Henry v Pierre (19 of 2003) (19 of 2003) [2005] SCCA 6 (19 May 2005);







IN
THE SEYCHELLES COURT OF APPEAL










Civil Appeal No. 19 of
2003







In the matter between











MARY HENRY -
Appellant







and






PERIN
PIERRE - Respondent





==========================================


Before:
RAMODIBEDI, P., BWANA, J. A., HODOUL, J.A.


Heard
on:
10May 2005


Judgment
delivered on:
20 May 2005








Mr.
C. Lablache for the Appellant


Mr.
F. Ally for the Respondent








J
U D G M E N T







RAMODIBEDI, P.





[1] This
appeal is concerned with an alleged breach of fiduciary duty owed by
the Appellant to the Respondent and others arising from
a joint
family venture that went horribly wrong all the way. The story of
the litigation began in this way.







[2] The Appellant
Mary Henry and Respondent’s late mother Luce Pierre
(hereinafter referred to as “Luce”) were sisters.
The
Respondent is the Executrix of the succession of Luce.







[3] At all material
times, Luce was the co-owner of an island known as Marianne Island
(“the property”) together with
nine of her siblings and
their mother. On 15 November 1976 the Supreme Court appointed the
Appellant as fiduciary of the property.






[4] It
is common cause that, by a deed of sale dated 15 April 1994 and
registered with the Registrar of Lands on 19 April 1994, the
Appellant acting for and on behalf of the other co-owners sold the
property to Sociéte Marianne (Seychelles) Ltd (“the
purchaser”) for Rs.10,000,000. However, by 19 April 1994 only
a sum of Rs.3,527,277.77 had been paid by the purchaser. The
sale
apparently fell through and shall hereinafter be referred to as “the
aborted sale”.







[5] In subsequent
litigation arising from the aborted sale, the Supreme Court delivered
judgment on 22 November 1995 in terms of which
the purchaser
forfeited in favour of the co-owners the part of the purchase price
it had paid for the property at that stage.







[6] It requires to
be stated that both in the court below (Perera J) and in this Court
it was not disputed that, as co-owner, Luce
was entitled to 1/11th
of the proceeds of the aborted sale.







[7] It is
Respondent’s case as pleaded in his plaint that the proceeds of
the aborted sale have been shared amongst only four
of the co-owners
and that Luce or her succession (Respondent himself) was never paid
their share. Accordingly, it is Respondent’s
case that the
Appellant acted in breach of her fiduciary duties under the Civil
Code of Seychelles resulting in loss and damage to
him in the sum of
Rs.324,793.38 being the aforementioned share in question.







[8] At the outset,
it will be noted that the Appellant’s defence as pleaded and in
argument both in the court a quo and in this
Court is to the
following effect, namely that:-







(1) it was agreed
among the co-owners of the property including Luce that the purchaser
should pay the share of the proceeds of sale
due to each of the
co-owners directly into the bank account designated by
each of them;







(2) none of the
proceeds of sale was to be paid to, or was in fact received by the
Appellant on behalf of the co-owners;






(3) some
of the co-owners received payment of their respective shares of the
proceeds of sale in conformity with the agreed arrangement
in
sub-paragraph (1) above; and







(4) the purchaser
defaulted on the payment of the amount due to the remainder of the
co-owners including Luce. Thus, the Appellant
disputed liability on
these grounds.






[9] In
a nutshell, Perera J upheld Respondent’s claim for payment of
the aforementioned share of Rs.324,793.38 together with
interest and
costs on the ground that the Appellant’s decision to leave the
depositing (by the purchaser) of the proceeds of
the sale directly in
the respective accounts of the co-owners was an “abdication”
of her duties as a fiduciary. The
learned trial Judge accepted the
Respondent’s evidence that the Appellant failed to administer
the property “diligently
and in a business-like manner”.
The question which arises in this Court, therefore, is whether the
learned trial Judge was
correct in this approach.







