Damages - appeal against decision of the Master dated 20th June
2014.
[2014]JRC217
Royal Court
(Samedi)
11 November 2014
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Before :
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W. J. Bailhache, Q.C., Deputy Bailiff,
sitting alone.
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Between
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Classic Herd Limited
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Appellant
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And
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Jersey Milk Marketing Board
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Respondent/Defendant
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Advocate A. D. Hoy for the Appellant.
Advocate F. B. Robertson for the Respondent/Defendant.
judgment
the deputy bailiff:
1.
This is an
appeal against a decision of the Master on 10th June pursuant to
Rule 6/13(1) of the Royal Court Rules 2004 to strike out two of the
three parts of the Appellant's claim which relate to claims for damages
in the sum of £26,943 and £52,500 respectively and to claims for
what the Master described as related declaratory relief. The Respondent/Defendant cross appeals
to have struck out the balance of the Appellant's claim, which the Master
had declined to strike out and which was in the sum of £11,052. The Respondent's application
before the Master to strike out the different parts of the Appellant's claims
was upon the basis that they were all prescribed and therefore brought out of
time. No affidavit has been sworn
in support of the application, but there has been produced before me an agreed
chronology. If the law is as Advocate Robertson contends, then there is no
dispute of the facts that the claims are prescribed. Advocate Hoy however contends that the
Master was wrong to accept the contentions of the Respondent in relation to the
first and third heads of claim, and that therefore the action should be
reinstated. I note that Advocate
Robinson appeared for the Respondent before the Master.
2.
The test
for appeals from the Master in procedural matters is that the Court retains a
free discretion to uphold, vary or reject his decision, giving all appropriate
weight to the reasoning which has been set out at first instance. The Master has given a fully reasoned
decision in this case and I gratefully adopt paragraphs 6 - 27 inclusive
of his judgment which are in these terms:-
"6. The plaintiff's claim arises out
of the defendant's status as a body established by statute pursuant to
the Milk Marketing Scheme (Approval) (Jersey) Act 1954 ("the
Scheme"). The Scheme was made
pursuant to the authority of the Agricultural Marketing (Jersey) Law 1953 ("the 1953
Law").
7. Article
2(1) of the 1953 Law provides as follows:-
"A scheme for regulating the
marketing or the marketing and production of any agricultural produce may be
submitted to the Minister by any persons (hereafter referred to as the
"promoters") who satisfy the Minister that they are substantially
representative of the producers of that produce:
8. Article
2(6) provides as follows:-
"If the Minister, after
making any such modifications as aforesaid, is satisfied that the scheme
submitted will conduce to the more efficient production and marketing of the
regulated produce, the Minister shall submit the scheme to the States, and the
States may, by Act, approve or reject the scheme and, if approved by the
States, the scheme shall come into force on the date prescribed by the Act.
9. Article
4 of the 1953 Law provides for registration of producers under any scheme
approved by the States. Article 8
sets out a number of requirements for running a scheme including that no sale
of any regulated produce shall be made by any producer who is not registered or
exempt from registration (see Article 8(1)(a)). It is also a criminal offence
to sell produce in breach of any scheme (see Article 23(1)).
10. Paragraphs
29 to 34 of the Scheme provide as follows:-
"PROHIBITION OF SALES BY
UNREGISTERED PRODUCERS
29
Subject to the provisions of the
Law with regard to existing contracts and to the provisions of this Part of
this Scheme, a producer who is not a registered producer shall not sell any
regulated produce either in Jersey or elsewhere.
GENERAL POWER TO REGULATE MARKETING
30
Subject to the provisions of
paragraph 28, the Board may regulate sales of any regulated produce by any
registered producer by determining by prescriptive resolution all or any of the
following matters, that is to say, the quality of such produce which may be
sold, and the prices at, below or above which, and the terms on which, such
produce may be sold by registered producers:
Provided that the Board shall at no
time determine the price at, below or above which any regulated produce may be
sold without having first invited the opinion of the Minister and given
consideration to that opinion as communicated to the Board within 28 days of
such invitation.
31
The Board may regulate the manner
in which any regulated produce is to be graded, marked, stored, adapted or
transported, for sale by or on behalf of registered producers.
32
Subject to the provisions of
paragraph 28, the Board may by prescriptive resolution require registered
producers to sell any regulated produce, or such kind or description thereof as
may from time to time be determined by the Board, only to or through the agency
of the Board or to or through the agency of such persons as may be authorized
by the Board for that purpose and, in such a case, the Board may determine the
times at which, the days on which and the places at which delivery of such
produce shall be made by registered producers or any of them.
