Analysis
A member of the company died in 2006, leaving his shares by his will to be held on trust. In 2007 the first petitioner and one other executor and trustee took out a grant. In 2014 the second executor and trustee was replaced by an order under s.50 Administration of Justice Act 1985.
By a deed dated 14 July 2015 the replacement executor and trustee himself retired as trustee and was replaced by the second petitioner. That deed did not expressly vest any assets in the new trustee, nor was there any evidence before the court that the deceased’s shares had been vested in the trustees by the executors.
The petition was issued in November 2016 by the petitioners ‘in the capacity as the trustees’ of the deceased brother’s will trust. The petition was defended, in part, on the basis that the trustees had no standing to bring the claim.
On 15 June 2018, only days before trial, a further order under s.50 was made removing the executor who had retired as trustee in 2015 and replacing him with the second petitioner. At the outset of trial the petitioners sought permission to re-re-amend the petition in order to plead their status as both trustees of the will trust and personal representatives of the estate.
The respondents argued that if the amendment were permitted, the previous executor (between 2014 and 2018) would have to give disclosure and also support the averments in the pleadings. Evidence was provided to the court that the previous executor was willing to do so.
The issues to be determined were:
A. Were the deceased’s shares now vested in the petitioners such that they had standing to bring a claim under s.994 Companies Act 2006?
B. If the said shares were not so vested at the time the petition was issued, did that render the proceedings a nullity, or did the court have power to remedy the defect?
C. Should the proposed amendment be allowed?
Held
1) The making of an order replacing an executor under s.50 Administration of Justice Act 1985 automatically vests the deceased’s estate in the new executor. It cannot be supposed that the legislature would have intended the transfer of the powers and duties of a personal representative without estate to which they are to be applied. Thus the 2014 order vested the deceased’s shares jointly in the new and existing executors. The automatic vesting of trust assets in new trustees provided by s.40(1)(b) Trustee Act 1925 does not apply to ‘any share, stock, annuity or property which is only transferable in books kept by a company …’ – s.40(4)(c). Accordingly, the shares were not vested in the new trustee by the 2015 deed. Nevertheless, the effect of the further order made shortly before trial was to vest the deceased’s estate jointly in the new and existing executors, such that they did have standing to bring a claim under s.994 Companies Act 2006.
2) If a cause of action belonging to two persons jointly is sued upon by only one of those entitled and, contrary to r.19.3 CPR, the others are not made defendants, the proceedings are not thereby rendered invalid unless the court so orders, and the court may remedy the defect if it thinks fit – r.3.10 CPR.
3) Although the application to amend was made late and the problem of standing ought to have been identified earlier, allowing the amendment would not require the adjournment of the trial or require substantial further evidence to be considered, nor would it involve any change to the allegations of fact to be tested at trial – Quah Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm) applied. Accordingly, the application would be allowed.
Permission given to amend the petition.
JUDGMENT HHJ PAUL MATTHEWS: [1] This is my judgment on an application to re-re-amend the petition in these proceedings under s994 of the Companies Act 2006, complaining of conduct unfairly prejudicial to the interests of the petitioners. The application has come on for hearing and decision at the outset of the trial of the petition. …Continue reading "McCallum-Toppin & anr v McCallum-Toppin & ors [2018] WTLR 531"