MR JOHN WETH & ORS v HER MAJESTY'S ATTORNEY GENERAL & ORS [2001] EWCA CIV 263

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MR LAWRENCE COLLINS QC
(SITTING AS A DEPUTY HIGH COURT JUDGE)
[2001] EWCA Civ 263Case No Case No: A3/1998/0415Venue Royal Courts of Justice, Strand, London, WC2A 2LL, Friday 23rd February, 2001
Between
MR JOHN WETH & ORSAppellantHER MAJESTY'S ATTORNEY GENERAL & ORSRespondent
Before
Lord Justice MummeryLord Justice RixMr Justice HolmanMr John Weth appeared in person for the AppellantMr William Henderson & Miss Louise Davies (instructed by the Treasury Solicitor for the Respondent)

LORD JUSTICE MUMMERY :

Introduction

[1]This is an unfortunate dispute in the affairs of a Christian charity based at Little Gidding, a timeless and secluded place not far from Cambridge. For the last 4 years members of the Little Gidding Trust (previously called The Society of Christ the Sower Trust) have been embroiled in Chancery proceedings. The sheer bulk of the court papers indicates that more time and money have probably been spent on financing excursions to the brawling courts than on the promotion of pilgrimage to the place to which, in the midst of the gathering religious and political conflicts of the 1630's, Nicholas Ferrar and his family withdrew, exchanging the vanities of the world for an exemplary life of piety, temperance and learning. In our own time, Little Gidding has also acquired strong literary associations with TS Eliot's profoundest religious poetry.[2]One thing is certain: the litigation has not promoted the religious purposes for which the charity was established 30 years ago. The Charity Commission, the Attorney General, as the constitutional custodian of charity, the trustees and the committee members are all caught up in the effort and expense of this ongoing dispute. This appeal is solely concerned with the question who should pay for the cost of it all. The Facts in Outline[3]The origins and course of the dispute have been explored in depth in the numerous judgments delivered in the Chancery Division and in this court. A background sketch is all that is necessary to set the scene for this appeal from the judgments of Mr Lawrence Collins QC (now Mr Justice Lawrence Collins) delivered on 21 November 1997 and 3 December 1997 and for the application by the appellant, Mr John Weth, to adjourn the appeal to await the outcome of yet more proceedings, complaints and investigations.[4]By a trust deed dated 17 September 1971 a charitable trust was established. Its principal object was the advancement of religion by pilgrimage to the church at Little Gidding. Originally there were 4 trustees and a committee of 12. The assets of the charity included residential properties at Little Gidding let to individuals, who formed themselves into a community and welcomed pilgrims and visitors. In the late 1970s the Reverend Robert Van de Weyer was appointed pastor. He took over the spiritual leadership of the community from one of the original trustees, the Reverend Anthony Hodgson. He was chairman of the charity from 1991 to September 1994. His wife Sarah was appointed a trustee of the charity. She or her husband was treasurer from 1991 to 1993. Between them they effectively ran the community, the charity and the finances from their property nearby, Castle House.[5]In February 1994 Mr Weth (who describes himself as a former senior public servant) and his wife joined the community. By August 1994 Mr Weth had become treasurer and legal secretary to the trustees and, after the resignation of the Reverend Van de Weyer in September 1994, he succeeded him as chairman. At about that time the decision making powers had been delegated to a committee of at least 5 members. The other trustees on the committee were Mr James Muggleton, Mrs Jillian Wilkinson, Mr Graham Ridgwell, Mrs Mary Read and Mrs Van de Weyer.[6]Mr Weth carried out investigations into the charity. He was concerned about the state of the financial records. He was also concerned at the Van de Weyers having allowed the charity finances to become mixed up with their personal finances. In June 1995 he produced a report on the draft accounts prepared by him for the year ending 31 March 1995. He recommended the appointment of auditors to prepare finalised accounts. The committee agreed. So in August 1995 a firm of accountants in Bedford, Neville Russell (Russells), were appointed. They carried out a lot of work on the records of the charity and sought information from the members of the community. The work was mainly done by a Mr Gerald Bygraves. Mr Weth prepared a further report for the committee on 28 August 1995. On 6 September 1995 Mr Weth wrote to the Charity Commission requesting them to undertake an urgent investigation into the financial position of the charity from April 1991. He and Mrs Wilkinson had a meeting with officers of the Commission on 7 September 1995. There were allegations of financial irregularities and mismanagement of the charity and its finances. It was the practice of members of the community to make informal interest free loans to the charity while they lived in Little Gidding. The source of the loans would be the proceeds of their houses which they had sold on moving to Little Gidding. The loans would be repaid from time to time, either in stages or when they left the community. The amount repaid would be related to changes in the general level of house prices during the period of the loan.[7]During 1995 the dissension in the community was reflected in the setting up of a rival committee involving Mr Christopher Saunders and Mrs Gray, as well as Mrs Van de Weyer. That committee was more supportive of the Van de Weyers than the committee headed by Mr Weth. Following a refusal to pay over cheques the Charity Commission made an order on 21 September 1995 forbidding payment out of the charity's bank accounts without the consent of the Commissioners. This provoked acrimonious correspondence involving Mr Weth, Mr Saunders and the Commission.[8]On 11 January 1996 Russells reported on their investigations and produced management accounts for the 18 months ending 30 September 1995. Investigations revealed an unsatisfactory state of affairs: no proper accounting records had been kept; there were different bank accounts of the charity controlled by different people; the funds of the charity became intermingled with the money of the members, including the Van de Weyers; substantial works had been carried out on buildings by a builder, Mr Fitzgibbon, without invoices or records of expenditure; and matters of financial significance were not reported or fully reported to the committee. In their efforts to ascertain the amount of the loans and repayments over the years Russells identified 6 members whose loans totalled nearly £270,000. The Van de Weyers were recorded as having lent over £227, 000. By letter of 21 March 1996 Russells recommended to the committee a settlement with the Van de Weyers in the sum of £196, 924, which was close to the figure which the Van de Weyers were willing to accept. On the recommendation of Mr Weth the committee decided that there should be no settlement with the Van de Weyers without further investigations into the true financial position of the charity and the Van de Weyers' loans and repayments.