National Westminster Bank Plc v Lucas & Ors

This application is the final stage of the administration of the estate of Jimmy Savile (“JS”). It concerns the distribution of JS’s estate (“the Estate”) in the implementation of the scheme approved by Sales J (“the Scheme”), his order being made on 1 April 2014. The events leading to the approval of the Scheme are explained in detail in the judgment of Sales J handed down on 11 March 2014, following a 3-day hearing in February 2014. His decision to approve the Scheme was challenged by the first and second Defendants, who are the trustees of the Jimmy Savile Charitable Trust (for simplicity, I will refer simply to “the Trust” as including the trustees). The Court of Appeal dismissed the appeal, with the judgment of Patten LJ (with whom Gloster and Bean LLJJ agreed) being handed down on 16 December 2014.

The Scheme is a scheme for dealing with claims against National Westminster Bank plc (“the Bank”), (as JS’s executor) and certain third parties asserted by a significant number of individuals (“the PI Claimants”) alleging sexual abuse against them by JS. The Scheme has effectively run its course. It provides, however, that no distribution out of the Estate is to be made without the approval of a Chancery judge. The application before me is made to obtain that approval by the Bank as the claimant in this action, being the executor of JS’s will. The application also seeks validation orders under section 284(1) Insolvency Act 1986 to which I will come.

As well as claims against the Bank, many of the PI Claimants have parallel claims against third parties on whose premises the alleged abuse took place. These include the Secretary of State for Heath, the BBC and Barnardos. They are referred to in the Scheme as “the Additional Defendants”. There is one other defendant in the same category, namely MIND, but it declined to participate in the Scheme. I will need to consider its position in relation to the application in due course. Although the Secretary of State is the nominal defendant, the reality is that the relevant claims are against the NHS and I will refer to it, rather than him, throughout this judgment.

Before me, Mr Cunningham QC appeared on behalf the Bank, Mr Hatherall of Capsticks LLP represented the NHS and Ms Liz Dux of Slater & Gordon (UK) LLP appeared on behalf of the PI Claimants for whom they act. Slater & Gordon I note, represent more of the PI Claimants than any of the other firms representing PI Claimants. The application is supported by Mr Hatherall and Ms Dux on behalf of their clients. Although the other PI Claimants, the BBC, Barnardos and MIND did not appear, it is clear that they do not oppose the application. Mrs Rosen Peacocke appeared on behalf of the Trust in circumstances to which I will come. Whether, at the end of the day, the Trust opposes the application is not entirely clear. But, as will appear, even if it does, I consider that the application should be granted.

I do not need to refer to the Scheme in detail, although I record early in this judgment the provisions of relevance to the present application:

The evidence in support of the Bank’s application is found in two witness statements of Claudia Glover, the solicitor at the Bank’s solicitors, Osborne Clarke LLP, most closely concerned with the Scheme. These witness statements were made on 31 May 2016 and 19 July 2016. I will refer to paragraphs of those witness statements in the format CG/[n]. The second witness statement was made to update some of the figures and statistics in the first witness statement, and to provide further information in the light of the intervention of the Trust which I will explain in due course. I will refer to relevant parts of that evidence as appropriate.

As already indicated, the Scheme requires the approval of a Chancery judge to be obtained to any settlement of a claim by a PI Claimant; and no distribution of the Estate is to be made without the approval of a Chancery Division judge. Clearly the Scheme does not require detailed scrutiny by the judge of each and every settlement on its merits. It is sufficient for the Bank to demonstrate to me the adoption of appropriate arrangements under which claims are scrutinised by or on behalf of the Bank and appropriate professional advice taken (and followed) and which can be expected to lead to a settlement on proper terms.

By way of background, CG1/[11] to [34] contain an explanation of the operation of the Scheme. All the claims under the Scheme have now been dealt with: see CG1/[11]. CG1/[18] to [24] deal with the breakdown of the number of claims. A number of “Out of Time Claims” are identified, that is to say claims which were made after the time laid down in the Scheme for notification of claims. Further information appears later in CG1 which I will mention in due course. In addition, a number of claims against the Bank and MIND were identified. MIND is not a participator in the Scheme; these claims are dealt with later in CG1/[58] to [64] under the heading “Claims outside of the Scheme”. At CG1/[35]ff is to be found the evidence concerning scrutiny of the claims.

