Twin Benefits Ltd v Barker [2017] EWHC 1412 (Ch)

[2017] EWHC 1412 (Ch)

Case No HC-2016-000053

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 19 June 2017

Before

THE HONOURABLE MR. JUSTICE MARCUS SMITH

Between

TWIN BENEFITS LIMITEDClaimant

(1) IAIN PAUL BARKERDefendants

(2) CONFIANCE LIMITEDDefendant

Mr. Jonathan Seitler, Q.C. and Mr. Stephen Hackett (instructed by Mishcon de Reya LLP) for Claimant

Mr. Stephen Moverley Smith, Q.C. and Mr. Dakis Hagen, Q.C.(instructed by Memery Crystal LLP) for First Defendant

Hearing Hearing dates: 22 and 23 March 2017

Judgment Approved

Mr. Justice Marcus Smith:

[1]The First Defendant, Mr. Barker, set up a business called “121 Consulting” in 1991. 121 Consulting delivered management consultancy and project services, and was very successful. The business developed into a set of trading companies under a group holding company, Team 121 Holdings Limited (“Team 121 Holdings”). I shall refer to the group as the “Team 121 group”.

[2]By the spring or summer of 1998, Mr. Barker, who had a majority shareholding in Team 121 Holdings, was looking to sell. Since the group was considered to be worth £30m to £40m, the impact of capital gains tax on any such sale would be considerable. Mr. Barker therefore sought tax planning advice from, amongst others, a firm of solicitors called Baxendale Walker Solicitors. Mr. Paul Baxendale-Walker was the principal partner in Baxendale Walker Solicitors, and was involved in providing tax planning advice to Mr. Barker.

[3]As a result of the advice received, Mr. Barker set up a tax avoidance scheme which was based on the establishment of an employee benefit trust (“EBT”). Had the scheme been successful, it would have avoided a very significant liability to capital gains tax and, eventually, inheritance tax.

[4]On 6 October 1998, Team 121 Holdings entered into a trust deed (the “Trust Deed”) with an offshore trust company based in Jersey, Matheson Trust Co. (Jersey) Ltd (“Matheson”). By the Trust Deed, Team 121 Holdings constituted a trust (the “Trust”) by settling the sum of £100 on trust for beneficiaries defined as being present, past and future employees of the Team 121 group, and the families of those employees, but expressly excluding specified “Excluded Persons”, defined in Schedule 3 of the Trust Deed. The definition of Excluded Persons in Schedule 3 to the Trust Deed followed the wording of section 28(4) of the Inheritance Tax Act 1984, and was critical to the working of the tax avoidance scheme. It will be necessary to revert to the meaning of “Excluded Persons” later on in this Judgment.

[5]Mr. Barker, and a Mr. Speksnyder, were appointed protectors of the trust. Mr. Speksnyder subsequently ceased to be a protector (on 28 September 1999), and from then on Mr. Barker was the sole protector of the Trust.

[6]On 15 October 1998, Mr. Barker as grantor executed a deed declaring that he held all his shares in Team 121 Holdings (the “Shares”) on trust for the EBT (the “Deed of Gift”). This gift of the beneficial interest in the shares was, however, expressed to be conditional. The condition was that “in the event that the Inland Revenue determines in writing to the Grantor that, in respect of this transfer of the equitable interest in the Shares to the [EBT], the trusts of the [EBT] do not satisfy the conditions for exemptions from inheritance tax set out in Section 28 Inheritance Tax Act 1984 or do not satisfy the conditions for a no gain/no loss of disposal for the purposes of capital gains tax set out in Section 239 Taxation of Chargeable Gains Act 1992; then…the Trustees shall hold the Shares and any income arising to the Shares and any capital proceeds of disposal of the Shares and any income arising from such capital proceeds upon trusts absolutely for the Grantor”.

[7]The Deed of Gift, therefore, made provision in the event that the tax avoidance scheme failed to achieve the objectives that it had been set up to achieve.

[8]On 23 March 1999, Matheson as trustee of the Trust declared a sub-trust (the “Sub-Trust”). The beneficiaries of the Sub-Trust were termed the “Principal Beneficiaries”, which term was defined as follows:

“...the widow, children and remoter descendants and the mother and sisters of Iain Paul Barker who shall be living after his death…”

[9]The Shares were sold in mid-1999 for a substantial consideration.

[10]It is averred in paragraph 32 of the Particulars of Claim that the Sub-Trust received either the Shares and/or their proceeds, and this Judgment proceeds on that basis.

[11]Her Majesty’s Revenue and Customs (“HMRC”) began investigating the EBT in 2005 and, in 2010, HMRC issued three Notices of Assessment to Mr. Barker, asserting a liability to tax on the income and gains arising via the Trust and Sub-Trust. Mr. Barker sought to appeal against the Notices of Assessment to the First-tier Tribunal. However, during the course of this appeal, Mr. Barker reached a settlement with HMRC, which concluded in April 2013 and which involved Mr. Barker paying £11.3m to HMRC. (2). The Confiance Proceedings

[12]The settlement with HMRC was effectively made on the basis that Mr. Barker had failed effectively to give away the Shares, and that he could be taxed on their capital gains. Nevertheless, the proceeds of sale of the Shares remained in the Sub-Trust, of which Mr. Barker was not a beneficiary. Mr. Barker accordingly sought to wind up the Trust and the Sub-Trust, thereby avoiding on-going trustees’ costs and (more to the point) securing the return to him of as much of the assets held by the Trust and the Sub-Trust as possible.

[13]Mr. Barker therefore commenced proceedings against the trustee of the Trust. The trustee was no longer Matheson, but the Second Defendant, Confiance Limited (“Confiance”). I shall refer to the proceedings commenced by Mr. Barker as the “Confiance Proceedings”. Confiance was named as a defendant in the Confiance Proceedings.

[14]In addition to the trustee (Confiance), the beneficiaries of the Trust and of the Sub-Trust were joined as defendants. The beneficiaries of the Trust included former employees of the Team 121 group and their children. The beneficiaries of the Sub-Trust comprised the Principal Beneficiaries. Essentially, these were: i) Mr. Barker’s children and any unborn descendants. Mr. Barker has five children by three women: a) At around the time when the tax scheme was being considered, Mr. Baxendale-Walker introduced Mr. Barker to a Ms. Susan Glover, with whom Mr. Barker formed a personal relationship, resulting in the birth of twin children, Tom and Freya Barker, in 2001. Mr. Baxendale-Walker is the godfather of Tom and Freya. Mr. Barker and Ms. Glover’s relationship subsequently broke down. b) In 2004, Euan Barker was born (by Ms. Deborah Siddoway). c) In 2005, Lauren Chadwick was born (by Ms. Julie Chadwick). d) In 2006, Rowan Barker was born (by Ms. Siddoway). ii) Mr. Barker’s mother, Ms. Joan Barker. iii) Mr. Barker’s two sisters, Ms. Ingrid Heywood and Ms. Margot White.

[15]The following were, therefore, defendants in the Confiance Proceedings: i) First Defendant. Confiance itself (as trustee). ii) Second Defendant. Euan Barker. Ms. Alison Meek, a solicitor of Harcus Sinclair LLP, was appointed as litigation friend to Euan Barker, since he was a minor. Although (as shall be seen) this is controversial, Euan appears to have been joined for the purposes of representing all of Mr. Barker’s children. iii) Third Defendant. Mr. Stuart Brown. Mr. Brown was joined as a representative of beneficiaries of the Trust (that is, former employees of the Team 121 group and their children). iv) Fourth Defendant. Mr. Barker’s mother, Ms. Joan Barker. v) Fifth and Sixth Defendants. Mr. Barker’s two sisters, Ms. Heywood and Ms. White.

[16]The Confiance Proceedings sought to have the Trust and Sub-Trust declared void for breach of a condition precedent (namely, the conditional nature of the Deed of Gift, described in paragraph 6 above) or, alternatively, for mistake. The Confiance Proceedings did not go to trial, but were settled. Settlement negotiations were conducted by the parties to the Confiance Proceedings and a compromise was reached (the “Confiance Settlement”).

[17]As Euan Barker was a minor, Ms. Meek instructed Mr. Francis Barlow, Q.C. and Mr. Richard Dew to prepare an opinion as to whether the Confiance Settlement was for the benefit of Euan. That opinion was not before the Court in these proceedings.

[18]The Confiance Settlement was put before Asplin J. for approval on 25 July 2014 and by an order of that date (the “Asplin J. Order”) the Confiance Settlement was approved. I understand that the opinion of Mr. Barlow, Q.C. and Mr. Dew was before Asplin J.

[19]It is necessary to consider separately the terms of the Confiance Settlement and Asplin J. Order.

