HM Attorney General v Zedra Fiduciary Services (UK) Ltd

For joinder under CPR 19.2(2), an applicant need not establish a real prospect of success. It is sufficient to show an arguable issue with some prospect of success, together with desirability of joinder so that the court can resolve connected matters and bind affected interests.

The court should assess the merits threshold and desirability together. A prospective costs order is exceptional. It should not be made unless the trial judge could properly, or almost inevitably would, order payment from the trust fund. The Buckton categories remain useful but are not closed, and the court retains a broad costs discretion.

The claim concerned the National Fund, a charity established in 1928 by a substantial anonymous gift intended ultimately to reduce the National Debt. HM Attorney General sought directions on the court’s jurisdiction to alter or apply the trusts. The current trustee was Zedra.

A relative of the benefactor applied to be joined and appointed to represent persons interested in the benefactor’s residuary estate. He wished to argue that the gift was void or had failed, including because the statutory protection in section 9(1) of the Superannuation and Other Trusts (Validation) Act 1927 did not prevent that result. He also sought a prospective costs order and an order for costs protection.

The issues were whether joinder was desirable, whether the applicant had sufficient prospects on the proposed issues, the proper scope of representation, and whether prospective costs protection was justified.

1. Joinder. The application was granted. Under CPR 19.2(2), “in dispute” includes matters “in issue”. The court must consider both whether there is an issue involving the proposed party and whether it is desirable to add that party so that the court can resolve the relevant matters. The public policy objective of enabling persons whose rights may be affected to be heard, together with the Overriding Objective, informs the exercise of the jurisdiction.
2. The applicant was required to show an arguable case with some prospect of success, rather than a real prospect of success. The issue must not be bound to fail or fanciful. Although the construction of section 9(1) of the 1927 Act presented substantial difficulties, the provision was untested and the applicant’s carefully formulated arguments were sufficient to cross the low merits threshold.
3. There was also a sufficient prospect of success on whether the Deed disclosed a paramount charitable intention and whether the gift was initially impossible or impracticable. The merits and desirability considerations were linked. The size of the fund, the absence of previous consideration of section 9, the potential effect on the fund, and the benefit of hearing submissions from a person with a genuine interest all favoured joinder.
4. The applicant was appointed to represent persons who were or might become entitled to share in the benefactor’s residuary estate. The class was not extended to other donors because their circumstances might differ, their support was unknown, and sections 63, 64(2) and 66 of the Charities Act 2011 might reduce the persons affected.
5. Costs. The applications for a costs-capping order and a prospective costs order were refused. Costs capping is exceptional. A prospective costs order should not be made unless the trial judge could properly exercise jurisdiction only by ordering payment from the fund, or, on the alternative formulation, would inevitably or almost inevitably do so. The claim was hostile litigation for the applicant’s benefit and fell outside Buckton categories 1 and 2. In any event, an adverse costs order or an order that the applicant bear his own costs remained realistically possible.
6. The application was dismissed insofar as it sought prospective costs protection. Directions were given for amendment of the claim, evidence and expert evidence. The court declined to determine the statutory construction issue as a preliminary issue.

First-instance decision. The judgment itself does not state any earlier appellate decision.