Sheffield v Sheffield & Ors

Where parties compromise accounts and inquiries, the court should ordinarily determine costs if doing so is proportionate. A broad-brush assessment should consider the settlement result, conduct, offers and any sufficiently clear indication of likely success. A defaulting trustee ordinarily bears the costs of accounts and inquiries made necessary by the breach, even if no further sum proves payable. The beneficiary is entitled to information and supporting documents, so a monetary offer made without that information will not normally justify adverse costs consequences. Costs may nevertheless be reduced to reflect a discrete successful offer or unreasonable conduct on a particular issue.

The judgment concerned costs following the settlement of a long-running breach of trust claim concerning the Laverstoke Estate and the 1968 Settlement. Earlier orders required the executors and Julian to provide accounts and inquiries concerning trust income, property, occupation rent, the Spring Pond Properties and a loan agreement. Most issues were resolved by agreement, producing payments exceeding £1.2 million to the claimant.

The court had to decide whether the claimant or defendants should bear the costs of the accounts and inquiries, and whether settlement offers, conduct and partial outcomes justified an issue-based or percentage reduction.

1. Costs following compromise. The court rejected the suggestion that the complexity of the case required it to decline to determine costs. Although the approach was necessarily broad brush, the guidance in Powles v Reeves [2016] EWCA Civ 1375; [2017] 1 Costs L.R. 19 required consideration of the settlement result, conduct, offers and any tolerably clear likely result at trial.
2. Defaulting trustees. The starting point for accounts and inquiries ordered against a defaulting trustee was that the trustee should pay the costs. That remained so even if the account showed that no money was payable. The beneficiary’s primary entitlement included accurate information about trust assets and their exploitation, together with inspection of supporting vouchers.
3. A defaulting trustee could not avoid the costs of accounting merely by making a monetary offer. Until the trustee supplied the information and documents in its possession, the beneficiary could not properly evaluate the offer or verify the account.
4. Julian’s liability concerning the Spring Pond Properties arose from acquiring the claimant’s share of a trust asset, rather than from failing to account for trust income. Some valuation issues could be determined without information uniquely held by Julian. The cost of improvements, however, required full disclosure, making the claimant’s position analogous to that relating to the executors’ accounts.
5. The principles in the Civil Procedure Rules 1998, including costs discretion, partial success and settlement offers, formed part of the background but were not directly applicable in their ordinary form. In particular, a claimant who failed to beat a Part 36 offer concerning an account should not normally pay the defendant’s costs where the information needed to evaluate the offer had not been provided.
6. The shooting-rights and spoil-spreading offer justified a 10% broad-brush reduction, reflecting the claimant’s failure to accept an offer ultimately matched by the settlement. The claimant’s conduct concerning the replacement trustee and deed of retirement justified a further 3% reduction on Julian’s costs. The executors were ordered to pay 90% of the claimant’s costs relating to the accounts under §§2 and 4 of the Main Order; Julian personally was ordered to pay 97% of the costs relating to §§5 to 7, subject to detailed assessment if not agreed.

First-instance costs determination following the parties’ agreement of the relief arising from the earlier breach of trust judgment and subsequent accounts and inquiries. No appellate history was stated.