[20]Beginning with the Confiance Settlement: i) The Confiance Settlement defined two classes of beneficiary, the “Family Beneficiaries” (defined in clause 1(k)) and the “Employee Beneficiaries” (defined in clause 1(l)). Essentially, the identity of the Family Beneficiaries tracked the definition of Principal Beneficiaries in the Sub-Trust, whilst the definition of Employee Beneficiaries tracked the definition of beneficiaries in the Trust. ii) As part of the settlement, each of these classes had settled upon it on trust a sum of money. In the case of the Family Beneficiaries, this was £1 million. In the case of the Employee Beneficiaries, this was £500,000. These monies were set aside and paid out of the Trust (including any assets held by the Sub-Trust). iii) The balance of the funds held on trust were to be held by Confiance: a) On trust to pay and discharge the costs of the Confiance Proceedings and the costs occasioned in establishing the trusts for the Family Beneficiaries and the Employee Beneficiaries. b) Subject to the payment of these costs, any remaining monies on trust for Mr. Barker for his own use and benefit absolutely. iv) Clause 5 of the Confiance Settlement released Confiance from (I am paraphrasing) any Claims relating to the administration of the Trust by it or by any of its predecessor trustees. “Claims” were broadly defined in clause 1(o) as “all and any actions proceedings accounts costs claims and demands of whatsoever nature and howsoever arising and whether made directly or indirectly”.

[21]The matter came before Asplin J. on 25 July 2014, and the Asplin J. Order was made. This Order provided that: i) The Second Defendant, Euan, was appointed to represent for the purposes of the Confiance Proceedings the interests of all living unborn and unascertained persons who may be or become members of the class defined as the Principal Beneficiaries in the Sub-Trust. ii) The Third Defendant, Mr. Brown, was appointed to represent for the purposes of the Confiance Proceedings the interests of all living unborn and unascertained persons who may be or become members of the class defined as the “Beneficiaries” under the Trust. iii) The terms of the Confiance Settlement were approved: “AND THE COURT is satisfied that the terms of compromise are for the benefit of the Second Defendant and the absent family beneficiaries and the absent employee beneficiaries HEREBY APPROVES the terms of the compromise on behalf of the Second Defendant and the absent family beneficiaries and the absent employee beneficiaries AND HEREBY DIRECTS that the terms of compromise shall be binding on them…” iv) The Confiance Proceedings be stayed. There was a liberty to apply for the purposes of carrying the terms of compromise into effect. (3). These proceedings

[22]These proceedings were originally brought by Mr. Baxendale-Walker as Claimant against Mr. Barker (as First Defendant) and Confiance (as Second Defendant). The Claim Form was subsequently amended to substitute the present Claimant, Twin Benefits Limited (“Twin Benefits”), for Mr. Baxendale-Walker.

[23]Both Mr. Baxendale-Walker and Twin Benefits bring this claim as the assignee of the claims of Tom and Freya Barker. It will be necessary, in due course, to consider the various assignments that have been executed. These assignments are not, however, pleaded in the Particulars of Claim that have been filed on behalf of Twin Benefits. The Particulars of Claim do state, in paragraph 2, that Twin Benefits “holds any proceeds of the causes of action pleaded herein upon trust absolutely for Ms. Glover and her children Tom and Freya”.

[24]The Particulars of Claim set out the history of the EBT, the Trust and the Sub-Trust, the Confiance Proceedings and the settlement of those proceedings. Claims are advanced against both Mr. Barker and Confiance.

[25]It is unnecessary to consider further the claims made against Confiance. The claim against Confiance was struck out by order of Deputy Master Lloyd on 16 February 2017 by reason of Twin Benefits’ failure to comply with an “unless” order of the Court dated 1 December 2016 that Twin Benefits provide security for Confiance’s costs by 5 January 2017.

[26]As regards the claim against Mr. Barker, the allegations are as follows: i) Paragraph 15 asserts that Tom and Freya were owed fiduciary duties by Mr. Barker as protector of the trust. ii) Paragraph 31 states:

“By virtue of his role as protector of the EBT Mr. Barker owed fiduciary duties to the beneficiaries of the EBT and the Sub-Trust. Those fiduciary duties included one or more [of] the following: i. A duty not to put himself in a position where his own interests conflicted with those of the beneficiaries. ii. A duty not to act so as to favour his interests over those of the beneficiaries. iii. A duty not to act for his own benefit or for the benefit of a third party without the informed consent of the beneficiaries.” iii) In paragraph 79, it is alleged that Mr. Barker breached his fiduciary duty in the following ways (I omit the particulars provided in this paragraph, and simply list the headings): a) Causing or permitting inadequate growth in the Sub-Trust fund. b) Appropriating funds from the Sub-Trust fund. c) Failing to ensure Tom and Freya’s interests were represented adequately or at all in the settlement of the Confiance Proceedings. iv) Paragraph 81 provides: “Further or in the alternative Mr. Barker has been unjustly enriched at the expense of the beneficiaries of the Sub-Trust and is therefore liable on a restitutionary analysis to reinstate to the Sub-Trust fund such sums as the court may conclude were passed to Mr. Barker in breach of trust and/or in breach of fiduciary duty. The Claimant contends that sum is, at a minimum, the £11,500,000 obtained by Mr. Barker from the Sub-Trust’s fund in 2013, plus the Lillianne Receipt believed to be in the region of £5.5 million.” v) Paragraph 82 provides: “The Claimant further seeks an order under CPR 19.7(7) to the effect that Mrs. Justice Asplin’s order settling the Confiance Proceedings does not bind Tom and Freya and/or an order under CPR 3.1(7) that Mrs. Justice Asplin’s order be varied or revoked to achieve the same outcome or such outcome as the court thinks fit. The consequence of such an order is that the Sub-Trust fund should be wholly or alternatively partly reconstituted unless and until Mr. Barker can succeed in or settle litigation on the lines of the Confiance Proceedings against Tom and Freya.” vi) Finally, the prayer seeks relief under the following five heads: “(1) An Order setting aside Mrs. Justice Asplin’s order of 25 July 2014 and/or providing that it does not bind Tom and Freya Barker; (2) Orders to restore the Sub-Trust fund consequential on the order described above in such terms as the court thinks fit, together with such accounts and enquiries of the First Defendant’s dealings with the funds as the court thinks fit; (3) Further or in the alternative damages as aforesaid; (4) Such further order as the court thinks fit; (5) Interest as aforesaid.”

[27]The claims against Mr. Barker thus fall into three classes: i) Allegations of breach of fiduciary duty. ii) A claim in unjust enrichment or restitution. iii) A procedural claim amounting to a collateral attack on the representation orders made by Mrs. Justice Asplin in the Asplin J. Order pursuant to CPR 19.7 and/or a procedural claim based upon CPR 3.1(7) seeking to have the Asplin J. Order, or parts of it, set aside. (4). Service of the proceedings on Mr. Barker and Confiance and the present application

[28]Mr. Barker and Confiance are both domiciled in Guernsey. Since neither Mr. Barker nor Confiance is domiciled in the EU or the EEA, this is not a case falling within Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition of judgements in civil and commercial matters (recast) (“the Brussels I Regulation (Recast)”).

[29]Twin Benefits require permission to serve the claim form out of the jurisdiction pursuant to CPR 6.36. That permission was granted by Master Price by order dated 1 June 2016. The application was made, as is usual in these cases, ex parte. The application notice was dated 26 May 2016 and was supported by a witness statement of Ms. Alexandra Whiston-Dew (a solicitor at Mishcon de Reya LLP) of the same date (“Whiston-Dew 1”).

[30]As is considered in greater detail below, three requirements must be shown before the court will permit service of a claim or claims out of the jurisdiction: i) The claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i.e. a substantial question of fact or law or both. ii) The claimant must satisfy the court that there is a good arguable case that the claim falls within one or more classes of case in which permission to serve may be given. These classes – referred to in this Judgment as “Gateways” – are presently listed in paragraph 3.1 of Practice Direction 6B of the Civil Procedure Rules. The Gateways relied upon by Twin Benefits were two: a) Gateway (3) (i.e. paragraph 3.1(3) of Practice Direction 6B), where there is a necessary or proper party to a claim made against a defendant susceptible to the jurisdiction of the court (the so-called “anchor defendant”). b) Gateway (9) (i.e. paragraph 3.1(9) of Practice Direction 6B), where a claim is made in tort and either: i) Damage was sustained, or will be sustained, within the jurisdiction (Gateway (9)(a)); or ii) Damage which has been or will be sustained results from an act committed, or likely to be committed within the jurisdiction (Gateway (9)(b)). iii) The claimant must satisfy the court that England and Wales is clearly and distinctly the proper forum for the trial of the claims.

[31]Mr. Barker objects to this court assuming jurisdiction and by an application notice dated 6 July 2016 seeks: i) An order declaring that this court has no jurisdiction alternatively an order that the court should not exercise any jurisdiction that it may have; ii) An order setting aside service as against him.

[32]Confiance has not, so far as I am aware, made a similar application. However, as I noted in paragraph 25 above, the claim against Confiance was struck out on 16 February 2017.

