Partner and Costs Lawyer Mat Knight asks when is it reasonable to recover costs of two separate firms acting for multiple Claimants in a case?

In the case of (1) Jane Rebecca Ong, (2) Alexander Ong, (3) Nicholas Ong and (4) Jordana Ong –v- Ong Siauw Ping [2015] EWHC 3258 (Ch), Mr Justice Morgan considered the question of whether the Claimants were in principle entitled to claim the costs of two firms of solicitors.

The case related to the estate of the late Madam Lim and whether there was a binding trust in which the children were beneficiaries.

The background of this case is that the First Claimant (“Jane”) took legal advice, in and after 1987, from various firms of solicitors. In 1995, Jane as a party to proceedings was represented by one firm of solicitors and the Second to Fourth Claimants (” the children”) applied to intervene in those proceedings and instructed their own solicitors for that purpose.

There was an agreement resulting in the stay of enforcement of an order for possession which was designed to avoid the need for the children to be joined as parties to those proceedings. The children did not play a part in any proceedings for some years after that time.

In 2005, the solicitors for Madam Lim wrote separately to Jane and the children and an application was made by those solicitors in relation to Jane and the children which was heard on 14 December 2005 and Jane and the children appeared in person.

In 2006, the children were represented by solicitors in relation to their application to the Court to defer execution of a writ of possession in relation to an order for possession made against Jane.

On 3 February 2015, Jane made a proposal for an individual voluntary arrangement (“IVA”).

On 2 November 2011, the Defendant made an application for various declarations and orders in relation to Jane’s IVA.

On 27 April 2012, Jane applied in those proceedings for an order for disclosure of what turned out to be a trust deed of the house. By this stage, Jane had instructed solicitors, Isadore Goldman, who continued to act for her thereafter in relation to the Trust Issue and Main Action.

On 17 August 2012, Deputy Registrar Jones ordered disclosure of the trust deed and joined the children as parties “for the purpose of ascertaining whether or not there was a trust settlement by the late Madam Lim of which they were beneficiaries”.

On 30 October 2012, Registrar Baister ordered a trial of the issue whether or not an effective binding Trust was settled by Madam Lim of which the children were beneficiaries and if so whether the trust incorporated the house within the trust at any time. This issue was the Trust Issue. The Registrar then gave directions for pleadings to be served by Jane and by the children.

On 20 November 2012, Jane and the children served Points of Claim in relation to the Trust Issue. The backsheet of the Points of Claim referred to two firms of solicitors, Stephenson Harwood for the children and Isadore Goldman for Jane.

On 21 December 2012, the Defendant applied to strike out parts of the Points of Claim. That application came before Mr Knowles QC on 22 May 2013 who ordered that Jane and the children issue and serve a claim form claiming the same relief as was claimed in the Points of Claim in relation to the Trust Issue. He also directed that the Trust Issue be tried together with the new claim. At that time, as indeed continued to be the case, Jane was represented by Isadore Goldman and the children by Stephenson Harwood.

On 23 May 2013, Jane and the children issued a claim form seeking various heads of relief in relation to an alleged trust of the house. This claim was defined as the Main Action. The claim form was supported by a statement of truth signed by a solicitor at Stephenson Harwood. The backsheet to the Points of Claim, which accompanied the claim form, referred only to Stephenson Harwood. The prayer for relief in the Points of Claim was on behalf of Jane and the children without any real distinction between the relief claimed by Jane for her benefit and relief claimed by the children for their benefit.

The proceedings encompassing the Trust Issue and the Main Action then took their course. Isadore Goldman acted for Jane and Stephenson Harwood acted for the children. The two firms of solicitors instructed the same counsel.

In the course of the trial, no issue was raised by the Defendant as to the appropriateness of the Claimants having two firms of solicitors. As trial judge, Mr Justice Morgan did not detect any difficulty created by the involvement of two firms. Because the two firms joined in instructing the same counsel, there was no problem with examination and cross-examination of witnesses, which might have conceivably have arisen if Jane and the children had been represent by separate counsel.

Having reviewed the history of the case, Mr Justice Morgan did not consider that it was reasonably necessary, after a certain point in the litigation, to have separate representation for Jane and the children.

Mr Justice Morgan could see that the interests of Jane and the children were not identical in the early stages of the Defendant’s application in relation to the IVA. However, on 20 July 2015, Mr Justice Morgan ruled that while he would make orders for costs in relation to the Trust Issue and the Main Action, he would not otherwise deal with the costs of the litigation about the IVA, on the basis that the issues in that litigation have not been decided. The Court ordered the trial of the Trust Issue on 30 October 2012. Jane and the children served a single points of claim in relation to the Trust Issue on 20 November 2012. Up to the point of service of the points of claim, Mr Justice Morgan could see that Jane and the children could justify the taking of separate legal advice but, from that point, he considered that separate representation was not reasonably necessary.

As the Claimants admitted, their interests were aligned from this point (i.e. 20 November 2012). There was in practice no conflict of interest as regards the arguments in relation to the Trust Issue and, later, the Main Action.

In light of the above, Mr Justice Morgan concluded that the assessment of costs in this case should reflect the fact that separate representation was not justified as reasonably incurred from immediately after 20 November 2012 and directed that the Costs Judge should determine, on the standard basis, the costs which would have been incurred if the Claimant had used one firm of solicitors, rather than two, from 20 November 2012.

In light of this judgment it appears that the costs of instructing two separate firms in a case which involves multiple Claimants can be recoverable if the Claimants claims are not identical and/or there is a conflict of interest.