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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> In the matter of Walton Degrevement [2015] JRC 003 (06 January 2015) URL: http://www.bailii.org/je/cases/UR/2015/2015_003.html Cite as: [2015] JRC 3, [2015] JRC 003 |
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Property - dégrèvement of immovable property.
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Before : |
Sir Michael Birt, Kt., Bailiff, and Jurats Kerley and Grime |
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Between |
Philip Syvret and Nina Benest as attournés in the said dégrèvement |
Applicants |
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And |
Leonard de la Haye |
Respondent |
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And |
HM Attorney General |
Partie Publique |
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IN THE MATTER OF THE DEGREVEMENT OF LUCITA ANGELVE WALTON (NEE DE LA HAYE)
Mr P Syvret appeared in person.
Advocate S. C. K. Pallot on behalf of the Attorney General.
judgment
the bailiff:
1. There has long been uncertainty in the profession as to whether an undivided share of immovable property owned in common can be the subject of a hypothec and therefore can in turn be the subject of a dégrèvement. For example, Matthews and Nicolle, the Jersey Law of Property, states at para 1.19:-
2. Conversely, the Jersey Law Commission consultation paper No.8 on 'Security on Immoveable Property" ("the Law Commission paper") concluded at 14.5 that it could see no reason why it should not be possible to hypothecate undivided shares in immoveable property.
3. This case requires us to resolve that uncertainty.
4. It relates to the dégrèvement of Lucita Angeleve Walton ("Mrs Walton"). Her immovable property in the Island consists of an undivided one third share of certain land owned in common with her two brothers, one of whom is the respondent. A dégrèvement was conducted before the Assistant Greffier on 6th October, 2014, at which time the respondent accepted the position as tenant après dégrèvement. On 17th October, the attournés convened the respondent before this Court in order that the Court might confirm him as tenant. The Court had received an e-mail from Mrs Walton querying whether one could have a dégrèvement of an undivided share of property owned in common. The Court accordingly asked that the Attorney General be convened as partie publique in order to give assistance.
5. The matter came back before the Court on 2nd December at which time Mr Syvret attended as one of the attournés and Crown Advocate Pallot attended on behalf of the Attorney General. The Court is most grateful to both of them for their assistance. Mr Lawrence de la Haye ("Lawrence"), the other brother who also owns a one third undivided share of the relevant property, also attended.
6. At the conclusion of the hearing, the Court ruled that one could have a dégrèvement of an undivided share of property owned in common and confirmed the respondent as tenant. We now give our reasons for that decision.
7. By her last will, Evelyn de la Haye bequeathed her immovable property in the Island in the following terms:-
"I give devise and bequeath the whole of the Real Estate which may belong to me or to which I may be entitled at the time of my decease unto such of my sons Lawrence John de la Haye and Leonard George de la Haye and my daughter Lucita Angeleve Walton née de la Haye as shall survive me and if more than one in equal shares for themselves and their respective heirs in perpetuity."
8. At the date of her death, she owned three fields in St Saviour and one in St Martin. There is no dispute that the result of the will was that the respondent, Lawrence and Mrs Walton each had a one third undivided share in that land ("the land") which was owned in common.
9. Subsequently, there was litigation between the respondent and Mrs Walton (De La Haye-v-Walton [2013] (1) JLR 117) which resulted in judgment in favour of the respondent against Mrs Walton in the sum of £386,219.08 on 28th January, 2013. There was a further award in respect of costs in the sum of £28,730.50. Both of these judgments were subsequently registered in the Public Registry giving rise to judicial hypothecs over the immovable property of Mrs Walton.
10. Mrs Walton has not paid these sums and, following the usual steps, a dégrèvement was ordered in respect of the property owned by Mrs Walton. The applicants were appointed as attournés. As already mentioned, the dégrèvement took place before the Assistant Greffier on 6th October, 2014, at which time the respondent agreed to accept the property as tenant après dégrèvement. The property which was the subject of dégrèvement was Mrs Walton's one third undivided share in the land.
