England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE CHANI 98/1158/3

COURT OF APPEAL (CIVIL DIVISION) CHANI 98/1159/3

(Mr John Martin QC) Royal Courts of Justice

Strand, London WC2

Thursday, 8th October 1998

B e f o r e :

LORD JUSTICE NOURSE

LORD JUSTICE WALLER and

SIR IAIN GLIDEWELL

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(1) JOHN WETH

(2) JAMES MUGGLETON Plaintiffs

-v-

(1) HER MAJESTY'S ATTORNEY GENERAL

(2) ADRIAN JOHN LAWRANCE RANDALL

(3) JILLIAN WILKINSON

(4) THE CHARITY COMMISSIONERS FOR ENGLAND AND WALES

Defendants

AND

JOHN WETH Plaintiff

-v-

HER MAJESTY'S ATTORNEY GENERAL

(2) THE CHARITY COMMISSIONERS FOR ENGLAND AND WALES

Defendants

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Computer Aided Transcript of the Palantype Notes of

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MR G NEWEY (MR S ATKINS 8.10.98 only) (instructed by the Treasury Solicitor, London SW1) appeared on behalf of the Appellant Charity Commissioners for England and Wales.

MR W HENDERSON (instructed by the Treasury Solicitor, London SW1) appeared on behalf of the Respondent Attorney General.

MR J WETH , the Respondent Plaintiff, appeared in person.

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J U D G M E N T

(As Approved by the Court)

Crown Copyright

Thursday, 8th October 1998

LORD JUSTICE NOURSE: The question on these appeals is whether the Charity Commissioners ought to be joined as respondents to appeals against orders made by them, under section 18(1)(vii) and (2)(i) respectively of the Charities Act 1993, for the appointment of a receiver and manager in respect of the property and affairs of a charity and for the removal of two of its trustees.

The charity was formerly called the Society of Christ the Sower Trust until it was renamed the Little Gidding Trust earlier this year. Two of its trustees and committee members were John Weth and James Muggleton. Mr Weth was also its treasurer. By an order ("the first order") made on 4th February 1997 the Commissioners, in pursuance of section 18(1)(vii), ordered that Adrian John Lawrance Randall be appointed receiver and manager in respect of the property and affairs of the charity. By a further order ("the second order") made on 17th December 1997 the Commissioners, in pursuance of section 18(2)(i), ordered that Mr Weth and Mr Muggleton be removed as trustees and committee members of the charity.

By originating summonses issued in the Chancery Division on 24th April 1997 and 16th January 1998, Mr Weth and Mr Muggleton, as plaintiffs, sought, by way of appeal pursuant to the 1993 Act, the setting aside of the first and second orders respectively. The Attorney General, Mr Randall and another individual were made defendants to the proceedings relating to the first order and the Attorney General and four individuals (against whom the proceedings were later discontinued) were made defendants to the proceedings relating to the second order. The Commissioners were not made defendants to either proceedings. Mr Muggleton was later struck out as a plaintiff in the proceedings relating to the second order, in which Mr Weth has since been the sole plaintiff. It is important to state at the outset that each originating summons includes allegations of bias and misconduct on the part of the Commissioners.

On 3rd April 1998 Master Dyson gave directions for the trial successively of both proceedings, including directions that all deponents should attend for cross-examination on their affidavits unless notified to the contrary in writing by the opposing party. Two of the Commissioners' officers have sworn affidavits in the proceedings. The time then estimated for the trial of both proceedings was seven days, but we have been told that it has now been increased to ten days. The hearing is fixed to start at the beginning of February of next year.

On 30th April 1998 the plaintiffs issued summonses in both proceedings seeking orders, first, for the joinder of the Commissioners as defendants and, secondly, for the disclosure to Mr Weth of a copy of a report made by Mr Randall, the receiver and manager, which was submitted to the Commissioners in or about June 1997. Each summons was supported by an affidavit sworn by Mr Weth, in which he submitted that, having regard to all the circumstances of the matter, the Commissioners should be joined as defendants for the following reasons:

"1. It is the conduct of the Commission and their exercise of High Court powers which are being challenged.