[33]By the time of the hearing of Mr. Barker’s application, Twin Benefits no longer relied upon Gateway (3). It is difficult to see how Twin Benefits could successfully have invoked this Gateway – which relies upon the existence of an anchor defendant susceptible to the English jurisdiction – when all of the defendants to the proceedings (i.e. Mr. Barker and Confiance) were outside the jurisdiction. For this Gateway to have succeeded against Mr. Barker, Twin Benefits would have had to have established a separate ground of jurisdiction against Confiance. As it is, given Twin Benefits’ withdrawal of its reliance on Gateway (3), these are questions I do not have to grapple with, and I do not do so.

[34]Mr. Barker’s application was supported by a witness statement from Ms. Nikola Lowry-Lee (a solicitor at Memery Crystal) dated 6 July 2016 (“Lowry-Lee 1”).

[35]Subsequently, the following evidence (in addition to Whiston-Dew 1 and Lowry Lee 1) was filed on behalf of Twin Benefits: i) Three statements of Ms. Victoria Pigott (respectively, “Pigott 1”, “Pigott 2” and “Pigott 3”) dated 18 July 2016, 30 September 2016 and 8 March 2017. ii) A statement of Ms. Glover (her second in these proceedings, but the only statement of her’s placed before me, “Glover 2”) dated 9 March 2017. B. MR. BARKER’S CONTENTIONS AND THE STRUCTURE OF THIS JUDGMENT

[36]The three requirements that a claimant must satisfy in order to obtain permission to serve out of the jurisdiction were described in paragraph 30 above. Because the parties whom the claimant seeks to serve out of the jurisdiction ex hypothesi cannot be joined, applications to serve out of the jurisdiction are generally made ex parte. There is, on such applications, a duty on the applicant to make full and frank disclosure of the material facts, including adverse facts.

[37]If a party served pursuant to such an order is minded to challenge it, this will be done on the inter partes return date of the applicant’s original ex parte application for permission to serve out of the jurisdiction. At this point, the court will reconsider, and decide de novo, by way of rehearing, whether permission to serve out should be given.

[38]The question on the re-hearing is whether it was proper to grant permission on the date upon which the order to serve out was granted, not (in light of changed circumstances or fresh evidence) whether it would be right to grant it as at the time of the inter partes application.

[39]In this case: i) Neither party suggested that the circumstances were different between those pertaining at the time of the ex parte application before Master Price and those pertaining at the time of the rehearing before me. The only change relates to the Gateways on which Twin Benefits relied: as I have noted, Twin Benefits abandoned its reliance on Gateway (3). ii) There was some suggestion in the written submissions made on behalf of Mr. Barker that the evidence adduced by Twin Benefits before Master Price was not full or frank. That point was not developed before me by Mr. Barker, and (understandably) Twin Benefits did not address it in response. It would not be appropriate, in those circumstances, to consider the question of full and frank disclosure any further, and I proceed on the basis that the order of Master Price is not being challenged on this basis. iii) It became clear from the written and oral submissions made on Mr. Barker’s behalf that Mr. Barker contests jurisdiction on two grounds: a) First, that there was no serious issue to be tried on the merits. b) Secondly, there was no good arguable case that the claims pleaded by Twin Benefits fell within Gateway (9), reliance on Gateway (3) having been abandoned by Twin Benefits. There was no challenge by Mr. Barker to the third requirement, namely that the claimant must satisfy the court that England and Wales is clearly and distinctly the proper forum for the trial of the claims.

[40]In these circumstances, it is only necessary for me to consider: i) The first requirement: whether there is a serious issue to be tried. ii) The second requirement: whether the claims fall within one of the Gateways. In general terms, a claimant must show a good arguable case that its claim falls within one or more of the Gateways. Specifically, in this case, the Gateway relied upon by Twin Benefits is Gateway (9).

[41]I consider these requirements in turn below. Before I do so, it is necessary to make one thing clear. As regards both the first and the second requirement, these requirements must be established in relation to each claim advanced by the claimant. For this reason it will be necessary to consider separately each of the three classes of claim (identified in paragraph 27 above) articulated by Twin Benefits in its Particulars of Claim. C. THE FIRST REQUIREMENT: SERIOUS ISSUE TO BE TRIED (1). The law

[42]The requirement that there be a “serious issue to be tried” has been held to be the same as the “reasonable prospect of success” test contained in CPR Part 6.37: Bas Capital Funding Corp. v. Medfinco Ltd

[2003] EWHC 1798

at [153] (per Lawrence Collins J.); Carvill America Incorporated v. Camperdown UK Ltd

[2005] EWCA Civ 645

at [24] (per Clarke L.J.).

[43]In essence, the underlying rationale is that an English court should not subject a foreign litigant to proceedings which a defendant within the jurisdiction would be entitled to have summarily dismissed. The test, therefore, whilst important, is not a high one. A claim has a real prospect of success if its chances are better than fanciful. (2). The approach to the facts

[44]In terms of the factual submissions underpinning Twin Benefit’s case, Mr. Seitler, Q.C. was keen to impress upon me that, in opposing this application, Twin Benefits had been prevented from relying upon a set of privileged documents obtained from Ms. Meek. Twin Benefits had applied for a non-party disclosure order, which was contested by Ms. Meek and heard by Arnold J. on 2 February 2017. Arnold J. ordered disclosure of certain documents which were subject to common interest privilege. Mr. Seitler, Q.C. brought to my attention that upon Ms. Meek seeking to appeal this decision, Arnold J. commented:

“It does not strike me as a neutral position…The fact that it has been resisted so hard really does make one suspicious.”

[45]Arnold J. made another order before this hearing that, since the issue of whether the documents could be produced in the context of this application had not been resolved, Twin Benefits’ allegations of fact made in the pleadings should be treated as at least arguable. Twin Benefits also argued that Arnold J.’s suspicions supported its contention that a trial was the appropriate place for the resolution of these issues, rather than disposal by way of what effectively amounts to summary judgment.

[46]I do not consider the latter suggestion to be well-founded. It seems to me that I cannot – simply because a trial might be the appropriate place for the resolution of certain factual matters – allow that fact to override the rules regarding the court’s exercise of its exorbitant jurisdiction over defendants outside the jurisdiction. This might well be a factor to take into account at the third stage of the inquiry, but not at either the first or second stages.

[47]Twin Benefits’ first point – that allegations of fact in the pleadings should be treated as at least arguable – is, however, clearly right. When considering whether a claim has a real prospect of success, it is appropriate to take the same starting point as in summary judgment applications in relation to the facts pleaded by the claimant and upon which the claimant’s case is based, i.e. to take the pleaded facts as read, unless they are contradicted by documents upon which the respondent is relying. I should say that I have taken a similar approach in relation to factual statements made in the evidence served on behalf of Twin Benefits.

[48]In particular, therefore, I note the facts pleaded by Twin Benefits at paragraphs 55, 57, 61, 76 and 79 of the Particulars of Claim, which Mr. Seitler, Q.C. drew to my attention. They can be summarised as follows: i) The terms of the Confiance Settlement were negotiated before the Court had made any order that Euan Barker could represent Tom and Freya. No effort was made to consult Tom or Freya (or their mother, Ms. Glover) or make them aware of the Confiance Proceedings. ii) At the time of the Confiance Settlement, Mr. Barker’s relationship with Ms. Glover was very poor, whereas his relationship with his ex-wife Deborah Barker (and her son Euan) was good. iii) Mr. Barker chose to issue the Confiance Proceedings against only Principal Beneficiaries with whom he was on good terms and whom he anticipated would be amenable to a settlement favourable to him. iv) Asplin J. had before her little or no evidence as to Tom and Freya or Ms. Glover’s knowledge of or views on the Confiance Settlement or whether it was appropriate for Euan Barker to represent the twins. v) Mr. Baxendale-Walker has incurred the costs set out in paragraph 76 of the Particulars of Claim for the benefit of Tom and Freya. vi) Mr. Barker has made use of the Sub-Trust funds for his own purposes, and the other alleged facts specified in paragraph 79 of the Particulars of Claim, which Twin Benefits alleges constitute breaches of fiduciary duty by Mr. Barker towards the twins. These alleged breaches of fiduciary duty are summarised in paragraph 26(iii) above. (3). Mr. Barker’s contentions

[49]Mr. Barker contended that Twin Benefits’ claims had no reasonable prospect of success on the grounds set out in paragraph 28 of the written submissions made on his behalf. It was contended that: i) Mr. Barker, as protector, did not owe the fiduciary duties alleged in the Particulars of Claim, whether to Tom or Freya or anyone else. ii) Tom and Freya Barker did not have the locus standi to bring the claims now being brought by Twin Benefits. iii) Tom and Freya were, in any event, bound by the outcome of the Confiance Proceedings. iv) The chain of assignments to Twin Benefits was void.

[50]I consider these points in this order. (4).

(a) The terms of the Trust Deed

[51]The Trust Deed is dated 6 October 1998. Team 121 Holdings, as settlor or “Founder”, settled on a trustee (initially, Matheson, as “Original Trustees”) the sum of £100. The settlement was, in due course, augmented by the property transferred by way of the Deed of Gift.