11. The question therefore is whether there can be a hypothec over an undivided share of property owned in common and accordingly whether there can subsequently be a dégrèvement of such a share.
12. Although it is the Loi (1880) sur la Propriété Foncière ("the 1880 Law") which introduced dégrèvement, that Law built on the principles of customary law. We think it convenient therefore to begin by looking at those principles.
13. It is clear that an essential principle of the customary law is that, in order to be capable of hypothecation, an interest in property must be capable of alienation. Thus Le Gros, Traité du Droit Coutumier de l'Ile de Jersey (1943), cites a maxim at 455:-
14. This is consistent with Pothier, Traité de l'Hypothèque, (1821 edition) chapter 1, section 2 at 194:-
In the 1827 edition at 537, Pothier expresses the same sentiment in slightly different language as follows:-
15. That principle is reflected in Article 18 of the 1880 Law which provides:-
16. There is no doubt that an owner in common may dispose of his undivided share in immovable property both by inter vivos transaction and by will. The difference between ownership in common and joint ownership was explained in re Dégrèvement Bonn [1971] JJ 1771 at 1774 in the following terms:-
When we refer hereafter to an 'undivided share' we are referring to an undivided share of a property which is owned in common, not one which is jointly owned.
17. The above extract deals specifically with the situation on death. Thus an owner in common of an undivided share may bequeath his share by will. Mrs Walton could therefore leave her one third share in the land by will. Alternatively, if there is no will, the rules of intestate succession will apply to determine who becomes the owner(s) of the undivided share.
18. It is clear that an undivided share may also be disposed of inter vivos without the consent of the co-owner(s). Para 14.4 of the Law Commission paper states at paragraph 14.4 that undivided shares are 'freely alienable' and this is similarly the view of Matthews and Nicolle at 1.18 where it is stated:-
Furthermore, the Court can take judicial notice that disposal of an undivided share is a transaction which regularly occurs in contracts passed before the Samedi Court on a Friday afternoon.
19. In Bonn, the Court held that the interest of a joint owner (as opposed to an owner in common) in immovable property could not be hypothecated and therefore could not be made the subject of dégrèvement for two reasons; first, that a joint owner of immovable property in Jersey does not have an interest which he can alienate without the participation of his co-owner (at 1783) and secondly, that the interest of a joint owner is a 'bien futur ou à venir' which under Article 3 of the 1880 Law, specifically cannot be hypothecated.
20. Neither of these reasons applies to ownership in common. As already discussed, such an owner may alienate his undivided share without the participation of the co-owners and such an interest is not a future interest which depends upon surviving a co-owner; it is a present interest which can be enjoyed and freely disposed of.
21. In the circumstances, we see nothing in the customary law principles which would suggest that an undivided share of an owner in common cannot be hypothecated. Furthermore, it is of interest that systems of law with which our customary law has much in common appear to permit hypothecation of an undivided share of immovable property owned in common. Thus:-
(i) Domat, Les Loix Civiles dans leur Ordre Naturel - Livre III, Titre I, Section I - alinéa XV provides:-
In translation
(ii) Planiol & Ripert, Traité Elémentaire de Droit Civil Tome II (1923 edition) Chapter 1, Section 4 at para 2653 states:-
In translation
(iii) In Re L F Morgan Limited (1987 - 88) JLR 336 at 340, Crill, Bailiff states:-
Unfortunately, counsel in the present case have been unable to unearth a copy of the 1964 edition of Dalloz to appreciate the context in which the suggestion was made, but it is nevertheless consistent with Planiol and Domat, although Domat was of course writing on the civil law before the introduction of the Code Civil.