It is explained, in CG1/[35], that in May 2013, as part of the detailed negotiations concerning the Scheme, the Bank sought advice from Paul Rees QC, a specialist personal injury silk. He has been involved in the matter from the outset (as further explained in the background description contained in Appendix 1 to CG1, prepared to assist me, as supervising judge as successor to Sales J). I attach, as Annex 1 to this judgment, CG1/[36] to [44] which contain a description of the scrutiny undertaken. The scrutiny has been carried out in accordance with the note prepared by Henry Witcomb QC dated 6 February 2014. A copy of that note is to be found at Appendix 2 to CG1. I do not repeat it, or annex it to this judgment. It is sufficient to say that it sets out a procedure designed to ensure that claims are indeed properly scrutinised, assessed and settled.

CG1 also includes, attached as Appendix 3, a summary of the activities undertaken on behalf of the Bank with regard to scrutinising the claims. Again, I do not repeat it or annex it to this judgment. It demonstrates, if I may say so, a thorough and professional approach to the assessments of the claims. CG1[39] explains the involvement of PI Counsel who have clearly been instructed on each case individually. Decisions are communicated to claimant solicitors and, if challenged, those decisions are revisited, sometimes resulting in PI Counsel being further instructed.

A number of claims have been made which were out of time for the purposes of the Scheme. They have been rejected on that ground by the Bank. The detail of this can be found in CG1/[71] to [74]. There are 57 such claims. Out of these claims:

For the avoidance of doubt, the parties to the Scheme have rejected all of the above 57 requests for these claims to be dealt with under the Scheme. The parties to the Scheme are aware that any of these out of time claimants may still attempt to pursue a claim outside of the Scheme by issuing proceedings as either a litigant in person or a claimant represented by solicitors. I am, nonetheless invited to ratify the proposed distribution of the Estate notwithstanding that such distribution is likely to have the effect of rendering out of time claims irrecoverable. I will say more about this later.

In addition to the above claims, there are two out of time claims which have been made against the NHS only. Since they are late, they fall outside the Scheme. Slater & Gordon act for the claimants. Both claims have also been made against the Bank. The NHS has rejected both claims. Osborne Clarke understand that Slater & Gordon will advise the claimants against bringing proceedings against the Bank should they proceed with their claims against the NHS outside the Scheme. Assuming that I approve the Bank’s application, the NHS will not seek to rely on any indemnity which it may have against the Bank. It is not easy to see how it could do so even without that express agreement in the light of their participation in this application and their support for it.

From the outset, claims were received against the Bank and MIND (claims relating to the period 1973-1976). MIND did not become a participator in the Scheme. Nonetheless, the scrutiny of these claims by the Bank has been carried out in the same detailed way as if they were claims under the Scheme.

As MIND was not a party to the Scheme, in order to obtain settlements for their clients, Slater & Gordon, acting for relevant PI Claimants, proceeded to make settlement offers under CPR Part 36. In doing so, they adhered to the tariff amounts set out under the Scheme and following the spirit of the Scheme.

In CG1, it is said that 8 of the 9 claims where Slater & Gordon have made Part 36 offers have now settled, with 1 claim rejected by MIND. Ms Dux of Slater & Gordon who appeared before me at the hearing did not suggest that this information is incorrect (which it was her duty to correct if it was wrong). I take it as accurate. This claim has also been rejected by the Bank.

There are three other claims against MIND which have been progressed by law firms Verisona and Osborne (a firm not connected with Osborne Clarke). Of these, two have settled and one, according to the information from the claimant solicitor, is not being pursued against MIND. Since the MIND claims have been dealt with outside the Scheme, MIND is not contractually obliged to agree that its entitlement to an indemnity from the Estate ranks behind any liability the Estate has to all of the claimants. This contrasts with the position of the Additional Defendants. However, it has been confirmed to Osborne Clarke that MIND and the Additional Defendants are prepared to agree that MIND's entitlement to an indemnity from the Estate is to be treated in the same way as that of the Additional Defendants under the Scheme, so that its indemnity ranks behind liability to the claimants. But this is subject to conditions, namely that

