Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
THE HONOURABLE MRS. JUSTICE COX DBE
Between :
DAVID ROY HOWELLS and JAMES KELLY (On behalf of themselves and all other members of the Hemel Hempstead Football & Sports Club) | Claimants/ Respondents |
- and - | |
THE DOMINION INSURANCE COMPANY LIMITED | Defendants/ Appellants |
Edward Knight (instructed by Elborne Mitchell, Solicitors, One America Square, Crosswall, London, EC3N 2PR) for the Claimants/Respondents
Nicholas Baldock (instructed by Sherrards, Solicitors, 45 Grosvenor Road, St. Albans, Hertfordshire, AL1 3AW) for the Defendants/Appellants
Hearing dates: 14th February 2005
Judgment
Mrs. Justice Cox :
This is an appeal by the Defendant insurance company (the Appellants) from the Order of Master Foster dated 6th November 2004, setting aside his previous Order of 14th April 2004, in which he had granted permission to the Appellants to enforce a judgment and a final costs certificate against certain named members of the Hemel Hempstead Football and Sports Club (“the Club”). The central issues raised, Master Foster having himself granted permission to appeal, are whether, as a matter of law, (a) the judgment and (b) the Costs Certificate can be enforced against named, individual members of the Club as an unincorporated association.
The Relevant Background
The following facts are not in dispute. The Club is and was at the material times an unincorporated members’ club. The Club’s football ground was hired out for school matches or local team fixtures; and various functions were held in the Club House. On payment of an annual membership fee, members of the Club were entitled to use the facilities (for example a bar, dance floor, pool table and darts board); and they enjoyed both the social aspects of the Club and the advantageous prices of the drinks available.
The Club Rules provided for the election of Officers and for the creation of a General or Management Committee. Rule 10 provided that:
“… the Committee as elected shall have the power to act for and on behalf of the Club in all contracts and … their decision in all matters shall be deemed final.”
There was provision in the Rules for Management Committee meetings, for minutes to be taken by the Secretary and for an Annual General Meeting of the membership. It appears that in around 1989 a Board of Directors was set up, in anticipation of the formation of a limited company, to which the assets of the Club would be transferred. However, the “company”, although incorporated in June 1991, remained inactive and was eventually struck off the Register of Companies. The assets of the Club were never transferred to the company and the Club therefore continued to function at all times as an unincorporated members’ Club.
On 8th June 1990 an insurance policy was taken out with the Appellants, which described the insured as “the Members for the time being of Hemel Hempstead Football and Sports Club”. The proposal form was signed by Mr. Hamblin as Secretary of the Club and the insurance was in respect of various contingencies, including loss and damage arising as a result of fire. The policy was renewed on 8th June 1991 and again in 1992.
On 10th November 1992 a fire occurred at the Club, which severely damaged the Club premises and was the subject of a claim made on the Policy. The Appellants in response made interim payments to the Club, by cheque payments in December 1992 and January 1993, totalling £52,550. However, the Appellants then repudiated liability and sought to avoid the Policy on the grounds that there had been non-disclosure of material facts when the Policy was renewed in 1992, or alternatively misrepresentations or breach of warranty. The Appellants relied, in this respect, on the previous convictions for offences of dishonesty of a Mr. Evans who was, in June 1992, the General Manager of the Club.
On 11th June 1993 the then Chairman and Secretary of the Club (David Howells and James Kelly respectively) issued representative proceedings against the Appellants by way of Writ of Summons, in which the Claimants were described as “1. David Howells and 2. James Kelly (on behalf of themselves and all other members of the Hemel Hempstead Football and Sports Club)”. The Writ issued on behalf of all the Club members, as provided for then by the Rules of the Supreme Court Order 15, Rule 12, sought a declaration that the insurance policy was valid; and that the Club’s claim on the policy arising from the fire damage should therefore be paid in full, in the sum of £367,305.79 plus interest.
The Appellants resisted the claim, asserting that they were entitled to avoid the Policy. They also counterclaimed against the Claimants, as representatives of the Club members as a whole, seeking return of the sum of £52,550, which had already been paid out.
