Lemos v Church Bay Trust Company Ltd & Ors

CPR 19.2(2)(a) confers a broad joinder jurisdiction. The threshold is desirability, not necessity, and is not confined to cases in which existing proceedings are formally defective. A party’s direct economic interest, statutory or fiduciary responsibilities, ability to assist with evidence, and capacity to advance the proceedings efficiently may together make joinder desirable.

The discretion must be exercised consistently with the overriding objective and the policy of allowing persons whose rights may be affected to be heard. Where trustees in bankruptcy are the appropriate statutory claimants, joinder may be preferable to discontinuance and fresh proceedings if it avoids duplication, satellite litigation, delay and unnecessary expense.

The claimant brought proceedings under s 423 of the Insolvency Act 1986 concerning a disposition of property allegedly intended to prejudice creditors. She had obtained permission under s 424 to bring the claim because the trustees in bankruptcy of the debtor had initially lacked funding.

The trustees later obtained funding and insurance and applied under CPR 19.2(2)(a) and (b) to be joined as co-claimants, with sole conduct of the proceedings. The claimant supported the application. The third defendant opposed it, relying on alleged delay, additional costs, settlement difficulties and prejudice to the bankruptcy estate. The central issues were whether the trustees crossed the jurisdictional threshold and whether joinder was desirable in the exercise of the court’s discretion.

1. Joinder ordered. The trustees in bankruptcy were joined as co-claimants and directed to have sole conduct of the s 423 proceedings. It was unnecessary to decide the alternative ground under CPR 19.2(2)(b).
2. CPR 19.2(2)(a) is drawn in wide terms. The jurisdictional threshold is not limited to what is necessary to ensure that proceedings are properly constituted. The relevant question is whether it is desirable to add the new party so that the court can resolve the matters in dispute.
3. The trustees crossed that threshold. Section 424(1) of the Insolvency Act 1986 recognises them as the appropriate persons to bring proceedings where the debtor is bankrupt. They had a direct economic interest, a duty to get in the bankrupt estate for all creditors, and responsibility for administering any recovery.
4. The trustees could materially assist the court. They had interviewed the debtor, conducted extensive investigations and were better placed to address disputes concerning the interview and the debtor’s conduct. As parties, they would also be required to provide disclosure and evidence, reducing the need for non-party applications.
5. In exercising the discretion, the court applied the two relevant policy considerations identified in Welsh Ministers v Price: enabling persons whose rights may be affected to be heard and furthering the overriding objective. The trustees would bring an independent, creditor-wide perspective and were more likely to progress the claim efficiently than the existing claimant, who had taken no step for three years.
6. Joinder was preferable to discontinuance and fresh proceedings. It avoided duplication, satellite disputes concerning the freezing order, cross-undertaking and costs, and potential arguments about abuse of process. The possible effects of funding arrangements, privilege issues, settlement complexity and costs were relevant but outweighed by the overall benefits of joinder.

The judgment records that the Court of Appeal allowed the claimant’s earlier appeal in November 2016 and continued the asset restraint order pending commencement of s 423 proceedings. The present decision was a first-instance determination of the trustees’ subsequent joinder application.