Roberts v Gill & Co Solicitors and others

A beneficiary may bring a derivative claim to enforce an estate’s right only where special circumstances make that remedy necessary to avoid injustice. In the ordinary case, the personal representative must be joined so that the estate is bound by the judgment and receives any recovery.

An expired limitation period cannot be circumvented by changing a personal claim into a representative claim and then joining the personal representative in stages. Although Limitation Act 1980 section 35 and the Civil Procedure Rules 1998 permit certain changes of capacity and causes of action, a new party may be joined out of time only where necessary for the original action. That requirement concerns the action as originally constituted, not a retrospectively amended derivative claim.

The appellant was one of three residuary beneficiaries of his grandmother’s estate. He alleged that solicitors acting for his brother, who was then the administrator, negligently enabled estate land to be transferred to the brother and sold. The appellant initially sued for breach of a duty allegedly owed to him personally.

After the estate’s own claim had become statute-barred, he sought to amend the proceedings so that he could sue derivatively on behalf of the estate. A deputy High Court judge refused permission because special circumstances justifying such a claim had not been established.

The Court of Appeal, in Roberts v Gill & Co Solicitors and others [2008] EWCA Civ 803, [2009] 1 WLR 531, held unanimously that the administrator would have to be joined and that the limitation rules prevented joinder. Its majority nevertheless considered that special circumstances would otherwise have existed. The issues before the Supreme Court concerned the limitation rules, the necessity of joining the administrator and the existence of special circumstances.

1. Appeal dismissed unanimously. Lord Collins delivered the leading judgment. Lord Walker agreed with it, and Lord Rodger agreed with Lord Collins and Lord Walker. Lord Hope and Lord Clarke also dismissed the appeal, principally because special circumstances had not been established.

2. The proposed derivative claim was both a change from personal to representative capacity and a new cause of action. The court could permit a change of capacity under rule 17.4(4) of the Civil Procedure Rules 1998. The new cause of action also arose from the same or substantially the same facts for the purposes of rule 17.4(2). Those conclusions did not, however, resolve the separate requirement governing the addition of the administrator after expiry of the limitation period.

3. Under section 35 of the Limitation Act 1980 and rule 19.5, an additional party is necessary only where the claim in the original action cannot properly be maintained without that party. The original action was the appellant’s personal claim, to which the administrator was neither necessary nor proper. The requirement could not be satisfied by first backdating a change of capacity and then treating joinder as necessary to the amended action. That staged procedure would defeat the statutory scheme and constitute an abuse of process.

4. In a beneficiary’s derivative action, the personal representative ordinarily must be a party. The beneficiary has no personal right to the estate’s cause of action, while joinder ensures that the estate is bound by the judgment, receives any recovery and cannot relitigate the claim. The majority distinguished the position of an equitable assignee, who is the beneficial owner and may sometimes commence proceedings before joining the assignor. Lord Collins did not exclude a rare justice-based exception, but neither the existence of special circumstances nor the loss of a limitation defence would alone justify non-joinder.

5. A derivative claim requires special circumstances sufficiently exceptional to make the remedy just and necessary to avoid injustice. The independent administrator had no conflict of interest, had committed no breach of trust, and had not been shown to have acted improperly by declining to sue. Legal-services funding and the possibility that an otherwise unavailable estate asset might be recovered did not make appellate intervention in the first-instance evaluation permissible.

6. Lord Hope and Lord Clarke reserved their positions on the limitation issue. They considered that the joinder rule might not be absolute and that, exceptionally, joinder could be postponed or dispensed with. That reasoning did not affect the disposition because both held that special circumstances were absent.

1. United Kingdom Supreme Court: The appeal in Roberts v Gill & Co Solicitors and others [2010] UKSC 22 was dismissed unanimously. A majority upheld the limitation ground, and the court also concluded that special circumstances had not been established.
2. Court of Appeal: In Roberts v Gill & Co Solicitors and others [2008] EWCA Civ 803, [2009] 1 WLR 531, the court unanimously held that the administrator had to be joined and that the expired limitation period prevented joinder. By a majority, it considered that special circumstances would otherwise have justified a derivative claim.
3. High Court, Chancery Division: A deputy judge dismissed the amendment application because no special circumstances justified a derivative action. The Court of Appeal upheld the refusal on a different, limitation-based ground.