2. If my appeal were to succeed, I will submit that the costs of the appeal shall be paid in whole or in part by the Commission."

The applications for the joinder of the Commissioners as defendants were opposed by both the Attorney General and the Commissioners. They came before Master Dyson on 21st May 1998, when he made no order on them save that the plaintiffs should pay the costs of the Attorney General and the Commissioners. In other words, the Master declined to make an order either for joinder of the Commissioners or for the disclosure of Mr Randall's report. The plaintiffs appealed to the judge. Their appeals came before Mr John Martin QC, sitting as a deputy judge of the Chancery Division, who, on 29th July 1998, allowed them. He ordered that the Commissioners be joined as defendants to each proceedings and that they should continue against the Commissioners as if they had been begun by writ. He gave directions for service of points of claim, defence and reply as between the plaintiffs and the Commissioners and made orders for general discovery between them. With the leave of the judge, the Commissioners now appeal to this court. The Attorney General, though in form a respondent to the appeals, has supported them. Although he was represented at an earlier stage of the proceedings, Mr Weth has appeared in person both before the judge and in this court. Mr Muggleton has not appeared or been represented.

At this stage it is convenient to set out or refer to the material provisions of the 1993 Act. Section 8 confers a general power on the Commissioners to institute inquiries with regard to charities, with powers for them to direct the furnishing of accounts, written statements and copies of documents and to direct the attendance of persons to give evidence, which may be taken on oath, and the production of documents. Section 18 provides:

"(1) Where, at any time after they have instituted an inquiry under section 8 above with respect to any charity, the Commissioners are satisfied -

(a) that there is or has been any misconduct or mismanagement in the administration of the charity; or

(b) that it is necessary or desirable to act for the purpose of protecting the property of the charity or securing a proper application for the purposes of the charity of that property or of property coming to the charity,

the Commissioners may of their own motion do one or more of the following things ...

(vii) by order appoint (in accordance with section 19 below) a receiver and manager in respect of the property and affairs of the charity.

(2) Where, at any time after they have instituted an inquiry under section 8 above with respect to any charity, the Commissioners are satisfied -

(a) that there is or has been any misconduct or mismanagement in the administration of the charity; and

(b) that it is necessary or desirable to act for the purpose of protecting the property of the charity or securing a proper application for the purposes of the charity of that property or of property coming to the charity,

the Commissioners may of their own motion do either or both of the following things -

(i) by order remove any trustee, charity trustee, officer, agent or employee of the charity who has been responsible for or privy to the misconduct or mismanagement or has by his conduct contributed to it or facilitated it; ..."

Section 18(8) provides that, subject to subsection (9), section 16(11) to (13) (relating to appeals against orders of the Commissioners) shall apply to orders under section 18 as they apply to orders under section 16. Subsections (11) and (12) of section 16 provide:

"(11) An appeal against any order of the Commissioners under this section may be brought in the High Court by the Attorney General.

(12) An appeal against any order of the Commissioners under this section may also, at any time within the three months beginning with the day following that on which the order is published, be brought in the High Court by the charity or any of the charity trustees, or by any person removed from any office or employment by the order ..."

Section 16(13) provides that no appeal shall be brought under subsection (12) except with a certificate of the Commissioners that it is a proper case for an appeal or with the leave of a judge of the Chancery Division, but section 18(9) provides that that requirement shall not apply, amongst others, to an appeal under section 18(1)(vii) or section 18(2)(i).

The effect of these provisions in the present case was that Mr Weth and Mr Muggleton were entitled, as they have, to appeal to the High Court against the first and second orders without a certificate of the Commissioners or the leave of a judge of the Chancery Division. In regard to such and similar appeals (eg under section 4(3) or section 16) section 92 provides:

"(1) Provision shall be made by rules of court for regulating appeals to the High Court under this Act against orders or decisions of the Commissioners.

