Hanspaul & Anor v Ward & Ors

Where substantive issues have fallen away or been settled but costs remain unresolved, the court has discretion to determine costs without directing a trial. The overriding objective requires a procedure that is fair and proportionate to the costs at stake. A trial is not inevitable merely because facts are disputed. The court should consider whether written evidence and oral submissions can fairly resolve the costs issues, and should avoid litigating academic or hypothetical substantive issues solely to decide costs. The general rule that trustees may recover costs from the trust fund under Civil Procedure Rules 1998 rule 46.3 is only a starting point.

The claim concerned the removal and replacement of trustees and a protector of a family settlement, together with issues concerning preference shares in a company. The preference-share issue was settled, the relevant trustees had been replaced, and the sixth defendant had resigned as protector and appointed a successor. The remaining dispute concerned costs.

The claimants sought a full trial, or a shortened trial, so that contested allegations could be determined and costs assessed. The defendants submitted that costs could be determined through written evidence and oral submissions. The central issue was whether a fair determination of costs required a trial with disclosure and cross-examination.

1. Disposition. The court directed that the outstanding costs issues should be determined without a trial involving cross-examination. Directions were to be settled, with each party presently envisaged as being permitted to serve one witness statement addressing costs and exhibiting the documents relied upon.
2. The power to decide costs after substantive issues have been settled or have fallen away is discretionary. The court must apply the overriding objective in Civil Procedure Rules 1998 rule 1.1, including the requirement of proportionate cost, and the costs criteria in rule 44.2. Whether a trial is required is fact-specific.
3. The observations in BCT Software Solutions Ltd v C Brewer & Sons Ltd did not establish that disputed facts necessarily require a trial. The court should be slow to determine disputed facts solely to decide costs, and must consider whether an alternative procedure can achieve justice fairly and proportionately.
4. The court was able to assess the parties’ positions and the causes of the litigation from correspondence without deciding whether the alleged misconduct had occurred. The contested factual issues therefore did not make cross-examination essential. The proposed “Trial Lite” procedure was also unattractive because it was unlikely to be workable and offered insufficient saving compared with a properly case-managed trial.
5. The general rule in Civil Procedure Rules 1998 rule 46.3 that trustees may recover costs from the trust fund was relevant to the first to fourth defendants’ position, but was only a starting point and was not determinative.
6. The court could determine the first to fourth defendants’ entitlement, if any, to costs of the preliminary issue. They were not parties to the Tomlin order, and that order did not bind or determine their costs. Any challenge to the successor protector’s appointment would require fresh or amended proceedings.