Popely & Anor v Popely & Ors

An appeal from a master is ordinarily a review, not a rehearing. New points should generally be excluded, particularly where they require further factual findings, unless there is a compelling reason to admit them. A derivative claim involving a foreign company is governed by the law of the company’s country of incorporation. If no evidence of that foreign law is adduced, the court may presume it to be the same as English law. In a trust-based derivative claim, the court must consider whether special circumstances justify allowing beneficiaries to proceed in place of the trustee. A trustee’s unwillingness to incur the costs risk of litigation may form part of those circumstances where there is an apparently justiciable claim and no effective alternative route.

The claim arose from long-running litigation between members of the Popely family concerning alleged breaches of duty by Ronald Popely in relation to Casterbridge Properties Limited. John and Andrew Popely sought permission to continue proceedings as a double derivative action for the benefit of Casterbridge, whose shares were held through trusts. Deputy Master Lloyd granted permission on 24 April 2017 and made related representation and substitution orders.

Ronald appealed, advancing five grounds, including alleged jurisdictional error, wrongdoer control, the law governing foreign companies, trust-based derivative claims and the exercise of discretion. The central issues were whether the Master could hear the application, whether the new arguments could be raised on appeal, and whether permission to continue the derivative claim had properly been granted.

1. Appeal dismissed. The Respondent’s Notice was upheld. The appeal was governed by CPR Part 52.11(3)(a), under which the lower decision had to be shown to be wrong. It was a review rather than a rehearing.
2. Ronald’s five grounds had not been advanced before Deputy Master Lloyd. The court would not ordinarily permit new points on appeal, especially where they required fresh factual findings. A change of counsel and solicitors was not a sufficient reason for a second opportunity to advance the arguments.
3. The Master had jurisdiction to determine the application. The application had begun before 1 October 2007, so the transitional provisions in Practice Direction 19C preserved the former procedural regime. The later application merely sought to lift the stay and pursue the earlier derivative claim. In any event, the Master’s decision would have been saved by the de facto office doctrine because he was not a usurper and the parties had ample notice of the hearing before him.
4. The suggested alternative remedy through Casterbridge’s liquidator could not succeed. Casterbridge had appeared before the Master under Ronald’s control and had opposed the derivative claim. It could not be treated as being under Ronald’s control for the original application but under the Official Receiver’s control for the appeal.
5. The Master correctly applied the conflicts rule that the right to bring a derivative claim for a foreign company is governed by the law of the place of incorporation. In the absence of evidence of St Vincent or Nevis law, he was entitled to apply English law. Novatrust Limited v Kea Investments Limited did not establish a universal requirement to prove foreign law positively or to obtain permission from the foreign court.
6. The Master correctly considered the special-circumstances requirement for a trust derivative claim. The trustee’s unwillingness to incur the costs risk, together with the existence of a genuine claim requiring adjudication, justified permission. The court also rejected the complaint that the Master had failed to exercise his discretion. Looking at the circumstances as a whole, permission should be granted so that the dispute could be determined.
7. Had the matter required redetermination, the court would have reached the same result. The claim was not hopeless and there was a case to answer.

• High Court (Chancery Division): Deputy Master Lloyd granted permission on 24 April 2017 for the claimants to continue the proceedings as a derivative action for the benefit of Casterbridge Properties Limited.
• High Court (Chancery Division): The appeal was dismissed and the Respondent’s Notice was upheld.