Roberts v Gill & Co & Anor

The appellant, Mr Mark Roberts (whom I shall call “Mr Mark Roberts”) contends that, in the events which have happened, he is one of the residuary beneficiaries of the estate of his late grandmother, Mrs Alice Margot Roberts (“Mrs Roberts”). In that capacity, he commenced proceedings for damages for professional negligence within the period permitted by the Limitation Act 1980 (“the 1980 Act”) against two firms of solicitors who advised the former personal representatives. They are the respondents to this appeal and I will call them “the solicitors”. Any fresh proceedings brought now by the present administrator of the estate would be outside the period of limitation. Mr Mark Roberts has made an application to amend his proceedings so that he can continue them both in his personal capacity and as a derivative action on behalf of the estate. Mr Mark Roberts contends that this is what the justice of the case requires. The solicitors say that the amendments are not permitted by the Civil Procedure Rules and that in any event the amendments should not be permitted because they will enable Mr Mark Roberts to bring a claim against them in circumstances in which the administrator could not do so.

Mr Paul Morgan QC, sitting as a deputy judge of the Chancery Division, who by order dated 4 April 2007 dismissed the application ([2007] All ER (D) 89).

Mrs Roberts died on 27 July 1995. The executors named in the will renounced their right to probate and John Langdon Roberts (“Mr John Roberts”) was appointed as administrator. Mr John Roberts is the appellant’s brother.

Clause 7 of the will of Mrs Roberts provides that:

“If my said Grandson John Langdon Roberts shall within one month of formal written demand from my Trustees or within twelve months of the date of my death whichever shall be the earlier pay to the Trustees such sum (or provide security for or indemnity therefor the adequacy of which shall be at the sole discretion of my Trustees) as shall represent the amount of all estate or other duty payable upon or by reason of my death in respect of all my estate whatsoever and wheresoever situate with any interest thereon payable under any statutory provision then in force then and in such case

(a)

I give a piece of land [known as The Coppice together with a right of way] to my said Grandson Mark Howland Roberts absolutely

(b)

I give all the remainder of my freehold property known as Lower Hellingtown aforesaid not hereinbefore specifically disposed of by this my Will subject to the rights of way hereinbefore granted to my said Grandson John Langdon Roberts absolutely”.

Therefore, if the inheritance tax was paid, or a suitable indemnity or security was provided for the inheritance tax due on the entire estate, Mr John Roberts would inherit a large amount of land.

In default, the property in question fell into residue, thus increasing the value of the amount to which, on the appellant’s case, he would have been entitled. Clauses 8 and 9 of the will provide:

“8.

If my said Grandson John Langdon Roberts shall not pay the sum specified in clause 7 of this my Will to my Trustees or shall fail to provide security or indemnity to my Trustees to their satisfaction as aforesaid in respect of such sum together with any interest accruing thereon within the period therein provided then in such event I declare that the provisions of subclause (a) and (b) of clause 7 of this my Will shall not take effect and in substitution therefore I give my said freehold property more particularly described in subclauses (a) and (b) of clause 7 of this my Will to my Trustees to hold the same upon the trusts hereinafter declared in clause 9 of this my Will.

9.

I GIVE DEVISE AND BEQUEATH all the remainder of my property both real and personal whatsoever and wheresoever not hereinbefore specifically disposed of by this my Will unto my Trustees UPON TRUST to sell call in and convert the same into money with power to postpone the sale calling in and conversion thereof in the absolute and uncontrolled discretion of my Trustees without being liable for loss and to hold the net proceeds and my ready money upon the following trusts:

(a)

Upon trust to pay thereout all my just debts funeral and testamentary expenses

(b)

Upon trust as to the remainder (hereinafter called “my Residuary Estate” to divide the same into three equal shares and to hold one such one-third share for my daughter JILL MORNA ROBERTS absolutely whom failing upon trust as to such share for her daughter ANGELA WOOD PROVIDED ALWAYS that if both my said daughter and the said Angela Wood predecease me then upon trust as to such one-third share of my Residuary Estate for such of the children of the said Angela Wood who shall be living at my death and attain the age of Eighteen years and if more than one as tenants in common in equal shares and as to the remaining two shares of my Residuary Estate for such of the said MARK HOWLAND ROBERTS and the said JOHN LANGDON ROBERTS who shall be living at my death and if more than one in equal shares as tenants in common.”

By order dated 30 October 2000, John Roberts was replaced as administrator of the estate by Mr Sainter, a partner in the firm of solicitors that act for Mr Mark Roberts in these proceedings (Chilcotts). The administrator discovered that several issues had arisen in connection with the conduct of Mrs Roberts’ estate. In particular, he found that all the assets in the estate had been realised and the proceeds paid to Mr John Roberts. It is not clear whether there was any demand for the payment of the inheritance tax or for any indemnity or security for it. Mr John Roberts cannot now be located. The outstanding inheritance tax is estimated at £100,000.