[10] Now, the
functions and powers of the fiduciary are laid down in Article 825 of
the Civil Code of Seychelles Act Chapter 33 (“the
Civil Code”)
in the following terms:-






The
functions of the fiduciary shall be to hold, manage and administer
the property, honestly, diligently and in a business-like manner
as
if he were the sole owner of the property. He shall be bound to
follow such instructions, directions and guidelines as are given
to
him in the document of appointment by the unanimous agreement, duly
authenticated, of all the co-owners or by the Court. He shall
have
full powers to sell the property as directed by all the co-owners,
and if he receives no such directions, to sell in accordance
with the
provisions contained in articles 819, 1686 and 1687 of this Code and
also in accordance with the Immovable Property (Judicial
Sales) Act,
Cap. 94 as amended from time to time”.





It
follows from the provisions of this Article, therefore, that the
hallmark of the fiduciary is utmost good faith (uberrima fidessima)
in the exercise of his/her functions. In this connection, it always
bears remembering that the fiduciary may not place himself/herself
in
a position of conflict of interest, that is to say, where his/her
interests conflict with his/her fiduciary functions.





[11] In
a commendable approach, the learned trial Judge correctly defined the
central issue for determination in these terms:-





The
crux of the matter is whether the defendant (Appellant) in her
capacity as fiduciary to the co-ownership acted “honestly,
diligently and in business-like manner as if (she) were the sole
owner of the property” as required in Article 825 of the Civil
Code”.





[12] Briefly
stated, the evidence disclosed this. The Respondent testified on his
own behalf and duly confirmed the allegations as contained
in the
plaint. He called only one witness, namely Harry Choppy who was one
of the co-owners. He too had not been paid his share.
It was the
latter’s evidence that he demanded his share from the Appellant
but got no reply from her.





[13] The
Appellant gave evidence and confirmed that she was duly appointed the
fiduciary in the matter. Subject to what follows hereunder,
she
generally confirmed her written statement of defence and thereby
sought to convey that it was the responsibility of the purchaser
to
pay to the co-owners’ bank accounts as per the latter’s
agreement. Yet it turned out that the instruction to the
purchaser
actually came from her through her lawyer, Mrs. Twomey. In her
evidence in chief she was asked by her own counsel,
Mr.
Lablache
:





Q: Briefly,
what was the gist of your instructions to Mrs. Twomey? What did you
said (sic) to her?





A: My
instruction to Mrs. Twomey I said that all the co-owners agreed that
their money should be banked into their bank account and
I told her
to do so”.





It
is apparent from this answer that no suggestion was made by the
Appellant that the co-owners instructed the purchaser to pay directly
into their bank accounts. That suggestion came from the Appellant’s
own lawyer himself as appears in the next question that
followed:





Q: What
was the agreement? Was it for you or for the purchaser to pay?





A: It
was the purchaser to pay”.





But
even then, it is evident that the magic word “directly”
as pleaded in the Appellant’s statement of defence was
not
used. Indeed, under cross-examination the Appellant made it
abundantly clear that the instructions were for her to pay the money
into the respective bank accounts. She testified as follows:-





It
was their instruction to put their money in their bank account (sic).
It was not me. It was their will, they call me to do it.
What I got it was my legitimate share. I have not taken anybody’s
money”.
(Emphasis added).





She
was later asked:-





Q: And
you instructed Mrs. Twomey to write to Mr. Lucas to inform him as to
how the co-owners would be paid?





A: Yes.”





[14] As
is evident from Article 825 of the Code referred to in paragraph [10]
above, the Appellant was, in my judgment, not bound
to follow any
instructions of the co-owners unless such instructions were given to
her
in a document of
appointment by the unanimous agreement, duly authenticated, of all
the co-owners or by the Court
.
There is no evidence on record to show that this material and
clearly mandatory condition was observed in its entirety or at all.

No document of appointment by the “unanimous” agreement
of all the co-owners as envisaged by the Article was produced
in
evidence. Indeed this is hardly surprising since it is common cause
that at least the Choppys’ mother who was one of the
co-owners
did not give the alleged instructions to the Appellant. Furthermore,
one of the co-owners, namely Micole, was admittedly
of unsound mind
and could, therefore, not legally have consented thereto unless she
was duly represented by the Attorney General
in the particular
circumstances of the case. In this regard, it will be borne in
mind that although the Appellant is Micole’s
legal guardian,
she could not legally represent her in this matter because of a
conflict of interest caused by the fact that the
Appellant had been
paid while Micole had not, and in circumstances where the Appellant
refused to share with the latter or the other
unpaid co-owners.