22. In addition to these commentaries in relation to systems of law which have similar roots to our own in matters of immovable property and hypothecs, there are strong practical reasons for thinking that an owner of an undivided share should be able to hypothecate his share:-
(i) If he can dispose of and therefore realise the value of his undivided share without the consent of his co-owners, logic would suggest that he must have the lesser ability to give security over it. Giving security over something is not such a major matter as disposing of it.
(ii) This would also seem desirable in the interests of commerce. If a person has a valuable asset which he can freely dispose of, it would seem desirable that he should have the ability to borrow money upon its security.
(iii) It would also seem desirable from a creditor's point of view. A judgment creditor can obtain a judicial hypothec over the biens-fonds of his debtor by registering the judgment in the Public Registry. It would seem undesirable if such a creditor was unable to enforce (by way of dégrèvement) his judgment against an undivided share owned by the debtor when the debtor is free to dispose of and realise the value of that share at any time.
(iv) Such a result would be a recipe for injustice. A person could acquire a substantial property in which he and his family reside but procure that, for example, a 1/1000th undivided share is held by someone else (perhaps one of his children or his wife). He would hold almost the entire value and would be able to realise that value at any time: yet it would not be an asset over which a creditor could obtain any security by way of hypothec or which could be the subject of a dégrèvement. Whilst the decision in Bonn has the result that jointly owned property is not available for creditors of one of the joint owners, the difference there is that the joint owner is unable alone to dispose of and realise his interest in the property without the other joint owner joining in the disposal of the property.
(v) We note that the Law Commission paper considered it was desirable that an undivided share of property owned in common should be hypothecable. Thus paragraph 14.5 stated:-
23. A combination of the principles of customary law and consideration of the practical effects leads the Court to conclude that, unless there is anything in the 1880 Law which prevents such a conclusion, the right answer is that an undivided share of an owner in common is capable of hypothecation and is therefore capable of being made the subject of a dégrèvement.
24. It was of course the 1880 Law which introduced the concept of dégrèvement and we therefore need to examine that Law to see whether there is anything in it which leads to a conclusion different from that which we have extracted from customary law principles as described above.
25. The key provision is Article 3, the relevant part of which provides:-
26. The question then arises as to what is a bien-fonds? There is no definition in the 1880 Law but in his Lettre Explicative which accompanied the draft Law and explained the reasons for it, Sir Robert Pipon Marett stated that:-
27. It is important to bear in mind the background to the 1880 Law, which was set out so clearly in the well-known lecture which Philip Le Couteur, former Judicial Greffier, gave to an audience of bankers on 6th December, 1955, and to which Crown Advocate Pallot referred the Court. In essence, the problem was that before 1880 rentes could be hypothecated, yet they could not be reimbursed following a change introduced by the Loi (1832) sur les Décrets. Coupled with the usual clause of guarantee, this meant that nearly all contracts of sale had the effect of subjecting all the immovable property, present and future, of the seller and in many cases of the purchaser also, to a hypothec which guaranteed the execution of the clauses and conditions of the contract but lasted forever and was unlimited in amount. The key change introduced by the 1880 Law therefore was to provide that rentes could no longer be hypothecated. That explains the distinction referred to above drawn by Marett in the Lettre Explicative.
28. The definition of dégrèvement is consistent with Article 3 in that it refers to biens-fonds. Thus Article 1 defines dégrèvement as "la procédure (semblable au décret) employée pour parvenir à disposer des biens-fonds tenant nature de propriété nouvelle, appartenant à un cessionnaire ..." [emphasis added]. In translation "The process (analogous to that of décret) used for the purpose of disposing of those of the biens-fonds of an insolvent which are of the nature of new property ..."
