“33. In his Particulars of Claim in these proceedings, Mr Barker put forward two contentions. The first contention relied upon the condition expressed in the Deed of Gift. The Particulars of Claim explained Mr Barker’s case as to how that condition was to be construed. In effect, he contended that the condition required the gift to be an exempt transfer for inheritance tax purposes pursuant to IHTA 1984, section 28 and a disposal which would be treated for capital gains tax purposes as having been made for a consideration which involved neither a gain nor a loss pursuant to TCGA 1992, section 239. The pleading then contended that this condition was not satisfied at the date of the Deed of Gift because the terms of the EBT [i.e. the Trust] did not satisfy IHTA section 28(4). In this respect, the pleading stated that the trust did allow benefits to be conferred on persons connected with Mr Barker and the pleading also relied upon the powers contained in clause 11 of and paragraph 1.2.18 of schedule 1 to the Deed. The pleaded result of the foregoing was said to be that the gift contemplated by the Deed of Gift failed so that the proceeds of sale of the Shares were held by Confiànce on a bare trust for Mr Barker. 34. The second contention put forward in the Particulars of Claim in the trust proceedings was that the Deed of Gift had been made by Mr Barker in the mistaken belief that members of his family would be capable of benefitting from the trusts of the EBT after his death. He sought an order from the court setting aside the Deed of Gift on the ground of mistake.”
“69. What happened in this case resulted in Ms Meek as the litigation friend for Euan, as a representative defendant, and leading and junior counsel advising Ms Meek, deliberately not informing Tom and Freya and Ms Glover of a proposed compromise so as to prevent them expressing their views upon that compromise. The decision not to inform Tom and Freya and Ms Glover was because it was foreseen that Ms Glover would be likely to raise objections to the compromise and would not agree to it. Ms Meek and counsel may or may not have thought that Ms Glover might be influenced by collateral considerations and might not act in the best interests of Tom and Freya. On the material before me, Ms Meek and counsel appear to have readily acquiesced in Mr Barker’s wishes and opinions on the matter; they do not appear to have thought it necessary to form their own opinion on that matter. It might have been open to Ms Meek and to counsel to come to a reasoned and well-informed conclusion that it was not in the best interests of Tom and Freya for Ms Glover to be told of the proceedings but simply acquiescing in Mr Barker’s wishes did not amount to reaching a reasoned and well-informed conclusion on the matter. 70. In any event, even if Ms Meek and counsel had properly considered the matter and had decided that Ms Glover should not be told of the proceedings, I consider that it was completely unacceptable for the court not to have been given a fair account of the position in that respect when the court was asked to appoint Euan as a representative for Tom and Freya and was further asked to approve a settlement on behalf of Tom and Freya. The information which was deliberately withheld from the court would have been relevant to the decision which the court had the responsibility for making, even if the court took the view that from a legal standpoint the interests of the five children were the same. However, it was not alleged, and I do not find, that Ms Meek (or the leading and junior counsel who were advising her) acted in bad faith. 71. If the court had been given a fair account of the position in relation to Tom and Freya, the court would then have had to decide what to do. The court might well have taken the view that it should not make a representation order in relation to Tom and Freya. The court might have taken the view that there was no difficulty in joining all five children as defendants to Mr Barker’s claim so that there was no real need for a 9. representation order. The court might also have thought that it was inappropriate to make a representation order where two of the parties being represented were likely to have a different attitude to the proceedings from that of the proposed representative defendant. In addition, the court might have been very concerned at the strategy being adopted which was to use a representation order as a means of keeping Tom and Freya (and Ms Glover) in the dark as to what was happening. If the court had declined to make a representation order then it seems likely that Tom and Freya would have been joined as parties. The question would then have arisen as to whether they should have a litigation friend and, if so, should their litigation friend be Ms Glover or someone else. 72. When the court was asked to approve the settlement it was asked to make a decision on behalf of Tom and Freya without being aware of the fact that the proceedings had been deliberately concealed from them. On the facts of this case, if the court had been told the true position, it may well have thought that it would be unfair to proceed in that way. If Ms Meek and counsel had reached a reasoned and well-informed decision as to why Ms Glover (and hence Tom and Freya) should not be informed of the proceedings, then that matter should have been fairly explained to the court so that the court could decide what to do. The court may have thought that it was simply unfair to consider whether to approve the settlement without hearing from someone on behalf of Tom and Freya. The court might also have welcomed relevant adversarial argument so that the court would have before it the full range of relevant considerations. Conversely, the court would not have welcomed adversarial argument put forward for collateral purposes although the court would have been wary of shutting out such argument without even hearing it. 73. In these circumstances, I disapprove of the course which was adopted in this case when the court was asked to make a representation order and to approve a settlement involving children where information relevant to the court’s decision was deliberately withheld from the court.”
