Belen Clarisa Velutini Perez v Equiom Trust Corporation (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Master Kaye |
| Judgment Date | 24 March 2023 |
| Neutral Citation | [2023] EWHC 615 (Ch) |
| Docket Number | Case No: PT-2021-001062 |
| Court | Chancery Division |
[2023] EWHC 615 (Ch)
Master Kaye
Case No: PT-2021-001062
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY TRUST AND PROBATE LIST
Rolls Building
7 Rolls Buildings, Fetter Lane
London, EC4A 1NL
Andrew Twigger KC and Timothy Sherwin (instructed by Mishcon de Reya) for the Claimant
James MacDougald (instructed by Sinclair Gibson) for the Defendants
Hearing date: 2 March 2023
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is a consequentials judgment about costs. The background to these costs decisions and my findings are set out in my judgment dated 29 November 2022, the neutral citation for which is [2022] EWHC 2996 (Ch) (“ the Judgment”). The Judgment includes a number of defined terms with which the parties are familiar. I will use the same defined terms in this judgment. References to paragraphs as [ ] are references to paragraphs in the Judgment unless the context denotes otherwise.
For the reasons set out in the Judgment and as subsequently recorded in an order also dated 29 November 2022, I made the declaration sought by the claimant in respect of the Revocation, made orders in relation to the transfer of the Assets, limited the Former Trustees' retention to $500,000, and capped/limited their indemnity.
I now need to consider the position in relation to the legal costs incurred by the parties as a result of these proceedings. This judgment only addresses the issues of liability for costs and not quantum. According to the updated costs schedules the total of the legal costs the parties are seeking to recover from each other (or from the Assets) are in combination approaching £700,000. That does not include the costs of the Former Trustees themselves, GTC or other third parties involved in either the transfer of the Assets or the claim. The parties' legal costs are substantial and in the context of what was essentially a claim for directions under CPR 64 remain a concern. However, whether costs at those levels will be recoverable either inter partes or by way of indemnity is an argument for a different day and if ultimately there is some form of detailed assessment for a different tribunal.
I have had the benefit of written and oral submissions from Mr Twigger KC and Mr Sherwin for the claimant and from Mr MacDougald for the Former Trustees. Even if I do not set out each and every submission made, whether written or oral, I have taken them into account in reaching this decision.
The parties have identified the following costs issues which they consider the court should determine:
i) Whether an inter partes costs order should be made and if so, what it should be;
ii) What the basis for assessment should be;
iii) Whether the Former Trustees should be deprived of their indemnity in respect of any inter partes costs order;
iv) Whether Ms Velutini should be entitled to recover any shortfall in her costs from the Assets?
The claimant's position is that she has been the overall successful party and that the Former Trustees should pay her costs on an indemnity basis; further that the Former Trustees should be deprived of their indemnity entirely in relation to any inter partes costs order.
The Former Trustees' position is that there should be no order as to costs and that they should be entitled to recover their costs from the Assets subject to the indemnity cap. However, if I were to make an inter partes costs order, the Former Trustees' position is that they should still be entitled to rely on their indemnity capped at 70% such that they are only liable to pay 30% of any inter partes costs order from their own funds.
Pursuant to CPR 44.2(1) the court has a broad discretion in relation to costs and whether they are payable by one party to another. The general rule is that an unsuccessful party will usually be ordered to pay a successful party's costs unless the court, in the exercise of its broad discretion, makes a different order.
The court has to determine who it considers to be the successful or more successful party. It is the court's perception of the matters set out in CPR 44.2(4) which determines who is the successful party and what, if any, order for costs the court decides to make.
If the court determines there is a successful or more successful party, it must then consider whether to exercise the court's broad discretion to make a costs order in favour of that party in whole or in part or whether to make a different order.
However, the approach is one that requires the court to stand back and take a common sense, broad-brush and pragmatic approach to determine where the overall balance lies as between the parties. It is not the role of the judge to analyse at a granular level every issue or argument that was pursued and determine who is successful on each. The cases in which one party will have been wholly successful on every argument or issue are rare. The court should therefore look at the substance and reality of who is overall the successful party.
Where a party has pursued a specific discrete issue or claim unsuccessfully or unreasonably it may be appropriate for the court to depart from that general approach and consider an issues or percentage based costs order but the court should be cautious of such an approach save in the clearest case given the often overlapping nature of claims/issues and should always have in mind that the approach to determine who is the overall successful party is a pragmatic and common sense one.
What one can draw from the authorities is that each case turns on its own particular circumstances and the weight to be applied to a particular factor or argument will vary from case to case. That is why the court's discretion is so broad and why, consistent with the overriding objective and the overall justice of the case, the court has to stand back and take a common sense approach when determining the reality of who is overall the successful party and/or the party in whose favour a costs order should be made.
There is a further consideration in proceedings which involve parties seeking directions or guidance from the court pursuant to CPR 64, as here. Ultimately as set out in the Judgment, I determined that these were Buckton type 2 proceedings and should be characterised as “friendly” despite the hostility between the parties.
The general rule is therefore that the Former Trustees would be entitled to rely on their indemnity in respect of their costs and expenses by virtue of s.31 Trustee Act 2000. The indemnity can be curtailed if the Former Trustees have acted improperly or unreasonably.
Further, in proceedings in which the directions sought fall within Buckton type 2, whether brought by trustees or a beneficiary, the more usual order or the starting point would be that all parties would be entitled to recover their costs from the fund/trust assets where their conduct has not been unreasonable or improper.
Consequently, in addition to determining who is overall the successful or more successful party and/or in whose favour a costs order should be made the court must consider the extent to which the Former Trustees are entitled to be indemnified from the Assets. The indemnity extends not only to the Former Trustees' costs but any costs they are ordered to pay unless the court orders otherwise.
As set out in the Judgment, consideration of any curtailment of the Former Trustees' indemnity is ultimately the exercise of a broad discretion having regard to all the circumstances of the case. Therefore, whilst the general rule and starting point, as set out in CPR 46.3(2), is that the Former Trustees are entitled to be paid the costs of the proceedings out of the Assets insofar as they are not recovered from or paid by another person the court may make a different order. That rule is supplemented by PD46 1.1 such that the Former Trustees are only entitled to be indemnified for costs properly incurred. Whether costs are properly incurred depends on all the circumstances of the case including whether the Former Trustees (c) “ acted in some way unreasonably in bringing or defending, or in conduct of, the proceedings.” An absence of neutrality, beyond simply airing a counter argument, may be seen as an indicator of unreasonable conduct.
Should an inter partes costs order be made?
There were four parts to the relief sought: (i) the declaration in respect of the validity of the Revocation; (ii) an order in respect of the transfer of the Assets; (iii) a determination of the amount of the Former Trustees' retention; and (iv) whether the Former Trustees should be permitted to rely on their indemnity. It is helpful to look at what happened in relation to each part of the relief originally sought and what the parties say about it in costs terms before standing back and considering the overall position.
In the Judgment I made a number of criticisms about the approach and conduct of the Former Trustees and Lord Balfour. The claimant relies on those criticisms and in particular paragraphs [50], [72], [74] to [75], [86], [146], [175], [193], [220] to [221]. Mr Twigger argues that Ms Velutini was overall the more successful party even if not wholly successful on all aspects of the claim, and/or that the conduct of the Former Trustees, as set out in the Judgment, is such as to justify a...
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