Trustees & Estates Archives

s71(3) | Beneficiaries Who Pursued Unreasonable Solicitors Act Assessments Bear the Costs Personally

Detailed Assessment, Indemnity Costs, New Costs Blog, Solicitor & Client Costs, Trustees & Estates

The Senior Courts Costs Office’s decision in Tucker & Anor v Howe [2026] EWHC 208 (SCCO) addresses two consequential issues arising from a nine-day detailed assessment of the costs of an estate administrator appointed under probate proceedings.

Background

The matter concerned the detailed assessment of costs under section 71(3) of the Solicitors Act 1974. The costs were those of Mr Mark Keeley, a solicitor and partner at Freeths LLP, who had been appointed as administrator pending suit of the estate of the late Mr Steven Howe. The appointment was made by order of HHJ Pearce on 16 October 2020 within probate proceedings brought by the executrices (the Claimants) to propound Mr Howe’s will against his daughter, the Defendant. Mr Keeley’s appointment authorised him to charge reasonable professional fees and terminated upon the final order in the probate claim.

The probate claim was compromised by a consent order in December 2021. Disputed matters of administration were later resolved by a further consent order made by District Judge Woodward on 21 February 2023. That order provided for the determination of the Administrator’s costs by way of a third-party detailed assessment pursuant to section 71(3) of the 1974 Act, setting out a timetable for the service of a bill, points of dispute, and the commencement of assessment proceedings in the Senior Courts Costs Office if agreement was not reached. The bill for assessment, served pursuant to that order, was drawn in the total sum of £147,436.33 across twelve parts, covering both contentious and non-contentious work under two separate contracts of retainer, together with Mr Keeley’s own professional time costs and counsel’s fees.

The assessment hearing took nine days of court time over three separate periods between April 2024 and February 2025. That duration was largely the result of 67 pages of Points of Dispute which employed the word “staggering” or “staggeringly” 54 times and the word “astonishing” 17 times. The court found none of that hyperbole justified. The bill was assessed at £129,686.76, just below 88% of the amount claimed. The court found the Claimants’ conduct to have been unreasonable to a high degree and ordered them to pay the costs of the assessment on the indemnity basis, summarily assessed at £132,400 exclusive of VAT.

The parties were unable to agree the terms of a final order, leading to a further hearing on two unresolved issues: whether the Claimants or the estate should bear the costs of the assessment, and the recoverability of VAT on those assessment costs. The question of costs liability had taken on particular significance because the estate of Mr Howe was insolvent, an Insolvency Administration Order having been made on 23 July 2025.

Costs Issues Before the Court

Two discrete costs issues required determination. The first was the identity of the party liable to pay the costs of the detailed assessment proceedings. The Claimants argued the burden should fall on the insolvent estate, while Mr Keeley contended the Claimants were personally liable in their capacity as beneficiaries who had applied for the assessment. The second issue was whether Value Added Tax was properly recoverable on the costs of the assessment, with the Claimants arguing that the work constituted a non-taxable self-supply by Freeths.

The Parties’ Positions

On the burden of costs, Professor Watson-Gandy submitted for the Claimants that the central consideration in a section 71(3) assessment was the protection of the estate’s interests, relying on Kenig v Thomson Snell & Passmore LLP [2024] EWCA Civ 15. He argued that the Claimants had participated in their capacity as executrices fulfilling a fiduciary duty to the beneficiaries. He submitted that DJ Woodward’s consent order made no provision for personal liability and that CPR 46.2, which governs costs orders against non-parties, would have been required if such liability was intended.

Mr Latham argued for Mr Keeley that the Claimants had clearly applied for and pursued the assessment in their capacity as beneficiaries, a point reinforced by their own pre-action correspondence and by the legal arguments they had advanced to broaden the scope of the assessment. The Claimants’ representative, Mr Valls, had consistently corresponded on behalf of all the beneficiaries and demanded a detailed assessment in that capacity. The court retained an absolute discretion under section 51 of the Senior Courts Act 1981 and section 71(3)(b) of the 1974 Act. Given the court’s findings on the Claimants’ unreasonable conduct — conduct not attributable to the estate or the beneficiaries as a whole — it was appropriate to order the Claimants to pay the costs personally.

On VAT, Professor Watson-Gandy argued that where solicitors act for themselves in contentious business matters, the supply is not a taxable supply, citing the VAT tribunal decisions in Ralph Arthur Archer v The Commissioners and D A Walker v The Commissioners. It was submitted that Freeths’ bills were addressed to Mr Keeley at Freeths, and that estate accounts bore Freeths’ business address, indicating a self-supply. Mr Latham submitted that the point had not been raised in the Points of Dispute against the main bill and should not be permitted to be raised after the assessment had concluded. On the merits, he argued that Mr Keeley and Freeths were separate legal entities capable of entering into a retainer and that VAT was properly chargeable on Freeths’ supply of services to him.

The Court’s Decision

Burden of the Costs of Assessment

Costs Judge Leonard held that the Claimants were personally liable for the assessment costs in their capacity as beneficiaries. The court rejected the argument that they had acted as executrices, for several reasons. The Claimants had made it clear from the outset that they were acting as beneficiaries. They had relied extensively upon their position as beneficiaries to broaden the scope of their challenges to Mr Keeley’s costs. And the statutory jurisdiction under section 71(3) does not empower the court to order an assessment on the application of a trustee, executor or administrator; it empowers the court to do so on the application of any person interested in the relevant property — in this case, the beneficiaries of Mr Howe’s will.

The description of the Claimants as executrices in the heading of the proceedings and other procedural documents reflected the proper title of the probate proceedings in which the consent order was made. It had no bearing on the substance of the order or the capacity in which the assessment was pursued. The court held that CPR 46.2 had no application because the Claimants were already parties to the assessment proceedings, not non-parties. DJ Woodward’s order made no provision for the costs of the assessment because orders for assessment do not make such provision; the award and quantification of those costs was a matter for the assessing judge.

Even if the court was wrong on any of those points, it accepted Mr Latham’s submissions on the appropriate exercise of discretion. The Claimants had, without ever themselves making any attempt at negotiation, rejected three attempts by Mr Keeley to settle the costs dispute upon receipt of a smaller sum than he was ultimately found to be due on assessment. Had they engaged with those settlement attempts, it would have been possible to avoid the necessity for the court to spend nine days reducing the bill by less than £18,000 inclusive of VAT. It would be unfair for the estate, and potentially for Mr Ross Tucker and Mr Jamie Tucker (who did not participate in the assessment), to bear any part of the burden of the unnecessary costs incurred through the Claimants’ actions.

Recoverability of VAT

The court first held that the Claimants were barred from raising a VAT challenge to the main bill itself, having failed to raise the point in their Points of Dispute. CPR 47.14(6) provides that only items specified in the points of dispute may be raised at the hearing unless the court gives permission, and no such permission had been sought or granted.

On the substantive question of VAT on the costs of the assessment, the court found no basis for the self-supply argument. Mr Keeley and Freeths LLP are separate entities capable of entering into a contract of retainer. Freeths had provided services to Mr Keeley under two contracts of retainer, and VAT was payable on their charges in the usual way. The termination of Mr Keeley’s appointment as administrator did not affect this analysis. On Mr Keeley’s own time costs (Part 10 of the bill), the court held there was no question of self-supply because his services as administrator were supplied to the estate, not to himself. As for the costs of the assessment, Mr Keeley had been represented by counsel instructed by Freeths; he was not representing himself. He had a liability to Freeths for the attendant costs, and they had an obligation to add VAT to their fees and disbursements. The inclusion of Freeths’ address on bills or estate accounts was not to the point.

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Does Removal As Trustee Always Mean Loss Of Indemnity?

Indemnity Costs, New Costs Blog, Trustees & Estates

The High Court’s decision in Smith v Campbell [2026] EWHC 144 (Ch) confirms that the test for a trustee’s indemnity following removal is whether they defended in the interests of the trust and acted reasonably in all the circumstances — not whether they were ultimately successful in resisting removal.

Background

The claimants, Nathan James Smith, Leah-Jane Styring, and Suzanne April Smith, beneficiaries of the Graham Cheslyn-Curtis Will Trust, brought proceedings against the four trustees. The claim was for the removal and replacement of all trustees; as recorded in this costs judgment, it involved “numerous allegations of breach of trust and misconduct,” the majority of which were ultimately dismissed. The trial on the merits resulted in a written judgment on 17 November 2025 (Smith v Campbell [2025] EWHC 3011 (Ch)) (the “Main Judgment”). In that judgment, the court ordered the removal of two trustees, Ian Patrick Campbell (‘Paddy’) and Malcolm Ronald Taylor, but declined to remove the remaining two, Sarah Cheslyn-Curtis and Maldwyn Stephen Henry Worsley-Tonks MBE. Following that decision, the parties agreed to the appointment of Freeths Trustees Limited as a replacement professional trustee. The only outstanding matter was the determination of costs, which was the subject of a hearing on 14 January 2026.

Costs Issues Before the Court

The court was required to determine two distinct but related costs issues. The first was the incidence of costs as between the claimant beneficiaries and the defendant trustees, to be decided under the court’s general discretion pursuant to section 51 of the Senior Courts Act 1981 and CPR rule 44.2. The second issue was whether the trustees should be deprived of their right to an indemnity from the trust fund for their costs of the proceedings, which is governed by section 31(1) of the Trustee Act 2000, implemented in the litigation costs context by CPR rule 46.3 and Practice Direction 46.

The Parties’ Positions

The claimants, represented by Paul Burton, argued they were the substantially successful party as they had achieved “regime change” by securing the removal of two trustees and the appointment of an independent professional trustee. They submitted the trustees had unreasonably refused to mediate and had rejected offers of settlement made shortly before trial which reflected the ultimate outcome. The claimants sought an order that the trustees pay their costs on the standard basis and that the trustees be deprived of their indemnity from the trust fund, contending it was unreasonable for Paddy and Malcolm to have “fully and determinedly defended their removal.”