[9]On 19 November 1996 the committee resolved to appoint new solicitors, Alan Smeath & Co, and, subject to their advice, to appoint HW Fisher & Co, chartered accountants, as reporting accountants, and in the meantime to defer further consideration of the settlement proposals. The view of the Charity Commission was that Russells' reports already provided formed a basis for negotiating a settlement. They were increasingly concerned about the additional costs. They were coming to the view that the appointment of a receiver was the only way to resolve the difficulties. In January 1997 Mr Stuart Crookshank, on behalf of the Commission, made it clear to the charity's then solicitor, Mr Lipson, that the Commission were likely to appoint a receiver in early February. At the end of January 1997 Mr Lipson provided a report to Mr Weth. At a meeting of the trustees called by Mr Weth and held on 29 January 1997 it was resolved that, if the Charity Commission appointed a receiver, the solicitors should be instructed to challenge the appointment and that £30,000 of the charity's funds should be deposited with the charity's solicitors on account of the costs and disbursements of proceedings to challenge the appointment of a receiver and for forensic accountant's fees.[10]On 4 February 1997 the Charity Commission appointed Mr Adrian Randall ,a partner in Moores Rowland, as receiver and manager of the charity. The appointment was made under section 18(1)(a) and (b) of the Charities Act 1993. On 11 June 1997 and 28 July 1997 Mr Randall presented reports to the Commissioners recommending that a compromise be reached with the Van de Weyers and that consideration be given to the appointment of new trustees and the removal of the existing trustees. On 29 July 1997 the Charity Commision made an order appointing four additional trustees (Mr Michael Cansdale, Mr Nicholas Saunders, Mrs Elaine Wilson and Mrs Rosemary Way) and suspending from the exercise of their trusteeship Mr Weth, Mrs Wilkinson and Mr James Muggleton pending consideration of their removal. (Mrs Wilkinson resigned as a trustee on 15 September 1997 and subsequently ceased to be a party to these legal proceedings. Mrs Van de Weyer had resigned as a trustee on 11 June 1997). On 1 August 1997 the appointment of the receiver and manager was varied, so as to determine it, except for certain additional specific functions relating to settlement of outstanding loans. On 17 December 1997 the Charity Commission made an order under section 18 (2) (i) of the 1993 Act removing Mr Weth and Mr Muggleton as trustees and committee members of the charity. The Proceedings[11]In order to understand this appeal it is necessary to refer briefly to no less than four sets of proceedings. Action Ch 1997 W No 2284 (Appeal against appointment of receiver)[12]This originating summons, in which the active plaintiffs were Mr Weth, Mrs Wilkinson and Mr Muggleton, was issued on 24 April 1997. They appealed against the Charity Commission's order of 4 February 1997 appointing the receiver and manager. They obtained an interim injunction pending the hearing, restraining the receiver from making certain payments from the funds of the charity to the Van de Weyers by way of settlement or to the auditors for their fees. This appeal was heard by Neuberger J for nearly 10 days in February 1999. He dismissed the appeal on 29 April 1999, making an order that Mr Weth should pay 60% of the costs. Permission to appeal against his order was refused first by him and then by the Court of Appeal (Nourse, Thorpe and Judge LJJ) on 10 July 2000. The ground of refusal was that the appeal had no real prospect of success. Action Ch 1997 W No 2285 ( the Beddoes/Costs Application)[13]By this originating summons, also dated 24 April 1997, the same plaintiffs sought the determination of the court as to whether(1) they should appeal against the order of 4 February and(2) whether they should be indemnified out of the property of the charity in respect of all costs properly incurred by them in connection with the appeal. On 14 April 1997 the Charity Commission authorised the plaintiffs to make application to the court. The Attorney General and the four new trustees were made defendants to the application. On 12 June 1997 the Treasury Solicitor informed the applicants that the Attorney General, in his capacity as the protector of charity, would be opposing the application. This application was heard by Mr Lawrence Collins QC, sitting as a deputy judge of the High Court, in November 1997. His refusal to make the orders sought is the subject of this appeal. Mr Weth applied for permission to appeal. On 23 March 1998 the Court of Appeal held that he did not need permission to appeal and extended his time for appealing. Action Ch 1998 W No 241(Appeal against removal as trustees)[14]By this Originating Summons Mr Weth and Mr Muggleton appealed against the order of 17 December 1997 removing them as trustees of the charity. This was heard by Neuberger J at the same time as the appeal against the appointment of the receiver. He dismissed it for the reasons given in his 160 page judgment on 29 April 1999. Permission to appeal to the Court of Appeal was refused at the same time as it was refused in the proceedings at 12 above. Action Ch 1997 W No 2284 (Appeal against appointment of new trustees)[15]By an Originating Summons dated 16 January 1998 Mr Weth and Mr Muggleton sought leave to appeal against the orders of the Charity Commission on 29 July 1997 suspending them from the exercise of their office and appointing additional trustees of the charity. The application was opposed by the Attorney General and the Charity Commission. On 6 March 1998 Lindsay J held that this action was out of time and that there was no power to extend time. He accordingly refused the leave to appeal sought under section 16(13) of the Charities Act 1993.[16]I should also mention that the Van de Weyers have now started their own proceedings against the current trustees for repayment of loans made by them to the charity. The sum claimed is £266,246.98. The trustees counterclaim for breach of trust. The matter is proceeding to a case management conference. The Judgments under appeal[17]On 21 November 1997 judgment was given on the Beddoes/Costs Application (No 2285). By his order dated 26 November 1997 the deputy judge declared that the plaintiffs were not entitled to be indemnified out of the property of the charity in respect of the costs incurred by them in connection with their appeal against the order of 4 February. He refused permission to appeal.[18]The judgment of 21 November 1997 was followed by a second judgment on costs on 3 December 1997 and by an addendum on 17 December 1997. He directed that the judgments be treated as given in open court. The effect of the judgments was that the plaintiffs were held not to be entitled to be indemnified out of the property of the charity in respect of the costs incurred by them in or in connection with their appeal against the appointment of the receiver ; they were ordered to pay the costs of the defendants of and incidental to the application in respect of the period from 12 June 1997; but they were entitled to their costs of the application down to that date, to be paid on the indemnity basis out of the assets of the charity, subject to the proviso that that costs order was not to be enforced until the £30,000 deposited with the solicitors had been accounted for satisfactorily.[19]The judgments describe the events leading up to the application and give reasons for the ruling that the Attorney General was entitled to be heard and allowed to submit evidence on the application. He did so as the protector of the beneficial interest or the objects of the charity.[20]In brief the deputy judge's reasons for his conclusions were as follows:- i) The prospects of success of the appeal were an important factor, but the appeal had no object which could be of benefit to the charity. ii) The financial position of the charity could not justify any proceedings involving substantial costs, unless they were likely to succeed and would involve a substantial benefit to the charity. iii) The appeal against the appointment of the receiver faced formidable difficulties. The written opinion of counsel placed by the plaintiffs before the court did not even express a view on the merits. iv) On the issue of the costs of the application the judge held that, after it became clear after 12 June 1997 that the application would be opposed, the application should be treated as hostile litigation and subject to the rule that costs normally follow the event. After that date the plaintiffs had not been acting for the benefit of the charity. They had been acting unreasonably. They were not be entitled to an indemnity out of the charity's assets for their costs and they were ordered to pay the defendants' costs after that date. Mr Weth's application for an adjournment[21]Mr Weth appeals against both the refusal of the costs indemnity for the appeal against the appointment of the receiver and against the orders against him for the costs of the application after 12 June 1997.[22]Shortly before the hearing of the appeal Mr Weth made a written application for an adjournment of the hearing. This was not granted. He renewed his application at the start of the hearing. It was opposed by counsel for the Attorney General. After hearing submissions from Mr Weth and from counsel for the Attorney General the court informed the parties that it needed to hear all the arguments on the appeal before it could decide whether or not to grant an adjournment. This unusual course was taken, as the reasons advanced for the adjournment are very closely connected with the grounds for the substantive appeal. The adjournment is not sought on any of the usual grounds of indisposition, lack of representation, absence of funding, unavailability, personal convenience or the need for more preparation time.[23]Mr Weth requested an adjournment of the appeal hearing for 2 or 3 months. He said that the application had the support of Mr Muggleton, who did not attend and was not represented.[24]The application was made on the ground that the appeal could not and should not be determined in advance of the court having evidence about the outcome of the complaints made by him to the Charity Commission and about the proceedings brought against the trustees by the Van de Weyers. The Chief Charity Commissioner had been asked to investigate the complaints, which may also be the subject of an application to the European Court of Human Rights. As for the action started by the Van de Weyers, that is contested by the trustees. Mr Weth is seeking disclosure of the terms of any indemnity or advice given to them by the Commission in respect of those proceedings.[25]The application for an adjournment was opposed on the grounds that evidence of these subsequent developments is irrelevant to the determination of this appeal. The issue is whether the deputy judge was right, on the material before him in November 1997, to dismiss the application for an indemnity for the appeal against the appointment of the receiver and to make an order for costs against Mr Weth. It was contended that the result of the investigation of the complaints against the Commission and the outcome of the litigation with the Van de Weyers could not possibly affect the determination of this appeal.[26]I keep these conflicting submissions well in mind as I turn to the rival arguments on the substantive appeal and consider the extent to which they can be determined without the need for an adjournment. Substantive submissions of Mr Weth[27]Mr Weth made extremely detailed written and oral submissions in support of his overall contention that this court should reverse the order of the deputy judge refusing to declare that he and his fellow trustee were entitled to be indemnified for the costs of the appeal against the order of the Commission in appointing the receiver.[28]He made it clear that he is not seeking to recover immediately from the assets of the charity all the costs incurred by him in the appeal proceedings. If the court decides that he is entitled to be indemnified he is prepared to give to the court an undertaking to spread repayment over a number of years.[29]Mr Weth's main points may be summarised as follows:[30]He was obliged by the actions of the Charity Commission to take the proceedings appealing against the appointment of the receiver in order to safeguard the assets of the charity. This was a proper and reasonable response to the unnecessary and improper interference of the Commission in the affairs of the charity, which was the cause of the litigation and the substantial costs incurred in it.[31]It was improper of the Commission to support the Van de Weyers' claim for a financial settlement. The trustees had received expert advice against a settlement. This advice was ignored by the Commission. They appointed the receiver in order to reach a settlement with the Van de Weyers, who should have been left to prove their claims, as they are now seeking to do in legal proceedings. The intervention of the Commission had relieved them of the need to do that.[32]The actions of the Commission were open to serious criticism. The Commission lacked a proper internal review system to review their decisions and to deal with complaints. Mr Weth is seeking to have that defect remedied. He has formed an association for the protection of charities. The Commission had been unwilling to deal with evidence presented to them regarding the charity and its affairs; it had encouraged and applied pressure for a settlement with the Van de Weyers against expert advice; it had failed to take action when pleas were made for guidance and decisions; it had disregarded the views of Mr Weth and of the committee; it had ignored information supplied to it by Mr Weth about the incompetence and improper conduct of Russells; and there had been bias and misconduct on the part of its staff. Mr Stuart Crookshank was singled out for adverse comment.[33]The action of the Commission in appointing the receiver came in for strong criticism. It was not necessary; the financial affairs of the charity were not in jeopardy; there were financial controls in place, so that there was no possibility of the assets being disposed of; a report of the charity's solicitor (Alan Smeath) was ignored; the trustees were acting reasonably in declining to implement Russells' proposals for a settlement with the Van de Weyers. The receiver himself is also attacked for his lack of professionalism and lack of objectivity and is accused of concluding in advance that the existing trustees should be removed.