[52]The Trust Deed defined the following terms: i) “Trustees” meant the Original Trustees or other trustees or trustee for the time being. ii) The “Trust Fund” meant the £100 originally settled and all property at any time added thereto by way of further settlement, accumulation of income, capital accretion or otherwise and all property from time to time representing the same. iii) The “Beneficiaries” were defined as follows: “…the present, past and future employees from time to time of the Founder and its subsidiaries and the wives husbands widows widowers children step-children and remoter issue of such employees and the spouses and former spouses (whether or not remarried) of such children and remoter issue and “Beneficiary” has a corresponding meaning PROVIDED THAT no Excluded Person shall be a Beneficiary”. iv) “Excluded Person” meant any of the persons named or described in Schedule 3 to the Trust Deed. Schedule 3 defined Excluded Persons as follows: “1. Each and every “Participator” (as defined in the Act) in the Founder. 2. Each and every person who has been a “Participator” (as defined in the Act) in the Founder within the ten year period prcceding the date of this Deed. 3. Each and every person who is “connected” with any such Participator (whether current or former) for the purposes of the Act. In this Schedule, references to “the Act” mean the Inheritance Tax Act 1984 and any statutory modification, amendment or consolidation of the same.” v) The “Protectors” were Mr. Barker and Mr. Speksnyder – although, as I have noted, Mr. Speksnyder ceased to be a Protector on 28 September 1999.

[53]It was common ground that Mr. Barker was a “Participator” within the meaning of the Inheritance Tax Act 1984: the relevant section is section 28. What was less clear was the proper construction of the definition of a person “connected with” the Participator. The Trust Deed was drafted on the premiss that – on the Participator’s death – persons who had been “connected with” the Participator when alive, would cease to be so connected on the Participator’s death.

[54]Unless this premiss was correct – that, on the death of the Participator, Excluded Persons would cease to be so – the EBT’s purposes could not be achieved. The whole point of the EBT was to enable persons “connected” with the Participator when alive, but who, on his death, would cease so to be “connected”, to benefit. In short, on the death of Mr. Barker, persons connected with him – including, in particular, his children – would cease to be Excluded Persons and therefore could become Beneficiaries under the Trust.

[55]It is unnecessary for me to decide this difficult point. It is sufficient to note that in professional negligence proceedings brought by Mr. Barker against Mr. Baxendale-Walker and Baxendale Walker Solicitors (

[2016] EWHC 664 (Ch)

), Roth J. concluded that interpreting the relevant legislation on the basis that Mr. Barker’s family could benefit from the EBT after his death was certainly a reasonable construction, and probably rather the better construction (at [155] to [156]). However, Roth J. did not decide the point or reach a concluded view (at [156]). I take the same approach: I proceed (without deciding) on the basis that the premiss on which the EBT was built was sound, but that the contrary could be argued.

[56]The Trust Deed goes on to provide:

“2. Subject to Clause 12 hereof the Trustees shall hold the Trust Fund and the income thereof UPON TRUST for all or any one or more exclusively of the others or other of the Beneficiaries in such shares and with such trusts and subject to such powers and provisions as the Trustees shall in their absolute discretion during the Trust Period by any deed or deeds revocable or irrevocable appoint. 3. Subject as aforesaid and subject to Clause 12 hereof the Trustees shall during the Trust Period hold the Trust Fund UPON TRUST to apply the income and capital thereof to all for the benefit of all or any one or more exclusively of the others or other of the Beneficiaries in such shares and in such manner generally as the Trustees shall in their absolute discretion think fit PROVIDED THAT the Trustees may if in their absolute discretion think fit accumulate the whole or any part of the income of the Trust Fund by investing the same and the resulting income thereof in any investments hereby authorised and adding the accumulations to the capital of the Trust Fund. … 8. The statutory power of appointing new and additional trustees hereof as varied by Schedule 1 to this Deed shall be vested in the Protectors. 8.1 In addition to the said statutory power as varied the Protectors shall have power at any time by deed to appoint any person to be an additional trustee thereof notwithstanding that the effect of any such appointment is to increase the number of trustees hereof beyond four. 8.2 Any Trustee for the time being hereof shall be entitled to resign from the trusts herein forthwith upon written notice of such resignation being delivered to the Protectors. 8.3 The Protectors shall have power to remove any Trustee from the trusts hereof by Deed and the grounds for exercise of such power shall not be limited to the grounds set forth in the Trustee Act 1925. … 11. Subject to Clause 12 hereof, the Protectors shall with the consent in writing of the Trustees have the power at any time by deed to alter or add to all or any of the provisions hereof in any respect PROVIDED THAT such power shall not be so exercised as to impose any new obligation or liability on the Founder. 12. No power or discretion hereby or bylaw conferred on the Trustees the Founder or the Protectors or any of them (notwithstanding anything to the contrary herein expressed or implied) be exercisable in such manner as to cause any part of the Trust Fund or the income thereof to be used to provide a Relevant Benefit or to become payable to or applicable for the benefit of the Founder or its subsidiaries PROVIDED THAT where the Trustees make any payment to or provide any benefit for a Beneficiary in the circumstances where the Founder or its subsidiaries are liable to account to the Revenue Authorities of the United Kingdom for income tax and/or national insurance contributions in respect of such payment or benefit then the Trustees shall pay to the Founder or its subsidiaries such sum as shall be required to fully discharge that liability.”

[57]Schedule 1 to the Trust Deed confers on the Trustees various additional powers including (at paragraph 1.2.18) “in the wider form to appoint any part or all of the Trust Fund on the trusts of any other existing settlement and to declare trusts of a new settlement whomsoever the trustees thereof may be”, subject to certain restrictions which are not material for present purposes.

[58]This is a power of appointment drawn in wide terms. Whether, as a matter of construction, the power is(i) a special (or limited) power or

(ii) a simple (general) power or

(iii) a “hybrid” power, lying somewhere between these extremes is not relevant for present purposes. It is sufficient to note that it was pursuant to this power that the Sub-Trust was established.

(b) The Deed of Gift

[59]As was described in paragraph 6 above, Mr. Barker, by way of the Deed of Gift dated 15 October 1998, gifted the Shares to be held upon trust on the terms of the Trust Deed. As has been described (see paragraphs 6 to 7 above), this gift was a conditional one.

(c) The Sub-Trust

[60]The Sub-Trust was made by Deed on 23 March 1999. Although the third recital of the Sub-Trust describes the Sub-Trust in these very terms (“sub-trust”), the description is actually a misleading one. A sub-trust generally arises where the beneficiary under a trust declares that he or she holds that beneficial interest on trust for someone else. This is not such a case. No trust over their interest in the trust property is declared by the Beneficiaries under the Trust.

[61]Rather, using the power conferred on the Trustees by paragraph 1.2.18 of Schedule 1 to the Trust Deed, the Trustees have appointed part of the Trust Fund to a new trust and have declared trusts of a new settlement.

[62]The Sub-Trust provided as follows:

“WHEREAS 1. Team 121 Holdings Limited…(“the Founder”) established a trust by Deed dated 6th October 1998 (“ the Principal Scheme”) of which the Original Trustee is the trustee. 2. The Original Trustee now declares itself the Original Trustee of the sum of One Hundred Pounds (£100) being part of the assets of the Principal Scheme at the date of this Deed (“the Assets”) on the terms set out below. 3. This trust shall be known as the First Team 121 Sub-Trust. NOW THIS DEED WITNESSETH as follows: 1. In this Deed unless the context otherwise requires the following expressions have the following meanings respectively: 1.1 “the Trustees” means the Original Trustees or other the trustees or trustee for the time being hereof; 1.2 “the Trust Fund” means the Assets all property at any time added thereto by way of further settlement accumulation of income capital accretion or otherwise and all property from time to time representing the premises respectively; … 1.4 “the Members” means the persons named in Schedule 2 to this Deed; 1.5 “the Principal Beneficiaries” means the widow, children and remoter descendants and the mother and sisters of Iain Paul Barker who shall be living after his death; and other expressions used in this Deed which are defined in the Deed establishing the Principal Scheme shall have the corresponding meaning in this Deed; 2. Subject to Clause 11 hereof the Trustees shall hold the Trust Fund and the income thereof UPON TRUST for all or any one or more exclusively of the others or other of the Principal Beneficiaries in such shares and with such trusts and subject to such powers and provisions as the trustees shall in their absolute discretion during the Trust Period by any deed or deeds revocable or irrevocable appoint and in default of any such appointment shall so hold UPON TRUST for the Members upon the terms of the Deed establishing the Principal Scheme. 3. Subject as aforesaid and subject to Clause 11 hereof the Trustees shall during the Trust Period hold the Trust Fund UPON TRUST to apply the income and capital thereof to or for the benefit of all or any one or more exclusively of the others or other of the Principal Beneficiaries in such shares and in such manner generally as the Trustees shall in their absolute discretion think fit PROVIDED THAT the Trustees may if in their absolute discretion think fit accumulate of the whole or any part of the income of the Trust Fund by investing the same and the resulting income thereof in any investments hereby authorised and adding the accumulations to the capital of the Trust Fund. … 7.1 The statutory power of appointing new and additional trustees hereof as varied by Schedule 1 to this Deed shall be vested in Iain Paul Barker. 7.2 In addition to the said statutory power as varied Iain Paul Barker shall have power at any time by deed to appoint any person to be an additional trustee thereof notwithstanding that the effect of any such appointment is to increase the number of trustees hereof beyond four. 7.3 Any Trustee for the time being hereof shall be entitled to resign from the trusts herein forthwith upon written notice of such resignation being delivered to the Founder. 7.4 Iain Paul Barker shall have power to remove any Trustee from the trusts hereof by Deed and such power shall be absolute and shall not be a fiduciary power and the grounds for exercise of such power shall not be limited to the grounds set forth in the Trustee Act 1925. … SCHEDULE 2 The Members “The Members” means the present, past and future employees from time to time of the Founder and its subsidiaries and the wives, husbands, widows, widowers, children, step children and remoter issue of such employees and the spouses and former spouses (whether or not re-married) of such children and remoter issue and “Member” has a corresponding meaning.”