The trustees, represented by Alexander Learmonth KC, submitted they were the successful parties in substance. They emphasised that the claimants had failed to remove two trustees and had advanced numerous allegations of misconduct which were almost entirely dismissed. They argued the claimants’ true objective was commercial, relating to Paddy’s directorship of the underlying company, Millpledge, and that the claimants had acted unreasonably by issuing proceedings without any pre-action correspondence and by rejecting reasonable settlement offers, including an early proposal for Paddy to retire as trustee. The trustees sought an order that the claimants pay their costs, or circa 90% of them, and that they retain their full right of indemnity from the trust.

The Court’s Decision

On the incidence of costs between the parties, the court held that the claimants were the partially successful party, having achieved the removal of two of the four trustees. The starting point pursuant to CPR rule 44.2(2)(a) was therefore that the trustees should pay the claimants’ costs. However, the court exercised its discretion to depart from this rule. The court found the claimants’ conduct was unreasonable in several key respects: they issued proceedings without any pre-action correspondence or compliance with the Practice Direction – Pre-Action Conduct; they made and pursued “myriad allegations of misconduct” against the trustees which were unjustified and exaggerated, and which formed the bulk of the litigation costs; and they were primarily responsible for the failure to engage in early alternative dispute resolution. On this last point, the court found the claimants had not accepted early offers of mediation and had rejected outright the trustees’ December 2024 proposal that Paddy retire as a trustee. Although shortly before trial the parties exchanged without prejudice save as to costs offers with substantive terms closely reflecting the eventual outcome, the principal remaining dispute was costs, and time ran out before a resolution could be reached. In all the circumstances, the court ordered that there be no order as to costs between the parties.

On the trustees’ right of indemnity, the court held that their costs were not improperly incurred and they were entitled to be indemnified from the trust fund. The court found it was proper and reasonable for the trustees to defend themselves against the numerous allegations of breach of trust and misconduct, the majority of which were dismissed. Furthermore, the trustees had made a good faith and reasonable attempt to address the legitimate relationship issues by making an open offer in December 2024 for Paddy to retire or for a demerger of the trust assets involving an independent trustee. The claimants’ rejection of that proposal, on the basis that Paddy would remain a company director, was not a reasonable basis on which to refuse an offer that sought to address their concerns about trust administration. The trustees had not acted perfectly—for example, Malcolm’s position was not addressed in their open proposal—but their conduct in defending the allegations and making a constructive settlement proposal was not such as to justify depriving them of their indemnity. The court also noted, obiter, that it was doubtful whether it had jurisdiction to order a partial deprivation of indemnity, but declined to decide the point and stated it would not have exercised any such jurisdiction on the facts of this case.

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Executors Lose Estate Indemnity After Hostile Removal Litigation

Indemnity Costs, New Costs Blog, Trustees & Estates

The High Court’s decision in Dorothy House v Helme [2026] EWHC 75 (Ch) confirms that executors who defend removal applications on their own behalf, rather than for the estate’s benefit, have no right to an indemnity from the estate for their litigation costs.

Background

The claim concerned the administration of the estate of Mary Organ, who died in December 2017. Her will appointed the first defendant, a solicitor employed by Richard T Bate & Co, and the second defendant, her first cousin once removed, as her executors and trustees [§7-9]. The estate was substantial, valued for probate at £4,717,302 net [§8]. The claimants, two charities, were the sole residuary beneficiaries.

The administration was characterised by significant delay. The defendants did not notify the claimants of their interest under the will; although this was not a breach of legal duty, it undermined the claimants’ confidence in the administration [§11, §14, §45, §56]. Instead, the claimants learned of their entitlement from a third party, Mr Outlaw, in August 2020, over two and a half years after the death [§11]. A grant of probate was not extracted until April 2022 [§11]. The defendants attributed the delays to complexities within the estate, including investigating lifetime gifts and dealing with the conduct of Mr Outlaw [§12-13].

A central issue arose concerning the sale of the main estate asset, Church Farm. In June 2024, an offer of £2.2 million was received from Simon Evans and his wife [§19]. Mr Evans was a first cousin once removed of the deceased, making him the second defendant’s second cousin [§7, §19]. Critically, Mr and Mrs Evans were also clients of the first defendant’s law firm, and the firm proposed to act for both the estate and the purchasers in the transaction [§19-21]. Despite repeated requests from the claimants from August 2024 onwards to re-market the property when the purchasers could not demonstrate available funds, the defendants persisted with the sale for approximately 18 months without putting the property back on the open market [§22-27, §65-67].

Frustrated by the lack of progress and concerned about conflicts of interest, the claimants’ solicitors wrote to the defendants on 13 August 2025, enclosing a draft consent order inviting them to step down without having to pay the claimants’ costs [§26]. This offer was refused. Following further correspondence, on 10 December 2025, the claimants threatened to apply for an injunction if undertakings to preserve estate assets were not provided by 11 December [§30]. No undertakings were given.

On 12 December 2025, the claimants issued proceedings seeking the removal of the defendants as personal representatives and the appointment of Stone King Trust Corporation Limited in their place [§1]. They simultaneously applied for an interim injunction to preserve the estate’s assets. Notably, on the morning of the same day, the defendants exchanged contracts for the sale of Church Farm without prior notice to the claimants [§32]. The defendants’ solicitors had stated in correspondence on 8 December that exchange would take place “at the beginning of next week” [§29, §68]. The court drew the inference that the sale was accelerated to avoid the possibility that an injunction would be granted on 15 December [§69].

The injunction application was heard on 15 December 2025. The defendants consented to an injunction preventing them from disposing of or diminishing estate assets, and directions were given for a disposal hearing [§34]. By the time of the disposal hearing on 7 January 2026, the defendants conceded that they should be removed and replaced [§4]. The contested issues before the court were therefore limited to costs.

Costs Issues Before the Court

Following the defendants’ concession on their removal, the court was required to determine three specific costs issues [§5]:

1. 1. Whether the defendants should be ordered to pay the claimants’ costs of the claim and the injunction application.
  2. If so, whether those costs should be assessed on the indemnity basis rather than the standard basis.
  3. Whether the defendants were entitled to an indemnity from the estate for their own legal costs and for any costs they were ordered to pay to the claimants.

These issues required the court to consider the defendants’ conduct both in the administration of the estate and in the litigation itself. The judge distinguished between these two categories of conduct in his analysis [§72].

The Parties’ Positions

The Claimants’ Position: The claimants argued that they were the successful parties and that the defendants should pay their costs [§72]. They contended that an award of indemnity costs was justified due to the defendants’ conduct in the litigation, which was “out of the norm” [§72]. This conduct included accelerating the exchange of contracts for the Farm after being put on notice of the injunction application, failing to serve evidence in a complete and timely manner, and unreasonably refusing earlier offers to step down without a costs order [§73].

Regarding the indemnity, the claimants submitted that the defendants were not entitled to an indemnity from the estate for any costs [§75]. They argued that the litigation was hostile, and the defendants had incurred costs in defending their own positions, not in acting for the benefit of the estate [§75].

The Defendants’ Position: The defendants did not dispute that the claimants were the successful party, but resisted an order for indemnity costs [§72-73]. Critically, they argued that they were entitled to a full indemnity from the estate for both their own costs and any costs payable to the claimants [§75]. They submitted that their opposition to removal was undertaken in what they believed to be the best interests of the estate, specifically to facilitate the sale of the Farm. They relied on the principle, acknowledged in Shufflebotham v Shuff-Wentzel [2025] EWHC 3321 (Ch), that any doubt should be resolved in favour of the fiduciary [§53].

The Court’s Decision

The court ordered the defendants to pay the claimants’ costs and made determinations on the specific issues as follows.

1. Liability for Costs and the Indemnity Basis: Applying CPR rule 44.2, the judge held that the claimants were the successful party and there was no good reason to depart from the general rule [§72]. The judge then considered whether to award costs on the indemnity basis, guided by Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden and Johnson [2002] EWCA Civ 879, which requires conduct or circumstances “out of the norm” [§54, §72].

The judge made clear that for this purpose he was not concerned with the defendants’ conduct of the administration as such; instead, he was looking simply at the claim and application made by the claimants, and the defendants’ conduct of their side of it [§72].

The judge found such conduct present [§73]. They had accelerated the exchange of contracts on the very morning they were served with the injunction application, having previously indicated exchange would occur “at the beginning of next week” [§68-69]. This was done without any plausible explanation and the court drew the inference that it was to avoid the possibility of an injunction [§69]. Furthermore, they had failed to serve their evidence completely by the agreed deadline and had served further evidence without permission [§35, §73]. Their refusal of more than one offer to retire without paying costs also contributed to this finding [§73]. The judge also noted that it may perhaps be that their solicitors did not have much experience of this kind of High Court litigation, but that was a matter between the defendants and their solicitors, and was not an answer to the claimants’ submission [§73]. Consequently, the defendants were ordered to pay the claimants’ costs on the indemnity basis [§73].

2. The Defendants’ Indemnity from the Estate: The judge analysed this issue by reference to the framework in Price v Saundry [2019] EWCA Civ 2261, the Trustee Act 2000, s.31(1), and CPR PD46, paragraph 1 [§50-53, §74].

There are two elements to the indemnity: first, that the expense was “properly incurred”; second, that it was incurred “when acting on behalf of the estate” [§74].

On the second element, the judge concluded that the defendants never incurred the costs of this litigation when acting on behalf of the estate [§76]. The character of the proceedings was hostile litigation from the outset. The defendants initially resisted removal vigorously, challenging all the claimants’ complaints about their behaviour and seeing no reason for their being removed [§76]. The fact that by 22 December 2025 they had offered to consent to removal (on terms including an indemnity) confirmed that they did not consider the estate’s best interests required their continuation in office [§75]. By the disposal hearing, they no longer opposed removal and were simply concerned to argue about costs and their indemnity [§75]. In these circumstances, the defendants were never entitled to an indemnity because they entered into and conducted the litigation on their own behalf, not on that of the estate [§76].

In the alternative, the judge held that even if the defendants had incurred the litigation costs on behalf of the estate, they would have been deprived of the indemnity because the costs were not “properly incurred” [§77]. Following Price v Saundry, “properly incurred” means “not improperly incurred”, and the right can be lost due to misconduct, which includes not only breach of duty but also unreasonable conduct [§50, §74].

