, by order of the judge."
Mr Kelleher accepted that Ferriere would be regarded as an authoritative guide to Jersey law, provided only that the entry were not speaking of some statutory amendment of the French common law before the Code Civile (there is no evidence that it is speaking of a statutory amendment). But he was of the opinion that, if indeed "minor fault" were being used to include negligence, the Jersey courts would prefer Pothier's classification and regard the cause of action as lying in quasi-delict and, therefore, now in tort.
Analogous application of prescription periods
Article 74(1)(a): analogous application of the period for breach of trust
1) The respondents' case, advanced most fully by Mr Gleeson, is that Article 57(2)(b) can properly be applied by analogy, by taking "the beneficiary" to refer to the company; for this purpose the knowledge of the wrongdoer director is not to be attributed to the company. The 3-year period is properly subject to analogous application of the 21-year longstop in Article 57(3C).
2) However, Article 57(2)(b) relates only to actions by beneficiaries. A claim against the wrongdoer trustee will also lie, for precisely the same purpose (namely, restoration of property or value to the trust fund) at the hands of a successor trustee; see Article 57(3B), which operates independently of Article 57(2)(b). Mr Gleeson explained that the trustee's right of action reflects the position at customary law, whereby an incoming trustee has a duty to investigate the conduct of the outgoing trustee, in order to identify any breaches of trust, and may bring a claim in that regard.
3) Mr Gleeson and Mr Kelleher both expressly accepted that this alternative period could have no application to companies, because a claim lies only with the company. Successor directors do not have rights of action; nor, significantly, do they have the same duty of investigation into the conduct of their predecessors that trustees have. The evidence of Mr Gleeson and Mr Kelleher, accordingly, was that there was no relevant analogue for the cause of action in Article 57(3B).
4) Therefore to apply only Article 57(2)(b) is to impose the relatively short period of 3 years from the date when knowledge of the breach of duty can first be attributed to the company, without however making any provision for the availability of a longer period to reflect later investigation by an incoming officer by analogy with Article 57(3B). This means that the headline 3-year period is not in fact being applied similarly in the two cases. Indeed, in the case of a trust the 3-year prescriptive period applying to a claim by a beneficiary (the analogue of the company) may even have expired before the commencement of the 3-year prescriptive period applying to the new trustee's distinct right of action in respect of the same breach of trust (for which there is no analogue in the case of companies). Analogous application of section 21 of the Limitation Act 1980 in England and Wales does not give rise to these considerations, which arise specifically from the words of the Jersey statute.
5) Although Mr Zacaroli did not say so in terms, his argument reflects what might be the intended point of Hunt, Commr's, dictum in Nolan that "what has to be analogous is the period, not the cause of action" (see paragraphs 30 and 32 above). It is not sufficient to show an analogy between different causes of action. What is required is that such an analogy should make it appropriate to apply to one case a period that applies to another case. Mr Zacaroli, while really accepting the close analogy between the causes of action, denied that there was a proper basis for the analogous application to company directors of a headline period applying to trustees.
Article 74(1)(b): analogous application of the period for torts
Conclusion on analogous application
Note 1 Section 310 of the 1985 Act provided:
“(1) This section applies to any provision, whether contained in a company's articles or in any contract with the company or otherwise, for exempting any officer of the company or any person (whether an officer or not) employed by the company as auditor from, or indemnifying him against, any liability which by virtue of any rule of law would otherwise attach to him in respect of any negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the company.
(2) Except as provided by the following subsection, any such provision is void.” [Back] Note 2 Evans comments in a footnote: “We have no term in the English law strictly corresponding with that of quasi contracts in the civil law; many of the cases falling within the definition of that term, may be ranked under the denomination of implied contracts, but that denomination is applicable rather to the evidence than to the nature or quality of the obligation, as in judgment of law an actual promise is deemed to have taken place, and the consequences are the same as if such promise had been declared by the most express and positive language.” This illustrates rather clearly how English law was misled, as civil law was not, by “the unintended overtones of the Roman phrasequasi ex contractu”: cf. Birks, An Introduction to the Law of Restitution (revised edn. 1989), p. 4; also Ibbetson, A Historical Introduction to the Law of Obligations (1999), pp. 276-281, where Evans’s footnote is cited. [Back]
Note 1 Section 310 of the 1985 Act provided: “(1) This section applies to any provision, whether contained in a company's articles or in any contract with the company or otherwise, for exempting any officer of the company or any person (whether an officer or not) employed by the company as auditor from, or indemnifying him against, any liability which by virtue of any rule of law would otherwise attach to him in respect of any negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the company. (2) Except as provided by the following subsection, any such provision is void.” [Back]
Note 2 Evans comments in a footnote: “We have no term in the English law strictly corresponding with that of quasi contracts in the civil law; many of the cases falling within the definition of that term, may be ranked under the denomination of implied contracts, but that denomination is applicable rather to the evidence than to the nature or quality of the obligation, as in judgment of law an actual promise is deemed to have taken place, and the consequences are the same as if such promise had been declared by the most express and positive language.” This illustrates rather clearly how English law was misled, as civil law was not, by “the unintended overtones of the Roman phrasequasi ex contractu”: cf. Birks, An Introduction to the Law of Restitution (revised edn. 1989), p. 4; also Ibbetson, A Historical Introduction to the Law of Obligations (1999), pp. 276-281, where Evans’s footnote is cited. [Back]