IP CHEUNG KWOK v. IP SIU BUN AND OTHERS

-------------------

----------------------------------

JUDGMENT ON COSTS

----------------------------------

Clough, J. A.:

1. This is the judgment of the court.

2. It now remains to deal with the issues arising on the Bank's appeal against the judge's order for costs made on the 17th October 1988 and with the costs of the appeal.

3. The judge's order for costs

4. The judge ordered the Bank to pay the taxed party and party costs of the plaintiff incurred in the action and counterclaim and of the Attorney General incurred in the counterclaim. The plaintiff was also awarded, out of the trust estate, the difference between his taxed common fund and party and party costs incurred in the action and counterclaim. The judge directed in his judgment that the Bank's own costs of the action and counterclaim should be born out of its own resources, thereby holding, in effect, that the bank was not entitled to indemnity itself in respect of its costs incurred in the proceedings (including the costs recoverable against the Bank by the plaintiff and the Attorney General) under Order 62 rule 6(2). The Bank sought on appeal to set aside the orders for costs made in favour of the plaintiff and the Attorney General and to obtain an order in its favour under Order 62 rule 6(2). However neither the Bank's grounds of appeal nor leading counsel for the Bank's arguments were addressed to the order regarding the Attorney General's costs.

5. The judge made a further order ("the indemnity order") in favour of the plaintiff granting him an indemnity in any event out of the trust estate for any costs then to be incurred by him in his representative capacity on behalf of the settlor in respect of any appeal from the judge's order in the action. No ground or argument advanced on behalf of the Bank on appeal has been specifically directed to the indemnity order but that order was expressed to be made "subject to any order of the Court of Appeal" and we therefore deal with it in this judgment.

6. We mention that the judge awarded the first and second defendants their taxed common fund costs of the action and the counterclaim out of the trust estate. The Bank did not appeal against this order.

7. By the time this court came to deal with the issues as to costs the trust properties had been sold and, we were informed by counsel, the net proceeds of sale amounting to $82,553,105 had been paid into court.

8. In our judgment the judge's order regarding costs (as distinct from his refusal to authorise the Bank to indemnify itself from the trust estate in respect of its costs incurred in the proceedings) is not to be faulted. Under section 52A of the Supreme Court Ordinance (Cap. 4) the costs of the action were in the unfettered discretion of the trial judge. The proceedings were hostile, certainly as between the plaintiff and the Bank, and the plaintiff was successful in his representative capacity in both the action and the counterclaim. The bank's counterclaim having been defeated we can see no reason why the Attorney General's party and party costs should not have been ordered to be born by the Bank. There was no serious argument to the contrary.

9. The main complaint of the Bank was that the judge had not penalised the plaintiff at all in costs (or relieved the Bank of any of the burden of the plaintiff's party and party costs) although the plaintiff had never abandoned or established his personal claim to the trust properties. A substantial volume of evidence had been called on the related issued ("the next of kin issue") whether the plaintiff was, as he claimed, the person solely beneficially interested in the settlor's intestate estate, but the judge had in the end expressed only a provisional view on this issue which was unfavourable to the plaintiff.

10. The judge had clearly been right in declining to decide the next of kin issue once it became apparent (on Day 2) that there were rival claimants who were not parties to the action. From Day l of the trial the plaintiff, by his leading counsel (an experienced trust lawyer whom we venture to think could not nave peen consulted for advice on the plaintiff's original pleadings before they were settled), had consistently advocated the deferment of the next of kin issue until the nature of he trusts had been determined. The Bank had consistently opposed this and had been able to persuade the judge to keep the next of kin issue open until the conclusion of the hearing. After the making of the representation order, which introduced the interest of the settlor's estate into the action, the Bank as trustee of the trust estate, could have had no legitimate interest in the next of kin issue. However it persuaded the judge to keep the issue open by opposing the applications by leading counsel to deter the issue until the true nature of the trusts had been determined.

