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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> X v Y [2014] EWCA Civ 1465 (11 September 2014) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2014/1465.html Cite as: [2014] EWCA Civ 1465

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
Mr. Justice Bodey

		Royal Courts of Justice Strand, London, WC2A 2LL
		11/09/2014

Lord Justice Briggs :

1. This is the oral renewal of an application for permission to appeal a refusal of Bodey J, on 27th June 2014, to permit the applicant to intervene in family ancillary relief proceedings by the wife seeking to enforce a financial remedy order made in her favour in early 2012 against the estate of the husband, who died in 2013, before the order had been fully implemented.
2. The grounds for refusal were in outline, firstly, that the applicant had delayed for no properly explained reason in making her application until long after the expiry of the time-frame for the application already laid down by the court, and secondly and more importantly, that the applicant's alleged interest in the subject matter is too tenuous and remote, all the more so because others with a much more direct interest have, despite an invitation to apply to join, decided not to do so.
3. The applicant is Z, a daughter of the husband, Y. Having made both her application to Bodey J and then her paper application for permission to appeal by leading counsel she appears today in person, her solicitors having come off the record on 9^th September. She complains in a letter to the court that the hearing has been rushed forward in such a way that has in practice prevented her instructing lawyers from being able to assist her. Nonetheless she has made concise oral submissions this morning for which I am very grateful.
4. She has also put in, albeit late, a short version of a litigant in person type of advocate's statement and I take no objection to it having been put in later than she was directed to put it in, no doubt due to other commitments of hers. I have of course read her previous leading counsel Mr Wagstaffe's detailed skeleton argument for permission to appeal and a Jolly v Jay submission by counsel for the wife which has itself already been served on the applicant. By the 2012 order which was made by consent the husband agreed to sell or cause to have sold a valuable villa abroad and to apportion the proceeds between himself as to a substantial fixed sum and the balance to the wife. This had not been done by the time of the husband's death. The villa was owned by a foreign company, itself owned by three UK companies, in turn apparently owned by a US company which I will call USCO which in turn is owned by an offshore Trust which had had two beneficiaries, V, a son of the husband, and another person (now also deceased). The husband left a letter of wishes asking the Trust to add further beneficiaries including the applicant, Z. There are proceedings pending by the trustees seeking the court's directions whether to do so. V opposes what the trustees are now seeking to do. The applicant, Z, is a defendant to the Trustee's proceedings and they have been stayed pending the wife's application here. By her application the wife seeks a declaration that the UK companies are held by USCO on a Prest type of resulting trust for the husband's estate, their shares having, so it is said, been acquired with the husband's money. That application has been ready for trial since June 2014, has been twice adjourned and is now listed for hearing on 18^th to 19^th September I think before Bodey J. On 2nd April 2014 Bodey J directed joinder of USCO and delivery of confidential documents to potentially interested parties including the applicant as a defendant to the Trustee proceedings, giving them 14 days after delivery to apply to intervene if so advised.
5. The applicant's then solicitors received the documents on 15th April so the 14 day period expired on 29th April. That day, by which I mean the 29th April, she wrote to the wife's solicitors saying that she saw them only on 25th April. On 3rd June she instructed new solicitors and applied to intervene only on 24th June, nearly 2 months after the expiry of the deadline.
6. The judge ruled against the applicant on the question of intervention on two grounds. First, that there was a two month inadequately explained delay in her applying to intervene in a case in which the wife stood to be prejudiced by delay, in particular due to the accrual of taxes on the villa over time, reducing the value to the wife of any recovery. Second, the applicant's alleged interest in the wife's proceedings was very weak, amounting to a hope that the father's letter of wishes would be enforced by the court in contested Trustee proceedings, making her a beneficiary of the Trust owning the company, that is USCO, owning the shares in the UK companies in circumstances where the trustees and USCO had both decided not to seek to intervene (in the case of the trustees) or to oppose the wife's application (in the case of USCO). A beneficial outcome for the applicant would also depend upon a recovery by the trust not being swamped by foreign taxes. The applicant had no evidence to contribute and joinder would do no more than enable her to test the wife's case forensically.
7. Permission to appeal was refused by McFarlane LJ on the grounds that the judge decided against the applicant for sound reasons which were open to him, not giving undue weight to the applicant's delay in making the application and that the decision was as much based on the judge's reasonable appraisal of the merits of her position.
8. McFarlane LJ concluded that no error of law was suggested in the grounds of appeal and it did not have a reasonable prospect of success.
9. This is an application against what was undoubtedly a case management decision by the judge, albeit with serious consequences for the applicant and for the litigation which the judge thereby allowed to go undefended. Nonetheless, the appeal court should be slow to intervene with case management decisions even where they have those consequences and should not substitute its own view unless the judge ignored relevant matters, took account of irrelevant matters or was plainly wrong.
10. The question for me is whether the applicant has a reasonable prospect of success in surmounting that high hurdle on a full appeal. It is convenient if I address the grounds of appeal, set out in detail, no doubt professionally prepared. I do so, as I say having read Mr Wagstaff's lengthy skeleton argument, the applicant's written statement and listened to her commendably short and focused oral submissions. There is first a general assertion that the judge's decision was plainly wrong. I will deal with that at the end.
11. Alternatively it is said the judge failed to give adequate weight to the fact that the applicant had not been informed of USCO's decision not to contest the proceedings until very shortly before the hearing before the judge. As to that, it seems to me that the applicant on the face it had ample time to find out what USCO's attitude to the proceedings was and I am not persuaded that of itself was something to which the judge gave insufficient weight.
