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Ong & Ors v Ping

[2015] EWHC 3258 (Ch)

Case No: HC2013000281
Neutral Citation Number: [2015] EWHC 3258 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL

Date: 11/11/2015

Before :

MR JUSTICE MORGAN

Between :

(1) JANE REBECCA ONG

(2) ALEXANDER ONG

(3) NICHOLAS ONG

(4) JORDANA ONG

Claimants

- and -

ONG SIAUW PING

Defendant

Andrew Twigger QC and Oliver Hilton (instructed by Isadore Goldman for the First Claimant and by Stephenson Harwood LLP for the Second, Third and Fourth Claimants) for

the Claimants

Mark Warwick QC and Henry Webb (instructed by Addleshaw Goddard LLP) for the Defendant

Hearing dates: 28 September and 5 October 2015

Judgment

MR JUSTICE MORGAN:

Introduction

1.

On 17 June 2015, I handed down judgment in this case (see [2015] EWHC 1742 (Ch)) and I adjourned consequential matters to a further hearing. In that judgment, I referred to the First Claimant as Jane and to the Second to Fourth Claimants as the children. I will continue to refer to them in that way and to them collectively as the Claimants. One of the issues which I determined in that judgment related to a house in Sheldon Avenue, London, N6. I held that the house was held on a discretionary trust under which the children were discretionary beneficiaries. The trustees in respect of the trust were Madam Lim and the Defendant (a son of Madam Lim). On 11 May 2006, Madam Lim sold the house for approximately £3.2 million. Madam Lim died on 8 August 2009 and the Defendant is the representative of her estate in Singapore and in England and Wales.

The application for disclosure

2.

On 10 July 2015, the children made an application for an order that the Defendant do provide disclosure in the form of a signed witness statement addressing three matters. These were: (1) what had become of the proceeds of sale of the house in Sheldon Avenue; (2) the assets in Madam Lim’s estate at the date of her death and what had become of those assets thereafter; and (3) the personal assets of the Defendant.

3.

This application was supported by a witness statement of the solicitor for the children. The solicitor explained that the application for disclosure was on the following bases: (1) the children had a right to information upon demand regarding the trust and pursuant to the court’s supervisory jurisdiction in relation to trusts; (2) the court had power to order specific disclosure under CPR r. 31.12; and (3) the court had power under section 37 of the Senior Courts Act 1981 and/or its inherent jurisdiction to require the disclosure of assets with a view to aiding the enforcement of a judgment. In particular, he stated that the application was made in order to ensure that the judgment as to the existence of a trust of the house and its proceeds of sale was effective and that equity would not act in vain in enforcing the judgment.

4.

At a hearing on 20 July 2015, I made various orders which were consequential on my earlier judgment. In response to the children’s application for disclosure, I directed the Defendant to serve evidence dealing with: (1) what he knew about the proceeds of sale of the house and what had become of them; (2) what he knew about the assets of the estate of Madam Lim at the time of her death; and (3) the steps available to him to obtain further information and documents relating to those matters. I then adjourned the disclosure application to a further hearing. I also directed that certain accounts and inquiries be taken; these included an inquiry as to what had happened to the proceeds of sale of the house. However, I did not give directions in relation to the accounts and inquiries. That was because the Defendant had indicated his intention to appeal against my finding that the house was held on trust and so I ordered that the directions which would be needed in advance of the taking of accounts and inquiries should be adjourned to a Master at a hearing which would be fixed to take account of whether the Defendant appealed and, if so, the progress of that appeal.

5.

On 7 August 2015, the Defendant served a witness statement in response to the order I made on 20 July 2015. His statement gave information about the sale of the house in May 2006 and the use of the proceeds of sale to pay the costs and expenses of the sale. He stated that most of the proceeds of sale were paid to two bank accounts in the name of Madam Lim in Hong Kong. He gave no information as to what subsequently happened to those monies. As to the estate of Madam Lim, the Defendant referred to four wills made by his mother, the wills having different territorial scope. The Defendant stated that he had obtained probate of Madam Lim’s wills relating to her estates in Singapore and England and Wales. He provided information about the assets in Madam Lim’s Singapore estate. In relation to her estate in Hong Kong, he stated that the executor named in her Hong Kong will was Bank of China (Hong Kong) Trustees Ltd and that he knew nothing about her estate in Hong Kong. He added that on 7 August 2015, the same day as his witness statement, he had written to the two banks in Hong Kong which received the bulk of the proceeds of sale of the house in May 2006.

6.

Also on 7 August 2015, the Defendant filed an Appellant’s Notice seeking to appeal to the Court of Appeal against my decision that the house was held on a discretionary trust and seeking a declaration that the house was at all times legally and beneficially owned by Madam Lim.

7.

On 28 August 2015, the Defendant served a further witness statement. This statement was in connection with an order I had made on 20 July 2015 requiring the Defendant to make a payment on account of the costs payable by him to the Claimants. However, it is right to note that in that witness statement, the Defendant did provide some information as to his own financial circumstances.

8.

On 25 September 2015, the Defendant served a further witness statement which referred again to the proceeds of sale of the house and the assets in Madam Lim’s estates. He stated that he had had no response from the two Hong Kong banks to his letters of 7 August 2015 and he had written to them again. He had also written to the executor named in the Hong Kong will.

9.

The further hearing of the application for disclosure took place on 28 September 2015. The children submitted a revised draft order dealing with disclosure by the Defendant. The draft order referred to documents in relation to the sale of the house and the whereabouts of the proceeds of sale, Madam Lim’s bank accounts in Hong Kong, all dealings with Madam Lim’s Singapore estate and information about the Defendant’s interest in a property he owned in Singapore, any charges on that property, the amounts outstanding in respect of any such charges and the value of that property.

