IAIN PAUL BARKER v CONFIÀNCE LTD

Under CPR 19.7(7), the court has a broad discretion to direct that a representative judgment or order is not binding on represented persons. The discretion must be exercised with regard to fairness and justice, procedural efficiency and finality in litigation. The court may assess whether the applicant would gain anything of value from being released from the order and may consider later developments when evaluating that issue. A direction may be made conditional on payment of costs where renewed proceedings would otherwise amount to an abuse of process.

Tom and Freya Barker applied under CPR 19.7(7) to be released from an order made by Asplin J on 25 July 2014. That order appointed their half-brother Euan as a representative party and approved a compromise concerning an employee benefit trust and sub-trust.

They alleged that they had not been informed or properly represented and sought to preserve possible claims against the trustee, Confiànce Ltd, and Iain Barker. The central issues were whether the earlier order should cease to bind them, whether they had any worthwhile underlying claim, whether the compromise would have been approved if they had participated, and whether any release should be conditional on payment of earlier costs.

1. Application refused. The court declined to direct that the 25 July 2014 order was not binding on Tom and Freya.
2. CPR 19.7(7)(a) contains no detailed statutory test. The discretion should be exercised by reference to fairness and justice, the efficient conduct of court proceedings and the need for finality in litigation. The formulation in Commissioners of Sewers of the City of London v Gellatly (1876) 3 Ch D 610, concerning collusion, fraud or the court being misled, was not treated as an exhaustive test.
3. The proposed underlying claims could not provide a worthwhile benefit. The court accepted the Court of Appeal’s likely construction of section 28 of the Inheritance Tax Act 1984. On that basis the trust failed to achieve the intended tax treatment. Iain Barker had made a mistake as to the effect of the trust arrangements and would have been entitled to rescission of the trust deed and deed of gift. Tom and Freya therefore could not establish that they were beneficiaries under a trust binding Confiànce.
4. The argument that a constructive trust could be imposed so as to make them beneficiaries was unsupported by Pennington v Waine [2002] 1 WLR 2075. The court also rejected the suggestion that possible payments from income gave them beneficial interests.
5. The compromise was in Tom and Freya’s best interests. Even without later developments, the claim to recover the trust assets was very strong and the compromise secured £1 million for the family beneficiaries. The court would have approved it had all the arguments now advanced been presented in 2014.
6. If a direction had otherwise been appropriate, it would have been conditional on payment of Confiànce’s and Iain Barker’s costs of successfully defending the related proceedings. Renewed claims without payment would amount to an abuse of process.

First-instance decision. The judgment refers to earlier proceedings concerning the trust, including Barker v Baxendale Walker Solicitors [2016] EWHC 664 (Ch) and the subsequent Court of Appeal decision reported at [2018] 1 WLR 1905, but those decisions were not appellate stages of the present application.