Liu v Matyas

Under Civil Procedure Rules 1998, r 44.2, costs remain discretionary, but the general rule is that the unsuccessful party pays the successful party. In removal or substitution proceedings, success is assessed by the substantive result, not necessarily by whether the precise person originally proposed is appointed. Costs may be ordered on the indemnity basis where conduct takes the case out of the norm. Repeated baseless allegations, disproportionate evidence, excessive correspondence and unnecessary cross-examination may each justify that order. A litigant in person is not excused from maintaining proper standards of conduct. Offers to mediate do not necessarily affect costs where the party’s entrenched position made settlement unrealistic.

The judgment determined costs following the court’s earlier decision appointing a professional executor in the estate of Huan Liu: [2020] EWHC 2807 (Ch). The claimant sought his costs, including reserved costs, on the indemnity basis. The defendant argued that the proceedings were unnecessary, that the claimant should bear the costs, and that mediation and alternative probate arrangements could have avoided litigation.

The central issues were who was the successful party, whether the defendant’s conduct justified indemnity costs, and what effect should be given to proposed mediation, correspondence and alleged procedural failures.

1. The claimant was the successful party. The proceedings resulted in the removal or replacement of the defendant as personal representative and the appointment of a substitute executor. The fact that the court appointed Ms Bagha rather than the claimant’s preferred candidate did not alter the substantive result. The court applied the approach discussed in Griffin v Higgs and others [2018] EWHC 2498 (Ch), where the identity of the replacement executor was treated as relatively trivial compared with the removal and replacement achieved.

2. The proceedings were necessary. The defendant had repeatedly opposed the appointment of a substitute executor and had not proposed an alternative until shortly before the hearing. A grant of probate with power reserved was not realistically available in light of his stated position. Costs therefore followed the event under Civil Procedure Rules 1998, r 44.2.

3. The defendant’s conduct took the case out of the norm. Repeated and unsubstantiated allegations of fraud, disproportionate and inflammatory evidence, a large volume of intemperate correspondence, and an inappropriate attempt to cross-examine several witnesses each materially increased costs and impeded settlement. Being a litigant in person did not excuse that conduct.

4. Applying the indemnity-costs principle stated in Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden and Johnson [2002] CP Rep 67, the court ordered the defendant to pay the claimant’s costs on the indemnity basis. Failure to pay an earlier costs order, failure promptly to provide a transcript and the initial redaction of documents did not, individually or collectively, justify indemnity costs. The mediation offers did not alter the result because settlement was unlikely while the defendant maintained his entrenched position.

The judgment records that the court had earlier decided the substantive appointment issue in the same proceedings: [2020] EWHC 2807 (Ch). This judgment determined costs following that decision.