Wong v Grand View PTC Ltd (Costs)
| Jurisdiction | Bermuda |
| Judgment Date | 05 August 2022 |
| Court | Supreme Court (Bermuda) |
| Docket Number | Commercial Jurisdiction 2018 No 44 |
[2022] Bda LR 76
Commercial Jurisdiction 2018 No 44
In The Supreme Court of Bermuda
Costs — correct approach — Applicability of issues-based approach — Unsuccessful challenge to validity of trusts on uncertainty ground — Whether non-adversarial costs order appropriate for issue clarifying construction of trust deeds
The following cases were referred to in the judgment:
Re Buckton [1907] 2 Ch 406
Singapore Airlines v Buck Consultants [2011] EWCA Civ 1542
In re Elgindata (no 2) [1992] 1 WLR 1207
Binns v Burrows [2012] Bda LR 3
AEI Rediffusion Music Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507
Seepersad v Persad [2004] UKPC 19
Mr D Hagen QC, Mr R Attride-Stirling and Mr S Dunleavy for the Plaintiff
Mr R Wilson QC, Mrs F Rana-Fahy for the 8th Defendant
Mr S Midwinter QC, Ms H Tildesley and Ms L Olander for the 5th Defendant
Mr J Adkin QC, Mr S Pearman and Mr P Smith for the 1st – 4th & 6th Defendants
Mr S Pearman and Mr P Smith for the 7th Defendant
JUDGMENT of Kawaley AJ
1. On June 22, 2022, I delivered Judgment. Save for the Plaintiff's successful claim in respect of the transfer of his father's share of the assets transferred by D5 to D6 (as Trustee of the Ocean View Trust) and his successful defence of D6's Powers of Appointment Counterclaim, all claims asserted by the Plaintiff and D8 were dismissed. A hearing to determine the terms of the Final Order and costs was scheduled for July 26–27, 2022. The parties reached a significant degree of agreement on the terms of the Final Order and costs before and over the course of the two-day hearing, resulting in a significant saving of costs.
2. As regards substantive relief, the following matters required adjudication at the beginning of the hearing:
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(a) the definition of the term ‘Ocean View Fund’;
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(b) the terms of the account and inquiry to be given by D6 of dealings with Chindwell BVI and Vanson BVI, as regards what information should be provided, when and whether the period should include dealings between the death of YC Wang in 2008 and the transfer to the Ocean View Trust in 2013, although no claim was pleaded in relation to this period (as contemplated by this Court's Order dated April 16, 2021).
3. By the conclusion of the hearing, those issues had been resolved. As regards costs, the following issues were still undecided and required adjudication by the end of the hearing:
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(a) whether the Court should award the Plaintiff and D8 their costs of arguing the certainty point on the grounds that the point needed to be determined in the interests of the Trusts in any event (whether the issue fell into Re Buckton[1907] 2 Ch 406 Category 2);
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(b) whether the Court should adopt an issues-based approach to costs (in relation to issues or points which the Plaintiff and D8 had won, principally governing law and was the Statute of Frauds part of BVI law point). This was clearly permissible under the English CPR regime, or the traditional Bermudian approach of proportionately reducing the successful party's costs to take into account any significant costs incurred on points in relation to which they did not succeed;
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(c) whether the Trustees' costs should be proportionately disallowed in respect of their unsuccessful pursuit of the Oral Mandate and Oral Assent defences against D8.
4. The Plaintiff advanced the following principal submissions on the costs of the certainty issue:
“41. The certainty question was an issue which arose from the terms of the Purpose Trusts themselves (and their application to the statute); it was one which was sufficiently difficult and balanced that its determination was necessary for the proper administration of the Purpose Trusts. It is beyond sensible dispute that had the PTCs themselves issued an originating summons for determination of whether the terms of the Purpose Trusts were sufficiently certain (a) they would have sought orders which bound YC Wang's and YT Wang's estates; (b) the court would have required adversarial argument (see Hellman J's finding on that topic quoted below); and (c) the costs of all parties would have been paid in equal shares from the funds of each of the Purpose Trusts.