The judge found the following misconduct in the defendants’ administration that was directly relevant to the litigation [§77]:

- - Inordinate and unjustified delay in selling the Farm, including taking an unjustified risk in waiting approximately 18 months for purchasers who did not have available funds [§58, §66-67];
  - Unauthorised self-dealing through the sale of estate machinery to the second defendant without seeking the claimants’ consent [§60];
  - Charging the estate at a professional solicitor rate for non-legal work, namely attending the Farm to water cattle [§61];
  - Placing themselves in a position of acute conflict of interest by allowing their solicitors to act for both sides in the Farm sale, without obtaining the claimants’ fully informed consent until over 15 months after the offer was made [§62-64].

This conduct amounted to breaches of duty and seriously unreasonable behaviour, more than mere mistake [§77]. Consequently, the defendants lost any right to an indemnity from the estate for their own costs or for the costs payable to the claimants [§77-78].

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The High Court’s decision in Shufflebotham v Shuff-Wentzel [2025] EWHC 3321 (Ch) confirms that trustees who bring an honest and reasonable application may retain their indemnity to recoup costs from the estate, even when ordered to pay the successful party’s costs personally.

Background

The case concerned an application made by two of the three executrices and trustees of the estate of Alan Shufflebotham (deceased), the claimants, for their replacement and for the removal and replacement of the third executrix and trustee, the defendant. The application was heard on 14 August 2025, resulting in an ex tempore judgment. The claimants were unsuccessful in their bid to remove the defendant from her office. However, they were permitted to resign (which was unopposed), and the court ordered the appointment of a professional executor and trustee to act alongside the defendant and a lay representative from the first claimant’s branch of the family. The claimants had originally proposed Mr Taylor as the professional trustee, but he subsequently withdrew his consent to act and another professional was appointed.

A significant procedural feature was that the defendant had substantially changed her position only nine days before the hearing. Until a fairly late stage — and in any event until her without prejudice save as to costs offer of 5 August 2025 — the defendant had opposed the appointment of Mr Taylor without providing any proper reason and had proposed either that she continue alongside a lay trustee or that a different professional trustee of her own choosing be appointed. The 5 August offer proposed that Mr Taylor replace all parties as sole executor to complete the administration of the estate, with the defendant and Mr Taylor then becoming the trustees of the testamentary trust. Acceptance of that offer would, as the judge later held, have left the first claimant’s branch of the family entirely unrepresented on the trust.

Following the substantive decision, the question of costs was disputed. The court determined that the claimants were entitled to their own costs from the estate under their trustee indemnity and that the defendant, as the overall successful party, was entitled to her costs of the application. However, significant disagreement remained over whether the defendant’s costs should be paid by the claimants personally or directly from the estate, and whether the claimants could recoup any personal liability via their indemnity. The court invited sequential written submissions on these issues, received on 23 September 2025 for the claimants and 9 October 2025 for the defendant.

Costs Issues Before the Court

The court was required to determine two distinct but related costs issues. The first was whether the defendant’s costs should be paid by the claimants personally or directly from the assets of the estate. The second, contingent on the first, was whether the claimants, if ordered to pay the defendant’s costs personally, should be permitted to recoup that outlay from the estate pursuant to their trustee indemnity.

The Parties’ Positions

The claimants, represented by Mr Perrin, argued that the case did not fit neatly into the conventional categories of trust litigation. They submitted it was more akin to a ‘trust dispute’ brought for the benefit of the estate to break a deadlock, rather than hostile litigation. They contended that as the application was necessary and brought reasonably in the execution of their duties, the defendant’s costs should be paid from the estate. In the alternative, if the claimants were ordered to pay personally, they argued they should be entitled to indemnify themselves from the estate, as their conduct was not improper. Distinction was also sought for the second claimant, who was not a beneficiary and was said to have played a neutral role, merely seeking her own removal.

The defendant, represented by Mr Poole, argued the proceedings were a hostile ‘beneficiaries dispute’ where costs should follow the event against the unsuccessful party personally. She submitted the claimants’ primary aim was her removal, which constituted hostile litigation. She further contended that the claimants had acted unreasonably by ignoring pre-action proposals, advancing overblown criticisms, and rejecting her reasonable settlement offer made on 5 August 2025. On this basis, she argued the claimants should not only pay her costs personally but should also be denied the right to recoup those costs from the estate via their indemnity.

The Court’s Decision

The court held that the defendant’s costs should be paid by the claimants personally, but that they were entitled to recoup those costs from the estate under their indemnity. In reaching this conclusion, the judge applied the principles summarised by Asplin LJ in Price v Saundry [2019] EWCA Civ 2261 and the traditional categories from Re Buckton [1907] 2 Ch 406.

On the character of the proceedings, the judge found that while the case did not fall squarely into one category, it was closest to a ‘beneficiaries dispute’. The central purpose of the claimants’ application was the removal of the defendant against her will, which was properly characterised as hostile litigation. Consequently, the correct order was for the unsuccessful claimants to pay the successful defendant’s costs. The judge rejected the argument that the second claimant should be treated differently, noting she had chosen to join the joint application, was represented by the same lawyers, advanced the same evidence, and had not distinguished her position until the costs submissions.

On the indemnity issue, the court found no basis to deprive the claimants of their right to recoup the costs from the estate. The judge held that bringing the application was a reasonable step to address a genuine deadlock in the administration of the estate. The claimants had acted honestly and not for their own personal benefit or for the benefit of one group of beneficiaries over another. While some criticisms of the defendant were exaggerated, trustees — particularly lay trustees — were not to be held to a standard of perfection. The rejection of the defendant’s 5 August offer was not unreasonable, as accepting it would have left one branch of the family unrepresented on the trust, an outcome the court itself later deemed inappropriate. Applying the principle from Lewin on Trusts that doubts should be resolved in favour of trustees, the judge ordered that the claimants’ right of indemnity remained intact.

The final order was that the claimants were jointly and severally liable for the defendant’s costs, but were entitled to call upon their indemnity from the estate in respect of that liability.

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Indemnity Costs | Unfounded Claims & Dishonest Conduct

Probate Challenger Ordered To Pay Indemnity Costs After Maintaining Baseless Opposition For Eight Years (04/11/2025)

In Burgess v Whittle [2025] EWHC 2829 (Ch), HHJ Paul Matthews held that maintaining a probate challenge without reasonable basis for eight years constituted grossly unreasonable conduct justifying indemnity costs. The court rejected the Spiers v English exception, finding the deceased’s estrangement and beneficiary changes within family provided no grounds for suspecting will invalidity. The first defendant’s last-minute concession only on the eve of trial, requiring the successful claimant to travel from Australia for an unnecessary hearing, compounded the finding of conduct outside the norm.

Are Courts Bound By Summary Assessment Principles When Ordering Pro Bono Costs Under Section 194? (09/11/2025)

In EJW Builders Ltd v Marshall [2025] EWHC 2898 (Ch), HHJ Paul Matthews reduced notional pro bono costs from £393,329 to £117,000 under section 194 of the Legal Services Act 2007, applying a broad brush approach and guideline hourly rates as a benchmark. The court emphasised that pro bono costs orders serve dual purposes—levelling the litigation playing field and funding organisations offering free legal help—and the court should “err on the side of caution” in assessment. Excessive solicitor attendances and disproportionate document work were substantially reduced despite counsel’s fees being allowed in full.

Failed Fraud Allegations Justify Indemnity Costs Order Despite Proper Conduct (09/11/2025)

In Malhotra Leisure Limited v Aviva Insurance Limited [2025] EWHC 2901 (Comm), Nigel Cooper KC ordered indemnity costs despite Aviva’s fraud allegations being properly pleaded and responsibly pursued through experienced counsel. Six factors justified the order: the exceptional seriousness of conspiracy allegations; foreseeable financial and reputational harm to the claimant; pursuit through to trial without settlement discussions; objective weakness apparent from the outset regarding the financial motive; an evolving case theory at trial with unpleaded allegations; and late withdrawal of specific allegations after substantial opposing party costs. The judgment confirms that technical compliance with pleading requirements does not prevent indemnity costs where overall circumstances take the case out of the norm.

Indemnity Costs Awarded Where Defences Were ‘Built On Deliberate Lies’ (13/11/2025)

In JSC Commercial Bank Privatbank v Kolomoisky [2025] EWHC 2909 (Ch), The Honourable Mr Justice Trower awarded the claimant indemnity basis costs on the grounds of defences built on deliberate falsehoods, significant disclosure failures, non-attendance of defendants as witnesses, belated abandonment of key arguments, and unsatisfactory expert evidence viewed in the round. The court ordered an interim payment of £76.4 million and awarded pre-judgment interest at Bank of England base rate plus 3% from payment dates, reflecting commercial borrowing costs and the serious fraud underlying the proceedings.

Indemnity Costs Awarded Where Proprietary Estoppel Claim Pursued As “Anvil For Settlement” Against Elderly Mother (19/11/2025)

In Grijns v Grijns [2025] EWHC 2853 (Ch), Master Bowles (Sitting in Retirement) awarded indemnity costs where the claimant pursued litigation as an “anvil for settlement” through invented assurances, capacity allegations raised solely for pressure, and a tactical committal application issued one month before trial. The court found the proprietary estoppel claim was based on assurances that had been constructed for litigation purposes and were wholly inconsistent with contemporaneous documents. The claimant’s conduct, viewed in the round, was outside the norm despite the defendants’ failure to mediate and rejection of settlement offers.

Detailed Assessment & Bill Defects

CPR 44.11 | 75% Costs Reduction For Egregiously Defective Bill | Solicitors Remain Vicariously Liable For Costs Draftsman Failures (10/11/2025)

In Hyder v Aidat-Sarran [2024] EWHC 3686 (SCCO), Deputy Costs Judge Roy KC refused strikeout but imposed a severe 75% costs reduction under CPR 44.11 where original and subsequent bills contained multiple egregious, persistent, and unrectified defects. The court held that solicitors bear full vicarious responsibility for costs draftsmen’s failures and cannot avoid sanctions by blaming their agents; solicitors must apply proper superintendence and oversight regardless of agent involvement. The draconian sanction of strikeout was declined on a very narrow balance, but the substantial reduction reflected the seriousness of the conduct.

