England and Wales High Court (Senior Courts Costs Office) Decisions

IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE

		Clifford's Inn, Fetter Lane London, EC4A 1DQ
		1st March 2007

Master Campbell:

1. This judgment addresses the following preliminary issue which the parties agreed on 30 November 2006 should be resolved at the outset of the detailed assessment of the Claimants' costs in this case:

"Are costs "incidental to the proceedings" recoverable by the Claimants under the terms of paragraph 1 of the order of Mann J dated 10 May 2006."

2. The relevant parts of the learned Judge's Order ("the Order") say this:

"BY CONSENT IT IS ORDERED that:

1. The Defendants do pay the Claimants' costs of these proceedings to be assessed on the standard basis if not agreed.

2. The issue as to whether the Defendants also pay the Claimants' costs incidental to these proceedings be reserved to be dealt with as follows:

(a) on the assessment of the Claimants' costs of these proceedings, if the Costs Judge also identifies any costs which he would have allowed if the order for costs had been that the Defendants do pay the Claimants' costs of and incidental to these proceedings, but which he is not allowing pursuant to paragraph 1 above ("the Incidental Costs");

(b) the issue as to whether, and if so the extent to which, the Incidental Costs should be paid by the Defendants be reserved to a single Judge of the Chancery Division for determination."

3. The hearing of the preliminary issue took place on 7 February 2007. Mr Simon P Browne of Counsel appeared for the Claimants and Mr Marven of Counsel represented the Defendants. The papers before the Court included skeleton arguments by both Counsel and a bundle containing authorities, the skeleton arguments relied on by previous Counsel before Mann J on 10 May 2006, together with a transcript of the argument before him and his judgment. At the conclusion of argument I reserved judgment.

BACKGROUND

4. Before addressing the parties' submissions it is necessary to say more about the background. The Claimants are beneficiaries under two settlements declared respectively on 2 November 1948 by Captain Edward Joicey and on 8 March 1968 by Major John Joicey in respect of land known as the Blenkinsopp Estate in Northumberland (including Blenkinsopp Hall and grounds). The Defendants were the trustees of the settlements until they executed deeds of retirement pursuant to undertakings to do so given to Mann J on 10 May 2006.
5. On the Claimants' case, Major John Joicey, as appointor of the 1948 settlement and settlor of the 1968 settlement, intended and wished that the Blenkinsopp Estate be kept as one estate for the eldest son (Alexander, the Second Claimant) of his eldest daughter (Lucinda, the First Claimant) to inherit. It is the Claimants' further contention that the trustees exercised their powers against the interests of Lucinda and Alexander in favour of Major Joicey's younger daughters, Fiona and Sabina. For that reason, Lucinda and Alexander sought the removal of the trustees and their replacement by independent solicitors with trusts experience.
6. The Claimants issued proceedings against the trustees on 16 November 2005. By the date of the hearing before Mann J on 10 May 2006, terms had been agreed whereby the trustees would retire and be replaced by solicitor trustees. The Defendants would also pay the Claimants' costs of the proceedings but no agreement could be reached about how this was to be expressed in the consent order. The Claimants contended that the exchange of correspondence which compromised the proceedings also resolved the issue of costs, on the basis that the Defendants would pay their costs "of and incidental to the proceedings". The Defendants accepted that they should bear the costs, but contended that these should be limited to "the proceedings" and that they should not be liable for any costs "of and incidental to" the proceedings.
7. The issue whether or not the exchange of correspondence evidenced a settlement of the terms upon which the Defendants had agreed to pay the Claimants' costs, was argued before Mann J on 10 May 2006, with judgment being delivered the same day. At paragraph 1 he said this:

"Any non-lawyers listening to the debate which has taken place in respect of the first matter which is before me this morning might be forgiven for thinking that the whole debate has an air of unreality about it. The debate concerns whether or not there has been an agreement that a costs order to be made in these proceedings should be an order that the defendants pay "the costs of these proceedings" or whether they should pay "the costs of and incidental to these proceedings."

