Nathan James Smith & Ors v Ian Patrick Campbell & Ors [2026] EWHC 144 (Ch)

[2026] EWHC 144 (Ch)

Case No PT-2024-000315

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NL

Date 29 January 2026

Before

DEPUTY MASTER HOLDEN

Between

NATHAN JAMES SMITHClaimants

LEAH-JANE STYRINGClaimant

SUZANNE APRIL SMITHClaimant

IAN PATRICK CAMPBELLDefendants

MALCOLM RONALD TAYLORDefendant

SARAH CHESLYN-CURTISDefendant

MALDWYN STEPHEN HENRY WORSLEY-TONKS MBEDefendant

Paul Burton (instructed by Shakespeare Martineau LLP) for Claimants

Alexander Learmonth KC (instructed by IDR Law Ltd) for Defendants

Hearing Hearing dates: 14 January 2026

Approved Judgment

This judgment was handed down remotely at 10.30am on 29 January 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

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Deputy Master Holden:

[1]This is my judgment on costs following my written judgment dated 17 November 2025 (see Smith v Campbell

[2025] EWHC 3011 (Ch)

(the ‘Main Judgment’)). For clarity and convenience of reference, in this judgment I adopt the defined terms used in the Main Judgment.

[2]By the Main Judgment, I decided that Paddy and Malcolm ought to be replaced as trustees of the Trust with an independent professional trustee, but that Sarah and Maldwyn (the ‘family’ trustees) ought to continue in office. It has now been agreed between the parties that Freeths Trustees Limited be appointed as a trustee in place of Paddy and Malcolm, and that conventional orders upon a change of trustee be made. The only remaining issue between the parties is therefore the question of costs.

[3]As at the hearing of the claim, the parties were represented by Mr Paul Burton (for the Claimants) and Mr Alexander Learmonth KC (for the Trustees).

The issues

[4]The parties agreed that there are two separate but connected issues for me to resolve: i) First, the incidence of the costs of the proceedings as between the parties. ii) Second, whether the Trustees ought to be deprived of their indemnity out of the assets of the Trust in respect of their costs of the proceedings.

Legal principles

(a) The incidence of costs as between the parties

[5]In determining the incidence of costs as between the parties, the court exercises a broad discretion, which derives from s.51 of the Senior Courts Act 1981. In exercising that discretion, the court applies the principles set out at CPR r.44.2.

[6]These principles are very well-known and uncontroversial. The general rule is that the unsuccessful party pays the successful party’s costs of the proceedings, but the court may make a different order. In judging success, the court should adopt a common-sense approach, considering which party has succeeded as a matter of substance, rather than simply as a matter of form or technicality.

[7]In determining the incidence of costs, the court will also have regard to all of the circumstances of the case, including(a) the conduct of the parties;

(b) whether a party has succeeded on part of its case, even if it has not been wholly successful; and

[8]In considering the parties’ conduct, the court will consider(a) pre-action conduct, including compliance with the Practice Direction – Pre-Action Conduct;

(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim; and

(e) whether a party failed to comply with an order for alternative dispute resolution, or unreasonably refused to engage in alternative dispute resolution.

(b) The Trustees’ right of indemnity

[9]A trustee’s right to be indemnified out of the assets of the trust in respect of his or her costs of proceedings concerning the trust, and the circumstances in which that right of indemnity may be lost, is a separate and distinct issue to the incidence of costs as between the parties. It is possible for the court to decline to make an order for costs in the trustee’s favour as against the other party, while at the same time permitting the trustee to be indemnified out of the assets of the trust in respect of his or her costs of the claim Or, more accurately, to decline to order that the trustee be deprived of his or her right of indemnity, since that right exists unless the court orders otherwise. . Indeed, while it is unusual, it is also possible for the court to order that the trustee pay the costs of the other party to the proceedings, but at the same time to permit the trustee to be indemnified out of the assets of the trust in respect of those costs, such that the costs are effectively paid out of the trust: such an order was made recently in Shufflebotham v Shuff-Wentzel

[2025] EWHC 3321 (Ch)

(see paragraph [34] of the judgment of HHJ Charman). Nevertheless, there is a considerable factual overlap between the issues, since both require consideration of the reasonableness of the trustee’s conduct.