Mr Mark Roberts’ proceedings against the solicitors

By a claim form dated 27 November 2002, Mr Mark Roberts started proceedings against the solicitors for breach of a duty of care owed to him as beneficiary of Mrs Roberts’ estate. The particulars of claim allege that the first firm, Gill & Co., were retained by Mr John Roberts to advise him on matters arising from the appointment of a receiver of the assets of Mrs Roberts on 29 September 1994 and after her death on 27 July 1995 to obtain letters of administration and subsequently to assist and advise on the administration of her estate. The particulars of claim allege that Mr John Roberts instructed the second firm, Whitehead Vizard, from April 1997 to advise and assist in the administration of the estate. The particulars of claim allege that inheritance tax payable by reason of the death of Mrs Roberts has never been paid and that no security or indemnity for the same has been furnished by Mr John Roberts. Inheritance tax was payable at the beginning of February 1996, together with the first of ten annual instalments payable thereafter. It is alleged that, notwithstanding this, on 23 July 1996 a legal executive employed by Gill & Co. prepared and witnessed the transfer of the farm referred to in clause 7(b) of Mrs Roberts’ will by Mr John Roberts as trustee of the property to himself as beneficiary under the will. The particulars of claim against Whitehead Vizard allege that that firm acted on the sale of the farm by Mr John Roberts to a third party when they knew that the inheritance tax had not been paid. It is alleged that both the estate and Mr Mark Roberts have suffered loss in consequence of these breaches of duty.

Mr Mark Roberts’ application to amend

By an application notice dated 25 August 2006, Mr Roberts applied to the court for permission to continue the proceedings in a representative capacity (as well as in a personal capacity) and to amend the particulars of claim in accordance with amendments annexed to the application. The principal proposed amendments are (1) to add the words "(on his own behalf and representing the estate of Alice Margot Roberts deceased)" after the name of Mr Mark Roberts in the title to the proceedings and (2) to add in the body of the particulars of claim allegations that each of the solicitors acted for the estate and owed a duty of care to the estate, as well as Mr Mark Roberts. The grounds for the application were that the current particulars were insufficient to enable Mr Mark Roberts to proceed with a claim in a representative capacity in addition to a personal capacity pursuant to the CPR 17.4(4) (set out below).

The judge held that a beneficiary could sue on behalf of an estate “in special circumstances”. The judge then set out a lengthy list of potential special circumstances but held that the only two candidates were the fact that Mr Roberts had legal aid funding and the further fact that Mr Roberts could (if leave to amend the proceedings was granted) defeat the limitation defence. The judge rejected these two candidates as special circumstances justifying giving leave to amend. He said that the availability of legal aid did not arise out of the relationship between the administrator and the beneficiaries or the relationship between the beneficiaries and the solicitors and that no circumstance of this kind had been recognised in the past. He also held that neither legal aid funding nor any limitation advantage would be a special circumstance within the decided cases.

On the question of whether the proceedings would be statute-barred, the judge held that it was common ground that an action started by the administrator as at the date of the hearing would be statute-barred but that Mr Mark Roberts had acquired his capacity as a beneficiary before the proceedings were started. He held that the requirement in CPR 17.4(2) (set out below) was satisfied.

The solicitors do not take any point at this stage on the questions whether (1) Mr Roberts’ claim as presently formulated has a real prospect of success; or (2) whether his claim as proposed to be amended would have a real prospect of success; or (3) he has an immediate or any beneficial interest in any residue under Mrs Roberts’ will.

Mr Mark Roberts has the benefit of legal aid, but he does not rely on the fact that he has legal aid as a special circumstance justifying the grant of permission to amend.

Mr Guy Adams, for Mr Mark Roberts, accepts that the normal rule is that the proper claimant to enforce a right of action belonging to an estate is the personal representative: see, by analogy, the position in relation to rights of action vested in trustees, Lewin on Trusts, 18^th ed, 2007, 43-01. An action brought to enforce a cause of action vested in another by some person who is interested in it is known as a derivative action. Lewin 43-05 contains a useful summary of the authorities on derivative actions by beneficiaries of a trust:

“Derivative action by beneficiaries

However, as an alternative to proceedings brought in the name of trustees, a beneficiary may, sometimes, bring an action in his name on behalf of the trust against a third party. The fact that the action is brought in the name of a beneficiary rather than the name of the trustees does not alter its character. The action is a derivative action in which the beneficiary stands in the place of the trustees and sues in right of the trust, and does not enforce duties owed to him rather than to the trustees: a beneficiary can be in no better position than trustees carrying out their duties in a proper manner. A beneficiary can bring a derivative action only in special circumstances, for example circumstances which tend to disable the trustees from pursuing (as where their acts and conduct with reference to the trust fund are impeached), or circumstances rendering it difficult or inconvenient for the trustees to sue, as where there is a conflict between their interest and duty. Special circumstances are not confined to circumstances of these kinds. But where the trustees are not mere bare trustees for the beneficiary, a refusal by the trustees to sue will not in itself count as a special circumstance, justifying an action being brought in the beneficiary’s name. Nonetheless, where the trustees have refused to sue, it may suffice to show that if an administration action had been brought, then the trustees would have been directed to sue, and that if action is not taken assets which might be recovered would probably be lost to the trust. If trustees in an administration action are given leave to discontinue an action already brought on the ground that the trust assets are insufficient to fund the future costs of the action, the costs of the trustees and any costs which they might be ordered to pay if the action fails, and thus reasonably refuse not to continue to sue, a beneficiary cannot rely upon the impecuniosity of the trust as a special circumstance justifying a derivative action in the place of the trustees. Where the trustees' refusal to sue is part of the special circumstances justifying the action being brought in the name of a beneficiary, then this fact should be stated in the particulars of claim. But there is no need for the beneficiary to show that the trustees have refused to sue in cases where other special circumstances are relied upon. And the fact that the beneficiary who commences an action against a third party in his own name has previously brought an unsuccessful administration action seeking a direction that trustees should sue will not cause the action against a third party to be struck out if the beneficiary can establish special circumstances which do not rely upon an allegation that the trustees would have been directed to sue if an administration action had been brought. If there is a genuine dispute between the beneficiaries as to whether action against a third party would be in the interests of the trust, then an administration action should be brought so that the matter might be determined as between the beneficiaries, before proceedings are commenced in the name of any of them or in the name of the trustee. Where a beneficiary brings a derivative action in his own name, and the trustees and other beneficiaries should normally be joined as defendants, so that they are bound by any judgment and to avoid the risk of multiplicity of actions. A derivative action may not be brought by a beneficiary against the professional advisers of the trustees in tort if the cause of action in tort is not trust property, but it is thought such a course of action, if arising in the administration of the trust may be trust property, thereby enabling the beneficiary to sue if the requisite special circumstances are established. It has been held in Australia that the beneficiary can sue only if there are exceptional circumstances and he seeks equitable relief; if he makes a claim at law he must bring an administration action.” (footnotes omitted)

Mr Adams relies on several of the cases cited by Lewin in the footnotes to this passage. Thus, for example, in Lancaster v Evors (1841) 4 Beav 158, a creditor could enforce a cause of action vested in an estate which the executors were not willing to enforce. It was established in Yeatman v Yeatman (1877) 7 Ch D 201 that a beneficiary could not sue in the name of the trustee merely because the trustee had refused to sue, but if in a case where the trustee refused to sue the court was satisfied that it would have given liberty to the trustee to bring proceedings even though there was no certainty that the proceedings would be successful, these would in general be special circumstances in which the beneficiary could sue in his own name. In Meldrum v Scorer (1887) 16 LT 471, where the plaintiff, a beneficiary under a will, sued the executors of the will and the trustees of a settlement made by him, Kay J directed that the other beneficiaries (as I read the report) of the trust be joined as defendants to avoid multiplicity of action.

Mr Adams also relies on more recent authorities. In re Field [1971] 1 WLR 555, the plaintiff brought proceedings in her own name against the company which had paid to the widow of the deceased insurance monies belonging to the estate. The plaintiff had an order for maintenance against the estate. The company sought an order that the action be struck out. The court had previously declined to make an order on the plaintiff’s application that the administrators be directed to sue or alternatively that she should be at liberty to sue in her own name in the new proceedings. The personal representatives were already joined as formal defendants. Goff J rejected the argument that the only circumstances in which the beneficiary could sue were those where the court would direct the executor to sue. That test was not a definition of the circumstances in which the beneficiary could sue in his or her name. Goff J accepted that this was not a case in which the executors would be directed to sue at the expense of the estate because the widow was the only beneficiary apart from the plaintiff.

Goff J refused to strike out the action despite the earlier order. He held, however, that the fact that an asset belonging to the estate could only be got in if the plaintiff sued the company could not, by itself, be a special circumstance "because, if it were, it would wholly abrogate the rule that special circumstances have to be shown." Goff J held that there were special circumstances for the reason that the alleged asset had been paid to the widow on the footing that it was not part of the estate. The widow could not be expected to litigate this question. Goff J further held that the circumstances were similar to the case where the cause of action was held on a bare trust. The relevance of that was that this court had held that a beneficiary under a bare trust could bring proceedings in his own name and where the trustees refused to sue, joining the other beneficiaries as defendants: Harmer vArmstrong [1934] Ch 65.

