Herman Baryohai Benjamin v Raymond Ephraim Benjamin & Anor

The presumption that a claimant discontinuing proceedings pays the defendant’s costs may be displaced where the claimant was entitled to information, made reasonable pre-action requests, and commenced proceedings only because the defendant’s unreasonable failure to engage left no practical alternative. Subsequent disclosure which substantially achieves the claimant’s legitimate objective may constitute the necessary change of circumstances. A protected party’s later-established lack of litigation capacity cannot be inferred retrospectively without evidence and does not, by itself, prevent a costs order. The protective provisions governing protected parties regulate procedural steps and costs assessment, rather than creating immunity from costs.

The claimant, a discretionary beneficiary, sought documents and information from his parents as trustees of a family trust. The trustees did not respond substantively to extensive pre-action correspondence. After Part 8 proceedings were issued, a litigation friend was appointed for each defendant and the trust deed showing the disposition of the trust assets was disclosed.

The claimant discontinued the claim and applied to depart from the default costs rule in CPR 38.6(1). The issues were whether the disclosure and the defendants’ pre-action conduct justified departure from that rule, and whether the defendants’ subsequent assessment as lacking litigation capacity altered the costs outcome.

1. Costs on discontinuance. The default rule in CPR 38.6(1) carries a presumption in favour of the defendant, and the claimant faces a high hurdle. The principles summarised in Nelson’s Yard Management Co v Eziefula and derived from Brookes v HSBC Bank required a good reason, normally involving an unprompted change of circumstances caused by unreasonable defendant conduct.
2. Application of the principles. The claimant was plainly entitled to the trust disclosure. He did not know the full circumstances surrounding the transfer of the shares and could not reasonably be treated as having achieved his objective before the deed and related information were provided. The disclosure constituted a relevant change of circumstances. The defendants’ failure to respond appropriately to pre-action correspondence fairly led the claimant to issue proceedings. The reasoning in Ashany v Eco-Bat Technologies Ltd and Hewson v Wells supported that conclusion.
3. Capacity. Under section 1(2) of the Mental Capacity Act 2005, capacity had to be assumed unless established otherwise. Capacity was decision-specific and time-specific. The assessments related to litigation and were not retrospective. The court could not infer that the defendants lacked capacity to respond to pre-action correspondence or act as trustees without evidence of actual incapacity at the relevant time.
4. Protected-party costs. CPR 21.3 protected a defendant from ineffective procedural steps taken before appointment of a litigation friend, but did not bar a costs order. CPR 46.4(1) protected the party through detailed assessment where money, including costs, was ordered to be paid. The approach was consistent with Bailey v Warren and Barker v Confiance Ltd.
5. The defendants were ordered to pay the claimant’s costs to 23 September 2022 on the indemnity basis, thereafter to 20 January 2023 on the standard basis, and the later costs of resolving costs on the standard basis.