[10]A trustee’s right of indemnity derives from s.31(1) of the Trustee Act 2000, which provides that “[a] trustee is entitled to be reimbursed from the trust funds… expenses properly incurred by him when acting on behalf of the trust.” “Properly incurred” is read to mean “not improperly incurred.” If there is doubt as to whether the costs have been properly incurred, the trustee has the benefit of the doubt: see Price v Saundry

[2019] EWCA Civ 2261

at [29] – [30], per Asplin LJ.

[11]CPR r.46.3 provides that “where… a person is or has been a party to any proceedings in the capacity of trustee… [t]he general rule is that that person is entitled to be paid the costs of those proceedings, insofar as they are not recovered from or paid by any other person, out of the relevant trust fund or estate.” Any such costs are assessed on the indemnity basis: CPR r.46.3(3). Practice Direction 46 paragraphs1.1 –

1.2 then provide that:

“1.1 A trustee or personal representative is entitled to an indemnity out of the relevant trust fund or estate for costs properly incurred. Whether costs were properly incurred depends on all the circumstances of the case including whether the trustee or personal representative (‘the trustee’) – (a) obtained directions from the court before bringing or defending the proceedings; (b) acted in the interests of the fund or estate or in substance for a benefit other than that of the estate, including the trustee’s own; and (c) acted in some way unreasonably in bringing or defending, or in the conduct of, the proceedings. 1.2 The trustee is not to be taken to have acted for a benefit other than that of the fund by reason only that the trustee has defended a claim in which relief is sought against the trustee personally.”

[12]These provisions “implement the statutory indemnity in the litigation costs context”: Smith v Michelmores Trust Corporation Ltd

[2021] EWHC 1521 (Ch)

, at [9], per HHJ Matthews.

[13]As is clear from the terms of CPR r.46.3, in determining whether a trustee has incurred costs improperly so as to be deprived of his or her right of indemnity out of the trust, the court must undertake a broad evaluative judgment, taking into account all of the circumstances of the case, but having particular regard to the three matters specified at CPR r.46.3(a) – (c).

[14]As to the application of the provisions of CPR r.46.3 and of Practice Direction 46 to a claim to remove and replace trustees: i) A claim to remove and replace trustees in office is ordinarily to be characterised as a ‘beneficiaries dispute’, which is “a dispute with one or more of the beneficiaries as to the propriety of any action which the trustees have taken or omitted to take or may or may not take in the future. This may take the form of proceedings by a beneficiary alleging breach of trust by the trustees and seeking removal of the trustees and/or damages for breach of trust”: see Price v Saundry at [27], citing Alsop Wilkinson v Neary

[1996] 1 WLR 1220

, at 1224B, per Lightman J (as he then was). Such a claim is usually “regarded as ordinary hostile litigation in which costs follow the event and do not come out of the trust estate”: Alsop Wilkinson, at 1224G, citing McDonald v Horn

[1995] ICR 685

, at 696. ii) However, a removal claim is not always categorised as hostile litigation: sometimes a claim to remove or replace trustees will in substance be concerned with remedying an issue that exists in the administration of the trust: see as an example Jones v Longley

[2015] EWHC 3362 (Ch)

. iii) Evidently, where a removal claim is brought against trustees and fails, it is unlikely that the court will deprive the trustees of their right of indemnity. But where the removal claim is successful, the position is more difficult. In that situation, the court must assess whether the trustees have defended the removal proceedings in their own interests, or in the interests of the trust. “There is no need for a positive finding of breach of trust in order for the indemnity to be lost. The question for the court is whether it was unreasonable to defend the application without the court’s approval”: see Hanson v Coleman

[2025] EWHC 116 (Ch)

, at [21], per Master Brightwell, citing Perry v Neupert

[2019] EWHC 2775 (Ch)