In relation to all of the claims that have been rejected, the Bank has sought written confirmation from the relevant claimant solicitors that they no longer act for the claimant and, where possible, that the claimant is withdrawing their claim altogether (ie not instructing other solicitors nor acting as a litigant in person). In cases where the claim is against the Bank only (and not against an Additional Defendant or MIND), Osborne Clarke have received written confirmation from all claimant solicitors that the claimant solicitors are no longer acting, and in most cases, written communication that the Claimant is no longer pursuing their claim. Where the Bank has not received such written confirmation that a Claimant is not pursuing their claim, the Bank understands that the relevant claimant solicitors have conveyed the risks associated with issuing proceedings to the rejected claimant(s). The Bank acknowledges that it is aware that these claimants could still, hypothetically, issue proceedings as either a litigant in person or represented by another firm, but as several months have passed since notification of the rejections, the Bank considers the risk to be remote, as do I. I am accordingly invited by the Bank – as it is put in CG1, out of fairness to the Claimants whose claims have been accepted, and so as to bring a conclusion to this protracted administration – to ratify the proposed distribution of the Estate notwithstanding that distribution is likely to render rejected claims irrecoverable.

With regard to all rejected claims where the claim involved an Additional Defendant, the Bank has sought confirmation from the Additional Defendant and the relevant claimant solicitors that the claimant solicitors are no longer acting and, where possible, confirmation that the Claimant is no longer pursuing his or her claim. Osborne Clarke have received confirmation from BBC and MIND that there are no outstanding claims and that where claims have been rejected, these claims are no longer being pursued. With regard to the claims where the NHS is an Additional Defendant, the position at the date of CG1 was believed by the Bank to be this: the NHS had confirmed that there remain 8 outstanding claims where they were waiting for confirmation from the claimant solicitors so that they can close their file. In relation to all 8 of these claims, Osborne Clarke have received written confirmation from the claimant solicitors that they have no outstanding claims against the Bank.

Updated information is given in CG2 about these 8 claims. There are four claims which the NHS’s solicitors consider to be concluded:

According to CG2, there were also four claims against the NHS outstanding:

Mr Hatherall told me that one of the claims had now settled. None of the unresolved claims will have any impact on the Bank. According to CG1/[44], the Bank has received confirmation that there is no claim being pursued against it. Although the indemnity in the Scheme would make the Bank liable for the amount eventually paid out by the NHS, the NHS has committed itself to making no claim under the indemnity in relation to any unresolved claims settled after the date of the approval of the distribution proposed by the court. If I accede to the Bank’s present application, it follows that the unresolved claims will have no financial consequence for the Bank.

The value of the Estate as at 27 May 2016 appears from CG1/[75] to [81] and the amount necessary to settle the claims and to meet costs and a small income tax liability appears in CG1/[83] to [86]. The estimated current net value of the Estate, as at that date, is approximately £2,042,088.16, which is after:

Since 7 December 2013, the Bank has been ordered to pay out £201,569.16 inclusive of VAT in respect of various parties’ costs; and has received £245,000 inclusive of VAT in respect of costs which the Trust has been ordered to pay into the Estate.

The Bank has incurred a further £1,411,165.16 since 7 December 2013. This is principally in respect of legal costs with a total of slightly in excess of £24,000 paid to Media Com and to Ogiers.

I should record here that the Bank has not made, and does not intend to make, any charge for its own time in the administration of the Estate and the operation of the Scheme.

Under the Scheme, the total value of the claims against the Bank only, whether accepted in full or at a reduced amount, is £1,033,687. The value of the costs of the accepted claim against the Bank only is £689,00 inclusive of VAT. In addition, the sum of £124,000 (which is damages and costs inclusive of VAT) has been agreed as payable out of the Estate in relation to claims that originally involved the BBC and NHS, but where for various reasons settlement was either split or agreed as a liability of the Bank only. Therefore, in accordance with paragraphs 8.1 and 8.4 of the Scheme, the Court is being asked to approve the total distribution of £1,846,687.50 from the Estate in order to settle these claims against the Bank only.

At the time of CG1, it was anticipated that the costs of further preparation for and attendance at the hearing of this application would be approximately £45,000 plus VAT (£54,000). That sum has been revised upward to £61,000 (including VAT) at least partly, it is said by the Bank, as a result of the intervention of the Trust.

