Wingate v Butterfield Trust (Bermuda) Ltd

• Jurisdiction: Bermuda
• Judgment Date: 11 February 2008
• Date: 11 February 2008
• Docket Number: Civil Jurisdiction 2007 No. 136
• Court: Supreme Court (Bermuda)

In The Supreme Court of Bermuda

Civil Jurisdiction 2007 No. 136

BETWEEN:

DAVID LIONEL WINGATE

Plaintiff

and

BUTTERFIELD TRUST (BERMUDA) LIMITED

Defendant

Mr D Kessaram for the Plaintiff

Mr J Riihiluoma for the Defendant

The following cases were referred to in the judgment:

BCCI v Ali (No. 4) [1999] NLJ 1734

LB Hackney v Campbell UNK [2005] EWCA Civ 613

The Den Haag Trust UNK (1997/1998) 1 OFLR 495

Bhander v Barclays Private Bank & Trust Co Ltd (197/1998) 1 OLR 497

Three Rivers District Council v Bank of England [2006] EWHC 816

Reid Minty v Taylor UNK [2001] EWCA Civ 1723

Alsop Wilkinson v Neary UNK [1995] 1 All ER 431

McDonald v Horn UNK [1995] 1 All ER 961

Costs - Interlocutory application for disclosure and documentation - Trustee - Whether standard or indemnity basis - Whether trustee entitled to an indemnity from the trust fund

RULING ON COSTS of BELL, J

Introduction

1. In this matter I delivered judgment on 14 December 2007, in respect of an interlocutory application made on behalf of the plaintiff ("the Plaintiff") seeking relief against the defendant ("the Trustee") in its capacity as trustee of a trust which had been settled by the Plaintiff's father in March 1976. The judgment did not deal with costs, and there was a subsequent hearing on 6 February 2008 at which detailed submissions on costs were made.

The Proceedings

2. The proceedings alleged breach of trust as against the Trustee in relation to three different aspects of its trusteeship; first, in relation to the failure of the Trustee to provide information and/or documentation in relation to the Trustee's fees and expenses, and in regard to certain trust assets; secondly, in regard to its failure to use reasonable care and skill or the prudence to be expected of a professional trustee in relation to a specific trust asset, and lastly, in regard to its fees and disbursements. However, the application which led to the judgment was an interlocutory application, for an order pursuant to Order 14 of the Rules of the Supreme Court 1985 ("RSC"), pursuant to which the Plaintiff sought extensive information and documentation, and for an order pursuant to Order 43 rule 1 RSC for an account on the basis of wilful default. The Plaintiff also sought an order pursuant to Order 43 rule 1 RSC for a common account, not based on wilful default, and in the event pursued that relief rather than an order for an account on the basis of wilful default. That concession was made only shortly before the hearing. One other matter which was dealt with by way of concession shortly before the hearing was that the Trustee's attorneys, Appleby, wrote a letter to the Plaintiff's attorneys, Cox Hallett Wilkinson, dated 2 November 2007, which provided the Trustee's published fee schedule, and agreed to make documents available for inspection and copying in relation to its fees.

The Applications for Costs

3. In broad terms, the judgment required the provision of substantial information and documentation, and declined to order an account in common form. The consequences of the judgment appear to be that each side regards itself as the successful party. The submissions for the Plaintiff start with the statement that:

"The Plaintiff's summons has succeeded. The Plaintiff's summons was about obtaining information and documentation from the Defendant in relation to the Defendant's stewardship of a significant trust fund."

Yet the Trustee similarly sought an order for costs, saying in its submissions that:

"The Defendant successfully defended the Plaintiff's application for an account in common form in respect of the thirty years that the Trust was in existence. A substantial amount of time and effort was put into preparing the Defendant's defence to the Plaintiff's claim for an account in common form. A substantial part of the hearing was devoted to this aspect of the Plaintiff's claim."

4. I commented in the judgment on the fact that during the course of argument, Mr. Kessaram for the Plaintiff had appeared at various times to equate the request for an account in common form with the provision of the information and documentation, which had originally been sought in a comprehensive letter sent by the Plaintiff's London solicitor to the Trustee on 25 November 2005. I pointed out that that letter sought information and documentation, as opposed to a common form account and commented that by the time the application came on for hearing, the application for the common form account appeared to come first, and the request for outstanding information followed.