, at [24], per HHJ Eyre QC (as he then was). iv) For obvious reasons, the grounds on which the court removes and replaces the trustees will be highly relevant to the assessment. If trustees are removed on the grounds of positive misconduct, it is likely that they will be deprived of their right of indemnity. Similarly, if trustees have engaged in self-dealing or are subject to a material conflict of interests rendering them unfit to continue in office, it is unlikely to have been in the interests of the trust or reasonable in all the circumstances for them to have resisted their removal from office. v) A more difficult category is a claim to remove and replace the trustees on the basis of hostility, or on the basis of a breakdown in relations between the trustees and the beneficiaries. In relation to a successful removal claim in that category (which includes the present claim), Mr Learmonth KC submitted that it would be wrong as a matter of policy for the court ordinarily to deprive a trustee of his or her indemnity, since it would encourage vexatious removal claims against trustees, who would have to “throw in the towel” in order to avoid exposure to a personal costs liability, even if the claim proceeds solely from a breakdown in relations caused by “human infirmity” rather than any positive misconduct on the trustees’ part. While I recognise that such cases are in a different category to cases of trustee misconduct and the like, I disagree that there is any general rule or policy that a trustee removed from office on the basis of hostility or a breakdown in relations should not be deprived of his or her indemnity. Equally, there is no universal rule that a trustee who is removed from office will be deprived of his or her indemnity. The issue remains whether the trustees’ resistance to the claim for their removal was in their own interests (as opposed to being in the interests of the trust), and whether it was unreasonable in all the circumstances. vi) Finally, it is often the case (and it is the position in this case) that a claim to remove and replace trustees is brought on multiple grounds. Thus, a claim may be based on both allegations of breach of trust/misconduct, and on hostility and a breakdown in the relationship between the trustees and the beneficiaries. In relation to a hybrid claim of that nature, the court must assess the reasonableness of the trustees’ response to the claim as a whole. Such a claim may place the trustees in an invidious position: see Lewin on Trusts, at 48-086: “[a] trustee who is faced with a claim for removal at the instance of beneficiaries who have animosity towards him, but base their claim on allegations relating to his conduct of the trusteeship which are not or may not be well founded, though he may not be anxious to continue in office, will be concerned that if he fails to defend and refute the allegations, he will be taken as acknowledging the allegations. In such circumstances, the trustee would be well advised to consider making an offer of settlement under Part 36 of the Civil Procedure Rules including positive proposals for the appointment of a new independent trustee of good standing in his place, with whom the beneficiaries might enjoy a better relationship, without in any way conceding the allegations of misconduct, and thereby protecting his position as to costs so far as possible.” vii) I agree with the good sense of that suggestion, although a Part 36 offer is only one possible means by which the trustees might properly and reasonably respond to a claim for their removal.

The parties’ submissions

[15]In his skeleton argument and at the outset of the hearing, Mr Burton submitted that, for costs purposes, the court should draw a distinction between the Trustees who had been removed from office (Paddy and Malcolm) and the Trustees who had not (Sarah and Maldwyn). He submitted that the court should “protect” Sarah and Maldwyn’s position by(i) making a Sanderson or Bullock order requiring the ‘unsuccessful’ Trustees (Paddy and Malcolm), and not the Claimants, to bear the ‘successful’ trustees’ costs; and

(ii) by ordering that, insofar as their costs were not recovered from their co-trustees on that basis, Sarah and Maldwyn ought to be indemnified out of the assets of the Trust in respect of their costs of the proceedings.

[16]I questioned whether the court had jurisdiction to make a Sanderson or Bullock order where the ‘successful’ defendants and the ‘unsuccessful’ defendants had instructed the same representatives and adopted a common position throughout the proceedings. Following discussion of that issue, Mr Burton modified his position, submitting that all of the Trustees had, to a certain extent, been unsuccessful in the claim, and that they should all be deprived of their trustee indemnity to a greater or lesser extent. I therefore took him not to be pursuing a Sanderson or Bullock order, but in any event I do not consider that such an order would have been appropriate in this case: in my judgment, the fact that the Trustees engaged the same representatives and adopted a common position throughout the proceedings means that I should not differentiate between them for the purposes of costs.