10.

On 28 September 2015, I heard argument on the disclosure application. The children relied on the fact that, as was apparent from the course of earlier litigation in Singapore involving Jane and Madam Lim (which litigation is referred to in my earlier judgment), Madam Lim had in Singapore a substantial amount of records and other documents concerning her assets and her business dealings. It appeared that the Defendant had not attempted to obtain and to search this material for documents and information relevant to the application for disclosure.

11.

There was not enough time on 28 September 2015 to give judgment that day in relation to the disclosure application. In addition, there was a further matter which remained to be argued in relation to the Claimants’ costs. I adjourned matters to a further hearing which took place on 5 October 2015.

12.

On 5 October 2015, I notified the parties that the order I would make in relation to the disclosure application was that I would order the Defendant:

(1)

to give disclosure by means of a list of all documents under his control which were relevant to the question which remains to be determined as to what has happened to the proceeds of sale of Sheldon Avenue between the date of its sale and the present time, such documents to relate to the immediate proceeds of sale and all assets which represent the traceable proceeds of such proceeds of sale;

(2)

to serve a witness statement which identifies all the steps which he took to search for the documents referred to in (1) above and the result of all such steps;

(3)

to provide to the solicitors for the children copies of all documents included in the list served pursuant to (1) above;

(4)

(in his capacity as personal representative of the estates of Madam Lim in Singapore and in England and Wales) to serve a witness statement which identified all steps taken by him to administer such estates and which gives full particulars of all distributions which have been made by him as personal representative of Madam Lim;

(5)

(in his capacity as personal representative of the estates of Madam Lim in Singapore and in England and Wales) to provide to the solicitors for the children copies of all documents in his control relating to the matters referred to in (4) above.

13.

I now give my reasons for making this order for disclosure.

14.

The court has the following powers which are potentially relevant to the application for disclosure:

(1)

power to order a trustee to give disclosure to a beneficiary (including a discretionary beneficiary under a discretionary trust) of trust documents: see Schmidt v Rosewood Trust [2003] 2 AC 709;

(2)

power to order disclosure for the purpose of ascertaining the whereabouts of trust property or its traceable proceeds where there is an allegation that a person is in possession of the trust property or its traceable proceeds; see White Book Vol. 2 paragraph 15-75 (at page 3350), citing Bankers Trust Co v Shapira [1980] 1 WLR 1274;

(3)

power to make an order, ancillary to a freezing order, requiring disclosure either under section 37 of the Senior Courts Act 1981 or the court’s inherent jurisdiction;

(4)

power to order disclosure which is ancillary to the intended execution of a judgment of the court; see Maclaine Watson v International Tin Council (No. 2) [1989] Ch 286;

(5)

powers in relation to disclosure under CPR Part 31.

15.

In this case, I considered that it was appropriate to exercise the court’s powers as summarised in paragraph 14(1) and (2) above. I did not consider that the power referred to in paragraph 14(3) added anything in this case because I had not been asked to make a freezing order against the Defendant and, in particular, it was not said that there is a risk that he will dissipate his assets.

16.

Further, in relation to the power referred to in paragraph 14(4), there was no judgment which is intended to be executed which would make it appropriate to order ancillary disclosure to assist execution. As regards the powers to order disclosure under CPR Part 31, as I have explained, the order for accounts and inquiries and, effectively, the remainder of the action was put into suspense following the Defendant’s service of an Appellant’s Notice on 7 August 2015. I consider that it is premature to give directions for the trial of the remaining issues, including directions as to disclosure under CPR Part 31.

17.

I make the following further comments in relation to the orders for disclosure:

(1)

for the purpose of these orders, in particular the orders in paragraphs 12(1) and 12(5) above, I hold that all of Madam Lim’s documents in Singapore are within the control of the Defendant;

(2)

these orders are made in relation to the estates of Madam Lim in Singapore and England and Wales because it was Madam Lim who received the net proceeds of sale of Sheldon Avenue and it is therefore appropriate to have disclosure and information about the distributions in relation to those estates, of which the Defendant is a personal representative, for the purpose of assisting in the tracing of those proceeds of sale;

(3)

I will not order the Defendant to become the personal representative of Madam Lim’s estate which was outside Singapore or England and Wales and on the present evidence I am not satisfied that other documents which form part of her estate outside Singapore or England and Wales are within his control for the purpose of these orders.

The costs of separate representation of the Claimants: the submissions

18.

On 20 July 2015, I heard argument on a number of issues as to costs and I gave a short judgment (see [2015] EWHC 2158 (Ch)) dealing with all but one of those issues. An order was then drawn up to give effect to my decisions as to costs. The order defined “the Trust Issue” as the issue which had been directed to be tried by an earlier order of 30 October 2012 and defined “the Main Action” as the action with claim number HC2013000281. I ordered the Defendant (in his personal capacity and/or as personal representative/trustee of Madam Lim’s estate) to pay all of the Claimants’ costs of the Trust Issue and of the Main Action on the standard basis, to be the subject of a detailed assessment if not agreed, save that I disallowed one item of costs and I reserved for further argument an issue that had been raised at the hearing on 20 July 2015.

19.

The issue which was reserved for further argument was described in the order made on 20 July 2015 as being “the question whether the Claimants are in principle entitled to claim the costs of two firms of solicitors”.

20.

On 5 October 2015, I heard further argument on the issue as to the costs of two firms of solicitors. The argument arose out of the fact that Jane and the children instructed different firms of solicitors to act for them in connection with the Trust Issue and the Main Action. Jane instructed Isadore Goldman and the children instructed Stephenson Harwood LLP. Those solicitors acted together to instruct Mr Oliver Hilton as junior counsel who was later led by Mr Andrew Twigger QC.

21.