CG1 contains a helpful summary of the financial position at [88] to [96] to the following effect:

It can be seen from these figures that, once the indemnities to which the Additional Defendants and MIND are entitled are taken into account, the Estate is insolvent in a substantial sum. The Additional Defendants (including Barnados) and MIND have agreed in principle how the balance is to be apportioned between them, namely pro rata to the amounts for which they are liable under claims which they have met. The precise percentages were not available at the hearing. The draft order produced by Mr Cunningham caters for this area of uncertainty.

Subject to the points raised on behalf of the Trust, I would have no hesitation in approving the distribution of the Estate, namely the payment of the claims mentioned in [29] vii) above and payment of the balance in a manner agreed by the BBC, the NHS, Barnardos and MIND. I am satisfied, in the light of the evidence about the scrutiny of claims and the manner in which settlements were subsequently reached, that the agreements by the Bank to make payment are ones which I should approve as required by paragraph 8.1 of the Scheme. Although I have a discretion to refuse to approve a settlement which falls within the tariff, I do not think that I should, absent very special circumstances, (of which there is no example), go behind the tariff amounts once I am satisfied, as I am, that the acceptance of liability within a particular type of assault listed in the tariff is justified. Similarly (subject to a point concerning CFAs raised by the Trust), I do not think that I should go behind the costs tariff contained in the Scheme (again subject to the same caveat about very special, but absent, circumstances). For reasons which I will come to, I reject the objections which the Trust has raised. Accordingly, I approve the amounts of the settlement agreements and the amounts of costs for the purposes of paragraphs 7.1 and 8.1 of the Scheme.

The question then is whether I should approve the distribution of the Estate in the manner sought by the Bank as required by paragraph 8.4 of the Scheme. The only reason against that course is that it will, in practice, mean that the claims of potential claimants whose claims are not satisfied by the distribution will be irrecoverable. The claims affected are these:

In my judgment, a line has to be drawn somewhere. The Bank cannot be expected to retain indefinitely assets against the possibility of proceedings being commenced in relation to any of the three types of claim which I have just listed. Indeed, if it were to retain assets against that possibility, a question which it is almost impossible to answer arises, namely: How much should be retained? As to claims of the first two types, I have already addressed at length how those claims have been dealt with by the Bank, the Additional Defendants and MIND. It is to be remembered that all of those claims are now time-barred subject to the power under section 33 Limitation Act 1980 to extend the time for bring proceedings. These potential claimants have known of, and have intimated their claims, months, and in some cases, years ago. They have had every opportunity to bring claims but have not done so; and they have failed to do so notwithstanding that they knew, or must be taken to have known, the time for bringing claims under the Scheme. Importantly, by raising claims under the Scheme, the individual concerned has demonstrated that he has knowledge of a claim which could, in the alternative, have been made in court proceedings. Once the claim under the Scheme was rejected (whether on its merits or because it was out of time), it was incumbent on the claimant to get on with his claim, seeking as part of his proceedings an extension of time under section 33. If a claimant delays in taking proceedings, as all of the relevant claimants have done, they cannot expect this court to delay the distribution of the estate.

The position of potential claimants who have not even intimated a claim is a fortiori. The Scheme was widely advertised and, quite apart from such advertisement, the media exposure to the whole affair was so great that it is difficult to imagine that a person with a claim did not know that he could make it through the Scheme. In any case, the Bank has made formal advertisement for claims. The statutory protection for an executor who distributed after such advertisement in the absence of knowledge of a claim points strongly, in my mind, to the conclusion that I should (apart from the points raised by the Trust to which I will come) approve the distribution notwithstanding the potential claims of the third type.

The application seeks two orders under section 284(1) Insolvency Act 1986 ratifying without qualification (but subject to one caveat) dispositions made or to be made by the Bank. The first order relates to the period 7 December 2013 to 27 May 2016. The second relates to the period thereafter. Before coming to the detail, I should mention that there have already been two ratification orders, each of which was made by Sales J.

The first ratification order was made by Sales J on 20 February 2013, before the Scheme had been approved. The order ratified various dispositions which had already been made by the Bank including Osborne Clarke’s bills in relation to which the ratification was expressed to be “without prejudice to the rights of whoever is so entitled to challenge those bills at a later date”. Under paragraph 6 of the order, the Bank was given approval under section 284(1) Insolvency Act 1986 to complete the administration of the Estate and to make “such further dispositions out of the Estate as are necessary for completing the administration”, including anticipated costs set out in a schedule to the order. However, the approval given in relation to the Osborne Clarke’s prospective bills was subject to the same without prejudice proviso (with the substitution of “stage” for “date”).