Part 36 Consequences In Detailed Assessment | De Minimis Form Errors Will Not Invalidate Offers (24/11/2025)

In Stockler v The Corporation of the Hall of Arts and Sciences [2025] EWHC 3080 (SCCO), Deputy Costs Judge Joseph held that a clerical error misdescribing a defendant’s Part 36 offer as a “claimant’s offer” on form N242A was de minimis and did not invalidate the offer or prevent CPR 36.17 consequences applying. The offer was clear, made shortly after pleadings closed, and provided sufficient information for evaluation; CPR 36.17(4)(c) consequences applied with interest on costs at 8% per annum until offer expiry and 14% thereafter. The court rejected arguments that Ainsworth rulings and disallowance of amendments made it unjust to apply Part 36 consequences.

Security for Costs

Security For Costs Under CPR 3.1(5) Ordered As Alternative Sanction To Debarring For Non-Compliance (05/11/2025)

In Serious Fraud Office v Smith (Thomas debarring application) [2025] EWHC 2876 (Comm), Henshaw J refused to debar Mr Thomas from participating in enforcement proceedings but ordered security for costs of £200,000 as a proportionate sanction for serious non-compliance with procedural orders. The court held that debarring is a draconian remedy of last resort and that security for costs under CPR 3.1(5) can serve as an effective alternative where breach of court orders has occurred, though the judge may consider the defendant’s history of non-payment and the proportionality of any sum ordered.

SCCO Rules That Solicitors Act Proceedings Qualify As “Claims” For CPR 25.26 Purposes But Dismisses Security Application On The Facts (17/11/2025)

In Pickering v Thomas Mansfield Solicitors Limited [2025] EWHC 3021 (SCCO), Costs Judge Nagalingam held that Solicitors Act assessment proceedings constitute a “claim” for CPR 25.26 purposes and security for costs applications are therefore permissible. However, the application failed on the substantive test under CPR 25.27(b)(vi) because the paying party’s financial transactions—including mortgage repayments, property investments, and loan repayments—converted liquid funds into other enforceable assets rather than dissipating them. The court held that the evidential burden rested squarely on the applicant and that the paying party bore no obligation to prove ability to pay.

Proportionate & Appellate Costs Orders

CPR 63.26(2) | IPEC Costs Order Quashed Where ‘Unreasonable Conduct’ Finding Overstated Application’s Lack Of Merit (18/11/2025)

In Costa v Dissociadid Ltd [2025] EWCA Civ 1475, Lord Justice Zacaroli allowed an appeal against an immediate IPEC costs order, holding that findings of “unreasonable behaviour” under CPR 63.26(2) cannot rest on overstated characterisations of applications as “so lacking in merit” where key arguments have real prospects of success. The court found the claimant’s argument regarding scope of the damages claim was arguable and that the judge had erred in failing to address the Part 18 aspect of the application before making the costs order.

Successful Defendant’s Costs In Judicial Review Claim Reduced by 15% for Partial Failure On Discreet Issue (12/11/2025)

In R (on the application of Prestige Social Care Services Ltd) v Secretary of State for the Home Department [2025] EWHC 2860 (Admin), HHJ Tindal dismissed the judicial review claim but reduced the defendant’s costs by 15% to reflect partial failure on the Annex C1 non-genuine vacancy ground. The court applied a broad-brush discretion recognising that most costs in multi-ground judicial review were “common costs” incurred regardless of which ground succeeded, and that the successful party would have won on alternative grounds in any event.

CPR 36.17(4)(c) Interest Calculation

CPR 36.17(4)(c) | How To Calculate Enhanced Interest On Costs — Aggregate Method Applies (26/11/2025)

In Barry v Essex County Council [2025] EWCC 64, Deputy District Judge Rathod held that enhanced interest on costs awarded under CPR 36.17(4)(c) is calculated using the aggregate costs method, applying interest at the enhanced rate to the total sum of all post-offer costs from expiry to the date of the costs order. The court rejected the individual item method as unworkable in practice, particularly in summary assessment contexts where individual dates of incurrence are not examined, and found the aggregate method consistent with the post-Jackson reforms’ “carrot and stick” policy designed to encourage settlement.

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Indemnity Costs Awarded Where Proprietary Estoppel Claim Pursued As “Anvil For Settlement” Against Elderly Mother

Indemnity Costs, New Costs Blog, Trustees & Estates

The Chancery Division’s decision in Grijns v Grijns [2025] EWHC 2853 (Ch) establishes that litigation pursued as an “anvil for settlement” through invented evidence and tactical pressure will justify indemnity costs despite mediation obstacles created by both parties.

Background

The dispute concerned a four-bedroomed Georgian terraced house at 31 and 31A Bury Walk, Chelsea, valued at approximately £3.85 million. The property was purchased by Andrew Grijns’s parents in 1994 and vested in his mother, Janice Grijns, by survivorship upon his father’s death in 2019 [§4]. Andrew had lived at the property since 1999 but his licence to occupy was terminated no later than 1 August 2023.

Andrew’s primary claim was founded on proprietary estoppel, asserting entitlement to a two-thirds beneficial interest based on alleged assurances from his parents [§3]. His secondary claim sought aggravated and exemplary damages arising from an incident on 10 June 2023, when Janice and his three brothers entered the property after Andrew refused them access [§5]. Janice counterclaimed for declarations of sole ownership, mesne profits for Andrew’s unlawful occupation, and an account of profits from lettings of the self-contained flat at 31A.

The substantive judgment handed down on 12 June 2025 ([2025] EWHC 1413 (Ch)) dismissed all Andrew’s claims, declared Janice the sole owner, determined Andrew had been a trespasser since 1 August 2023, and ordered him to pay mesne profits [§§1-2]. Andrew’s only success was limiting his rental account liability to 10 May–1 August 2023, due to overlap with mesne profits liability thereafter [§2].

Costs Issues Before the Court

At the consequential hearing held on 19-20 August 2025, the defendants sought all costs on the indemnity basis, characterising Andrew’s claim as weak, speculative, and based on concocted evidence, with litigation conduct including unfounded capacity allegations and a late committal application [§8].

Andrew argued for no order as to costs, contending the defendants’ 10 June 2023 conduct warranted a 50% penalty and their failure to mediate or engage with his Calderbank offers warranted an additional 30-50% reduction—combined penalties totalling 80-100% [§17].

The Court’s Decision

Costs Follow the Event

The court held that the defendants were clear winners and costs should follow the event [§11]. The accounting issue was peripheral, having no significant impact on costs, as the factual narrative concerning the relationship between Andrew and his parents would have been examined regardless for the proprietary estoppel claim [§§13-16]. No allowance was made in Andrew’s favour.

Pre-Litigation Conduct

The court rejected Andrew’s submission that the 10 June 2023 entry warranted a costs penalty. The entry, although forcible in the literal sense, was entirely lawful and not a self-help remedy. The defendants’ intention was not to remove Andrew from possession but to attempt negotiation [§§18-20]. The approach went wrong through failure to inform Andrew of the visit, but it was Andrew’s unlawful refusal of access to his mother that triggered the confrontation [§21].

Taking a wider view, the court found no reason to believe that, absent the 10 June events, settlement would have resulted [§22]. The parties were already very far apart: Andrew asserting claims to 100% or 55% of the property whilst Janice had offered £200,000 to each child [§§23-24]. The court was satisfied the events of 10 June 2023 should have no adverse bearing on the defendants’ costs entitlement [§25].

Mediation and Settlement

The court conducted a detailed analysis and concluded the defendants’ approach had been reasonable throughout [§§76-106]. This was not a case where the defendants ever refused to mediate [§31].

The defendants proposed mediation as early as August 2023 [§79]. However, Andrew imposed unreasonable conditions by refusing to allow his brothers to participate, notwithstanding their position as defendants in the case. The court characterised Andrew’s approach as “high-handed” [§80]. The brothers were defendants against whom penal damages were sought; any sensible settlement had to embrace their position. They had a very real interest in mediation given the relief Andrew claimed would, if granted, have seriously and unfairly affected them [§80]. Moreover, Janice, elderly and in ill-health, was wholly entitled to family support at mediation, with any concerns about improper influence met by her representation by competent lawyers [§81].

Andrew later modified his position to accept his brothers’ attendance, but only for the trespass claim portion of mediation—an approach that remained inappropriate [§§84, 87]. By the time parties were contemplating post-disclosure mediation, delays in disclosure (for which both parties shared responsibility) left insufficient time for meaningful mediation pre-trial [§§88-93]. Master McQuail’s direction of 23 September 2024 recognised this “time pressure” and made only a general ADR direction [§95].

The court distinguished PGF II SA v OMFS Co Ltd [2014] 1 WLR 1386 and its “general rule” that failure to respond to mediation requests is unreasonable. This was not “silent non-engagement” [§106]. Drawing on Gore v Naheed [2017] 3 Costs LR 509, the court held that particular circumstances meant no costs penalty was warranted [§35]. The court concluded: “Far from failing to engage with mediation, the Defendants chose, in circumstances where they could readily and properly [have] eschewed mediation, to contemplate mediation and to continue to do so notwithstanding unreasonable objections raised by Andrew” [§106].

The court also held it would have been wholly reasonable for the defendants to refuse to mediate, given they properly considered Andrew’s claim unfounded and wished to contest it rather than buy him off [§78].

Calderbank Offers

Andrew made four Calderbank offers during the litigation [§67]. Given the property’s £3.85 million value, even his lowest offer of 25% would have required the defendants to pay approximately £900,000. His earlier offers demanded 55%, 40%, and 40% respectively [§§23, 67]. All offers were “well beaten” by the trial outcome, as Andrew recovered nothing and faced substantial liabilities [§§68-69].

The court rejected Andrew’s submission, founded on OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195, that the defendants should have engaged in negotiation [§§29, 73]. Whilst parties should make reasonable efforts to settle and engage with reasonable offers, this does not compel a litigant confronted by wholly unrealistic offers to waste time and costs dealing with them [§74]. The court distinguished Kiam v MGN Ltd (No.2) [2002] EWCA Civ 66: there, the refused offer was better than the eventual outcome, whereas here Andrew’s offers fell very substantially short of the defendants’ complete success [§§71-73].