The Defendant made the following principal submissions in relation to the question of the Claimants being able to recover the costs of two firms of solicitors:

(1)

Jane and the children had acted irregularly by bringing proceedings in which they were all Claimants but using two firms of solicitors;

(2)

the right response to that irregularity was to rule that the Claimants were only entitled to recover the costs involved in instructing one of those firms;

(3)

even if the conduct of the Claimants had been regular, or the irregularity could be overlooked, it would still not be right to award the Claimants two sets of solicitors’ costs;

(4)

in any event, I should give guidance to the costs judge as to how he should approach the detailed assessment in this case, in particular by being astute to detect and to disallow costs which might have been duplicated.

22.

Jane and the children made the following principal submissions in response:

(1)

there was no irregularity in the Claimants instructing two firms of solicitors;

(2)

even if there had been such an irregularity, it had caused no difficulty, in particular no difficulty which should affect the detailed assessment of costs actually incurred by the Claimants;

(3)

any irregularity which there might have been had been waived by the Defendant and so it was irrelevant;

(4)

this is a proper case in which to allow two sets of costs, in particular, the costs of two firms of solicitors;

(5)

it will be for the costs judge to consider what to do in response to any assertion that costs have been duplicated although if I were persuaded that it were possible to give guidance to the costs judge, which would be likely to be helpful to him, then I could do so.

Separate representation: the facts

23.

In order to determine the questions arising, I need to refer to some of the history of the disputes which were the subject of the proceedings which came before me and, in particular, the procedural history involved in those disputes.

24.

The history of the disputes is a long one. The story is told in detail in the judgment I delivered on 17 June 2015. I will obviously not repeat that story in any detail but, in order to consider the present submission as to costs, I need to refer to the way in which Jane and the children were legally represented (to the extent that they were) at various stages. In the following discussion, references to paragraph numbers in square brackets are to the paragraphs in the judgment handed down on 17 June 2015.

25.

In my earlier judgment from [121] onwards, I referred to Jane taking legal advice, in and after 1987, from various firms of solicitors. At [178] and [179], I referred to a time in 1995 when Jane as a party to proceedings was represented by one firm of solicitors and the children applied to intervene in those proceedings and instructed their own solicitors for that purpose. At [183], I referred to an agreement resulting in a stay of enforcement of an order for possession which was designed to avoid the need for the children to be joined as parties to those proceedings. The children did not play a part in any proceedings for some years after that time.

26.

At [228], I referred to a time in 2005 when the solicitors for Madam Lim wrote separately to Jane and to the children and at [231] I referred to an application made by those solicitors in relation to Jane and the children. At the hearing of that application on 14 December 2005, Jane and the children appeared in person.

27.

At [237] – [241], I referred to the time in 2006 when the children were represented by solicitors in relation to their application to the court to defer execution of a writ of possession in relation to an order for possession made against Jane. That takes the history of the earlier dispute up to early 2006.

28.

On 3 February 2005, Jane made a proposal for an individual voluntary arrangement. On 2 November 2011, the Defendant made an application for various declarations and orders in relation to Jane’s IVA. On 27 April 2012, Jane applied in those proceedings for an order for disclosure of what turned out to be a trust deed of the house. By this stage, Jane had instructed solicitors, Isadore Goldman, who continued to act for her thereafter in relation to the Trust Issue and the Main Action.

29.

On 17 August 2012, Deputy Registrar Jones ordered disclosure of the trust deed and joined the children as parties “for the purpose of ascertaining whether or not there is a trust settlement by the late Madam Lim of which they are beneficiaries”.

30.

On 30 October 2012, Registrar Baister ordered a trial of the issue whether or not an effective binding trust was settled by Madam Lim of which the children were beneficiaries and if so whether the trust incorporated the house within the trust at any time. This issue was the Trust Issue as defined in the order of 20 July 2015. The Registrar then gave directions for pleadings to be served by Jane and by the children.

31.

On 20 November 2012, Jane and the children served Points of Claim in relation to the Trust Issue. The pleading was signed by Mr Hilton. The backsheet to the Points of Claim referred to two firms of solicitors, Stephenson Harwood for the children and Isadore Goldman for Jane.

32.

On 21 December 2012, the Defendant applied to strike out parts of the Points of Claim. That application came before Mr Knowles QC, sitting as a Deputy High Court Judge (now Knowles J) on 22 May 2013. He ordered that Jane and the children issue and serve a Claim Form claiming the same relief as was claimed in the Points of Claim in relation to the Trust Issue directed by Registrar Baister. He also directed that the Trust Issue be tried together with the new claim. At that time, as indeed continued to be the case, Jane was represented by Isadore Goldman and the children by Stephenson Harwood.

33.

On 23 May 2013, Jane and the children issued a Claim Form seeking various heads of relief in relation to an alleged trust of the house. This claim was defined as the Main Action in the order made on 20 July 2015. The Claim Form was supported by a statement of truth signed by a solicitor at Stephenson Harwood. The backsheet to the Points of Claim, which accompanied the Claim Form, referred only to Stephenson Harwood. The prayer for relief in the Points of Claim was on behalf of Jane and the children without any real distinction between the relief claimed by Jane for her benefit and relief claimed by the children for their benefit.

34.

The proceedings encompassing the Trust Issue and the Main Action then took their course. Isadore Goldman acted for Jane and Stephenson Harwood acted for the children. The two firms of solicitors instructed the same counsel, initially Mr Hilton and later Mr Hilton and Mr Twigger QC.

35.

In the course of the trial, no issue was raised by the Defendant as to the appropriateness of the Claimants having two firms of solicitors. As trial judge, I did not detect any difficulty created by the involvement of two firms. Because the two firms joined in instructing the same counsel, there was no problem with examination and cross-examination of witnesses, which might conceivably have arisen if Jane and the children had been represented by separate counsel.

