Roberts v Gill & Co & Anor

A beneficiary may in appropriate exceptional circumstances bring a derivative claim to enforce a cause of action vested in an estate, but cannot obtain a better position than the estate or personal representative. The personal representative must ordinarily be joined as a defendant to prevent multiplicity of actions and to bind the estate. An amendment changing the claimant’s capacity may therefore also add a new party and a new claim. It must satisfy the post-limitation requirements in the Civil Procedure Rules 1998 as well as the rule concerning change of capacity. It is insufficient that the claimant had beneficiary status when proceedings began. Where the existing personal claim can proceed independently, joinder is not necessary. The appeal was dismissed.

Mark Roberts brought professional-negligence proceedings against two firms of solicitors in his personal capacity as a beneficiary of his grandmother’s estate. He alleged loss both to himself and to the estate. The proceedings were commenced within the limitation period, but a fresh claim by the administrator would be statute-barred.

He sought permission to amend the proceedings so that he could continue them both personally and as a derivative claim on behalf of the estate. The deputy judge dismissed the application by order dated 4 April 2007: [2007] All ER (D) 89. The central issue was whether the amendment merely changed capacity under the Civil Procedure Rules or also required joinder of the administrator as a new party after expiry of the limitation period.

1. Disposition. Arden LJ delivered the leading judgment. Patten J agreed, and Pill LJ agreed that the appeal should be dismissed on the limitation and joinder ground. The appeal and the respondents’ notice were dismissed.
2. Nature of the proposed amendment. A beneficiary’s personal claim against solicitors is distinct from the estate’s derivative claim. In a derivative claim brought by a beneficiary to enforce a cause of action vested in an estate, the personal representative must be joined as a defendant. The joinder prevents multiplicity of actions, binds the estate, and permits orders concerning damages and costs. The court applied by analogy the practice illustrated by Harmer v Armstrong [1934] Ch 65, Vandepitte v Preferred Accident Insurance Corporation of New York [1933] AC 70 and Performing Right Society Ltd v London Theatre of Varieties Ltd [1924] AC 1.
3. Limitation and the rules. Although the claimant satisfied Civil Procedure Rules 1998, CPR 17.4(4), because he had beneficiary status when proceedings began, the proposed derivative claim also required addition of the administrator. CPR 19.5 therefore applied. The limitation period was current when the proceedings began, satisfying CPR 19.5(2)(a), but the necessity requirement in CPR 19.5(3)(b) was not met because the existing personal claim could properly proceed without the administrator. The court should not permit an amendment which would leave the claimant unable to obtain judgment. Section 35 of the Limitation Act 1980 makes the rules governing addition of parties applicable where a change of capacity also involves a new party and new claim. Giles v Rhind [2008] EWCA 118 supported the same approach.
4. Derivative claims. Arden LJ’s discussion of special or exceptional circumstances was obiter because the limitation issue disposed of the appeal. The categories are not closed. The court should identify the governing principle and apply it to the circumstances. The personal representative’s unwillingness to sue is not, by itself, sufficient, although the prospect of recovering an otherwise unrealisable estate asset may be powerful, subject to financial and costs risks. Arden LJ considered that public funding would not necessarily prevent a derivative claim where the estate had no assets, although the availability of another unfunded claimant could be relevant. Pill LJ added that the beneficiary bears the onus and that conduct, delay and failure to use an earlier opportunity could defeat the application. He would have upheld the judge’s conclusion even without CPR 19.5.

1. Court of Appeal (Civil Division): Dismissed the appeal and the respondents’ notice. The court’s reasons differed from those of the deputy judge.
2. High Court of Justice, Chancery Division: Mr Paul Morgan QC, sitting as a deputy judge, dismissed the application to amend by order dated 4 April 2007: [2007] All ER (D) 89.