(2) On such an appeal the Attorney General shall be entitled to appear and be heard, and such other persons as the rules allow or as the court may direct."

The material provisions of the Rules of the Supreme Court are contained in O.108, r.5, which provides:

"(1) An appeal against an order or decision of the Commissioners shall be heard and determined by a single judge.

(2) Such an appeal must be brought by originating summons to which the Attorney General, unless he is the appellant, shall be made a defendant in addition to any other person who is a proper defendant thereto.

(3) An originating summons under this rule must state the grounds of the appeal and, except with the leave of the judge hearing the appeal, the appellant shall not be entitled to rely on any ground not so stated."

It will be observed that section 92(2) provides that there shall be entitled to appear and be heard on an appeal the Attorney General and such other persons as the rules allow or as the court may direct. That would appear to give the Attorney General a choice as to whether he should be made a party to the appeal or not. However, O.108, r.5(2) provides that the Attorney General, unless he is the appellant, shall be made a defendant to the proceedings and also any other person who is a "proper" defendant thereto. The effect of section 92(2) may be that the Attorney General, once joined pursuant to r.5(2), could apply to have himself struck out as a defendant, but it is very difficult, if not impossible, to conceive of circumstances in which he would think it right to do so. The important point is that neither the statute nor the rule makes specific provision for the Commissioners to be joined as defendants. They can only be joined if they are proper defendants. A little time has been spent in discussing who might be other proper defendants, perhaps the most obvious example being the Commissioners of Inland Revenue on an appeal under section 4(3) against a decision of the Commissioners not to enter an institution in the register of charities; cf. Council of Law Reporting v. A-G [1972] Ch 73 and McGovern v. A-G [1982] Ch. 321.

In Jones v. Charity Commissioners [1972] 1 WLR 784 the plaintiff appealed, under the provision of the Charities Act 1960 equivalent to section 16(12) of the 1993 Act, against his removal as a trustee of a charity. The Commissioners and the Attorney General having been joined as defendants to the proceedings, the question arose whether the Commissioners were rightly made a party. That question arose on what was then r.4(2) of O.108, which was in exactly the same form as the present r.5(2). Having observed that the Commissioners and the Attorney General both had their separate duties with regard to charities, and that the Attorney General on such an appeal had to make up his mind quite independently of the Commissioners, Ungoed-Thomas J said, at p. 785B:

"But their attitude on an appeal might well be identical, as it has been in this case, with the result that if they are both made parties and are represented, there is a duplication of work and of costs.

As the appeal is against an order of the commissioners, a statutory body exercising what may be considered a semi-judicial jurisdiction, it might well seem preferable, that, if either the commissioners or alternatively the Attorney-General is to take part in the appeal, it should be the Attorney-General; and the Act, to some extent at any rate, appears to countenance such an approach. Thus section 28(7) apparently contemplates that legal proceedings with reference to a charity should be taken by the Attorney-General rather than by the Charity Commissioners. And RSC Ord. 108, r.4, whilst expressly providing for the Attorney-General to be joined as a party to an appeal, unless he is the appellant, makes no comparable express provision for the commissioners to be joined.

In view of all these considerations, the convenient and proper course would thus appear to be that the Attorney-General alone should be joined as defendant in the first instance on such an appeal as this. Of course, there would be no difficulty in the commissioners providing him with all relevant information. If he is not minded to take the same course as the commissioners he could so inform them; in which case the commissioners could also be joined as parties. Such a course commends itself to both the Attorney-General and the commissioners."

By way of clarification I should state that section 28(7) of the 1960 Act was the predecessor of section 33(7) of the 1993 Act.

