Howell and Others v Lee Millais and Others
| Jurisdiction | England & Wales |
| Judge | The Master of the Rolls |
| Judgment Date | 06 July 2011 |
| Neutral Citation | [2011] EWCA Civ 786 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2010/1782 & 2138 |
| Date | 06 July 2011 |
[2011] EWCA Civ 786
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
THE HIGH COURT OF JUSTICE, CHANCERY DIVISION
SIR JOHN LINDSAY
Royal Courts of Justice
Strand, London, WC2A 2LL
The Master of The Rolls
Lord Justice Thomas
and
Lord Justice Moses
Case No: A3/2010/1782 & 2138
Case No HC06C04217
Mr Gilead Cooper QC and Mr Andrew Child (instructed by Boodle Hatfield) for the appellants
Mr Alan Steinfeld QC (instructed by Harcus Sinclair) for the first and second respondents
Hearing date: 20 th June 2011
This is an application for permission to appeal, ordered to be heard on the basis that the appeal is to follow if the application succeeds. It is brought by the claimants against a costs order made by Sir John Lindsay. The circumstances which gave rise to the order were unusual, complicated and disturbing. Fortunately, only a relatively brief recital of the facts is necessary, from which the unusual nature of the case will be self-evident, its complexities can be largely avoided, and its disturbing aspects may be dealt with shortly.
The original application
As indicated, this matter has a long and tangled history (and, I fear, a long and tangled future), but, fortunately, for present purposes, the relevant facts are within a pretty slight compass.
The claimants ("the trustees") are trustees of two settlements ("the 1948 settlement" and "the 1968 settlement"). In December 2006, they issued an application ("the application") in the Chancery Division seeking the sanction of the court to pursue various claims which, they contended, the two trusts had for breach of trust and other relief. There were originally two beneficiaries who were made defendants to the application, namely Marcus Lees-Millais ("Marcus") and his grandmother Lorna Joicey ("Lorna") (together "the respondents"). At a preliminary hearing, another beneficiary, Fiona Lees-Millais ("Fiona"), Marcus's mother and Lorna's daughter, was added as third defendant.
The trustees' case was that the court should sanction all the proposed claims. All three defendants contended that none of the proposed claims should be sanctioned, with the exception of a claim for negligence against a firm of solicitors.
The application came before Lindsay J ("the Judge") in May 2008, and lasted eight days. On 10 July 2008, the Judge gave a very full and closely reasoned judgment in which he decided not to sanction any of the proposed claims, save the negligence action against the firm of solicitors. There was no appeal against that decision.
A very substantial amount of costs had been incurred on behalf of the trustees (who were represented by leading counsel), Lorna (who was represented by leading and junior counsel), and the defendants (who were each represented by very experienced junior counsel). The Judge made it clear in the course of his judgment that, in his view, the trustees had acted in an inappropriately partisan way. After judgment was handed down, there was a dispute as to how the costs of the application should be allocated ("the costs dispute"), and this led to directions being given for a costs hearing, which eventually was listed in May 2010, with an estimated hearing time of ten days.
Between September 2008 and April 2010, the parties set about preparing for the costs hearing. In that connection, part of the work carried out by and on behalf of the respondents involved seeking to establish that the trustees had been acting in an underhand or improper way. This was hotly denied by the trustees.
The negotiations about costs
Meanwhile there were negotiations, expressed to be "without prejudice save as to costs" or, more accurately, "without prejudice save as to the costs of post-judgment matters", with a view to settling the costs dispute. Those negotiations were mostly conducted through solicitors, although barristers were also sometimes involved. In that connection, shortly after the Judge had given judgment, the trustees' then solicitors instructed new leading and junior counsel.
Although an earlier offer was made on behalf of the trustees in 2008, the first offer that need be mentioned was contained in three letters dated 9 April 2009.
The first letter of 9 April 2009 was to Fiona's solicitors and offered her nothing. The second letter, which we were not shown, appears to have been sent to Marcus's solicitors, and offered to limit the costs which the trustees could recover from the 1968 settlement in respect of the application to £211,215.30.
