Ca suffit: Jersey’s Bailiff draws line in sand over contract law

11/12/2020

Is the recent judgment of the Royal Court in Murray v Camerons [2020] JRC179 the judgment that everyone (or at least Jersey lawyers and their contracting clients) has been waiting for? Quite possibly.

It looks like we finally have an answer to a question that has been plaguing the Jersey legal profession and judiciary: how to assess consent in the formation of a contract. Jersey’s Bailiff has spoken definitively on the issue: consent is to be assessed objectively, not subjectively. Whether that finding will survive an appeal remains to be seen.

The question of whether Jersey contract law ought to adopt a subjective or an objective approach to establishing the state of mind of contracting parties and therefore what the parties consented to when entering into a contract has been bubbling away for some time. It is a fundamental issue of contract law, affecting whether a contract has been validly formed.

Perhaps because of that, the question had become more than a simple point of law. It had come to represent Jersey’s singularity as a jurisdiction positioned (literally, in fact) between France and England, with its own body of Norman-derived customary law. A metaphor for an island which has gone from having a legal profession limited to six advocates to an international finance centre in barely 150 years.  Unfortunately for the certainty of Jersey contract law, because the result is frequently the same whether an objective or a subjective approach is adopted and few contract cases are appealed, the question had remained without a definitive answer.

Matters came to a head last summer, in the form of the extraordinary excursus to the Court of Appeal’s judgment in Jersey Law of Contract – Booth v Viscount [2019] JCA122. This saw one of Jersey’s Court of Appeal judges explore the tangled state of the case law and commentary to date and make a plea for something to be done to decide the question one way or the other, followed by the then Bailiff (who clearly did not entirely agree with his learned colleague) warning against departing from the customary law in favour of commercial convenience and demolishing the structure of contract law. The third judge, perhaps wisely, chose to merely hope for a resolution via a suitable case or legislation.

It appears that the current Bailiff, who was promoted from Deputy Bailiff after the judgment in Booth v Viscount, has decided to mark a line in the sand. Reading the Court’s detailed analysis of the existing case law and legal commentary on consent in this latest judgment, Murray v Camerons, you get the impression that this is something he has been reflecting on for quite some time. It builds on the analysis in the Excursus in Booth v Viscount and emphasises the need for Jersey to have a contract law that is workable and certain for modern commercial dealings. To quote Birt, Deputy Bailiff (as was), in Re Amy [2000] JLR 80, as the judgment does: “the court’s sole duty is to declare the law of Jersey, and it must do so for a community of the 21^st century”.

The judgment concludes by summarising the reasons why the objective test must be the test that applies in Jersey in nine short points (at para. 189). Essentially (and crudely), these boil down to:

1. As far as anyone can tell, the Royal Court had applied an objective test from at least the 1950s when it started producing reasoned judgments until the 2008 case of Marrett v Marrett marked the point where it all went subjectively pear-shaped.
2. Applying French principles to what makes up a valid Jersey contract does not mean French principles have to be used to determine how we know whether those constituent parts were present.
3. The Jersey legal system is adversarial and fundamentally based on witness testimony and supporting documents (i.e. designed to establish what parties actually thought and said), unlike the French system.
4. Even in France, the subjective approach appears to be a bit clumsy when strictly applied and requires some shoehorning via qualifications to make it work.
5. Jersey law has often picked principles from different jurisdictions where these suit. Striving for purity despite the unsatisfactory result that might appear is no reason to disregard an objective approach that appears to have been what was used in Jersey for decades before Marrett.
6. Civil law (and therefore French/Roman law) sources are not used in large areas of contract law as it is. The examples given are remoteness of damage and mitigation of loss, where the Royal Court is perfectly happy to apply English law principles.
7. In other areas of law, Jersey manages to achieve a coherent body of law by picking and choosing which bits of English law to use as guidance.
8. An objective test has the virtue of certainty and simplicity and, importantly, stops someone ending up in the position where they think they have a valid contract but it is actually invalid because of a subjective flaw in the other person’s consent which is outwith anyone else’s control.
9. Lastly and fundamentally, there appears to be no Jersey case law or text that actually suggests that the Jersey approach to consent has been subjective in the past.

Line drawn. The message is clear: we are returning to the objective approach and that is that.

Of course, it may not be. Given the apparent resources on both sides, it may be that the judgment is appealed. Certainly it will not have pleased fans of the subjective approach, and the joy and frustration of Jersey’s lack of a system of judicial precedent means that another Royal Court could decide to go another way in the future.

Watch this space.