[34]The Commission ought not to have removed the trustees. They were honourable people with ability and experience. They were committed to the interests of the charity. They had acted professionally, putting their qualifications, experience, time and effort at the disposal of the charity. They had acted fairly, justly, promptly, prudently and with integrity. There had been no misconduct or mismanagement by them in the affairs of the charity. On the contrary, it was they who had detected and exposed serious financial irregularities by others in the affairs of the charity; they had drawn attention to the deficiences in Russells' report; they had sought legal advice from the trustees' solicitors and counsel; they had acted with the authorisation of the Commission in seeking the directions of the court; and later developments had vindicated their actions and demonstrated that it would not have been in the interests of the charity to settle for the figure of £197,000 proposed by the receiver. Conclusion[35]In my judgment, the application for an adjournment should be refused and the appeal should be dismissed. The deputy judge adopted the correct legal approach to the exercise of his discretion. He cannot be criticised, on the material before him, for refusing a declaration that Mr Weth should have an indemnity for the appeal proceedings or for making the limited order for costs in respect of those proceedings against Mr Weth.[36]During the course of two days the members of the court have explored with Mr Weth all of the many points which he has raised at various times in this litigation. After judgment was reserved Mr Weth continued to update the court in correspondence about developments in connection with the Van de Weyers proceedings, the complaints against the Charity Commission and the Chief Commissioner's review of the complaints. He relies on those developments as indicating that his past actions were for the protection of the true interests of the charity.[37]Mr Weth opened his appeal with three aspirational comments on the common law by a disparate trio-Lord Hewart, Mr Roger Scruton and Sir William Blackstone-in support of his contention that life would be intolerable without justice and justice is what he seeks from this court.[38]If there is an apposite quotation for this case, I would select just two lines from "Little Gidding "- "And the end of all our exploring Will be to arrive where we started "[39]I start and finish with the two judgments of over three years ago. My conclusion is that the decisions of the deputy judge were right. I have the following comments on Mr Weth's criticisms of the judgments:[40]The critical question for the deputy judge on Mr Weth's application was whether it was in the best interests of the charity to make an order that the assets of the charity should be liable to meet Mr Weth's costs of the appeal against the appointment of the receiver.[41]In deciding what was in the best interests of the charity, the deputy judge had to consider whether he had before him all the appropriate material to enable him to decide whether to exercise his discretion to give the direction sought by Mr Weth : see Marley v. Mutual Security Merchant Bank [1991] 3 All ER 198 at 201d-j per Lord Oliver. That case was concerned with an application to the court for directions relating to the exercise of the discretion of a trustee of a private trust, but, in my view, the same basic principles apply to the use of the assets of a public trust to fund litigation concerning its affairs. In the absence of the appropriate information the deputy judge could either dismiss the proceedings or, depending on all the circumstances, adjourn them for "full and proper information" to be provided.[42]The material before the deputy judge at the hearing did not justify the making of a direction that Mr Weth and the other applicants should appeal against the appointment of the receiver or that they should be indemnified out of the property of the charity in respect of all the costs incurred by them in prosecuting the appeal. That material revealed a number of factors which substantially reduced the prospects of persuading the court to make the directions sought: Mr Weth and his co-applicants had been suspended as trustees of the charity; new trustees had been appointed; the costs likely to be incurred in the proceedings were substantial in relation to the available liquid assets of the charity; the written opinion of counsel for the applicants provided to the court did not express any view on the merits; and the appeal would face formidable difficulties on the law and the facts.[43]Quite apart, however, from all those factors the deputy judge rightly focused on one point as conclusive of the application. It is a point which further information and material on the other points could not answer. I am in complete agreement with the deputy judge's summary of the position - " .....the clearest reason why the application must fail is that it has no object which could be of benefit to the charity. The plaintiffs seek to appeal against the order appointing the receiver and manager. The duties of the receiver and manager are now limited to settling the Van de Weyer loans. The avowed purpose of the appeal is to prevent settlement until the loans situation has been further investigated. But four additional trustees have been appointed, and even if the plaintiffs (who are already suspended from the performance of their functions) were not removed, it is common ground that the new trustees (who could, as charity trustees, act by a majority) would be in favour of a settlement with the Van de Weyers. Consequently the plaintiffs could only achieve their object if, in addition to overturning the order appointing the receiver and manager, they could go on to overturn the order appointing the new trustees, and secure their own re-instatement. In my judgment this is so far from an application for directions by a trustee that it must fail on this basis alone."[44]In brief, the position was that, even if the appeal against the appointment of the receiver was not hopeless, it was pointless. It was clearly not in the best interests of the charity to spend its funds on pointless litigation.[45]The issue on this appeal is whether the judge was right or wrong in the exercise of his discretion on that material. It is accordingly irrelevant to have regard to what has in fact happened subsequently or to what may happen in the future. Both sides have attempted to persuade the court to take later events into account. As already explained, one of Mr Weth's main grounds of appeal and of the adjournment application is that, depending on the outcome of the Van de Weyer action and the Charity Commission investigation, he may yet be vindicated and prove to have been "right" all along in his opposition to the terms of settlement with the Van de Weyers proposed in 1997. Counsel for the Attorney General also made a submission based on later events, contending that Mr Weth's appeal is an abuse of process, because the substantive issue on the appeal is academic and irrelevant. Mr Weth and his co-plaintiffs had pursued the appeal at their own expense without waiting for the outcome of this appeal; they had lost it; and they had been ordered to pay the bulk of the costs personally. That was the end of the matter.