29. The draftsman of the 1880 Law seems to have used the expression 'bien-fonds' and 'héritage' fairly interchangeably, suggesting that there is no real distinction between the two terms. For example [emphasis added in all cases]:-
(i) The definition of 'rentes ou hypothèques constituées' in Article 1 is as follows:-
(ii) Although there is no definition of bien-fonds, there is a definition of 'corps de biens-fonds' in Article 1:-
(iii) Article 29 deals with prescription in relation to hypothecs created under the 1880 Law and provides as follows:-
As can be seen, despite the fact that Article 3 provides that only biens-fonds may be made the subject of a hypothec under the Law, Article 29 here refers to 'héritage' which is the subject of a hypothec.
(iv) Article 91 begins the part of the 1880 Law which deals with dégrèvement and reads as follows:-
(v) Similarly Article 92(1) seems to refer interchangeably to bien-fonds and héritage. The Article is concerned with the giving of notice in the newspapers describing 'l'héritage ou des héritages en dégrèvement'. It then goes on to provide:-
(vi) Articles 93 to 104 refer on occasions to 'l'héritage en dégrèvement', but also to 'biens en dégrèvement'.
30. Héritage is not defined in the 1880 Law. We think the natural translation into English is 'hereditament' and Advocate Pallot referred the Court to the 8th Edition of Wharton's Law Lexicon - published in March 1889 - which says this in relation to the entry 'hereditaments'
This would certainly appear wide enough to include an undivided share of property owned in common because that is something which can be inherited or purchased.
31. It is clear that an owner of land can grant a hypothec over the land which he owns. It is a bien-fonds. It is hard to see why an owner of an undivided share of land should not be able to grant a hypothec over that share of the land. It seems to us that a share of land is equally a bien-fonds which is capable of being hypothecated.
32. The only argument against such a construction is to be found in Article 21 of the 1880 Law which deals with the creation of conventional hypothecs and states that they must be created on a 'corps de bien-fonds spécial et déterminé'. The Article goes on to provide:-
In translation
33. It is argued that, because an owner in common has an undivided share and does not own an identified part of the land which can be described, Article 21 cannot be complied with in respect of such ownership and it must follow therefore that such an undivided share is not a bien-fonds.
34. The alternative argument, as developed in the study guide of the Institute of Law in relation to the law of immovable property at para 13.28 is that Article 21 relates only to specification. The owner must specify the property which is being hypothecated; so there can be compliance with Article 21 by describing the bien-fonds in which the owner has a part indivise but limiting the grant of the hypothec to that part indivise.
35. In our judgment, the arguments in favour of construing a bien-fonds as including an undivided share of land owned in common greatly outweigh the arguments against. We would summarise our reasons for so holding as follows:-
(i) There is no reason of principle for holding that an ability by an owner to charge his interest in land should be confined to an outright owner. It would seem to be equally consistent with the underlying principles of the 1880 Law that an owner of an undivided share in land should be able to grant a hypothec over his undivided share. What would then be subject to dégrèvement would be his undivided share and the tenant would (as in the case of the owner of an entire property) simply step into the shoes of the debtor and acquire ownership of the undivided share previously owned by the debtor. The whole purpose of dégrèvement is to enable the holder of a hypothec to step into the shoes of the debtor and acquire the property owned by the debtor and there seems no logical reason why that cannot apply to an undivided share, given that an undivided share is something which is capable of alienation without the consent of any other co-owner. It is therefore a valuable asset in the hands of the debtor.
(ii) Construing the meaning of bien-fonds so as to exclude an undivided share of an owner in common would be a restrictive interpretation which would have no bearing on the vice that the 1880 Law was intended to cure, namely the ability to hypothecate rentes. There is no good reason therefore to interpret the expression in a restrictive fashion. In particular, the raison d'être of dégrèvement proceedings is to enable creditors to realise the interest of their debtor in the relevant bien-fonds; in the words of Pothier (see para13 above) 'La fin de l'hypothèque et de vendre la chose hypothéquée pour être payer sur le prix." The undivided share of an owner in common of land can be realised by means of a dégrèvement with no more impact on the interest of the other owners in common than if the debtor agreed to sell his or her interest to a third party in order to avert the dégrèvement in the first place.