5. No doubt it is the case that each side succeeded in part. But I do not think that it can be said that the respective successes cancel each other out, as Mr. Riihiluoma urged, if his primary submission was not accepted. In that case, he said, there should be no order as to costs, referring to the Trustee's success in resisting the obligation to produce an account in common form, and the Plaintiff's success in obtaining disclosure in respect of certain transactions. He carried on to say that, in sporting terms, one might call the result "a draw".

6. I do accept that the task of the Court is, as Lightman J said in BCCI v Ali (No. 4) [1999] NLJ 1734, to consider success not as a technical term, but as a result in real life, with the question of which side has succeeded being a matter for the exercise of common sense. And looking at matters on that basis, I do not agree with Mr. Riihiluoma's contention (and this was of course his fall-back position) that the result represented a draw. The reality is that disclosure of information and documentation lay at the heart of these proceedings. The letter from the Plaintiff's London solicitor of 25 November 2005 was comprehensive, and although the Trustee had initially indicated a willingness to comply with the request, that position changed, and it was that change which led to the institution of these proceedings in late May 2007. And although I did not agree that the ordering of an account in common form would prove to be at all productive, and would no doubt be extremely expensive, a significant factor in terms of not making such an order was my view that such an order would be unlikely to provide the Plaintiff with anything more by way of assistance than an order for disclosure of the information and documentation, most of which the Plaintiff had sought since November 2005.

7. And so my view is, looking at matters on a common sense basis, that the Plaintiff has succeeded of his application, in broad terms. However, it does have to be recognised that his success has not been complete, and that because of the overly broad way in which the matter was pursued, the overall costs increased, and so far as the Trustee was concerned, unnecessarily incurred.

8. 8. The position now in the United Kingdom, following the institution of the Civil Procedure Rules 1998 ("CPR") is that if the court is to reflect success or failure on individual issues, then it should do so, if at all possible, by expressing a success or failure in the form of a proportion of costs - see the judgment of Arden L J in The Borough of Hackney v CampbellUNK[2005] EWCA Civ 613. It seems to me that that represents the modern and practical approach, which should be followed in this case. It is always difficult to seek to reconstruct how much of a hearing has been spent dealing with a particular matter, and of course the hearing represents only a part of the costs; preparation will also be a highly significant component of the complete costs picture.

9. I have reviewed the submissions prepared on each side for the November hearing, and it is obviously the case that, as I commented in the judgment, the Plaintiff ran the issue of an account very much as a part of the application for provision of information and documentation. On the other hand, the Trustee put the issue of an account first, even when referring to the Plaintiff's summons which had in fact dealt with the provision of information and documentation first. No doubt the Trustee attached more weight to the issue of an account in common form because of its appreciation as to how much work that would have involved, whereas the Plaintiff was primarily concerned with the provision of information and documentation. In the circumstances, and looking at matters as completely as I can, the view that I take is that the Plaintiff should be entitled to an order for two thirds of his costs in relation to the summons, and I so order. I will turn next to the question whether such costs should be ordered on the standard basis or on an indemnity basis, as sought by the Plaintiff.

Indemnity Costs

10. The Plaintiff sought an order of indemnity costs, on the basis that:

"This is a bad case of default, with an insouciant trustee making no serious effort to disclose, let alone justify, its own dealings with and drawings from the trust property."

11. The Plaintiff referred to a number of different aspects of the Trustee's conduct in support of its application for costs to be on the indemnity basis. First was that the Trustee's initial response to the 25 November 2005 letter had been that the information would be provided, whereas with the passage of time, and despite a further promise, relatively little documentation or information was provided. Next, the Plaintiff complained of the pressure which he said the Trustee had sought to apply, most particularly in asking David Nash, an independent advisor both to the Trustee and to various members of the Wingate family, to include in his letter to the Plaintiff's London solicitor a paragraph designed to dissuade the Plaintiff from pursuing litigation. Having expressed the hope that the Plaintiff would abandon any thought of litigation on the basis that this would inevitably delay any distribution to him, the letter carried on:

"Your client should appreciate that given the...