Hanspaul & anr v Ward & ors [2019] WTLR 609

Analysis

The claimants had applied to remove the 1st to 5th defendants as trustees, and the 6th defendant as protector, of a settlement which owned shares in the family company, and for a relief as to the disputed issue of preference shares in the company. The preference shares question was settled during the trial of a preliminary issue, on terms that the claimants’ costs were paid. The trustees and protector all resigned before trial of the removal application. The claimants applied for their costs on the basis that they had achieved the result they sought. The 1st to 4th defendants contended that there should be no order as to costs, save that they should have their indemnity as to costs out of the settlement. The protector sought his costs from the claimants on the indemnity basis.

The court had previously [2016] EWHC 1358 (Ch) refused to hold a trial for the sole purpose of determining who would have won the claim.

Held, ordering the 1st to 4th and 6th defendants to pay the claimants’ costs, and refusing them an indemnity from the settlement:

1. 1) The court was not attempting to determine which party would have succeeded at trial, but what if any costs award to make, applying the usual principles under CPR rr.44.2 and 46.3, supplemented by PD 46 para 1. The trustees having resigned and the protector having appointed someone to replace him, the court would not speculate about their reasons for doing so. The fact that the claimants had obtained the relief they sought was an important consideration.
2. 2) Certain aspects of the background were sufficiently solid to be placed in the balance when assessing why the proceedings came about, how the parties behaved and the outcome of the proceedings. These aspects were: the protector’s obvious resentment of the 1st claimant’s involvement in the company; his refusal to negotiate on certain points; his apparent ‘pre-emptive strike’ by removing the 1st claimant as trustee and appointing the 1st to 5th defendants as trustees; the claimants’ efforts to resolve the matter; the steps taken to remove the 1st claimant as an employee of the company; a lack of cooperation by the 6th defendant and his conduct as protector in exercising powers to appoint a replacement for himself without consultation or even notification to the other parties. The 6th defendant was therefore to be ordered to pay the claimants’ costs.
3. 3) The trustees were to be given credit for having given stability to the company during their period in office, and had not caused loss to the trust. However, they did not need to defend the claim in order to answer the criticisms that had been made of them. Although they had acted on advice in deciding, initially, to defend the claim, that advice was in the nature of litigation advice rather than advice on what was in the best interests of the beneficiaries. Overall, they had taken an unfortunate approach to their role as trustees, closing their mind to the break-up of the trust and failing to engage actively with the claimants to reassure them as to their even-handed approach, and this made them partly responsible for the litigation. Accordingly, they were ordered to pay the claimants’ costs, and deprived of their indemnity from the settlement.

JUDGMENT CHIEF MASTER MARSH: [1] This judgment concerns the costs of this claim. Despite the claim having been issued on 4 December 2013, no part of the relief claimed has been the subject of a final determination by the court and no substantive orders are now sought. [2] The first claimant and the sixth defendant …

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