Description
JERSEY INSOLVENCY AND
ASSET TRACKING
Fifth Edition
by
ANTHONY DESSAIN
Advocate and Notary Public
of Bedell Cristin, Jersey Partnership
and
MICHAEL WILKINS, M.B.E.
Viscount of the Royal Court of Jersey 1981 – 2015
and Judicial Greffier 1997 – 2015
Edited by Robert Gardner and Edward Drummond,
Advocates, both of Bedell Cristin, Jersey Partnership
and Ed Shorrock, F.C.A, of Baker & Partners
ISBN 978-1-901614-67-1
Soft back 692 pages
FOREWORD TO THE FIFTH EDITION
by
Sir William Bailhache
(Deputy Bailiff and Bailiff of Jersey from 21.11.09 to 17.10.19)
This is the fifth edition of this very useful contribution to the law of Jersey. The last edition showed the law as at 31 December 2011.
I am told by the authors that since then there have been some 200 new developments in our law and practice, which makes the new edition especially valuable.
So far, notwithstanding my foreword to the fourth edition, the 2012 Security Interests Law has not provided the number of cases one might have expected but then the 1983 Security Interests Law did not do so either. Perhaps both pieces of legislation are so clear they brook no argument.
A work of this kind makes a vital contribution to the overall package which an international financial centre should offer. This is particularly so by describing some of our older insolvency procedures such as dègrévement which are special to Jersey and which are not instinctively familiar to clients and practitioners both in and outside the Island.
I congratulate the authors and am pleased to commend it.
William Bailhache
Bailiff of Jersey
Royal Court of Jersey
TABLE OF CONTENTS
Foreword to the First Edition
Foreword to the First Edition
Foreword to the Third Edition
Foreword to the Fourth Edition
Preface to the Fifth Edition
Illustrations
Principal Abbreviations
Table of Jersey Cases
Table of Jersey Legislation
Table of English and Other Cases
Table of English Legislation
Human Rights Cases
Table of International Conventions
Glossary
PART 1 – MAIN TEXT
Chapter 1 – Introduction
Background
The Jersey Court System
Sources of Jersey Law
Formal Validity, Essential Validity and Capacity
Chapter 2 – Asset Recovery and Claimants’ Rights Prior to and after
Insolvency Procedures
Types of Property
Types of Co-ownership
Usufructs and Leases
Types of Security
Immovable Property
Hypothèque Conventionelle Simple
Hypothèque Judiciaire
Hypothèque Légale
Flats
Long Leases
Foreign Security
Movable Property
General Rule
Tangible Property situated in Jersey
Pledges
Lien
Non-Judicial – Landlord’s Right to Distrain
Statutory Rights of Payment – Ship and Aircraft Dues
Mortgages over Ships
Leasing and Hire Purchase Agreements
Unauthorised Transfers of Movables and of those subject to Hire Purchase Agreements
Aircraft
Reservation of Title Clauses
Intangible Property situate in Jersey
Security Interests
Security Interests and Bankruptcy
Security Interests and Désastres
Security Interests (Jersey) Law 201- (the “new Security Interests Law”)
Purpose of the new Security Interests Law
Principal features of the new Security Interests Law
Trust Property, whether Tangible or Intangible, situate in Jersey or Elsewhere
Foreign Security
Movables situate in Jersey
Foreign Situate Movables
Rights of Foreign Claimants
Pursuit of Secured Claims
Judicial
Non-Judicial
Pursuit of Unsecured Claims
Judicial
Ordre Provisoire
Claims against Property in Co-ownership
Pursuit of Claims Generally
Commencement of Proceedings
Jurisdiction to Commence Proceedings or to Make an Application