NOW THIS DEED WITNESSETH as follows: SCHEDULE 2 The Members (d). Analysis

[63]I proceed on the basis that Mr. Barker behaved in the manner pleaded in paragraph 79 of the Particulars of Claim (summarised in paragraph 26(iii) above). Assuming Mr. Barker to have acted in the manner alleged, the question is whether such conduct constitutes a breach of fiduciary duty on the part of Mr. Barker. This, of course, turns on the nature of the duties assumed by Mr. Barker.

[64]The claim against Mr. Barker is said to arise out of his role as protector. Paragraph 31 of the Particulars of Claim (quoted in paragraph 26(ii) above) make this clear. Although, in argument, Mr. Seitler, Q.C. sought to expand the source of Mr. Barker’s fiduciary duties, so that they were said to arise not merely by virtue of Mr. Barker’s role as protector but by virtue of other factors, I do not consider that Twin Benefits is entitled to vary its claim in this way. The question of whether there is “a serious issue to be tried” must be judged on the pleadings. The averment in paragraph 31 of the Particulars of Claim is that “[b]y virtue of his role as protector of the EBT Mr. Barker owed fiduciary duties to the beneficiaries of the EBT and the Sub-Trust”.

[65]Mr. Barker was the protector of the Trust. I do not consider that this rendered him also the protector of the Sub-Trust or that his status as protector of the Trust caused him to owe any fiduciary duties to the beneficiaries of the Sub-Trust. The Sub-Trust is an entirely separate trust created by the trustees of the Trust using their power of appointment under the Trust. Although, of course, there is a close relationship between these two trusts – they had the same original trustees, and the Sub-Trust was constituted using funds appointed to it out of the Trust – the fact remains that they are distinct.

[66]The Sub-Trust does not appoint anyone as protector. There is no such thing under the terms of the Sub-Trust. There is no reason why the provisions of the Trust, which do appoint Mr. Barker as protector, should be read across into the Sub-Trust or that Mr. Barker’s responsibilities as protector of the Trust should give rise to any duties on his part in relation to the Sub-Trust.

[67]True it is that clause 7 of the Sub-Trust vests certain powers in Mr. Barker regarding the appointment and removal of trustees. However, in my judgment, these powers are personal to Mr. Barker and are not fiduciary in nature. Indeed, the Sub-Trust says so in terms in relation to Mr. Barker’s power of removal.

[68]More to the point, the duties that Mr. Barker owed as protector are too narrow to support the breaches of fiduciary duty that are alleged by Twin Benefits. There is an inevitable relationship between the existence of a fiduciary duty and the potential for the fiduciary to breach it. A “breach” of fiduciary duty will only be a breach if the facts said to amount to the breach actually infringe the duty. The point is clearly put in paragraph 8.19 of Hubbard, Protectors of Trusts, 1st ed (2013):

“To say that a protector will be liable for breach of fiduciary duty is useful only so far as the content of that usual duty can be established…in any case where an attempt is made to hold a protector to account for breach of ‘fiduciary’ duty, the content of that duty will need to be established on the basis of the terms of the trust instrument in question and any relevant statutory provisions.”

[69]Similarly, in Davidson v. Seelig

[2016] EWHC 549 (Ch)

at [15], Henderson J. stated that a protector’s powers “are fiduciary, and they must be exercised in the interests of the beneficiaries. The protectors do not, however, have a general power or duty to supervise the administration of the Settlements…”.

[70]In this case, even treating the powers conferred on Mr. Barker personally by the Sub-Trust as in reality powers given to him in his capacity as protector under the Trust, it is plain that these powers are far too narrow to sustain the allegations of breach maintained in the Particulars of Claim.

[71]There is nothing in the Particulars of Claim to suggest that the breaches pleaded in paragraph 79 of the Particulars of Claim (summarised in paragraph 26(iii) above) arose because Mr. Barker breached his fiduciary duty as protector. Thus: i) It is not alleged that Mr. Barker owed fiduciary duties in relation to his powers to appoint new and additional trustees (clause 8 of the Trust Deed; clause 7.1 of the Sub-Trust) or to remove trustees (clause 8.3 of the Trust Deed; clause 7.4 of the Sub-Trust). ii) It is not alleged that Mr. Barker breached these fiduciary duties. Indeed, it is impossible to see (certainly on the face of the pleading) how even the most egregious breach of these duties could result in the consequences pleaded in paragraph 79.

[72]The same point can be made the other way round. The fiduciary duties it is alleged Mr. Barker owed are pleaded in paragraph 31 of the Particulars of Claim (see paragraph 26(ii) above). Yet I can see no basis for the averment that these duties were owed by Mr. Barker. Certainly, neither the terms of the Trust Deed nor the terms of the Sub-Trust lend any support and, as a matter of law, it is wrong to assert that a protector owes the sort of “general” fiduciary duties that a trustee might be subject to.

[73]For these reasons, I conclude that there is no serious issue to be tried in relation to the allegations of breach of fiduciary duty. (5). Locus standi

[74]Even supposing the existence of a fiduciary duty capable of sustaining the allegations of breach of fiduciary duty contained in the Particulars of Claim, the question is whether Tom and Freya have standing to enforce these claims.

[75]As I have described, I proceed on the basis that, according to the terms of the Trust, Tom and Freya will cease to be Excluded Persons on the death of Mr. Barker and that, on that occurrence, they will be Beneficiaries as that term is defined in the Trust Deed.

[76]If this is right, Tom and Freya are Beneficiaries under the Trust and Principal Beneficiaries under the Sub-Trust if the same contingency occurs: namely, if they are living after the death of Mr. Barker.

[77]The law distinguishes between three different types of interest: i) Vested interests. Lewin on Trusts (19th ed. (2015)) draws a clear distinction between vested and contingent interests. It states at paragraph 1-048:

“A vested interest is an interest which is not subject to any condition precedent. Thus a beneficiary may have a vested interest in trust assets even though he is not entitled to immediate enjoyment of those assets under the terms of the trust. Interest may be vested in interest or vested in possession. An interest vested in possession confers an immediate right to present enjoyment of the property one interest that is merely vested interest confers a present right to future enjoyment. Both are distinct from a contingent interest which will not invest unless and until some requirement (other than merely the determination of a prior interest) is satisfied, for instance attainment of some specified age, or survival to a particular time, or the occurrence of some external event. Where property is held on trust “A for life, then to B absolutely” both A and B have a vested interest in the property albeit A has the immediate right to enjoy the property. A’s interest is vested in possession and B’s interest is vested in interest. By contrast, a beneficiary with a contingent interest has no vested right until the contingency occurs. A vested interest is transmissible and may be assigned by the beneficiary, and will form part of the beneficiaries estate upon his death.” ii) Contingent interests. Paragraph 1-055 of Lewin states: “A contingent interest is an interest which may become a vested interest but is dependent for that transformation upon a future event or occurrence. The difference between an estate vested in interest and a contingent interest is the difference between a “present right of future enjoyment” and “a right of enjoyment which is to accrue, on an event which is dubious or uncertain.”

As we have seen, in the case of a trust for A for life, then to B absolutely, both A and B have vested interests, and even if B predeceases A, then B is vested interest will pass to his estate. In contrast, a trust for A for life, then to B provided that B shall outlive A creates a contingent interest in favour of B because B will only obtain a vested interest if he is still alive when A dies.” iii) Unascertained interests. The third type of interest is not really an interest at all, and is referred to as either an “unascertained interest” or a mere spes. In Re. Midleton’s Will Trusts

[1969] 1 Ch. 600

at 607 to 608, Stamp J. stated:

“A gift to A, if on the death of B he shall be the heir of B or one of the next-of-kin of B or shall then have some other specified characteristic, confers on A a present interest called contingent and which becomes vested if, on the death of B, A has the required characteristic. On the other hand, a gift to whomsoever shall at the death of B, a living person, be the heir of B or one of the next-of-kin of B, or shall then have some other specified characteristic, in my judgment confers no interest upon anyone until the death of B, when you inquire who has the required characteristic. A gift in equal shares to the persons who at the death of B shall be members of the Athenaeum club no more confers an interest, contingent or otherwise, on the present members of the club who may hope to remain members until the death of B than it does to all those other persons in the world who may hope to be elected in the meantime and remain members at the death of B. Neither class has during the life of B, even if B be in articulo mortis, more than a hope of being or becoming one of the designated class, spes successionis.”