The second ratification order is contained in the order approving the Scheme made by Sales J on 1 April 2014. By paragraph 7(3) of the order, dispositions listed in a schedule were ratified without qualification under section 284(1) but again subject to the same without prejudice proviso. So far as I can see, those dispositions were already subject to the ratification of future costs found in the first order, but nothing turns on that. There was a further express ratification in paragraph 9 relating to the costs of the Removal Application (an application by the Trust to remove the Bank as executor, an application which was refused) and the Approval Application (ie the application by the Bank for approval of the Scheme).

In his judgment approving the Scheme, Sales J recorded two main effects of approval of it:

Mr Cunningham submits that the only persons who could launch a challenge under the without prejudice provisos in the ratification orders would be those persons who would, or might, benefit if such a challenge were successful. The same can be said in relation to the need for agreement for payment from the Estate of the Bank’s costs of operating the Scheme. In the present case, the Additional Defendants and MIND would be able to make a challenge under the validation orders or to require an assessment of costs under paragraph 7.3 of the Scheme, since a reduction in the costs of Osborne Clarke or a reduction in the costs recovered by a PI Claimant would increase the funds available to them. None of them makes any such challenge or seeks an assessment. Mr Cunningham submits that the Trust has no locus standi to launch any challenge or to require an assessment: it has no financial interest in the result given that there is no prospect, come what may, of the Trust or any other beneficiary under JS’s will receiving a penny out of the Estate. I agree. I reject Ms Rosen Peacocke’s assertion to the contrary.

I have nonetheless taken into account the observations which she has made and which I will deal with in due course. Apart from the matters which she raises, I would have no hesitation in making the ratification orders which Mr Cunningham seeks. Like Sales J (see [113] to [117] of his judgment) in relation to the application before him, I consider that it is appropriate to make an order in relation to all the items of expense for which sanction is sought in the application before me. As in the application before him (see [116]), there is no item of expense which, on the material before me, can be seen to be improper and not fit for validation. I consider that the Bank has acted properly and for the due administration of the Estate in operating the Scheme and that the work carried out by Osborne Clarke has been appropriate. From what I have seen, I think that their charges have been reasonable. Similarly, the costs payable to the PI Claimants have been reasonable in the sense that they are the tariff costs envisaged under the express provisions of the Scheme in respect of which neither Sales J nor the Court of Appeal raised any objection. In any case, as I have said, the persons in whose interests it would be to see a reduction in these costs and expenses, namely the Additional Defendants and MIND, raise no objection or challenge. Indeed, they support the Bank’s application.

I also repeat, in relation to the application before me, what Sales J said in [117] of his judgment. There is nothing in the material before me regarding the charges made by the Bank or by Osborne Clarke to the Bank which supports any case by the Trust to the effect that the Bank has overcharged the Estate.

Subject to the points raised on behalf of the Trust, I would have no hesitation in making the ratification orders sought.

Having said all of that, it may well be that it is unnecessary for me to make any order. It seems to me that the Bank already has the ratification it needs under paragraph 6 of the first ratification order made by Sales J (see [36] above). Nonetheless, it is perfectly reasonable for the Bank, as part of its application for approval of distribution of the Estate, to seek confirmation of the position and I am prepared to provide that confirmation by making a further order.

It is fair to say that since some time before the hearing leading to approval of the Scheme, relations between the Bank and the Trust had not been good. I do not think they have got any better since then. On 25 May 2016, the Trust’s solicitors wrote to Osborne Clarke following up on certain concerns which they had expressed. So far as costs were concerned, they pointed out that the Scheme contained no provision for the payment of Osborne Clarke’s fees nor any provision in the Scheme for the fees to be reviewed by the BBC, NHS, Barnardos or MIND. Although that is correct in the sense that there is no express provision using words to that effect, there are two relevant protections. First, the Bank is entitled to recover its costs from the Estate (“on the trustee indemnity basis”) under paragraph 7.3 of the Scheme. Those costs include, of course, Osborne Clarke’s fees, a challenge to which is most properly made by the Bank in the first instance. But quite apart from that, the Bank’s costs are to be subject to detailed assessment if not agreed. As I have already concluded, once it became apparent that, come what may, the Trust had no interest in the Estate, its agreement to the costs incurred by the Bank could no longer be required. In that context, the Trusts’ solicitors refer to remarks in the Court of Appeal suggesting that the costs would be open to challenge by the defendants (who include the Trust). That, of course, was correct at the time when the Court of Appeal gave its judgment before it was known that the Estate was insolvent. It is in any case inaccurate for the Court of Appeal to say that it was a term of the order that the bills should remain open to challenge by the defendants and that the defendants had the right to object to items. What the judge did was to reserve the rights of those entitled to challenge the bills to do so. That may have included the Trust, as a defendant, at the time of the Court of Appeal’s judgment but it has not been true for some time.