8. The learned Judge gave his decision in paragraph 24. He ruled that:

"…it the light of that little exchange of correspondence which amounts almost to a student-type problem question on offer and acceptance, it seems to me that there has been a mismatch in relation to what the parties were saying about costs, and unfortunate though it is … it seems to me that there is no binding agreement as to costs in relation to this matter … I understand that the next phase of the operation is not that the parties will be resiling from the compromise but I shall nonetheless be invited to decide what order for costs it is correct to make, in other words whether I should make an order that the costs to be paid should be costs of the proceedings or whether the order should be that the costs should be costs of and incidental to the proceedings."

9. That matter was also argued before Mann J on 10 May 2006, but over the short adjournment, the parties agreed terms, which were then embodied in the Order, the relevant parts of which I have set out at paragraph 2 of this judgment.

THE SUBMISSIONS FOR THE CLAIMANTS

10. In his skeleton argument at paragraphs 18 and 19, Mr. Browne draws attention to two cases where "costs incidental to the proceedings" have been defined. In Department of Health v Envoy Farmers Ltd. (1976) 1 WLR 1018 at 1021, Jupp J adopted the dictionary definition that a thing was incidental if "it occurred in subordinate conjunction with something else". In Contractreal Ltd. v Davies and Davies (2001) EWCA Civ 928, Arden LJ examined a number of cases where costs were held not to be incidental the proceedings and at paragraph 41 said this:

"So those authorities show that the expression "of and incidental to" is a time hallowed phrase in the context of costs and that it has received a limited meaning, and in particular that the words "incidental to" have been treated as denoting some subordinate costs to the costs of the action."

11. Mr Browne submits that under the Civil Procedure Rules ("CPR"), any order for costs on the standard basis (the situation here) includes both costs of and incidental to the proceedings. Such costs are required to be reasonable and proportionate in amount and to have been reasonably incurred (see CPR 44.4).
12. Prior to the implementation of the "new" RSC Order 62 on 28 April 1986 which introduced standard costs, the position under Order 62 (the predecessor to the CPR) was different. Costs were defined on the party and party basis (Order 62 rule 2(2)) and the common fund basis (Order 62 rule 2(4)). Under the former, only "necessary and proper" costs were recoverable. Under the latter, a "reasonable amount in respect of all costs reasonably incurred" was allowable. In Mr Browne's submission the latter phrase of "costs reasonably incurred" is directly comparable to the standard basis under CPR 44.4, and has been defined to include "costs of and incidental to the proceedings".
13. To support this submission, Mr Browne relies on the judgment of Sir Robert Megarry V-C in Re: Gibson's Settlement Trusts [1981] 1 Ch 179. On page 185 at F, the learned Judge said this:

"The power to award "the costs of and incidental to all proceedings in the Supreme Court" is conferred by the Supreme Court of Judicature (Consolidation) Act 1925, Section 50(1) [replaced by Section 51(1) Supreme Court Act 1981]; and these words are echoed by RSC Order 62 rule 2(4) which provides that the power to be exercised "subject to and in accordance with this order". By rule 28(2), on a party and party taxation there are to be allowed –

"All such costs as were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed."

By rule 28(4), on a taxation on the common fund basis, "being a more generous basis than that provided for by paragraph (2)," there is to be allowed "a reasonable amount in respect of all costs reasonably incurred," and paragraph (2) does not apply. I think that from the setting in which this provision occurs, it is plain enough that the words "costs reasonably incurred" refer to "the costs of and incidental to" the proceedings in question."

14. The Vice-Chancellor on page 187 at C continued:

"Whatever may be the position on a party and party taxation, if a taxation is on the common fund basis I think that one must go back to the words "costs reasonably incurred"; and, as I have said, I think that this must mean the costs of and incidental to the proceedings in question."

15. It follows, Mr Browne submits, that on its proper construction, paragraph 1 of the order of Mann J includes both costs of and incidental to the proceedings.
16. What then is the effect of paragraph 2 of the order? In Mr Browne's submission, in applying paragraph 1, the Court must then apply paragraph 2(a) in order to decide whether there are any additional costs which the Court would have allowed. What paragraph 2(a) does not require the Court to do is to identify "incidental" costs separately; the purpose of the paragraph is to charge the Costs Judge with identifying those additional costs which do not fall within paragraph 1. The wording of the order does not require the Costs Judge to make a table informing the Chancery Judge on the left hand side the level of the "costs of the proceedings" and on the right hand side "the incidental costs" to those proceedings.
17. In the alternative, Mr Browne argues that if I was to find that "costs incidental to the proceedings" are not recoverable, for example due to the inter-action of paragraph 1 with paragraphs 2(a) and (b) then in his submission, on the detailed assessment, any costs which are "incidental" to the proceedings would be very limited. The reason for this is that it is the Claimants' case that all the costs in the bill, including investigative costs are all "costs of the proceedings" when properly defined (see his skeleton argument at paragraph 5).