Causes of Action
Contract
Tort Generally
Specific Torts
Fraud as a Tort
No Discharge for Fraud
Fraud as a Criminal Offence under Common Law
Comparison of Criminal and Civil Fraud
Equitable Rights
Background
Constructive Trust Claims
Remedial Constructive Trusts
Unjust Enrichment and Restitution
Immovable and Movable Property and Succession Rights
Statutory Rights
New Causes of Action and Certainty
Le Criminel Tient Le Civil en État
Remedies and Orders Available
Tracing
Interlocutory Orders
Interlocutory and Freezing Injunctions
Ancillary Orders available against a Defendant
Ancillary Orders available against Third Parties
Express Undertakings
Restricted Use of Discovered and Disclosed Documents
“In Private” Hearings
Enforcement of Judgments and Arbitration Awards
Enforcement in Jersey of Jersey Judgments
Enforcement in Jersey of Foreign Judgments
Enforcement Abroad of Jersey Judgments
Enforcement in Jersey of Jersey Arbitration Awards
Enforcement in Jersey of Foreign Arbitration Awards
Chapter 3 – Officers’ and Directors’ Duties and Liabilities
Types of Jersey Company, their Registered Office and Regulation
Regulation and Compliance
Directors’ Duties
Generally
Maintenance of Accounting Records and Retention of Documents
Directors of Corporate Directors
Controlling Directors’ Activities
Acting ultra vires and wrongly
Collective Responsibility
Shareholders’ Protection
Creditors’ protection
Wrongful Trading
Fraudulent Trading
Disqualification Proceedings
Criminal Liability
Companies Law
Désastre Law
Regulatory Laws
Common Law
Appointment of Inspectors
Indemnity for Civil and Criminal Liability
Chapter 4 – Piercing the Veil
The Veil
Piercing the Corporate Veil
Members’ Statutory Liability to Contribute
Lifting the Corporate Veil
Lifting the Corporate Veil – to protect assets
Lifting the Corporate Veil – to obtain information about the beneficial owner of a company
Lifting the Corporate Veil – to obtain information about the affairs of a company
Trusts have no Veils to Pierce or Lift
Chapter 5 – Bankruptcy
Section 1: Introduction
Insolvency, Bankruptcy and the Anti-Deprivation Principle
Section 2: Désastre
Désastre
Origins and meaning
Statistics
Who may Commence?
Commencement by a Sole Creditor
Commencement by the Jersey Financial Services Commission
Requirements for Commencement and the Exercise of Discretion
Who may be a Debtor?
Individuals, some Companies and some Partnerships
Other Companies
Other Partnerships
Deceased Debtors
Application for a Désastre
Application Generally to be Heard in Open Court (Open Justice)
Requirement for Liquidated Sum
The Rôle of the Viscount and the Vesting of Assets
Vesting of Immovable Property
Vesting of Movable Property
Leases and Licences to Occupy
Excluded Assets
Rights of Action in respect of Injuries caused to the Person or Feelings of a Personal Bankrupt
Pension Schemes
Old Age Pension
Liquor and Gambling Licences
Liquor Licences
Gambling Licences
Medicinal Products
Realisation of Assets
Licitation
Investment of Sums Realised by the Viscount
Derisory Offers
Referential Bids
Competing Offers
Universality Principle
After Acquired Property
Duty to Investigate
Legal Advice Privilege
Funding Désastre Proceedings
Special Position of the Matrimonial Home
Status of Trust Assets
General Powers of the Viscount
Agents of the Viscount
General Duties of the Debtor
Exceptional Position of the Viscount
Annual Returns
Section 3: Winding up of Jersey Companies
Winding Up of Jersey Companies
Who may Commence?
