Legal Principles
In Payne Hicks Beach Trust Corporation Ltd v Nielsen [2026] EWHC 1813 (Ch) ('Nielsen'), Deputy Master Holden, under the heading 'Legal principles' said, at paragraphs 19 to 23:
'The court's power to direct that one or more issues be tried as preliminary issues is conferred by CPR r 3.1(2)(j). Whether to exercise that power is a case management decision, involving a broad discretion exercised in accordance with the overriding objective: see, recently, in connection with the closely connected jurisdiction to direct a split trial, Soroka v Payne Hicks Beach (a firm) [2025] EWHC 602 (Ch), at [13] – [14], per Master Kaye.
In Steele v Steele [2001] CP Rep 106, Neuberger J (as he then was) identified ten questions relevant to the court's decision whether to order the trial of a preliminary issue, which have subsequently been used as a convenient, non-exhaustive checklist of factors to consider in exercising the jurisdiction:
i) Would determination of the preliminary issue dispose of the case, or at least one aspect of it?
ii) Could it significantly cut down the cost and time involved in pre-trial preparation or in connection with the trial?
iii) If the issue is one of law, how much effort would be involved in identifying the relevant facts for its purposes?
iv) If the issue is one of law, to what extent is it to be determined on agreed facts?
v) Where the facts are not agreed, to what extent does that impinge on the value of a preliminary issue?
vi) Would the determination unreasonably fetter the parties, or the court, in achieving a just result?
vii) To what extent is there a risk of the determination increasing costs or delaying the trial?
viii) To what extent may the determination prove irrelevant?
ix) To what extent could the determination lead to an application to amend so as to avoid its consequences?
x) Taking account of all of the foregoing, is it just to order the preliminary issue?
The authorities are replete with warnings as to the exercise of this jurisdiction. In Tilling v Whiteman [1980] AC 1, at 25, Lord Scarman famously described preliminary points of law as "too often treacherous short cuts", whose price can be delay, anxiety and expense. In Rossetti Marketing Ltd v Diamond Sofa Company Ltd [2012] EWCA Civ 1021; [2013] Bus LR 543 at [1], Lord Neuberger MR observed that "the siren song of agreeing or ordering preliminary issues should normally be resisted", adding that if preliminary issues are nonetheless to be tried, it is vital that the issues, and the agreed facts or assumptions on which they rest, be simply, clearly and precisely formulated. More recently, Master Kaye said that "there are dangers and unintended consequences, where an apparently bright line separating particular issues turns out not to be so bright or perhaps a little bit fuzzy": see Soroka, at [19].
Guidance is also given in the Chancery Guide: paragraph 6.10 provides that "[c]osts and time can sometimes be saved by identifying decisive issues, or potentially decisive issues, and ordering that they are tried first. A trial of a preliminary issue may also be appropriate where its determination, although not itself decisive of the whole case, may enable the parties to settle the remainder of the dispute or otherwise shorten the proceedings. An example would be a relatively short question of law which can be tried without significant delay (or much in the way of disclosure or witness evidence) but which would be determinative of one or more of the key issues in dispute."
Drawing these materials together, the court should order the trial of a preliminary issue with caution, and ordinarily will do so only if the preliminary issue can be simply, clearly and precisely formulated; determined on agreed or readily ascertainable facts; and where the court is reasonably confident that the trial of the preliminary issue will result in costs being reduced, and/or in the use of court time being minimised.'
On the facts
In Nielsen, a Mr Louis Nielsen took out a OneLife Individual Unit-Linked Life Assurance Contract (the 'Policy') (quite what documents were incorporated in the Policy, and when it was formed, were in dispute - paragraph 9). At its inception, Mr Louis Nielsen's wife, Ms Nazma Nielsen (the First Defendant) was the nominated beneficiary under the Policy (paragraph 8). Later, Mr Nielsen may have executed a Change of Nominated Beneficiaries Form, changing the beneficiary under the Policy, to the Claimant (as executors of his estate) (paragraph 10). Mr Nielsen died, with the Claimant appointed as executor (paragraph 1). Dispute arose as to who was the beneficiary under the Policy. The First Defendant did not accept that there had been a change of beneficiary under the Policy; she contended that she remained the nominated beneficiary under the Policy.