THE SUBMISSIONS FOR THE DEFENDANT

18. Mr Marven submits that the meaning of the Order is clear on its face; the Defendants are to pay the Claimants' costs of the proceedings but not the costs "incidental to" the proceedings.
19. Mr Marven submits that the whole scheme of the Order is to draw a distinction between "costs of the proceedings" on the one hand and "costs incidental to the proceedings" on the other. Thus, stage 1 is for the Court on detailed assessment to identify the costs of the proceedings; stage 2 is to identify costs "incidental" to those proceedings which would have been allowed if paragraph 1 of the Order had said "costs of and incidental to the proceedings"; and stage 3 is for the costs identified under stage 2 to be referred to a Judge of the Chancery Division to decide whether or not the Defendants should pay those costs to the Claimants in addition to the costs assessed under stage 1.
20. Mr Marven also submits that if Mr Browne were to be right, paragraph 2 of the order would be a nullity since, if paragraph 1 includes incidental costs, then there can be no incidental costs falling within paragraph 2 and which are capable of being identified. The Court should not construe paragraph 1 of the Order in a way which makes paragraph 2 a nonsense. On the contrary, in order to arrive at the true interpretation of a document, a clause must not be considered in isolation, but must be considered in the context of the document as a whole; (see Lewison - "The interpretation of contracts" 2004 edition at 7.02).

DECISION

21. The parties' competing submissions can be summarised as follows: do the words "costs of these proceedings" in paragraph 1 of the Order include "costs incidental to" the proceedings (as Mr Browne contends), or are "incidental costs" excluded from paragraph 1 entirely, in which case are they to be identified separately under paragraph 2(a), with the Defendants' liability to pay any such costs to be referred to a Judge of the Chancery Division under paragraph 2(b) (as Mr Marven contends)?
22. As a proposition of law, I would agree with Mr Browne that, without more, the words "costs of these proceedings" would include all costs "of and incidental" to the proceedings. I reach this view for the following reasons. First, there is Section 51 of the Supreme Court Act 1981 Act which provides that:

"(1) Subject to the provisions of this or any other enactment and to the Rules of Court, the costs of and incidental to [emphasis added] all proceedings in –

(b) the High Court …

shall be in the discretion of the court."

It follows that in my opinion, an order of the Court which awards the costs of any proceedings will include costs of and incidental to those proceedings.

23. Second, there is the judgment of Sir Robert Megarry in Re: Gibson's Settlement which, for convenience I repeat :

"I think that from the setting in which this provision [s50(1), the predecessor to s51] occurs, it is plain enough for the words "costs reasonably incurred" refer to "the costs of and incidental to" the proceedings in question."

24. It follows that in my judgment, Mr Browne would, in the normal course of events, be right that under the CPR, any order for costs on the standard basis would include both "costs of" and "costs incidental to" the proceedings in question.
25. Is the meaning different here (as Mr Marven contends) on account of the existence of paragraphs 2(a) and (b) in the Order?
26. Both Counsel submit that the meaning of the Order is plain on its face. In these circumstances, it is Mr Marven's primary position that as there is no ambiguity, it is unnecessary for the Court to look at the process whereby the compromise was reached in order to ascertain the Order's meaning. Put another way, I should only look at the material deployed before Mann J if the terms of the Order are ambiguous (see Foskett on Compromise (6^th Edition) paragraph 5-36).
27. For his part, Mr Browne also submits that the meaning of the order is clear on its face but he does not object to the admission of the extraneous material if it assists the Court. Likewise, Mr Marven agrees that if I am satisfied that the Order is ambiguous, the Court should consider the documents placed before Mann J (which he had helpfully assembled for this purpose).
28. Having reflected carefully on these submissions, I consider that the Order is ambiguous within the Shorter Oxford Dictionary definitions of "doubtful", "of dubious meaning", "capable of more than one meaning", "not clearly defined" and that in these circumstances I will be assisted by receiving evidence of the process by which the terms of the agreement were reached. I also reach this view because, quite apart from its strained and unhappy syntax, two experienced costs counsel have argued forcefully that the Order has distinctly different meanings; in other words, that it is "of dubious meaning" and/or "capable of more than one meaning", to adopt the dictionary definition.
29. The material deployed before Mann J leading up to the compromise lies in the exchange of correspondence annexed to a skeleton argument drafted by the Claimants' previous counsel on 8 May 2006 and used at the hearing two days later.
30. The first letter is dated 17 March 2006. It is written by Withers on behalf of the Claimants to Harcus Sinclair, the then solicitors for the Defendants. It says this:

"Dear Sirs

Without prejudice

Newall v North-Lewis & Ors

At our meeting on 15 February you invited us to let you know, in order that your clients' insurers could consider discharging them, our clients' costs of the application for removal of your clients.

We think it would be helpful to agree, if possible, the principles to assist quantification …

First, the costs of the removal should be regarded as commencing with our first intimation of proceedings to remove your clients in our letter of 1 December 2003 … On the authority of cases such as Frankenburg v Famous Lasky Film Service Ltd (1931) 1 Ch 428 and Re: Gibson's Settlement Trusts (1981) CH 179 (the reasoning in which has been endorsed rather than supplanted by the CPR) costs of these removal proceedings should include costs from inception of this matter, encompassing all our attempts to persuade your clients to retire without the necessity for proceedings.

Secondly, the cases referred to support the proposition that the costs incurred by our clients in these proceedings necessarily include the investigative work resulting in materials used in these proceedings. We do not consider that it is possible to divorce the investigation of the property transactions giving rise to your clients' acute conflict of interest from the removal proceedings.

Of course considerable other costs have been incurred by our clients during the course of this unhappy matter such as costs incurred on behalf of our client Alexander Newall investigating the manner in which and reasons for his purported disinheritance, the costs of mediation with Mr and Mrs Lees-Millais and steps taken to implement the agreement reached at the mediation. For the avoidance of doubt, our clients do not propose to seek reimbursement of any part of such costs as costs of the removal proceedings. These will fall to be addressed at a later date.

We should be grateful if you would confirm that you agree; we will then calculate and provide you with the figures.

Yours faithfully"

31. The correspondence continues on 11 April 2006, Withers to Harcus Sinclair:

"Dear Sirs…

Thank you for your 3 April 2006 letter.[Not before the Court]

A ball park indication of our clients' costs to 31 March including counsel's fees and disbursements related purely to the trustees' refusal to retire and the removal and injunction proceedings is £95,000 plus VAT …

Significant costs have been incurred in researching the administration of the trust and establishing the matters which gave rise to the loss of confidence on the part of our clients and claims of breach of trust and fiduciary duty … As stated in our 17 March letter, the costs incurred by our clients in these proceedings necessarily include the investigative work resulting in the product of that investigation used in the removal proceedings. We do not consider it is possible to separate the removal proceedings from the property transactions giving rise to your clients' conflict of interest. This work, including counsels' fees and disbursements, cost no less than £130,000 plus VAT. …

Yours sincerely"

32. Harcus Sinclair's reply is dated 12 April 2006 and is in these terms:

"Dear Dawn…

Just to make sure that I understand what you are saying, are you saying that your clients' total costs are about £215,000 plus VAT, and it is that figure that you would seek to claim, or that the amount that you would seek to claim within the proceedings is in fact £95,000 plus VAT. The lower figure seems high the combined figure is very high and I want to make sure that the £95,000 is not subsumed within the £130,000 figure ...

Yours sincerely"

33. Withers reply is dated 13 April 2006 and is in these terms:

"Dear Sirs…

To clarify, the costs of approximately £95,000 (and increasing daily) plus VAT are purely in relation to the trustees' removal and, as we had hoped we had made clear in our letter of 10 April, the costs of not less than £130,000 plus VAT relate to investigative work resulting in a product which was used in the removal proceedings which we would have invite the Costs Judge to accept should also be paid by your clients ...