Bar to Commencement
Procedure for Commencement
Procedure for Commencement of a Summary Winding Up and its Effect
Procedure for Commencement of a Court Winding Up
Procedure for Commencement of a Creditors’ Winding Up
Appointment and removal of a Liquidator
General Duties of a Liquidator
General Rights and Powers of a Liquidator
Vesting of Assets
Trust Assets
Contributions in respect of the Purchase or Redemption of Shares
Contributions of Present and Past Members
Duty to Co-operate
Delivery and Seizure of Property
Legal Effects of Initiation of Désastre and Company Winding Up
Effect on Directors’ Powers
Automatic Stay of Proceedings and Effect on Arbitration
Abolition of the Ten Day Rule – the Effect on Conveyances and Judgments
Treatment of Claimsin a Désastre and Company Winding Up
Costs, Charges and Expenses
Section 4: Désastres and Winding up – Similarities and Differences
Désastre or Winding Up – Some considerations
Désastre or Winding Up – Where either is possible
Special Effects of Initiation of Désastre on Individuals
Categories of Creditor
Secured Creditors
Harbour and Airport Dues
Priority Creditors
Unsecured Creditors
Claims
Time of Filing
Proofs of Claim
Foreign Currency Claims
Adjudication
Set Off (Compensation)
Contractual Netting
Purchases by Credit Card
Extortionate Credit Transactions
Contingent Claims and Liabilities
Claims for Performance
Contractual and Other Subordination of Claims
Fines as Claims
Hire Purchase
Subrogation of Claims
Treatment of Foreign Creditors
Competing Claims of Foreign Insolvencies
Filing in a Désastre
Overriding Claims
Seeking Assistance in Jersey
Interest
Position of Shareholders
Directions of the Court
Meetings of Creditors
Désastre
Creditors’ Winding up
Conduct of Proceedings
Use, Sale, Lease or Disposal of Property
Assignment of Rights of Action
Third Parties’ Rights against Insurers
Disclaimer of Onerous Property
Unprofitable Leases and Sub-leases
Annulment of Leases
Borrowing
Powers of Attorney
Voidable Transactions
Transactions at an Undervalue
Preferences
Unperfected Security
Invalid Trusts and Invalid Transfers to Trusts
Excessive Pension Contributions
Wrongful and Fraudulent Trading
Wrongful Trading
Fraudulent Trading
Common Law and Other Statutory Claims
Fraudulent and other claims generally
Improper Use of Share Capital
Section 5: Dégrèvement and Réalisation
Dégrèvement and Réalisation
Introduction
Who may apply?
Requirements
Preliminary Procedure
The Dégrèvement Hearing
Practical Considerations
Vacant possession
Discharge
Surplus
Guarantors
Servitudes
Abolition of Dégrèvement
Table of Completed Cases and Statistics
Réalisation
Procedure
Practical considerations
Section 6: Debtor Protection Procedures
Remise de Biens
Who may apply?
Requirements
The application
Considerations
Foreign Immovable Property
The decision
Application granted
Application Refused/Remise Fails
Discharge
Costs in a Remise
Practical considerations
Table and Statistics
Cession Générale (cession de biens)
Involuntary cession
Who may apply?
Requirements
Implicit voluntary cession
Voluntary cession
Procedure
Considerations
Discharge
Practical Considerations
Procedure following cession
Décret
Effects of the Alternative Bankruptcy Procedures in the Context of Discharge
Other Debtor Protection Procedures
Stay
Who may apply
Requirements
Application
Recall of a Désastre
Who may apply?
Application
Requirements for Recall
An Alternative Approach by way of Appeal
Recall or Appeal?
Other Appeals?
Judicial Review?
Seeking Damages for a Wrongful Declaration
Statutory or d’Allain Damages?
Company Amalgamation and Schemes of Arrangements
Administration and Re-organisation
Recent Proposals for Reform
Section 7: Finalising a Désastre or Winding Up
Criminal Offences
Reporting Possible Criminal Offences
Distribution of Assets
Payment of Final Dividend by, and Discharge of, the Viscount
Pooling of Assets and Liabilities
Discharge of a Personal Bankrupt
Student Loans and Discharge
Cessation of Activity by the Viscount
Exclusion of the Viscount etc from Liability in Damages
Termination of a Creditors’ or Court Winding Up
Dissolution of a Company and the Disposal of Records
Section 8: Traditional and Statutory Partnerships
Traditional and Statutory Partnerships
Section 9: Miscellaneous Enactments
Miscellaneous Enactments
Chapter 6 – Cross Border Insolvency
Introduction
Recognition and Universality
Collecting Evidence in Jersey
Statutory Requests for Assistance
Requests by Foreign Courts to the Royal Court
Application of the General Rules of Private International Law
Requests by the Royal Court to Foreign Courts
Comity and Co-operation
International Co-operation
Chapter 7 – Human Rights
The Human Rights (Jersey) Law 2000 (“HRJL”) – Its impact upon the Désastre Law and the Companies Law (on winding up)
Rôle of the Royal Court
Principally applicable to Public Authorities
Viscount as a Public Authority
Liquidator as a Public Authority
Recurring, Absolute and Qualified Rights
Prescription (Limitation of Action)
Complainants
New Legislation to be Convention Compliant
Example of Operation of the Right to a Fair Hearing under Article 6 of the Convention
Example of Operation of the Right to Respect for Private and Family Life, Home and Correspondence under Article 8 of the Convention
Example of Operation of the Right to Peaceful Enjoyment of Possessions and Protection of Property under Article 1 of Protocol 1
Interface with the UNCITRAL Model Cross-Border Insolvency Law
The Effect on the Decision-making Process
Chapter 8 – Scrutiny of Jersey as an International Finance Centre
The Edwards’ Report
International Monetary Fund and MONEYVAL Assessments
The Foot Review: Review of British Offshore Financial Centres
The Bankruptcy Regime
PART 2 – COMMENTARIES ON THE TEXT
Commentary 1: Guarantees – Cautions (and Insolvency)
Definition
Types of Guarantee Commonly Encountered in Practice
Validity of the Guarantee
The rights of those involved
To what may a Guarantee relate?