The general practice which has prevailed since Jones v. Charity Commissioners is that where the Attorney General, as the protector of the charity and the representative of the beneficial interest in it, takes the view that it is of advantage to the charity that the orders of the Commissioners should stand, the Commissioners are not joined as defendants to the proceedings. The desirability of the savings in work and costs which underlies the practice is even more apparent in current conditions, especially where, as here, it has been estimated that the trial will last for many days. But in every case the question is whether the Commissioners are proper defendants to the proceedings. The practice cannot deprive the court of its discretion to determine, on the facts of an individual case, whether the Commissioners are proper defendants or not. The present case is one where the Commissioners object to being joined. There might be others where they wished to be joined but the appellant objected to their joinder, for example on the ground of his being put at risk of a liability for two sets of costs if the appeal failed.

Because the Commissioners were not made defendants to the proceedings in the first instance, it was necessary for the plaintiffs to apply for their joinder under RSC O.15, r.6(2)(b). The view of the learned deputy judge was that the question depended on whether their "presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon" within r.6(2)(b)(i). He held that it was on the ground, shortly stated, that the plaintiffs would not otherwise be able to obtain the general discovery which they needed and to which they were entitled in order that their allegations of bias and misconduct against the Commissioners could be properly investigated.

Mr Newey, for the Commissioners, has argued that the judge's reliance on O.15, r.6(2)(b)(i) was misconceived, first, because as a matter of principle ( Norwich Pharmacal Co. cases apart) a person ought not to be made a party to proceedings for the sole purpose of making him liable to pay costs or to give discovery (see Burstall v. Beyfus (1884) 26 Ch.D. 35); secondly, because, as a matter of construction, a need for a person to give discovery cannot make his presence "necessary" for the purpose stated; thirdly, even if it can, no such need has been identified in the present case. While I see great force in these arguments, I prefer a simpler view of the matter which has been put forward by Mr Henderson, for the Attorney General. He submits that no question arises under O.15, r.6(2)(b)(i) as such, since the only question is whether the Commissioners are proper defendants within O.108, r.5(2). While Mr Henderson accepts that the necessity of the Commissioners' presence for the purpose stated in r.6(2)(b)(i) is, by analogy, one of the matters to be taken into account in deciding that question, it is not the only one. He accepts of course that if the Commissioners are proper defendants, then they are persons who "ought to have been joined as a party".

I agree with Mr Henderson that the question is whether the Commissioners are proper defendants to the proceedings. In considering that question, I start by observing that the proceedings are a statutory appeal to the High Court against a decision of persons acting in a quasi-judicial capacity. There are many such appeals against decisions of other statutory bodies, tribunals or ministers of the Crown, and in each case their substance and procedure are prescribed by the relevant statute and rules of court. In some cases it is provided that the appeal shall be by way of case stated. I would expect to find that in most cases where the appeal is not by way of case stated there is a provision for the decision-maker to be a necessary respondent to the appeal.

There has been some discussion as to the nature of an appeal under section 92 of the 1993 Act. It is not by way of case stated. Moreover, it was established by the decision of this court in the Jones case, Jones v. Attorney General [1974] Ch. 148, that it is open to the appellant to challenge findings of fact on which the Commissioners' decision has been based. To that extent, and for present purposes it is unnecessary to carry the inquiry further, the appeal may fairly be said to be a rehearing. On that footing and bearing in mind, first, that there is no provision for the Commissioners to be necessary respondents, secondly, that there is provision for the Attorney General to be a respondent and, thirdly, the special relationship between the Attorney General and the Commissioners in charity matters, I start from the position that it is in general neither necessary nor desirable for the Commissioners to be joined as respondents to the appeal. That view is strongly confirmed by the potential consequences in relation to pleadings and discovery which are exemplified by the directions made by the deputy judge in this case. It seems bizarre that in an appellate process such as this the decision-maker, against whom no relief can be sought, should be subjected to such a process.

