The Royal Court of Jersey has determined a novel point of
insolvency law in relation to the vesting of claims in a
désastre, Jersey's unique bankruptcy regime for personal
and corporate debtors.
Although the Bankruptcy (Désastre) (Jersey) Law 1990
("Désastre Law") expressly provides that "all
property" of the debtor vests in the Viscount upon a
declaration of désastre, which definition includes
"things in action", following submissions from Advocate
Edward Drummond of Bedell Cristin on behalf of the Viscount, who
administers all désastres in Jersey, the Royal Court held
that purely personal claims are excluded from its ambit as a matter
of customary law, following venerable English law principles.
Two Jersey individuals had made a claim for damages for libel.
They lost at trial and were ordered to pay the defendants'
costs. They wished to appeal but the relevant time period had
expired, so they applied to the Court of Appeal for an extension of
time. Upon the failure of that application, one of the defendants
petitioned for their bankruptcy on the basis of its unpaid costs
order, and they were declared en désastre. The bankrupts
wished to appeal further to the Privy Council, and if necessary, to
the European Court of Human Rights. Could they do so?
According to the Désastre Law, subject to two statutory
exceptions (trust assets and pension rights), all the
bankrupt's property and powers, as widely defined, vest in the
Viscount. Similar definitions appear in the Insolvency Act 1986
("Insolvency Act"), albeit with more wide-ranging
The English courts have however recognised as a matter of common
law, since as long ago as the 1840s, that property of a nature
peculiarly personal to the bankrupt does not vest - despite no
express provision to this effect in the Insolvency Act or its
predecessors. A claim for defamation is the paradigm example. One
can imagine that a bankrupt may have every incentive to clear his
or her name, but there is little incentive for the
trustee-in-bankruptcy to spend what is effectively creditors'
time and money in doing so. But Jersey and English insolvency law
is not the same – should these principles apply in
The Royal Court held that they should. The Désastre Law was
not a codification. The customary law was not fixed and indeed
other exceptions existed in practice which did not find statutory
expression in the Désastre Law. The rationale for the
English position was persuasive. The Royal Court granted
declarations that a bare right of appeal could not be treated
separately from the underlying cause of action, and that the
defamation claim was personal to the bankrupts and did not vest in
A guide which outlines the procedures to wind up Jersey registered companies, the circumstances in which transactions entered into by an insolvent company may be set aside, and the circumstances in which a company’s officers and managers may incur civil or criminal liability.
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