33
If any registered producer
contravenes any requirement made by the Board under paragraph 30, 31 or 32, the
Board shall, subject to the provisions of paragraph 41, by resolution impose
upon and recover from the registered producer such monetary penalty as the
Board thinks just.
MISCELLANEOUS POWERS
34
The Board may -
(1) buy any regulated produce;
(2) produce from milk any products
or by-products;
(3) sell, grade, pack, store, adapt
for sale, insure, advertise and transport any regulated produce;
(4) buy and sell or let for hire to
any registered producer, anything required, and to be utilized by the
registered producer wholly or mainly, for the production, adaptation for sale
or sale of any regulated produce;
(5) co-operate with any other
person in doing any of the things which the Board is empowered to do by virtue
of the foregoing provisions of this paragraph;
(6) encourage, promote or conduct
schemes of co-operation among producers of any regulated produce, or research
and education in connection with the production and marketing of any regulated
produce."
11. There
are also powers to impose penalties on producers who act in breach of the
Scheme (see Paragraph 41).
Factual Background up to 2005
12. In
January 1955 the defendant passed a resolution requiring all milk produced by
registered producers to be sold to the defendant. It was common ground between the parties
that the effect of the Scheme and the 1955 resolution was to require a producer
to register and to sell milk exclusively to the defendant.
13. In
June 2001 a second resolution was passed setting up a licencing scheme dealing
with matters such as milk collection, sampling, testing procedures, payments to
producers and the welfare of livestock.
14. Around
the same time a quota system was introduced by the defendant limiting the
amount of milk products that each producer was permitted to produce. Milk products produced up to the quota
were guaranteed to be purchased by the defendant at a particular price. Any products produced in excess of the
quota were purchased only at a lower price of 10p per litre.
15. In
May 2003 the plaintiff informed the defendant that it wished to sell products
directly to consumers as an independent business and sought an exemption from
the Scheme to do so. This led to
discussions between the parties.
The Competition (Jersey) Law 2005
16. On
1st May, 2005 the Competition (Jersey) Law 2005 ("the Competition
Law") came into force apart from Parts 2 and 3. Parts 2 and 3 came into force on 1st
November, 2005. The Competition Law
is described as "A Law to promote competition in the supply of goods and
services in Jersey".
17. The
Competition Regulatory Authority (Jersey) Law 2001 had established the Jersey
Competition Regulatory Authority ("JCRA") which body is now known
as the Channel Islands Competition Regulatory Authority ("CICRA"). However, it was the Competition Law that
gave the JCRA and the CICRA substantive powers to address issues of
competition.
18. For
the purposes of this application the relevant provisions are found in Articles
8, 16 and 51 which provide as follows:-
"8 Prohibition on hindering
competition
(1) Except as otherwise provided by
this Part, an undertaking must not make an arrangement with one or more other
undertakings that has the object or effect of hindering to an appreciable
extent competition in the supply of goods or services within Jersey or any part
of Jersey.
(2) ...
(3) An arrangement prohibited by
paragraph (1) is in this Law referred to as an anti-competitive arrangement.
(4) An arrangement is void to the
extent that it is, or contains or is tainted by an anti-competitive
arrangement.
(5) The fact that an arrangement
may have no legal effect, does not bind the parties to it or could not be
enforced by action in any court or by any other means does not prevent the
arrangement being prohibited by paragraph (1).
(6) An arrangement may be prohibited
by paragraph (1) although not every party to it is an undertaking so long as at
least 2 are.
16 Abuse of dominant market
position
(1) Except as otherwise provided by
this Part, any abuse by one or more undertakings of a dominant position in
trade for any goods or services in Jersey or in any part of Jersey is
prohibited.
(2) ....
(3) For the purpose of this Article
an abuse of a dominant position may consist of a failure or refusal to do
something.
51 Civil action
(1) A person has a duty not to
breach Article 8(1), 16(1) or 20(1), or a direction.
(2) A breach of that duty is
actionable by an aggrieved person.
(3) The Court may grant such relief
as it considers appropriate, including awarding punitive or exemplary damages.
(4) If a breach of duty mentioned
in paragraph (1) is committed by a commercial entity with the consent or
connivance of, or is attributable to neglect on the part of an officer of the
entity, that officer is also liable in the same manner as the entity for the
breach of duty.
(5) The Authority or an aggrieved
person may seek from the Court -
(a) an injunction to restrain any
actual or apprehended breach of the duty mentioned in paragraph (1); or
(b) a declaration that a person has
breached Article 8(1), 16(1) or 20(1), or a direction.
