Friday, 17 January 2014

Revisiting the Remise de Biens – Part 2

I've been looking at the judgement given in the rejected Remise de Biens application by the Pitmans,
While I think the Court provided sound reasons for rejecting a Remise (see part 1 of my article), there remain unanswered questions relating to the whole proceedings, which I find most unsatisfactory, and these are explained here.
Jurat's Calculation of Assets
With regard to the Jurats assessment of the situation:
"The Jurats concluded that on the basis that the property was sold before 13th June 2014 and the secured lending discharged in full, together with additional interest amounting to approximately £10,670.40, there would be a surplus available to pay a dividend to the unsecured creditors providing sufficient margin to justify a remise."
Unsettled Questions
While the Court rejected the application for a remise on the grounds of past judgments, what is more curious is that upon the original application for a Remise, the jurats were instructed to make a valuation of the Pitman's assets.
Since that played no part whatsoever in the legal judgment, apart from determining that they had sufficient assets to pay the secured creditor (as required for a Remise),  one wonders why the Jurats were instructed to do so. Clearly, at that point in the proceedings, the case for rejecting a Remise was still open, otherwise why involve work in obtaining valuations?
The Jurats were appointed on 29th November, 2013 to examine the property of the applicants. They reported back that there would be a surplus available to pay a dividend to the unsecured creditors providing sufficient margin to justify a remise. On the basis of the Jurats' report, it seemed clear that the Court had jurisdiction to grant a remise."
But then the Court decided, on other matters entirely, to reject the Remise – "the Court's decision was not based upon the amount of the surplus that would be available for the unsecured creditors."
I've explained the reasoning behind the Court's judgement above, and it seems they certainly had grounds for rejecting the Remise:
"The Court was faced with applicants who were applying for a remise not to avoid the potential injustices of a dégrèvement but to gain the advantages of a remise and avoid the disadvantages of a désastre. There was no authority, as Mr Clarke conceded, to support the notion that a remise should be granted in order to avoid a désastre.."
I'm not saying that is not sound, and the reasons given in the rejection were comprehensible.
But what the Court failed to explain was why they wasted all the Jurats' time, and expenses in obtaining valuations in the first place, if they were going to be set aside on other grounds altogether. That I find quite incomprehensible. Is it the Court's business to waste what is probably tax payers money sending Jurats off on what is in fact a wild goose chase of no relevance? I would welcome an explanation.
Frederick Benest and Michael Wilkins's article on the Remise states that
"In summary, in making an application for a remise the debtor presents to the Court a sworn schedule of all his movable and immovable property. If the Court accepts the application in principle a double-phased process is then triggered.  First, two Jurats are appointed.  The Jurats examine the schedule and verify the value of the property of the debtor.  Following such consultation with creditors[8] as they deem appropriate the examining Jurats then report back to the Court (within fifteen days) as to the efficacy of a remise. Assuming that the Jurats are satisfied that a remise would have utility (namely that the value of the debtor's property indeed exceeds the secured claims) and any objections from creditors are not found by the Court to be overriding, the second phase of the process will in all probability be engaged." 
According to Benest and Wilkins, then, for the Jurats to present their case to Court, as they did in the case of the Pitmans, the Court must have accepted the application in principle. It remains unanswered, without satisfactory explanation, why the Court changed its mind and rejected the application in principle, even though there were good grounds for doing so.
I offer two possible explanations which would make sense of this, and of the two, I prefer the latter.
The first is that the Court had made up its mind to reject the application for a Remise on whatever grounds, and when those of valuation failed, sought other grounds to reject the Remise. The weakness of this is that the evidence of cases shows that the Remise had never been applied to a Désastre, only a Dégrèvement, and it was obvious beforehand that the Jurats valuation would almost certainly support a Remise. If an outsider like myself could see that, it must have been obvious to the trained legal minds.
The second is that in facing an attempt to use a Remise against a Désastre, the Court had no precedents to guide it, and needed time to examine the principles of law involved, and study the existing cases and commentary on the use of the Remise. The strength of this is that it explains why the Jurats investigated the property. At that time, the Court was faced with something unprecedented, and was not in a position to decide whether a Remise was viable.
What is unsatisfactory, if that is taken to be the case, is that the Court did not elucidate its own ignorance in the matter, and the fact that it had been "caught on the hop". It is quite probable that such an admission would be seen as a weakness, and hence was concealed simply to save face. No one likes to admit ignorance, especially lawyers.
That also explains the somewhat harsh tones in which the Court describes the Remise – "The 1839 Law as a stand alone statutory insolvency regime is barely fit for purpose in this modern age."
In fact, it is perfectly adequate in its proper case, as Benest and Wilkins point out, in mitigating the effects of a Dégrèvement, which itself is surely barely fit for purpose, and as archaic as the Remise. To remove one without tackling the other would, in my view, create a dangerous imbalance.  As a remedy against a Dégrèvement and not Désastre, it works very well.

No comments: