PNPF Trust Company Ltd (Pilots' National Pension Fund, trustee of) v Taylor & Ors [2009] EWHC 1693 (Ch)

[2009] EWHC 1693 (Ch)Case No HC08C02054
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 10/07/2009
Before
MRS JUSTICE PROUDMAN
Between
PNPF TRUST COMPANY LIMITEDClaimantGEOFF TAYLORDefendantand OthersDefendant
Michael Tennet QC, David Pannick QC, Jonathan Hilliard and Adam Baradon (instructed by Lovells LLP) for claimantAndrew Spink QC and Nicolas Stallworthy (instructed by CMS Cameron McKenna) for 2 nd defendantJohn Martin QC and John Stephens (instructed by Dickinson Dees) for applicantHearing Hearing dates: 2, 3, 6, 7 July 2009
Judgment
[1]These proceedings concern the Pilots’ National Pension Fund of which the claimant is the trustee. The Scheme has 53 participating bodies and has some 1,800 members who are marine pilots. The second defendant is one of those individual Scheme members. It is an unusual scheme because it has a mix of employed and self-employed members, authorised by Competent Harbour Authorities to operate as pilots in their areas. Some authorities (ECHAs) employ their pilots, others (SCHAs) simply authorise self-employed pilots. Some do both. Each of these classes can be further sub-divided into those CHAs which currently employ or authorise pilots who are members of the scheme (so-called active CHAs) and those CHAs which did so formerly but do so no longer (so-called formerly active CHAs). PD Teesport Ltd (“Teesport”) and the seventh defendant First Corporate Shipping Limited (“Bristol”) are both active SCHAs. ECHAs contribute to the Scheme as employers. The obligation of SCHAs is to collect the contributions made by self-employed pilots and pass them on to the trustee. To date they have not had to make any contributions to the Scheme.[2]Teesport applies to be joined as a defendant to these proceedings. The application is contested by the claimant (a Board comprising several persons including some CHAs) and the second defendant. Most of the other defendants oppose the application and none of them actively supports it. Several non-parties, both CHAs and individual members, have also written to the trustee expressing their opposition to the joinder.[3]Teesport’s application for joinder is the only application before me, although it is closely related to an application by the claimant for representation orders, which, if granted, will result in Teesport being represented by up to four of the defendants for the purposes of the proceedings. I say ‘up to four’ because the representation is to be what is termed interest-based or issue-based. Although Bristol has close identity of interest with Teesport, the proposal is for a division of labour between the defendants and their legal teams and no single defendant will represent Teesport’s interests for all the purposes of argument.[4]The decision, whichever way it went, would impinge upon the representation issue in certain respects. Thus, if the application were dismissed, it would be on the basis that Teesport would be adequately and properly represented by others; if granted, no representation order made in future would cover Teesport.

Overview of the parties’ positions

[5]Before I consider the legal merits of the parties’ respective cases, it is important to take an overview of the practical matters which underlie the present dispute about joinder and representation. Both sides have serious concerns about these issues and the concerns of the losing side will remain as a result of my decision.[6]The Scheme is in deficit. The latest estimate is a deficit of between £188m and more than £285m. The claimant is obliged by the Pensions Act 2004 to formulate a recovery plan to eliminate the deficit. If it cannot do so it faces regulatory action and may be wound up. The recovery plan should have been in place by March this year, but there is a multiplicity of issues about the trustee’s powers and who may be liable to contribute to the Scheme in certain circumstances. These include some issues with which Teesport is not directly concerned.[7]For the purpose of formulating a recovery scheme the trustee needs to know the scope of its powers to obtain additional funding and in particular whether it is authorised to obtain such powers by amendment. To a similar end it also needs to know whether certain statutory mechanisms apply. The Part 8 proceedings ask for determination of questions of construction of the Scheme and of statute as to the scope of the trustee’s powers, for representation orders and for directions. 11 main issues (with numerous sub-issues) of construction have been identified and addressed in the Part 8 claim form.

Teesport’s position

[8]Teesport regards the proceedings as hostile. What Teesport means is that the trustee is far from neutral as to the outcome of the questions for the Court. The object of the exercise is to enable the trustee to make certain persons, including the SCHAs, contribute in order to save the scheme. It is likely that, if it has the powers to do so, the trustee will indeed exercise them to amend the scheme and impose liability to contribute on the SCHAs.[9]Teesport’s exposure on such a rule change could be as much as £23m for the past service deficit alone. In addition, if permitted to do so, the trustee may seek to recover from those CHAs which can pay, of which Teesport is one, the amounts due from those who cannot. This would severely prejudice the terms of Teesport’s borrowing and could threaten its very existence. The stakes for Teesport are therefore very high.[10]The evidence is that the stakes are high for all those who are to be represented, not least individual members who are at risk not merely of losing their pensions but, unusually, of having to contribute to the scheme deficit if some of the issues of construction are resolved against them. Teesport has a substantial commercial interest in the outcome of the action, but so do those who have agreed or submitted to representation. In commenting on Teesport’s extensive financial exposure, the solicitors for the third defendant, Milford Haven Port Authority, wrote to Teesport’s solicitors in these terms:
“We do not believe the exposure of your client is necessarily greater in proportion to their respective business or significantly different from the exposure of any other authority affected by these proceedings, to make the granting of your application desirable…”
[11]Teesport objects to the interest/issue based representation. For example, one of the matters it would wish to argue for itself is to be allocated to the first defendant. Teesport asserts that as the primary interest of that defendant is contrary to that of the SCHAs the argument will necessarily be presented as one of fallback only. Further, because of the issue-based allocation, Teesport cannot rely upon Bristol to protect Teesport’s interests. Again because of the allocation, it is difficult for Teesport to present its arguments indirectly as it has to deal with four parties and four teams of lawyers. It is concerned that ultimate decisions as to how the arguments are to be presented lie with others so that it has only what has been described by one of the directors of the claimant as a “measure of influence” over the issues. The sixth defendant, Port of Tyne Authority (“Tyne”), also has some community of interest with Teesport but Teesport is reluctant to disclose details of its concerns and finances to Tyne because Tyne and Teesport are direct commercial competitors.[12]The crux of Teesport’s concern is that because it has such a significant financial interest in the outcome of the action it wants to be able to ensure that it is represented at trial by its own separate independent legal advisers. It objects to the trustee, which has its own objective, dictating the structure of the proceedings and in particular dictating who (both in terms of the selection of representative defendants and in terms of the legal teams acting for those defendants) should present the arguments on Teesport’s behalf. It further objects to the trustee dictating how those arguments should be allocated among the defendants.[13]Teesport accepts that if it is joined it will not be entitled to the kind of protection as to costs afforded to a representative defendant. It is content to be joined on the basis that it takes its chances as to costs, including the increased costs of other parties resulting from the joinder.

The position of the other parties

[14]The claimant’s and second defendant’s concerns are as to convenience, proportionality, delays and costs.[15]The proceedings are necessary and it is also necessary that they should be determined as expeditiously as possible. Teesport now accepts this and Mr Martin QC, its leading counsel, said that his client is as eager as the claimant to adhere to the trial date fixed for January 2010.[16]The proceedings are necessarily complex. Teams of expert lawyers (all leaders in their field) for the existing parties, in consultation with the CHAs which are not parties, have expended a huge amount of time, effort and costs in condensing the issues and allotting arguments to provide as streamlined and intelligible a structure for the proceedings as possible.[17]Mr Tennet QC on behalf of the claimant has taken the Court through the issues in the claim form and a schedule of the proposed representation on each of those issues. He has satisfied me that there is nothing mutually inconsistent in CHAs or individual members arguing some of the matters which have been allocated to them. Every argument set out against each issue in the schedule is, as far I can tell on the cursory examination I have undertaken, properly assumed by the party to which it has been allocated.[18]Mr Spink QC, counsel for the second defendant, pointed out by way of example that his client has been allocated one issue in which he will be arguing against the fourth defendant, Port of London Authority, whereas on another issue the fourth defendant is taking the lead in an argument in support of his client. The parties and those they represent have, he says, submitted to considerable compromises in order to achieve a manageable framework enabling the issues before the court to be determined in a sensible, proportionate and cost-efficient manner. They have had to ignore all kinds of differences of approach and perspective.[19]It is remarkable, say leading Counsel for the claimant, Mr Tennet QC and Lord Pannick QC and leading counsel for the second defendant, Mr Spink QC, that all the CHAs except Teesport have at present agreed to abide by the current structure. Teesport has not established grounds on which it would be prejudiced by the matter being conducted in such a manner. In seeking to be joined in its own self-interest it is, so the other parties imply, acting selfishly rather than for the common good.[20]Teesport was asked if it wanted to be a representative defendant at an early stage but declined. It said that it did not approve of the form of proceedings as a Part 8 action, wishing to hold the trustee and its former advisers accountable in a Part 7 action for the Scheme’s financial difficulties. At least one defendant has said that it agrees that the option of suing for negligence should be explored, but none of the defendants has ever wished to complicate these present proceedings further by introducing such issues.[21]Mr Tennet, Lord Pannick and Mr Spink all submitted that Teesport has no distinct legal interest in the action which requires special treatment. It has community of interest with Bristol. Teesport is able to introduce input in consultation with the other defendants. Mr Spink explained the liaison procedures enabling persons represented to require the representative to take any point which is reasonably arguable. Thus any position Teesport could legitimately take could be shared with and adopted by Bristol, Tyne or (in some cases) one of the other defendants, according to the agreed division of labour as to the presentation of argument. The legal teams instructed to present those arguments all have particular expertise in the field of pensions law. It was submitted in effect that it is preposterous to suggest that they will not present all the available arguments in good faith, properly and fully or that the lawyers instructed by Bristol will not, in its own interests as an active SCHA, monitor them to ensure that they do so.[22]Further, the claimant foresees that adding a defendant with licence to address all the issues at will in its own way will cause dissatisfaction. There would be a real risk of other CHAs breaking ranks, not merely prejudicing the orderly, wieldy and efficient disposal of the issues but putting at risk the practicality of them being disposed of at all. Already one CHA which is not a party is threatening to apply for joinder (although as a representative defendant) and others have apparently taken advice on the issue. If Teesport is successful the claimant fears that there might be no logical ground for distinguishing the positions of other CHAs.[23]The scheme for representation allocates one party to argue for each issue and one party to argue against it. This is a deliberate policy. One reason is to avoid duplication of argument and thus save time and costs in what is in any event a very time-consuming and expensive case. The other reason is to maintain a perceived equality of arms. It is felt that if a representative defendant is faced with two opponents rather than one on each issue other defendants (already on the record) in the same interest would seek to address arguments to support that defendant. In addition, if it is seen by CHAs, at present non-parties who are content to be represented, that Teesport has been given a licence to argue outside the agreed structure, they may seek to be placed on an equal footing. As Mr Tennet put it, this could result in a “free-for-some”; that is to say a free-for-all among the richer CHAs and inequality of arms among the poorer ones. There are some issues, such as the liability of individual members to contribute, on which currently represented members would be unable to afford to instruct their own legal teams. The current structure thus maintains a delicate but, it is said, precarious balance.[24]It is also alleged that Teesport has been uncooperative, unconstructive and indeed positively obstructive in bringing the proceedings to a conclusion. It is feared that, if Teesport is joined, the proceedings will become unmanageable. Mr Martin accepted that Teesport has in the past said things in correspondence that “give rise to concerns about its attitude”, but he said that once joined it too needs to and will bring the matter to speedy resolution. It has become urgent for it to know how to provide for the question of contribution in its accounts.[25]The claimant complains that Teesport has not been able to point to any argument that it would currently intend to raise that is not being raised. However Mr Martin relies on the fact that unforeseen matters can and inevitably do arise in the course of a trial which he and the rest of the legal team would wish to address on Teesport’s behalf.

The rules

[26]That is the overview. I now turn to the applicable rules.[27]CPR r. 64 enabled the action to be commenced with such parties as the claimant selected. The application for joinder is made under CPR r. 19.4. Under r.19.2(2) the Court has a discretion to add a new party if (and I quote):
“it is desirable in order to resolve all the matters in issue in the proceedings”
. The rule is set out in such a way that the Court’s wider discretion is engaged only after determining that joinder is desirable. Desirability is limited to the stated purpose. Realistically, however, the two matters run in tandem at least to some extent as the word ‘desirable’ involves a value judgment; whether it is desirable to add the party in itself depends on the application of the overriding objective.[28]The claimant’s case under r. 19.2(2) was summarised by Mr Tennet in admirably simple and clear terms. Teesport has no legal interest distinct from the proposed representative defendant Bristol. It has no interest that is not capable of being represented in the proceedings. It has not sought to identify any such interest and it cannot do so. In those circumstances Teesport does not meet the test of demonstrating that its presence as a party is desirable in order to resolve all the matters in dispute.[29]If it were not proposed that Teesport should be represented it seems to me that Mr Martin’s application would be bound to succeed. Teesport plainly has a direct and very substantial interest in the outcome of the action and it is plainly desirable that it should be engaged in the argument and bound by the decision.[30]Thus the success of Mr Tennet’s argument depends on whether Teesport can be adequately represented in the proceedings and whether it should be so represented against its will. The question of representation orders is therefore at the heart of the issue I have to decide. Encroaching as little as possible on the discretion of the judge who has to determine at some future time whether to make the representation orders sought, I therefore turn to that question.[31]The application for representation orders could be pursued at a case management conference, at a pre-trial review or at the trial itself. The claimant’s current intention is that representation orders will be made at the end of the trial.[32]The orders will be sought under CPR r. 19.7. There is some discussion of CPR r. 19.6 in the skeleton arguments. That rule enables parties to be joined as representatives without the permission of the court where more than one person has the same interest in the claim. However, r.19.6 is expressly disapplied by r. 19.6(5) in cases to which r. 19.7 applies. It is common ground that r. 19.7 applies because the proceedings are both about property subject to a trust and about the meaning of a document, including a statute, within r. 19.7(1).[33]CPR r. 19.7(2) prescribes what the Court can do on such an application and in what circumstances. It provides as follows:
“The court may make an order appointing a person to represent any other person or persons in the claim where the person or persons to be represented- (a) are unborn; (b) cannot easily be found; (c) cannot easily be ascertained; or (d) are a class of persons who have the same interest in a claim and- (i) one or more members of that class are within sub-paragraphs (a) (b) or (c); or (ii) to appoint a representative would further the overriding objective.”
[34]It is common ground that for present purposes the applicable part of this provision is r. 19.7(2)(d)(ii), namely, where the persons to be represented are a class of persons who have the same interest in the claim and to appoint a representative would further the overriding objective.[35]Even if these requirements are satisfied, it is still a matter of discretion for the Court whether to make a representation order, as the rule says “the court may make an order”. I cannot think of any circumstances in which it would further the overriding objective to make a representation order but the Court nevertheless might decide in the exercise of its discretion not to do so. Despite various suggestions made by Mr Martin it seems to me that it is unrealistic to separate the discretion from the requirements of CPR 19.7(2)(d)(ii). The existence of the discretion emphasises that before making a representation order the Court must consider all the relevant circumstances in the light of the overriding objective, giving them such weight as may be appropriate. The overriding objective and the discretion run together.[36]Mr Tennet submits that it is simply fanciful to question whether representation orders would, as a matter of principle, be made in this type of proceeding. Not only are such orders appropriate, they are absolutely necessary if there is to be any practical prospect of the issues being justiciable at all. It would be wholly impracticable to open the argument directly to 53 CHAs and nearly 2000 members.[37]The necessity (and I say that neutrally as far as joining Teesport is concerned) for representation orders in complex proceedings is evident and has been recognised by the Court for centuries. As far back as the early 19th century, Lord Eldon said in Adair v. New River Co (1805) 11 Ves 429 at 444 (cited by Purchas LJ in Irish Shipping Ltd v. Commercial Union [1991] 2 QB 206 at 235):
“…it is not necessary to bring all the individuals: why? Not, that it is inexpedient, but, that it is impracticable, to bring them all. The court therefore has required so many, that it can be justly said, they will fairly and honestly try the legal right between themselves, and all other persons interested, and the plaintiff…”
[38]In John v. Rees [1970] Ch 345 at 370, Megarry J, citing Duke of Bedford v. Ellis [1901] AC 1 and various 19th century cases, spoke of the rule about representation being treated not as a rigid matter of principle but “a flexible tool of convenience in the administration of justice”.[39]Specifically in relation to pension fund cases, I note MNOPF Trustees Limited v. FT Everard & Sons Ltd [2005] PLR 225, a case which raised issues which were similar to the present in that it was about the validity of rule changes, made by the trustee to manage deficits, which imposed liabilities on employers who absent the changes were not so liable. The approach of Patten J in that case was to make representation orders enabling him to hear full argument on the various possible constructions. Where it was not possible to find a suitable representative defendant to argue one point, he saw no objection (despite an obvious conflict of interest) to Counsel for the trustee putting the relevant argument before the Court.[40]Again in NBPF Trustees Limited v. Warnock-Smith and Another [2008] EWHC 455 (Ch), Floyd J said (at the third page of the judgment):
“As a perusal of the order of Lloyd J shows, the proposals for distribution are necessarily complex. I was told that it was possible to identify over 200 distinct categories of potential recipient. In order for the Court to form a view on whether it can approve the proposed distributions of the remaining funds, it is necessary to have parties before it who can present the Court with a critical analysis of the proposals, and who can present any arguments for saying that the proposals are wholly or partially invalid. It would have been wholly impractical to divide the potential beneficiaries into classes with separate representation. In whatever way the beneficiaries are divided up there will always be conflicts of interests within the classes.”
[41]At an earlier hearing Hart J had approved an approach in which a single legal team would consider all the possible legal objections to the trustees’ proposals. Floyd J went on to say:
“The same approach has been taken by the defendants on the applications now before me. They appreciate that in many cases their legal team will be concerned on behalf of groups of members whose interests conflict with their own. They have nevertheless given their legal representatives a free hand to present any arguments they believe to be relevant. Mr Michael Furness QC appeared at the hearing to perform this function, which I am satisfied he performed with the help of his instructing solicitors Baker & McKenzie, to the very high standards expected in such circumstances.”
[42]The NBPF case is distinguishable from the present case in that the way in which the case was conducted and conflicts of interest ignored was consensual. However, the passages which I have cited from Floyd J’s judgment demonstrate the very real practical difficulties faced by interested persons and the Court in managing argument in complex pension fund cases.[43]Again, in Bestrustees v. Stuart [2001] PLR 283, Neuberger J, in approving interest-based representation by three parties, said at paragraph 27, “It could be argued that there are more than three different interests…However, it seems to me that one has to invoke a degree of practicality and common sense in a case such as this…In [the circumstances of this case], to require every conceivable different interest to be represented by separate solicitors and counsel would, to my mind, be quite inappropriate, and the arrangement the parties have come to is one which seems to me eminently sensible. All the possibilities have been very fully and fairly canvassed before me, and I am quite satisfied that, although limiting the parties to three could in a perfect world be said to be over-simplifying, to take it beyond three would have been quite inappropriate”.[44]Complex pension litigation is increasingly common as a result of pension deficits, scheme closures and more onerous statutory employer funding obligations. Such cases have to be efficiently managed if they are to proceed to a satisfactory resolution. Nevertheless it seems to me that it would be wrong in principle for there to be one law for pensions cases and another for other types of trust cases. None of the above cases suggests that there is.[45]That said, I do not think it can seriously be argued that a case such as the present is capable of being heard promptly, over a reasonable length of trial, and proportionately as to costs, without some structure as to representation and argument. I therefore start from the position that it is very likely indeed that at any rate some form of representation orders will be made for the purposes of the main hearing. I should say that at one point Teesport’s lawyers admitted in correspondence (although it has now withdrawn that concession) that if it failed to be joined it would itself have to submit to a representation order.[46]Mr Martin does not dispute that representation orders are necessary. Most of the represented persons are content to be represented. However, his client is not and therefore he says a representation order should not be made in Teesport’s case.[47]It is settled law that a person may be represented without obtaining his consent, even where he can be found and his opinion sought. In such circumstances, if the requirements of the rules are made out, no party to the action can complain that the consent of the person represented has not in fact been given. Consent is not a requirement of the rules: see Independiente Ltd v. Music Trading On-Line (HK) Ltd and Others [2003] EWHC 470 (Ch).[48]That case does not however decide whether the person himself can prospectively object to being represented on the ground that he has positively and expressly withheld his consent.

Principle and practice as to representation orders in trust cases

[49]There is nothing specific in the rules about objections to representation and Mr Martin accepted that there was no absolute bar on the Court making a representation order because the person to be represented objects. He made it clear that he did not assert that Teesport has a right to be joined or a right to resist a representation order. It is a matter of discretion in each case.[50]However, he qualified this concession by adding that save in exceptional circumstances, of which there is none here, the Court’s discretion can only be exercised in favour of refusing representation of a person against his will.[51]This is something more than that a person’s unwillingness to be represented is a weighty factor to be brought in to the scale in the exercise of the court’s discretion. Mr Martin submitted that to make a representation order in the present case would be a departure from principle and practice. He based this submission on the historical purpose of representation orders and the attitude and approach of the Court in decided cases.[52]He started with CPR r.19.7 itself. He pointed out that the primary categories of persons there referred to as candidates for representation orders are the unborn, the unfindable, and the unascertained. Their common characteristic is that it is impossible otherwise to get them before the Court. The final category, where someone else has the same interest and the Court is satisfied that it would further the overriding objective, is a catch-all. The main thrust of the rule is towards the traditional candidates for representation orders.[53]The classic exposition of the Court’s approach to representation orders appears in statements by Lord Eldon in passages from two cases cited by Lord Macnaghten in Bedford v. Ellis (above) at 10. The rule about representative suits has from the first been a simple rule resting merely on convenience. “The strict rule was that all persons materially interested in the subject of a suit, however numerous, ought to be parties…but that, being a general rule established for the convenient administration of justice, must not be adhered to in cases to which consistently with practical convenience it is incapable of application…It was better to go as far as possible towards justice than to deny it altogether”. Lord Macnaghten himself went on to add at 10, “…if you cannot make everybody interested a party, you must bring so many that it can be said they will fairly and honestly try the right.”[54]Mr Martin relied on a number of cases showing that the remedy of a beneficiary disgruntled by a representative suit was to apply to be joined to the action. He submitted that this practice, which he described as universal, showed that joinder was both what the beneficiary expected and the normal and correct course for the Court to take.[55]In Wilson v. Church (1878) 9 Ch D 952, it was held by Jessel MR that a dissentient bondholder in a representative action brought on his own behalf and all other bondholders should be added as a defendant. However it is plain from the judgment that the bondholder was a dissentient and indeed the only dissentient; he disagreed with the stance of the Plaintiff who represented him. It was plainly inappropriate for the plaintiff to represent him and plainly right for him to be made a defendant.[56]In Watson v. Cave (No 1) (1881) 17 Ch D 19 too a bondholder had brought proceedings on behalf of himself and other bondholders. One of the persons represented was dissatisfied with the appointment of a receiver which the representative had obtained and sought to appeal the order. The Court of Appeal held that the correct course was not to appeal but to apply to the court for joinder as a party to get the order set aside on the ground that the representative did not truly represent his interests. This case is directed to the wrong procedure adopted by the represented person, not at whether if the right procedure had been adopted, he would have been successful in his application for joinder. James LJ was careful to qualify his statement that no doubt the Court would join the represented person as a party with the words “if a proper case is made out”. Cotton LJ’s judgment is similarly neutral on the merits of any joinder application.[57]In John v. Rees (above) Megarry J said he saw no harm in a person being represented by a party who had a common interest, even though he did not have a common grievance, provided there was a party to the action who espoused the same cause so that all views were fully advanced. However, Mr Martin relied on the passage where the Judge went on to say (relying on Wilson v. Church and Watson v. Cave):
“The remedy for someone who is not consoled by this thought is…for him to apply to be joined as a defendant.”
[58]Megarry J was not considering the question of whether such an application would succeed. As appears later in the judgment at 374, there was on the facts of that case no objection from the relevant parties to changing the representation to ensure that it reflected the views of the dissentient person.[59]In the Irish Shipping case (above), Mr Martin relied on a passage from the judgment of Staughton LJ (who also quoted Lord Eldon’s observations) in which it was said that if a class of represented persons did not trust the representative to argue a particular point, one or more of them could apply to be joined as defendants. Again, however, Staughton LJ was not purporting to lay down any general rule that a party who did not wish to be represented would necessarily succeed in his application for joinder.[60]In Bank of America National Trust and Savings Association v. Taylor and Another [1992] 1 Lloyd’s Rep 484 the Commercial Court had to deal with the scope of a representative action in the absence of a lead underwriter clause in the marine insurance policies under which the claims in the action were made. Waller J decided that he had power to make an order that one defendant represented all the underwriters as they had a common defence to the action. One company would not agree to be bound by the result of the proceedings, and the Judge said that it seemed to him more satisfactory for that company to be joined as a separate defendant. On the facts, however, the representative did not wish to represent a company not prepared to be bound, and it was therefore conceded that it was better for the company to be separately joined.[61]Finally in this context, Mr Martin relied on British Airways Pension Trustees v. British Airways [2000] PLR 311 in which Park J made separate pre-emptive costs orders in favour of two representative defendants. The trustee had argued that they ought not to have separate legal representation on the ground that they had community of interest. It is not surprising that the Judge reached the conclusion that he did on the facts of the case, which were that the claimant, knowing the defendants’ position, had intentionally and voluntarily joined them both. Observations made by Park J to the effect that a party could be joined at his own risk as to costs must be read in the context of the facts and issues in the case.[62]Thus all of these authorities can be distinguished from the present case on their own facts in the manner I have suggested. However, I agree with Mr Martin that all the cases show a consistent and instinctive approach on the part of the judges that the remedy of a person dissatisfied with his representation is to be joined as a defendant in his own right.[63]Mr Tennet cited the unreported decision of Hart J in Law Debenture Trust Corp plc v. Philips (27 April 1999). In that case a scheme beneficiary wanted a matter judicially determined rather than submit to a compromise even on the terms he propounded. Hart J did not criticise the decision of the Master refusing to join the objector as a party and he made a representation order over his objections to the relief sought. The Judge undoubtedly felt unconstrained by the fact of the objections in performing his case management exercise. However the case is not determinative of the present issue as the objector had been given leave by the Master to, but did not, renew his application for joinder. That was the best case that Mr Martin’s opponents have been able to find to counter the approach in those I have cited. No-one involved in these proceedings has been able to find a case in which a representation order has been made to bind a person against his will.[64]The genesis and purpose of the rules about representation, the reasons for their inclusion and the attitude of judges in former days can indeed provide a foundation for a logical and principled analysis of procedural rules in trust actions. To my mind the cases cited support Mr Martin’s proposition that the historical purpose of representation orders was to enable all relevant parties to be heard in circumstances where that would otherwise be impracticable. The procedure was (and is) intended to include people within the ambit of an action rather than to exclude them. The purpose was (and is) not to shut someone out who is ready and willing to appear to represent his own interests at his own risk as to costs.[65]That said, it seems to me that the Civil Procedure Rules are designed to give the Court much less in the way of prescription in the exercise of discretions than was formerly the case. The Court now follows the rules according to their terms, without gloss, taking into account all relevant circumstances and weighing those circumstances in the context of and in accordance with the overriding objective. CPR 19.7(2) (d) (ii) is giving effect in modern terms to the principle enunciated by Lord Eldon two hundred years ago. CPR 19.7 and the overriding objective in CPR 1.1 Same interest in the claim

CPR 19.7 and the overriding objective in CPR 1.1

[66]I therefore turn to the application of the express provisions of CPR r 19.7. Logically the first question is whether Teesport has the same interest in the claim as another defendant, for if it does not, CPR r. 19.7(2)(d) cannot be engaged at all. In my judgment Teesport and Bristol (and in some respects, Teesport and Tyne) do have a community of interest. That was not challenged by Mr Martin and it was admitted in correspondence: see the letter from Teesport’s solicitors, Dickinson Dees, to the claimant’s solicitors, Lovells LLP, of 8th April 2009, as follows: “we are not aware of any factual difference which gives rise to any conflict in the classic sense between the positions of Bristol and Teesport such that it would be impossible for Bristol and its solicitors to represent Teesport”.[67]The fact that Teesport has different views about how those interests should (at any rate potentially) be addressed in the proceedings does not to my mind affect that conclusion and nor does the fact that Teesport and Tyne are commercial competitors.[68]Nor in my judgment, is it relevant that there are factual differences between the position of Bristol, Tyne and Teesport as to the commercial outcome of the action: see Stevens v. Bell [2002]PLR 247. First, it is hard to see how those factual differences affect what are essentially construction issues since they have arisen since the dates of the documents to be construed. Secondly, Teesport has already adduced detailed evidence in this action of fact-specific matters in a witness statement. Thirdly, factual differences do not generally affect the principle that relevant persons have community of interest.[69]The crucial question is whether it is in the interests of the overriding objective that Teesport should be represented rather than be joined as a party to represent itself with its own lawyers. To use the phraseology employed Dickinson Dees in the letter of 8th April 2009, whether it should:
“have its case argued by anyone other than the lawyers of its choice instructed exclusively by it”
.

Article 6 rights

[70]A preliminary question under this head is whether it would be contrary to the human rights of Teesport and its members to deny the right to be heard save through representative defendants. There is an issue whether Article 6 of the European Convention (and s. 6 of the Human Rights Act 1998) is brought into play.[71]Article 6 provides (so far as is material) that:
“In the determination of his civil rights and obligations…everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law…”
[72]The decisions of the European Court of Justice in Lithgow & Others v. United Kingdom (1986) 8 EHRR 329 and Wendenburg & Others v. Germany (Application 71630/01, 6th February 2003), (see also Smithson v. Hamilton [2008] EWCA Civ 996 at paragraph 13) show that Article 6 confers no absolute right of access to the court but only a qualified access. Access through a representative is adequate to satisfy that right.[73]In Lithgow, Sir William Lithgow was the single largest shareholder in a nationalised company. In assessing compensation for the compulsory purchase of the company’s assets the nationalisation statute provided for the shareholders to be represented by a Stockholders’ Representative. Sir William claimed that his article 6 rights had been breached because he had been denied direct access to the tribunal assessing compensation. It was held that such denial pursued the legitimate aim of avoiding a multiplicity of claims. The role of the representative sufficed for Article 6 purposes. The statute provided for meetings of those represented. In the present case, the liaison procedures allow for consultation between the representatives and those represented. Indeed there is no suggestion that Bristol has refused to consider any points raised by Teesport on any matter of principle.[74]Mr Martin asserts that Lithgow can be distinguished because there were provisions enabling removal of the Stockholders’ Representative. However, it is always open to Teesport to apply to the Court for the removal of a representative defendant for cause. There is also a costs sanction in the event of misconduct.[75]In Wendenburg the German Constitutional Court had set aside certain exclusive rights of audience previously held by the applicant advocates. They put forward several claims, one of which was that they were not heard before the decision was taken. An association of lawyers which had made representations on their behalf did not officially represent them as they were a loosely coordinated group representative of lawyers as a whole. However it was held that the requirements of Article 6 had been sufficiently fulfilled. The applicant did not even get past the admissibility stage. The Court focused on whether in reality the representative adequately performed the role of ensuring that all relevant arguments were put before the Court.[76]I doubt if the decision would have been different if the applicant had raised the issue in advance of the decision of the Constitutional Court. There is nothing in the judgment specific to a decision after the event. On the contrary, the European Court proceeds on the basis that it will not speculate as to unfairness in advance of a hearing. The whole jurisdiction is based in retrospect, when there is evidence of what has actually happened: see R (Roberts) v. Parole Board and Another [2005] 2 AC 738.[77]Accordingly, I find that Lord Pannick was right in submitting that the decisions in Lithgow and Wendenburg establish that there is no breach of Article 6 merely because a person has no direct access to the Court but only access through a representative, even where that representative is not of his own choosing.[78]I also agree as a matter of principle with Lord Pannick’s submission that it would be surprising if for any reason the English domestic court were to apply a different and more stringent test about what is fair in this context bearing in mind that Article 6, now part of English law, is directed to determination of this very question.[79]However to my mind that is looking at the matter through the wrong end of the telescope in this case. In both Lithgow and Wendenburg the procedure or law being challenged was one which for reasons of practicality shut out personal representation. The question I have to decide is the different one which arises in circumstances where the primary rule is that all interested parties are to be joined, and the burden is on the person seeking a representation order to justify it. Thus while Article 6 does not assist Mr Martin, the cases cited do not other than loosely and indirectly affect the exercise of the Court’s discretion.