11. The transcript of the proceedings on Day 33, when the judge heard arguments on costs in the light of his judgment in the action, shows that he was much exercised by the question of the time (the amount of which was in dispute but was on any footing substantial) consumed ineffectively at the trial on the next of kin issue after the judge had made the representation order on Day 6. Mr. Ching for the Bank contended that the judge had thereby given the plaintiff a "crutch" upon which to base his claim for costs after failing on this issue in hostile proceedings.

12. With the benefit of hindsight the judge acknowledged to Mr. McDonnell for the plaintiff on Day 33 that the costs relating to the next of kin issue could have been saved if he had acceded to the plaintiff's repeated applications for this issue to be deferred. Accordingly the judge was, in our opinion, exercising his discretion reasonably and judicially when in his reserved judgment on costs he said:

13. As regards the costs incurred before the making of the representation order on Day 6 the judge had previously observed in his reserved judgment:

14. We consider that the judge was fully entitled to take this view having regard to the plaintiff's pleaded case which coincided with the interest of the settlor's estate save for the plaintiff's personal claim under the next of kin issue which the judge went on to deal with in the manner to which we have already referred with approval.

15. On Day 33 Mr. McDonnell had produced a draft minute of the order which he invited the judge to make in the action. This proposed inter alia that the Bank should pay the taxed party and party costs of the Attorney General. Counsel then appearing for the Attorney General supported this proposal which was implemented by the judge's order. On appeal Mr. Marshall for the Attorney General submitted that the Attorney General's party and party costs should in the first instance be paid out of the trust fund which in turn should be aisle to recover such costs from the Bank.

16. In support of this proposition Mr. Marshall cited Attorney General v. Lewis (1845) 8 Beav. 179. That case does not seem to us to be in point because in the present case there is no evidence to suggest that the Bank, a wholly owned subsidiary of the Sank of China, is other than solvent and good for the relevant costs.  In any event Mr. Marshall's argument fails in limine because the Attorney General has not cross appealed against the judge's order for costs, nor has he applied for leave to do so pursuant to section 14(3)(e) of the Supreme Court Ordinance.

17. As regards the indemnity order made by the judge in favour of the plaintiff in respect of his costs incurred in this appeal as the representative of the settlor's estate, Mr. McDonnell informed this court in his written submissions on the costs of the appeal that, the appeal having been dismissed, it was no longer necessary for the plaintiff to rely on the indemnity order. We accordingly treat it as spent and superseded by the order to be made by this court concerning the plaintiff's costs, but we do not intend to be taken to have accepted that the indemnity order was validly made.

18. Having concluded that the judge's order on the costs of the trial should not be disturbed, it remains to deal with tile separate question whether, as the Bank claims, the judge erred in refusing to sanction tile retention by the Bank of its costs (including the party and party costs of the plaintiff and the Attorney General ordered to be born by the Bank) of the action and counterclaim out of what is now the trust fund. This question has to be considered in the light of Order 62 rule 6 (2) which provides that:

19. This sub-rule reflects the long established practice of the Chancery Division in England regarding the costs, in the form of costs charges and expenses properly incurred, to which a trustee is entitled out of a trust fund at the expense of the beneficiaries.  A trustee has always been entitled as between himself and his cestuis que trust to indemnify himself out of the trust fund against all proper costs incurred by him as trustee. The rights of a trustee in this respect were described in the following dictum of Lindley M.R. in In re Beddoe [1893]1 Ch 547 (C.A.) at p.558:

20. Thus the court has no discretion to deprive a trustee of his costs charges and expenses properly incurred. It is only if the trustee has misconducted himself in terms now of Order 62 rule 6(2) by acting unreasonably or, in substance, acting for his own benefit rather than for the benefit of the trust fund, that the court may "otherwise order". In practice the court will in its discretion give advance protection to a trustee who contemplates bringing or defending proceedings. It may make a Beddoe order giving him leave (which may be limited) to bring or defend an action and indemnify himself in respect of his costs if he is unsuccessful, but it will only do this if the litigation appears to be prima facie proper and in the interest of the trust. A trustee who brings or defends an unsuccessful action does not lose his right to indemnity himself in respect of his costs but it will be for him to show that his costs were properly incurred : see Shell 28th edition at pp. 256-7.

