An islander’s claim that a £2.9million loan he couldn’t repay was based on a mistake has led to a fall-out over contract law between the past, present and future Bailiffs.
Accusing them of “washing the judicial linen in public”, Advocate David Cadin – the island’s Bâtonnier and Managing Partner of Bedell Cristin – is now calling for politicians to step in to resolve the dispute once and for all.
If they don’t, he warns that “unlucky” islanders and the finance industry as a whole could be put at risk.
The contract law clash emerged after an islander argued in the Royal Court that he should have never been able to obtain a £2.9million loan, which he couldn’t repay, because it was secured on the basis of an incorrect valuation of a property he owned.
The argument over whether the contract was therefore void has rumbled across numerous court sittings – most recently, in a Court of Appeal hearing in which the islander’s claims were thrown out.
Pictured: The dispute was over Jersey's "opaque" contract law.
The decision was handed down in a 45-page judgment – but 27 of those were dedicated to “controversy” around Jersey’s contract law, rather than the islander’s appeal itself.
The Royal Court’s key question was whether a mistake can set aside a contract (known as the ‘subjective view’) or whether an agreement is binding in an objective sense.
Unfortunately, this ended up an extremely difficult matter to resolve due to what the Bâtonnier terms as Jersey’s “opaque” contract law, and lawyers’ necessity to rely on “ancient principles, French texts, judgments from Jersey and elsewhere and instinct to determine what the law is.”
In this case, the legal interpretations and instincts of the island’s past, present and future (current Deputy) Bailiff were split.
In an unusually strongly-worded judgment published earlier this month, the Court of Appeal Judge John Martin hit out at the state of affairs in Jersey as being “wholly unsatisfactory.”
Pictured: Advocate David Cadin.
“It should not be the case in a modern, developed jurisdiction such as Jersey that something as fundamental to its commercial law as the correct approach to the determination of contractual consent should be uncertain,” he stated.
“The uncertainty is made worse by the fact that the matter is controversial at the highest level in the local judiciary. On one side of the debate, espousing the subjective approach, are the current and a former Bailiff; on the other, favouring the objective approach, are a former Bailiff and the current Deputy Bailiff, soon to be the Bailiff. It is clear…that some of the current personnel of the Court of Appeal also consider the matter to be at best uncertain.
“It is time the debate came to an end,” the Judge concluded.
Commenting on the judgment, Advocate Cadin said: “At the risk of stating the obvious, Jersey is a small jurisdiction, with a limited judiciary, and relatively few cases coming to trial. One might have hoped and expected that the opportunity and inclination for judicial disagreements was rather limited. However, the recent Court of Appeal decision… rather gives the lie to that.”
And this, he argues, “has consequences for all of us.”
Pictured: The current Bailiff, Sir William Bailhache, agrees with the subjective approach.
“We enter into contracts every day for all sorts of things, ranging from the mundane to the life affirming, and we need certainty.”
The next islander to have the “misfortune” of facing a similar contractual court case is at risk of ending up in costly continued litigation – all because the court doesn’t have a clear view.
“…Whoever the unlucky parties might be, they should steel themselves for the inevitable appeal to the Privy Council. All this will be at significant expense, both in terms of financial costs to the parties and the island and in lost opportunities for the parties, the Judges and the Courts (what other cases could and should those Courts have been dealing with?).”
He continued: “Nor can it be right that for something as fundamental as the approach to contractual consent, we have to wait for the right case to come along between equally energetic and wealthy parties.”
Warning of implications too for the finance industry, which “depends on certainty with contracts”, Advocate Cadin urged: “…This current issue is something that should be looked at – and looked at quickly.”
Pictured: The contract law controversy, Advocate Cadin argues, has implications for the finance industry.
Back in 2002, there had been a recommendation by the Jersey Law Commission to follow English law on the matter – but this was never acted on.
Advocate Cadin is therefore calling on the States Assembly to ensure they act this time, and take up the challenge in the name of open access to justice.
“Forcing a litigant (of whatever means) to run a gauntlet of uncertain decisions to clarify a fundamental aspect of Jersey law is not Access to Justice; having significant uncertainty on a matter of law which impacts across our community and our financial services industry is unacceptable; perhaps it is time for the States to intervene.”
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