[17]Developing his submissions, Mr Burton argued that: i) The purpose of a costs order is to achieve substantial justice between the parties, and justice in this case requires a costs order in the Claimants’ favour. ii) On a common-sense basis, the Claimants had been substantially the successful party in the claim, having achieved what Mr Burton described as “regime change” in the trusteeship. As well as having achieved the removal of Paddy and Malcolm as trustees of the Trust, the Claimants obtained the appointment of an independent professional trustee in their place, which in turn has an impact on the position of Sarah and Maldwyn (who will now be constrained to act as trustees together with an independent trustee). iii) Having undertaken a review of the parties’ open and without prejudice save as to costs correspondence, Mr Burton submitted that the Trustees had unreasonably refused to mediate the dispute, and had rejected offers of settlement made shortly before trial which reflected the ultimate outcome of the case. Conversely, he submitted that the Claimants had not unreasonably refused to mediate, and that they had ‘beaten’ offers of settlement made by the Trustees earlier in the proceedings. I consider the parties’ correspondence at paragraph 26 below. iv) The conduct of the Trustees in defending the proceedings had been unreasonable. Even if not all of the allegations made by the Claimants against the Trustees had been sustained, Mr Burton submitted that it was unreasonable for Paddy and Malcolm in particular to have “fully and determinedly defended their removal.” Mr Burton submitted that Sarah and Maldwyn had supported them in doing so, and had also acted unreasonably in doing so. v) In the premises, Mr Burton submitted that the court should order the Trustees to pay the Claimants’ costs of the proceedings on the standard basis, and order that the Trustees be deprived of their indemnity out of the assets of the Trust in respect of their own costs.

[18]On behalf of the Defendants, Mr Learmonth KC submitted that: i) In substance it was the Trustees, and not the Claimants, who were the successful parties in the proceedings. In considering success, one must consider not merely the relief sought, but the commercial objectives of the Claimants in pursuing the claim. Mr Learmonth KC submitted that the Claimants’ real objective, as revealed by their approach to an open offer made by the Trustees in the course of the proceedings (which I address further at paragraph 26(iii) and (iv) below), was to remove Paddy from the board of directors of Millpledge. ii) In any event, the claim to remove the Trustees was unsuccessful even on its own terms: it sought the removal of all four of the Trustees and insisted on the appointment of Mills & Reeve Trust Corporation in their place, whereas the ‘family’ trustees were not removed, and ultimately the Claimants jettisoned their request to have Mills & Reeve Trust Corporation appointed as the replacement trustee. Mr Learmonth KC also submitted that the Claimants failed in respect of the vast majority of their “myriad allegations of misconduct”: the Claimants are said to have brought the removal claim on (depending on how they are classified) 15 or 22 grounds, all of which were rejected by the court save for the ‘hostility’ ground, which Mr Learmonth KC said arose as a result of the “extraordinary provocation” of service of the claim on Paddy without warning at his home address. iii) It was the Claimants, and not the Trustees, who had unreasonably refused to mediate or engage with sensible settlement proposals. Mr Learmonth KC also relied on the fact that the claim had been issued and served without warning and without any attempt by the Claimants to comply with the Practice Direction – Pre-Action Conduct. iv) In those circumstances, the appropriate costs order as between the parties was for the Claimants to pay the Trustees’ costs, either in full or as to a very high percentage (the suggestion was circa 90%), reflecting the proportion of the misconduct allegations on which the Trustees succeeded, versus the lone issue on which the Claimants succeeded. v) The Trustees should not be deprived of their indemnity in this case. They behaved reasonably throughout the proceedings, and it cannot be said that they defended the claim simply in furtherance of their own interests. Mr Learmonth KC submitted that it would be wrong for these Trustees – all of whom are lay trustees (in the sense that, while professional people, they are not professional trustees) – to be penalised personally for defending a removal claim based largely on meritless allegations of breach of trust and misconduct.

Disposal

(a) The incidence of costs as between the parties

[19]The starting-point is to consider which party has been substantially the successful party in the proceedings.