The Trust took no further steps in relation to the Bank’s application until PWT Advice wrote to me on 18 July 2016. They protested against the refusal of the Bank to allow the Trust to attend the hearing at the expense of the Estate. The concern expressed on behalf of the Trust was that

“estate funds not available to the beneficiaries should be applied to compensate those who have legitimate claims against the deceased (“the PI Claimants”), and those funds should not be prejudiced by consumption of estate funds in legal costs. Even if it now clear that no funds will be available for any of the beneficiaries of the estate, the trustees remain concerned that:

(1)

Such a large proportion of the estate is proposed to be paid in legal costs – by our calculation this is more than twice the value of the settled claims, before the question of any uplifts under CFAs are considered, and more than half the value of the estate;

(2)

The court is being asked to direct the unqualified payment of unsecured debts in an insolvent estate without scrutiny in circumstances where the unsecured creditors stand in conflict with one another; and

(3)

Some PI Claimants are expected by the Executor to be frustrated by the exhaustion of the estate pursuant to this application…..”

Those concerns were developed in the letter under the heading “Objections to the Application”. In particular, the letter purported to detect conflicts of interest between unsecured creditors of the estate “especially as between the PI Claimants and their solicitors, who act under personal injury CFAs”. Rather surprisingly, it was asserted that the law required the estate to be administered in accordance with the Administration of Insolvent Estates of Deceased Persons Order 1986. It was asserted that the only way to address the issues and to resolve the conflicts was by the making of an Insolvency Administration Order. Towards the end of the letter, it was submitted “that the present application is inappropriate and the Court should make an immediate IAO in respect of this estate”.

Having read that letter, but not the application or the evidence in support of it, I considered that I was likely to have to address the issues raised in the letter. I thought that I might gain assistance from the attendance of counsel on behalf of the Trust. My clerk responded to the letter by saying that I might be assisted by attendance of counsel but that I was not directing attendance. My clerk’s communication indicated that, from what I understood at the time, it would be highly unlikely that I would make an adverse costs order against the Trust and likely that I would allow the Trust its costs of attendance. It was made clear that things might be seen in a different light after I had been addressed at the hearing.

The letter was copied to Osborne Clarke. Mr Cunningham produced a note in response to it. He points out, forensically, that the Trust is in effect asking the Court to abort the settlement of the PI Claimants’ claims arrived at after much time, trouble and expense. He submits that the Trust’s contention that the law requires the Bank to apply for an IAO is wrong. Indeed, Article 4 of the 1986 Order specifically contemplates an insolvent estate being administered “other than in bankruptcy”. He refers also to paragraph 51-42 of Williams, Mortimer and Sunnucks on Executors, Administrators and Probate which identifies three methods of administration of an insolvent estate: administration out of court and out of bankruptcy by the deceased’s representative, administration under the court’s direction under CPR Pt 64 and administration in bankruptcy after the making of an IAO. Paragraph 51-42 is, I consider, entirely accurate. In the present case, the Estate is being administered out of court and out of bankruptcy: no administration order has been made under CPR 46.2(b), although the operation of the Scheme is being carried out under the general supervision of the Court. Plainly the third option is not required as a matter of law.

Mr Cunningham draws attention to what he describes as linked errors. First, reference is made in the letter to depriving PI Claimants “of their CFA uplifts”; and secondly, there is reference to sums payable to PI Claimants having been reduced because of CFA uplifts. There are, however, no uplifts under the Scheme: the Scheme provides for tariff costs and the opening words of paragraph 7.1 of the Scheme show that the tariff costs include profit costs, additional liabilities, disbursements and VAT. There is no question of the Estate being liable for any CFA uplift. If it is the case that PI Claimants have entered into CFAs with their solicitors, that is not a matter for the Bank in operating the Scheme or administering the Estate.

