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: 10 May 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