In approximately September 1993 the litigation stalled, because insufficient funds were available to the Club to progress the claim. However, in the summer of 1997, a new Chairman, David Boggins, arrived on the scene and injected further cash into the Club. The Claimants’ solicitors then served a Notice of Intention to Proceed in July 1997; and no changes were made at that time to the names of the Claimants, or to their description as representatives of all the members.
In 1999 the action subsequently came before Richard Fernyhough QC, sitting as a deputy judge of the Queen’s Bench Division, and the trial lasted approximately four days, both sides being legally represented. On 24th November 1999 he upheld the Appellants’ contentions and ordered that judgment be entered for the Appellants on both the claim and the counterclaim. The Claimants were ordered to pay to the Appellants the sum of £75,740; and, further, to pay to the Appellants the costs of the claim and counterclaim, to be assessed on the standard basis if not agreed. There was no appeal from this decision.
The costs were not agreed and a contested hearing took place before the Deputy Costs Judge on 24th April 2001, at which both parties were again legally represented. A final costs certificate was issued on 28th June 2001. Total costs were assessed in favour of the Appellants at £65,543.72 and, once again, there was no appeal from this costs decision.
The Appellants have received nothing in respect of either of these sums. There therefore remain due and outstanding to them both the judgment sum of £75,740, together with statutory interest from 24th November 1999, accruing at the relevant daily rate; and, further, the total costs assessed, also with statutory interest accruing.
The Appellants have, since 2001, been endeavouring without success to secure by various means payment by the Claimants of these sums. The Club not being a legal entity, the Appellants have had to look to the represented members for satisfaction. This has been time-consuming and unrewarding. They have orally examined both Mr. Howells and Mr. Kelly, in order to obtain documents and information for the purpose of enforcing the judgment. Relevant membership lists were eventually obtained only as a result of applications made by the Appellants to the Court. Despite the Club’s solicitors appealing for funds from the membership in order to pay the judgment debt and costs (see for example page 133 of the appeal bundle), no progress was made.
Eventually, on 8th April 2004, the Appellants applied to the Court for an Order granting them permission, pursuant to CPR Part 19 Rule 6(4), to enforce the judgment and costs certificate against 32 named, individual members of the Club. In order to avoid any disputes relating to the correct date of membership for enforcement purposes, the Appellants sought permission to enforce against only those members who were members both at the date of issue of the writ (11th June 1993), and as at the date of judgment (24th November 1999). No issue has arisen below, at any stage, as to the individual members on this list being club members at the relevant times, although a few individuals have, by consent, since been withdrawn from this list for various reasons which are irrelevant to these proceedings.
In his Affidavit filed in support of this application, Mr. Goodger of the Appellants’ solicitors referred to the fact that Mr. Kelly and Mr. Howells, and/or the Claimants’ solicitors, had had every opportunity since 1999 to contact those members identified and to make arrangements for contributions, so as to enable full settlement of the judgment debt and costs, the liability of each member being joint and/or several. He also observed that these were in any event matters arising as between the members themselves, and were not matters with which the Appellants as judgment creditors were concerned.
On 14th April 2004 Master Foster granted permission to the Appellants as requested on the papers but, since their application and his Order had been made without notice to the Claimants, he ordered that the named members should have 14 days following service to apply to set aside the Order. On 12th May solicitors acting for 17 Club members applied for the Order to be set aside; and on 28th June Master Foster gave directions for a hearing of the following issue; “whether an individual member of the [Club] can be liable as a matter of law to satisfy the judgment and/or costs Order in this matter”. That hearing took place on 9th November 2004, both parties being represented by counsel.
Master Foster’s Decision
The Master held, first, at paragraphs 5 to 6 of his judgment that, although there was no doubt that the judgment of 24th November “… is binding on the Club and all its members, none of whom can challenge that judgment now”, that did not mean “… that payment of the sums can necessarily be enforced against each member”. The individual Applicants were therefore not precluded from arguing that they were not liable to pay. He held that it was not clear from the judgment of 24th November whether, in referring to “the Claimants” the judge was referring to the two named people (that is Messrs. Howells and Kelly) or to the Club; and, further, that there was nothing in the judgment to indicate that the judge was deciding the issue as to whether individual members of the Club should pay the judgment sum and the costs. He therefore concluded that it remained open to him to decide that issue; and he rejected the Appellants’ submission that the objections now raised by the Applicant members should have been taken at the trial, and that it was too late for them to seek to argue them now. He made it clear, in paragraph 9 of his judgment, that he was deciding at this stage only the question whether the appellants could enforce against the individual members as a matter of law; and he did not go on to consider, if they could, whether as a matter of his discretion enforcement was appropriate in each case.