(iii) The States has twice passed legislation which assumes that one can hypothecate an undivided share and that no amendment to the 1880 Law was required to permit this to happen. Thus:-
(a) Article 11(4) of the Bankruptcy (Désastre) (Jersey) Law 1990 ("the Bankruptcy Law") provides as follows:-
Thus, on the occurrence of such an event, there will be undivided shares owned in common which will each have a hypothec attached to the share. Unlike in the case of the creation of the ability to hypothecate long leases under the Loi (1996) sur l'hypothèque des biens-fonds incorporels or the ability to hypothecate a lot under the Loi (1991) sur la copropriété des immeubles bâtis, no amendment was made to the 1880 Law so as to permit a hypothec on an undivided share of property owned in common as a consequence of the Bankruptcy Law. This must be on the basis that such could already occur.
(b) Article 2 of the Social Security Hypothecs (Jersey) Law 2014 provides that the Minister for Social Security shall have a legal hypothec on all the immovable property of a debtor (as defined in that Law). Article 2(4) goes on to provide:-
This wording presupposes that a hypothec can exist over an undivided share and that conversion into ownership in common satisfies the pre-requisites for the dégrèvement i.e. that there is nothing in principle to prevent a dégrèvement where the debtor's property is an undivided share of property owned in common. Again, no alteration to the 1880 Law was thought to be necessary.
(iv) Interpreting the 1880 Law so as to hold that an undivided share is not a bien-fonds and cannot therefore be hypothecated would have some surprising consequences. Thus Article 11 confers a legal hypothec in favour of unsecured creditors over the biens-fonds of a deceased person in certain circumstances. Such a hypothec would not extend to property owned by the deceased in common even though that was property which was capable of sale and realisation without the consent of any co-owner.
(v) We do not consider that Article 21 prevents the interpretation which we prefer. We agree with the study guide of the Institute of Law that Article 21 is complied with in relation to an undivided share if the property in which the share is held is fully described as required by that Article.
(vi) There is no prejudice to a co-owner in allowing an interest in an undivided share to be hypothecated and to be subject to a dégrèvement. We allowed Lawrence to address us although he was not technically a party to the proceedings. He was concerned that whereas, at the moment, he held a one third undivided share (with each of the respondent and Mrs Walton also having one third), the position following dégrèvement would be that the respondent owned two thirds. He thought that he (Lawrence) would thereby be prejudiced because he could be outvoted. However, as the Court pointed out to him, that was to misunderstand the position. His rights will remain unaltered. He will still be the owner of an undivided one third share. The fact that the respondent will now own two thirds does not give him (the respondent) any greater power. Owners in common do not act by majority. The law is clear that any changes to a property owned in common require the consent of all the co-owners (see Re L F Morgan Limited [1987 - 88] JLR 336 and the cases there cited).
(vii) Our attention was drawn to two cases where there has been a dégrèvement of an undivided share of property owned in common, namely Re dégrèvement Howell (1910) 3 D 295 and Re dégrèvement England (1970) (cited in the Law Commission paper at 14.4). We accept that there is no judgment to support these but nevertheless the fact that the Greffier and lawyers involved at the time did not see any objection to what was being proposed offers some modest support for our conclusion.
36. In summary therefore we conclude that an undivided share in land owned in common is a bien-fonds. It follows that the 1880 Law permits hypothecs to be taken over such a share and that such a share can be the subject of dégrèvement. This is entirely consistent with the principles of customary law which we have referred to earlier and seems to be consistent with the practice in jurisdictions with similar roots in the civil law. Furthermore, for the reasons summarised earlier, there are strong practical reasons for concluding that such an interpretation is preferable to one which would prohibit hypothecs over an undivided share.
37. It was for these reasons that we concluded that the present dégrèvement was in accordance with the law and we therefore registered the respondent as tenant après dégrèvement of Mrs Walton's one third undivided share in the land.