36.

As to the possibility of a conflict of interest between Jane and the children, I will consider this both at the theoretical level and the practical level. To discuss the position at the theoretical level, I need to describe the claims which were made. The prayer for relief in the Main Action was expressed to be a claim by Jane “and/or” the children. The children asserted that there was a discretionary trust and that they were discretionary beneficiaries under it. Jane asserted that there was a discretionary trust but she accepted that she was not a discretionary beneficiary under it. Nonetheless, she wished to establish the existence of the trust as its existence was relevant to her claim to set aside various judgments and orders, that had earlier been made against her, on the grounds of fraud. The children also applied to set aside earlier judgments and orders; their position in that respect was different from Jane’s as explained in [331] – [335]. There was a possibility of a conflict of interest, at least in theory. An earlier judgment had held that Jane was liable to pay Madam Lim a sum approaching £2.3 million for mesne profits and interest. If the children established that Madam Lim held the house on a discretionary trust, then the benefit of that judgment would be held by the trustees on that trust, under which the children were discretionary beneficiaries. It might therefore have been thought to have been in the children’s legal interest to resist Jane’s claim to set aside that judgment. As against that, the children might have considered that they should apply to set aside that judgment in case the existence of the judgment would give rise to some sort of issue estoppel as against them or produce the result that their claim to a declaration as to the existence of the discretionary trust would be considered to be an abuse of process.

37.

At the practical level, Jane and the children acted as if they had the same interests. They instructed two firms of solicitors but the solicitors instructed the same counsel and at the trial there was no conflict in the way the cases for Jane and the children were presented. In particular, in relation to the judgment for mesne profits and interest, Jane applied for that judgment to be set aside and the children independently applied for it to be set aside. Quite apart from the theoretical legal position, the children may well have taken the view that they did not wish their mother to be subject to a substantial judgment for mesne profits and interest, whatever theoretical benefit such a judgment might have been to them. Accordingly, Jane and the children must have received advice that there was, for all practical purposes, no conflict of interest between them in the way in which their cases would be presented.

Separate representation: discussion and conclusions

38.

The Defendant submits that it was irregular for Jane and the children to be represented by different solicitors. Jane and the children submit that there was no irregularity in that respect. The Defendant relies on the decision of the Court of Appeal in Lewis v Daily Telegraph Ltd (No. 2) [1964] 2 QB 601. The procedural history in that case was somewhat complicated. The case involved libel actions by Mr Lewis and by a company against two newspapers. There were originally four actions for libel which were consolidated into two actions, with each action being against a different newspaper defendant. It is convenient for the purpose of analysis to simplify the facts somewhat and regard the case as one where there were two plaintiffs (Mr Lewis and the company) both suing a newspaper defendant for libel. Difficulties arose between Mr Lewis and the company and Mr Lewis wished to have the action in which he and the company were co-plaintiffs (by reason of the earlier consolidation) to be “de-consolidated”. The judge refused to order de-consolidation and his decision was upheld by the Court of Appeal.

39.

Prior to the disagreement between Mr Lewis and the company they had been represented by the same solicitors and counsel: see the earlier proceedings reported at [1963] 1 QB 340 and [1964] AC 234. Following the disagreement, the original solicitors on the record for both plaintiffs came off the record and were replaced on the record by separate solicitors for Mr Lewis and the company. Mr Lewis considered that there were reasons for the claims by the co-plaintiffs to be de-consolidated. One of the reasons put forward was that if the proceedings continued with co-plaintiffs it would not be regular for the co-plaintiffs to have different solicitors or different counsel: see the submissions of Mr Lawson QC at pages 608-609 and 613. He accepted that the step taken to place two solicitors on the record for the two plaintiffs was irregular: see at 613.

40.

The leading judgment in the Court of Appeal was given by Pearson LJ and the other members of the court (Russell and Sellers LJJ) gave short concurring judgments. Pearson LJ considered that there was no conflict of interest between Mr Lewis and the company: see at pages 617 – 618. As to the question of separate representation for Mr Lewis and the company, he stated at pages 619 - 622:

(1)

it was not regular and not proper practice that two firms of solicitors should be placed on the record as representing Mr Lewis and the company separately;

(2)

it might have been argued in that case that the defendants had acquiesced in the position and waived any rights they might have had to object;

(3)

the court itself had an interest in having actions properly constituted and the situation in that case was irregular;

(4)

he was not saying that it was impossible ever in any case to have separate representation, wholly or partially, in a consolidated action;

(5)

the case of Healey v A Waddington & Sons Ltd [1954] 1 WLR 688, [1954] 1 All ER 861n showed the possibility of partial separate representation in consolidated actions;

(6)

in the case before the court, separate representation would be extremely inconvenient and awkward and many difficult problems would arise; the possible problems referred to related to opening speeches, cross-examination, the asking of leading questions and final speeches;

(7)

the action was not properly constituted where the plaintiffs were represented by separate solicitors;

(8)

he did not encourage an application to be made for complete or partial separate representation as he did not see how it could work in that case.

41.

Russell LJ said that “prima facie” co-plaintiffs should be jointly represented by solicitors and counsel; an order authorising severance in point of representation might be made in a proper case but such an order would be rare and only done to avoid injustice: page 623. If there were no order permitting separate representation and, at trial, no solicitor and counsel could say that they appeared for both plaintiffs then the case could not be opened and the action would be dismissed: page 623.

42.

Sellers LJ agreed, described the situation involving separate representation as being irregular but he would not prejudge whether a method could be found for the court to permit separate representation but he saw no justification for separate representation in that case; there was no conflict between the co-plaintiffs whether as to liability or as to damages: page 624.