Indemnity Costs

Indemnity costs were awarded for the main litigation on multiple grounds establishing conduct outside the norm [§§39-65].

The Legal Framework

The court set out the broad principles: conduct must be outside the “norm,” with no need for findings of impropriety or dishonesty, though such findings pave the way for indemnity orders. The court retains discretion not to award indemnity costs even where conduct is demonstrably outside the norm [§§40-41].

Applying Three Rivers District Council v Bank of England [2006] 5 Costs LR 714 and drawing on Hosking v Apax Partners LLP [2018] 5 Costs LR 1125, the court identified circumstances guiding towards indemnity costs orders: (from Three Rivers) speculative, weak, opportunistic or far-fetched claims irreconcilable with contemporaneous documents; and (as added by Master Bowles) cases where evidence is, in material respects, dishonest, and where the true purpose is to exact settlement rather than achieve adjudication on merits [§§42-43].

Invented Evidence

The court found Andrew’s proprietary estoppel claim was not merely weak but based on assurances that had been invented and on evidence about those assurances that had been “constructed” for litigation purposes [§§44-51]. Although determination required lengthy factual enquiry, “this was, when that enquiry was completed, always a very weak claim, which failed at every level” [§44].

None of the pleaded ingredients were established. The alleged assurances were never made and, correspondingly, there was no reliance [§47]. The court stated: “In blunt terms, the assurances, which constituted the core of Andrew’s case, were and must have been invented, as part of the ‘constructive’ process” [§48].

Andrew’s case was tested against substantial contemporaneous evidence. None of the contemporaneous material supported Andrew’s case; much was wholly inconsistent with it [§§49-50]. This was precisely the type of case identified in Three Rivers: a claim “far fetched and irreconcilable with the contemporaneous documents” [§42].

Anvil for Settlement

The court considered that Andrew’s conduct could properly be seen as using litigation as an “anvil for settlement”—adopting Hildyard J’s phrase from Hosking—rather than pursuing adjudication on genuine merits [§§52-54]. The court stated: “It seems to me that this litigation was pursued by Andrew as, in effect, a continuation of his efforts… to preserve, or even enhance, what he undoubtedly saw as his rightful inheritance” [§53].

The court concluded: “Andrew was prepared to ‘construct’ a case and assert assurances by his mother that were never made, in the hope, not realised, that a settlement would be achieved and the claim would not be fully investigated at a trial” [§54].

Capacity Allegations

Over and above the pressure implicit in pursuing unfounded litigation against an elderly woman, Andrew chose to raise and plead capacity issues [§§55-61]. Capacity was raised on two occasions before litigation, repeatedly referenced during proceedings, but never formally abandoned and never properly pursued at trial [§§56-57].

The court found Andrew was never prepared to “follow through” on the capacity issue. If he had genuinely believed Janice’s capacity was in question, he could and should have applied to the court or secured medical evidence. He did neither [§61]. The court concluded: “I am left with the clear conclusion… that the entire capacity issue was never intended for determination but was raised to enhance the pressure on his mother to settle his unfounded claim” [§61].

Tactical Committal Application

Andrew issued committal proceedings against Janice on 11 October 2024, just over one month before trial, founded upon three intemperate messages from August 2023 [§62]. The application was never pursued. The court found the timing “hard not to see… as anything other than an attempt to impose additional pressure on Janice, in the period immediately prior to trial, while, at the same time, inevitably disrupting trial preparation” [§63]. The allegations were “historic” and should have been raised timeously if genuinely concerning [§63].

The court concluded: “Andrew’s motives in respect of the application were not founded in a genuine belief that he had been damaged by his mother’s conduct, in a way that required the exercise of the court’s contempt jurisdiction, but were concerned, rather, with the tactical imposition of pressure upon his mother, in the hope of facilitating a settlement, in his favour, of what I reiterate to have been wholly unfounded litigation” [§64].

The Order

The court stated: “In the result, I am entirely satisfied that, standing in isolation, Andrew’s conduct of this litigation clearly warrants an order for indemnity costs and that there is no discretionary reason not to make such an award” [§65].

However, post-judgment costs were awarded on the standard basis as Andrew’s challenges to the costs order, though unsuccessful, were not unreasonable [§108]. Consequently, Andrew was ordered to pay all costs of the claim and counterclaim on the indemnity basis, save for post-judgment costs on the standard basis [§107].

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Probate Challenger Ordered To Pay Indemnity Costs After Maintaining Baseless Opposition For Eight Years

Indemnity Costs, New Costs Blog, Payment on Account, Trustees & Estates

The High Court’s decision in Burgess v Whittle [2025] EWHC 2829 (Ch) held that maintaining a probate challenge without reasonable basis for eight years constituted grossly unreasonable conduct justifying indemnity costs, and the court rejected arguments that circumstances had warranted the Spiers v English exception.

Background

The substantive proceedings concerned the validity of the will of the deceased, dated 12 June 2014 [§6]. The claimant, Fiona Jane Burgess, sought a grant of probate in solemn form of this will. The first defendant, Julie Elizabeth Whittle, opposed the grant, challenging the will on the grounds of lack of testamentary capacity, want of knowledge and approval, undue influence, and the absence of the original will [§17]. The second defendant, Robert Paul Rowell, did not participate in the proceedings.

The deceased died on 13 April 2017 [§6]. In May 2017, the first defendant, then acting in person, lodged a caveat against the grant of probate [§6]. The originally appointed executor, Abbotts Wills and Probate Services Ltd, was dissolved in late 2020 before the caveat was lifted [§6]. The claimant issued the present claim on 7 September 2023 – more than six years after the death [§21]. The first defendant served a defence and counterclaim in October 2023 [§7].

A key procedural feature was the first defendant’s late application in October/November 2024 for permission to instruct a joint expert on testamentary capacity, which was granted [§10-11]. Notably, at the first Case and Costs Management Conference in August 2024, the first defendant had expressly confirmed she was not seeking expert evidence on capacity [§8, §21]. The joint expert’s report, produced in March 2025, concluded that the deceased had testamentary capacity when making the will [§13].

On the day before the trial was due to commence, 13 October 2025, the first defendant, by then legally represented, served her skeleton argument conceding the issues of testamentary capacity and undue influence and declaring neutrality on the remaining issues [§17]. The trial consequently lasted less than an hour [§17]. In the substantive judgment handed down on 16 October 2025, the court held the 2014 will to be valid and ordered that a grant issue to the claimant [§1]. The matter then proceeded to a determination on costs.

Costs Issues Before the Court

The court was required to determine several consequential costs issues [§1]. The primary issue was whether the general rule that costs follow the event should apply, or whether the case fell within the second probate exception from Spiers v English, which could justify a departure from that rule [§5, §18]. Subsidiary issues included whether any costs order against the first defendant should be on the standard or indemnity basis [§23]; the amount of any interim payment on account of costs [§26]; whether interest should be awarded on costs [§28]; and whether the claimant was entitled to an indemnity from the estate for any costs not recovered from the first defendant [§29-32].

The Parties’ Positions

The claimant sought an order that the first defendant pay her costs of the claim on the indemnity basis, to be assessed if not agreed, together with a substantial interim payment [§1]. The claimant also sought an order that she be indemnified out of the estate for any costs not recovered from the first defendant [§1]. The claimant argued that the general rule on costs should apply, as the first defendant’s challenge to the will was speculative, weak, and pursued unreasonably [§23]. She highlighted the first defendant’s last-minute concession, the fact that the claimant had travelled from Australia for a trial that became unnecessary, and a history of settlement offers from the claimant that were rejected by the first defendant [§23-25].

The first defendant did not seek her own costs but argued that there should be no order as to costs between the parties [§1]. Her primary submission was that the circumstances engaged the second probate exception from Spiers v English, as her knowledge and means of knowledge had reasonably led to an investigation of the will’s validity [§5]. She contended that this provided good reason to depart from the general rule that the unsuccessful party pays the successful party’s costs [§5].

The Court’s Decision

The court ordered that the first defendant pay the claimant’s costs of the claim on the indemnity basis, with a detailed assessment if not agreed [§22]. It also ordered an interim payment on account of £109,000 [§27], awarded interest on costs [§28], and granted the claimant an indemnity from the estate for any costs not recovered from the first defendant [§32-33].

Rejection of the Second Probate Exception

On the incidence of costs, the court held that the second probate exception did not apply [§18, §22]. It found that there was no reasonable basis for the first defendant to suspect the will was invalid [§19-22]. The estrangement from the deceased was not a ground for challenging capacity or knowledge and approval [§19]. People fall out and testators are entitled to change their minds [§19]. The will was made professionally and independently [§19], and the beneficiary change kept the gift within the family by giving the first defendant’s share to her own two sons [§19].

Crucially, the first defendant had taken no substantive investigative steps for years despite having access to all relevant material [§20-21]. In September 2022, the will-writers confirmed they had seen the original will after the deceased’s death, removing any basis for suspecting destruction [§20]. In February 2023, the claimant sent copies of the will file and medical records, neither of which gave grounds for suspicion [§20]. The first defendant did not herself seek medical or social care records until making her third-party disclosure application in October 2024 – more than seven years after the death [§20-21]. When these records were produced, they showed no grounds for suspicion [§21].

The court concluded: “Overall, on these facts, and in my judgment, there is simply no room for the application of the second exception in Spiers v English to operate. The first defendant had no reasonable basis to suspect that the 2014 will was invalid, and therefore no reason to investigate” [§22].

Indemnity Costs for Conduct “Out of the Norm”

The court found the first defendant’s conduct to be “out of the norm”, justifying an indemnity costs order [§23-25]. This was based on three main grounds.

First, the case was “entirely speculative and objectively weak” [§23]. All evidence in the first defendant’s possession before the claim was issued pointed to the will’s validity, with none pointing to invalidity [§23]. The first defendant challenged the will on four separate bases, including undue influence for which there was “simply no evidence whatever” [§23]. She did not seek evidence on incapacity until more than a year after the claim was issued, and when obtained, that evidence was also against her case, including the expert report [§23].