In Hayim v Citibank NA [1987] 1 AC 730, where a trustee (HK) held the trust property on trust for C, the trustee of another trust of which the appellant (H) was a beneficiary, the Privy Council considered the question whether H could bring a derivative action against HK for breach of trust on account of their failure to sell a house in Hong Kong. The Privy Council held that the terms of the trust enabled C to give directions to HK in respect of the retention of this house in the interests of the elderly residents of the house. Lord Templeman, giving the advice of the Privy Council, held that:

“The authorities cited by Mr Nugee only demonstrate that when the trustee commits a breach of trust or is involved in a conflict of interest and duty or in other exceptional circumstances a beneficiary may be allowed to sue a third party in place of the trustee. The beneficiary allowed to take proceedings cannot be in a better position than the trustee carrying out his duty in an improper manner. ” (page 747C)

In Bradstock Trustee Services Ltd v Nabarro Nathanson [1995] 1 WLR 1405, the plaintiffs were trustees of an occupational pension scheme which had started proceedings to recover a sum thought to represent surplus which had been repaid to the employer. They brought proceedings for professional negligence against the solicitors who had advised on the matter. However, they were informed that the costs of both sides might exceed the total assets of the scheme and that they were personally at risk as to costs. They obtained directions from the court allowing willing beneficiaries to be substituted as plaintiffs. These beneficiaries obtained legal aid to take over the proceedings. They then applied to the court to be substituted as plaintiffs. HHJ Baker QC, sitting as a deputy judge of the Chancery Division, dismissed the application. He held that the trustees had not failed in the performance of their duty to protect the trust estate by declining to continue the action and that the applicants had no cause of action against the solicitors since they had no legal or equitable property in the subject-matter of the action but were simply beneficiaries of any property recovered by the trustees. The judge further held that the trust estate would probably be liable for costs if the action failed and that there was nothing in the rules of court to justify handing over the conduct of the action against the third party and accordingly he had no jurisdiction to make the orders sought.

The ruling of HHJ Baker QC on the question whether the proceedings could be continued as derivative proceedings was obiter. The judge noted that if the beneficiaries were to begin a new derivative action based on the same facts it would clearly be statute-barred. The judge rejected the argument that the amendment did not require the addition of new parties because the beneficiaries had always been represented parties. Damage was suffered when the payment was made and thus the beneficiaries could not rely on section 14A of the Limitation Act 1980 as amended by the Latent Damage Act 1986. On the question of whether the order resulted in an injustice, the judge pointed out that the position of the defendants was also unenviable because the beneficiaries were legally aided and the claim would be expensive to try. He left open the question of how he would have exercised his discretion if he had held that he had jurisdiction to make the order sought.

The principle which Mr Adams seeks to extract from these authorities is that the ultimate question is whether in all the circumstances justice requires that the beneficiary should be entitled to bring a claim. He submits that in this case the judge took too narrow a view. If Mr Mark Roberts could bring a claim, an asset could be realised for the benefit of the estate that could not otherwise be realised. He submits that the making of the claim potentially prejudices neither the solicitors nor anyone else. It is better that Mr Mark Roberts should bring a derivative claim than that he should seek to obtain an assignment of the estate’s causes of action to himself.

Mr Adams submits that it is not necessary for the administrator to be joined as a party, although the court would have discretion to require this. Under CPR 19.8A the court can make an order that the proceedings be served on the personal representative. The administrator could then decide for himself whether to apply to be joined. The joinder of a personal representative or the assignor of a chose in action is merely a matter of practice. If joinder is necessary, it can be done under CPR 19.5 (set out below). He submits on the authorities that the proceedings are not a nullity even if the party in whose right a derivative claimant seeks to sue ultimately has to be joined, and he emphasises that Mr Mark Roberts’ proceedings were commenced within the limitation period: see, for example, Weddell v J.A. Pearce & Major [1988] Ch. 26.

Mr Adams alternatively submits that, in effect, the joinder of the administrator would merely be the substitution of a successor rather than the substitution of a new party in the full sense. No new cause of action is being asserted. CPR 19.5 ought not to apply in this situation. He submits that, for the purposes of s 35 (6) of the 1980 Act (set out below), there is merely a change of capacity and not the substitution of a new party.

Mr T.J.B. Dumont, for the solicitors, lays particular emphasis on the final sentence of the passage cited above from the speech of Lord Templeman in Hayim. This clearly reflected the fact that the trustee, who in that case had acted upon the instructions of C, was entitled to act on those instructions without reference to the interests of the beneficiaries. In other words, the trustee would not be worse off because it was sued by the beneficiaries for whom C was a trustee, rather than by C itself. Lord Templeman further held that “exceptional circumstances” would include the case where a trustee’s failure to act was not a breach of trust. He held that the authorities (which he set out):

“demonstrate that a beneficiary has no cause of action against the third party save in exceptional circumstances, which embrace a failure, excusable or inexcusable, by the trustees in the performance of the duty owed by the trustees to the beneficiary to protect the trust estate, or to protect the interests of the beneficiary in the trust estate.” (page 748F)

Mr Dumont further submits that, if the amendments are permitted, Mr Mark Roberts could avoid the limitation defence to which the estate would be subject. Mr Dumont submits that the negligence claim is neither strong nor valuable, and he puts forward a number of answers to the factual allegations in the statement of claim. He accepts however, that the solicitors have made no application for an order striking out the action. He submits that on the authorities special circumstances have to be shown and that the test is not whether in all the circumstances justice requires that the beneficiary be entitled to bring a claim. There has in any event been delay. Mr Mark Roberts issued his proceedings in 2002, and it was not until September 2006 that the present application was issued.