He dealt firstly with the enforcement of the judgment. He dealt shortly with the Applicants’ contention that the members’ liability was in any event limited to the amount of their subscriptions, rejecting it on the basis that none of the authorities cited to him was sufficient to support such a contention.
The Applicants succeeded, however, on their submission that the Club members, as principals, did not give the committee, as agents, sufficient authority to commence or pursue the litigation. His reasoning was expressed as follows, at paragraphs 7 to 10 of his judgment:
“The basis for that submission is a passage in Chitty in respect of which, of course, a number of authorities are cited in that work, but the passage in Chitty, paragraph 9/077, reads as follows:
‘No member of a members club is liable for the debts of the club, except to the extent that he has expressly or impliedly authorised some official of the club to pledge his personal credit. Clubs are not partnerships, and the law which was at one time uncertain is now settled that no member of a club is liable to a creditor except so far as he has assented to the contract in respect of which liability has arisen.’
Now, for ‘contract’ here I think has to be read the word ‘litigation’, because, in my judgment, although the rules of the club clearly gave the committee the power to act on behalf of the members in entering into the contract of insurance, the rules, in my judgment, did not give the committee permission or authority to commence or pursue the litigation and thereby to put, of course, individual members’ finances at risk.
It may be that some members did authorise the committee to act in that way, but, on the evidence before me, that is far from certain. And, even if some members did, there is certainly no evidence as to which members they were, and it would be quite wrong for a judgment to be enforced on the ground of speculation. So I have concluded that there is insufficient evidence that specific authority was given by the members to the committee or to the two representatives who became claimants to commence or pursue the litigation. Equally, I am satisfied that there is quite insufficient evidence from which authority could be implied. Certainly it is true to say that merely by bringing a representative action, which did not need consent of course of the members, the mere fact of that representative action being brought is insufficient to imply that authority had been given by the members to the committee.
Therefore, I find that the point that has been made on behalf of the members is a good one and is quite sufficient to disposes of the issue as to whether the judgment should be enforced or can be enforced against the individual members. That being the case, it seems to me that it is unnecessary for me to consider the issue as to whether or not there are any facts or matters upon which I can exercise my discretion in favour of the members and I decline to do so.
I should just add this, for the sake of completeness. It is right to say that, towards the end of his judgment, the learned Deputy Judge did express the view that it was unfortunate that the decision would cause hardship to the claimants. That, in my judgment, is not an expression of opinion by the judge that the members were individually liable. It can be read equally consistently with the judge simply saying that clearly there would be damage to the finances of the club and that therefore, of course, all the members of that club would suffer as a result. I cannot construe the words of the judge in the judgment as indicating that he had decided or even expressed a view that the members were individually liable for the sums.”
In relation to the costs, the Master expressed himself entirely satisfied that the matter was covered by the decision of the Court of Appeal in the case of Moon v. Atherton [1972] 2 QB 435 and in particular the dicta of Lord Denning that:
“In a representative action, the one who is named as a Plaintiff is, of course, a full party to the action. The others who are not named, but whom she represents are also parties to the action. They are all bound by the eventual decision in the case. They are not full parties because they are not liable individually for costs. That was held by Eve J. in Price v. Rhondda Urban District Council but they are parties because they are bound by the result.”
He rejected the Appellants’ submission that CPR 19.6(4) and in particular 19.6(4)(a) mean that that decision is no longer good law, holding at paragraph 12 as follows:
“First of all, I cannot accept that the drafting of the Civil Procedure Rules was intended to, or indeed had the effect of, overturning decisions of the Court of Appeal on substantive law. Secondly, I think that, read properly, CPR 19.6(4) simply says that a judgment is binding, in other words that it cannot be challenged by anyone who is represented in the claim. The reason I say that is because in (b) of 19.6(4) there is specific provision in relation to enforcement, and it is not, in my judgment, intended by that rule, as I say, to overturn the long established law that an application has to be made against a non-party in order for an Order for costs to be enforced. I am certainly not prepared to say that I am not bound by the decision in the Court of Appeal in Moon v. Atherton, nor am I prepared to say that it was decided per incuriam because nobody took the point about enforcing costs against a non-party.”