The third letter of 9 April 2009 ("the April 2009 letter") was to the solicitors acting for Lorna. This letter started by stating that it "constitute[d] a Part 36 offer", and went on to say that:
"This offer is open for acceptance up to and including twenty one days from the date of receipt of this letter. It relates to the whole of the claim advanced by your client for her own costs of the…application and to [the trustees' costs]. Naturally in accordance with Rule 36.10 acceptance of this offer will mean that [Lorna] will be entitled to her costs of the disputed costs application up to the date on which acceptance is made."
The April 2009 letter then made the following offer:
i) The trustees would pay Lorna either "(a)…a sum representing 75% of her costs [of the application] to be assessed on an indemnity basis", or "(b)…the sum of £354,417.88 (being 75% of [her] payable costs [of the application] assuming 80% recovery", and
ii) The trustees would limit the costs of the application which they could recover to £45,000 from the 1948 settlement, in addition to the £205,000 from the 1968 settlement as proposed to Marcus.
On 24 April 2009, Lorna's solicitors replied to "what [the trustees' solicitors] describe as a 'Part 36 offer'", and raising six questions. Those questions included a challenge to the trustees' failure to offer any sum to Fiona in respect of her costs of the application. That letter was answered four days later by the trustees' solicitors, who replied to all the questions, and reaffirmed their refusal to pay any sum towards Fiona's costs.
Negotiations seem to have resumed in September 2009, by which time it appears that Lorna's solicitors were also acting for Marcus. In an email that month to the trustees' solicitors, the respondents' counsel put forward figures which would have cost the trustees more than they had proposed in April 2009, and indicated that although "Fiona's costs will of course have to be paid", the respondents were "prepared to discuss [their costs] separately from [Lorna's]". The proposals in that email relating to Fiona's costs were reiterated in a letter from their solicitors in a letter dated 14 October 2009.
Thereafter, the trustees changed their solicitors and their counsel, who then renewed the costs negotiations. During the course of those negotiations, on 11 January 2010, the respondents' solicitors wrote stating that the trustees "have not withdrawn [their] Part 36 offer…". Further correspondence ensued, but it is not necessary to refer to any letter until that of 26 March 2010 ("the March 2010 letter"), which was sent by the trustees' solicitors to the respondents' solicitors. The March 2010 letter began by referring to the evidence being exchanged in anticipation of the costs hearing, and expressed the view that it was "unlikely" that the Judge "would award costs against the trustees exceeding the Part 36 offers already made", and "confirm[ing]" that "these part 36 offers have not as yet been withdrawn".
The March 2010 letter then referred to the fact that the respondents' solicitors had said that, while the respondents had given instructions "to accept a settlement", they had also said that it was likely that Fiona would continue to claim her costs from the trustees. The trustees' solicitors reiterated that the trustees were entitled to refuse to pay Fiona's costs, but then said that "in the hope of achieving an immediate settlement, [the trustees were] willing to make an offer of £100,000 in respect of [Fiona's] costs, if–but only if–[the respondents] are now prepared to accept the Part 36 offers made in April 2009".
There then was a "without prejudice" meeting on 19 April 2010, following which, on 21 April 2010, the trustees' solicitors wrote to the respondents' solicitors confirming that there would be no "increase [in] the offer contained in the [9 March 2010] letter", and giving the respondents until close of business on 22 April 2010 to accept, failing which the trustees and their lawyers would prepare for the costs hearing. In a letter dated 22 April 2010, the respondents' solicitors "accept[ed] the offers set out in the [April 2009 letters]", making it clear that Lorna and Marcus were opting for the second option offered, namely the lump sum payment of £354,417.88 to Lorna and £211,235.30 to Marcus. The promised offer to Fiona of £100,000 then followed; it was refused by Fiona, and the trustees eventually agreed to pay her £175,000 in respect of her costs of the application.
The Judge's decision on costs
Unfortunately, this did not put an end to the costs dispute or avoid the costs hearing, as the trustees contended that they were entitled to their costs in respect of the period from the beginning of May 2009...
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