Second, the first defendant effectively conceded the case only on the day before trial via an overdue skeleton argument [§24]. By that time, the claimant had flown from Australia to give evidence. The court held: “This should never have happened” [§24]. The decision to concede should have been taken “months, if not years before” [§24]. Importantly, the fact that the first defendant was a litigant in person for much of the proceedings “cannot excuse her in this respect” [§24]. The procedural rules apply equally to litigants in person and represented parties [§24].

Third, the claimant made repeated settlement offers, all of which the first defendant refused [§25]. Although the offers were technically flawed because they involved discontinuance rather than a court order under CPR rule 57.11, “if the first defendant had otherwise been prepared to accept one of them, a means would have been found to implement it” [§25]. The court regarded the first defendant’s conduct overall as “grossly unreasonable, taking more than eight years to decide that there was in fact no basis for challenging the validity of the deceased’s will” [§25].

Payment on Account of Costs

Regarding the payment on account, the court noted that the usual practice of ordering 90% of an approved costs budget does not apply where indemnity costs are awarded [§26]. This is because CPR 3.18, which prevents departure from budgeted costs without good reason, does not apply to indemnity basis assessments [§26]. As Coulson LJ observed in Burgess v Lejonvarn, “if there is an order for indemnity costs, then prima facie any approved budget becomes irrelevant” [§26].

Nevertheless, having regard to the claimant’s varied budget of £109,133.50 (excluding VAT) and her evidence of total costs incurred of approximately £155,000, the court considered £109,000 to be a reasonable sum to order as an interim payment [§27]. The court acknowledged that the budget included some costs not actually incurred (such as the second day of trial and mediation disbursements) but also that there were other incurred costs not included in the budget [§27].

Interest on Costs

The court awarded interest on the claimant’s costs at 2% above the Bank of England base rate from the dates on which she paid her legal costs invoices until the date of judgment [§28]. This was to compensate the claimant for the loss of use of her money [§28]. The statutory Judgments Act 1838 rate of 8% per annum would apply to interest accruing after judgment [§28].

Indemnity from the Estate

Finally, the court held that the claimant, as a successful party propounding a will where the executor had not acted, was entitled to the same costs indemnity from the estate that an executor would have received [§29-33]. This principle, derived from Sutton v Drax (1815) 2 Ph 323 and confirmed by subsequent authorities including Wilkinson v Corfield (1881) 6 PD 27, provides that where a legatee propounds a will and succeeds, “thereby fulfilling the duty of the executor, the legatee is entitled to have his expences paid out of the estate of the deceased” [§29, §31].

The court noted that the claimant had filed the required notice of her intention to seek costs from the estate on issue of the claim, as mandated by CPR PD 3E, paragraph 5.4 [§32]. Accordingly, the claimant was entitled to her costs of the claim on the indemnity basis out of the estate, to the extent not recovered from the first defendant [§33]. Since the claimant was to be administratrix of the estate, it would be her duty to seek to recover those costs from the first defendant in the first instance [§33].

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The High Court’s decision in Ellis v Ellis & Ors Re: Care (Decd) [2025] EWHC 2609 (Ch) confirms that Part 36 offers in probate disputes remain valid even where the offeror does not yet own the assets being offered, and clarifies when it is reasonable to delay mediation pending disclosure.

Background

The dispute concerned the estate of Yeamon Keith Care, who died in March 2020. The Claimant, Luke Ellis, sought to propound the will dated 23 August 2016, under which he was the sole beneficiary of the residuary estate, primarily comprising a share in Tregear Farm. The Third Defendant, Vivian Care, the brother of the deceased, challenged the will on the grounds of lack of testamentary capacity, want of knowledge and approval, and due execution. Vivian also advanced a counterclaim for proprietary estoppel, asserting that the deceased had led him to believe he would inherit the farm. The First and Second Defendants were the executors of the estate and adopted a neutral stance throughout the proceedings [§2, §5, §92].

Pre-action correspondence commenced in June 2020, with Vivian indicating a challenge to the will [§7]. A Larke v Nugus request was made in July 2020 [§8]. Despite repeated promises, Vivian failed to provide a letter of claim outlining his case [§89]. Luke instructed solicitors in May 2021 and, after further delays, issued proceedings in July 2022 without a prior letter of claim [§15, §50]. Vivian served a defence and counterclaim [§53]. A case and costs management conference took place in May 2023 [§26, §57], and mediation was attempted in November 2023 but was unsuccessful [§32, §128]. The substantive trial occurred over several days in April and May 2024, with a further hearing in July 2024 [title page]. The substantive judgment, handed down in January 2025, upheld the validity of the will and dismissed all of Vivian’s claims [§1].

Costs Issues Before the Court

The court was required to determine the incidence of costs following the substantive judgment. The key costs issues were:

- - whether the general rule that costs follow the event should be departed from due to alleged unreasonable pre-action conduct by the Claimant;
  - whether the Claimant’s refusal to mediate until September 2023 warranted a costs sanction;
  - the applicability of the probate exceptions concerning the testator’s conduct causing the litigation and reasonable grounds for investigation;
  - the validity and consequences of the Claimant’s Part 36 offer dated 15 January 2024;
  - whether the Third Defendant should pay the litigation costs of the First and Second Defendants as executors; and
  - the appropriate payment on account of costs [§5-6].

The Parties’ Positions

The Third Defendant accepted that the Claimant was the successful party but contended that the First and Second Defendants were not successful [§5, §47]. He argued for no order for costs until September 2023 based on three grounds: unreasonable pre-action conduct by the Claimant, including a failure to serve a letter of claim before issuing proceedings [§7-20]; an unreasonable refusal to mediate until September 2023 [§21-33]; and the application of the probate exceptions [§34-40]. He submitted that the testator’s conduct, through promises and familial expectations, caused the litigation, and that there were reasonable grounds for investigation, particularly regarding due execution and testamentary capacity [§35-40]. He challenged the validity of the Part 36 offer, arguing it was uncertain and not a genuine attempt to settle [§41-46], and contended there was no principled basis for him to pay the executors’ costs [§47-48].

The Claimant argued that costs should follow the event in accordance with the general rule [§49]. He submitted that his issuance of proceedings without a letter of claim was justified due to the Third Defendant’s prolonged delays and failure to articulate his case despite having access to relevant documents [§50-56]. He maintained that his refusal to mediate prior to September 2023 was reasonable because he lacked necessary disclosure from the Third Defendant, including medical records and evidence supporting the proprietary estoppel claim [§57-61]. He opposed the application of the probate exceptions, contending that the testator’s conduct did not cause the litigation and that any investigation period had ended well before proceedings were issued [§62-69]. He asserted that the Part 36 offer was valid and should trigger the full consequences under CPR 36.17 [§70-72], and that the Third Defendant should pay the executors’ costs to avoid the successful party bearing them [§73-74].

The First and Second Defendants supported the Claimant’s position on costs [§75]. They argued that the Third Defendant’s challenge to the will necessitated their involvement and that it would be unjust for the estate or the Claimant to bear their litigation costs [§76]. They emphasised that their costs budget had been agreed, indicating an expectation that the unsuccessful party would pay [§77]. They submitted that the probate exceptions did not apply and that the Third Defendant’s conduct had prolonged the litigation unnecessarily [§78-79].

The Court’s Decision

Pre-Action Conduct

The court held that the general rule under CPR 44.2 should apply, with the Third Defendant paying the costs of the Claimant and the executors, subject to specific considerations [§80-83]. On pre-action conduct, the court found that the Claimant’s failure to serve a letter of claim was not a brazen breach of the protocol [§84]. The Third Defendant had ample time and material to formulate his claim from as early as August 2021, and the Claimant’s issuance of proceedings in July 2022 was a reasonable response to prolonged inactivity [§86, §89]. The court concluded that a letter of claim would not have altered the course of litigation or facilitated earlier settlement [§99].

The court made detailed findings about the Third Defendant’s delay in formulating his case. Despite having access to most key documents by late 2020, including the will file and signed authorities to obtain further records, no letter of claim was forthcoming despite repeated promises [§87-89]. The documents held out for—such as full Adult Social Care records and complete bank files—were not necessary to formulate the claim [§90-93]. The court found that the Third Defendant was able to plead his counterclaim without difficulty once proceedings were issued, demonstrating that sufficient information was available much earlier [§98].

Mediation

Regarding the refusal to mediate, the court determined that the Claimant’s delay in agreeing to mediate until September 2023 was justified [§100]. The Third Defendant had withheld key disclosure, including medical records and evidence on proprietary estoppel, until after the case management conference [§100, §106]. The court found it reasonable for the Claimant to await disclosure before engaging in mediation, and noted that the period of delay was relatively short and incurred minimal additional costs [§101, §107-108]. No costs sanction was imposed [§109].

The court rejected arguments based on Northamber Plc v Genee World Limited, noting that silence in response to mediation invitations is only “as a general rule” unreasonable, and each case turns on its own facts [§102-103]. The reasons given by the Claimant—lack of complete information about the estate and evidence supporting the proprietary estoppel claim—were reasonable in the circumstances [§104, §106].

Probate Exceptions

The court rejected the application of the probate exceptions [§110]. On the first exception (testator’s conduct), it held that the testator’s conduct did not cause the litigation [§110-114]. Familial expectations and promises, even if they existed, did not amount to conduct surrounding the will with confusion or uncertainty, following established authority such as Re Cutcliffe’s Estate [§110-111]. The court declined to depart from Re Cutcliffe, noting that recent authoritative decisions have endorsed it and the trend is to narrow rather than broaden the exception [§111].

The court found that the worst that could be said against the testator was that he did not live up to expectations he had allowed to develop within the family, based on intentions formed during his first wife Betty’s lifetime [§112, §39]. The testator had gone out of his way to engage professionals in making his will, which was in short form and perfectly clear [§113]. There was no confusion or uncertainty surrounding the will itself [§113].

On the second exception (reasonable investigation), the court found that any reasonable investigation period had ended by August 2021 for most issues, and by March 2022 for the due execution issue [§122]. The Third Defendant had sufficient information to assess the merits early on, and pursuing the claims beyond those points constituted hostile litigation.