21. The practical test for determining whether a trustee who has unsuccessfully brought or defended an action should be allowed to charge his costs against his beneficiaries by retaining them out of the trust fund was indicated by Lindley L.J. in Beddoe at p.557 where he said:

Lindley L.J. added at p.558:

Bowen L.J. observed in Beddoe at p.562:

22. In the present case the Bank had made an abortive ex parte Beddoe application to a master on the 20th August 1987. The master dismissed the application, not on the merits or for want of the proper parties, but because, he considered the application had been made too late and should be left to the trial judge as the trial had been fixed for the 14th September 1987. The judge concluded in his judgment dealing with costs that the Bank could not have obtained a Beddoe order at all, the action being one in which the central question was concerned with the trusts on which the trust properties were held. He considered that having taken the risk of defending the action without a Beddoe order the Bank should bear the consequential liability for costs out of its own resources. He was critical of the Bank's conduct, saying:

23. After giving due consideration to the unusual course which these proceedings took below we are in almost entire agreement with the judge's decision on this important issue. The only matter on which we consider some measure of allowance should be granted to the Bank concerns the conduct of the proceedings prior to the making of the representation order on Day 6 of the trial. This court held on the 25th October 1989 ([1990]1 HKLR 497 at pp. 514H-I), 523G-H and 524E-F) that the personal action of the plaintiff could not have been maintained in the absence of a party representing the settlor's estate. We therefore consider it to be likely that the court would have acceded to a prompt and properly constituted Beddoe application by the Bank for leave to apply, if necessary at the expense of the trust estate, to strike out the plaintiff's writ endorsed with a statement of claim on the ground that the personal claim of the plaintiff was not maintainable.

24. Such an application would have been in the interest of the trust estate because the plaintiff was strictly a stranger to the trust even if there was a resulting trust in favour of the settlor's estate. In that event the duly constituted personal representative of the settlor would have been the beneficiary and not the plaintiff. It may be that, having regard to the disputes which had arisen in 1977 and 1984 concerning the trust estate, the court would have required tile Bank to undertake to restore the 1977 action or issue an originating summons for the determination of the trusts affecting the trust properties, but we consider that it would have been right to authorise the Bank to apply to strike out the plaintiff's action as being not properly constituted and therefore not maintainable in its then form.

25. The Beddoe and strike out application should have been made promptly so as to avoid the Bank as trustee incurring avoidable costs on the substantive issues raised by the plaintiff's action. However the Bank did no such thing. The writ indorsed with a statement of claim was issued on the 1st November 1984. On the 13th November 1984 the Bank acknowledged service of the writ and gave notice of intention to defend. Instead of making a Beddoe application or applying to strike out the plaintiff's claim at that early stage of the proceedings the Bank took it upon itself to defend the action on the substantive issues and to bring in the Attorney General by its counterclaim, thereby incurring substantial costs without the authority of a Beddoe order.

26. By the time the Bank made its unsuccessful Beddoe application to a master on the 20th August 1987 the proceedings were far advanced on the substantive issues. That application was wrongly made ex parte and supported by evidence indicating that it was seeking only indemnity out of the trust estate in the event of the Bank being successful in the proceedings and being unable to recover its costs from the plaintiff. The transcript for Days 1 and 2 shows that the judge was anxious to determine the trusts affecting the trust properties and seeking, with the assistance of counsel, to find a way of ensuring that all the relevant interests were represented.