“i) The terms of the Confiance Settlement were negotiated before the Court had made any order that Euan Barker could represent Tom and Freya. No effort was made to consult Tom or Freya (or their mother, Ms. Glover) or make them aware of the Confiance Proceedings. ii) At the time of the Confiance Settlement, Mr. Barker’s relationship with Ms. Glover was very poor, whereas his relationship with his ex-wife Deborah Barker (and her son Euan) was good. iii) Mr. Barker chose to issue the Confiance Proceedings against only Principal Beneficiaries with whom he was on good terms and whom he anticipated would be amenable to a settlement favourable to him. iv) Asplin J. had before her little or no evidence as to Tom and Freya or Ms. Glover’s knowledge of or views on the Confiance Settlement or whether it was appropriate for Euan Barker to represent the twins ….”
“Not only did [Mr Baxendale-Walker] set up the company and provide all the litigation funding, but he also provides the majority of the instructions to the solicitors …. Ms Glover does have some input, both she and Mr Baxendale-Walker are directors of [Twin Benefits]. But it is plain that the solicitors take the bulk of their instructions from Mr Baxendale-Walker and that he exercises substance control.” “Not only did [Mr Baxendale-Walker] set up the company and provide all the litigation funding, but he also provides the majority of the instructions to the solicitors …. Ms Glover does have some input, both she and Mr Baxendale-Walker are directors of [Twin Benefits]. But it is plain that the solicitors take the bulk of their instructions from Mr Baxendale-Walker and that he exercises substance control.”
“The order of Asplin J dated25 July 2014 be revoked or varied or alternatively is not binding on the Proposed Seventh and Eighth Defendants [i.e. Tom and Freya] pursuant toCPR 19.7 (7) and/or 3.1(7).”
“Mr Seitler QC seeks a direction pursuant to rule 19.7 (7)(a) [of the CPR] that part of the Order of25 July 2014 should not be binding on Tom and Freya. The relevant part of the Order was the approval of the settlement of the proceedings. Mr Seitler explained that if the approval of the settlement was not binding on Tom and Freya then they would not be bound by the release (contained in the settlement) of all claims against Confiànce. Tom and Freya would then be able to bring claims against Confiànce. Tom and Freya recognise that the settlement between Mr Barker and Confiànce has happened and they do not seek to have that settlement rescinded; accordingly, the result would remain that the Trust and the Sub-Trust no longer have effect. However, Mr Seitler submits that Tom and Freya would be able to pursue claims against Confiànce under two principal heads. The first head would be a claim for breach of trust as a result of Confiànce making loans to Mr Barker prior to the order of25 July 2014 . The second head of claim would be that Confiànce acted in breach of trust in agreeing the compromise with Mr Barker and, more particularly, allowing the compromise to go before the court for approval without the interests of Tom and Freya being properly protected. If Tom and Freya established that Confiànce had committed a breach of trust in parting with the trust assets to Mr Barker, then Tom and Freya would seek to follow or trace those trust assets and/or claim against Mr Barker by reason of his receipt of those assets.”
“I consider that, in the light of the clarity and cogency of the reasoning of the Court of Appeal judgment, a future court will apply that reasoning and decide that section 28 [of the IHTA] is to be construed in the way which the Court of Appeal considered was the most likely way. Further, for the purposes of the application before me, it is open to me to make my own decision as to the meaning of section 28. My decision is that section 28 is to be construed in the way identified by the Court of Appeal.”
“I therefore need to consider whether Mr Barker would have succeeded in claiming that the Trust or the Deed of Gift should be set aside for mistake. This point arises on the assumed basis that the Trust and the Deed of Gift were otherwise effective. If so, what was their effect? There are only two possibilities. Either, the family beneficiaries were excluded from benefitting at any time and the Trust complied with section 28 or the family beneficiaries were not excluded from benefitting with the consequence that the Trust did not comply with section 28 and Mr Barker did not gain the intended tax advantages. In view of the Court of Appeal’s views as to the correct interpretation of section 28, Mr Barker had failed to achieve what he wanted to achieve which was that the Trust did comply with section 28 and he obtained the various tax advantages and the family beneficiaries were capable of benefitting after his death. It is therefore plain that Mr Barker had made a mistake as to the effect of what he had done. The nature of the mistake would have entitled him to an order rescinding the Trust Deed and Deed of Gift ab initio. There were no identified defences to such a claim. I consider that the position in that respect is clear beyond argument.”