[20]The claim was for the removal and replacement of the Trustees, and the court has removed two of the four Trustees and appointed an independent professional trustee in their place. It is therefore the Claimants who have been substantially the successful parties. However, what the Claimants have achieved is a partial success, rather than a complete success: having sought the removal and replacement of all of the Trustees, they succeeded in removing and replacing only some of the Trustees. The identity of the independent trustee ultimately appointed does not alter that conclusion.

[21]In those circumstances, the starting-point pursuant to CPR r.44.2(2)(a) is that the Trustees be ordered to pay the Claimants’ costs of the proceedings, but the court retains a broad discretion to make a different order if it is just to do so considering the conduct of the parties and the other factors set out at CPR r.44.2(4) and (5).

[22]In relation to pre-action conduct, the Claimants did not engage in any pre-action correspondence whatsoever, and made no attempt to comply with the Practice Direction – Pre-Action Conduct. Mr Burton sought to justify that approach on the basis that the Claimants were fearful of the Trustees’ reaction to any such correspondence (for example, in respect of their position as employees of the company, and their ongoing distributions from the Trust), and so felt obliged to begin the proceedings without giving any prior notice. There was no evidence in any of the Claimants’ witness statements to support that contention, but in my judgment it would not in any event have been a good reason to ignore and bypass the pre-action protocol.

[23]Mr Burton also submitted that, in light of the manner in which the parties’ correspondence developed during the proceedings, the lack of pre-action correspondence had not added to the cost of the litigation, on the basis that it could be inferred that pre-action discussions would not have resolved the parties’ differences. In my judgment that submission is wrong as a matter of law: there is no strict rule to the effect that pre-action conduct is relevant to costs only if causative of the bringing of an unsuccessful claim, or of increased expense in the subsequent litigation: see Bank of Tokyo-Mitsubishi Ufj Ltd v Baskn Gida Sanayi Ve Pazarlama AS

[2009] EWHC 1696 (Ch)

; [2010] 5 Costs LR, at [23], per Briggs J (as he then was), cited at paragraph 44.2.25 of the White Book. It is not in any event a justifiable inference: in fact, as I explain below, the parties’ extensive discussions as to possible means of resolving the dispute did make progress during the proceedings, but the parties ran out of time and reached trial before those discussions resulted in any concluded settlement. This is therefore a case in which pre-action correspondence may well have reduced the overall cost of the litigation.

[24]As to whether it was reasonable for the Claimants to formulate their claim in the manner they did; the manner in which they pursued their claim; and whether they exaggerated their claim, I consider that the Claimants’ conduct of the claim was unreasonable, and that a very significant proportion of the costs of the claim were referable to claims of misconduct against the Trustees which were not justified. I agree with Mr Learmonth KC that the Claimants made “myriad allegations of misconduct” against the Trustees, none of which justified the Trustees’ removal from office. The Claimants also plainly exaggerated certain allegations – for example, that Paddy had “lied” to the Claimants, which allegation was ultimately not pursued at the final hearing. In truth, much of the cost incurred in these proceedings has been incurred in litigating allegations that have either not been made out or should never have been made in the first place.

[25]As to whether either party has unreasonably failed to engage in alternative dispute resolution: i) At a relatively early stage in the proceedings, the Trustees made various proposals that there be a mediation. On 23 October 2024, the Claimants’ solicitors responded, saying:

“[o]ur clients are of course mindful of their obligations in relation to ADR. They are aware however that the primary remedy our clients seek in the claim is binary i.e. the removal of your clients as trustees. We assume your clients are still not willing to step aside, but if they are prepared to do so, they should without further delay. It is worth noting that our clients have already tried to discuss matters with your clients directly, but to no avail. As such they were left with no option but to issue proceedings in order to resolve matters. Mediation is an expensive exercise and could delay the case, which needs to be resolved as soon as possible. There is an urgent need for change given the performance of the business. Taking all of the above into account, we would suggest that in the first instance, we arrange to speak with you and have a without prejudice discussion.” ii) Mr Learmonth KC characterised that letter as a rejection of the Trustees’ offer of mediation, on the basis that mediation was unlikely to succeed because the remedy sought by the Claimants was “binary” (which, of course, it is not, as is apparent from the result in the case). Mr Burton submitted that it was not a rejection of mediation, but rather a suggestion that there be a without prejudice discussion. iii) In December 2024, the Trustees’ solicitors wrote to the Claimants’ solicitors making the following open proposals to resolve the claim, and saying that “[o]ur clients are hopeful that at least one of these offers will appeal to your clients and bring the dispute to a prompt conclusion.” “Proposal One: Paddy shall retire as Trustee of the Graham Cheslyn-Curtis Will Trust forthwith and following the execution of a Deed of Retirement confirming the same. The other trustees will continue in post. Proposal Two: That there be a demerger between the two elements of the Trust, as set out above, such that an independent professional trustee be appointed to hold the shareholding in the Company (perhaps alongside one or more of the existing trustees), and the remainder of the trust assets continue to be held by the existing trustees. Obviously, provision would have to be made to ensure that the existing settlement terms with Suzanne are honoured.” iv) The Claimants’ solicitors responded to these proposals on 15 January 2025. In respect of the first proposal, they said “we do not consider this would be a viable way forward as it would mean that the other trustees remain in situ and Paddy would (presumably) remain as a director of the company. Whilst on the face of it, your first proposal achieves separation between the trust and company, whilst Paddy remains a director, our clients believe that he is likely to exercise significant (undue) pressure on the trustees (as their evidence shows), such as to render any separation of powers essentially meaningless. It follows that a complete change of trustees is a clear necessity.”

They also sought information as to how a demerger of the Trust might work in practice. v) On 21 January 2025 the Trustees’ solicitors replied, refuting the suggestion that Paddy’s removal as a trustee would be unsatisfactory because he would remain as a director of Millpledge: as the Trustees’ solicitors (correctly) put it, this “provides no justification for objecting to this proposal either, because Paddy’s performance as a director of the Company is not under examination in this case.” As to the second proposal, the Trustees’ solicitors stated somewhat bluntly that “this proposal is either of interest to your clients, or it is not”, and invited the Claimants to indicate whether they were indeed interested in the proposal, which could then (it was said) be discussed at a mediation. vi) Discussions as to the possible “demerger” of the Trust continued. In April 2025, the Claimants’ solicitors then suggested mediators for a possible mediation. The Trustees’ solicitors did not accept that suggestion of mediation. Instead, they indicated that further consideration of the tax issues surrounding the possible demerger was necessary before any mediation could take place. It must be said that, by that stage, it appears to have been largely common ground that tax advice would be needed for the proposed demerger, which by that stage was the focus of the parties’ attention, to be discussed in a meaningful way. vii) Three working days prior to the final hearing, the Claimants’ solicitors then made a without prejudice save as to costs offer that Paddy and Malcolm be removed and replaced by an independent professional trustee, and that the parties’ costs be paid out of the Trust. The substantive terms of that offer closely reflect the ultimate outcome in the case. The Trustees then made a counter-offer, which also involved Paddy and Malcolm being replaced with an independent professional trustee. The main difference between the parties was as to how the costs of the proceedings ought to be dealt with, with the Trustees expressing the concern that payment of the Claimants’ costs out of the Trust fund “would risk placing the Trust into significant financial difficulty.” There was then a further counter-offer by the Claimants, which was rejected by the Trustees, and the final hearing arrived without the parties reaching any resolution.

[26]It would have been far preferable for the parties simply to mediate this dispute, rather than each meeting the other’s offer of mediation with caveats and qualifications. Nevertheless, overall I consider that it is the Claimants, rather than the Trustees, who were primarily responsible for the failure to resolve the dispute by ADR: i) The Claimants’ decision to initiate the proceedings without any forewarning placed a particular onus on them to consider mediation at an early stage. ii) The Trustees then made several offers of mediation at an appropriately early stage of the proceedings, which were not accepted by the Claimants. The Claimants also rejected outright the Trustees’ proposal – also made at a relatively early stage – that Paddy retire as a trustee. iii) The Trustees’ later failure to take up the Claimants’ offer of mediation was in the context of ongoing discussions of the possible demerger of the Trust, which both sides recognised would require further information and tax advice to be obtained. iv) While it is unfortunate that the parties’ last-minute exchange of offers did not result in a resolution, that is because time ran out on the discussions. That reinforces my impression that pre-action discussions or a more concerted attempt at ADR at an earlier stage of the proceedings could well have saved much of the cost that has been incurred.