This Appeal
I heard submissions from counsel on both questions relating to the enforcement of the judgment. Mr. Baldock for the Applicants had prepared his skeleton argument without the benefit of the transcript of the Master’s judgment and he had therefore not fully appreciated, until very late in the day, the need for service of a Respondent’s Answer containing a cross appeal against the Master’s rejection of his contention that the members’ liability is limited, in law, to the amount of their subscriptions. Despite Mr. Knight’s objections, due to the lateness of Mr. Baldock’s application to cross appeal, Mr. Baldock had addressed all the issues in his skeleton argument, dated 5th January 2005, there was no real prejudice caused to the Appellants by my granting the application; and Mr. Knight was able to deal with both issues before me on the day of the hearing. I therefore decided in the interests of justice to determine both issues, which are in any event linked and are sensibly dealt with together.
Enforcement of the Judgment
Mr. Knight’s first and main ground of appeal is that the Master erred in law in holding that the committee’s lack of sufficient authority to conduct litigation on behalf of the individual members in representative proceedings is a defence to liability for the return of monies paid under a void contract. The Master found that lack of consent to representative proceedings was a defence to liability itself, not to enforcement. This, he submits, was misconceived and the question of authority to litigate was wholly irrelevant to the contract of insurance, which the Master correctly held was entered into by the officers of the Club, acting on behalf of, and authorised by, the members in accordance with the Rules. The finances of the individual members were not put at risk by the commencement and continuance of the litigation but, rather, by the failure to disclose material matters to the Appellants, entitling them to avoid the Policy and to recover the sums paid under it.
Relying on the case of Moon v. Atherton and in particular the dicta of Lord Denning referred to above, Mr. Baldock submits in response essentially that, under RSC O.15 r.12, the individual Club members were not parties for the purposes of enforcement, because those who are represented by others are not full parties to the action. The advent of the Civil Procedure Rules, he contends, has not altered that position as a matter of substantive law. Thus the only parties to the action were Messrs. Howells and Kelly who were, as a matter of law, “the Claimants” for the purposes of enforcement proceedings; and the judgment can be enforced only against the Club assets, as opposed to the assets of the individual members. There is no evidence that the individual members ever consented to the litigation being brought in their name; and the Appellants never applied, as they could have done, to join as defendants to the counterclaim other Club members who were capable of meeting both the judgment sum and costs, in the event that the Appellants were successful in the litigation.
The starting point, in considering the parties’ submissions, is to consider the relevant provisions of the CPR 19.6, which are as follows:
“(1) Where more than one person has the same interest in a claim –
(a) The claim may be begun; or
(b) The Court may order that the claim be continued, by or against one or more of the persons who have the same interest as representatives of any other persons who have that interest.
(2) The Court may direct that a person may not act as a representative.
(3) Any party may apply to the Court for an Order under paragraph (2).
(4) Unless the Court otherwise directs any judgment or Order given in a claim in which a party is acting as a representative under this rule –
(a) Is binding on all persons represented in the claim; but
(b) May only be enforced by or against a person who is not a party to the claim with the permission of the Court.”
These rules replaced those contained in the Rules of the Supreme Court O.15 r.12, which provided as follows:
“12. – (1) Where numerous persons have the same interest in any proceedings, not being such proceedings as are mentioned in rule 13, the proceedings may be begun, and, unless the Court otherwise orders, continued, by or against any one or more of them as representing all or as representing all except one or more of them.
(2) At any stage of proceedings under this rule the Court may, on the application of the plaintiff, and on such terms, if any, as it thinks fit, appoint any one or more of the defendants or other persons as representing whom the defendants are sued to represent all, or all except one or more, of those persons in the proceedings; and where, in exercise of the power conferred by this paragraph, the Court appoints a person not named as a defendant, it shall make an order under rule 6 adding that person as a defendant.
(3) A judgment or order given in proceedings under this rule shall be binding on all the persons as representing whom the plaintiffs sue or, as the case may be, the defendants are sued, but shall not be enforced against any person not a party to the proceedings except with the leave of the Court.