The court made detailed findings on each challenged ground:

- - Testamentary capacity: The plentiful medical evidence did not suggest incapacity [§117]. The Third Defendant failed to admit this fact after service of a Notice to Admit Facts, and the court noted this could be taken into account under CPR 32.18(5) [§117]. The description of the deceased by the Third Defendant’s expert was alien to the true picture, and the Third Defendant would or should have been aware of the deceased’s acuity [§117].
  - Knowledge and approval: This was a professionally drawn will that accorded with detailed attendance notes of instructions [§118]. The Third Defendant had access to the will file long before proceedings were issued [§118]. Even without prior knowledge of a meeting where the deceased reviewed the draft will with his chosen executors, this ground was always going to be extremely difficult [§118].
  - Due execution: While there was an apparent conflict between the attestation witnesses’ evidence, the Third Defendant had spoken to both witnesses before issuing proceedings [§119]. The court found that any reasonable investigation should have factored in: (a) the strong presumption of due execution; (b) the professional standing of the witnesses; (c) careful instructions given on execution; and (d) an attendance note placing both witnesses at the surgery on the date of execution [§119]. An objective assessment of these factors, all available pre-issue, should have led to the conclusion that this would be difficult to succeed on and was “certainly going to be in the nature of hostile litigation” [§120].

The court emphasised that while reasonable investigations may justify a “no order as to costs” for a period, “once the parties are aware of the settled positions of the attestation witnesses, time must begin to run to decide whether the investigation phase is over” [§120].

Part 36 Offer

The court upheld the validity of the Claimant’s Part 36 offer, finding it sufficiently clear and a genuine attempt to settle [§123-129]. The offer represented a significant value (approximately 14.6% of the estate), and the Third Defendant’s objections were deemed pedantic or capable of resolution [§124-125, §128]. Issues such as whether the will would be formally admitted to probate or which party owned the third tractor were “technical details that could have been sorted out had the Part 36 Offer been accepted” [§125].

The court rejected arguments that the offer was invalid because the Claimant did not own the land being offered (it was vested in the executors) or that the bank’s charge created difficulties [§126]. It found these submissions “almost contrived” since the executors would obviously abide by any settlement and the estate’s net value would have allowed the bank to be paid [§126].

Consequently, the consequences under CPR 36.17(4) applied, including indemnity costs from the expiry of the relevant period and an additional amount [§129]. However, considering the offer was made only three months before trial, the court reduced the interest on costs to 5% above base rate to avoid injustice, while applying the other consequences in full [§134]. The court noted that “all circumstances of the case” included the Third Defendant’s conduct in relation to the personality disorder issue raised late in the proceedings [§134].

Executors’ Costs

The court ordered the Third Defendant to pay the executors’ litigation costs on the standard basis [§140]. It held that the executors’ costs were incurred solely due to the Third Defendant’s challenge, and it would be unjust for the Claimant or the estate to bear them [§137]. The court noted the executors’ neutrality and the agreement of their costs budget as supporting this outcome [§138-139].

The court rejected the Third Defendant’s argument that there was no principled basis for this order, observing that CPR 44.2(1) clearly encompasses executors as parties [§136]. The court emphasised that if the Third Defendant did not pay the executors’ costs, the Claimant would effectively bear them despite being the successful party, which would be “wholly unjust” [§137]. The court noted by analogy to administration pending suit cases that the losing party should pay such costs [§139].

Payment on Account

On payment on account, the court awarded the Claimant £94,000, representing 90% of budgeted costs and 75% of incurred costs, reflecting the approved budget and the indemnity basis applicable from February 2024 [§145-147]. The executors were awarded 85% of their budgeted costs (on combined incurred and budgeted costs of £20,278), considering the estate’s illiquidity and the need for efficient administration [§148].

The court applied the principles from Cleveland Bridge v Sarens, noting that where costs form part of an approved costs budget, payment on account should be no less than 90% of that budgeted amount [§144]. For incurred costs not subject to the approved budget, a more cautious approach of 75% was adopted [§145].

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The High Court’s decision in Fernandez v Fernandez [2025] EWHC 2530 (Ch) confirms that unreasonable refusal to mediate on appeal may independently justify indemnity costs, and that executors conducting appeals in their own interest lose their right to indemnity from the estate.

Background

This judgment follows HHJ Paul Matthews’ substantive appeal judgment handed down on 22 September 2025 ([2025] EWHC 2373 (Ch)), which dismissed Julian Fernandez’s appeal against his removal as executor. Having invited written submissions on consequential matters, the court now addresses the specific costs orders arising from the appeal, including whether unreasonable refusal to mediate justifies indemnity costs.

The case concerned an appeal by Julian Fernandez against an order made by District Judge Wales on 3 December 2024, which removed him as executor of the estates of his parents and of a trust established during their lifetimes. The respondents to the appeal were his siblings, Leessa Karen Fernandez and Graeme Nicholas Fernandez, along with other defendants to counterclaim. The appeal was heard by HHJ Paul Matthews, who handed down a written judgment on 22 September 2025 dismissing the appeal [§1]. Following the substantive decision, the court invited written submissions on consequential matters, leading to this judgment dealing exclusively with costs-related issues [§1].

Costs Issues Before the Court

The court was required to determine five matters arising from the dismissed appeal [§2]: (i) the incidence of costs, specifically whether the unsuccessful appellant should pay the respondents’ costs; (ii) the basis of assessment, namely whether costs should be assessed on the standard or indemnity basis; (iii) whether a payment on account of costs should be ordered and in what amount; (iv) whether interest should be awarded on costs; and (v) whether the appellant was entitled to an indemnity from the estates and trust fund for his own costs and any costs liability to the respondents [§2]. The court also determined whether summary or detailed assessment was appropriate [§25-28].

The Parties’ Positions

The respondents sought an order that Julian pay their costs of the appeal on the indemnity basis [§4, §13]. They argued that Julian’s conduct warranted indemnity costs, citing his unreasonable refusal to mediate, his pursuit of unwarranted factual enquiries, his making and failure to withdraw improper allegations, his misdescription of legal authorities, and the over-elaborate and repetitive nature of his grounds and skeleton arguments [§13]. They also requested a detailed assessment of costs [§25], a payment on account of £46,000 (approximately 60% of their claimed costs of £77,663.91) [§31], interest on costs at 2% above base rate from the dates of payment [§34], and a declaration that Julian was not entitled to an indemnity from the estates or trust for his costs or his liability to pay theirs [§36].

Julian’s position on costs was ambiguous [§4]. In his submissions dated 25 September 2025, he initially appeared to argue that the respondents should not be entitled to recover costs at all, primarily due to their late service of a costs statement, which he claimed was served after 16:00 on the day before the hearing and therefore deemed served on the hearing day [§4, §7]. However, his draft order proposed that he pay the respondents’ costs on the standard basis [§4]. He opposed indemnity costs, contending that the grant of permission to appeal by Michael Green J indicated his conduct was not “out of the norm” [§14]. He also argued that the respondents’ costs were inflated and disproportionate, suggesting that summary assessment was appropriate and disputing the need for a payment on account or interest [§26, §31-32]. On the indemnity issue, Julian did not provide a substantive response to the respondents’ application [§37].

The Court’s Decision

The court ordered Julian to pay the respondents’ costs of the appeal on the indemnity basis, to be subject to detailed assessment if not agreed, with interest at 2% above bank base rate from the dates the respondents paid their legal costs until judgment [§38]. A payment on account of £38,832 was required by 4 pm on 20 October 2025 [§38]. The court also declared that Julian was not entitled to any indemnity from the estates or trust fund for his own costs of the appeal or for his costs liability to the respondents [§37-38].

Incidence of Costs

On the incidence of costs, the court applied the general rule under CPR rule 44.2(2)(a) that the unsuccessful party should pay the costs of the successful party [§3, §6]. As the appeal had been dismissed, the respondents were the successful party, and no reason was found to depart from the general rule [§6]. Julian’s argument that the respondents should be denied costs due to late service of their costs statement was rejected [§7-11]. The court found that any prejudice was minimal, as Julian had the statement the evening before the hearing, and the case was not suitable for summary assessment, rendering the point largely irrelevant [§11]. The court cited authority, including Macdonald v Taree Holdings Ltd [§9], that failure to comply with the practice direction should not lead to a total deprivation of costs where otherwise entitled. The court described Julian’s submission as “formalism of the most unthinking kind” [§11].

Basis of Assessment

Regarding the basis of assessment, the court held that indemnity costs were justified due to Julian’s conduct, which was “out of the norm” [§24]. The court referenced Hosking v Apax Partners Ltd [§12] in emphasising that indemnity costs are appropriate where behaviour takes the case out of the norm.

Key factors included:

- - Unreasonable refusal to mediate | Julian delayed responding to mediation offers for ten weeks (from 14 April to 23 June 2025) and failed to propose alternative dates, effectively frustrating the process [§15-16]. On 14 April 2025, the respondents proposed 26 dates for mediation (5 in May, 21 in June) [§15]. They chased for a response on 9 May and 8 June, but received only a holding response on 13 June [§15]. Julian’s substantive response on 23 June stated none of the 26 dates was possible and that mediation was unlikely before the appeal hearing on 8 July [§15]. The court found it “unacceptable to take so long to respond” and “equally unacceptable not to be able to make some re-arrangement” for at least one of 26 dates [§16]. It concluded that “Julian just did not wish to mediate” [§16]. This alone warranted a costs sanction, as per Thakkar v Patel [§17-18].
  - Pursuit of matters beyond the core issue | Julian insisted on pursuing matters other than whether he should be replaced as executor, including what he called “central issues” that were not even pleaded [§19]. This constituted “conduct out of the norm” [§19].
  - Other conduct points | The court considered allegations regarding misdescription of authorities and over-elaborate pleadings but found these, standing alone, were not sufficient to justify indemnity costs [§21-22]. The court was not prepared to conclude that counsel deliberately miscited authorities and proceeded on the basis of mistaken understanding [§21]. Similarly, over-elaborate and repetitive pleadings, whilst regrettable, were not of themselves “conduct out of the norm” [§22].

