A v A

In ancillary relief proceedings, costs must be determined by considering all the circumstances, including conduct, partial success, settlement offers, disclosure, the parties’ means and the proportionality of the litigation. A party who rejects a generous Calderbank offer and pursues issues that are hopeless or fail at trial may bear the subsequent costs, even where the other party has engaged in litigation misconduct. A protective costs condition imposed on an intervening trustee should be challenged promptly; it should not ordinarily be revisited after the intervention and substantive hearing have been completed. Trustees may properly be joined where a hostile trust dispute requires a binding determination against them, but joinder is generally unnecessary for a conventional Thomas v Thomas application.

The judgment determined costs following ancillary relief proceedings between a wife and husband in which trustees had intervened. The substantive proceedings concerned matrimonial assets, alleged sham trusts, the treatment of trust assets, alleged diversion of business and disclosure. The wife failed on the principal issues, while the husband had also engaged in delayed disclosure and other litigation misconduct.

The court considered the parties’ Calderbank offers, earlier costs orders, the trustees’ conditional joinder, and costs arising from an unsuccessful freezing-order application involving FHP and MA. The central issues were the appropriate allocation of costs between the parties, the effect of the offers, and whether the trustees could recover costs despite the earlier protective condition.

1. Costs between the wife and husband. The court applied the requirement to consider all the circumstances, including conduct, partial success and admissible settlement offers. Before 22 July 2005, both parties had contributed to the litigation’s costs and misconduct, although the husband’s disclosure failures had materially increased expense. The appropriate order for that period was no order as to costs, without disturbing earlier costs orders.
2. The wife’s continued pursuit of the sham-trust allegation, despite its weak factual and legal foundation and the evidence of Mr St George, substantially prolonged and increased the costs. The husband’s disclosure failures did not justify the wife’s continued pursuit of the unsuccessful issues after disclosure was substantially complete.
3. The husband had made generous Calderbank offers which the wife rejected and comfortably beaten. In light of the information available, the parties’ conduct and the husband’s disclosure history, it would be unjust to deny him the benefit of the applicable costs rule. He was therefore entitled to his costs from 22 July 2005 to 4 April 2007 and 75 per cent of his costs thereafter.
4. Trustees. The protective costs condition imposed when the trustees were joined had not been appealed or challenged in good time. Applying Campaign Against Arms Trade v BAE Systems plc [2007] EWHC 330 (QB), it would be contrary to justice to vary or discharge it after the trustees had relied on it through the substantive hearing. The trustees were nevertheless entitled to costs from 17 December 2005, when the wife had had a reasonable opportunity to reconsider her position, and 50 per cent of their costs thereafter.
5. A hostile trust dispute could not usefully or effectively be litigated without joining the trustees, since a decision would not otherwise bind them. Intervention was the appropriate procedure. By contrast, trustees ordinarily need not be joined merely because a conventional Thomas v Thomas argument is advanced.
6. There was no order as to costs between the wife and FHP and MA. The final order required payment by the wife to the husband and trustees on the standard basis, with the agreed sums and interest provisions set out in the postscript.

First-instance costs judgment following the court’s earlier ancillary relief judgment, A v A (St George Trustees Ltd and others, interveners) [2007] EWHC 99 (Fam). The parties subsequently agreed the form and amount of the costs order, which was made on 24 July 2007.