British Camelids Limited v Brooke Hospital for Animals & Ors

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1. This is my judgment on costs following my decision as to the construction of the will of Candia Midworth ( the Will ) reported with NCN [2025] EWHC 2255. The claimant argued unsuccessfully that the Will should be construed in such a way that shares of the estate passing to the first, second and third defendant’s predecessors failed and fell to be distributed only among the claimant and fourth defendant. There was a further point concerning the failed share left to a now defunct charity, which I concluded should be applied by way of scheme between the first, second and third defendants but not the claimant or fourth defendant. The claimant as well as being a beneficiary is the administrator of the estate.

2. CPR 44.2(1) provides that the court has a discretion as to whether costs are payable by one party to another and as to their amount. The general rule under CPR 44.2(2) is that the unsuccessful party will be ordered to pay the successful parties’ costs.

3. Sections 31(1) and 35 of the Trustee Act 2000 provide that trustees, including personal representatives, are entitled to be reimbursed for expenses properly incurred. CPR 46.3 provides that parties to litigation acting as personal representatives, are entitled to their costs, insofar as not recovered from another party, out of the estate on the indemnity basis.

4. Para. 1 of PD46 provides that a representative’s entitlement to an indemnity out of the estate depends whether costs were properly incurred and that depends on whether the representative obtained directions before bringing proceedings whether the representative acted in the interests of the estate or for a benefit other than that of the estate and whether the representative acted unreasonably in bringing or defending or in the conduct of the proceedings.

5. As is explained in paragraph 48-033 of Lewin on Trusts (20 th ed., 2020) applications to the court for the construction of trust documents are conventionally treated as divided into three categories as explained by Kekewich J in Re Buckton [1907] 2 Ch 406 : “(1) Proceedings brought by the trustee to have the guidance of the court as to the construction of the trust instrument or some other question of law arising in the administration of the trust or in relation to the trusts on which the trust property is held. In such cases, the costs of all parties are, whatever the outcome, usually treated as necessarily incurred for the benefit of the trust fund and ordered to be paid out of it. But a trustee is at risk as to costs if he commences a construction claim unnecessarily, though will be given credit if he does so on advice. In a case where any doubt is a slight one, consideration should be given to an application to the court under section 48 of the Administration of Justice Act 1985 as a convenient and inexpensive method of securing appropriate protection for the trustees. (2) Proceedings in which the application is made by someone other than the trustee, but raises the same kind of point as in the first category and would have justified an application by the trustee. Such proceedings differ in form but not in substance from the first category and similar considerations apply as to costs. Where the application is made by someone other than the trustee, however, it may be less easy to show than in the case of a trustee that the applicant was acting reasonably in making the application and doing so for the benefit of the fund. (3) Proceedings in which the application is made by someone other than the trustee, but differ in substance from the second category, and in substance as well as form from the first category, in that they have the character of a hostile claim founded on a point of construction or law raised by someone other than the trustee to a beneficial interest in or entitlement to the trust fund. The distinction, though one not easy to draw in practice, between this kind of litigation and litigation within the first two categories, is that the claim is brought not in substance for the benefit of the trust fund, but for the benefit of the claimant, and is resisted for a similar reason. A case which falls clearly within the third category is where the whole of the trust fund has been distributed to a supposed beneficiary in reliance on some construction of the trust instrument, or view of the law, and another person claiming to be the true beneficiary brings proceedings against the recipient or the trustee in reliance on a rival construction, or rival view of the law. Here the general principles as to costs of hostile litigation apply between the claimant and the party against whom the claim is directed, and so the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, subject to the general qualifications which apply in ordinary hostile litigation.” (There is a passage to similar effect at paragraph 20-003 of Theobald on Wills (19 th ed., 2021)

6. The paragraph in Lewin goes on to point out that the distinction is a question of law but it is not determinative as to the costs order to be made. So a trustee in a Buckton (1) case may not recover costs if they have acted unreasonably and a trustee might recover costs from the trust fund in a category (iii) case, such as one where they successfully defend a claim for breach of trust, to the extent costs are not recovered from another party.

7. Paragraph 48-037 of Lewin says this: “In a case where a trustee is also a beneficiary, normally the correct procedure is for a trustee who is not interested to be the claimant, the beneficiary trustee being joined as a defendant and being in the same position as regards costs as other beneficiaries. If there is no trustee who is not also a beneficiary, then the claimant may be either the trustee or a beneficiary, and the case will normally fall within Buckton category (1) or (2).”

8. Paragraph 48-041 of Lewin explains that in Buckton category (1) and (2) cases the beneficiaries’ costs will normally be ordered to be paid out of the trust fund whatever the outcome and the costs are often or usually assessed on the indemnity basis.

9. On behalf of the first to third defendants Mr Curry submitted that the correct analysis is that this is a Buckton (3) case and the claimant should pay his clients’ costs.

10. Ms Carslaw submitted that this case concerned a question of construction which had to be resolved for the benefit of the estate. She submitted that this was a Buckton (1) or (2) case in reliance on Buckton itself, the passages in Lewin and Theobald to which I have referred and the cases of Harrison-Mills v The Public Trustee [2019] EWCA Civ 966 and Lane v Lane [2024] EWHC 752. Accordingly she submitted that the right order was that the costs of the claimant as well as the costs of the first, second and third defendants should be paid out of the estate on the indemnity basis.

