Susan Glover v Iain Paul Barker

JurisdictionEngland & Wales
JudgeLord Justice Newey,Lord Justice Moylan,Lord Justice Patten
Judgment Date21 August 2020
Neutral Citation[2020] EWCA Civ 1112
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A3/2019/1513
Date21 August 2020
Between:
Susan Glover
Appellant
and
(1) Iain Paul Barker
(2) Confiance Limited
(3) Euan Barker (a child by his litigation friend Deborah Barker)
Respondents

[2020] EWCA Civ 1112

Before:

Lord Justice Patten

Lord Justice Moylan

and

Lord Justice Newey

Case No: A3/2019/1513

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

PROPERTY TRUSTS AND PROBATE LIST (ChD)

Mr Justice Morgan

[2019] EWHC 1401 (Ch)

Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Daniel Saoul QC and Mr Stephen Hackett (instructed by Candey Ltd) for the Appellant

Mr Adam Cloherty (instructed by Memery Crystal LLP) for the First Respondent

Mrs Elspeth Talbot Rice QC (instructed by Reynolds Porter Chamberlain LLP) for the Second Respondent

Miss Constance McDonnell QC (instructed by Withers LLP) for the Third Respondent

Hearing date: 7 July 2020

Approved Judgment

Lord Justice Newey
1

This appeal raises important issues as to the circumstances in which litigation friends should be ordered to pay other parties' costs. In a judgment dated 5 June 2019 (“the Costs Judgment”) ( [2019] EWHC 1401 (Ch), [2019] 1 WLR 5737), Morgan J (“the Judge”) concluded that costs orders should be made against the appellant, Ms Susan Glover, who had acted as litigation friend to her children Tom and Freya Barker (“Tom” and “Freya”). Ms Glover appeals against that decision.

Basic facts

2

The first respondent, Mr Iain Barker, has five children. The oldest of them are Tom and Freya, twins born on 23 July 2001 whose mother is Ms Glover. Euan Barker (“Euan”), the third respondent, is Mr Barker's third child. He was born in 2004 and now has as his litigation friend his mother, Ms Deborah Barker, who is also the mother of Mr Barker's youngest child, Rowan, born in 2006. Finally, Mr Barker is the father of Lauren Chadwick, who was born in 2005 and whose mother is Ms Julie Chadwick. Ms Barker was formerly married to Mr Barker.

3

In the 1990s, Mr Barker set up a business which developed into a group of companies of which Team 121 Holdings Limited (“Team 121”) was the parent. By 1998, Mr Barker wished to sell his shares and sought tax planning advice from Baxendale Walker Solicitors, of which a Mr Paul Baxendale-Walker was the principal partner. On the basis of advice from Baxendale Walker Solicitors, Team 121 established an employee benefit trust (“the Trust”) whose beneficiaries were given as present, past and future employees of the group and their families but not “Excluded Persons”, the definition of which term was based on section 28(4) of the Inheritance Act 1984 (“the IHTA”). On 15 October 1998, Mr Barker executed a deed of gift (“the Deed of Gift”) declaring that he held his shares in Team 121 on trust for the Trust, subject, however, to a clause providing for the shares to be held on trust for him if HM Revenue and Customs (“HMRC”) determined that the Trust did not satisfy the conditions laid down in section 28 of the IHTA and section 239 of the Taxation of Chargeable Gains Act 1992 (“the TCGA”). On 23 March 1999, the then trustee of the Trust declared a sub-trust (“the Sub-Trust”) for “the widow, children and remoter descendants and the mother and sisters of Iain Paul Barker who shall be living after his death”, collectively termed the “Principal Beneficiaries”. In June 1999, the shares in Team 121 which Mr Barker had formerly held were sold and their proceeds were credited to the Sub-Trust.

4

In 2010, HMRC raised assessments on the basis that Mr Barker had failed to give away his shares effectively and so could be taxed on income and gains arising via the Trust and Sub-Trust. HMRC maintained that the requirements of section 28(4) of the IHTA were not met because the Trust did not exclude Mr Barker's family members as beneficiaries after his death. Mr Barker appealed to the First-tier Tribunal, but in 2013 Mr Barker entered into a settlement under which he paid HMRC about £11.3 million.

5

Thereafter, Mr Barker sought to recover the assets held by the Trust and Sub-Trust. On 14 July 2014, he issued proceedings (“the Main Proceedings”) claiming, first, that the proceeds of the shares he had given to the Trust were held on trust for him because the proviso to the Deed of Gift applied and, secondly, that the Deed of Gift should be set aside for mistake. The Judge explained Mr Barker's contentions as follows in the judgment which he gave in these proceedings on 8 November 2018 (“the Principal Judgment”, [2018] EWHC 2965 (Ch)):

“33. In his Particulars of Claim in these proceedings, Mr Barker put forward two contentions. The first contention relied upon the condition expressed in the Deed of Gift. The Particulars of Claim explained Mr Barker's case as to how that condition was to be construed. In effect, he contended that the condition required the gift to be an exempt transfer for inheritance tax purposes pursuant to IHTA 1984, section 28 and a disposal which would be treated for capital gains tax purposes as having been made for a consideration which involved neither a gain nor a loss pursuant to TCGA 1992, section 239. The pleading then contended that this condition was not satisfied at the date of the Deed of Gift because the terms of the EBT [i.e. the Trust] did not satisfy IHTA section 28(4). In this respect, the pleading stated that the trust did allow benefits to be conferred on persons connected with Mr Barker and the pleading also relied upon the powers contained in clause 11 of and paragraph 1.2.18 of schedule 1 to the Deed. The pleaded result of the foregoing was said to be that the gift contemplated by the Deed of Gift failed so that the proceeds of sale of the Shares were held by Confiànce on a bare trust for Mr Barker.