“I have now reached three conclusions, as follows: (1) if I made the order sought by Tom and Freya, I would not thereby give them anything of value as they would still have no arguable claim for breach of trust against Confiànce and Mr Barker; (2) the settlement was in the best interests of Tom and Freya; and (3) if I had been asked to approve the settlement in the light of all of the arguments I have now heard, I would have done so. In the light of the first of these conclusions, I do not see how it could be appropriate or fair or just to anyone to declare that the Order of25 July 2014 is not binding on Tom and Freya. This view is powerfully supported by the other two conclusions set out above.”
“When considering whether to make an order for costs against a litigation friend, who has acted for an unsuccessful child party, the court should apply the general approach that, as regards costs, the litigation friend is expected to be liable for such costs as the relevant party (if they had been an adult) would normally be required to pay. The governing rule is that the court has regard to all the circumstances of the case and it is open to the litigation friend to point to any circumstance as to their involvement in the litigation which might justify making a different order for costs from that which would normally be made against an adult party.”
“Having regard to the substance of the [Twins’ Application], I consider that Tom and Freya acting by their litigation friend started the legal process which led to the costs being incurred. By the time they made that application, having regard to what had happened on25 July 2014 , they were not merely defending proceedings that had been brought against them but they were initiating a challenge to the pre-existing state of affairs based on new allegations which they were advancing. On this basis, even if there is a special rule that the court will not order a litigation friend of a defendant to pay the costs of a successful claimant, in the absence of gross misconduct, I conclude that such a rule would not apply to the circumstances of the [Twins’ Application].”
“If the proceedings had succeeded, it was apparently intended that Tom and Freya would bring proceedings against Confiànce for equitable compensation for breach of trust and there might have been a tracing claim made against Mr Barker. Those proceedings would have been for the benefit of Tom and Freya and not directly for the benefit of Ms Glover. In her witness statement, Ms Glover stated that she wished to obtain funds to provide for the needs of Tom and Freya and she gave information as to what those needs were. She accepted that a financial recovery by Tom and Freya would have alleviated the financial burden on her. I was also shown an email dated15 July 2017 from Ms Glover to Mr Barker which referred to the possibility of reconstituting the original sub-trust and she explained that this would enable Tom and Freya to pay back the debts she had incurred. Accordingly, if Tom and Freya did make a financial recovery as a result of these proceedings (and further proceedings) then there could be an element of an indirect benefit to Ms Glover.”
“I consider that the risk of injustice is greater if I make orders for costs against Tom and Freya than it is if I leave Confiànce and Euan to the benefit of the orders for costs which I will make against Ms Glover. On the material before me, it seems likely that the [Twins’ Application] was brought by Ms Glover of her own initiative in circumstances where Tom and Freya had no ability to control or influence the course of that application. Tom and Freya have gained nothing from the application. Accordingly, I will not make orders for costs against Tom and Freya personally.”
“(1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in— (a) the civil division of the Court of Appeal; (b) the High Court; (ba) the family court; and (c) the county court, shall be in the discretion of the court. (2) Without prejudice to any general power to make rules of court, such rules may make provision for regulating matters relating to the costs of those proceedings …. (3) The court shall have full power to determine by whom and to what extent the costs are to be paid ….”
“The subsection simply provides that ‘the court shall have full power to determine by whom . . . the costs are to be paid.’ Such a provision is consistent with a policy under which jurisdiction to exercise the relevant discretionary power is expressed in wide terms, thus ensuring that the court has, so far as possible, freedom of action, leaving it to the rule-making authority to control the exercise of discretion (if it thinks it right to do so) by the making of rules of court, and to the appellate courts to a establish principles upon which the discretionary power may, within the framework of the statute and the applicable rules of court, be exercised. Such a policy appears to me, I must confess, to be entirely sensible. It comes therefore as something of a surprise to discover that it has been suggested that any limitation should be held to be implied into the statutory provision which confers the relevant jurisdiction.”