What then can make it either necessary or desirable for the Commissioners to be joined as defendants to these proceedings? It cannot, as the judge thought, be a need for them to give general discovery. Although Mr Newey has been disposed to submit that there could be no discoverable documents in the possession or power of the Commissioners, I do not think that we could make that assumption where allegations of bias and misconduct, however improbable they might appear, have been made against them. However, an order for general discovery would be wholly inappropriate. Indeed, although the judge's view was to the contrary, Mr Weth has told us that he has not really been concerned to obtain such an order. What he has said is that he has reason to believe from documents in his possession that certain documents in the Commissioners' files will further confirm his allegations of misconduct and bias on their part. No order for discovery is necessary for any such document to be produced. In an appeal process such as this the court must have an inherent power to order the decision-maker to produce documents in his possession or power which are necessary for the determination of the issues in the appeal. It is open to Mr Weth to apply for such an order, either at a pre-trial review or during the course of the trial, if he wishes to do so. I would not, however, expect the court to entertain any such application unless it was supported by evidence, as on an application for specific discovery.

Mr Weth's primary submission before us, as I think it was before the judge, has been that the allegations of bias and misconduct are in themselves enough to make the Commissioners proper defendants to the proceedings. I cannot agree. Those allegations are made and can only be made in support of his contention that the Commissioners' orders ought to be discharged. No relief has or can be sought against the Commissioners themselves, or indeed against any other person. Allegations of bias or other misconduct in the decision-making process do not in themselves make it either necessary or desirable for the decision-maker to be made a respondent to the appeal. Mr Weth evidently feels that it is only right and proper that the Commissioners should be made defendants so as to give them a proper status to answer the allegations against them. While I can understand his feelings, they are not a sound basis for making orders having the actual or potential consequences to which reference has been made. For myself, I have been unable to see what real advantage Mr Weth would gain by the Commissioners' joinder. Indeed, as has been pointed out, there might be real disadvantages to him, especially in regard to costs if the appeals were to fail. On the substance of the matter, he will be able to put his allegations of bias and misconduct to the Commissioners' two officials in cross-examination, and he will be able to do that whether the Commissioners are defendants to the proceedings or not.

I am therefore of the opinion that the Commissioners are not proper defendants to the proceedings and that the judge's orders cannot stand. I desire to mention three further points. First, Mr Weth's subsidiary ground for the Commissioners' joinder, as stated in his affidavits, was that that would enable him to get an order for costs against them. That point went when Mr Newey, correctly, accepted that if it became appropriate to make such an order it could be made under the Aiden Shipping Co. Ltd v. Interbulk Ltd principle. Secondly, Mr Weth has understandably pursued his claim for the production of a copy of Mr Randall's report. It being obvious that he would, sooner or later, be entitled to production either against the Commissioners or the Attorney General, I am unclear as to the reason for his not having been supplied with a copy already. We have, however, been assured by Mr Newey that he will receive one now. Thirdly, it has become clear in the course of argument that a state of affairs might arise in this or other cases in which the Attorney General did not think it right to support individual findings of the Commissioners, even though he supported the decision itself. It is very important that in that event the judge hearing the appeal should make clear in his judgment what findings are not supported and therefore cannot stand, especially when they are findings of misconduct on the part of the trustee or other person concerned.

I would allow these appeals.

LORD JUSTICE WALLER: I agree.

SIR IAIN GLIDEWELL: I also agree.

Order: orders of the deputy judge discharged in their entirety; the plaintiff Mr Weth to pay three-quarters of the Charity Commissioners' costs of the appeals to the judge and the appeals to this court, with no order for taxation and payment of those costs forthwith; no order as to the Attorney General's costs of the appeals to the judge or the appeals to this court; no variation made in the master's orders except that the costs of the Charity Commissioners shall not be assessed at £2,000 in each case but shall be taxed on the standard basis if not agreed; order not to be drawn up for seven days, with liberty to Mr Newey to make representations in writing by 4.00pm on Wednesday 14th October as to the proposed orders insofar as they affect the Charity Commissioners, the matter subsequently being dealt with on paper.