[78]Clearly, this is not a case of a vested interest. The question is whether Tom and Freya’s interests are contingent interests or unascertained interests. The significance of the difference is that, in the former case, Tom and Freya have standing to sue and have an interest in property that is transmissible; whereas in the latter case they have no locus standi and no transmissible interest.

[79]In my judgment, the interest of Tom and Freya, both under the Trust and under the Sub-Trust is a contingent interest and not an unascertained interest. Indeed, their case is the paradigm example cited in paragraph 1-055 of Lewin. Their interest certainly cannot be described as a mere spes successionis. This conclusion is consistent with the Asplin J. Order, which proceeded on the basis that Euan (whose interest was the same as that of both Tom and Freya) had a sufficient interest himself to be joined to the Confiance Proceedings and a similar interest so as to represent the other issue of Mr. Barker in those proceedings.

[80]Accordingly, I hold: i) That Mr. Barker, as protector, did not owe the fiduciary duties alleged in the Particulars of Claim, whether to Tom or Freya or anyone else; but ii) That, if such duties had existed, Tom and Freya would have had the standing to enforce such claims.

[81]In the circumstances, therefore, I find that there is no serious issue to be tried in relation to the allegations of breach of fiduciary duty. (6).

(a) The settlement

[82]The Confiance Proceedings were stayed by the Asplin J. Order on the terms described in paragraph 21 above. The terms of the Confiance Settlement that was approved by Asplin J. included: i) Release of Confiance (but not Mr. Barker) from any “Claims”. ii) Approval of the terms upon which the Trust and Sub-Trust were to be unwound. iii) Approval of the establishment of the Family Beneficiaries and Employee Beneficiaries trusts. iv) Approval that the balance of the funds held on trust, after the establishment of the Family Beneficiaries and Employee Beneficiaries trusts, the payment of the costs of establishing those trusts and the payment of the costs of the Confiance Proceedings, be held for the benefit of Mr. Barker for his own use and benefit absolutely.

(b) The claims of breach of fiduciary duty

[83]I have held that there is no serious issue to be tried in relation to the allegations of breach of fiduciary duty.

[84]Even if that conclusion were wrong, I do not consider that these claims for breach of fiduciary duty could be advanced without seeking to set aside the Confiance Settlement which, in turn, involves a contention that the Asplin J. Order approving the Confiance Settlement must be varied or revoked. This is obvious from the terms of the Confiance Settlement: i) Although there is nothing in terms in the Confiance Settlement to preclude the claims of breach of fiduciary duty inasmuch as they relate to causing or permitting inadequate growth in the Sub-Trust fund (paragraphs 79(1) to (3) of the Particulars of Claim), it is impossible to understand what interest Tom and Freya could have in such a claim. Their interest in the monies held on trust by way of the Trust and/or the Sub-Trust have been compromised by the Confiance Settlement and translated to an interest in the Family Beneficiaries trust. That is, after the Confiance Settlement, the entirety of their interest. ii) The other claims for breach of fiduciary duty are inextricably tied to the Confiance Proceedings and compromised by the Confiance Settlement. Thus, the appropriation of funds from the Sub-Trust fund is a matter squarely raised by Mr. Barker in the Confiance Proceedings (see his witness statement in those proceedings dated 12 July 2014). I note, of course, that the Particulars of Claim aver that this evidence was misleading. Paragraph 79(6) of the Particulars of Claim pleads:

“Further or in the alternative Mr. Barker breached his fiduciary duties by neglecting to include the Lillianne Receipt and the £11.5 million received in 2013 in the valuation of the Sub-Trust’s assets he gave to the court for the purposes of settlement of the Confiance Proceedings. The point is significant because, had the full value of the Sub-Trust fund been included in Mr. Barker’s evidence that might have influenced the court’s decision as to whether to approve the settlement of the Confiance Proceedings.”

This makes the connection between the Confiance Settlement and this aspect of Twin Benefits’ allegations of breach of fiduciary duty very clear. iii) The allegation that Mr. Barker acted in breach of fiduciary duty in failing to ensure that Tom and Freya’s interests were represented adequately or at all (paragraphs 79(7) to (11) of the Particulars of Claim) is obviously directly related to the representation orders made in the Asplin J. Order.

[85]Accordingly, I hold that the claims of breach of fiduciary duty advanced in the Particulars of Claim were compromised by the Confiance Settlement and the Asplin J. Order. Of course, the Particulars of Claim anticipate this, and seek to set aside, vary or revoke both the Confiance Settlement and the Asplin J. Order. Whether it is possible to do this in the present proceedings is a matter considered further below. For the present, my conclusion is simply that without setting aside the Confiance Settlement and the Asplin J. Order, these claims are unarguable and must fail.

(c) The restitution claim

[86]Similarly, the unjust enrichment/restitution claim advanced in paragraph 81 of the Particulars of Claim (set out in paragraph 26(iv) above) is not one that can be separated from the compromise sanctioned by the court in the Confiance Proceedings and has been compromised by the Confiance Settlement. Unless the terms of the settlement are set aside, there can be no question of unjust enrichment. (d). Setting aside the Confiance Settlement and the Asplin J. Order

[87]In this regard, I stress that I proceed on the basis that the factual allegations pleaded in the Particulars of Claim are true. In particular, I proceed on the basis that the interests of Tom and Freya were either inadequately represented before Asplin J. or not represented at all.

[88]If that is right, then the representation orders made in the Asplin J. Order may have been obtained on a false basis. That, as it seems to me, is what the Particulars of Claim aver, and that is what (for the purposes of determining this application only) I must accept is the case.

[89]However, unless and until these representation orders are varied or revoked or successfully appealed, they stand and they bind Tom and Freya and Tom and Freya’s successors in title (namely, Mr. Baxendale-Walker and Twin Benefits).

[90]In paragraph 82 of the Particulars of Claim, Twin Benefits sought an order under CPR 19.7(7) to the effect that Asplin J. Order “does not bind Tom and Freya”. CPR Part 19.7(7) provides as follows:

“Unless the court otherwise directs, any judgement or order given in a claim 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 law against a person who is not a party to the claim with the permission of the court.”

[91]It was Twin Benefits’ case that the right to make an application to the court under CPR Part 19.7(7) that the court should “otherwise direct” was a matter that could be pressed before me in proceedings altogether separate from those in which the representation order was made. In effect, it was Twin Benefits’ position that the right to apply under CPR Part 19.7(7) was a right that: i) Could be asserted in separate proceedings, ii) By a party other than the person by whom the application would ordinarily be made, presumably because the right to make the application had been transferred to that person.

[92]Twin Benefits’ assertion of a right to apply under CPR Part 19.7(7) amounted to an assertion that this was a right of action (i.e. a species of chose in action) capable of being asserted in other proceedings by an assignee of the original holder of the right of action.

[93]I do not consider that a right to apply under CPR Part 19.7 amounts to a right of action capable of being asserted in other proceedings, nor is it property capable of transfer. In Re. Marley Laboratory Limited [1952] 1 All E.R. 1057, Lord Evershed M.R. in the Court of Appeal said this about the suggestion that the right to make an application for costs was a chose in action (at 1058):

“… I think that the applicant’s argument is erroneous and that it rests on the hypothesis (which is also erroneous) that a chose in action includes the right of a party to an action to make an application to the judge for order for costs which the judge may or may not direct, and, therefore, I do not think that the applicant’s application was correctly made.”

[94]I consider that, as a general proposition, the “right” to apply to the court under the Civil Procedure Rules is a right entirely governed by those rules and by (to the extent applicable) the court’s inherent jurisdiction. Such “rights” are not private law rights subsisting between two parties. They are not capable of assertion or vindication by way of a separate cause of action. Nor are they rights capable of alienation or of transfer to another by the party who could have made the application.

[95]I reject, as unarguable, the proposition that an application under CPR Part 19.7(7) in respect of the Asplin J. Order could be made in proceedings other than the Confiance Proceedings.

[96]CPR Part 3.1(7) provides that “[a] power of the court under these Rules to make an order includes a power to vary or revoke the order”. For the same reasons as I have given in relation to CPR 19.7(7), I reject, as unarguable, the proposition that an application under CPR Part 3.1(7) in respect of the Aspin J. Order could be made in proceedings other than the Confiance Proceedings.