(6) If the Authority or an
aggrieved person has reasonable grounds for suspecting that there will be a
breach of the duty mentioned in paragraph (1) by a commercial entity the
Authority or person may seek an injunction from the Court to restrain any
action by an officer of the entity that could cause the breach of duty by the
entity.
(7) The Court may grant an
injunction under this Article on such terms as it considers appropriate.
(8) This Article has effect whether
or not the Authority or aggrieved person has exercised or is proposing to
exercise any other powers under this Law.
(9) In this Article,
"aggrieved person" means a person who has suffered or is likely to
suffer economic loss or damage as a result of an actual or apprehended breach
or Article 8(1), 16(1) or 20(1), or of a direction."
Factual background from 2005
onwards
19. By
May 2005 the plaintiff and the defendant's negotiations about the
plaintiff selling its products direct to consumers had resulted in heads of
terms described in the order of justice as the "2005 Heads". It is clear from the pleadings that in
2005 there were meetings between the parties and the then head of the JCRA, Mr.
Charles Webb, about the 2005 Heads and possibly about the Scheme more
generally. Who was present at such
meetings and what was said is not a matter that can be resolved for the
purposes of this application. What
I do note is that the plaintiff alleges that the 2005 Heads are not binding on
either party. The defendant alleges
they are binding. The plaintiff further
alleges that the 2005 Heads were void as a result of Article 8(4) of the
Competition Law set out above. The
defendant denies this allegation.
20. Discussions
between the plaintiff and the defendant continued in 2006 and 2007. The central thrust of those discussions
was the plaintiff's desire to sell milk and milk products independently
i.e. outside the Scheme.
21. In
2007 the parties reached further heads of terms (referred to in the order of
justice as the 2007 Heads) which were intended to replace the 2005 Heads. The 2007 Heads were conditional upon the
plaintiff's and the defendant's agreement on a sum of money that
one of them would have to pay to the other in respect of the operation of the
Scheme prior to July 2007. No such
agreement was ever concluded and therefore the plaintiff now alleges and seeks
a declaration that the 2007 Heads have no effect. The defendant in its answer specifically
admits this allegation at paragraph 32 and as a consequence denies the
necessity of the court needing to give any declaration to that effect.
22. In
its order of justice the plaintiff seeks three heads of damage as follows:-
(i) £26,000
being the amount that the plaintiff claims to have lost by not being allowed by
the defendant to sell surplus milk to other retailers between November 2006 and
July 2007.
Paragraph 46 of the order of
justice pleads as follows:
"In 2008, the defendant in
purported reliance on its powers under the Scheme and in particular the First
Resolution, refused to permit the plaintiff to sell surplus milk to other
retailers, despite it having agreed in the 2007 Heads that the plaintiff could
sell liquid milk to whosoever it wished commencing from July 2007."
Paragraph 50 pleads:-
"the plaintiff seeks a
declaration that Articles 31, 32, 33 and 34 of the Scheme are incompatible with
the Competition Law, further and/or alternatively the plaintiff seeks a
declaration pursuant to Article 51(5) of Part 9 of the Competition Law that the
defendant has breached Article 8(1) and/or Article 16(1) of the Competition
Law."
(ii) The second head of damage the
plaintiff seeks is £11,052.00 being the amount the plaintiff says was
wrongfully deducted by the defendant from amounts it paid to the plaintiff
during 2006 and 2007. The amount of
deductions and the fact they were made is admitted by the defendant in its
answer. The deductions were made
from the price paid for milk sold by the plaintiff to the defendant. The plaintiff argues that these
deductions were an abuse by the defendant of its powers under the Scheme. The defendant denies this allegation and
contends that the deduction was made on the basis of independent advice.
(iii) The third amount claimed is the sum of
£52,500 being losses suffered by the plaintiff by the plaintiff not being
permitted by the defendant to sell its quota under the Scheme. The plaintiff argues it was required to
produce a quota of 350,000 litres but was not permitted by the defendant to
sell to others and the defendant would not buy back the quota pursuant to the
Scheme. The defendant denies the
allegation and argues that by this time the plaintiff had resigned as a
registered producer under the Scheme.
23. Advocate
Robinson on behalf of the defendant informed me that the plaintiff had ceased
to be part of the Scheme since resigning in July 2007. Although the terms of the Scheme have
not been altered since they were approved in 1954, the reality is that the
plaintiff is no longer subject to the Scheme and appears not to have been so
since it resigned in July 2007. The plaintiff is therefore free to pursue its
own activities and sell milk and milk related products direct to
consumers. I also note that on the
defendant's website it now describes itself as a "voluntary
cooperative".