43.

I was shown a number of cases decided before Lewis v Daily Telegraph Ltd (No. 2) but, on examination, they did not add anything relevant in the present context. Lewis v Daily Telegraph Ltd (No. 2) does not appear to have been very much discussed in later cases although I note that it was applied by Hirst J in Black Rock Shipping Corporation v Massie (“The Litsion Pride”) decided on 27 June 1984 and reported in The Times, 9 July 1984.

44.

Since Lewis v Daily Telegraph Ltd (No. 2) the Rules of the Supreme Court have been replaced by the Civil Procedure Rules but it was not suggested that any change in the rules had affected the relevance of that decision. It was submitted that, if anything, the disinclination against separate representation for joint claimants should be stronger under the CPR given the elements of the overriding objective as to saving expense and dealing with cases expeditiously: see Blackstone’s Civil Procedure 2015 at 21.4.

45.

It remains to consider the effect of the decision in Lewis v Daily Telegraph Ltd (No. 2) in the present case. I ought to consider the argument that the Claimants’ conduct in this case was irregular and then, separately, the relevance of the decision to the present issue as to costs.

46.

There is a strong argument that the Claimants’ conduct in the Main Action, in having separate representation by solicitors, was irregular. Although Jane and the children were not joint claimants in that they were not pursuing a cause of action vested in them jointly, they were co-claimants and the approach in Lewis appears to apply to such claimants. The question of the regularity of what they did does not seem to me to be affected by considering whether they could have brought separate proceedings which, without formal consolidation, could have been the subject of an order that the two proceedings could have been heard together. That did not happen as Jane and the children were co-claimants in the Main Action. Nor is the question as to regularity affected by the fact that as well as the Main Action, there was a direction for the trial of the Trust Issue where it is less easy to describe Jane and the children as co-claimants.

47.

However, on the assumption that the conduct of Jane and the children in this respect was irregular, any such irregularity was waived by the Defendant, in so far as it was a matter for the Defendant alone, rather than for the court. The Defendant knew all the material facts as to what is now said to be an irregularity and made no objection of any kind.

48.

As to the separate interest of the court, referred to by Pearson LJ in Lewis v Daily Telegraph Ltd (No. 2), the conduct of the Claimants in instructing two firms of solicitors did not impact in any way on the conduct of the trial or otherwise on the conduct of the proceedings. The only potential impact of that conduct is in relation to the present point as to costs. That is a point which now needs to be decided on its merits and it would not have arisen if Jane and the children had instructed a single firm of solicitors.

49.

I next consider the question as to the relevance of Lewis v Daily Telegraph Ltd (No. 2) to the question now before me as to the recoverability of the costs incurred by the Claimants in instructing two firms of solicitor. There is nothing in that case which directly bears on that question but, of course, where the principles in that case are observed, separate representation would not usually exist and the possibility of two sets of costs would not arise.

50.

Nonetheless, it may be a useful exercise to consider whether, if Jane and the children had applied to the court to be allowed separate representation, what attitude the court would have adopted. I deal with the appropriateness of separate representation in more detail later in this judgment where I conclude that after a certain point, separate representation was not justified. In accordance with the reasoning later set out, I consider that if the Claimants had applied for an order permitting separate representation, that order would have been refused.

51.

Before considering the further submissions made by the parties based on specific authorities, it is worth recalling the relevant provisions of the CPR. The order for costs in this case was that the Defendant paid the Claimants’ costs on the standard basis. The relevant parts of CPR 44.3 provide:

“44.3.

Basis of assessment

(1)

Where the court is to assess the amount of costs (whether by summary or detailed assessment) it will assess those costs—

(a)

on the standard basis; or

(b)

on the indemnity basis,

but the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount.

(Rule 44.5 sets out how the court decides the amount of costs payable under a contract.)

(2)

Where the amount of costs is to be assessed on the standard basis, the court will—

(a)

only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and

(b)

resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.

(Factors which the court may take into account are set out in rule 44.4.)

(3)

(4)

(5)

Costs incurred are proportionate if they bear a reasonable relationship to—

(a)

the sums in issue in the proceedings;

(b)

the value of any non-monetary relief in issue in the proceedings;

(c)

the complexity of the litigation;

(d)

any additional work generated by the conduct of the paying party; and

(e)

any wider factors involved in the proceedings, such as reputation or public importance.

(6)

(7)

Paragraphs (2)(a) and (5) do not apply in relation to—

(a)

cases commenced before 1st April 2013; or

(b)

costs incurred in respect of work done before 1st April 2013,

and in relation to such cases or costs, rule 44.4.(2)(a) as it was in force immediately before 1st April 2013 will apply instead.”

52.

The former rule, rule 44.4(2)(a) as it was in force immediately before 1 April 2013, as referred to in CPR 44.3(7), provided that where costs were to be assessed on the standard basis, the court will only allow costs which are proportionate to the matters in issue and resolve any doubt as to whether costs were reasonably incurred, or reasonable and proportionate in amount, in favour of the paying party.

53.

CPR 44.4 provides:

“44.4.

Factors to be taken into account in deciding the amount of costs

(1)

The court will have regard to all the circumstances in deciding whether costs were—

(a)

if it is assessing costs on the standard basis—

(i)

proportionately and reasonably incurred; or

(ii)

proportionate and reasonable in amount, or

(b)

if it is assessing costs on the indemnity basis—

(i)

unreasonably incurred; or

(ii)

unreasonable in amount.

(2)

In particular, the court will give effect to any orders which have already been made.