[46]In my judgment, both sides are wrong in their attempts to rely on subsequent developments. The matter is not truly academic, as liability for a large sum of costs is involved. For the reasons already given, however, it cannot be said that the deputy judge erred in the exercise of his discretion as to the indemnity for the costs of the appeal or as to liability for the costs of the application for directions: he adopted the correct approach in law; he took all the relevant factors into account; and he was not swayed by any irrelevant factors. He could not properly or reasonably have been expected to take into account events which had not yet occurred. Far from being plainly wrong the exercise of judicial discretion was clearly right. Result[47]I would refuse the application for the adjournment and I would dismiss the appeal. MR

JUSTICE HOLMAN :

[48]I too, agree that this appeal should be dismissed. I only add a judgment of my own out of regard for the position of Mr Weth and respect for his sustained, sincere and courteous argument before us. In his judgment of 29th April 1999 Neuberger J. described Mr Weth as "an honourable man who throughout has been acting in a way which he genuinely believes to be right and intends to benefit the charity." Nothing I have read or heard leads me to doubt that description.[49]Mr Weth's substantive proceedings were his appeals, which he was able to bring as of right, against the appointment of a receiver and manager and against his later removal as a trustee. Those appeals were dismissed on 29th April 1999 by Neuberger J. who made certain orders against Mr Weth as to the costs of the Attorney General and the Charity Commissioners. On 10th July 2000 the Court of Appeal dismissed the application of Mr Weth for permission to appeal from those decisions and orders of Neuberger J. The orders accordingly stand and are not open to further review or reconsideration by us. The Court of Appeal ordered Mr Weth to pay the costs of the Attorney General of that application. We have been told that, subject to assessment, the aggregate liability of Mr Weth under the orders so far made against him as to costs is about £108,000 plus VAT. Since his own income and capital is apparently very modest, he faces financial ruin when all along he has been honest and well-intentioned and has, he says, already spent £60,000 of his own money on his own costs and expenses of this litigation.[50]Mr Weth tried to protect himself from exposure to those costs by the originating summons which he issued on 24th April 1997 and which was determined by the order of Mr Lawrence Collins QC on 26th November 1997. There was a good deal of argument before Mr Collins QC, and in skeleton arguments and papers generally, as to whether the application was properly classified as a Beddoe type application for directions, or an application for a pre-emptive costs order. Mr Collins QC avoided reaching any conclusion on that issue, saying that "it is clearly not possible to draw a rigid line between Beddoe applications and pre-emptive costs orders"; that the application had features in common with both types of application and order; and that "on whatever view is taken on the nature of the order which is sought, the application must fail." He continued "I will therefore order that the plaintiffs may not be indemnified out of the property of the charity in respect of costs incurred by them in connection with their appeal…" It seems to me that Mr Collins QC was right not finally to classify the application as a Beddoe application or one for a pre-emptive order, since the application did indeed have features of both types and the practical effect for the present case is the same. Either way, Mr Weth was hoping to establish in advance that he would be indemnified in the litigation out of the funds of the charity .[51]The present appeal lies only from that order of Mr Collins QC dated 26th November 1997. Mr Weth argues that Mr Collins QC was wrong, and that if he had made a different order, then the orders(i) of Mr Collins QC himself as to the costs of the proceedings before him; and(ii) of Neuberger J. as to the costs of the proceedings before him; and even perhaps(iii) of the Court of Appeal as to the costs of the hearing before them last year, would all have been different.[52]There is, in fact, the preliminary difficulty for Mr Weth that the orders as to costs under (ii) and (iii) above are no longer open to reconsideration by us although we do, of course, still have power to vary the order made by Mr Collins QC himself. Further, it became increasingly clear during the hearing that the preferred target of Mr Weth for "an indemnity" was not the funds of the charity itself (which he has always striven to preserve), but the Charity Commissioners or the Attorney General. Yet the sole and express target of the originating summons, which Mr Collins QC was considering, was the charity itself. So it seems to me that even if we concluded that Mr Collins QC ought to have made a different order, there are considerable difficulties in the way of relieving Mr Weth of the current liabilities as to costs, save only as to the (relatively small) costs under the order of Mr Collins QC himself. Even so limited an outcome would, however, be a benefit to Mr Weth and, perhaps no less importantly to him, success on this appeal would be some vindication of all that he has struggled to achieve throughout this protracted litigation.[53]It is important to stress that the refusal of Mr Collins QC to make a Beddoe or pre-emptive order in no way fettered the subsequent discretion of Neuberger J. as to the costs of the substantive proceedings. Neuberger J. was left with the discretion to make whatever order as to costs he thought appropriate, including making no order, or an order that the charity or the Attorney General should pay Mr Weth's costs of those proceedings. Indeed the provisions of RSC O.62 rule 6(2) remained operative, at any rate if Mr Weth had been successful in his appeal against his removal as a trustee and had been restored to that capacity.[54]Insofar as he was considering a Beddoe application, the test for Mr Collins QC to apply was: is the proposed appeal in the interests of the charity? In Marley v Mutual Security Merchant Bank and Trust Company Limited [1991] 3 All ER 198 at 201h, Lord Oliver of Aylmerton, giving the opinion of the Privy Council, said:
"……it should be borne in mind that in exercising its jurisdiction to give directions on a trustee's application, the court is essentially engaged solely in determining what ought to be done in the best interests of the trust estate and not in determining the rights of adversarial parties…it is essential that the primary purpose of the application – indeed its only legitimate purpose – be not lost sight of…."