Mr Dumont submits that the administrator must be joined as a defendant if the amendment is allowed. He submits that CPR 19.5 applies. Under that rule the joinder of the administrator would have to be “necessary” to enable the existing action to be pursued, which cannot be shown.

The first question is to determine the proper nature of the application. This is necessary in order to identify which provisions of the Civil Procedure Rules are applicable. Mr Adams submits that his application is simply to change the capacity in which he sues, and so the relevant rules are those which deal with a change of capacity. Mr Dumont submits that in substance the application is also one to add a new party. The effect of adding a new party is that the administrator, if not willing to be joined as a claimant, must be joined as a defendant. So I need to determine whether, when the court gives permission for a personal claim, brought by a beneficiary of an estate in his personal capacity, to be continued as a derivative claim, the personal representative needs to be joined.

The Civil Procedure Rules do not deal expressly with a derivative claim by a beneficiary of an estate. The Civil Procedure Rules contain detailed provisions dealing with derivative actions brought by members of a company, body corporate or trade union for a remedy to be given to that body: see CPR 19.8. Indeed the term “derivative claims” is used in such a way in CPR 19.9 as to suggest that a derivative claim can only arise in relation to a body corporate or trade union. In fact, derivative claims can arise in other circumstances, such as where a beneficiary sues to enforce the cause of action vested in a trust of which he is a beneficiary. A derivative claim can also be brought in a case like the present, where a beneficiary under a will seeks to enforce a cause of action vested in the estate.

In the case of a derivative claim brought by a member of a company, body corporate or trade union, the rules specifically provide that the company, body corporate or trade union should be joined as a defendant (CPR 19.9(3)). This does not mean that the company, body corporate or trade union needs to take an active part in the proceedings. On the contrary, because the claimant is the driving force in the litigation, it will only be a nominal defendant. Joinder of the trustees (as nominal defendants) is also the practice where a beneficiary of a trust brings a derivative claim: see Lewin, para. 45-05 cited in [14] above, or where the beneficiary of a contract brings a claim: Vandepitte v Preferred Accident Insurance Corporation of New York [1933] AC 70 at 79 per Lord Wright; Harmer v Armstrong [1934] Ch 65 at 88 per Lawrence LJ. Similarly, when an equitable assignee of a chose in action sues to enforce it, then unless there was some reason such as collusion between the debtor and the assignor or that all the parties otherwise agree, the legal owner of the chose in action also had to be joined. By way of further example,where a claimant claims a remedy to which some other person is jointly entitled with him, all persons jointly entitled to the remedy must be parties unless the court orders otherwise (CPR 19.2). Furthermore, in a debenture holder’s action, all the trustees must be made defendants if they are not the plaintiffs: see Palmer’s Company Precedents Part III, Debentures and Debenture Stock (16^th edition) (1952) page 481.

The principal reason for joinder of the company, body corporate, trade union, trustees, assignor or joint owner is to bind those persons so that there cannot be any further claim based on the same cause of action. Thus in Performing Right Society Ltd v London Theatre of Varieties Ltd [1924] AC 1 at 14, where the plaintiff society was an equitable assignee suing its own name, Viscount Cave L C. said:

“That an equitable owner may commence proceedings alone, and may obtain interim protection in the form of an interlocutory injunction is not in doubt; and is, I think, the rule of the Supreme Court, that, in general, when a plaintiff has only an equitable right in the thing demanded, the person having the legal right to demand it must in due course be made, a party to the action: Daniells’ Chancery Practice (7^th ed), Vol 1, p 172. If this were not so, a defendant after defeating the claim the equitable claimant might have to resist like proceedings by the legal owner or by persons claiming under him as assignees for value without notice of any prior equity, and proceedings might be indefinitely and oppressively multiplied. No doubt the rule does not apply to a mortgagor at least since the passing of section 25(6) of the Judicature Act 1873; and there may be special reasons, were, it will not be enforced as in William Brandt’s Sons & Co vDunlop Rubber Co [1905] AC 454, where the defendant disclaimed any wish to have the legal owners made parties.”

There are other reasons for joinder. If the company is a defendant, any order for the payment of damages can be for the payment of damages in its favour, and it can seek to enforce the order if it is necessary to do so. In addition, an order for costs can be made against it, including (where appropriate) an order to indemnify the claimant for its reasonable costs.