Yours faithfully"

34. Harcus Sinclair's reply is dated 3 May 2006 and is in these terms:

"Dear Sirs…

We are instructed to make the following offer: ….

2. Our clients will bear your clients' costs of the removal proceedings on a standard basis and will provide an interim payment of £50,000 ...

Yours faithfully"

35. Withers' reply is dated 3 May 2006 and is in these terms:

"Dear Sirs,…

As to the interim payment suggested by you since matters are so near trial and the brief has necessarily been incurred we invite you to agree an increased figure of £100,000; our costs of the removal proceedings to date are in the order of £140,000 plus VAT and the investigative costs to which we referred in our letters of 11 and 13 May of not less than £130,000 plus VAT are additional to that figure ...

Yours faithfully"

36. Harcus Sinclair's reply is dated 4 May 2006 and is in these terms:

"Dear Sirs….

Thank you for your letter dated 3 May.

Now that substantive matters in the proceedings are agreed, our offer of yesterday is open and we are also now instructed to offer an interim payment of £70,000 ...

As we have already said, we would not consider the cost properly attributable to the removal proceedings would include all of the costs of your investigative work in the context of a Part 8 claim commenced in November 2005 where disputes of fact are not to be dealt with. Nonetheless, this is not now a matter for us and will doubtless be drawn out on a detailed assessment.

Yours faithfully"

37. Withers' reply is dated 8 May 2006 and is in these terms:

"Dear Sirs

Thank you for your letters of 4 and 8 May.

Agreement has been reached between us for payment of costs (on the usual basis) costs of and incidental to these proceedings to be assessed on a standard basis, if not agreed.

We understand that there is an issue between us here as to the extent to which the costs of the investigative work, the product of which was used in these proceedings is to be met by your clients, a matter which we have both accepted is to be determined by the Costs Judge on a detailed assessment (as indeed your letter of 4 May indicates). That issue should not prevent an Order being made in the terms agreed between us with a proviso which specifically preserves your clients' position in that respect by indicating that the extent to which such costs are to be met by our clients is to be decided by the Costs Judge.

…

Yours faithfully"

38. Harcus Sinclair's reply is dated 8 May 2006 in two separate letters and is in these terms:

"Dear Sirs…

In so far as costs more generally are concerned, our open offer to pay your costs of the proceedings (shorn of the words "and incidental to") to be assessed on the standard basis if not agreed of course still stands.

Yours faithfully"

39. The second letter of 8 May 2006 is in these terms:

"Dear Sirs

Blenkinsopp

Thank you for your fax of this afternoon. As you know, there is a disagreement as to what was agreed. Our offer was that our clients pay your clients' costs of these proceedings, to be assessed on the standard basis if not agreed. An order for costs 'of and incidental to' proceedings is not the usual costs order, and your correspondence has sought to take our clients further than the offer that was made.

It is right that our clients apprehend that your wish for an 'of and incidental to' order originates in a wish to secure recovery of costs on a broader basis than is usual, including costs that do not relate to these proceedings but to different proceedings your clients have not advanced. Our clients' position remains that the order in these proceedings should relate to the costs of these proceedings. It will then be for both sides to make submissions to the Costs Judge at any assessment hearing as to the costs which truly relate to these proceedings. The difficulty as we see it of accepting your unusual formulation, even if customised further with a proviso, the risk is run that the Costs Judge will approach this detailed assessment on something other than the usual basis. The costs court is, evidently, well used to separating out costs that should and should not be payable within proceedings on the usual basis, and we would suggest that the Costs Judge will be the position to assess the extent that pre-action investigative work is recoverable.

…

Yours faithfully"

40. Withers reply is dated 9 May 2006 and is in these terms:

"Dear Sirs…

We refer to our letters of 8 May….

We think this leaves only one issue between us, namely that detailed in the third paragraph of our letter yesterday upon which we invite you to agree the wording of the Consent Order prepared by our Counsel with the incorporation of the proviso suggested at paragraph 5 of her skeleton argument….

Yours faithfully"

41. The concluding letter (Harcus Sinclair to Withers) is dated 9 May 2006 and is in these terms:

"Dear Sirs

Blenkinsopp

Thank you for your letter sent by fax earlier today. It raises two issues.

