Analysis
Following judgment upholding claims for various breaches of trust (Sheffield v Sheffield & ors [2014] WTLR 1039, [2013] EWHC 3927 (Ch)), the judge ordered accounts, on the footing of wilful default, and inquiries consequent upon the judgment. The accounting parties were the executors of (and standing in the shoes of) a defaulting trustee (“A”) and the individual who benefited from the breaches of trust (“B”). Agreement was reached in respect of certain accounts and the claimant (“C”) pursued other accounts and inquiries, in respect of various issues. The judge also ordered that A and B give standard disclosure to C of all documents relating to the accounts and inquiries, unless already disclosed. This order was not formally complied with. The parties were at liberty to apply to the Master.
The parties were unable to reach agreement on the issues and applied to the Master for an order for an account and directions. The Master ordered A and B to serve a summary account in tabular form, with C to respond to it, and made various directions, including directions as to disclosure. Service of the summary account and response led to significant agreement amongst the parties and the remaining issues were then resolved, with C substantively succeeding. The only remaining matter was the question of costs, of which the parties sought a determination by the court.
The parties had reached a compromise without any determination of the issues by the court and, although the case was of some complexity, it would not be proportionate or an efficient use of the parties’ or the court’s resources to refuse the determine the costs liability and require the parties to proceed to trial solely for the purpose of determining costs. Several factors were to be considered, including the result of the settlement; the conduct of the parties in the course of the litigation; any reasonable offers of settlement that may have been made; and in any case where it was tolerably clear, which party would have succeeded at trial (Powles v Reeves [2016] EWCA Civ 1375; [2017] 1 Costs LR 19 followed). The court adopted a broad-brush approach.
Special considerations applied in this case:
(a) This was a case of accounts and inquiries ordered against trustees. Where this was necessary because of a breach of trust, the defaulting trustee would be ordered to pay the costs of the claim, including the costs of the accounts and inquiries made necessary by the breach.
(b) The order for accounts also followed C’s entitlement to accurate information as to the state of the trust and the inspection of the trustees’ vouchers for their expenditure.
The starting point in determining costs in a case against a defaulting trustee was that the trustees should pay those costs, even if the accounts established that no sum was payable. The beneficiary needed an account to be taken before he could ascertain his entitlement from the exploitation of the trust assets and, for that, he had an accompanying right to accurate information about the trust assets and their exploitation. A consequence of this was that the defaulting trustee could not protect himself from costs by making a monetary offer. Analogous principles applied to B, even though he was not a trustee in breach, in respect of information that was solely in his knowledge.
In deciding the overall costs order, however, the court was able to look at the factors relevant to costs of particular accounts. In respect of one of the accounts to be taken, C had been given sufficient information with which to reach a decision on an offer that had been made. The overall costs recoverable by C from A were reduced by 10% to reflect the additional work resulting from his not initially accepting the offer, on the basis of his paying his own costs and those of A and B.
As to conduct, although this could be taken into account, for the most part the Master did not find that any of C’s conduct gave a reason to depart from the usual order of costs in his favour. There was, however, one issue that did justify a reduction of 3% of the costs recoverable from B: the parties had agreed that an additional trustee should be appointed but C did not for some time countersign the relevant instrument, having failed properly to engage in the correspondence with the solicitors acting for A and B, delaying the process for extended periods of time.
JUDGMENT MASTER CLARK: [1] This judgment deals with the costs order to be made following the parties’ agreement reached in respect of the relief ordered in a breach of trust claim. Parties and the claim [2] This is the final stage of a claim commenced on 24 November 2010, by which the claimant, John David …Continue reading "Sheffield v Sheffield & ors [2019] WTLR 295"