Even if there were an uplift, the persons adversely effected would be the Additional Defendants and MIND: there would be no financial impact on the Trust. Indeed, it appears from the letter that the Trust is not advancing a beneficial claim on its own behalf but is concerned rather, to further “compensate … the PI Claimants”. In these circumstances, it would not be open to the Trust to challenge these litigation costs. In any case, Ms Dux has explained to me that, so far as concerns the PI Claimants for whom her firm acts, the firm does not recover from the client any more than the tariff costs recovered as part of any settlement. She cannot speak for other firms, of course.

Mr Cunningham’s note resulted in a responsive note from Mrs Rosen Peacocke, which I do not consider takes the matter further in any useful way. At the hearing, Mrs Rosen Peacocke accepted that, come what may, the Trust would not receive a penny from the Estate whatever course was taken to complete the administration of the Estate and termination of the Scheme. She also accepted that the Trust could not itself actually challenge the amount of the costs payable out of the Estate. She maintained that, even if an IAO were not made, (she made no application that one should be made), the Estate should be administered as in bankruptcy. I am not entirely clear what she says should follow from that or how what she says should follow would differ from the actual positon on the ground.

As to that, the position is that all ordinary creditors of the Estate have long since been paid and the payments have been ratified as a result of the ratification orders made by Sales J. All of the PI Claimants whose claims have been accepted will have their claims paid in full. Those potential claimants ((i) rejected claims (ii) out of time claims already indicated, and (iii) out of time claims of which the Bank, the Additional Defendants and MIND have no knowledge) will in practice become irrecoverable: but that is not because of a present insufficiency of assets to meet those claims but because the authorised disposition of the Estate will result in the currently available assets no longer being available. The remaining assets will be distributed among the Additional Defendants and MIND who have agreed to postpone their claims to indemnity behind the settled claims of the PI Claimants against the Bank with the NHS agreeing not to seek an indemnity at all in relation to claims settled after the date of the approval of the distribution. This surely is precisely a result permitted under an administration as in bankruptcy.

In my judgment, there is nothing in the points raised on behalf of the Trust which should cause me to refuse to make the orders which I would otherwise make.

I will make an order substantially in the form sought to the following effect:

Although I indicated in correspondence that I would be likely to allow the Trust its costs of attendance out of the Estate, I consider, having heard from Mr Cunningham and Mrs Rosen Peacocke, that I should not make such an order. There was, on analysis, nothing in the points made by Mrs Rosen Peacocke at the hearing or by PWT Advice in their letter to me, to raise any doubt about the appropriateness of the order which is sought in the application. If I had had the full picture when my clerk wrote to PWT Advice, I would not have said what I did. Things do, indeed, appear very differently to me now from the way in which they appeared then before I had had the time to read the evidence. The Trust must bear the costs of its own attendance.

Mr Cunningham submits that the Trust should meet the additional costs incurred by the Bank as a result of the Trust’s intervention. He suggests that the additional cost is in the region of £7,000 including VAT which I understand to be the cost of preparation of CG2 and additional cost incurred in relation to the preparation by Mr Cunningham of his note. I had indicated through my clerk, as explained already, that I thought it highly unlikely that an adverse order would be made against the Trust. I have considered the matter carefully and can see there is some force in Mr Cunningham’s submission. However, I think that there is rather less at stake than is suggested. Much of CG2 was desirable, and possibly even necessary, quite apart from the intervention of the Trustee. Further, I myself would have raised questions about the impact, if any, of possible CFAs and about the need to retain assets to meet the claims identified in CG2/[8], especially paragraphs (e) to (h). It would have been appropriate for Mr Cunningham at least to have raised the possible impact of the 1986 Order even without the Trust’s intervention. It was not improper for PWT Advice to write the letter to me which it did. If the Trust had not appeared, there would not, I think, have been any question of making an adverse costs order against it. If it had not appeared, I think it likely that more time would have been spent addressing the letter than was spent by Mr Cunningham in preparing his note. In the exercise of my discretion, I will make no order for costs against the Trust.