…

On the wording of the costs order, there is still some distance between us. The essence of the disagreement is that the proposed costs order is an unusual order. The matters set out in Mrs Talbot Rice's proviso will be issues in the assessment proceedings in any event; but to mention them here is to widen the ambit of the costs order. The attached passage from Heward's Chancery Practice makes it clear that 'of and incidental to' is wording which is usual in costs orders (updating it a little) made on an indemnity basis, but unusual in costs orders made on the standard basis.

Unfortunately, if we cannot agree on this matter, our instructions are that we will have to seek the court's determination of this limited point. We hope, however, that you will obtain instructions to agree a costs order made on the usual basis.

Yours faithfully"

42. In the event, it did not prove possible to agree a consent order and as I have said, the parties referred the issue of whether the correspondence evidenced a binding agreement on costs back to the Court (see paragraphs 7 and 8 ante). On 10 May 2006 they summarised their respective positions in the skeleton arguments they deployed before Mann J. For the Defendants, paragraph 4 said this:

"The Ds wish the order to be that they pay to the Cs "the costs of the proceedings" whereas the Cs want the wording to be "the costs of and incidental to the proceedings."

5. In most cases there might be little, if anything, between these two forms of words, but, in the present case, the Cs have indicated that their total costs are £270,000 plus VAT of which they say that £130,000 plus VAT are attributable to "investigative" costs – i.e. costs incurred prior to issue." [Emphasis added]

43. For the Claimants paragraph 5 said this:

"The Cs contend that the extent to which the investigative costs are recoverable is a matter for the Costs Judge on assessment ... If it assists, the Cs are perfectly content that the order reflects the fact that Ds dispute the extent to which they should have to pay the investigative costs ..."

44. Having reviewed the correspondence and the skeleton arguments, in my opinion all that the parties meant by "incidental costs" were the investigative costs incurred pre issue, no more, no less.
45. Support for this view can also be drawn from Mann J's judgment dated 10 May 2006 at paragraphs 2 and 3:

"I have described the two different expressions which are in use in this case. Both counsel before me…accept, and indeed rely on the fact that the wording has a different effect. For present purposes the different effect is said to go to the extent to which the receiving party will receive certain pre-action costs [emphasis added].

3. The motivation behind the disputes that are before me today is based on the assumption that if I make an order that the Defendants pay the costs of these proceedings without the addition of the words "and incidental to" then the Defendants will find it easier to resist having to pay some or indeed all of some pre-trial investigative work [emphasis added] which was apparently carried out by the Claimants ..."

46. Later, during the course of argument about the form of order (transcript page 1) the Learned Judge said this:

"Now I am going to give you five minutes to sort this out before we have a debate which involves us ranging over 6, 8 authorities which seem to me largely completely pointless. I shall give you my preliminary views as to where you ought to be and ought to end up. It seems to me that I am most unlikely to make any order as to costs which pre-judges, which rules completely out any attempt to claim these investigative costs [emphasis added] and that I am highly unlikely to make an order for costs which completely rules them in. That means that the order for costs I am most likely to make is one which leaves the fate of these costs up to the Costs Judge. At the moment I don't have material which enables me to make any order which gives anybody a "leg up" or gives anybody whatever the opposite of a "leg up" is. I can't say a "leg down", it is not that. It seems to me that the appropriate order for costs is costs neutral, it leaves them all to be played for and the Costs Judge will have to decide whether they are proper costs. If there is a question in principle as to whether these are the sort of costs which should be recoverable then I don't think I can decide that, that might have to be decided and formulated as a proper question to be decided in a different forum when one can see exactly what one is talking about."

