1 HIS HONOUR: The final question to be decided in this action is the question of costs. In my judgment delivered on 14 April 1999, I indicated that the costs should be paid out of the estate. I was asked not to make that order to enable there to be further argument on this question which has taken place this morning.
2 In ordinary circumstances, irrespective of the provisions of section 93(3) of the Trustee Act 1925, the costs which are incurred in the estate as a result of doubt or ambiguity arising under the wording of a will would be payable out of residue unless there were some clause in the will setting up a particular fund out of which testamentary expenses were to be paid. In this estate, under the clear wording of the will, the testamentary expenses are to be paid out of residue. Clause 5 of the will so provides. It is after those expenses have been paid that the balance of residue is to be distributed between the two residuary beneficiaries.
3 Counsel for the plaintiff, the plaintiff being one of the trustees, says, first, that the costs should be paid on an indemnity basis and that, as I understand it, extends of the costs of all parties. Second, that the costs should be borne, as I understood it, rateably between the fund and the residue, but in any event, not entirely borne by residue or by the fund, because that would throw an unfair burden either way.
4 Counsel for the first defendant, who is also a trustee, accepts that if the ordinary rule were followed that might bring about an unfair result, in this case particularly, because to some extent it could not be said that it was not adversary litigation among the parties.
5 Counsel for the residuary beneficiaries, while pressing for an order that the costs should be borne by the fund, in the alternative says that the costs should be borne by the parties rateably in accordance with their shares in the estate, or in the alternative that each party should pay his own costs.
6 There can be no doubt that this litigation was brought about by the most unfortunate drafting of the will of the deceased. None of the parties is responsible for that and to that extent the litigation, while to some extent adverse, is not brought about by them. In those circumstances, I do not think it would be appropriate to make an order that would have the result of the parties paying their own costs. Neither do I think it would be appropriate to make any order under which any of the parties receive costs on an indemnity basis out of the estate. In ordinary circumstances the residuary beneficiaries would not be entitled to such an order and in view of the separate interests being contended for by the trustees, in this litigation, I do not think they should be entitled to such an order. As the common fund basis no longer exists and there is little distinction between that and the costs which will be allowed under the Legal Profession Act, in my view, no order as to indemnity costs should be made.
7 Both trustees accept that it would produce an unfair result to cast the total burden of the costs on the residuary beneficiaries. Thus, while I have no doubt that if it were not for s93(3) of the Trustee Act, the law would require that order to be made. I think it would be appropriate to make a special order in this case so that the parties will bear the costs rateably in proportion to their interests in the estate. It would seem, therefore, that the appropriate order be that the costs be paid out of the estate but borne out of the beneficiaries rateably in accordance with their interests. That would enable the costs to be payable now, but adjusted later.
8 I should add that I have also been asked to make an order that further consideration be reserved in case there is any difficulty arising or question arising on the sale of the shares and I am prepared to make that order.
9 Finally, I should say that in my view questions of costs ought to be argued at the trial because it would have taken very little time to have had this argument while the construction proceedings were on foot and that could have saved the additional expense which has now been incurred.
ORDER
10 The cost of the parties to be paid out of the estate, but borne by the parties rateably in proportion to their shares in the estate. The rateable allocation should take place on the actual value of the benefits received by each beneficiary. Those proportionate benefits to be calculated before the costs of these proceedings are deducted from the funds of the estate.