[15] In
any event, the Appellant’s case is further hit by the
provisions of Article 827 of the Code. That Article reads:-





A
fiduciary shall be under a duty to render full and regular account of
his management until such time as his functions are terminated.
He
shall be liable for any damage or loss sustained by the property.
However, he may discharge such liability by showing that he
has not
deviated from the standard of reasonable care. He may also discharge
that liability by showing that he has delegated his
management to a
competent business firm, bank or other reputable financial
institution, or by taking out insurance cover up to the
full extent
of the assets included in his administration. Any agreement or
stipulation limiting or excluding the duties or liabilities referred
to in this article shall be null
.





A
fiduciary shall be entitled to his reasonable expenses and any fees
which may have been agreed upon or allowed by the Court.”

(Emphasis supplied).





The
effect of this Article, therefore, is that any agreement limiting or
excluding the duties or liabilities referred to in the Article
as
suggested by the Appellant would be null and void. In this
connection, it is right to say that it was precisely for the purpose
of rendering full and regular account of her management of the
proceeds of the aborted sale that a fiduciary account was admittedly
opened. It follows that, by allowing payments to be made in accounts
other than the fiduciary account which she controlled, the
appellant
did not act honestly, diligently and in a business-like manner.





[16] Thereafter,
the Appellant’s evidence amounted, in my view, to an
unacceptable account of her discharge of her functions
as fiduciary.
By way of an example, I point to the answers that follow hereunder.
Her own counsel surprisingly asked her in chief:-





Q: With
the money of transfer by the purchaser, was it within your
responsibility to intervene to assure that all the heirs receive
their share?





A: No.”





Indeed,
as will become evident shortly, the attitude evinced by the Appellant
that it was none of her business to ensure that the
co-owners
received their fair share of the proceeds of the aborted sale
permeates the entire proceedings both in the court a quo
and in this
Court. It is, in my view, a complete contradiction of the functions
and duties of the fiduciary under Article 825 of
the Civil Code as
fully set out in paragraph [10] above. Equally of concern is the
fact that it then turned out that the Appellant
had in fact got her
own share. She steadfastly refused to share it with those who had
not been paid thus demonstrating self-interest
in the matter contrary
to her duty as fiduciary.





[17] Under
cross-examination by
Mr.
Ally
for the
Respondent, the Appellant’s lack of diligence as fiduciary was
exposed even further. She was asked:-





Q: May
I ask you whether it was within your possibility for you to file a
case in court after those (sic) were paid did not agree
to surrender
the money of the share proceeds, for you to compel them to surrender?





A: I
have just said I did not want to take side (sic). So, I told them to
do it.





Q: So
the reason why you did not file a case in court was because you did
not want to take side (sic) although you were the fiduciary?





A: Yes
but I advised them to do it.





Q: Why
did you not resign?





A: If
the co-owners saw that I was not doing a good job they should have
come to the court and have me remove (sic). So I think I
was doing a
good job because I was there since 1976.”





Concerning
the share which she herself had got from the purchaser, the Appellant
was asked the following pertinent questions:-





Q: Are
you prepared to pay to heir (sic) Luce Pierre (the Respondent) the
percentage of your share in that money which was supposed
to go to
them?





A: No
Sir.





Q: Why?





A: Because
it was agreed that anybody (sic) wanted their money to be put in
their account, so may be I was lucky to have mine in my
account.





Q: Am
I therefore correct to state that even personally you are not
prepared to pay, to surrender your share as fiduciary?





A: No.”





The
Appellant’s lack of diligence was further exposed in
cross-examination as follows:-





Q: Did
you know the names of the co-owners who were paid out of the proceeds
of the aborted sale?





A: I
did not.





Q: And
the amount of money they each received?





A: I
did not.”





[18] As
pointed out earlier, it turned out that the Appellant was the legal
guardian of Micole referred to in paragraph [14] above.
It is common
cause that Micole was one of the co-owners who were not paid their
shares. Yet the Appellant admitted that she did
not sue on Micole’s
behalf. She was asked:-





“Q: You
were not interested to do so?





A: It
is not a question of interest but I did not take it to court.”