12. The next point is that the judge is said to have failed to give any adequate weight to the fact that the first respondent, that is the wife, had delayed in bringing her own proceedings for some considerable time after the husband's death. It is said that the judge should have taken that into account. It is not clear to me that this point was really made out to the judge at the hearing and in any event it does not seem to me to be demonstrated by the evidence. I have seen the brief statement made on behalf of the wife and it puts forward a raft of reasons why in fact the wife did everything she could in the circumstances of her former husband's death. I am not persuaded that what I think is a new point first raised at this stage is one of significant weight. The court had to address the question of delay on the material available at the time.
13. The next point is that the judge did not give adequate weight to the fact that the applicant's interests would be adversely affected to a considerable extent if not allowed to intervene in these proceedings. That seems to me the principal point of the applicant's application for permission to appeal. The judge evidently had it well in mind that the effect of his decision would be to deprive the applicant of any prospect of a successful outcome for her financially from the Trustee proceedings. This is apparent from the judge's recitation of the point in paragraph 30 of his judgment, and his coming back to it again in paragraph 42. But since plainly he did not leave it out of the count, the question of how much weight he should give to this point seems to me to have been a matter for him.
14. The next point is that it is suggested in ground 7 that the judge wrongly assumed that the decision by USCO not to contest the English proceedings was a decision taken by the directors of that company who I think are United States lawyers by reference to the evidence and it is suggested that there was nothing to justify that conclusion by the judge.
15. The judge's judgment at paragraph 42 states it to be a reasonable assumption that the lawyers had decided not to contest the claim on the behalf of USCO as its directors, acting on a proper appreciation of all relevant materials. It seems to me that this is in reality the applicant's principal problem.
16. The decision of the company which, subject to the wife's claim is the legal and beneficial owner of the assets in question, that is the shares in the UK companies, must be entitled to great respect. It was for the applicant to show that the directors' decision was otherwise than in the best interests of USCO and the shareholders because the ordinary assumption of the court is that professional directors, as these were, would be acting in the company's best interest and the best interests of its shareholders. It may be that a decision not to defend proceedings is not made purely on the basis of the perception of the merits of the proceedings. There may be all sorts of other economic considerations which lead to a decision in that way. Accordingly it seems to me there is nothing wrong with the judge's assumption and this ground of appeal carries no weight with me.
17. The next point made is that the judge did not give any adequate weight to the effect of dismissing the application, namely that the proceedings would go undefended and there would not be a forensic examination or testing or challenging of the evidence put forward in support of the wife's claim. Again it seems to me the judge was plainly aware that the effect of his decision not to permit the applicant to intervene would have that consequence.
18. That is I think the most substantial factor in the applicant's favour but it was for the judge to take it into account, as in my view he did and to decide what weight to give to it. It is always difficult to balance the consequence that a case may go undefended against, as in this case, allowing in an applicant who is in a doubly derivative position, and not the proper or ordinary defendant to the claim. In this case the proper defendant to the claim is the company. It is a difficult balancing exercise to conduct and one on which reasonable minds may differ. But it is not for the Court of Appeal to substitute any different view of its own if the judge's view is not perverse. It seems to me that recognising that it is a difficult balancing exercise where reasonable minds might easily decide it either way, it cannot sensibly be suggested that the judge's decision on this point was perverse.
19. The last point raised as a distinct ground of appeal is really a repetition of the point that by allowing the applicant to intervene there would be a forensic testing of the wife's case. I have said what I have said about that and I do not need to add to it.
20. Overall it is asserted the dismissal of the application to intervene was therefore plainly wrong. In my view there is no real prospect that will be established on a full appeal.
21. Taking all those matters together, I conclude that this is not a case where the applicant has shown a real rather than fanciful prospect of success on a full appeal. It was a case management decision by the judge. He clearly had in mind all the matters which he should have in mind and the weight to be given to the competing factors was, as I have said, a matter for him. Nor is there, in my view, any other compelling reason why permission to appeal should be given. I recognise that this, being the final conclusion of the applicant's attempts to intervene in these proceedings, leaves her with a feeling that she has been shut out. She should understand that is a feeling which, however deeply felt, arises from the fact that her interest in this litigation, or the proceeds of sale of this villa, is so tenuous and precarious depending only on the enforcement of the letter of wishes in contested proceedings and where the proper party to defend a claim that it does not own the assets in the UK companies is indeed USCO. Those whose interests in property are held in that way have to face the realities that it is for those parties to defend those interests and the court will not simply allow in a prospective discretionary possible beneficiary of a trust which is a shareholder of the relevant company simply because the directors of that company have decided not to defend the proceedings.
22. I should add that I make it clear I express no view, even a provisional view, on the merits of the wife's application; indeed nor did the judge in deciding to refuse the application to intervene.
23. The application of a Prest resulting Trust to a case where the husband not merely paid for assets acquired by a company but erected a sophisticated corporate trust structure on top is by no means straightforward, unless perhaps it is said, and I do not know whether it is said, that the entire corporate trust structure was a sham. I therefore make no observation about the strength of the claim and indeed it has not been necessary for me to review the evidence in support of it in any detail.
24. For those reasons I must dismiss this application for permission to appeal and I direct that a transcript should be made available of the judgment as quickly as possible, that it be sent to me first for approval and will then be distributed to the parties to see whether it needs to be anonymised before being made available for public dissemination.