27. At one stage on Day 2 he seems to have been concerned that the Bank should seek protection against an adverse order as to costs. Early on Day 2 Mr. McDonnell had told him about the Bank's unsuccessful Beddoe application. The following passage (upon which Mr. Chang relied on the appeal) in the transcript records the exchanges which occurred soon afterwards between the judge and counsel:

28. In the course of argument in this court Mr. Ching suggested that had the judge indicated that the Bank might be at risk as to costs its conduct might have been affected. However it seems to us that the judge cannot be taken, on the strength of these exchanges when considered in the light of his subsequent comments, to have given the Bank grounds for supposing that he was inviting it to proceed without being at risk as to costs. Shortly after the exchanges set out above, Mr. Ching having explained to the judge tile reasons given by the master for refusing the Bank's Beddoe application, the Judge, in effect,   invited a renewal of the application to him but the invitation was not accepted despite the indication from tile judge that the Bank might be at risk if no Beddoe order were made. The following relevant passage of the transcript has been corrupted in parts but the gist of tile exchanges between the judge and Mr. Ching is reasonably clear:

29. Shortly after this Mr. Ching asked the judge to deal with the Bank's strike out application. In his judgment dismissing that application the judge indicated teat he considered that he had before him the interests with which he was immediately concerned. He was clearly content (as was counsel for the attorney General) to permit one of the Bank's leading counsel to argue in support of charity and he found it "welcome and useful" that the Bank's other leading counsel proposed to advance the argument in favour of valid private trusts. The judge said nothing about the Bank's costs although he made it clear to the plaintiff in the same judgment that at that stage of the proceedings he regarded the plaintiff as being at risk as to costs if he failed to establish the invalidity of the trusts or his beneficial entitlement to the settlor's estate.

30. Thus it was that the Bank never obtained a Beddoe order on Day 2, nor did it apply for such an order after the proceedings had been made maintainable by the representation order on Day 6. In our judgment, it cannot be fairly said in all the circumstances that the judge ever expressly or impliedly absolved the Bank from the need to make such an application by giving it reasonable grounds for entertaining the expectation that he would necessarily sanction the retention of its costs out of the trust fund in the event of it being unsuccessful in the proceedings.

31. We agree, with the judge that (apart from the prompt limited application we have earlier envisaged) no court could nave been reasonably expected to make a Beddoe order in favour of the Bank in this case. Although this court has held, contrary to the view expressed by the judge, that the Bank was entitled to advance the argument in favour of charity to defend its own private interest, the judge's reasoning on this issue concerning the Bank's costs is not thereby flawed. If a properly constituted Beddoe application had been made to authorise the Bank to defend the action on the substantive issues the Attorney General would have been one of the parties required to be joined and entitled to be heard. It is to us inconceivable that the Bank could properly have been authorised by the court to defend the action or pursue its counterclaim at the expense of the trust fund in the face of the denial by the attorney General that the trusts were charitable. The only basis upon which the Bank could have been heard at all in support of charity was that it was protecting its own interests. On that basis it would be acting for its "own benefit rather than for the benefit of the fund" within the meaning of Order 62 rule 6(2).

32. In this connection we have borne in mind that counsel for the Attorney General raised no objection to the Bank advancing its argument for charity at the trial but, the Attorney General having gone so far as to deny charity in his pleading to the counterclaim, it cannot be said that the Attorney General expressly or impliedly permitted the Bank to support charity on his behalf.

33. As to the private trust arguments advanced by the Bank we concur with the judge's view that they were untenable. At no stage of these proceedings has there ever been an evidential or legal basis for supporting those arguments which can fairly be described as other than speculative. In our judgment they could not afford a reasonable basis for a Beddoe order authorising a trustee to defend hostile proceedings (particularly when that defence was proposed for the benefit of one of the claimant interests) at the expense of the trust estate.

34. We also concur with the judge's approach that at the centre of these proceedings was the substantive question as to the trusts upon which the trust properties were held. We have accepted that the plaintiff in his personal capacity was strictly a stranger to the trust but this was not simply a case in which, (as in Merry v. Pownall [1898] 1 Ch. 306 and Bullock v. Lloyds Bank Ltd. [1955] Ch. 317 relied upon by Mr. Chang) a stranger was seeking to set aside a trust whose beneficiaries were certain and ascertained and on whose common behalf the trustees could properly defend the trust against a stranger at their expense as to costs. In the present case it was common ground that the Bank and the first defendant were trustees, out questions had arisen as long ago as the 1977 action as to the true nature of the trust and the ascertainment of its beneficiaries. Inter alia the question had arisen whether the trusts declared by the settlor were charitable, as the officers of the Bank's parent company and those they represented had claimed and the Attorney General had denied. In that action the first defendant in these proceedings was a defendant. He had not admitted that the trusts were charitable and had pleaded that the beneficiaries were the Loan Associations.