24. The
matters pleaded in the order of justice were first raised in correspondence by
Messrs. Voisin in a letter dated 5th February, 2009 on behalf of the
plaintiff. Messrs. Appleby
responded on 22nd June, 2009. There
was a further exchange of correspondence in October and November 2011 and a
letter before action sent by Voisins in June 2013 with proceedings being issued
on 29th July, 2013. The
defendant's answer was filed on the 11th October, 2013. Paragraph 4 of the answer expressly
raised a limitation defence that both the matters complained of and any losses
suffered had occurred more than three years prior to the claim being issued and
therefore the whole of the claim was time barred.
25. Paragraph
3 of the reply in response to the limitation defence is as follows:-
" it is denied that the
plaintiff's claim is time barred either to the extent that it relates to
any losses suffered more than three years prior to the date of issue of the
claim or at all. It is also denied
that the prescription period for bringing tortious actions runs from the date
when the plaintiff suffered the alleged loss. The prescription period for actions
founded on tort begins to run when all the necessary prerequisites for a cause
of action to accrue are present."
26. Paragraph
7 of the reply pleads-
"Accordingly, it is a
necessary prerequisite for the activation of a suit under Article 51 of the
Competition Law that the Court declare void the aspects of the Agricultural
Marketing Law and the Scheme and the defendant's actions taken pursuant
thereto as pleaded in the order of justice. Until such time as the Court has made
the declarations sought in the order of justice, the prescription period in
respect of an action in damages under Article 51 of the Competition Law cannot,
as a matter of law, have begun to run.
Accordingly, far from being time barred, the plaintiff's claims
for damages as pleaded in the order of justice are not yet even subject to the
effluxion of any prescriptive period applicable to them."
27. The
relief sought by the plaintiff in its order of justice is as follows:-
"WHEREFORE the plaintiff
prays that after the proof of these facts that are alleged herein the Court
might order the defendant to pay the plaintiff:
1. Damages
to be fully assessed;
2. Interest
on item 1 above for such a rate as the Court might deem just;
3. The
costs of this action.
WHEREFORE the plaintiff prays that
after the proof of these facts that are alleged herein the Court declare the
following that:
4. The
2005 Heads are of no effect;
5. By
the 2005 Heads the defendant has breached Article 8(1) and/or Article 16(1) of
the Competition Law;
6. The
defendant's decision to delay consent to the plaintiff to sell its milk
to third parties is a breach of Article 8(1) and/or Article 16(1) of the
Competition Law;
7. The
2007 Heads are of no effect;
8. The
defendant's refusal to allow the plaintiff to take up the Buy Back Scheme
was a breach of Article 16(1) of the Competition Law;
9. The
defendant's refusal to allow the plaintiff to sell its quota to third
parties was a breach of Article (8(1) and/or Article 16(1) of the Competition
Law; and that
10. Articles
31, 32, 33 and 34 of the Scheme are incompatible with the Competition
Law.""
3.
There was
also placed before me a draft amended order of justice. Both Advocate Hoy and Advocate Robertson
were at pains to emphasise that no leave to file an amended order of justice
had been given, but, as some of the older authorities put it, it is an
important decision to drive a plaintiff from the seat of justice, and it has
long been the practice both here and in the English courts that an action would
not normally be struck out if it could be saved by an appropriate amendment. I have therefore considered both the
order of justice in its initial form and the draft amended order of justice in
case the latter document removes any objections which could be validly
maintained to the former. In fact
Advocate Hoy was anxious to emphasise before me that there was no real
difference in substance between the order of justice and the draft amended
order of justice. The facts
asserted by the Appellant were the same and the only real differences were the
labels which were attached to those facts under the different documents. Thus there are in the draft amended
order of justice numerous references to a contract between the Appellant and
the Respondent whereas under the order of justice which was considered by the
Master, there was only reference to statutory duties owed by the Respondent and
alleged to have been breached. I
record that Advocate Robertson emphasised that the Respondent denied having
acted in breach of any of his obligations, however categorised.
4.
In his
skeleton argument, Advocate Hoy contended on behalf of the Appellant that the
claims made by the Appellant are not prescribed "because the relationship between the parties created by the
Scheme and subsequently varied is in contract or quasi contract to which a ten
year limitation period applies and perhaps in the context of the public law
actions of the [Respondent] no cause of action in tort has accrued unless and
until the Court declares its actions to have breached the Competition Law. Accordingly the Master erred in striking
out parts of the order of justice".