Marley concerned a private trust. Mr Henderson, on behalf of the Attorney General, drew our attention to an unreported judgment of Sir Richard Scott V-C on 5th April 2000 in which he was considering a Beddoe type application in relation to a charity. Sir Richard said, at page 4, line 12 of the transcript, "the public interest comes into play in considering what directions should be given on a Beddoe application involving a charity in a way which is absent where ordinary Beddoe applications regarding private trusts are concerned." However, his decision was that wider considerations of the public interest operated to make it inappropriate that the receiver and manager should pursue proceedings, which would ostensibly be in the financial interests of the charity itself, against aged former trustees of the charity. There is nothing in the judgment to suggest that, in the case of a charity, the wider public interest might make it appropriate to take proceedings even though they were contrary to the interests of the charity itself.[55]In part of his written submissions to us, Mr Weth suggests that it should have been sufficient that he and his fellow trustees were acting "properly, reasonably, upon sound professional, legal and accountancy advice, and in the interests of the charity (or at minimum in perceived interests of the charity)." I cannot accept that test for the purpose of a Beddoe application and direction. The trustees' perception of the interests of the trust or charity is not enough. Indeed, the very purpose of a Beddoe application is for the court to rule whether the trustees' perception of the interests of the trust accords with the actual interests of the trust.[56]The test which he had to apply being: is the proposed appeal in the interests of the charity?, I have no doubt that Mr Collins QC was right, for the reasons he gave, not to make the requested order but, rather, to indicate in plain terms that Mr Weth and his colleagues should not proceed further with their appeal. First, it could not, as Mr Collins QC explained, have achieved the avowed purpose of Mr Weth, namely to prevent a settlement too soon or at too high a figure with Mr and Mrs Van de Weyer. Even if the appointment of the receiver and manager had been overturned and Mr Weth and his colleagues reinstated as trustees, they would – on the evidence available at that time – have been out-voted by the new trustees who were sympathetic to the position and claims of Mr and Mrs Van de Weyer. Secondly, the costs of the proposed proceedings would be likely to be considerable in proportion to the assets of the charity. Thirdly, the proposed appeal faced "formidable difficulties". In short, it was litigation with which the charity would be most ill-advised to proceed.[57]I now consider the order of Mr Collins QC as to costs. Mr Henderson argued before him, as he did before us, that at no time after the appointment of the receiver and manager could Mr Weth and his colleagues be considered trustees within the meaning of that word in RSC O.62 rule 6(2). However, Mr Henderson conceded before the judge that Order 62 rule 6(2) was declaratory of a general equitable jurisdiction to order costs to be paid out of the trust property. In my view Mr Collins QC correctly approached the question of the costs of the proceedings before him on the basis that (whether as an application of RSC Order 62 rule 6(2) or the analogous equitable jurisdiction) Mr Weth and his colleagues were entitled to be indemnified out of the assets of the trust until such time, if at all, as they were acting unreasonably or in substance for their own benefit rather than that of the fund. The policy of the law is to encourage trustees to make Beddoe applications in cases of doubt or uncertainty; and it is important that people who generously give their time and energy to acting as trustees should be able to seek the guidance of the court at no personal risk as to costs, provided only that they are not acting unreasonably or for the benefit of themselves rather than that of the fund.[58]I have had some doubt myself whether it was fair or appropriate of the judge to draw the line at 12th June 1997. All that happened on that date was that a representative of the Treasury Solicitor informed Mr Weth's solicitor on the telephone that the Attorney General would be opposing the Beddoe application. Until that point Mr Weth and his colleagues had in fact had the active encouragement of the Charity Commissioners to make it. It must be in the nature of a Beddoe application that there is, or may be, room for two views as to whether the substantive proceedings or step in issue are in the interests of the trust. The mere fact that the Attorney General takes a different view and intends to oppose the application (so that it may thereafter be labelled as "hostile") does not seem to me a sufficient basis for saying that a trustee is now acting unreasonably. However, I do agree with the judge that at least from 29th July 1997, when new trustees (sympathetic to the Van de Weyers) were appointed, the appeal ceased to have any object of benefit to the charity, for the reasons I have already given. According to the judgment of Mr Collins QC as to costs, "……apart from the costs associated with the hearing before Master Dyson on 25th June, most of the costs incurred between [12th June 1997] and the end of September were in connection with the appeal." The costs of the appeal itself were outside the scope of the order of Mr Collins QC, though later, of course, the subject of the order of Neuberger J. It follows that there is little significant practical difference whether the line as to costs is drawn at 12th June 1997, or at or around 29th July 1997 or some later date in the summer of 1997. I agree that, at any rate by the end of September 1997, the judge was entitled to take the view that "the plaintiffs have not so much been seeking the guidance of the court as to whether they should challenge the order, but have been seeking to impose their will and determination to challenge it against the objection of the Attorney General representing the beneficiaries." The judge's decision as to costs was within the proper bounds of his discretion and there is no basis upon which we can interfere with it.[59]Mr Collins QC reached his conclusions on the evidence available to him at the time and in the circumstances as they were at the time; and so far I have endeavoured, too, to evaluate his conclusions from the same standpoint without applying hindsight. We are, however, now over three years further on. If subsequent events, including subsequent judicial decisions, were now to show his reasoning and conclusions to have been wrong, I would have been willing to re-evaluate them in the light of those subsequent events by an application of, or by analogy with, the rules as to admitting fresh evidence. Without labouring the point, however, the only effect of subsequent events has been to reinforce the wisdom and correctness of the decision of Mr Collins QC. As predicted by Mr Collins QC, the appeal did fail. As predicted by Mr Collins QC, the proceedings proved to be enormously expensive in proportion to the assets of the charity. As predicted by Mr Collins QC, they have been of no benefit to the charity at all.[60]Mr Weth pressed us very strongly to adjourn the present appeal to await the outcome of, or further information about(i) a review by the Chief Charity Commissioner of complaints made by Mr Weth against the staff of the Charity Commission and decisions taken by them, and possibly even a further review after that by the Independant Complaints Reviewer;(ii) proceedings brought by Mr and Mrs Van de Weyer against the charity or the present trustees; and(iii) the scope of any indemnities given by the Charity Commission to the present trustees in relation to the current litigation by and against Mr and Mrs Van de Weyer. Since the conclusion of the oral argument Mr Weth has further notified us that the present trustees of the charity have now made an offer of £130,000 to settle with Mr and Mrs Van de Weyer, and he has supplied to us a draft summary of his heads of complaint as submitted by him to the Independent Complaints Reviewer. Most recently he has sent to us a further draft of his complaint in which he now alleges that certain public servants deliberately conspired and colluded to injure him which, if established, is a very serious matter.