The Claimant issued proceedings, seeking '...declaratory relief as to the meaning and effect of the Policy: in substance, that the benefit of the Policy is held for the Deceased's estate. The First Defendant's case is that she remains the beneficiary of the Policy. The principal issue in the proceedings is accordingly whether the Claimant or the First Defendant is beneficially entitled to the Policy.' (paragraph 11)
The First Defendant counterclaimed, alleging that the Claimant, as the Deceased's executor, was '...estopped from denying that the First Defendant is the beneficiary of the Policy.' (paragraph 12)
The Claimant applied for an order, directing the trial of two preliminary issues (paragraph 1) namely:
i) what are the documents which contain the terms applicable to the Policy? and
ii) what is the governing law of the Policy? (paragraph 4)
(the 'Proposed Preliminary Issues')
At a costs and case management hearing, the Claimant's application was heard, and dismissed, by Deputy Master Holden:
(1) the Deputy Master's reasoning is set out in paragraphs 26 to 30 of the judgment[1]; and
(2) under the heading 'Conclusion', Deputy Master said, at paragraph 30:
'This is a dispute about the beneficial entitlement to a single policy, which I have directed be determined at a 6-day trial (inclusive of judicial pre-reading), at which all of the issues of fact and law - the nature and terms of the contract, including the applicable law; the alleged trust in the First Defendant's favour; the alleged legal restrictions on any alteration to that trust; and the alleged estoppel - will be before the court together, to be taken in whatever order the trial judge finds most efficient. A trial of the Proposed Preliminary Issues would not dispose of the main trial, and may not shorten or simplify it; indeed, there is at least some risk of the disposal of the case being complicated or delayed by it. The siren song of a preliminary trial should on this occasion be resisted.'
Collatory Case Series
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[1] In Payne Hicks Beach Trust Corporation Ltd v Nielsen [2026] EWHC 1813 (Ch), under the heading 'Discussion and disposal', the Deputy Master said, at paragraphs 26 to 30:
'The Proposed Preliminary Issues are linked, and the second depends on the first: the issue of the law applicable to the contract cannot be answered until it is known which documents comprise the contract. The first Proposed Preliminary Issue is, in substance, a question of contract formation and incorporation: when the contract was concluded, and on what terms.
I have some doubt as to whether the question of the formation of the contract is the sort of clear, self-contained issue that can be determined without disclosure and on the basis of agreed or readily ascertainable facts, so as to be suitable for determination as a preliminary issue. Moreover, and as to the issue of contractual interpretation, that is an exercise that must be undertaken against the admissible factual matrix. The Claimant does not admit the First Defendant's account of the discussions between her and the Deceased which, at least on her case, form part of the relevant background. The extent to which any such discussions form part of the admissible factual matrix is not something for me to determine, but again I have a real concern as to whether it is a suitable issue for determination in advance of disclosure, and without the parties having agreed a statement of facts on which the determination could be based.
However, even if I were to assume, in the Claimant's favour, that the Proposed Preliminary Issues could fairly be determined on the existing documents, without disclosure or cross-examination, at a hearing occupying 1 to 1½ days of court time including judicial pre-reading (which is the estimate given at paragraph [14] of Manyon 3), it does not in any event seem to me that I should order the trial of the Proposed Preliminary Issues. I reach that conclusion for the following reasons:
i) The Proposed Preliminary Issues would dispose neither of the claim, nor of any pleaded cause of action or defence. Whichever way the Proposed Preliminary Issues were determined, there would remain the need for a trial. The issues that would remain to be determined at trial include: whether a trust was created in the First Defendant's favour; whether the Deceased completed the Change Form, and whether it related to the Policy at all; the true construction and effect of the Change Form, and its impact on the alleged trust in the First Defendant's favour; and the First Defendant's proprietary estoppel counterclaim (which will involve a dispute of fact requiring disclosure and cross-examination at trial).