5.
This
contention is somewhat different from paragraph 4 of the order of justice
- maintained in the draft amended order of justice - that:-
"The [Respondent] is a
statutory body, owing a statutory duty to all registered producers and in
particular owing a statutory duty to the [Appellant] to deal with all and any
matters between the [Respondent] and the [Appellant] in accordance with the
Scheme."
6.
In his
decision the Master determined that it was necessary for him to consider the
effects of the Scheme and of the Competition Law 2005 ("the
Competition Law"). In
connection with the latter piece of legislation, he proceeded on the assumption
for the purposes of a strike out application that the Respondent fell within
the scope of the Competition Law, without actually making any finding to that
effect. I have proceeded on this
same basis.
7.
The Master
also indicated that he considered that any claim which pleads a breach of the
Competition Law amounted to a private law claim and not a public law claim. I agree with that analysis provided it is
limited to claims brought by persons other than the Channel Islands Competition
Regulatory Authority ("the Authority"). The Authority has conferred upon it a
statutory right to bring a claim for a declaration or an injunction under
Article 51 of the Competition Law.
It seems to me to be clear that the Authority is a public body
exercising public functions and without further argument I would not myself go
so far as to say at this stage that all claims under the Competition Law were
necessarily private law claims. However, I agree with the Master that all
claims brought by an aggrieved person other than the Authority pursuant to
Article 51 of the Competition Law do fall to be treated as private law claims. The fact that such claims are under the
relevant Rules of Court brought by order of justice shows that no leave from
the Court is required to bring them, which takes the action out of the
territory of judicial review and into the territory of a private law claim.
8.
In its
order of justice, the Appellant seeks a number of declarations. Some of them relate to actions by the
Respondent which have particular reference to the Appellant. One of them however is a declaration that
Articles 31, 32, 33 and 34 of the Scheme are incompatible with the Competition
Law. In my judgment, the
application for that declaration falls outside Article 51 of the Competition
Law. The aggrieved person under
Article 51(5) is only entitled, as part of a private law action, for a
declaration that there has been a breach of Article 8(1), 16(1), or 20(1), or a
direction.
9.
It is
important to reach a decision on this point because the Master's judgment
does not in my view address the main reason as to why the prayer for a
declaration that the various articles in the Scheme are incompatible with the
Competition Law should have been struck out. In my judgment, it would be right to
strike that prayer out, whether the remaining provisions in the order of
justice stand or not. That
particular declaration would be a public law declaration, and it is not the
type of declaration which is envisaged by Article 51 and should not therefore
have been combined with an action brought pursuant to Article 51. Even if that is wrong, however, I share
the Master's view that this particular declaration is so subordinate to
the other claims for relief that it does not in reality stand as a separate
head of claim. I am reinforced in
that conclusion by the fact that, as Advocate Robertson contended, the claim
that Articles 31, 32, 33 and 34 of the Scheme are incompatible with the
Competition Law arises in the context of the claims in the order of justice for
damages under the three particular heads of claim. Accordingly, I do not find on a proper
construction that the order of justice maintains the claim for a declaration
that these articles are incompatible with the Competition Law as a separate
matter. For these two reasons, the
claim for a declaration that the Scheme is incompatible with the Competition
Law cannot stand in these private law proceedings. This is an important conclusion because
if I had considered the position to be other than as described, there might
have been something to be said for the proposition that once that particular
claim stood, the other claims might be run in parallel with it. Once that claim goes, however, I take the
view that all of the other claims are prescribed and I will go on to my reasons
for that conclusion. I note that
had this been a judicial review application on the compatibility of the Scheme
with the Competition Law, it has been brought far too late as far as the
Appellant is concerned.
10. I also note that the Master distinguished
between the claim under the second head and the claims under the first and
third head. In this context both
Advocate Hoy and Advocate Robertson agreed when this question was put to them
that there was no real distinction in principle to be drawn between the three
heads of claim and that they would all stand or fall together.
11. The Master indicated in relation to the first
head of claim that:- "I regard this complaint as one that
directly arises out of the exercise of functions by the [Respondent] under the
scheme. However I do not regard the
scheme as contractual. Rather it
imposed a regulatory regime on the [Appellant] . . . in my view therefore the
complaints under this head are for a breach of statutory duty where the
applicable limitation period is three years". Having said that he
reached the same view in relation to the third head of claim. The Master then went on to the remaining
head of claim in which the Appellant claims that the Respondent wrongfully made
various deductions from the price of milk sold by the Appellant to it in the
total sum of £11,052.00. Here
the Master said this:-
"The view I have reached in
relation to this head of claim is that it is not a claim in tort unlike the
other claims which I have struck out.