(3)

The court will also have regard to—

(a)

the conduct of all the parties, including in particular—

(i)

conduct before, as well as during, the proceedings; and

(ii)

the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;

(b)

the amount or value of any money or property involved;

(c)

the importance of the matter to all the parties;

(d)

the particular complexity of the matter or the difficulty or novelty of the questions raised;

(e)

the skill, effort, specialised knowledge and responsibility involved;

(f)

the time spent on the case;

(g)

the place where and the circumstances in which work or any part of it was done; and

(h)

the receiving party's last approved or agreed budget.

(Rule 35.4(4) gives the court power to limit the amount that a party may recover with regard to the fees and expenses of an expert.)”

54.

The Defendant submitted that quite apart from any question as to the regularity of retaining two firms of solicitors, it would not be appropriate to allow Jane and the children to recover the costs of two firms of solicitors. Jane and the children submitted the opposite.

55.

Both sides submitted that I would be assisted in resolving this dispute by applying the principles in Bolton Metropolitan DC v Secretary of State for the Environment [1995] 1 WLR 1176. In that case, Lord Lloyd of Berwick gave a judgment with which the other members of the House of Lords agreed. The case considered the practice of the court in relation to costs in a case such as one where a decision of the Secretary of State in favour of a developer was challenged by a local authority and the Secretary of State successfully defended his decision and where the developer as an interested party had also been represented before the court. However, before addressing that specific type of case, Lord Lloyd referred at page 1178A-B to another case before the House of Lords where numerous parties had been separately represented. Lord Lloyd suggested that the House of Lords would be astute to ensure that unnecessary costs were not incurred so that, where there was multiple representation, the losing party would not normally be required to pay more than one set of costs, unless the recovery of further costs was justified in the circumstances of the particular case. Then reverting to the specific type of case described above, Lord Lloyd said at 1178 F-1179A:

“What then is the proper approach? As in all questions to do with costs, the fundamental rule is that there are no rules. Costs are always in the discretion of the court, and a practice, however widespread and longstanding, must never be allowed to harden into a rule. But the following propositions may be supported.

(1)

The Secretary of State, when successful in defending his decision, will normally be entitled to the whole of his costs. He should not be required to share his award of costs by apportionment, whether by agreement with other parties, or by further order of the court. In so far as the Court of Appeal in the Wychavon District Council case may have encouraged or sanctioned such a course, I would respectfully disagree.

(2)

The developer will not normally be entitled to his costs unless he can show that there was likely to be a separate issue on which he was entitled to be heard, that is to say an issue not covered by counsel for the Secretary of State; or unless he has an interest which requires separate representation. The mere fact that he is the developer will not of itself justify a second set of costs in every case.

(3)

A second set of costs is more likely to be awarded at first instance, than in the Court of Appeal or House of Lords, by which time the issues should have crystallised, and the extent to which there are indeed separate interests should have been clarified.

(4)

An award of a third set of costs will rarely be justified, even if there are in theory three or more separate interests.”

56.

Lord Lloyd then applied those propositions to the case before him and held that the Secretary of State should have his costs and that there were special features justifying an award of costs in favour of the developer. He also held that a third set of costs in favour of another party was not justified.

57.

The Bolton decision directly concerned statutory appeals in relation to planning decisions but it has been influential in relation to costs incurred in judicial review generally. The Claimants cited a number of cases which illustrated that this is so and as examples of cases where more than one set of costs was allowed. The cases cited were R (Smeaton) v Secretary of State for Health [2002] EWHC 886 (Admin), [2002] FLR 146, R (A, B, X and Y) v East Sussex County Council [2005] EWHC 585 (Admin) and R (Rawlinson and Hunter Trustees SA) v Central Criminal Court [2013] 1 Costs LR 122. Whilst those cases illustrate the type of considerations which arise in this context, it is not necessary to describe the facts of those cases.

58.

The Defendant also cited Bristol-Myers Squibb Co v Baker Norton Pharmaceuticals Inc [2001] RPC 1. In that case the proprietor of a patent sued two other pharmaceutical companies for infringement of the patent. Both defendants successfully argued at trial that the patent was invalid and the judge’s order revoking the patent was upheld by the Court of Appeal. The judge had ordered the plaintiff to pay the Defendants’ costs but he imposed a limitation that from a specified date: “the first and second defendants shall recover only one set of costs between them, to be taxed as if only one firm of solicitors were acting for both parties and the parties were represented by one leading and one junior counsel, and how that one set of costs is split between the first and second defendants is a matter for them”. The judge explained his order as follows:

“It seems to me that the governing principle should be that where there are two or more parties fighting a common enemy, unless there are special circumstances, the court should lean in favour of one set of costs. One can always say that the second party might be better off if they had their own particular legal team. I am not always sure that is true: too many cooks often spoil the broth. Even assuming that a party might be slightly better off, unless there is a real conflict, genuinely justified by separate sets of lawyers, I think the better view is the parties should be under pressure to agree there should be one set of lawyers to face the common enemy. I think the court should be reluctant to grant two sets of costs.”

59.

The judge’s order for costs was reversed by the Court of Appeal. Aldous LJ (with whom Buxton LJ and Holman J agreed) said:

“70 In my view the governing principle enunciated by the judge is too broadly stated. The governing principle is that the losing party should only be required to pay the costs reasonably incurred by the other party or parties. No doubt parties should be under pressure only to instruct one set of lawyers to face a common enemy, as to do otherwise could result in an unreasonable expenditure of costs for which the losing party should not pay. But it does not follow that successful defendants, even if they adopt a common approach, should be invariably deprived of part of their costs.

