Wedgwood Museum Trust Ltd, Re

In charity-related directions proceedings, a necessary representative defendant who acts properly will ordinarily receive costs from the relevant fund, even where unsuccessful. The court should avoid discouraging the Attorney-General from participating in the public interest. Office-holders’ costs remain subject to scrutiny when recoupment from an insolvent estate is sought. Administrators should adopt a genuinely neutral role where the Attorney-General and other parties are already presenting the opposing arguments. Unnecessary representation by Leading Counsel may be disallowed. The court may determine recoupment within the directions application and order indemnity-basis assessment, placing the burden on challengers to show unreasonableness.

The joint administrators of Wedgwood Museum Trust Limited applied for directions concerning the company’s assets and the charitable-trust issue. The court’s substantive judgment had determined that the assets were not held on charitable trusts separate from those of the company. This judgment concerned the resulting costs issues.

The Attorney-General had participated as the necessary representative of the public interest. The Pension Trustees and the Pension Protection Fund had succeeded on the substantive arguments. The administrators also sought recovery of their legal costs, including the costs of briefing Leading Counsel, raising questions about the proper role of administrators and the court’s power to scrutinise and restrict recoupment from the company’s assets.

1. The Attorney-General was an involuntary defendant representing the public interest, not a hostile claimant. Having acted properly and performed a necessary function, he was not ordered to pay the successful defendants’ costs. All parties’ costs were payable from the company’s assets.
2. Once the Attorney-General actively participated and briefed Leading Counsel, the administrators should have adopted an entirely neutral stance. Their unnecessary briefing of Leading Counsel was disallowed, subject to any allowance for separate earlier work. The guidance in BNY Corporate Trustee Services Ltd v Eurosail-UK 2007-3BL Plc and Others [2011] EWCA Civ 227 was applied.
3. Administrators are officers of the court and must scrutinise costs charged to the estate. The court has jurisdiction to determine recoupment issues within a directions application. Disallowance is appropriate where the administrators acted unreasonably.
4. Defendants’ costs were to be assessed on the standard basis and the administrators’ costs on the indemnity basis. Disallowed costs were not recoverable from the assets.