11. In Harrison-Mills the substantive issue was whether, on the true construction of a settlement, a certain fund should be divisible between the first and second defendants or be divisible among 31 people including the first, second and third defendants. The Court of Appeal concluded that the former construction was correct but allowed the third defendant’s appeal against the Judge’s order that she should pay the first and second defendant’s costs. Sir Timothy Lloyd concluded that the Judge’s approach was incorrect where: “an issue as to the true construction of a trust document or documents requires to be determined by the court, because it is not clear how the trustee should apply the relevant property in the circumstances that have occurred.” He went on to explain that the correct approach in such a case is set out in Re Buckton [1907] 2 Ch 406 where Kekewich J said this: “In a large proportion of the summonses adjourned into court for argument the applicants are trustees of a will or settlement who ask the court to construe the instrument of trust for their guidance, and in order to ascertain the interests of the beneficiaries, or ask to have some question determined which has arisen in the administration of the trusts. In cases of this character I regard the costs of all parties as necessarily incurred for the benefit of the estate, and direct them to be taxed as between solicitor and client and paid out of the estate.”

12. In Lane v Lane Jonathan Hilliard KC, sitting as a deputy judge of the High Court, concluded that the costs of an argument whether a gift in a will had adeemed or not should be paid out of the estate on the indemnity basis. He rejected the contention that the party who had lost the argument should pay the winner’s costs. The deputy judge concluded that where the claimant beneficiary had brought the claim for directions, which the defendant as personal representative could have brought, and the defendant defended as personal representative the case was a Buckton (2) one. He explained that it was in the interests of the estate for the matter to be resolved and even if the defendant had a personal interest, which it seemed she might not, that would not be sufficient to make it a Buckton (3) case. He pointed out that: “construction issues in trust or estate cases will frequently be contested, and in most cases they will be argued by people who have a personal interest in them, as they were in Buckton itself. Indeed it will normally be what qualifies them to be the appropriate people to take the relevant side of the argument.”

13. Mr Curry’s argument was essentially that where the question of construction is to determine to whom the trust fund is to be paid and is not a matter that has an impact on any ongoing administration of the trust the nature of the dispute is a hostile one between rivals to establish their beneficial entitlement. He said that the claimant in the present case was arguing in its own interest that the estate should be divided in a certain way and had lost and the usual costs consequence in hostile litigation should follow.

14. In support of his argument Mr Curry pointed to Buckton itself in which the construction question concerned the trusts upon which the relevant property would be held after the death of the plaintiff beneficiary and thus concerned the future administration of the trust fund.

15. Mr Curry submitted that in Harrison-Mills there were a very large number of persons potentially interested in the position for which the third defendant argued and it had therefore been necessary for the court to rule on the point as a binding compromise would have been difficult to achieve.

16. Mr Curry acknowledged that the case of Lane v Lane provided less support for his argument. Discussion and Conclusion

17. In this case there were proper arguments to be made whether the Will should be construed in the manner argued for by the claimant or that argued for by the first, second and third defendants.

18. I do not accept Mr Curry’s contention that if the only construction question to be resolved is as between rival beneficiaries to whom the fund will fall to be distributed that that means the case becomes a Buckton (3) case. In the passage I have set out from Buckton Kekewich J makes express reference to ascertaining “the interests of the beneficiaries.” In Harrison-Mills Sir Timothy Lloyd’s reference to the true construction of the document was not limited in the way Mr Curry argues. In Lane v Lane the position was very similar to the present case, although here it is the claimant personal representative which has brought the claim for directions and the rival beneficiaries which have defended and advanced the contrary argument . It is also instructive that the example given of a Buckton (3) case in Lewin is one that would arise only after a distribution had occurred.

19. In my judgment the correct reading of all the textbooks and the cases to which I have referred is that a construction question, including as to those among whom the fund falls to be distributed, is not ordinarily to be treated as a hostile claim within Buckton (3).

20. There is no neutral trustee in this case and in order for the construction question to be resolved the claimant, which is administrator and beneficiary, has brought the question before the court. Accordingly this is a Buckton (1) or (2) case.

21. That a case is a Buckton (1) or (2) case does not mean that there might not be circumstances in which the party losing the construction argument would be ordered to pay costs. If the losing party had acted unreasonably or improperly or caused the other party to incur unnecessary costs an adversarial costs order might be made.

22. I have read the correspondence passing between the parties and do not conclude that there was unreasonable conduct of this litigation by either side. At an early stage the claimant took advice from counsel and was advised that there was at least a proper argument that the estate should be divided in the manner for which the claimant contended at the hearing. Although initially the claimant’s position was that counsel’s opinion was obtained in its capacity as administrator, the claimant later claimed to withhold the opinion from the other parties on the ground that it was privileged and had been obtained for the claimant’s own benefit. The claimant did however set out the basis for its position in a letter dated 27 August 2024, to which the first second and third defendants’ solicitors responded in a letter of 11 December 2024. The exchanges between the parties were robust, but not in my judgment unreasonable or improper and I cannot identify conduct by the claimant which can be said to have increased the costs of the first, second and third defendants.

23. Just because the claimant advanced a line of argument based on the case of Berry v IBS-STL (UK) Ltd [2012] EWHC 666 which I concluded was not of assistance does not mean that I should conclude the claimant’s litigation conduct was improper or unreasonable.

24. In my judgment, although I have determined the construction question the other way, the terms of the Will and the circumstances that had occurred mean that the claimant’s position was not unarguable.

25. I conclude that this claim for the court’s determination of a construction question falls within Buckton (1) (since it is the administrator which has brought the claim), or, if I am wrong about that, it falls within Buckton (2) (as the administrator is also a beneficiary) but either way that the correct order is that each of the claimant and the first, second and third defendants should have their costs out of the estate on the indemnity basis.