(4) An application for the grant of leave under paragraph (3) must be made by summons which must be served personally on the person against whom it is sought to enforce the judgment or order.
(5) Notwithstanding that a judgment or order to which any such application relates is binding on the person against whom the application is made, that person may dispute liability to have the judgment or order enforced against him on the ground that by reason of facts and matters particular to his case he is entitled to be exempted from such liability.
(6) The Court hearing an application for the grant of leave under paragraph (3) may order the question whether the judgment or order is enforceable against the person against whom the application is made to be tried and determined in any manner in which any issue or question in an action may be tried and determined.”
It is clear, and indeed Mr. Baldock does not dispute it, that the proceedings brought by Messrs. Howells and Kelly were representative proceedings and that the members of the Club were therefore “represented persons”, within both RSC O.15 r.12 and CPR 19.6, all of them having the same interest in the proceedings. The Master found, correctly, that the judgment of 24th November 1999 is binding on the Club and all the members, and that no member could now seek to challenge the judgment (CPR 19.6(4)(a) and RSC O.15 r.12(3)). The Master also found that the Club Rules (Rule 10) gave the committee the power and the authority to act on behalf of the members in entering into the contract of insurance. Not surprisingly, given that the Club themselves brought the claim relying on the Policy, that is also accepted as correct by Mr. Baldock.
In these circumstances I agree that the Master erred in apparently conflating the authority to contract with the authority to litigate; and in seeking to read the extract from Chitty, to which he refers, as if the word “litigation” could simply be substituted for the word “contract”. The contractual analysis set out in Chitty and relied upon by the Master is based entirely, as it seems to me, on privity of contract. Neither the CPR nor the RSC require permission to be given for proceedings to be begun or continued by or against any one or more persons, as representing all or any persons with the same interest in the proceedings. As a matter of law, in representative proceedings,
“The Plaintiff is the self-elected representative of the others. He has not to obtain their consent. It is true that, consequently, they are not liable for costs, but they will be bound by the estoppel created by the decision.” (Fletcher Moulton L.J. in Markt and Co. Limited v. Knight Steamship Company Limited (CA) [1910] 2 QB 1021 at 1039).
This was emphasised more recently by the Vice-Chancellor in the case of Independiente Ltd & Ors v. Music Trading On-Line (HK) & Ors [2003] EWHC 470. Having held that the claim in that case was capable of being brought in a representative capacity, he said as follows at paragraph 32:
“In their written argument counsel for the defendants emphasised that there was no evidence that either the claimants or PPL or BPI had the authority of the Relevant Members to bring these proceedings on their behalf. This is true as a matter of fact but it is irrelevant as a matter of law Markt & Co Ltd v Knight Steamship Co. Ltd [1910] 2 KB 1021, 1039 and John v Rees [ibid] at p. 371. It appears to me that in cases falling within CPR Rule 19.6 the rule itself provides the authority of the person who is represented.”
It is unclear on the evidence in this case whether, as a matter of fact, the individual members expressly or impliedly authorised the committee to commence or pursue the litigation. There was certainly no opposition voiced to its continuance at the AGM on 20th August 1998 when the litigation was actively discussed (see the minutes at page 116 of the appeal bundle). However, as a matter of law, the Club itself not having any legal identity, the authority of the members to the bringing and continuing of proceedings was irrelevant, such authority being clearly provided in the circumstances by the provisions of the RSC; and the litigation being effectively the mechanism used to determine the questions of validity and liability arising under the contract of insurance. In reality the Appellants were already entitled to avoid the Policy and to the return of the monies advanced prior to the commencement of litigation, as a result of the material non-disclosure. Their counterclaim against the Club in representative proceedings was therefore clearly an administratively convenient and appropriate procedure in the circumstances.
No defence was advanced in response to the counterclaim that the committee did not have authority to enter into the contract of insurance on the members’ behalf; and no such defence was relied upon before Master Foster. Nor did counsel seek to argue at the trial in 1999 that the represented members of the Club were not liable on the counterclaim because the Club committee had failed to obtain sufficient authority to commence or pursue litigation; a submission which would clearly not have been open to him on the authorities, and one which he could not sensibly have made when Club members had themselves instigated representative litigation. Messrs. Howells and Kelly were not at any stage suggested to be personally liable on the contract, as opposed to being Defendants to a counterclaim against them as representatives of all the members of the Club.