“25. A number of the decided cases have sought to catalogue the main principles governing the proper exercise of this discretion and their Lordships, rather than undertake an exhaustive further survey of the many relevant cases, would seek to summarise the position as follows. (1) Although costs orders against non-parties are to be regarded as ‘exceptional’, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such ‘exceptional’ case is whether in all the circumstances it is just to make the order. It must be recognised that this is inevitably to some extent a fact-specific jurisdiction and that there will often be a number of different considerations in play, some militating in favour of an order, some against. (2) Generally speaking the discretion will not be exercised against ‘pure funders’, described in para 40 of Hamilton v Al Fayed (No 2)[2003] QB 1175 , 1194 as ‘those with no personal interest in the litigation, who do not stand to benefit from it, are not funding it as a matter of business, and in no way seek to control its course’. In their case the court’s usual approach is to give priority to the public interest in the funded party getting access to justice over that of the successful unfunded party recovering his costs and so not having to bear the expense of vindicating his rights. (3) Where, however, the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them, justice will ordinarily require that, if the proceedings fail, he will pay the successful party’s costs. The non-party in these cases is not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes. He himself is ‘the real party’ to the litigation, a concept repeatedly invoked throughout the jurisprudence …. (4) Perhaps the most difficult cases are those in which non-parties fund receivers or liquidators (or, indeed, financially insecure companies generally) in litigation designed to advance the funder’s own financial interests. Since this particular difficulty may be thought to lie at the heart of the present case, it would be helpful to examine it in the light of a number of statements taken from the authorities …. 29. In the light of these authorities their Lordships would hold that, generally speaking, where a non-party promotes and funds proceedings by an insolvent company solely or substantially for his own financial benefit, he should be liable for the costs if his claim or defence or appeal fails. As explained in the cases, however, that is not to say that orders will invariably be made in such cases, particularly, say, where the non-party is himself a director or liquidator who can realistically be regarded as acting rather in the interests of the company (and more especially its shareholders and creditors) than in his own interests…. 33. … The authorities establish that, whilst any impropriety or the pursuit of speculative litigation may of itself support the making of an order against a non-party, its absence does not preclude the making of such an order.”
“[An costs order against a non-party] may be made in a wide variety of circumstances where the third party is considered to be the real party interested in the outcome of the suit …. It is not, however, sufficient to render a director liable for costs that he was a director of the company and caused it to bring or defend proceedings which he funded and which ultimately failed. Where such proceedings are brought bona fide and for the benefit of the company, the company is the real plaintiff. If in such a case an order for costs could be made against a director in the absence of some impropriety or bad faith on his part, the doctrine of the separate liability of the company would be eroded and the principle that such orders should be exceptional would be nullified.”
“(1) This rule does not apply if the court has appointed a person to be a litigation friend. (2) A deputy appointed by the Court of Protection under the 2005 Act with power to conduct proceedings on the protected party’s behalf is entitled to be the litigation friend of the protected party in any proceedings to which his power extends. (3) If nobody has been appointed by the court or, in the case of a protected party, has been appointed as a deputy as set out in paragraph (2), a person may act as a litigation friend if he— (a) can fairly and competently conduct proceedings on behalf of the child or protected party; (b) has no interest adverse to that of the child or protected party; and (c) where the child or protected party is a claimant, undertakes to pay any costs which the child or protected party may be ordered to pay in relation to the proceedings, subject to any right he may have to be repaid from the assets of the child or protected party.”
“The liability of a litigation friend for costs continues until— (a) the person in respect of whom his appointment to act has ceased serves the notice referred to in paragraph (4); or (b) the litigation friend serves notice on the parties that his appointment to act has ceased.”
“(1) This rule does not apply if the court has appointed a person to be a litigation friend. (2) A person with authority as a deputy to conduct the proceedings in the name of a protected party or on that party’s behalf is entitled to be the litigation friend of the protected party in any proceedings to which that person’s authority extends. (3) If there is no person with authority as a deputy to conduct the proceedings in the name of a protected party or on that party’s behalf, a person may act as a litigation friend if that person— (a) can fairly and competently conduct proceedings on behalf of the protected party; (b) has no interest adverse to that of the protected party; and (c) subject to paragraph (4), undertakes to pay any costs which the protected party may be ordered to pay in relation to the proceedings, subject to any right that person may have to be repaid from the assets of the protected party. (4) Paragraph (3)(c) does not apply to the Official Solicitor. (‘deputy’ is defined in rule 2.3).”
“These two decisions are direct decisions that the person who acts as guardian to an infant petitioner is liable for the respondent’s costs of the proceedings. I am glad that the cases so decide, because I think that is the right rule. In my opinion the same rule that applies in the Chancery and King’s Bench Divisions ought to apply in the Divorce Division and for the same reasons.”
“I think it is impossible in this case to order the guardian ad litem to pay these costs. I do not mean to say there could not be such a case of gross misconduct as to render him liable to do so, but that is not the case here; and your client, Mr Chitty, is much in the same position as a plaintiff suing a pauper defendant.”