We have not been shown any case which deals with the question whether, in a derivative claim brought by the beneficiary of an estate, the personal representative must be joined as a defendant. Nonetheless, in my judgment, this situation is indistinguishable from the examples which I have already given. There is no reason for distinguishing this situation from any of the situations previously mentioned; nor is there any reason for departing from the general practice in those situations on the facts of this case. In my judgment, the personal representative must be joined as a defendant. Otherwise the solicitors are exposed to the risk of multiplicity of actions. It is immaterial that the Civil Procedure Rules contain no requirement to this effect. Likewise, in my judgment, it is immaterial that it need not necessarily be done straight away. It is sufficient that it has to be done at some stage.

If it was only a change of capacity that was relevant, then we would only be concerned with CPR 17.4(4). That provides as follows:

“(4)

The court may allow an amendment to alter the capacity in which a party claims if the new capacity is one which that party had when the proceedings started or has since acquired.”

Mr Mark Roberts has no difficulty in meeting the requirements of CPR 17.4(4) in that he was a beneficiary of the estate even before the proceedings began.

I have concluded, however, that he also needs to add the administrator as a defendant. There is no application for that purpose but if there were one it would clearly be an application to add a party outside the limitation period. In those circumstances, the applicable rule is CPR 19.5, which provides so far as far as material as follows:

“(1)

This rule applies to a change of parties after the end of a period of limitation under—

(a)

the Limitation Act;

(b)

the Foreign Limitation Periods Act; or

(c)

any other enactment which allows such change, or under which a change is allowed.

Under this rule, Mr Mark Roberts can show that the relevant limitation period was current when he started his proceedings and thus satisfy CPR 19.5(2)(a). He must next satisfy the requirement that the addition is "necessary” (CPR 19.5(3)(b)). He can only do this in one of the ways set out in (a) to (c) of CPR 19.5(3). The only relevant option is (b), namely that the claim cannot properly be carried on against the solicitors unless the administrator is added. But Mr Mark Roberts cannot satisfy this requirement because his existing claim is a personal claim and the addition of the administrator is not necessary for that purpose. The court should not take the course proposed by Mr Adams, namely apply the test of necessity immediately after permitting an amendment to reflect a change of capacity. It would be contrary to principle for the court to grant permission to amend the claim merely to reflect a change of capacity as that would not enable Mr Mark Roberts to proceed to judgment. As to the principles applying to the court’s power to allow an amendment, see generally Giles v Rhind [2008] EWCA 118, in which I held that: “Permission to amend should be refused if the claim, as amended, would fail to disclose a viable cause of action either because it is statute-barred or because the ingredients required for the relevant cause of action are not made out.”. The same must apply if the amendment will not enable the party seeking to amend to succeed on the claim he makes because the relevant parties have not been joined.

The approach that I have adopted is not to treat the category of amendment that involves the addition of a new party and the category of amendment that involves a change of capacity as mutually exclusive. Moreover, contrary to Mr Adams’ submission, the addition of the new party must necessarily involve the addition of a new claim. Mr Mark Roberts' personal claim is separate and different from the claim of the estate of Mrs Roberts.

CPR 17.4(4) and CPR 19.5 are enacted pursuant to the authority contained in s 35 of the 1980 Act. Subs (1) provides that, where a new claim is added by amendment, it is deemed to have been commenced on the date of the original action. A new party may not be added after the expiration of the applicable limitation period (unless it is an original set-off or counterclaim) except in accordance with the rules of court (subs (3)). Subs (4) provides that a new claim involving the addition of a new party can only be made if the conditions specified in subs (5) (which is expanded in ss (6)), and any further restrictions in rules of court, are satisfied. (Those conditions and restrictions are to be found in CPR 19.5). Changes of capacity are dealt with in subs (7), which provides:

“(7)

Subject to subsection (4) above, rules of court may provide for allowing a party to any action to claim relief in a new capacity in respect of a new cause of action notwithstanding that he had no title to make that claim at the date of the commencement of the action.

This subsection shall not be taken as prejudicing the power of rules of court to provide for allowing a party to claim relief in a new capacity without adding or substituting a new cause of action.”

Thus the opening words of this provision, authorising rules of court which provide for changes of capacity, subject this provision to that dealing with the addition of new parties (ss(4)). If, therefore, an amendment requires the addition of a new party as well as a change of capacity, the rules dealing with the addition of a new party must also be satisfied. There are no rules within the description of the second paragraph of ss (7).

These conclusions are sufficient to dispose of the appeal. However, the parties argued the further question whether in principle a beneficiary could bring a derivative claim in circumstances such as these. We were taken to a large number of authorities. They show that the courts have required there to be special circumstances where a beneficiary seeks to bring a derivative claim. In my judgment, it is in general no longer necessary to cite these authorities, which are merely applications of a general principle. That general principle was summed up by Lord Templeman in Hayim in these terms, namely, as “exceptional circumstances, which embrace a failure, excusable or inexcusable, by the trustees in the performance of a duty and by the trustees to the beneficiary to protect the trust estate, or to protect the interests of the beneficiary in the trust estate”.