Thus in my judgment the Master erred in concluding, as a matter of law, that for the reasons he gave the judgment could not be enforced against the named, individual members. It is correct that a represented person may be able to avoid a judgment being enforced against him personally, by reason of special facts or matters which are particular to his case. Such facts would include, for example, facts relating to the person’s membership of the class of persons represented; or, as in the case of Commissioners of Sewers of the City of London v. Gellatly [1871] 3 Ch.D. 610, facts from which it can be shown that there was an element of fraud or collusion in the original action. There would therefore have to be some special reason why the judgment could not be enforced against a particular member of the class of persons represented. No such ground appears to have been advanced so far in the present case.
In the light of my conclusion in favour of the Appellants on this main challenge, there is no necessity for me to deal with Mr. Knight’s second ground of appeal, namely that the Master erred in finding that the members’ liability had not been established at trial, and in finding that he was therefore entitled to decide whether individual members of the Club should pay the judgment sum and costs. In deference to both counsel’s submissions on the issue, however, the judgment of the 24th November was in my view clear. The deputy judge referred to the Club as “the Claimants”, as did the Court Order. He found expressly that the Club Secretary signed the proposal form on behalf of the insured “… i.e. the members of the Club”, and that the sum of £52,550 had been advanced to “the Claimants”, which can only mean the Club members in the circumstances. He also expressed himself to be mindful of the hardship which would be caused to “the Claimants and its many members” by his decision. No inference could in my view reasonably be drawn from the judgment that only the two named Claimants were liable personally for the judgment sum, or that some of the individual members represented in the proceedings were not liable for the return of that sum. Further, as the Master found, the judgment was binding on all the represented members. Whilst no permission is required to enforce a judgment against named Claimants under CPR 19.6, the named Claimants in this case were no more and no less liable for the judgment debt than any other Club member. I accept Mr. Knight’s submission that it cannot now be suggested that the judgment is not enforceable against the individual members, or that the Appellants should have applied to join other members as Defendants to the counterclaim. Had the Claimants won the action in 1999 Messrs. Howells and Kelly would not have benefited personally from an Order for payment in accordance with the insurance policy, rather than receiving it as representatives of all the Club members whom, as the judge found, were the insured under the contract. The Appellants would therefore succeed on this ground of appeal in addition.
The Cross Appeal
Mr. Baldock refers to the note to be found in the White Book at RSC O.15/12/27, namely: “An action cannot be maintained against certain members of an unincorporated association on behalf of the others to enforce a strictly personal liability against members of the association”. He submits that this Club, as an unincorporated association, is no more than a group of individuals and that members of such an association cannot be individually liable for its debts. He relies for this submission on the extract from Chitty referred to by Master Foster and on observations at page 86 of Warburtonon Unincorporated Associations (second edition) that:
“Just as an unincorporated association cannot be liable in tort, so it cannot be liable in contract; it has no separate legal persona to acquire liability. It is also impossible to make a contract to bind all persons who are from time to time members of an association. Thus the Chairman of Tunbridge Wells Benefit Society’s Medical Association could not enforce an agreement made by a medical practitioner with the association as opposed to one made with the Chairman personally.”
He contends, therefore, that a money judgment can only be given against parties to the action and cannot, therefore, be given against a group of individual members, relying on the decision of the Court of Appeal in Walker v. Sur [1914] 2 KB 930 and the following dicta of Kennedy LJ at page 937:
“When I consider the nature of a money claim, I think the case for this purpose becomes reasonably clear, because day by day, if this is a large body, one member is going out and another is coming in. The body is continually changing, and to give a judgment against all the members for debt would be to include the case of an incoming member, who would be made liable though he was not a member at the date of the contract, and in the case of an outgoing member you would have to take the state of things at the date of the judgment. A judgment could not very well be given against one who had ceased to be a member, and yet they are all supposed to be the persons who are said to be represented.”
