SMITH AND OTHERS v CAMPBELL AND OTHERS [2026] EWHC 144 (Ch)

Trustees removed from office on hostility grounds retained their right to an indemnity from the trust fund after making early settlement proposals, while the partially successful claimants obtained no costs order having pursued exaggerated misconduct allegations.

• In determining the incidence of costs in a successful but partially unsuccessful claim, the court will consider whether the successful party’s conduct was unreasonable, including the pursuit of unjustified or exaggerated allegations which generated a significant proportion of the costs, and may depart from the general rule that the unsuccessful party pays. [24, 27]
• A party’s failure to engage in any pre-action correspondence, contrary to the Practice Direction – Pre-Action Conduct, is a relevant factor in the exercise of the costs discretion, even if it is not strictly causative of the subsequent litigation or increased expense. [22, 23]
• When assessing a trustee’s right to an indemnity from the trust fund for litigation costs, the court will consider whether the trustees made a good faith and reasonable attempt to address the legitimate concerns underlying the claim at an early stage, such as by constructive settlement proposals; the absence of such attempts may be relevant to, and weigh against, a trustee’s claim to an indemnity in the court’s evaluative assessment. [28, 29]
• The defence of a trusteeship removal claim which includes numerous allegations of breach of trust and misconduct does not, of itself, mean the trustees acted for a benefit other than that of the trust, and it can be proper and reasonable for trustees to defend such allegations. [28]
• In a hybrid claim for trustee removal based on both allegations of misconduct and a breakdown in relations, the reasonableness of the trustees’ conduct is assessed as a whole, taking into account their response to the substantive allegations and their proposals to address the relationship issues. [14(vi), 28]