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Dispute Resolution analysis: This decision represents an expansion in the understood scope of CPR r.19.8A with claims in respect of property subject to constructive trusts being included within the scope of the definition of “property subject to a trust”. This will potentially be a very useful tool in fraud claims which can be notoriously protracted and difficult from a case management perspective.
This judgment, best viewed as a pragmatic exercise in case management as part of a protracted and highly complex piece of multi-party fraud litigation, appears to have significantly expanded the understood scope of CPR r.19.8A. This has always been a useful provision for binding non-parties in the context of trusts and estate litigation. In this decision, Foxton J held that references in that provision to “property subject to trust” was broad enough to include property subject to a constructive trust. The court also had power within its inherent jurisdiction to bind non-parties to a judgment, provided that power was not exercised in a manner inconsistent with the language of existing provisions such as CPR r.19.8A. Finally, this judgment demonstrates that even complex case management hearings involving many different parties such as this one can take place during the restrictions imposed by the COVID-19 pandemic. The judge plainly felt that instructions could be given and parties could participate despite the lockdown restrictions. Applications to adjourn hearings should not succeed unless the parties can demonstrate real prejudice caused to them by the hearing proceeding remotely.
This was an important case management decision, the latest in a series made in the context of a protracted and highly complex fraud claim brought by the Serious Fraud Office (“SFO”) in relation to the fraudulent activities of Dr Gerald Smith. In broad terms, the underlying proceedings require the court to determine competing claims to interests in a variety of assets. This hearing sought to determine an application by a group referred to as the Settlement Parties to include within the scope of the proceedings, assets referred to as the Identified Underlying Assets. In addition to orders relating to service, the Settlement Parties sought the following orders:
Each of the orders sought were made by Foxton J. He first had to address requests by a number of parties that the hearing be adjourned, broadly as a result of the impact of the COVID-19 pandemic and the difficulties they claimed to face in participating constructively in the hearing. These applications were all dismissed. The judge addressed the specific reasons given by each of the parties seeking an adjournment but did not accept that any had provided a good enough reason to adjourn the hearing. It was a proper exercise of case management for the claims in relation to the Identified Underlying Assets to be dealt with as part of the main proceedings and for the Additional Parties to be joined as a result. The judge was content that the date proposed by the Settlement Parties for those claiming an interest in the Identified Underlying Assets was adequate and fair. This order was, therefore, made. Finally, the judge used CPR r. 19.8A as a jurisdictional basis for making the order binding on any parties who failed to advance their claims following advertisement and debarring from those persons from raising those arguments at a later date.
This article was first published by Lexis PSL on 22 May 2020.
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