He has also referred me to the decision of the Privy Council in the case of Wise v. Perpetual Trustee Company Limited [1903] AC 139 and to the following dicta of Lord Lindley at page 149:
“Clubs are an association of a peculiar nature. They are societies the members of which are perpetually changing. They are not partnerships; they are not associations for gain; and the feature which distinguishes them from other societies is that no member as such becomes liable to pay to the funds of the society or to anyone else any money beyond the subscriptions required by the rules of the Club to be paid so long as he becomes a member. It is upon this fundamental condition, not usually expressed but understood by everyone, that clubs are formed.”
Whilst acknowledging that a representative action was appropriate in this case, Mr. Baldock submits that that cannot affect the substantive law; and that it does not mean that the individual club members were thereby rendered personally liable for the judgment sum and costs. Their liability, he submits, did not extend beyond the sums paid by way of their subscriptions.
I find these submissions, on analysis, unpersuasive. I accept - and it is not in dispute – that the CPR do not and cannot affect the substantive law. A members’ club cannot, therefore, as opposed to individual members, be liable for its debts. Further, it is undoubtedly correct that, as O.15 r.12 made clear, an action cannot be brought against certain members of a club, on behalf of the others, to enforce what is a strictly personal liability against those club members. That, however, was not the position in the present case. The trial judge found, at paragraph 3 of his judgment, that the insured under the Policy were the members for the time being of the Club. The original proposal form was signed by the Club Secretary and “… plainly he signed on behalf of the insured, i.e. the members of the Club”. Clearly, therefore, the Club members were all parties to that contract. There was no suggestion at trial that the committee or Mr. Hamblin had no authority to enter the insurance contract on their behalf; and the agency of Mr. Hamblin and of any other officer of the Club who signed the insurance renewal application forms in 1991 and 1992 was never in dispute. The Appellants are, therefore, not seeking to establish the liability of named individual members for the personal debt of another or other Club members.
That, in my judgment, is what distinguishes this case from the authorities on which Mr. Baldock relies. In Wise it was held that the landlord of club premises, to whom trustees of the club owed rent and other monies pursuant to onerous covenants in the lease, could not recover those sums from other club members, where there was no rule imposing personal liability on the members to indemnify the trustees. As between the landlord and the members there was no privity of contract. In the present case the Appellants are seeking to enforce the personal liability of all the members to them, arising from the fact that they were all parties to the contract of insurance entered into.
In Walker the Plaintiff agreed with four members of an unincorporated religious society that he would provide his professional services as an architect. When he was not paid he sued these four members. After a defence had been delivered the Plaintiff, with a view to binding the society and its property took out a summons asking that the writ be amended by describing the four Defendants as being “sued on their own behalf and on behalf of all other members of” the society. The Court of Appeal held, on the trial of a preliminary issue, that the Plaintiff was not entitled to a representative Order under what was then Order XVI, Rule 9. In his affidavit sworn in opposition to the summons the Defendant had stated: “The only members of the said brotherhood who have any interest in this cause or matter are the [four] brothers or members who gave the Plaintiff some instructions … the other members of the said brotherhood have no interest in this cause or matter and have no common interest with the Defendants in this action …” (page 931 to 932)
At page 936 Buckley LJ said:
“We have to determine whether this action ought to go on so as that execution could be maintained against all the persons represented. In my judgment that would be impossible. It is simply an action of debt against a large number of individuals, and no judgment could be obtained which would be representative against all of them; there could only be a judgment individually against each of them.”
At page 936 Kennedy LJ said as follows:
“I will confine myself to saying that this is an action of debt, and that such an action, where the person or persons sought to be sued are, as here, members of an unincorporated body which cannot itself be sued, will not lie, framed as this action is sought to be under the authority given by the learned judge.”
The Court of Appeal therefore decided that the Plaintiff lost, firstly because there could be no representative action brought in debt. That decision has however, as Mr. Baldock accepts, since been overruled in the case of Irish Shipping Limited v. Commercial Union Assurance Co. Plc and Another [1991] 2 QB 206. In that case there were numerous Plaintiffs having the same interest in the proceedings. At pages 227B to G, having reviewed the authorities, Staughton LJ said:
“In that state of the authorities it is not, in my judgment, the law that claims for debt or damages are automatically to be excluded from a representative action, merely because they are made by numerous Plaintiffs severally or resisted by numerous Defendants severally. The rule is more flexible than that … For all practical purposes this is one claim upon one contract, which the ship owners have an interest in pursuing and the insurers all have the same interest in resisting …”
The second reason that the Plaintiff lost in that case was because the Court held that he was seeking to sue in representative proceedings, when the contract sued upon was a strictly personal contract between the Plaintiff and the four members of the brotherhood. This is to be contrasted with the present case, where the insurance contract was held to be one made with all the Club members, through the agency of the Club Secretary, and the litigation proceeded from the outset as a representative action on that basis.
