Analysis
Two sets of proceedings had come before the court, which had involved several applications. An order was made on 8 May 2013 by Deputy Judge Foster, which awarded costs. On 30 May 2013 Deputy Judge Foster set out her reasoning behind that order. The proceedings were in respect of a trust for the primary benefit of Louise Fyfe (the trust). The proceedings related to the successful removal of Mr John Watts (the defendant) as trustee and to a claim against the defendant for misappropriation of trust property (the property) which was in reality bought by a company owned by the trust (Dream Star Ltd). The new trustees brought the claims (the claimants). The applications referred to were:
- (i) The removal of the defendant and a freezing order to prevent him dissipating trust assets.
- (ii) Strike out or summary judgment of the misappropriation claim due to the particulars of claim being fundamentally flawed, as:
- (a) the parent company of Dream Star Ltd, BVI, bought the property and it did not belong to the trust; and
- (b) the principle of reflective loss would bar a claim by the trustees, the correct claimant being Dream Star Ltd (not then a party to the action).
- (iii) Amendments to be made to the particulars of claim to add Dream Star Ltd. The claimants stated that that this was unnecessary but avoided technical arguments.
On the question of costs the court needed to broadly determine which party was the winner and which was the loser. The claimants believed they had succeeded and the costs of applications (i) and (ii) should be met by the defendants. They would meet the costs of (iii). The defendant argued that the claimants had not provided full disclosure to the court in relation to the freezing order application and, if they had, this would have been unnecessary. In addition, prior to the amendment of the particulars of claim the claimants’ case was confused and the court would have struck out the claim. Therefore costs should fall to the claimants.
Held:
- (1) The battleground on which these proceedings were fought had to be considered. The claimants were clearly the successful party. They had not withheld information. The particulars of claim were not confused. Had it been required the court would have amended the proceedings even if the claimants had not.
- (2) Only the costs of the amendment of the particulars of claim were attributable to the claimants.
- (3) The principle of reflective loss would not be considered on an application for strike out. Furthermore there is good authority showing it not to be applicable in trustee claims.
- (4) The defendant’s series of failures to comply with orders of the court did not assist the defendant’s case for costs. The only costs awarded to the defendant are those occasioned by the amendments to the particulars of claim.
- (5) The order made on 8 May stands.
Continue reading "Fyfe v Watts & ors; Watts & anr v Watts & anr [2013] EWHC 1374 (CH)"