Barnsley & Ors v Noble

Permission to appeal should be granted where the proposed grounds are arguable and have a real prospect of success, even though the applicant faces a difficult appeal. A construction issue may be advanced on appeal where it requires no further evidence, subject to objections that the point was not taken below or is outside the grounds of appeal. The interaction between an express self-dealing provision, a good-faith requirement and protection against wilful wrongdoing in a trustee exoneration clause may raise an arguable issue for the full court. Granting permission does not determine the merits.

The claimants appealed from the judgment of Nugee J given on 31 July 2014, which dismissed claims arising from the demerger of a family-owned business and property group. Their claims included allegations of breach of trust concerning self-dealing and potential VAT repayments.

The judge held that the defendant was protected by an exoneration clause in a will. The claimants challenged the construction of that clause, including the meaning of wilful and individual fraud or wrongdoing, the requirement that acts be done in the professed execution of the trusts and powers, and the finding that the defendant acted in good faith. Permission to appeal had been refused on the papers. The issue was whether it should be granted after oral reconsideration.

1. Permission granted. The claimants showed an arguable case with a real prospect of success, although the proposed appeal faced formidable difficulties and the court had some hesitation.
2. The full court should consider whether wilful wrongdoing in the exoneration clause means conscious and wilful misconduct, as held below, or includes an intentional act amounting to wrongdoing without conscious awareness that the act was wrongful. The interaction between that clause and the separate transactions clause, which permitted self-dealing only in specified circumstances including good faith, also raised an arguable construction issue.
3. The proposed appeal could address whether good faith required fuller disclosure of material information and proper consideration of the beneficiaries’ interests, and whether in the professed execution of the trusts and powers hereof merely confined the clause to acts performed in the executors’ capacity or imposed a further condition on invoking its protection.
4. Additional grounds concerning disclosure, equitable compensation for self-dealing, an account of profits and the position of the third and fourth claimants could be developed before the full court.
5. Permission was granted without preventing the respondent from arguing that some points had not been advanced at trial or were not open on the grounds of appeal.

• Court of Appeal (Civil Division) — permission to appeal had been refused on the papers by Lewison LJ on 31 December 2014. On oral reconsideration, Kitchin LJ granted permission to appeal against the judgment and consequential order of Nugee J dated 31 July 2014.
• High Court, Chancery Division — Nugee J dismissed the claimants’ claims.