The court concluded that the mediation refusal and pursuit of unpleaded issues “amply justify an award of costs on the indemnity basis” [§24].

Method of Assessment

On the method of assessment, the court ordered detailed assessment rather than summary assessment [§25-28]. Although Julian argued that summary assessment was suitable for a hearing lasting one day or less under CPR PD 44 paragraph 9.2(b) [§26], the court noted he had omitted the final part of the rule, which provides for detailed assessment where “there is good reason to do so, for example where the paying party shows substantial grounds for disputing the sum claimed” [§27]. The court found substantial grounds for disputing the costs existed, which could not be dealt with summarily, and therefore ordered detailed assessment [§28].

Payment on Account

For the payment on account, the court applied CPR rule 44.2(8), which requires such a payment unless there is good reason not to do so [§29]. Julian’s arguments about inflated costs went to quantum rather than the principle, and no good reason was found to avoid an order [§32]. The respondents sought 60% of £77,663.91, rounded down to £46,000 [§31]. The court, applying the approach in Excalibur Ventures LLC v Texas Keystone Inc [§30], considered factors including hourly rates exceeding guidelines and potential duplication of work [§33]. District Judge Wales had previously expressed concerns about the respondents’ costs [§33]. Taking a cautious approach, the court ordered 50% of the claimed costs, amounting to £38,832 (to the nearest pound), payable within 14 days [§33].

Interest on Costs

Interest on costs was awarded at 2% above bank base rate from the dates the respondents paid their legal costs until judgment [§34-35]. The court noted this power is “now routinely exercised” following trial [§34, citing Involnert Ltd v Aprilgrange Ltd]. The court rejected Julian’s argument that inflated costs made interest inappropriate, noting that interest would apply only to costs allowed on detailed assessment, not the claimed amounts [§35].

Indemnity from Estates

Finally, the court denied Julian any indemnity from the estates or trust fund for his costs or his liability to pay the respondents’ costs [§36-37]. The court held that the appeal was conducted entirely in Julian’s own interest, not for the benefit of the estates or trust [§37]. Costs were therefore not properly incurred under section 31(1) of the Trustee Act 2000 and CPR PD 46 paragraph 1.1(b) [§37]. The court noted that the judge below had been entitled to reach the same conclusion regarding Julian’s indemnity for costs of hostile litigation at first instance [§36].

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The High Court’s decision in Fernandez v Fernandez [2025] EWHC 2373 (Ch) demonstrates that executors who persist in defending removal applications after their position becomes untenable risk both personal costs liability and loss of their estate indemnity.

Background

The proceedings concerned the estates of Jean Fernandez, who died on 29 March 2010, and Alexander Fernandez, who died on 14 October 2013. The appellant, Julian Fernandez, was the executor of both wills, which were discovered after initial grants of administration had been made. The first and second respondents, Leessa and Graeme (Nick) Fernandez, had obtained letters of administration for Jean’s estate in 2013, believing she had died intestate. Julian subsequently found wills for both parents dated 1 October 1996, appointing him as executor. He obtained a grant of probate for Alexander’s estate in January 2016 and for Jean’s estate in November 2019, after the validity of her will was confirmed following a trial of a preliminary issue in July 2019.

On 10 July 2018, Julian issued a claim seeking revocation of the letters of administration granted to Leessa and Nick and a grant of probate to himself. Leessa and Nick defended the claim only by putting Julian to proof of the will’s validity and brought a counterclaim seeking Julian’s removal as executor of both estates and as trustee of a discretionary trust settled by the parents in 2008. The counterclaim alleged various instances of misconduct, including mismanagement of estate assets, conflicts of interest, and a breakdown in relations between Julian and the other beneficiaries.

The procedural history was protracted. In September 2019, District Judge Watson ordered Leessa and Nick to pay Julian’s costs of the preliminary issue concerning the validity of Jean’s will, with detailed assessment, and gave directions for a four-day trial of the counterclaim. However, the parties subsequently sought and obtained multiple stays to negotiate a settlement, including an unsuccessful mediation in January 2022. In June 2023, HHJ Paul Matthews refused a further stay, directing that the litigation must proceed. Fresh directions were given by District Judge Taylor in November 2023, leading towards a four-day trial.

On 28 March 2024, Leessa and Nick applied for summary determination of the removal application. This was heard by District Judge Wales on 16 September 2024 [§14]. On 29 October 2024 [§15], the judge handed down his substantive judgment. Following a hearing on 3 December 2024 for consequential matters, the judge made an order removing Julian as executor and trustee and appointing an independent professional trustee. At the hearing on 3 December 2024, the judge also dealt with consequential matters, including costs. He delivered a series of extempore judgments on costs, resulting in an order that Julian pay the respondents’ costs on the standard basis up to 28 March 2024 and on the indemnity basis from 28 March 2024 onwards [§26, §135], and that Julian be deprived of his right to indemnity from the estates and trust for his litigation costs (but not his administration costs) [§24, §127-128]. Julian appealed against this order, with permission granted by Michael Green J on 3 March 2025. The appeal was heard on 8 July 2025 before HHJ Paul Matthews sitting as a Judge of the High Court [§1].

Costs Issues Before the Court

The appeal required the court to review the costs orders made by District Judge Wales on 3 December 2024. The specific costs issues for determination were:

Whether the judge erred in ordering Julian to pay the respondents’ costs of the counterclaim and the application.
Whether the judge erred in awarding costs on the indemnity basis for the period following the application dated 28 March 2024.
Whether the judge erred in depriving Julian of his right to indemnity from the assets of the estates and trust in respect of his own litigation costs and the costs liability imposed by the order.
Whether the judge erred in setting the payment on account of costs at £55,000.

These issues arose in the context of hostile litigation between an executor/trustee and beneficiaries, engaging special principles under the Civil Procedure Rules and trust law.

The Parties’ Positions

The Appellant’s Position Julian argued that the costs orders were erroneous. He submitted that there was no sufficient evidence of misconduct to justify ordering him personally to pay costs or depriving him of his indemnity from the estates. He contended that the litigation was necessary for the proper administration of the estates and that he had acted properly throughout. Regarding indemnity costs, he argued that such an award required a finding of exceptional conduct, such as bad faith or gross negligence, which was not present. He also criticised the judge for failing to consider the respondents’ own litigation conduct and for not providing adequate reasons for the costs orders.

The Respondents’ Position The respondents supported the costs orders. They argued that the litigation was hostile and that Julian had acted in his own interests rather than for the benefit of the estates. They submitted that Julian’s continued resistance to removal after the application of 28 March 2024 was unreasonable, justifying indemnity costs for that period. They contended that Julian should not be entitled to an indemnity for litigation costs because he had acted for a benefit other than that of the estates, citing his conflicts of interest and the adversarial nature of the proceedings. They also argued that the payment on account was appropriately calculated. They faced a “formidable obstacle” in challenging the costs consequences [§17], citing Webb v Liverpool Women’s NHS Foundation Trust [2016] EWCA Civ 365.

The Court’s Decision

The appeal was dismissed, and the costs orders of District Judge Wales were upheld. The court analysed each costs issue as follows.

Order for Costs Against the Executor

The court held that the judge was entitled to order Julian to pay the respondents’ costs. The general rule under CPR rule 44.2(2) is that the unsuccessful party pays the costs, and the respondents were the successful parties on the counterclaim and application. The judge correctly characterised the litigation as hostile, meaning the usual inter partes principles applied, rather than treating it as trust litigation where costs might be paid from the estate. The court referred to the principle that a trustee or executor is not automatically entitled to an indemnity for costs incurred in hostile litigation, especially where they have acted for their own benefit. The judge’s decision that Julian had acted in substance for a benefit other than that of the estate was an evaluative judgment open to him on the evidence, particularly given the conflicts of interest and the breakdown in relations.

Indemnity Basis Costs

The court upheld the award of costs on the indemnity basis for the period following the application of 28 March 2024. The judge had applied the correct test, namely whether the case was taken “out of the norm” by the paying party’s conduct. The judge found that Julian should have realised his position was untenable after that date, given the clear conflicts of interest and the hostility between the parties. His continued resistance was conduct outside the ordinary and reasonable conduct of proceedings. The court cited Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879 and Three Rivers District Council v Bank of England [2006] EWHC 816 (Comm) but emphasised that the test is not limited to specific examples like fraud; any conduct making the case exceptional can justify indemnity costs. The judge’s decision was not plainly wrong and fell within his discretion.

Deprivation of Indemnity from Estate/Trust

The court affirmed the order depriving Julian of his right to indemnify himself from the estates and trust for litigation costs [§127]. Under section 31(1) of the Trustee Act 2000 and CPR rule 46.3, a trustee or executor is entitled to an indemnity only for expenses “properly incurred”. CPR Practice Direction 46 paragraph 1 provides that costs are not properly incurred if the trustee acted for a benefit other than that of the estate. The judge found that Julian had acted in his own interest in the hostile litigation, which was a sufficient basis to deny the indemnity. The court noted that this was consistent with the obiter comments in Armitage v Nurse [1998] Ch 241, where a trustee who successfully defends a claim is entitled to an indemnity, but one who unsuccessfully defends may not be. Importantly, the judge’s distinction between administration costs (where indemnity was preserved) and litigation costs (where it was denied) was justified [§24, §128].

Payment on Account

The court found no error in the payment on account of costs set at £55,000. The judge had considered the estimated costs and exercised his discretion appropriately under CPR rule 44.2(8). No specific challenge to the amount was raised in the appeal, and the court saw no basis to interfere.

Adequacy of Reasons

The court rejected the argument that the judge failed to provide adequate reasons for the costs orders. The extempore judgments on costs spanned several pages and addressed the key issues, including the basis for awarding costs, the decision on indemnity costs, and the deprivation of indemnity. The court cited English v Emery Reimbold & Strick Ltd [2002] 1 WLR 2409, noting that reasons need not be exhaustive but must show the basis of the decision. The judge’s reasons met this standard.

In conclusion, the appeal court found that the judge below had correctly applied the legal principles and that his costs orders were within the generous ambit of his discretion. All grounds of appeal failed, and the appeal was dismissed.

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