The complaint in summary is that the [Respondent] has wrongfully
withheld monies due to the [Appellant] for milk sold by the [Appellant] to the
[Respondent]. This sale in my view
is a contract arising out of the scheme as distinct from a complaint relating
to how the [Respondent] exercised its powers in relation to the scheme. The contract is that the [Appellant]
sold milk to the [Respondent] for an agreed price, part of which the price
[sic] had not been paid by the [Respondent] to the [Appellant]".
12. I do not share the view that the sale of milk
was a contract arising out of the Scheme but somehow distinct from the Scheme
itself. It is clear from Articles
30 - 34 inclusive of the Scheme that the Respondent had some very wide
ranging powers:-
(i)
To
determine the quality of the produce which might be sold and the prices at
below or above which and the terms on which the produce might be sold.
(ii) To regulate the manner in which any regulated
produce was to be graded marked stored adapted or transported for sale.
(iii) To require that any regulated produce be sold
only to or through the agency of the Respondent.
(iv) To buy any regulated produce itself and to sell
it.
13. These were powers conferred on the Respondent
which were integral to the Scheme and it seems to me to be impossible to say
that the relationship between the producer and the Board as purchaser of the
milk was a contractual one. In Selby
v Romeril [1996] JLR 210, the Royal Court set out the four essential
conditions for the validity of a contract - the consent of the parties to
contract, the capacity of the parties to contract, an "objet" and a
"cause". Here there is no question of consent
between the parties because the producers were required to sell to the Board,
and not only required to sell but also required to sell at a particular price
and if necessary to deliver at particular times. In his opening submissions Advocate Hoy
described this as a forced contractual arrangement, but in my judgment there is
no such thing. The will or volonté to make a contract is an
essential prerequisite of the contract as a matter of Jersey law. It is the basis upon which that maxim of
Jersey law has long been established that la
convention fait la loi des parties. One cannot simply dispense with this
essential requirement of a contract and assert that a contract remains. By contrast, the proper analysis is that
there is a statutory regime which contains a number of obligations on the part
of the Respondent and on the part of all milk producers and if there is a
breach of those obligations on the part of the Respondent, then the producer is
able to sue for breach of statutory duty.
14. Although the order of justice makes no
reference to a claim in contract, the draft amended order of justice does. In my judgment, such a claim is hopeless
and does not cure the difficulty which the Appellant faces in terms of
prescription. Advocate Hoy
contended that the draft amended order of justice simply applied a label to the
nature of the claim - but the corollary of that is that the label must be
accurately applied if it is to deal with the criticism, on limitation grounds,
of the claim as presently brought, and in my judgment one cannot construct a
contract out of the arrangements made pursuant to the Scheme for the reason I
have given. It follows that I think
the Master was wrong to do so when he found this to be the basis for preserving
the second head of claim and that he was right to take the approach he did in
relation to the first and third heads of claim.
15. In the skeleton argument which was advanced for
this appeal, Advocate Hoy also contended that there might be a quasi contract. As far as one can tell, this is the
first time this contention has been raised, and Advocate Robertson was very
critical of the Appellant's process in doing so. However before driving the Appellant from
the seat of judgment, it seems to me that I need to look at the matter not in
terms of process but as to whether or not quasi
contract provides a legitimate basis for making the claims which are made.
16. The Royal Court reached a decision in the case
of Gale and Clark v Rockhampton Apartments Limited [2007] JLR 27 that
the doctrine of voisinage, namely an obligation not to use one's property
so as to damage neighbouring property, was part of Jersey law and gave rise to
proceedings in quasi contract. This decision was upheld in the Court of
Appeal, reported in same volume of the Jersey Law Reports at page 332. I note that in the Rockhampton
case the obligation which was asserted was not to damage a contiguous
neighbouring property, and while the two neighbours had no contractual
relationship with each other, they clearly did have contracts individually by
which their different properties had been acquired. One can see how an action in voisinage might be characterised as a
claim in quasi contract. At paragraph 16 of the judgment of the
Royal Court, Bailhache, Bailiff, said this:-
"It is true that there
appears to be no reference to voisinage in the writings on the customary law of
Normandy and one cannot therefore test the interpretation placed on the custom
as stated by Terrien. Counsel
submitted that the doctrine of voisinage, and its quasi contractual basis, was
derived from the civil law and incorporated into the customs of Paris and
Orleans. She contended that there
was no evidence that this approach to relations between neighbours was ever
adopted in Normandy or in Jersey.