Extinction of Guarantees
Guarantees and Insolvency
Commentary 2: Enforcement in Jersey of Foreign Judgments
General Rule and Exceptions
Enforcement Requirements
Currency Regulations and Restrictions
Documentary Requirements
International Conventions
Authentication of Documents
Translation of Documents
Re-opening or Review of Judgments
Pending Proceedings
Defences
Jurisdiction
Contractual Waiver
Service of Documents
Interim Relief
Interest
Time of Enforcement and Subsequent Action
Expenses, Legal Fees and Security for Costs
Cross-Examination of a Deponent on the Deponent’s Affidavit
Requirements of Affidavit
New Action Instead of Enforcement
Prescription for Registration
Commentary 3: Special Situations: Foreign Taxation and Trusts and Estate Planning
Introduction
Tax
Trusts and Estate Planning
Conclusion
Commentary 4: Company Winding Up
Part I –Summary Winding Up Pursuant to Article 146 of the Companies
(Jersey) Law 1991
Part II – Creditors’ Winding Up Pursuant to Article 157 of the Companies
(Jersey) Law 1991
Commentary 5: Employment Law and Insolvency
Background
The Jersey Employment Tribunal
Redundancy and insolvency
Effect of winding up under Article 155 of the Companies Law on contracts of employment
Continuation of employment by agreement
Impact of a Royal Court stay on Tribunal claims
Employment and priority claims
Commentary 6: Applications under Article 49 of the Désastre Law – A Practitioners’ Guide
Introduction
Prescribed country or territory
Applications to be notified to the Viscount’s Department
Applications usually “ex parte”
Format of the application
Registration of the office holder by the Royal Court
Disclosure of assets/documents
Examination of witnesses
Gagging orders
Freezing orders
Application of information obtained
Deceased estates
Time delay
Costs’ Orders
Private International Law
The correct approach?
Requests by the Royal Court to Foreign Courts
Format of the application
Conclusion
Commentary 7: Universality – A Broader Discussion
The Principle
The Cases
Conclusion
Commentary 8: Limited Liability Partnerships in Jersey
Introduction
Main Characteristics and Differences between Traditional Partnerships
Creditor Protection
The Type of Partnership Available
Dissolution
Winding Up
Conclusion
Commentary 9: Jersey Foundations
What is a Jersey foundation and what can it do?
Features of Jersey foundations
Incorporation of a foundation
The Charter
The Regulations
The Founder
The Council
The Guardian
Beneficiaries and Provision of Information
Administrative Matters and Record Keeping
Merger and Migration
Winding Up and Dissolution
Foundations and the Désastre Law
Commentary 10: Saisies Judiciaires
Introduction
The statistics
Saisie Judiciaire procedure
Conclusion
Commentary 11: Overview of the Security Interests (Jersey) Law 2012
Introduction
Scope
Attachment and perfection
Priorities
Persons taking free of security interest
Assignments of receivables
Enforcement of security interests
Registration
Effect of grantor’s bankruptcy
Commencement, repeal and transitional provisions
PART 3 – MISCELLANEOUS
Index
Useful addresses and other publications
Authors and Editors