Lucilla Mary Belson & Ors v Timothy Belson & Ors

Costs remain discretionary, but the unsuccessful party normally pays the successful party’s costs. In an account claim, the accounting party ordinarily bears the costs of taking the account where the receiving party obtains a substantive recovery. Settlement or mediation proposals do not justify departing from that rule where the account was incomplete or inadequately evidenced. Indemnity costs require conduct or circumstances taking the case out of the norm. Disproportionate costs caused by unreasonable conduct do not, without more, meet that threshold. The court may order a reasonable payment on account of costs.

The claimants obtained an order requiring the first defendant, a fiduciary, to account for dealings with property and money held by him. The Consent Order required him to pay the costs of the claim to 5 September 2023. The remaining issues concerned costs incurred thereafter.

The first defendant argued that the claimants’ refusal to mediate and their failure to recover more than their without-prejudice offers justified a different costs order. The claimants sought their costs on the indemnity basis. The court considered who was successful, whether the claimants’ conduct justified departing from the general rule, and whether the first defendant’s conduct justified indemnity costs.

1. Costs liability. The claimants were the successful parties because the accounts resulted in the first defendant being ordered to make payments on every account. The starting point was that the accounting party should pay the costs of taking the account. The general rule and the discretion to make a different order arise under Civil Procedure Rules 1998, r.44.2(2)(a), subject to the circumstances identified in r.44.2(4) and r.44.2(5).
2. The claimants’ refusal to mediate or meet before adequate accounts and supporting evidence had been provided was reasonable. Their without-prejudice offers were to be compared with the recovery excluding costs. On that comparison, the recovery was substantial. Their conduct gave no basis for departing from the general rule.
3. The first defendant was ordered personally to pay the claimants’ costs from 5 September 2023, excluding costs already covered by earlier orders. He was not entitled to indemnify himself from the deceased’s estate or other funds held as fiduciary.
4. Indemnity basis. Applying Excelsior Commercial and Industrial Holdings Ltd [2002] EWCA Civ 879; [2002] C.P. Rep. 67, indemnity costs are appropriate where conduct or other circumstances take the case out of the norm. The first defendant’s failure to produce clear and complete schedules, piecemeal disclosure, late applications, attempts to reopen decided matters and pursuit of irrelevant documents caused increased costs. However, that conduct was not sufficiently unreasonable to meet the threshold.
5. The fact that disproportionate costs would not be fully recovered on the standard basis was not itself a reason to order assessment on the indemnity basis. The court ordered a reasonable payment on account under Civil Procedure Rules 1998, r.44.2(8), with further submissions and a draft order to follow.