Discretion and the overriding objective

[80]I therefore turn to whether, on the facts of this case, I can be satisfied that the Court hearing the application for a representation order would require Teesport to be represented by existing defendants against its prospectively expressed wishes. I am constrained to consider the question (although the discretion to be exercised on that application is not mine to exercise) in the context of deciding Teesport’s application under CPR r. 19.4.[81]For that purpose I must apply the overriding objective, namely the objective of enabling the court to deal with the case justly. CPR r. 1.1 (2) specifically provides that dealing with a case justly includes, so far as practicable- “(a) ensuring that the parties are on an equal footing; (b) saving expense; (c) dealing the with the case in ways which are proportionate-(i) to the amount of money involved(ii) to the importance of the case;(iii) to the complexity of the issues; and(iv) to the financial position of each party; (d) ensuring that it is dealt with expeditiously and fairly; and (e) allocating to it an appropriate share of the court’s resources.” (b) saving expense; (c) dealing the with the case in ways which are proportionate- (i) to the amount of money involved (ii) to the importance of the case; (iii) to the complexity of the issues; and (iv) to the financial position of each party; (d) ensuring that it is dealt with expeditiously and fairly; and (e) allocating to it an appropriate share of the court’s resources.”[82]The concept of fairness undoubtedly includes the need to promote efficiency in the disposition of cases. The opposition to Teesport’s application is based primarily on that issue of efficiency.[83]The following submissions are made by the claimant and the second defendant. First, the existing structure has been devised in such a way as to try to ensure that all arguments are put before the court fully, expeditiously and proportionately, ensuring that all the parties are on an equal footing. Attempts have been made to represent all possible viewpoints on the issues before the court, to achieve a broad equality of arms and to minimise so far as possible delays and additional costs by reducing duplication of arguments. The represented CHAs have been given every opportunity to raise legal points with those who will represent them and also every opportunity (taken up in Teesport’s case) to put in their own evidence.[84]Secondly, Bristol has a community of interest with Teesport and there is every reason to believe that it will promote the case for the SCHAs fully and properly.[85]Thirdly, to place Teesport in a special position would increase the length and cost of the hearing. There would doubtless be additional costs for the claimant both of the hearing itself and of preparation for the hearing. Teesport would be at risk as to those costs, it is true, but once it became a party there would also be a risk that the scheme, which is already in severe deficit, would have to bear the costs. It is a luxury that the scheme cannot afford for Teesport to be added to the current structure. Those costs are unnecessary as Teesport’s position will be entirely adequately protected by Bristol.[86]Fourthly, it would be unjust for Teesport to be placed in a special position merely because it prefers to have its own representation. That would create an inequality vis a vis the other CHAs and indeed the individual members. Individual members and some of the CHAs will not be able to afford representation but at present are on an equal footing because of their costs-protected position.[87]Fifthly, those who can afford to be separately represented and do not wish Teesport to be in a special position may themselves seek to be joined. If that were to happen the proceedings would become unwieldy and could even become unjusticiable.[88]I will consider these first five matters together. The factors specified in r. 1.1 (2) are not of course the only matters the Court has to consider in the context of the overriding objective. The sub-rule emphasises the vital importance of dealing with cases efficiently if they are to be dealt with justly, but fairness comprises more than that. The efficiency which the claimant promotes begs the question of whether it is unjust to exclude Teesport from its basic liberty to protect its own interests in litigation, in other words, whether it must submit to another person’s structure however efficient that structure may be.[89]That said, I do not disagree with Mr Tennet’s proposition that the trustee’s structure is an efficient one. I accept the first and second points referred to above without reservation for present purposes. I also find that these are not only relevant, but very weighty, factors to be taken into account in the exercise of the Court’s discretion.[90]As to his third point, it is evident that Teesport’s intervention will increase the length and costs of the hearing and increase pre-action costs to an extent that cannot be gauged in advance. That is also material to the exercise of the Court’s discretion. Mr Martin says the increase would be an absolute maximum of 1 day over the current estimate of 15 days. He says the additional costs of the hearing would be about £120,000. Mr Martin might have complained, but did not, about the inequality of arms (according to the second defendant’s definition) inherent in the fact that he was opposed by no fewer than three other silks on this application. What he did complain about was the costs of the application, opining that they were likely to exceed the extra costs occasioned by Teesport’s appearance at trial. However, estimates of time and costs at trial are notoriously unreliable.[91]Nevertheless, it is also relevant that there is a potential sanction in costs if the claimant’s fears are realised. Mr Martin submitted that either Teesport has a valid contribution to make, in which case it is proper to make it, or it has not, in which case it is unlikely to seek to add anything much to the proceedings. In either event, costs are in the discretion of the trial Judge. He will be at liberty, having heard what arguments are actually advanced and knowing about what was said on both sides in this present application, to decide that Teesport’s presence is (or is not) a privilege for which it will have to pay.[92]As to the length of the hearing and the nature and conduct of preliminary hearings, there is clearly a genuine concern, viewed in the context of the massive deficit in the scheme, that Teesport will adopt an attitude that delays the trial or adds greatly to its length, or both. Again that is a material factor.[93]I have two comments to make about that from the opposite perspective. First, Mr Martin has given assurances to this Court in aid of this application that his client is at one with the parties in seeking to keep the trial date and in seeking to avoid unnecessary expenditure of costs. In the event that Teesport proves difficult, it will doubtless be reminded of and held to those assurances. Secondly, the manner in which the case proceeds is essentially a matter for case management. I do not believe, even in the circumstances of this present case, that active and efficient case management will be outside the capability of a Judge of this Division.[94]As to equality of arms, I agree with Mr Martin that this is not so much a matter of counting heads as one of the quality of representation, which in this case will be of the highest. The point about equality really overlaps with the fear that if Teesport is joined other parties will seek to go outside their agreed remit and other non-parties will seek to be joined.[95]There is little hard evidence to this effect, save perhaps in relation to Peterhead Port Services, although even there the issue is different as Peterhead wishes to be joined as a representative defendant with the increased chance of protection as to costs that such joinder entails. However I would not adopt Mr Martin’s description of the claimant’s attitude as scaremongering. The claimant and all the other objectors plainly have a serious, genuine and legitimate concern to which this Court should give weight. It is difficult enough to proceed within the constraints of the present structure without the risk that other CHAs will break ranks. That is plainly a relevant factor. However, provided that the current structure basically remains, the ability of other parties to argue their corner, the issues addressed and the length of any such arguments is again subject to case management by the Court.[96]I would add that the claimant’s case that the fate of the application depends on Teesport falling in line with the integrity of the structure is undermined by the terms of a circular letter sent by the claimant to all CHAs on 13 August 2008. This letter describes the proposals for the court application in some considerable detail. Although they were by no means finalised (Bristol was not yet proposed as a representative) it is evident that they were already at quite an advanced stage. Paragraphs 26-27 of the letter speak for themselves:
“26. As explained above, the representation is structured such that all interests will be represented through the arguments advanced by the lawyers for the Representative Parties. There is therefore no need for you to be joined to the proceedings or to seek to make representations at the hearing on your own behalf. However, if you wish to represent your own interests you are free to attend and make submissions (whether through lawyers or on your own behalf), though you will do so at your own risk as to costs. This means that, were you to do so, the Court may well order that you should bear your own legal costs if it considers that your participation in the proceedings was not necessary. In addition, it is possible for the Court to order you to bear some of the costs of the other parties. 27. Alternatively, if you are happy to be represented through one of the Representative Parties but you wish to make certain comments in relation to the proceedings, you are free to contact the lawyers for the appropriate Representative Party…”
[97]It has not been explained when and why the claimant changed its mind. I cannot accept Mr Tennet’s assertion that the letter was only speaking of attendance at the hearing, not joinder. CHAs reading those paragraphs would have interpreted them (correctly) as an invitation to appear in their own right, but outside the agreed costs arrangements, if they were not “happy to be represented through one of the Representative Parties”.[98]Sixthly, the claimant relies on safeguards afforded to Teesport if it is dissatisfied by the ultimate decision. One is its potential opportunity to appeal in the event that the representatives decide not to do so: see Tolstoy Miloslavsky v. United Kingdom (1995) 20 EHRR 442, George Wimpey UK Limited v. Tewkesbury Borough Council [2008] EWCA Civ 12, [2008] 1 WLR 1649.[99]Another is the safeguard provided by CPR r. 19.7(7). This merits detailed consideration. It provides as follows:
“Unless the court otherwise directs, any judgment or order given in a claim in which a party is acting as a representative under this rule- (a) is binding on all persons represented in the claim; but (b) may only be enforced by or against a person who is not a party to the claim with the permission of the court.” (b) may only be enforced by or against a person who is not a party to the claim with the permission of the court.”
[100]This sub-rule applies two further layers of discretion in the exercise of the Court’s powers. The Court has power, where a representation order has been made, to order that the Court’s judgment shall not be binding on all the represented persons. In the present case that discretion is unlikely to arise because any representation orders will be made at the end of the trial. If the Court does not want Teesport to be bound it will simply decline to include it in the representation order.[101]CPR r. 19.7(7) (b) is however directly relevant. If a representation order is made, the judgment in the action cannot be enforced against a non-party without the permission of the court. It is common sense that the claimant is much more likely to get permission to enforce against a person who has consented or submitted to representation than against one who has strenuously objected to it. Teesport wants to be joined, in which case it will be fully bound by the outcome of the action. If however it is represented only, and some point arises during the course of the trial which it would have wished to address but the representative either fails to do so or makes a value judgment not to do so, Teesport will be in a stronger position than any other represented person to object to enforcement.[102]The claimant says that r.19.7(7) is a safeguard for Teesport, enabling the question of fairness of the representation to be determined after the event. The claimant is satisfied that the procedures are fair and therefore that Teesport would be bound to fail in any challenge under r. 19.7(7)(b). However, I agree with Mr Martin that this is a matter not for the claimant but for the court to decide in determining whether to make a representation order in the first place. My understanding is that, if represented but not joined, Teesport is very likely indeed to refuse to contribute to the deficit without a permission application. That permission application will in effect re-litigate some of the issues which the court has already decided in the main action. The probability of satellite litigation of this nature is another reason why the court should be slow to order persons to be represented against their will.[103]I have also been asked by the claimant to take into account the question of conduct. I would stress the very proper conduct of the claimant and all the representative defendants and their respective advisers in exploring the options, providing liaison procedures, communicating with interested persons in a measured and careful manner and keeping all relevant persons informed. However, the claimant’s submissions go further than this, in that I have been asked to contrast Teesport’s conduct. In the circumstances I do not hold against Teesport its lack of cooperation in refusing to accede to the current representative structure. In so far as its lack of cooperation goes further than this, as demonstrated in its solicitors’ letter of 24 December 2008, I have been assured, as I have already said, that Teesport will if joined cooperate in the determination of the issues in these proceedings.[104]Lord Pannick also took me to two passages in witness statements filed on Teesport’s behalf which he asserted could only be construed as deliberately or at best recklessly misleading. Mr Martin has satisfied me that both those statements are capable of bearing a different interpretation. I attach no weight to the matter for present purposes.[105]Taking all relevant factors into account I have to balance the concerns of the claimant, second defendant and other affected persons as to efficiency, proportionality, delays, costs and equality of arms against Teesport’s objections to representation and its willingness to be unconditionally bound as a party to the proceedings.[106]Having performed that balancing exercise I cannot be satisfied that the Court faced with the application under CPR 19.7 would exercise its discretion to make a representation order in the face of Teesport’s objections.[107]In those circumstances, it seems to me that its presence as a party is desirable in the interests of resolving all the matters in dispute within CPR r. 19.2. I therefore have to exercise the discretion given to me by that rule in hearing the application under r. 19.4.[108]Teesport wants to conduct its own case with its own lawyers who have only its own interests at heart and who will act only on its own instructions. Teesport does not wish to trust to the other defendants to argue all the points that it may want to raise, for the reasons I gave at the outset. There are difficulties for both a representative (and its lawyers) and for the person represented where that person is unwilling to be represented.[109]It is true that Teesport has every opportunity to contribute to the proceedings through those others and that some of the specific matters mentioned in CPR r.1.1(2) as included in the overriding objective would be secured if Teesport were not joined.[110]However, I have no doubt that the fair course is to allow Teesport to be heard through its own voice with the corollary that it will be bound by the outcome of the action. To quote Lord Eldon, it is better to go as far as possible towards justice than to deny it altogether.[111]I therefore grant Teesport’s application.[112]I am told that there is an industry-wide interest in the decision in this case. I cannot stress too highly that questions of fairness and what best satisfies the requirements of the overriding objective have to be decided on the facts of each case.

Cited in 4 later judgments