In the case of Hardie and Lane Limited v. Chiltern and Others [1928] 1 KB 663 the Plaintiffs, who were members of an association of motor dealers and manufacturers (an unregistered trade union certified under the Trade Union Act of 1913), brought an action against three of the other members who were named as Defendants twice over and were sued “on their own behalf and on behalf of all other members of the association” for damage allegedly caused to the Plaintiffs by the conspiracy and fraud of the Defendants, who were not trustees of the association. The Court of Appeal upheld the decision of the trial judge that the Plaintiffs were not entitled under Order XVI Rule 9 or otherwise to maintain the action against the Defendants as being representative of the other members, there being no grounds for saying that the members had the same interest in the action or in the defence to it. By contrast, it was not suggested in the present case that there was no community of interest between all the Club members in relation to the contract of insurance. Nor had it ever been suggested that one or more of the individual members fell outside the class of persons represented or that for some other reason particular to that individual, for example fraud, he or she was to be exempt from enforcement proceedings. No such defences having been raised below at trial before the deputy judge there would seem to be no evidence of special circumstances applying to any of the individual members with whom we are concerned in the present case.
For these reasons I agree with the Master’s decision on this point. Just as any named, individual member could have taken steps on behalf of the Club’s other members to enforce the judgment against the Appellants, if the Claimants had succeeded on their claim, and to secure payment of the sum due under the Policy into the Club’s bank account, so can the Appellants as a matter of law now seek to enforce the judgment sum against the named members of the Club in these proceedings, I therefore dismiss the cross appeal.
Costs
Mr. Knight acknowledges that, in respect of costs, however, the case law is currently against him and that represented persons are not liable individually for the costs. In 1972 the Court of Appeal so held in Moon v. Atherton (see above). The same point had been made earlier in the case of Markt & Co. Ltd v. Knight Steamship Company Ltd. (see above) where, as referred to above, it was held at page 1039:
“The Plaintiff is the self-elected representative of the others. He has not to obtain their consent. It is true that consequently they are not liable for costs, but they will be bound by the estoppel created by the decision.”
Mr. Knight submits, however, that these authorities were dealing with very different circumstances and that they were not cases involving members’ clubs. In the present case there is only one contract, one cause of action and one defence in relation to all the Club members. The claim was instituted by the Club, not by the Appellants. In such circumstances he submits that it is entirely unjust that those who would have benefited from the litigation, had the Club won, should now avoid liability for costs owing to their representation by impecunious or insolvent individuals. Costs, he submits, should prima facie have been paid from the assets of the Club. The named Applicants were not suing or being sued in respect of any personal liability. It cannot therefore be right that the Appellants could protect themselves in costs only by joining every member of the Club as a party to the action. To have done so would fly in the face of the proper administration of justice and would have caused an enormous increase in costs. The interests of justice which underpin the CPR mean that CPR 19.6.4 applying to any judgment or Order, therefore includes an Order for costs.
Whilst I recognise the force of these arguments, Mr. Knight’s difficulty is that the words on which he relies in CPR 19.6.4 also appeared previously in the Rules of the Supreme Court at 15.12(3). The editors also pointed out at 15/12/47 that: “the represented parties are not liable for costs”. The authorities on which Mr. Baldock relies appear therefore still to be good law and binding on this Court. It seems to me that any application for the costs to be paid by any individual members could and should have been made on the basis of an application for costs to be paid by a non-party, where the Court has a discretion in exceptional cases. However, no such application has been made in this case and there would appear to be no grounds for making any such exceptional order.
I therefore dismiss the appeal against the Master’s decision on this point.
In relation to enforcement of the judgment the matter must now, therefore, be remitted to the Master in order for him to consider whether or not, in the exercise of his discretion, to grant permission to enforce against the individual members, having regard to whatever special circumstances may be shown to exist, if any, in relation to each of them.