The
Appellant’s attitude in this connection is hardly surprising in
view of the fact that there was, as pointed out earlier,
a clear
conflict of interest between herself and Micole. It is significant
for that matter, and this is indeed common cause, that
the Appellant
failed to respond to written queries from the co-owners who did not
receive their shares.





[19] It
will be noted that the Appellant’s witnesses, Charles Lucas and
Auguste Choppy did not advance her case. On the contrary,
their
evidence favoured the Respondent. Auguste Choppy was one of the
co-owners who did not receive their shares while Mr. Charles
Lucas
was the attorney representing the purchaser. The latter confirmed
receiving the letter of instructions as to the mode of payment
from
Mrs. Twomey. His evidence is crucial. He was asked:-





Q: Was
there a pre-determined order which your clients were to make the
transfer?





A: No.
Actually by that time my client had known who the Choppy’s
(the co-owners) were the hardest nuts to crack, I have indicated
this
to Ben. And it transpired that those who received the money first
were that class of Choppy.





Q: From
your knowledge, did Mrs. Henry (the Appellant) have any input in the
order of the transfer?





A: No.
… She never had any physical control or any influence on the
Choppy’s that I dealt with.”





And
later he continued his testimony as follows:-





But
Mary (the Appellant) she hardly played any role in the process.”





This
evidence clearly shows that the Appellant had no control of the
situation contrary to her duty as the fiduciary. Worse still,
she
negligently allowed the “hardest nuts” Choppys to
dominate her.





[20] The
most damaging piece of evidence against the Appellant’s
defence, in my view, is the letter exhibit P4 from
Mr.
Pardiwalla
, attorney for
the fiduciary. In other words he was Appellant’s own attorney.
That letter is dated 14 May 1996 and is addressed
to the co-owners.
It states in part:-





as
most heirs wanted moneys to be paid overseas, the executrix (the
Appellant) for practical purposes, had instructed that the individual
shares be paid directly to the heirs
.”





So,
this is clear proof that the instruction to the purchaser to pay
directly to the bank accounts in question came from the Appellant
herself. It is not insignificant for that matter that all those who
were paid lived overseas like the Appellant did.





[21] Although
the learned trial Judge does not say so in so many words, it is
apparent from his analysis of the case that after seeing
and hearing
the witnesses, he came to the conclusion that the Respondent was
testifying to the truth. He disbelieved the Appellant.
In this
connection the learned Judge said this:-





The
evidence in this case amply support (sic) the plaintiff’s
assertion that the defendant failed to administer the property
diligently and in a business-like manner. Her decision to leave the
depositing of the proceeds of the sale directly in the respective
accounts was an abdication of her duties as a fiduciary. Her
imprudence resulted in some co-owners being deprived of their
legitimate
shares of the proceeds. Hence the defendant is liable to
pay to the plaintiff the share of the late Luce Pierre, which has
been
calculated at Rs.324,793.38. Had the paid co-owners been added
as defendants, this sum may have been made payable jointly and
severally
as under Article 830, the Act done by the Fiduciary binds
the co-owners. However in the present circumstances, as there has
been
no proper exercise of her functions, she will be personally
liable. Judgment is therefore entered in favour of the plaintiff in
sum Rs.324,793.38 together with interest from 22nd
November 1995 and costs of action payable by the defendant.”





Indeed,
the learned trial Judge found as a fact that the Appellant’s
instructions to the purchaser enabled the latter
“to
select the co-owners to be paid, leaving seven of them unpaid. Hence
the defendant
(now Appellant)
did not act diligently ….”





[22] In
my view, the findings of the learned Judge a quo as fully set out in
the preceding paragraph are fully justified on the facts.
I have
myself quoted extensively from the evidence to indicate the vast
material of evidence that supports the findings in question.





[23] In
the light of these facts, I have come to the inevitable conclusion
that the appeal cannot succeed. It is accordingly dismissed
with
costs.











………………………………


M.
M. RAMODIBEDI


PRESIDENT














I
concur: ………………………………


S.
J. BWANA


JUSTICEOFAPPEAL











I
concur: …………………………………


J.
M. HODOUL


JUSTICE
OF APPEAL








Delivered
at Victoria, Mahe this 20th day of May 2005