34. The second contention put forward in the Particulars of Claim in the trust proceedings was that the Deed of Gift had been made by Mr Barker in the mistaken belief that members of his family would be capable of benefitting from the trusts of the EBT after his death. He sought an order from the court setting aside the Deed of Gift on the ground of mistake.”

6

The defendants to the Main Proceedings were the second respondent to the present appeal, Confiance Limited (“Confiance”), which had become the trustee of the Trust; Euan, who was joined to represent Mr Barker's children; Mr Stuart Brown, who was joined to represent former employees of the Team 121 group and their families; and Mr Barker's mother and sisters. Since Euan was a minor, Ms Alison Meek of Harcus Sinclair LLP, solicitors, was appointed as his litigation friend.

7

On 25 July 2014, an application for the Court to approve a compromise of the Main Proceedings came before Asplin J. It was proposed that £1 million should be settled on discretionary trusts for the benefit of Euan and “Principal Beneficiaries” of the Sub-Trust who were not parties to the proceedings, that £500,000 should be settled for the benefit of employee beneficiaries of the Trust and that Mr Barker should be entitled to the balance of the funds held by the Trust and Sub-Trust. It was further proposed that Euan should be appointed to represent the interests of all living, unborn and unascertained persons who may be or become members of the class defined as the “Principal Beneficiaries” in the Sub-Trust and who were not parties to the proceedings. After hearing submissions from counsel for Mr Barker, for Confiance, for Euan and for Mr Brown, Asplin J said that she was satisfied both with the proposed representation orders and that the compromise was for the benefit of the represented classes and, accordingly, made an order approving the settlement.

8

As yet, Tom, Freya and Ms Glover knew nothing about the Main Proceedings or the proposed compromise. Moreover, Asplin J was asked to appoint Euan to represent, among others, Tom and Freya without being informed that they and their mother were unaware of the claim. Morgan J said this in the Costs Judgment about how matters were handled:

“69. What happened in this case resulted in Ms Meek as the litigation friend for Euan, as a representative defendant, and leading and junior counsel advising Ms Meek, deliberately not informing Tom and Freya and Ms Glover of a proposed compromise so as to prevent them expressing their views upon that compromise. The decision not to inform Tom and Freya and Ms Glover was because it was foreseen that Ms Glover would be likely to raise objections to the compromise and would not agree to it. Ms Meek and counsel may or may not have thought that Ms Glover might be influenced by collateral considerations and might not act in the best interests of Tom and Freya. On the material before me, Ms Meek and counsel appear to have readily acquiesced in Mr Barker's wishes and opinions on the matter; they do not appear to have thought it necessary to form their own opinion on that matter. It might have been open to Ms Meek and to counsel to come to a reasoned and well-informed conclusion that it was not in the best interests of Tom and Freya for Ms Glover to be told of the proceedings but simply acquiescing in Mr Barker's wishes did not amount to reaching a reasoned and well-informed conclusion on the matter.

70. In any event, even if Ms Meek and counsel had properly considered the matter and had decided that Ms Glover should not be told of the proceedings, I consider that it was completely unacceptable for the court not to have been given a fair account of the position in that respect when the court was asked to appoint Euan as a representative for Tom and Freya and was further asked to approve a settlement on behalf of Tom and Freya. The information which was deliberately withheld from the court would have been relevant to the decision which the court had the responsibility for making, even if the court took the view that from a legal standpoint the interests of the five...

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3 cases
  • Karen Pegler v Timothy Bruce McDonald
    • United Kingdom
    • Chancery Division
    • 7 Octubre 2022
    ...rules of court, these words enabled the court to order that the costs of the proceedings be paid by a non-party. In Glover v Barker [2020] EWCA Civ 1112, for example, the Court of Appeal held that section 51 conferred jurisdiction to order a litigation friend to pay the costs of the 32 Thi......
  • Nicola Bushby v Maria Galazi
    • United Kingdom
    • Chancery Division
    • 2 Febrero 2022
    ...question being “whether it is in all the circumstances just to make the order” (see the CPR notes at 46.4.2, and Glover v Barker [2020] EWCA Civ 1112 at §§58–64). Factors which might, depending on the specific facts, be thought to justify such an order in the case of the litigation friend ......
  • George Major (by His Litigation Friend Katherine Gee) v Kalaivani Jaipal Kirishana
    • United Kingdom
    • King's Bench Division
    • 30 Junio 2023
    ...the claim and the conduct of all ancillary functions 14. 108 The conduct of the litigation is not “risk free”. In Glover v Barker [2020] EWCA Civ 1112, Newey LJ, with whom Patten and Moylan LJJ agreed, explained that the jurisdiction to make a costs order against a litigation friend is der......
1 firm's commentaries
  • The Liability Of A Litigation Friend For Costs: Glover V Barker In The Court Of Appeal
    • United Kingdom
    • Mondaq UK
    • 7 Octubre 2020
    ...August 2020 the Court of Appeal handed down judgment in Glover v Barker [2020] EWCA Civ 1112, overturning the decision of Morgan J. in Barker v Confiànce Ltd [2019] EWHC 1401 (Ch) and giving comprehensive guidance as to the circumstances in which a defendant's litigation friend might be lia......

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