[97]There is a further reason – arising from the nature and terms of CPR Part 3.1(7) itself – as to why Twin Benefits’ CPR Part 3.1(7) application can only be made in the Confiance Proceedings. The principles on which the discretion under CPR Part 3.1(7) could be exercised were considered by the Court of Appeal in Tibbles v. SIG plc

[2012] EWCA Civ 518

at [39]. It is unnecessary to set out all of the principles articulated by Rix L.J. The first two, however, were as follows:

“(i) Despite occasional references to a possible distinction between jurisdiction and discretion in the operation of CPR 3.1(7), there is in all probability no line to be drawn between the two. The rule is apparently broad and unfettered, but considerations of finality, the undesirability of allowing litigants to have two bites at the cherry, and the need to avoid undermining the concept of appeal, all push towards a principled curtailment of an otherwise apparently open discretion. Whether that curtailment goes even further in the case of a final order does not arise in this appeal. (ii) The cases all warn against an attempt at an exhaustive definition of the circumstances in which a principled exercise of the discretion may arise. Subject to that, however, the jurisprudence has laid down the firm guidance as to the primary circumstances in which the discretion may, as a matter of principle, be appropriately exercised, namely normally only (a) where there has been a material change of circumstance since the order was made, or (b) where the facts on which the original decision was made were (innocently or otherwise) misstated.”

[98]Given the assumed facts on which I am proceeding, it is clearly arguable that the facts on which Asplin J.’s original decision was based were (innocently or otherwise) misstated. However, I consider that any such application, if made, must be made in the Confiance Proceedings. I say this for the following reasons: i) I have, in these proceedings, no power to make a representation order in respect of parties in other proceedings. That order could only be made – and was in fact made – by Asplin J. in the Confiance Proceedings. ii) CPR Part 3.1(7) accords the court that has the power to make a particular order, the power to vary or revoke it. But I have – in these proceedings – no such power to make the representation order; and so, no power to vary or revoke it. iii) I consider that the Court of Appeal, in Tibbles, was proceeding on the assumption that an application to vary or revoke an order would be made in the same proceedings as the order was originally made. iv) Equally, as a matter of procedural common sense, it makes no sense for Twin Benefits (which was not a party to the Confiance Proceedings) to apply in other proceedings to vary or revoke an order made in respect of two other parties (Tom and Freya) not party to either these proceedings or the Confiance Proceedings in circumstances where the representative party (in whose favour the representation order was made) – Euan – is only party to the Confiance Proceedings. (7). The effectiveness of the chain of assignments to transfer rights to Twin Benefits

[99]The assignments by way of which Twin Benefits brings these proceedings are as follows: i) The 18 December 2015 Assignment. By a deed of assignment dated 18 December 2015, Tom and Freya (as “Assignors”) assigned to Mr. Baxendale-Walker with immediate effect all litigation rights, title, interest and benefit in and to the Causes of Action and the Potential Proceedings with effect from the Effective Date.

(A) ) of the deed as follows:

“The Assignors are the potential claimants in a claim to be brought by them and one other in the High Court of Chancery Division in relation to the dealings with (i) a Deed of Trust dated 6 October 1998 establishing an employee benefits scheme known as the Team 121 Holdings Limited Employee Benefits Trust and Shares Scheme and rights or expectancies or interests under (ii) The Iain Barker Guernsey based pension scheme; (iii) Ilex Associates FURBS (the “Potential Proceedings”) seeking equitable compensation for breach of fiduciary duty and on other grounds, damages for negligence and tortious interference and conspiracy, declarations of indemnity, all necessary accounts, inquiries and further or other relief, interest and costs (the “Causes of Action”). It will be noted that these definitions of “Potential Proceedings” and “Causes of Action” are circular. These terms are defined by reference to the Assignors as “potential claimants in a claim to be brought by them and one another in the High Court of Justice Chancery Division”

. Although, to an extent, the subject matter of these future proceedings is circumscribed by the reference to dealings with (i) the Deed of Trust, (ii) the Iain Barker Pension scheme and (iii) Ilex Associates FURBS, nevertheless the precise ambit of the assignment is actually only crystallised by the scope of the proceedings ultimately issued. b) In consideration of the assignment, Mr. Baxendale-Walker agreed to pay the sum of £1,000 plus 90% of the damages or settlement sum proceeds arising from any litigation conducted by him or his assigns. ii) The 19 January 2016 Assignment. By a contract of assignment dated 19 January 2016, Tom and Freya (as “Assignors”) assigned to Mr. Baxendale-Walker all rights they had in relation to the Confiance Proceedings. The consideration paid by Mr. Baxendale-Walker in respect of this assignment was the sum of £1,000. iii) The 8 April 2016 Assignment. By a contract of assignment dated 8 April 2016, Mr. Baxendale-Walker assigned to Twin Benefits (on terms that it is unnecessary to set out): a) The rights that had been assigned to him by Tom and Freya pursuant to the 18 December 2015 Assignment. b) The rights that had been assigned to him by Tom and Freya pursuant to the 19 January 2016 Assignment. iv) The 10 May 2016 Assignment. By a deed of assignment dated 10 May 2016, Tom and Freya assigned to Twin Benefits such rights as they might have under the Trust and/or under the Sub-Trust and/or under any “Potential Implied Trust” arising because of the voidness, non-binding nature, variation and/or revocation of the Asplin J. Order.

[100]I have found that: i) The procedural claims advanced by Twin Benefits, based on CPR Parts 19.7(7) and 3.1(7) are not private law rights capable of assignment. To the extent that the assignments purport to transfer or assign such rights, they are not so much void as ineffective. ii) The claims for breach of fiduciary duty are either: a) Unsustainable because the fiduciary duty does not exist; or b) Unsustainable because any claims have been compromised by way of the Confiance Settlement. Again, to the extent that the assignments purport to transfer or assign such rights, they are not so much void as ineffective because the rights purportedly assigned do not exist by reason of the compromise. iii) The restitutionary claim is unsustainable, again, because of the Confiance Settlement, and the position is as in the case of the claims for breach of fiduciary duty.

[101]In these circumstances, it is unnecessary for me to decide the question of the validity of the assignments. Although, in case this matter were to go further, I would ordinarily be inclined to determine the question of whether the assignments are capable of transferring Tom and Freya’s causes of action to Twin Benefits, in this case it is quite difficult for me to do so, because inevitably the question of the validity of an assignment is coloured by the nature of the right being assigned. Thus: i) The scope of the 18 December 2015 Assignment is defined by reference to the scope of these very proceedings. That, in itself, is unsatisfactory enough. More to the point, however, is the fact that I have concluded that the causes of action pleaded in those proceedings either do not exist, or are unarguable, or have been compromised in other, separate, proceedings (i.e. the Confiance Proceedings and the Confiance Settlement). ii) The scope of the 19 January 2016 Assignment is defined by reference to the Confiance Proceedings, which have been settled. iii) The 8 April 2016 Assignment merely adds a further link to the chain, and effects an assignment of the rights purportedly transferred to Mr. Baxendale-Walker pursuant to the 18 December 2015 Assignment and the 19 January 2016 Assignment to Twin Benefits. iv) By the 10 May 2016 Assignment, Tom and Freya purported to transfer to Twin Benefits their rights under the Trust and under the Sub-Trust. By virtue of the Confiance Proceedings and the Confiance Settlement, neither of these trusts any longer exists. Nor, given that the Asplin J. Order continues to stand, can it seriously be suggested that Tom and Freya have any rights arising out of a “Potential Implied Trust”. Moreover, I have held that the Asplin J. Order cannot be revoked or varied in these proceedings.

[102]In these circumstances, it is very difficult to discern any subject-matter to any of these assignments, and that is what I hold. For the reasons I have given elsewhere in this Judgment, the assignments transfer nothing because there was nothing to transfer.

[103]Mr. Barker sought to contend that the assignments in this case were void because neither Mr. Baxendale-Walker nor Twin Benefits had any genuine commercial interest in the enforcement of the claim of another, relying on the statement to this effect in the speech of Lord Roskill in Trendtex Trading Corporation v. Credit Suisse [1982] A.C. 679 at 703. Given the findings that I have made in relation to the assignments, I do not consider that it is possible for me to evaluate the commercial interest in Mr. Baxendale-Walker or Twin Benefits seeking to enforce rights they claim to have, but do not have, pursuant to these assignments. I therefore do not consider this particular question any further. (8). Conclusions

[104]For the reasons that I have given, the Particulars of Claim disclose no serious issue to be tried on the merits. For that reason alone, the order of Master Price permitting service out and the service of the proceedings out of the jurisdiction on Mr. Barker must be set aside. D. THE SECOND REQUIREMENT: A GOOD ARGUABLE CASE THAT THE CASE FALLS WITHIN ONE OR MORE OF THE GATEWAYS (1). The law

[105]At common law, the court had no power to permit claims to be served abroad. Power to do so was introduced by the Common Law Procedure Act 1852; was from 1883 in Order 11, rule 1 of the Rules of the Supreme Court; and since 2000 has been provided for by CPR Part 6.36 and paragraph 3.1 of Practice Direction 6B.