There is no doubt, however, that quasi contract was known to the
customary law of Normandy. There is a short definition to be found in Houard at
4 Dictionaire de Droit Normand 1st edition at 3 (1782) in the following terms:
"On donne le nom
[quasi-contrat] à une obligation qui naît de
l'équité, sans que la convention des parties y intervienne.
Ainsi il se forme un quasi-contrat entre l'absent et celui qui, durant
son absence, fait pour lui quelquechose d'utile; car l'absent, par
seule équité, est tenu de la restitution des dépenses
nécessaires et utiles faites pour lui."
I translate that passage as
follows:-
'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'.
17. Quasi contract is part of our
law, but the customary law of Normandy is silent, or brief, on the meaning and
extent of the term. In my judgment, it is legitimate in such circumstances to
look at other customs, including the Coutume d'Orleans, to explain the
force and effect of the expressions. The custom of Orleans is, indeed, a
particularly appropriate source to explore in this context for the author of
this commentary is the author upon whom very great reliance is placed in the
context of the law of contract.
18. The word
"equité" in the context of quasi contract is
interesting. The pleadings in the
two cases cited at paras 11 - 13 above seemed to me to import the concept
of reasonableness. In other words, the duty not to cause damage to ones
neighbour is not absolute but is qualified by notions of what is reasonable in
the context of neighbourly relations. All that is entirely consistent with the
equitable foundation of duties arising in quasi contract."
17. I also note that in the same case in the Court
of Appeal Gale and Clark v Rockhampton Apartments Limited [2007] JLR 332
at paragraph 165, reference was made to an extract from Pothier's
Traité des Obligations, Section II at paragraphs 113 - 114. The citation to the Court of Appeal was
clearly the English translation of Pothier's work, and I prefer to
look at the original, if only because it does not contain some of the
punctuation marks which are to be found in the translation. Paragraph 114 is in these terms:-
"Dans les contrats,
c'est le consentement des parties qui produit l'obligation; dans
les quasi - contrats, il n'intervient aucun consentement, et
c'est la loi seule ou l'équité naturelle qui produit
l'obligation, en rendant obligatoire le fait d'où elle
résulte. C'est pour cela que ces faits sont appelés quasi
contrats ; parceque, sans être des contrats, ni encore moins les
délits, ils produisent des obligations comme en produisant les contrats."
18. In my judgment, in the historical context in
which this paragraph was written, in the expression "c'est la loi seule
ou l'équité naturel le qui produit
l'obligation", there is nothing disjunctive. The natural construction of the paragraph
is that there is a comparison between a contract, where it is the consent of a
contracting party which produces the obligation, and a quasi contract where there is no consent but it is a matter of the
customary law, which allows for the application of equity, which produces the
obligation.
19. So in the present case therefore, I have
considered whether, if the Appellant were to seek leave to amend the order of
justice by pleading in quasi
contract, that would cure the defect.
20. Claims in contract are prescribed by the lapse
of 10 years after the breach. In Rockhampton,
the Royal Court concluded, as did the Court of Appeal, that the prescription
period for a claim in voisinage was also ten years. It was not really contended before me
that any other limitation period would apply if this were legitimately a claim in
quasi contract and without deciding it, I have assumed ten years to be the
prescription period for such claims.
21. In my judgment however, the claim here cannot
be regarded as a legitimate claim in quasi
contract. Such claims, like claims
in unjust enrichment, are permitted because equité
allows the Court to remedy what would otherwise be injustice arising out of the
lack of contractual obligation.
Here however, there is no injustice because there is no lack of remedy
and no need for the reach of equité.
There is a statutory obligation
which is provided by the Scheme and in my judgment, the remedy is to sue for
breach of statutory duty, if it is asserted that such breach has taken place. It is because that remedy is available
that it would be wrong to create a new quasi
contractual cause of action.
22. That leaves me with the remaining ground of
appeal that the Master erred in not finding that the declaratory remedy under
Article 51(5)(b) of the Competition Law was a necessary prerequisite to the
accrual of an actionable breach of statutory duty. The argument in this respect has not been
put entirely consistently by Advocate Hoy but it seemed to be that as there is
a presumption of validity in relation to the actions of a public body such as
the Respondent, those actions remain lawful until they are declared otherwise
and accordingly time does not start to run until the declaration of
unlawfulness has been made.