[61]At the outset of the appeal, and when we later received the further material from Mr Weth, there seemed to me to be some force in the application for an adjournment. If the review concludes that the Charity Commission acted improperly or mistakenly, that may indeed be a vindication of much that Mr Weth has urged upon the many courts who have considered this case; the more so if the review establishes that Mr Weth has been the victim of a conspiracy. If Mr and Mrs Van de Weyer ultimately recover less than Neville Russell proposed should be paid to them in settlement in 1996/1997, that might be seen as a vindication of Mr Weth's opposition to settling at a higher figure then. If the present trustees have been given an indemnity, that may make it seem unfair that a similar indemnity was not given to Mr Weth and his colleagues by the decision of Mr Collins QC.[62]But on closer examination none of these matters meet the central thrust of Mr Collins QC's reasoning; namely, that even if the appointment of the manager and receiver had been set aside, and Mr Weth and his colleagues reinstated as trustees, they would not have been able to prevent a settlement at that stage with the Van de Weyers. Further, that the proceedings that Mr Weth wished to pursue, namely his appeal, would not be cost-effective in proportion to the funds of the charity. Contrary to the submission of Mr Weth, an adjournment would not in fact meet the ends of justice nor lead to any different outcome on this appeal, which, as I have stressed, is concerned only with the correctness of the decisions and orders of Mr Collins QC on the particular applications that he was considering. So I would refuse an adjournment and would dismiss the appeal.[63]Repeatedly during the argument, and with great eloquence, Mr Weth pleaded for justice. Such a plea tugs at the heart of any court and certainly did at mine. In reality, however, the plea was not for justice but for mercy. At the hearing in front of Mr Collins QC, Mr Weth and his colleagues said that without his approval they would not pursue the appeal. But despite the reasoning, decision and order of Mr Collins QC, Mr Weth did pursue it, and indeed launched a further appeal against his later removal as a trustee. That may have been courageous and, as Mr Weth saw and sees things, principled. But it was unwise, and Mr Weth must have known that if he lost he would be likely to have to pay the costs of other parties. I am sympathetic to the plight of Mr Weth and would like to be merciful to him; but in my view justice requires that we dismiss his appeals. LORD JUSTICE RIX[64]I agree, and gratefully adopt the statement of the background facts and of the parties' submissions set out in the judgment of Mummery LJ.[65]The sole questions on this appeal are whether the deputy judge wrongly exercised his discretion(a) in refusing to grant Mr Weth's application to have the costs of his appeal in action no 2284 (to set aside the appointment of the receiver and manager) paid out of the funds of the charity and(b) in making Mr Weth pay the costs of that application from and after 12 June 1997. There is also the preliminary question raised by Mr Weth as to whether his appeal should be adjourned for some 2/3 months, pending the outcome of his complaint to the Charity Commission and the reference of it to an Independent Complaints Reviewer, and pending clarification of the situation in the action brought by the Van de Weyers against the charity's present trustees.[66]In my judgment, on the substance of Mr Weth's application to have the costs of his challenge to the appointment of the receiver and manager paid out of the charity's own funds, no fault can be found with the reasoning or the decision of the deputy judge. Although Mr Weth had applied to the court for its determination as to whether he should appeal against the Charity Commission's order of 4 February 1997 appointing the receiver and manager, he has never been prepared to accept the court's view that it would not be in the interests of the charity for him to do so. It followed from the deputy judge's view (that an appeal would not be in the interests of the charity) that there was no cause for the charity to indemnify Mr Weth for the costs of his appeal. Like Mummery LJ, I can find no escape from the deputy judge's reasoning that there would have been no point to setting aside the appointment of the receiver and manager, even if that could have been justified, since that in itself would have secured neither the reinstatement of Mr Weth (and Mr Muggleton) as trustees nor a majority among the trustees for Mr Weth's policy as to how to deal with the Van de Weyers' claim; that in any event the appeal was fraught with difficulty; and that the charity's financial situation did not justify the risking of its limited resources on such litigation. That reasoning was fully justified by the subsequent outcome of those proceedings which Mr Weth then pursued at his own risk. Thus, after the expense of a ten day hearing, Mr Weth's appeal against the Commission's order failed before Neuberger J and he was required to pay 60% of the costs; and he was in due course refused permission to make a second appeal to the court of appeal on the ground that such an appeal had no real prospect of success. Nourse LJ prepared a lengthy judgment explaining why permission to appeal had failed.[67]Nevertheless, Mr Weth seeks to say that the deputy judge ought to have encouraged him to proceed with his appeal against the appointment of the receiver and manager and to have ordered the charity to indemnify him against his costs in so proceeding: essentially on the grounds that he had always been right to challenge, in the interests of the charity, the view expressed by Russells that a settlement should be made with the Van de Weyers in the region of £197, 000. In essence, Mr Weth submits that the merits of the charity's defence to the Van de Weyers' claim to the repayment of their loans to the charity are such as to justify his campaign on behalf of the charity. In that connection, he is still confident, despite his setbacks in litigation to date, that his current complaint to the Charity Commission and the Van de Weyers' recent action against the trustees in which the trustees have counterclaimed for breach of trust, will bring to light new evidence to show that he was all along justified in his stance. It is for that reason that he puts his application for an adjournment at the forefront of his submissions on this appeal.[68]It is in theory possible that the new proceedings which Mr Weth prays in aid will throw some new light on the sorry history of events which Mummery LJ has outlined. It is certainly true that the ultimate merits of the Van de Weyers' claim for the repayment of their loans, or of Mr Weth's conviction that they were responsible for breaches of trust in the conduct of the charity, have yet to be adjudicated, if indeed they ever will be. Yet there is nothing in the material which Mr Weth has put before this court which entitles Mr Weth to ask this court to reopen matters which have been litigated to their conclusion, even if that were possible which I cannot see that it is, and nothing which would justify this court in faulting the exercise of the deputy judge's discretion on the materials which were then before him, and which were again fully scrutinised by Neuberger J and by the court of appeal on the application for permission to appeal.