[106]All of the Gateways listed in the Practice Direction presuppose some connection – apart from mere presence in the jurisdiction when served – with England and Wales. The burden of demonstrating that a claim falls within one of the Gateways lies on the party seeking to serve out of the jurisdiction: i) Where the facts required to found jurisdiction are disputed, the applicant must show a good arguable case that those facts are true. The court will not make any factual determination intended to be binding at trial. The test has two strands, a relative one and an absolute one. The relative test is whether, on the evidence before the court, the applicant has much the better of the argument (see, e.g. Canada Trust Co. v. Stoltenberg (No. 2) [1998] 1 W.L.R. 547 at 555 (per Waller L.J.). But relative plausibility is only a necessary and not a sufficient condition. There must – and this is the absolute part of the test – be some substance to the case articulated by the applicant (see Brownlie v. Four Seasons Holdings Inc.

[2015] EWCA Civ 655

at [23] (per Arden L.J.). Because this is a question of exorbitant jurisdiction, the evidence must achieve an acceptable level of quality and adequacy, albeit that the standard to be attained is not that of succeeding on a balance of probabilities. ii) Where there is a pure point of law, not involving a factual dispute, on which jurisdiction depends, the court should normally decide it: see Altimo Holdings and Investment Ltd. V. Kyrgyz Mobil Tel Ltd

[2011] UKPC 7

at [81] (per Lord Collins). (2). The ambit of Gateway (9)

[107]Gateway (9) provides that a claimant may serve a claim form out of the jurisdiction with the permission of the court where:

“A claim is made in tort where – (a) damage was sustained, or will be sustained, within the jurisdiction; or (b) damage which has been or will be sustained results from an act committed or likely to be committed, within the jurisdiction.”

[108]On behalf of Mr. Barker, Mr. Stephen Moverley Smith, Q.C. advanced the short contention that the claims for breach of fiduciary duty (described in paragraphs 26 and 27(i) above) were not claims in tort and so could not fall within Gateway (9).

[109]As I have noted, these claims for breach of fiduciary duty are but one of three classes of claim pleaded in the Particulars of Claim. The other two are the restitutionary claim (see paragraphs 26(iv) and 27(ii) above) and the procedural claims (see paragraph 26(v) and 27(iii) above). It is important to be clear that neither of these claims is capable of falling within Gateway (9): i) The procedural claims – for the reasons given in paragraphs 87 to 98 above – are not private law claims at all. They are applications made during the course of existing proceedings before the English Courts and cannot, in my judgment, fall under any head of Practice Direction 6B. ii) A restitutionary claim – a claim for unjust enrichment – is not a tortious claim. It is not necessary in this judgment to consider the precise borderline between tort and restitution. This is not a “difficult” case, where (for instance) restitution is claimed as a remedy arising out of a tort committed by the defendant: see Mitchell, Mitchell & Watterson (eds.), Goff & Jones: The Law of Unjust Enrichment, 9th ed. (2016) at paragraphs 1-03 to 1-05. This is plainly a restitutionary claim which has its own Gateway, Gateway (16). Gateway (16) is framed as follows:

“A claim is for restitution where – (a) the defendant’s alleged liability arises out of acts committed within the jurisdiction; or (b) the enrichment is obtained within the jurisdiction; or (c) the claim is governed by the law of England and Wales.”

That Gateway has not been relied upon here. For the reasons I have given, however, I do not consider that, even if Gateway (16) had been relied upon, Twin Benefits could have shown a good arguable case that the restitutionary claim fell within Gateway (16).

[110]There is no Gateway specifically designed for alleged breaches of fiduciary duty. Although Gateways (12) to (15) deal with “claims about trusts, etc”, none of them clearly applies to cases of breach of fiduciary duty. Mr. Seitler, Q.C., contended that it would be odd in the extreme for it not to be possible to serve out of the jurisdiction in cases where a breach of fiduciary duty was alleged.

[111]The problem with a claim for breach of fiduciary duty is that the claim is difficult to characterise, and (depending on what, exactly, is alleged) is capable of different characterisations. A fiduciary duty may sometimes be regarded as contractual (and so arguably falling within Gateway (6)); sometimes tortious (and so arguably falling within Gateway (9)); and sometimes as giving rise to a claim against a defendant as constructive trustee (and so arguably falling within Gateway (15)). In Yeo, Choice of Law for Equitable Doctrines 1st ed. (2004), the author readily acknowledges that the categorisation of fiduciary duties for choice of law purposes means that some fiduciary duties are analysed as contractual (see paragraph 7.25), some as tortious (see paragraph 8.71). In paragraphs 7.30 to 7.32, it is stated:

“7.30 For choice of law purposes, the overlapping sources may be considered. A fiduciary duty may arise because one party has voluntarily undertaken the obligation. Scott said: “A fiduciary is a person who undertakes to act in the interest of another person. It is immaterial whether the undertaking is in the form of a contract [or] is gratuitous.”

Where the fiduciary duty derives from a voluntary undertaking in an agreement, whether it amounts to a contract or not in domestic law, the contract analogy for the purpose of choice of law is very strong. Even if the voluntary assumption is made without actual agreement, the context of a consensual relationship also suggests the appropriateness of a contractual analysis. 7.31 A fiduciary obligation may arise because one party has voluntarily placed himself in a position to which the obligation normally attaches, resulting in the reasonable expectation of the other that the former would not act in his own interest. If the context is consensual, the argument in the previous paragraph applies. The duty may be imposed where a person assumes an office carrying fiduciary obligations, for example, as a trustee, executor, administrator, agent, guardian, or liquidator. Many of these offices are the subject of existing choice of law categories which may provide analogies for analysing duties arising in these contexts. 7.32 Some legal systems may also impose what are sometimes labelled “fiduciary”obligations between strangers to further some legal objective. A stranger to a trust or fiduciary relationship who commits a wrong against the beneficiary, for example, by assisting in the breach of trust or fiduciary duty, is sometimes said to owe a fiduciary duty to the beneficiary. A stranger may owe a fiduciary duty to return money or property to another, where he has been unjustly enriched at the expense of the claimant, was received property which the law deems to belong to the claimant. The categories of tort, restitution, and property provide analogies.”

[112]In Henderson v. Merrett Syndicates Limited [1995] 2 A.C. 145, Lord Browne-Wilkinson expressly noted that a claim in equity for breach of fiduciary duty could amount to the same thing as a claim in tort for negligent transaction of duties (at 205). He also noted (at 206) the dangers lying in the breadth and fluidity of the concept of breach of fiduciary duty.

[113]So far as the Gateways enumerated in Practice Direction 6B are concerned, I consider the position to be as follows: i) The mere fact that Gateway (6) uses the label “claim…made in respect of a contract” and Gateway (9) “claim…made in tort” is insufficient to exclude a breach of fiduciary duty from the ambit of the Gateway provided that breach is in substance a contractual claim (for the purposes of Gateway (6)) or in substance a tortious claim (for the purposes of Gateway (9)). ii) In my judgment, the process of determining the ambit of the Gateways in the Practice Direction “falls to be undertaken in a broad internationalist spirit in accordance with the conflict of laws of the forum”: Raiffeisen Zentralbank Österreich AG v. Five Star trading LLC [2001] Q.B. 825 at [26] (per Mance L.J.). iii) Of course, there will be cases where a claim does not in substance fall within a Gateway. In such a case, it is clear that service out cannot take place. Thus, in Kitechnology BV v. Unicor GmbH Plastmaschinen [1995] F.S.R. 765 at 777 to 779, a claim for breach of an equitable obligation of confidence did not fall within Gateway 9, and a new Gateway (Gateway (21)) had to be inserted into the rules. On the other hand, in Vidal-Hall v. Google Inc.

[2015] EWCA Civ 311

at [51], the Court of Appeal held (after some debate) that “misuse of private information should now be recognised as a tort for the purposes of service out of the jurisdiction”.

[114]Accordingly, I reject the contention that simply because Twin Benefit’s claims fall within the rubric of breach of fiduciary duty, there is no Gateway that can be used to serve out of the jurisdiction. The question, in each case, is what, in substance, is the nature of the claim being asserted.

[115]It seems to me that the second type of breach of fiduciary duty asserted by Twin Benefits (misappropriation of funds) might well be capable of amounting in substance to a tort, but that the first type (causing or permitting inadequate growth) probably was not and that the third type (failing to ensure adequate representation in the Confiance Proceedings) certainly was not.

[116]However, I was not addressed on the points and, for the reasons I have given, even if all of these alleged breaches of fiducuiary duty were capable of being regarded as in-substance torts, I do not consider that Twin Benefits could have shown a good arguable case that these claims fell within Gateway (9) for the reasons given in Section C above. E. DISPOSITION

[117]For the reasons I have given, Mr. Barker’s application succeeds. The order of Master Price permitting service out and the service of the proceedings out of the jurisdiction on Mr. Barker must be set aside.