Accordingly Advocate Hoy submitted that one cannot assume that there has
been any breach of the Competition Law until the Court says so and that the
application for a declaration of unlawfulness is a necessary pre-requisite for
the Appellant's claim. In
this respect he relied considerably on a passage from Lord Diplock's
judgment in Hoffmann v La Roche and Co. A.G. -v- Secretary of State
for Trade and Industry [1975] AC 295 where at page 365 Lord Diplock said
this:-
"Under our legal system,
however, the court as the judicial arm of government do not act on their own
initiative. Their jurisdiction to
determine that a statutory instrument is ultra vires does not arise until its
validity is challenged in proceedings inter-partes either brought by one party
to enforce the law declared by the instrument against another party or brought
by a party whose interests are affected by the law so declared sufficiently
directly to give him locus standi to initiate proceedings to challenge the
validity of the instrument. Unless
there is a challenge and, if there is, until it has been upheld by a judgment
of the Court, the validity of the statutory instrument and the legality of acts
done pursuant to the law declared by it, are presumed. It would, however, be inconsistent with
the doctrine of ultra vires as it has been developed in English law as a means
of controlling abuse of power by the executive arm of government if the
judgment of a court in proceedings properly constituted that a statutory
instrument was ultra vires were to have any lesser consequence in law than to
render the instrument incapable of ever having had any legal effect upon the
rights or duties of the parties to the proceedings (cf Ridge -v-
Baldwin [1964] AC 40). Although
such a decision is directly binding only as between the parties to the
proceedings in which it was made, the application of the doctrine of precedent
as the consequence of enabling the benefit of it to accrue to all other persons
whose legal rights have been interfered with in reliance on the law which the
statutory instrument purported to declare."
23. In my judgment, this extract from Lord
Diplock's judgment in Hoffman v La Roche does not assist the
Appellant. What the House of Lords
was considering in that case was whether or not the judge at first instance was
right to refuse to grant an interim injunction which would restrain the
appellants from charging any prices in excess of those specified in an order
made pursuant to the Monopolies and Restrictive Practices (Inquiry and
Control) Act 1948 without the Secretary of State giving an undertaking in
damages so as to recompense the appellants if the order he had made was held to
be invalid. In my judgment there is
a big difference between an assessment as to the factors which the Court should
properly take into account in exercising a discretion to grant an interlocutory
injunction - where the presumption of regularity applied to the Order
made by the Secretary of State - and a case such as the present where the
basis of the Appellant's claim is that there has been a breach of the
Competition Law, which basis the Appellant would have to prove to the civil
standard at trial. If so proved,
the Appellant would be entitled to claim damages if such damages are
ascertainable. If not
ascertainable, it may be that the Appellant would apply for an alternative
remedy of a declaration. However it
is a false reading of Article 51 of the Competition Law to construe it to
require that there must be a declaration before there can be a claim for
damages. Article 51(3) contains the
requirement that a person has a duty not to breach the various articles of the Competition
Law and there is created by paragraph (2) a right of action by an aggrieved
person in respect of any breach of that duty. By paragraph (3) the Court can grant
such relief as it considers appropriate - which obviously includes damages
which are compensatory but is expressed to include damages which are punitive
or exemplary. The statutory
provision at paragraph (5) allows equitable remedies to be applied as well, but
these are permissive - the Court has a free jurisdiction to grant such
relief as it considers appropriate.
It follows that as a matter of construction all that has to be proved is
a breach of the respective articles or of a direction, and it is quite
unnecessary that there should be a judicial declaration to that effect before
any right of action arises for damages.
To construe the article in that way is to confuse the facts which need
to be proved - the breach - from the remedy which might be afforded
- damages, injunction or declaration.
24. It was agreed between the Appellant and the
Defendant that the limitation period in respect of breaches of statutory duty
claims was three years. The
question is three years from what?
The answer to that is that the three year period starts running from the
occasion of the breach which is asserted.
On the facts in the present case, the claim, being properly categorised
as a claim for breach of statutory duty, is prescribed. The appeal is therefore dismissed and
the cross appeal is allowed. As a
result the Plaintiff's order of justice is struck out in its
entirety.
Authorities
Royal Court Rules 2004.
Competition Law 2005.
Classic
Herd Ltd-v-Jersey Milk Marketing Board [2014] JRC 127.
Selby
v Romeril [1996] JLR 210.
Gale
and Clark v Rockhampton Apartments Limited [2007] JLR N 27.
Gale
and Clark v Rockhampton Apartments Limited [2007] JLR 332.
Pothier's Traité des
Obligations.
Hoffmann v La Roche and Co. A.G.
-v- Secretary of State for Trade and Industry [1975] AC 295.
Monopolies and Restrictive Practices
(Inquiry and Control) Act 1948.