ii) I cannot be confident that the trial of the Proposed Preliminary Issues will significantly cut down the time and cost involved in the resolution of the case. The extent of the time and cost saving generated by the trial of the preliminary issue depends on its outcome, as to which:
a) if English law is held to apply, the First Defendant's case under Luxembourg law would fall away, and with it any need for expert evidence of Luxembourg law. I recognise that that would be a genuine saving. But the extent of the saving is debatable: the First Defendant relies on only two discrete pleaded points of Luxembourg law concerning the legal effect of the Change Form, and Ms Stanley KC challenged as overstated the Claimant's estimate that submissions on Luxembourg law would occupy 2½ days of trial time (including judicial pre-reading).
b) conversely, if Luxembourg law is held to apply, expert evidence of Luxembourg law would be required at the trial in any event. Ms McDonnell KC submitted that the First Defendant's case under the 1882 Act and the 1925 Act would then fall away, but Ms Stanley KC submitted that this was incorrect, and that the First Defendant's position is that the creation of a trust of the benefit of the Policy in her favour as a matter of English law, and the formality requirements of English law governing any subsequent disposition of her subsisting equitable interest, are questions distinct from the law governing the contractual rights created by the Policy itself. While it is not for me to determine those issues, it does seem that, if Luxembourg law is held to apply to the contract, there is a real risk that the preliminary trial would have achieved no saving of time or expense whatsoever.
iii) It follows that the Claimant's projection of a time saving of 2½ days may not be realised. Against that, I must set the additional cost of the preliminary trial itself: not less than 1½ days of court time including pre-reading; the preparation of evidence, bundles and skeleton arguments for two hearings rather than one, by two (or, if the Second Defendant participates, three) legal teams; two rounds of judicial pre-reading, re-familiarisation and judgment writing; and the risk of an appeal from the preliminary determination interposing itself before the main trial could safely be heard.
iv) As to delay: there is a real risk that, if I were to order the trial of a preliminary issue, the realistic effect would be to postpone final resolution of this case, not accelerate it. That is because case management steps including disclosure would be postponed pending determination of the preliminary issues, which themselves could easily be the subject of appeals that may further postpone the main trial which, as I have said, must take place in any event. As such, I do not accept that the trial of the Proposed Preliminary Issues would necessarily result in the main trial being listed sooner. Based on the parties' positions to date, I have also regrettably formed the view that the trial of the Proposed Preliminary Issues would not necessarily improve the prospect of settlement.
v) There is a further dimension: there is at least the possibility that the Proposed Preliminary Issues may never need to be decided at all. If the First Defendant were to succeed at trial under, for example, s.11 of the 1882 Act, or in respect of her proprietary estoppel claim, it might well be unnecessary for the trial judge definitively to resolve which documents contain the terms of the Policy or which law governs it: any change effected by the Change Form could, on those hypotheses, be negated or overridden regardless. At a single trial, the trial judge can take the issues in whatever order is most economical, based on the evidence given at trial.
vi) For completeness, I do not consider that the First Defendant's conduct in respect of the Beddoe application or her jurisdiction challenge is of any great relevance to the issue I have to determine.
vii) Standing back, the claimed benefits of the order sought are contingent and asymmetric. If the governing law issue were to be decided in favour of English law, there would be some time and cost saving, of debatable extent. If it were to be decided in favour of Luxembourg law, I am not satisfied that the preliminary trial would achieve any significant saving of time or cost. On the contrary, I consider that there is a real risk that it would achieve no material saving at all, and a real risk that it would generate additional cost and delay.
Applying the checklist derived from the judgment of Neuberger J in Steele v Steele: (1) the determination would dispose neither of the case nor of any pleaded claim or defence; (2) I cannot be satisfied that it would significantly cut down cost or time, and there is a real risk it would do the opposite; (3) to (5) the issues are not pure points of law, would not be determined on agreed facts, and the absence of agreed facts materially diminishes their value; (6) an early determination, reached without disclosure, carries some risk of unreasonably fettering the just disposal of the fact-sensitive issues that remain; (7) there is a risk of increased cost and of delay to final resolution of the case; (8) the determination may prove irrelevant if the First Defendant succeeds at trial on other grounds; (9) there is a real prospect of consequential applications to amend, not least by the Claimant itself; and (10) therefore, in my judgment, in all the circumstances it would not be just to make the order.'