71 In the present case the appellants chose to fight the issues of infringement and validity against two defendants. No complaint was made, nor could it have been made, that both instructed solicitors and counsel to advise them and to serve defences. The complaint upheld by the judge was that sometime in February, before the trial in July 1998, that position changed and it became unreasonable for the defendants to be represented by their own solicitors and counsel. That being so, it was not reasonable for the appellants to pay both sets of costs. What was it that meant that it was unreasonable for one of the parties to continue to be separately represented? The judge did not answer that question, except to say that he was not saying that the solicitors acted improperly. His conclusion depended upon what he thought was reasonable for the losing party to pay, not upon an assessment as to whether one of the respondents had acted unreasonably. That became evident in the discussion after judgment when [counsel], who appeared for the respondents, raised the difficult questions as to how the respondents were to split the one payment of costs between them in the absence of agreement. That resulted in the judge ordering that how the one set of costs was to be split between them “was a matter for them”. Did he expect that if agreement was not reached, the actual split would have to be decided by litigation? I am not sure how that would be done as he did not give them liberty to apply to him for that purpose.

72 [Counsel for the appellants] supported the judge's conclusion that from February 1998 the appellants should only be liable to pay one set of costs as that was the amount that it was reasonable for a claimant to pay. I disagree. A losing claimant should ordinarily pay the costs reasonably incurred by the parties that he takes proceedings against. What costs are reasonably incurred by one or more defendants should be ascertained by the costs judge who carries out the assessment. Upon such an assessment duplication and failure to co-operate can be seen and adjustments made accordingly. To decide what costs were reasonably incurred by defendants by considering what costs a losing client should pay, amounts to pre-judging the results of a detailed assessment without considering the facts. The judge's conclusion involved, by implication, a decision that the costs of one or both of the respondents had been unreasonably incurred. That could not have been inferred from the fact that they had separate solicitors and counsel and he had no evidence before him to enable him to reach that decision. No such conclusion could be reached without looking at the full picture which of course would be done by the costs judge on a detailed assessment.

73 I would discharge the costs order made by the judge upon the basis that he approached the issues between the parties on the wrong basis. Successful parties are ordinarily entitled to their costs reasonably incurred. If there be evidence before the judge that certain costs do not fall within that category, then they should be disallowed. In this case there was no such evidence and therefore the matter had to be left to the costs judge when carrying out the detailed assessment. Of course it is always open to the judge to draw attention in his judgment to matters which he believes require particular investigation during assessment. I would therefore substitute for the judge's orders as to costs an appropriate order for the costs of the respondents to be paid by the appellants.”

60.

The relevant rules of the CPR, taken together with these decisions, establish the following propositions, which are relevant to the assessment of costs on the standard basis:

(1)

costs will be recoverable only to the extent that they were reasonably incurred;

(2)

the court will resolve any doubt as to whether costs were reasonably incurred in favour of the paying party;

(3)

where the receiving parties were separately represented, the court will give them the opportunity to explain their case as to why the costs of the separate representation were reasonably incurred;

(4)

it may often be appropriate for that opportunity to be given in the course of a detailed assessment by a costs judge but there is no reason in principle why the matter should not be capable of being considered by the judge who is asked to make an order or orders for costs;

(5)

if the court considers that the costs of separate representation exceeded what was reasonably necessary to present the Claimants’ case and protect their interests, then the court will conclude that the additional costs (in excess of the costs which would have been incurred if the Claimants had instructed a single firm of solicitors) were not reasonably incurred and those costs will be disallowed.

61.

I have reached the above conclusions on the basis of the authorities cited to me by the parties but I find that these conclusions are further supported by a number of decisions dealing with separate representation in relation to disputes concerning trusts. That topic is discussed in Lewin on Trusts, 19th ed. at para. 27-117 and Underhill and Hayton, Law of Trusts and Trustees, 18th ed. at paras. 85.42 – 85.43. Both textbooks state that the normal position in relation to trustees involved in litigation is that they should not be separately represented and will be allowed one set of costs only, but there will be cases where the court takes the view that separate representation and the recovery of separate costs will be appropriate. The application of this approach is illustrated by Re Spurling’s Will Trusts [1966] 1 WLR 920. Underhill and Hayton at para. 85.42 states that where trustees who have been separately represented are restricted to one set of costs, the costs may be apportioned by the costs judge. The case cited for this proposition is Re Isaac [1897] 1 Ch 251. In that case, counsel submitted that such an order was the normal practice: see at page 252. The order actually made in that case directed the costs judge (then the taxing master) to allow one set of costs and to apportion them between the trustees so as to give the second trustee only the costs applicable to the work done by him alone.

62.

The first question I need to determine is whether the decision in Lewis v Daily Telegraph Ltd (No. 2) requires me to hold that the Claimants should be restricted to one set of costs only. I do not consider that it does. The decision did not directly deal with the costs consequences of separate representation on the part of claimants. However, when I consider what order to make in relation to the costs of the separate representation in this case, I will take into account the following:

(1)

the separate representation of the Claimants was probably irregular;

(2)

the Defendant waived that irregularity, so far as it was a matter for him;

(3)

the separate representation did not create any difficulties for the court;

(4)

if the Claimants had applied for the permission of the court to enable them to be separately represented, the court would probably have refused to grant that permission.

63.

The next question is whether I should determine anything about the appropriateness of separate representation or whether I should leave that question to the costs judge. I have decided that I should determine certain matters in relation to the appropriateness of separate representation. The principal reason for doing so is that the matter has been fully argued before me. The point was raised on behalf of the Defendant on 20 July 2015 when I indicated that I would deal with the arguments on the point rather than direct them to be dealt with by the costs judge. It may be, at that time, the Defendant’s point was thought to be more in the nature of a point of law based on Lewis v Daily Telegraph Ltd (No. 2) but, on the subsequent hearings on 28 September and 5 October 2015, both sides addressed the matter by reference to the detailed circumstances of the case. In addition, having conducted the trial, I believe that I am in a better position to assess the appropriateness of separate representation than the costs judge would be.

64.