[69]I will illustrate Mr Weth's difficulties by reference to the principal materials on which he relies for the underlying merits of his campaign. For Mr Weth has not sought the removal of the receiver and manager or his own reinstatement as a trustee for his own benefit, but so as to be able to control or influence once again the affairs of the charity in order to protect it, as he would submit, from the error of settling with the Van de Weyers at anything like the figure proposed by Russells. For these purposes, he relies first and foremost on the advice of professionals listed in his Submission dated 22 January 2001 at para 12.3 and there submits that he (and Mr Muggleton) had every reason to believe that they were acting properly, reasonably and in the interests of the charity by seeking to protect its assets in reliance on such professional advice.[70]These materials have to be seen against the background of Russells' detailed report of January 1996 and their recommendation of 21 March 1996 as to the basis of a settlement with the Van de Weyers. Mr Weth ignores the Russells' findings and conclusions and refers first to Jephsons' (the charity's then solicitors') report of 13 February 1996 (at Bundle D.1342). That, however, merely says that "there is a case to answer" as to various heads of claim against the Van de Weyers totalling some £74,000. It makes no recommendation other than that the charity "should attempt to settle all outstanding matters". Mr Weth next refers to Alan Smeath & Co's report of 31 January 1997 (Bundle E.1728). They were the charity's new solicitors. Their detailed report refers to "prima facie" evidence of breaches of trust quantified at some £58,000 plus further unquantified amounts including professional fees, rejects Russells' work as having ignored the trustees' (ie the old trustees') concerns, and recommends further investigation following which the trustees "should then decide on the basis of proper professional advice what steps to take in the best interests of The Society to protect its assets while at the same time making every reasonable effort to resolve the matter by agreement." Mr Weth commissioned through Alan Smeath & Co another firm of accountants, H W Fisher & Co, to travel again over the road covered by Russells. Fishers' report dated 27 February 1997, which is the next document referred to by Mr Weth (E.1801/15) was prepared in reliance "upon certain documents which have been provided to us by yourselves [Alan Smeath & Co] and Mr Weth, as well as the explanations and representations of Mr Weth himself". The report took issue with Russells' conclusions and recommended further thorough investigations before a financial settlement with the Van de Weyers was made.[71]Finally, Mr Weth relied on three one page affidavits by deponents whom Mr Weth described as two accountants and a solicitor. These affidavits were made in December 1998, that is to say after the issue of Mr Weth's originating summons in his costs application and the judgment of the deputy judge under appeal. One of these three affidavits spoke to Mr Weth's integrity and ability but did not otherwise deal with the matters in dispute. The second affidavit said that in 1995 (that is to say before the Russells' report) Mr Weth had approached the deponent informally and had produced books of account relating to the charity and had expressed concern about a claim for repayment of a loan. The deponent merely commented:
"I could not see sufficient evidence in the books of account of the Trust produced to me to substantiate the validity of the claim"
. The third deponent, an accountant, said that he was a personal friend of Mr Weth whom the latter had approached in his professional capacity on 23 March 1996 (ie soon after the Russells report): he opined that there was nothing in the report or other papers shown to him by Mr Weth which amounted to evidence that Mr Van de Weyer had made any loans to the charity or had accounted properly for expenditure on behalf of the charity.[72]What Mr Weth did not cite in paragraph 12.3 of his Submission was the Opinion of counsel dated 8 April 1997, on the basis of which he had launched his application to be indemnified out of the funds of the charity. That Opinion is before this court, as it was before the deputy judge. The Opinion raises the question whether the charity's trustees should apply for leave to appeal against the Charity Commission's order for the appointment of a receiver and manager. It pointed out that it would clearly be wise to avoid incurring substantial costs without first obtaining the court's leave and proceeded to advise on the merits of an application for such leave. What, however, the Opinion failed to do was to deal in any way with the merits of the appeal upon which Mr Weth proposed, with the leave of the court, to risk the charity's resources.[73]In my judgment, the materials on which Mr Weth seeks to rely to emphasise that at the root of all this litigation is a substantial point which in the interests of the charity ought to have justified the removal of the receiver and manager and his own reinstatement as a trustee, with the end in view that he rather than the receiver or the new trustees could supervise the affairs of the charity in relation to any dispute with the Van de Weyers, are matters which have been considered not only by the deputy judge but also by Neuberger J and the court of appeal when it considered Mr Weth's application for permission to appeal from Neuberger J's judgment. In these circumstances, whatever the future of Mr Weth's complaint to the Charity Commission or of the Van de Weyers' action, it is impossible for this court to find in those developments a substantial ground on which to adjourn this appeal, and thus add further delay and expense to this saga. Moreover, although Mr Weth requested an adjournment of only 2 or 3 months, it would be inevitable, if that adjournment were granted, that he would seek further extensions of it.[74]For the reasons given by Mummery LJ, I am quite satisfied that there is no reason why this court should interfere with the exercise by the deputy judge of his discretion whether or not to order the charity to indemnify Mr Weth against the costs of his appeal against the appointment of the receiver, and whether or not to order Mr Weth to pay at any rate part of the costs of his application. Moreover, if subsequent events be relevant at all, I cannot find in them any reason to doubt the deputy judge's decisions, or to adjourn this appeal.[75]Finally, while I regret, for Mr Weth's sake, that he has devoted so much energy and so much of his personal resources, to litigation which he believes to be in the interests of the charity, he might pause to consider, after so many hearings, whether there might possibly be another valid point of view from that to which he adheres. After all, those who have the best interests of a charity at heart owe to it as much objectivity as possible. The circumstances of these proceedings have put me in mind not only of the legal maxim, that it is in the public interest for there to be an end to litigation, but also of King Solomon's wise if melancholy saying that the end of a thing is better than its beginning.

ORDER

Appeal dismissed. No order as to the balance of the costs which relate to the hearings of the appeals on 13 th and 18 th of January last year; but as to the remaining costs of this appeal, we order that they be paid by Mr. Weth who has been unsuccessful. Applications for permission to appeal to the House of Lords refused. We give authority, if that is required, for a transcript of the hearing before us to be made at Mr Weth's expense. (Order does not form part of approved Judgment)

Cited in 1 later judgment