The danger of setting out a large number of cases is that it may lead to the conclusion that the case under consideration has to be brought within any category of special circumstance already identified. Where a party comes to the court and asserts that he can show a special circumstance which has not previously been considered as a potential special circumstance justifying a derivative action, the task of the judge becomes not one of trying to find a precedent but one of identifying the principle and then applying it to the new circumstances.

The court must naturally consider the financial impact of the bringing of the proceedings on the estate or trust. As Goff J held in Re Field, the fact that the personal representative is unwilling to sue is not in itself enough. However, in very many cases, the fact that the derivative claim will enable an asset that could not otherwise be realised to be realised will be a very powerful consideration, subject, however, to bringing into account the risk to the estate involved in bringing the action. In the present case, Mr Mark Roberts has legal aid and thus the estate will not have to fund his costs. There is no suggestion of a counterclaim. The only claim is for the recovery of damages. If that were to be successful, the estate’s assets would be increased. But the estate would also have a contingent liability for costs of the defendants. In the present case there are no assets out of which those costs could be paid.

In Bradstock, referred to above at [19] above, HHJ Baker QC left open the question whether permission to bring a derivative claim should be brought in these circumstances. No doubt the reason for his concern was that, if the court gave permission for a claim, it was likely that the defendants, if successful, would not recover their costs. This is a most unsatisfactory state of affairs, but it must often be the case that defendants are faced with a claimant who has the benefit of public funding for his costs. If there were other persons who could bring the claim who were not publicly funded, I would expect the court to consider refusing permission. Subject to that, in my judgment, a publicly-funded claimant should be able to bring a derivative claim. The fact that the estate has no assets means that it is not at risk if a derivative claim is brought.

I proceed therefore on the basis that it is no objection in this case that Mr Mark Roberts has the benefit of costs protection as a publicly-funded litigant. On this basis, the next question is whether, if there had been no limitation objection as I have concluded above, Mr Mark Roberts would have been able to show that there were special circumstances justifying the grant of permission to amend to bring a derivative claim. For this purpose, I leave on one side the possible impact of the matters considered under “Other Factors” below.

Mr Dumont submits that special circumstances are not shown. In particular he submits that Mr Mark Roberts could have made his application to amend some time ago. But, in my judgment, in the absence of prejudice, that is not a good objection. On the assumption on which I am proceeding, the derivative claim is not statute-barred and it was always open to the solicitors to take out an application for the claim to be dismissed as having no real prospect of success. There is no evidence that Mr Mark Roberts made a deliberate decision at an earlier stage not to bring a derivative claim and then changed his mind. On the other hand, the solicitors have not at any stage made an application to strike out the existing proceedings, and thus this court has not heard full argument on the question whether it would have succeeded. Importantly, as things stand, the court is not in a position to say that the claim of the estate has no value. I bear in mind in favour of the solicitors that their solicitors wrote a long letter to Mr Mark Roberts's solicitors before the expiry of the limitation period, explaining among other things their view that there was no duty of care. Mr Mark Roberts was thus clearly put on notice that his personal claim might be defective and he could have reconsidered his position in the light of this letter and decided there and then to apply to continue his action as a derivative action on behalf the estate. He failed to do that until 2005. However, notwithstanding this, in my judgment, the fair result in the circumstances of the case would have been to give permission to amend to enable him to bring a derivative claim and to leave it to the solicitors, if so advised, to take out an application to strike the personal claim out.

The judge reached the conclusion that special circumstances were not shown in this case, but the major point, as I read his judgment, was the limitation advantage claimed by Mr Mark Roberts. On that, he did not have the benefit of the argument advanced in this court, as Mr Dumont did not rely on CPR 19.5 in the court below.

If this had been a case in which the court was minded to grant permission, it would have to consider whether to give directions to enable the wishes of the Inland Revenue, as the largest creditor of the estate, or of Mrs Jill Morna Roberts, the other residuary legatee, to be ascertained. In the circumstances, it is unnecessary to express a view on this point. Where it is necessary to join the beneficiaries as defendants to avoid multiplicity of actions, the beneficiaries must be joined.

In their respondents’ notice, the solicitors rely on the principle that a derivative claimant can be in no better position than the party in whose right he seeks to sue: see the passage cited in [18] above from the speech of Lord Templeman in Hayim. This is a general principle, which is illustrated by the facts of Hayim, and it reflects the fact that the claimant is not enforcing his own cause of action but that of the party in whose right he seeks to sue. It concerns the position of a party bringing a derivative claim. Since I have concluded that CPR 19.5 specifically covers this case, it is unnecessary to consider whether, in the absence of s 35(4) to (6) of the 1980 Act and CPR 19.5, this principle would have applied to produce the same result.

For the reasons given above, which differ from those of the judge, I would dismiss both this appeal and the respondents’ notice.

I agree.

I agree that the appeal should be dismissed on the ground that CPR 19.5 specifically covers the case and permission to amend should not be granted. The rules, in my view, reflect the merits of the situation when an administrator has been duly appointed.

