Glover v Barker – Cost Orders against Litigation Friends

3 September 2020

It is not uncommon in claims involving trusts and estates for one or more of the parties to be a child or other protected party. This is particularly true of claims under the Inheritance (Provision for Family and Dependants) Act 1975 and in cases involving trusts with minor beneficiaries. The procedures for litigation by or on behalf of a protected party are covered by Part 21 of the Civil Procedure Rules. More information about these procedures can be found in my previous blog:  Children and Protected Parties - Can They Participate in Trust and Probate Claims?

Before taking on the role, a litigation friend should understand their potential liability for the costs of the child or protected party, which may differ depending on whether the child is a claimant or a defendant. Issues around a litigation friend’s liability for costs have been considered by the Court of Appeal in its recent decision in the case of Glover v Barker and Others [2020] EWCA Civ 1112. The background facts were that Mr Barker had set up an employee benefit trust (EBT) in order to protect the substantial sale proceeds of his business from capital gains tax. The EBT created a sub-trust of some of the assets, and it was intended that his five children would become beneficiaries. However the scheme failed and Mr Barker reached settlement with HMRC. Thereafter Mr Barker started proceedings to wind up the trust and sub-trust, in which the court made a representation order providing that one of Mr Barker’s children should represent all of his five children as beneficiaries. Settlement was subsequently reached on behalf of the five children, which released the trustee from any claims relating to the administration of the trust.

However, two of Mr Barker’s children (twins Tom and Freya) and their mother, Ms Glover, had not been involved in and had no knowledge of the proceedings relating to the trust. The Court found in fact that the proceedings have been deliberately concealed from them. After becoming aware of the proceedings and the settlement, Ms Glover made an application, acting as the twins’ litigation friend, for an order that the settlement was not binding on the twins, which would enable them to pursue a claim against the trustee for breach of trust. That application was refused and the Judge at first instance made an order against Ms Glover as litigation friend, ordering her to pay the costs of the other parties (“the Costs Order”). Ms Glover appealed against the Costs Order.

The Court of Appeal considered a number of issues, which included the following:

1.       The general liability of litigation friends for costs

Under the Civil Procedure Rules, it is the general rule in civil litigation that an unsuccessful party will be ordered to pay the costs of the successful party. In cases where a litigation friend has not previously given an undertaking to pay costs, the court’s power to make a costs order is derived from section 51 of the Senior Courts Act 1981. Under this provision the court has the discretion to direct who should pay the costs of the proceedings, and to what extent.

The Court of Appeal confirmed that when deciding whether an order should be made under section 51, the ultimate question was whether in all the circumstances it was just to make such an order. In cases involving litigation friends and protected parties, it would typically be just to order a claimants litigation friend to pay costs if such an order would have been made against the claimant, were they not a child or protected party. However the Court is entitled to have regard to the circumstances in exercising its discretion.

In contrast, there is no presumption that a defendants litigation friend should bear the costs which a defendant would have been ordered to pay, were they not a child or protected party. Whether or not an order is justified against a defendant’s litigation friend will depend on the specific facts, but relevant factors might include bad faith, improper or reasonable behaviour, or the prospect of personal benefit.

The Judge at first instance had erred in principle when he advocated following the general approach that the litigation friend is expected to be liable for such costs as the protected party would normally be required to pay, were they not a protected party. In this case, Ms Glover had not acted in bad faith and did not stand to gain a substantial personal benefit from the twins' application. Further, the application was “not so obviously flawed as to justify a costs order against Ms Glover”. The Court of Appeal concluded that, in all the circumstances, a costs order against Ms Glover would not be appropriate (if the twins were to be viewed as defendants, rather than claimants).

 

2.        Should the judge have concluded that the twins were ‘claimants’, such that Ms Glover should be treated as if she had given an undertaking under CPR 21.4(3)(c)?

CPR 21.4(3)(c) provides that a person may act as a litigation friend if, where the child or protected party is a claimant, they undertake to pay any costs which the child/ protected party may be ordered to pay in relation to the proceedings. One of the arguments advanced against Ms Glover’s appeal was that the twins should be seen as claimants and that Ms Glover should be treated as if she had given an undertaking in accordance with CPR 21.4(3)(c). The Court of Appeal dismissed that argument by pointing to the fact that Ms Glover had never entered into any undertaking (despite being pressed to do so whilst the twins’ application was pending), and as such she could not be held liable on an undertaking that was not given. Further, CPR 21.4(3)(C) contemplates an undertaking to pay any costs which the child might be ordered to pay – in the present case no costs order had been made against the children for whom Ms Glover acted.

 

3.       Was the Judge wrong to conclude that the twins should be treated as claimants, so as to engage the principle that Ms Glover should be liable for costs?

At first instance, the judge had concluded that the twins, acting by their litigation friend, “started the legal process which led to the costs being incurred” and that they were “initiating a challenge to the pre-existing state of affairs”. This analysis was challenged in the Court of Appeal on the basis that the twins had only initiated their application because they “had been wrongly deprived of the opportunity to participate as defendants in the first place”. To treat them as claimants would be “artificial and fail to reflect the substance of their position”.

The Court of Appeal stated that where a party was “neither a conventional claimant nor a conventional defendant” the court should consider whether “the nature and circumstances of the party's participation pointed to adopting a particular approach, before arriving at an overall conclusion as to how it should exercise its discretion on the particular facts”. On balance, the nature of the twins' participation made it appropriate to apply the approach adopted in relation to defendant's  litigation friends. Although the twins had initiated their application, the Court of Appeal found that the twins’ application represented an “attempt to remedy what had gone wrong” and that they were “responding to the Main Proceedings and their exclusion from them”. In the circumstances, the Court of Appeal concluded that it was the approach governing costs orders against litigation friends of defendants that ought to be applied and, on that basis, costs orders against Ms Glover would not be considered appropriate.

 

In all the circumstances the Justices unanimously agreed that the appeal should be allowed, as there was no sufficient justification for costs orders against Ms Glover, which were set aside.

Further information 

Further information regarding wills, trusts and inheritance disputes is available on our website. If you need advice in relation to a claim involving a protected party, please get in touch with the author Kateor with a member of our Wills, Trusts and Inheritance Disputes team.

 

 

 

Share insightLinkedIn Twitter Facebook Email to a friend Print

Email this page to a friend

We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.

Leave a comment

You may also be interested in:

Close Load more

Skip to content Home About Us Insights Services Contact Accessibility