“If the defence in this case had been made without any just ground, or had been founded upon a statement which the Defendants knew, or with reasonable diligence could have known, was untrue, I should have thought the Plaintiff entitled to the costs occasioned by such defence.”
“In his first judgment, the Vice-Chancellor [in Morgan v Morgan] was not in any doubt as to the authority of Bamford v Bamford. He indicated that if the child defendant in Morgan v Morgan had been an adult, the Vice-Chancellor would have made an order for costs against him. The only matter he needed to inquire into was as to the position of the litigation friend. His subsequent ruling is to be understood as a finding that he would not make an order for costs against the litigation friend of a child defendant even where he would have made an order for costs against an adult defendant. He referred to an exception for a case of gross misconduct but that exception is much more narrowly expressed than the test in Bamford v Bamford as to when costs could be ordered against an unsuccessful defendant in a dower suit. Although the Vice-Chancellor concluded his judgment by saying that there would be no order for costs ‘according to the ordinary rule in dower suits’, I do not take him to be reversing his earlier statement that, applying Bamford v Bamford, he would have made an order for costs against an adult defendant in that case.”
“The question was argued at length in Reynolds v Mead …. In the course of argument, … Morgan v Morgan was cited as authority for the proposition that a guardian ad litem was not liable in costs unless there had been gross misconduct on his part. I shall make no order as to costs ….”
“[i]t was necessary that the infant should be represented by a guardian ad litem for the purpose of these proceedings and it appeared that the only person suitable and available was the Official Solicitor” so “[t]he appointment of the Official Solicitor as guardian ad litem was … a sine qua non to the proceedings going on and being effectively disposed of” (see 317-318). In Re G (Minors)[1982] 1 WLR 438 , Ormrod LJ, giving the judgment of the Court of Appeal, distinguished between custody cases, where the Official Solicitor “is much more than a mere guardian ad litem”, and cases where the Official Solicitor “was acting as guardian ad litem to an infant who was made a defendant in ordinary litigation in which the infant had to be made a defendant to enable the plaintiff to proceed with his action” (see 442). In the latter class of case, Ormrod LJ explained at 442, “a plaintiff is obliged by R.S.C., Ord. 80, r. 6, to apply to the court for the appointment of a guardian ad litem and may not proceed with his action until a guardian ad litem is appointed”, but “[n]o such provision applies to either wardship proceedings or proceedings concerning children under theMatrimonial Causes Act 1973 ” where “[t]he child is not a necessary party and the case can, and usually does, proceed without making the child a party to the proceedings”
“In my judgment, however, when a decision has to be made whether or to what extent a local authority or any other party should be ordered to pay the Official Solicitor’s costs, it matters not whether the proceedings in which the question arises are matrimonial proceedings, wardship cases or adoption applications; whether his intervention is invited by the court, requested by the parties, or prescribed by regulation. In each case, in my opinion, the decision lies in the unfettered discretion of the trial judge, to be exercised in accordance with similar general principles. One of these, in my view, is that, as the parties, in whatever circumstances, have become involved in a situation in which it has become necessary to seek the assistance of the Official Solicitor, it is not unreasonable for him to ask that they should meet or contribute towards the cost of his intervention. In some cases there may be factors or considerations which will lead the court to refuse such a request.”
“In my judgment, viewed in the light of these principles, the applications in the present case were originating applications falling within the expressions I have just quoted. They brought before the court issues which were not previously before the court, and which would not otherwise have been before the court; and, although brought in the context of a winding up ordered by, and under the ultimate supervision of, the court, these applications were essentially free-standing.”
“Another possible example of the necessity of having regard to substance rather than form might arise in the case of an application to set aside a compromise of an action on the ground of misrepresentation or concealment of material facts. Such an application would usually be made in a new action and there could be no question but that the new action would constitute ‘proceedings’ for the purposes both of section 74 [of theCayman Islands Joint Stock Companies Act 1857 (as revised)] and of Order 23 [of theGrand Court Rules 1995 ]. But, if the original action were technically still on foot, the application to set aside the compromise could be made by interlocutory motion in the still existing action: see Gilbert v Endean(1878) 9 Ch D 259 and the remark of Jessel MR, at p 266, that the object of the motion was to decide ‘a substantial question between the parties’. In such a case the applicant would be in the position of a plaintiff and the respondent in the position of a defendant whatever their respective roles in the existing action. The ability of the court to entertain an application by the respondent for security for costs of the applicant’s application to set aside the compromise could surely not be denied on the ground that the application was not in form an originating process and so did not constitute ‘proceedings’ for section 74 or Order 23 purposes.”