The Isle of Man High Court of Justice has recently provided a helpful reminder of its jurisdiction to make binding declarations regardless of whether or not any other remedy is claimed (Montpelier v Gittins & Otr, judgment of His Honour Deemster Khamisa QC delivered on 10 March 2022).
The jurisdiction of the court to make binding declarations on an application for declaratory relief is found in section 6(2) of the High Court Act 1991.
Rule 10.21 of the Rules of the High Court of Justice 2009 (the “Rules”) states: “The court may make binding declarations whether or not any other remedy is claimed.” Applications can also be made for interim declarations pursuant to Rule 7.16.
The principles which the court will apply when considering a claim for declaratory relief can be summarised as follows:
- Declaratory relief is an equitable and discretionary remedy;
- Declarations are made as to the legal rights of parties;
- A declaration should constitute what the court has found after proper argument;
- In determining whether to exercise its discretion, the court should take into account:
- the justice done to the parties;
- whether the declaration would serve any useful purpose;
- whether there are any special reasons why the court should or should not grant the declaration;
- whether the matters asserted have been established to the court’s satisfaction;
- whether in all the circumstances it is appropriate to make the declaration.
- A declaration should not be granted unless it is in respect of matters which are proven;
- The order should be necessary, useful, accurate and appropriate in the context of the case.
As noted above, declarations are made as to the legal rights of parties; not as to facts. It has been confirmed in previous cases that whilst a Manx court may declare that property, for example, is vested in a certain person or that a document or statute bears a particular meaning, Isle of Man courts do not make declarations as to facts which are contentious (Crowd Shout Ltd and another v Nova Scotia Ltd and others (1 February 2018)).
The recent case of Montpelier v Gittins concerned a claim by a former trust and corporate service provider acting through its court-appointed manager and receiver. The claimant sought a declaration that five companies legally owned by it were also beneficially owned by it. The defendants to the claim were the claimant’s shareholder (the “first defendant”) and his wife.
The claimant’s position was that the declaration was justified in the circumstances to prevent frustration of the order appointing a manager and receiver in respect of the claimant. The claimant relied on the documents held on file in relation to the five companies, submitting that there was no evidence at all that the beneficial ownership of the companies had been held other than by the claimant.
The defendants relied inter alia on stock transfer forms purporting to transfer the shares in the companies to the defendants personally for nil consideration. They argued that those forms had the effect of transferring the beneficial interest to the first defendant. In respect of some of the companies, the defendants also sought to argue that the claimant had always held the shares as bare nominee for the first defendant.
After considering all the documentary evidence and oral evidence from the parties, the court found that the stock transfer forms were not genuine; they had likely been created in response to the manager and receiver being appointed. Further, there was no evidence that the claimant had held any of the companies pursuant to declarations of trust in favour of the first defendant. Accordingly, the court found that the claimant was (and probably always had been) the legal and beneficial owner of the companies.
The case is a reminder that declarations can be helpful in providing clarity and certainty as to parties’ legal rights where the same would serve a useful purpose, even if no other remedy is claimed.
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The guidance in this note is for information purposes only and is not intended to be exhaustive. It is not intended to constitute legal or other professional advice, and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. Cains only advises on the laws of the Isle of Man and accepts no responsibility for any errors, omissions or misleading statements or for any loss which may arise from reliance on the information in this note.