42. It so happened that the PTCs did not need to bring this issue to a head because P issued a writ which set the process in train, but it is an issue which they could not properly have avoided, at least not after their leading counsel was recorded as having said to the Beddoe court exercising its supervisory jurisdiction over the Purpose Trusts that the certainty issue:
‘raise[d] an important issue of principle regarding the application of the certainty test in the 1989 Act’ and ‘the Main Action will be a test case on the issue, which is likely to go the Privy Council’.’
43. And as the judge, Hellman J, observed, ‘I accept that the Court in the Main Action will require assistance from counsel on both sides of the argument to resolve the issue’.
44. Since the certainty question raised an issue which a reasonable trustee would have had to resolve at the expense of its trust funds, an adverse costs order against P constitutes a windfall to the Purpose Trusts which is unjust. The court should focus on the substance of the question before the court in connection with the certainty issue and not the form by which it fell to be determined: it was, objectively viewed, an essential question which needed to be resolved for the future administration of the Purpose Trusts. That should lead to an order that, on the certainty question, all necessary parties' costs should come from the Purpose Trusts' funds.
45. Indeed, P issued a summons in the Beddoe to the effect that he (and the PTCs) should have a pre-emptive costs order in relation to this issue. The PTCs successfully resisted that on the basis that the proper place for the granting of such an order would be in the Main Action. As to questions of timing (without explicitly denying that the certainty question was capable of being a so called Buckton Category 2 issue), the PTCs made the following written submission:
‘In circumstances where the uncertainty claims will clearly not be stifled, the question whether Winston Wong should get his costs of those claims from the trust funds, even if they are unsuccessful, can sensibly be left to the trial Judge who will be well placed to adjudicate on that issue once those claims have been determined.’ [emphasis added]
46. It is precisely that application, as invited by the PTCs themselves, which P now makes.
Legal principles
47. The Court will be familiar with the three categories of trust proceedings identified by Kekewich J in Re Buckton[1907] 2 Ch 406 at 414–415:
47.1 Proceedings brought by the trustee seeking the court's guidance as to the construction of the trust instrument, or a question arising in the administration of the trusts. The costs of all parties are necessarily incurred for the benefit of the trust and ordered to be paid out of it.
47.2 Proceedings brought by someone other than the trustee, but which raise the same kind of point as in the first category and would have justified an application by the trustee. The treatment of costs is the same as in the first category, because ‘the application is necessary for the administration of the trust, and the costs of all parties are necessarily incurred for the benefit of the estate regarded as a whole’ (at 415).
47.3 Proceedings brought by someone other than the trustee which have the character of hostile litigation. The unsuccessful party will usually bear its own costs and be ordered to pay the other parties' costs, although whether he is ordered to pay the trustee's costs ‘is sometimes open to question’.
48. Re Buckton referred to ‘beneficiaries’, but it is plain the reasoning extends to third parties who are properly joined or who bring applications: see the Beddoe costs judgment at [13] … per Hellman J ‘These authorities speak about the costs of trustees and beneficiaries. However in my judgment all parties who have been properly joined to a Beddoe application or analogous trustees' application for directions should, absent disqualifying conduct on their part, normally be paid out of the trust fund, even if they are not trustees or beneficiaries’…; In re Savile[2015] BPIR 450, [2014] EWCA Civ 1632. It follows that if P could be treated as a proper party capable of having his costs in Buckton 1 proceedings affecting the Purpose Trusts, he must have been capable of launching his own Buckton 2 proceedings in connection with the same Purpose Trusts.
49. The categorisation of proceedings is a question of law, not an exercise of discretion. Although distinguishing between categories 2 and 3 can in some cases be difficult, the following principles are clear from the authorities.
50. First, when categorising proceedings as Buckton 2 or 3, the focus must be on whether, if the beneficiary or third party had not brought proceedings, the trustee would have been justified in doing so for the benefit of the fund. As Nugee JA (as he then was) observed in the Jersey Court of Appeal in Re JP Morgan 1998 Employee Trust(2013) 2 JLR 239 at [42]–[43]:
‘Where I think the question of benefit to the trust is potentially relevant is in deciding what order should be made in respect of the beneficiary's [or third party's] liability for costs. Where a trustee brings a claim (a Buckton...
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