47. Whilst what Mann J said is not evidence of the circumstances in which the agreement about costs did (or did not) come about, his summary of the parties' competing submissions and his findings are important and relevant to the issue I have to decide. It follows that in my judgment, the exchange of correspondence, the skeleton arguments, the extracts from the judgment of Mann J and the argument before him, are all indicative of the fact that by "incidental costs" the parties simply meant "investigative costs" incurred pre issue. For their part, the Claimants were not content to leave the potential recoverability of such investigative work to legal arguments involving Re: Gibson's Settlement and Frankenberg v Famous Lasky and wished to include a form of words (viz "of and incidental to") which they considered would give them a "leg up" on assessment. Conversely, the Defendants were anxious to avoid the inclusion of words which might give them the opposite of a "leg up" and which might prevent their Solicitors arguing at the assessment, that any investigative costs incurred pre-issue were outside the scope of the Order and should be disallowed.
48. It follows that whilst I accept that in isolation, the words "costs of these proceedings" would ordinarily include costs of and incidental to them, on the facts of this case, I am persuaded by Mr Marven's argument to the following extent; in my judgment, by including paragraph 2 in the Order, the parties expressly agreed to exclude "incidental costs" by which was meant any investigative costs incurred by Withers prior to the issue of the proceedings on 16 November 2005. Thus, any such costs will be dealt with differently to the manner in which they would have been assessed had the Order not contained paragraph 2.
49. What is the effect of this interpretation of the Order?
50. First, I consider that for the pre-issue period, the terms of the Order require me to distinguish "incidental costs", by which is meant investigative costs of the type identified in Withers' letters dated 17 March and 11 April 2006, from the costs of removing the trustees and applying for an injunction. The incidental or investigative costs- I use the description interchangeably- fall to be identified and quantified on detailed assessment and thereafter referred to a Judge of the Chancery Division who will decide whether or not the Defendants should pay them.
51. Second, I consider that all costs claimed by the Claimants post-issue, including any incidental costs, are potentially recoverable, subject to being reasonable and proportionate in amount and reasonably incurred, since they would not include any investigative costs, the investigative stage now being over. Moreover, there is no requirement for any of these costs to be referred to the Chancery Judge.
52. The consequences which flow from this decision ought to result in a much simpler detailed assessment than that envisaged by the Defendants in their Points of Dispute. In my opinion all that the Court will need to do is to apply the principles in Re: Gibsons Settlement (which was followed by Stanley Burnton J post CPR in Admiral Management Services Ltd v Para- Protect Ltd (2002) 1 WLR 2722) to the investigative costs (as opposed to the costs which the parties agree or I decide are costs of the action); such costs will, in principle, be recoverable if reasonably incurred and reasonable and proportionate in amount. Once identified, it will be the task of the Judge of the Chancery Division to decide if the Defendants are to pay them.
53. One simple example is sufficient to demonstrate how effect will be given to the Order when interpreted in this way. Item 59 in the bill claims 9 hours 6 minutes of the principal solicitor's time attending a meeting with the Claimants on 3 November 2004 including a tour of the Blenkinsopp Estate (worth £3,412.50). I ask myself rhetorically "what does a tour of the Blenkinsopp Estate have to do with the issue of whether the trustees should be removed and/or an injunction?" If the Claimants on assessment are able to meet this challenge and persuade me that such a tour is an investigative cost which falls reasonably within the scope of the Order, then the appropriate sum will be reserved to the Chancery Judge to decide whether the Defendants should pay it. In so far as I am not satisfied that it is a reasonable and proportionate expense, then that investigative cost will be disallowed, thereby resolving the point for good.

NEXT STEPS

54. If either party wishes to apply for permission to appeal, any such application should be made when this judgment is handed down (on paper if the parties wish to save costs). However, and without wishing to pre-judge the issue, I would not envisage any such application being successful. To my mind, the result of my finding on the preliminary issue will simply give effect to the judgment Mann J expected to deliver on 10 May 2006 had the case not settled over the short adjournment, which for convenience I repeat:

"The appropriate order for costs is costs neutral, it leaves them all to be played for and the Costs Judge will have to decide whether they are proper costs … My preliminary view is that these are costs which the Costs Judge will have to decide on an item by item basis or if there is some other point of principle involved that point of principle will have to be formulated in some other way …" [see transcript of discussion as to form of order page 1]

55. So far as the costs of the preliminary issue are concerned, I consider that these should be costs in the detailed assessment.

FORMAL DECISION

56. The answer to the preliminary issue is "yes", in so far as the costs in question were investigative costs incurred pre-issue and as may be ordered by a Judge of the Chancery Division to be paid by the Defendants. Costs incidental to the proceedings incurred post-issue are recoverable under paragraph 1 of the Order; they are unaffected by paragraph 2 and do not need to be reserved to the Judge.