[27]In summary: while the Claimants have achieved a partial success, their claim was materially exaggerated, and the majority of the cost of the proceedings was incurred in litigating allegations of breach of trust and misconduct against the Trustees that were either withdrawn or have been dismissed. The Claimants unreasonably failed to engage in any pre-action correspondence, and were primarily responsible for the lack of early-stage ADR. In those circumstances, I do not consider that it would be just or fair to visit the Claimants’ costs of the claim on the Trustees. In all the circumstances, in my judgment the appropriate costs order as between the parties is that there be no order as to costs.

(b) The Trustees’ right of indemnity

[28]In my judgment, the Trustees’ costs of these proceedings were not improperly incurred. I have reached that conclusion for the following reasons: i) Throughout these proceedings, the primary focus of the Claimants’ claim has always been on the Trustees’ conduct in the administration of the Trust. The Claimants made numerous allegations of breach of trust and misconduct against the Trustees, all of which I have dismissed. In my judgment, it was proper and reasonable for the Trustees to have defended themselves against these allegations of misconduct. Moreover, and as is made clear by CPR PD 46 paragraph 1.2, the mere fact that the Trustees defended themselves from allegations of breach of trust and misconduct does not mean that they acted for a benefit other than that of the Trust. ii) In respect of the breakdown in relations that occurred, and the hostility to the Claimants shown by Paddy in particular in his responsive evidence, those are matters which made it obvious that Paddy should not continue as one of the trustees of the Trust. In those circumstances, the reasonable course of action for the Trustees to have taken would have been to make proposals at an early stage of the proceedings for Paddy to step down as a trustee of the Trust, perhaps together with other proposals that might address the breakdown in relations and the negative impact of that breakdown on the administration of the Trust. iii) In my judgment, the open offer made by the Trustees in December 2024 that Paddy retire as a trustee of the Trust, or that there be a demerger of the assets of the Trust “such that an independent professional trustee be appointed to hold the shareholding in the Company (perhaps alongside one or more of the existing trustees)” was just such a proposal. iv) With the benefit of hindsight, the Trustees did not propose a complete or perfect solution (e.g. Malcolm’s position was not addressed in that open proposal). However, trustees are not deprived of their right of indemnity because they have not acted perfectly. The Trustees’ open proposal, made at an early stage, recognised the breakdown in relations that had occurred, and that the Claimants’ criticisms related primarily to Paddy. In all the circumstances, the Trustees’ proposals were a good faith and reasonable attempt to address those criticisms in a constructive fashion. v) The Claimants rejected outright the proposal that Paddy retire as a trustee of the Trust on the footing that he would remain as a director of Millpledge. In my judgment, that was not a reasonable basis to reject a proposal that sought to address their legitimate concerns about the administration of the Trust in a constructive fashion. In circumstances in which the Claimants failed to comply with the pre-action protocol and had thrust these proceedings on the Trustees without any warning, that was a particularly regrettable failure. vi) Overall, I consider that the Trustees reasonably and properly resisted the numerous allegations of breach of trust and misconduct made against them, and made an early, good faith and reasonable attempt to address the Claimants’ legitimate concerns about the breakdown in the relationship.

[29]In the premises, I do not order that the Trustees be deprived of their right of indemnity out of the assets of the Trust in respect of their costs of the proceedings, with the result that they are entitled to an order confirming their indemnity.

[30]For completeness, Mr Burton did at certain points in his submissions suggest that I might order that the Trustees be partially deprived of their indemnity. I queried whether the court has jurisdiction to order that trustees be partially deprived of their indemnity, but the submission was not developed to any real extent, and I do not decide that issue. In any event, even if the court had such a jurisdiction, I would not have exercised it on the facts of this case.

Conclusion

[31]For the reasons set out above, I will order as follows: i) There be no order as to costs as between the parties. ii) The Trustees be entitled to be indemnified out of the assets of the Trust in respect of their costs of the claim.