Lemas & Anor v Williams

A judgment against a person in an individual capacity does not bind that person in a trustee capacity. A beneficiary is therefore not bound by earlier proceedings unless the trustees were parties in that capacity or there is sufficient privity to make that result just. Under Civil Procedure Rules 1998, CPR 19.7A binds beneficiaries only where the claim was brought by or against trustees in that capacity.

A resulting-trust claim based on a contribution to the purchase price need not be advanced in earlier possession proceedings where that interest did not confer a right to possession against the registered proprietor. The later claim is then neither res judicata nor an abuse of process. The exceptional power to disapply an estoppel for special circumstances is a sparingly used failsafe requiring a principled basis.

Mr Williams, the registered proprietor of a property, had obtained possession in earlier County Court proceedings. A defence based on an April trust deed failed because the trial judge found that the trust did not include the property.

In a later High Court action, Nathan Lemas, a beneficiary, relied on an October trust deed and sought a declaration that the trust beneficially owned the property. Alternatively, Mr Sealy claimed a beneficial interest under a resulting trust based on money he said he had contributed to its acquisition. Mr Williams applied to strike out that action as barred by res judicata or as an abuse of process.

The Chancery Division dismissed the application: [2012] EWHC 3168 (Ch). Mr Williams appealed. The central question was whether the earlier possession proceedings precluded either later claim.

1. The appeal was dismissed unanimously. Arden LJ gave the judgment, with which Ryder and Macur LJJ agreed. Neither claim was barred by res judicata or abuse of process.

2. Cause of action and issue estoppel depend upon the requisite identity of parties or privies. Privity requires sufficient identification, having regard to the subject matter, to make it just to bind the non-party. A person sued personally is legally distinct from that person as trustee. CPR 19.7A of the Civil Procedure Rules 1998 did not apply because neither Mr Lemas nor Mr Sealy had been made a party to the first action as a trustee. Their personal participation did not bind the trust or its beneficiary.

3. Nathan had not had an effective opportunity to have his October trust deed claim determined. The earlier judgment did not determine an issue concerning that deed. The trustee’s failure to advance the trust claim in the earlier action did not, on these facts, make Nathan sufficiently connected with that action or make his later claim abusive. The court declined to determine, without evidence and full argument, whether the October deed was a self-standing trust.

4. Mr Sealy’s alternative resulting-trust claim was a new claim. A partial beneficial interest arising from a contribution to the purchase price did not itself give him a right to possession against the registered proprietor. There was therefore no reason why that claim had to be made in the earlier possession proceedings. It followed that neither estoppel nor abuse of process arose.

5. The court rejected the judge’s alternative reliance on procedural irregularities and special circumstances. The special-circumstances exception is a sparingly used failsafe and requires a principled basis; it cannot be invoked merely from the particular facts. The appeal, and Nathan’s respondent’s notice, were dismissed.

• Court of Appeal (Civil Division): Dismissed Mr Williams’s appeal and upheld the refusal to strike out the second action: [2013] EWCA Civ 1433.
• High Court, Chancery Division: Ms Lesley Anderson QC, sitting as a deputy judge, dismissed Mr Williams’s strike-out application: [2012] EWHC 3168 (Ch).