The Claimants submitted that it was appropriate for Jane and the children to have separate representation. They referred to the procedural history and to the origin of the dispute in the Defendant’s application in relation to Jane’s IVA and the joinder of the children to that application. It was then accepted that the interests of Jane and the children were aligned in relation to the dispute about the trust. It was said, however, that their interests might later diverge if they were to be competing creditors of Madam Lim’s estate. It was emphasised that both firms of solicitors instructed the same counsel. It was submitted that, in effect, only one set of costs had been incurred. As to that, it was said that:

“A decision was reached in 2013 whereby the costs of disclosure would be borne principally by Stephenson Harwood and those of witness statement preparation by Isadore Goldman. Additionally, Stephenson Harwood was the lead firm in dealing with the trial bundle preparation. As regards responsibility for payment of counsel’s fees, this fell to Stephenson Harwood up to May 2014 and to Isadore Goldman thereafter.”

65.

I also add the following. Stephenson Harwood’s costs up to 10 July 2015 are estimated to be some £945,000, including a success fee of some £237,000. Isadore Goldman’s fees up to the hearing on 20 July 2015 are estimated to be some £519,000 and they claim a success fee in addition to that figure. In the course of a discussion as to the possible extent of duplication of costs, I was told by counsel for the Claimants that draft documents settled by counsel on behalf of the Claimants would have been sent to both firms of solicitors acting for the Claimants and both firms would have been involved in approving such documents.

66.

I do not consider that it was reasonably necessary, after a certain point in this litigation, to have separate representation for Jane and the children. I can see that the interests of Jane and the children were not identical in the early stages of the Defendant’s application in relation to the IVA. However, on 20 July 2015, I ruled that while I would make orders for costs in relation to the Trust Issue and the Main Action, I would not otherwise deal with the costs of the litigation about the IVA, on the basis that the issues in that litigation have not been decided. The court ordered the trial of the Trust Issue on 30 October 2012. Jane and the children served a single Points of Claim in relation to the Trust Issue on 20 November 2012. Up to the point of service of that pleading, I can see that Jane and the children could justify the taking of separate legal advice but, from that point, I consider that separate representation was not reasonably necessary. As they themselves admit, their interests were aligned. There was in practice no conflict of interest as regards the arguments in relation to the Trust Issue and, later, the Main Action. That should have been clear upon service of the Points of Claim in relation to the Trust Issue. Accordingly, I conclude that the assessment of costs in this case should reflect the fact that separate representation was not justified as reasonably necessary from immediately after 20 November 2012.

67.

The next question is how to give effect to that conclusion. The Defendant submits that the Claimants should only be allowed to recover the costs of instructing Stephenson Harwood or Isadore Goldman, but not both. I do not think that can be right in view of the likelihood that not all of the work done by those two firms was duplicatory. I will not make a finding as to the extent of the duplication but in view of what I was told as to the division of the work between them, if I were to disallow the entirety of the costs charged by one of the firms, I would prevent the Claimants recovering costs which were necessary for them in order to conduct the litigation.

68.

I consider that the right order to make should distinguish between the period up to and including 20 November 2012 and the period on and after 21 November 2012. In relation to the former period, the costs judge should assess the costs of Jane and the children on the standard basis without further direction from me. In relation to the latter period, the costs judge should determine, on the standard basis, the costs which would have been incurred if the Claimants had used one firm of solicitors, rather than two. On the basis of the submissions made to me, it is likely and certainly possible, that the costs recoverable will involve the addition of some of the costs incurred by Stephenson Harwood to some of the costs incurred by Isadore Goldman.

69.

The order I will make will ultimately result in the assessment of the sum payable by the Defendant to the Claimants. I was not addressed on the separate question of which part of that sum would be paid to Jane and which part to the children. It may be that the Claimants will agree that matter as between themselves. If they do not agree, it will have to be decided. It would be better to decide it after the detailed assessment has been done. It would be wrong of me to decide anything on this point in the absence of argument but a possible preliminary approach would be to distinguish between charges for work which was not duplicated and charges for work which was duplicated. In the case of the former, it would seem right that the costs which are allowed for that work by one solicitor should be regarded as receivable by the client of that solicitor. As regards the latter category, it will be necessary to apportion that cost between the Claimants.

70.

I understand that both firms of solicitors acting for the Claimants entered into conditional fee agreements with their respective clients. The parties asked me to decide the questions as to the appropriateness of separate representation, and as to the order which I should make, without regard to this consideration. I emphasise therefore that I have not been asked to decide anything about the consequences of my decision as regards the Claimants’ ability to recover conditional fees nor how such fees should be calculated.

Other matters

71.

There are three other matters which I now need to mention. They are: (1) an application by the Claimants for an order for a further payment on account of costs; (2) an application by the Defendant for an order extending his time for complying with an earlier order requiring him to pay £550,000 into court, on account of the costs of the Second to Fourth Claimants; the Defendant sought an extension of time until after the determination of his appeal against my decision in relation to the trust of the house; and (3) the costs of the Claimants’ disclosure application and the costs of the dispute as to the costs involved in separate representation for the Claimants.

72.

As to the third of these matters, the parties agreed that it should be dealt with by written submissions following the handing down of this judgment. As to the second of these matters, as some time has gone by since I reserved my judgment, I would wish to be informed of the current position in relation to the Defendant’s application to the Court of Appeal for permission to appeal and the current position as to a possible sale of the Defendant’s house in Singapore. It is possible that my decision on the second of the matters referred to above might affect my decision on the first of those matters.

73.

Accordingly, I direct that each party is to make written submissions on these three matters within 14 days of this judgment being handed down and to make written submissions in reply within 14 days thereafter.

Ong & Ors v Ping

[2015] EWHC 3258 (Ch)

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