I agree that the general principle as to exceptional circumstances stated by Lord Templemann in Hayim may be applied in circumstances other than those considered in decided cases. The judge accepted as much at paragraph 51 of his judgment. As Arden LJ states, at paragraph 40, special circumstances have to be shown where a beneficiary seeks to bring a derivative claim.

The judge, before whom the CPR 19.5 point was not taken, found that special circumstances were not, on the facts, present so as to allow a derivative claim against the solicitors. The judge did state in terms that the availability of public funding did not constitute a special circumstance justifying the derivative claim. It is difficult to disagree with that, and the appellant does not, but, as Arden LJ observes, at page 43, the issue on that factor is rather whether the possible effect on the other party of having to confront a publicly-funded claimant should prevent a derivative claim. .

The judge did, however, set out a list of sixteen other relevant circumstances which, in his view, were not to be regarded as special. He did so on the assumption, and contrary to the finding of this court, that the limitation defence could be defeated under Rule 17.4 (factor 18).

In my judgment, a consideration of whether special circumstances exist involves an assessment of the conduct of those involved, including that of the beneficiary who seeks to bring the derivative claim. It is he who must establish special circumstances which justify the bringing of the claim.

I do not find it decisive against the existence of special circumstances that the appellant is not the sole beneficiary, or that there is no specific evidence as to the attitude of the other beneficiaries, or that the proceedings against the solicitors are far from straightforward (judge’s factors 13, 14 and 15). However, those are hardly factors which create special circumstances on which the appellant can rely as distinct from factors which might otherwise disqualify. The existence of an arguable claim in negligence, in itself, is not in my view a special circumstance.

I set out circumstances 1 to 18:

“(1)

When Mr Sainter was appointed as administrator on 30th October 2000, he was still in time, under the Limitation Act 1980, to bring any claim which the estate was able in law to bring against the solicitors;

(2)

At the present time, a claim by the estate against the solicitors is statute barred;

(3)

Mr Sainter was appointed by the Court as administrator on the application of Mark Roberts;

(4)

Mark Roberts did not apply for himself to be appointed as an administrator;

(5)

Mark Roberts did not procure by way of an assignment or by way of an assent, the vesting of the estate's cause of action against the solicitors into himself before the limitation period ran out;

(6)

If Mark Roberts procured the vesting of the estate's cause of action in himself at the present time then he would not be able to assert that cause of action, by reason of limitation;

(7)

Whilst I do not have specific evidence about Mr Sainter's attitude, I have no reason to think that Mr Sainter would not have been prepared to vest the estate's cause of action in Mark Roberts;

(8)

There is no basis for any allegation of any breach of trust against Mr Sainter;

(9)

There is no conflict of duty or interest involving Mr Sainter;

(10)

Mr Sainter's decision not to sue the solicitors has not been said to be open to any criticism;

(11)

If John Roberts had remained the administrator then there might at that time have been special circumstances arising out of the allegations being made as to the involvement of John Roberts in the matters complained of;

(12)

Any special circumstances which existed during the time that John Roberts was administrator ceased to exist when Mr Sainter became administrator in October 2000;

(13)

Mark Roberts is not the sole beneficiary;

(14)

The Court has no specific evidence as to the attitude of Jill Morna Roberts or the Inland Revenue;

(15)

The proceedings against the solicitors are far from straightforward, although I do not base my decision on any assessment of the precise prospects of success in those proceedings;

(16)

In the absence of argument on the point, I leave out of account the question whether Mr Sainter as administrator might be liable to pay the costs if a derivative action were permitted and proceeded and failed;

(17)

Mark Roberts has Legal Services funding to bring the present proceedings and it might very well be the case that he has or will obtain Legal Services funding to bring a derivative claim;

(18)

The Court has power under rule 17.4 to give Mark Roberts permission to amend the present proceedings to add a derivative claim (if the Court thinks that special circumstances exist) and thereby defeat a limitation defence.”

I agree with the judge’s analysis of the situation at factors 11 and 12, based on the facts stated in factors 1 to 10. Had John Roberts remained administrator, special circumstances may have been present. However, in 2000, the appellant could have applied to be appointed as administrator and the administrator appointed, Mr Sainter, was appointed on the appellant’s application. The appellant had the opportunity over seven years ago to take the action he now seeks to take.

The court seeks to do justice between the parties and, the appellant not having taken that opportunity, I see nothing special in the current circumstances to justify a claim in a derivative action based on the conduct of solicitors as long ago as 1996 and 1997.

Nor does the inaction of those solicitors during those years create a special circumstance. By letter of 12 March 2003, that is within the limitation period, they set out their case, including their claim that any duty owed was to the personal representative and not to the beneficiary. The onus was on the appellant to take such action as he saw fit years ago. Thus, even in the absence of CPR 19.5, I would have upheld the judge’s decision. The existence of an action on his own behalf, which he is free to pursue, cannot be relied on as a special circumstance justifying the action now sought to be taken.