35. The plaintiffs in the 1977 action had contrived to come to terms with the first defendant and to avoid any adjudication by the court of the true nature of the trusts affecting the trust properties. By the consent order made in that action oh the 31st March 1979 the proceedings were stayed oh the basis that the Bank and the first defendant were to be the trustees of the trust property but the true nature of the trusts was left uncertain.   It seems to us that the Bank as a corporate trustee failed in its duty to the trust estate by omitting to have the manifest uncertainty as to the true nature of the trusts determined once it had been appointed to be a trustee. Furthermore as late as Day 2, after the judge's invitation to the Bank's leading counsel to revive the Beddoe application had not been accepted the Bank demonstrated through its leading counsel, in the following exchange with the judge, its extraordinary indifference to its obvious duty to the trust estate to obtain the adjudication of the true nature of the trusts:

36. The judge returned to the same point on Day 6 when Mr. Ching mentioned that the nature of the trusts was in question in other proceedings, namely the 1977 action which had been stayed, but Mr. Ching indicated that he was not asking the judge to adjourn this action or consolidate it with the 1977 action or to revive that action.

37. Mr. McDonnell addressed us in considerable detail (which we do not find it necessary to rehearse now) in support of his contention that the Bank was not a corporate trustee altruistically advancing an argument in support of charity (which should strictly have come from the Attorney General) but was in fact taking sides with one group of beneficiaries and invoking charity only because the trust in favour of its "clients" was wound to fail unless it was charitable. We think that is a fair analysis of the Bank's role in this matter.

38. We conclude that the Bank should only be allowed to have out of the trust fund in court such costs as it would have incurred had it applied timeously after service of the writ upon it for a Beddoe order authorising a strike out application and thereafter prosecuted timeously a strike out application before incurring costs on the substantive trust issues. Following Lindley L. J. in the Beddoe case at p.558 we fix the amount of those costs in the total sum of $200,000 to avoid further costs being incurred about this matter. We add that it would clearly have been the Bank's duty, in the event of a successful strike out application, to revive the 1977 action or initiate proceedings without delay by way of originating summons to resolve the substantive trust issues.

The costs of the appeal

39. It was contended oh behalf of the Bank in reliance on Mayor of Westminster v. Rector and Church Wardens of St. George, Hanover Square [1909]1 Ch. 592 (C.A.) that this was an exceptional case where costs should not follow the event and where this court should not apply the ordinary rule that an unsuccessful trustee appellant is to be treated in the same way as any other unsuccessful appellant. We are unable to accept that contention.

40. We accept that the issue of charity is complex, that it is of public importance and that large financial interests are at stake. If it could be said that the Bank had defended the action and brought its counterclaim and appeal on the charity issue for want of any ascertained party entitled to do so, this might well have been an exceptional case in which it would have been proper not to apply the ordinary rule as to costs oh this appeal. However the position is that the Attorney General is exclusively charged with the protection of charity and he was a party to the proceedings as a defendant to the Bank's counterclaim. It was always been open to the Attorney General, in the 1977 action and in these proceedings, to advance the argument that the trusts in question are charitable, but tie declined the opportunity.

41. The Attorney General having not only declined to support charity but, when joined as a party to the Bank's counterclaim, having denied that the trusts were charitable, we do not think that it can have been possible or proper for the Bank to have appealed on this issue save for the purpose of protecting itself from allegations of breach of trust in the misapplication of trust property. On such a basis costs clearly must follow the event.  

42. Although the majority of this court upheld Mr. Chang's argument against tile judge's decision on the construction point regarding the welfare trusts, the judge's decision that those trusts were invalid was nevertheless upheld by this court for the reasons relied upon in the plaintiff's respondent's notice. Again, this court did not accept the judge's view that the Bank was not entitled to advance any argument in support of charity in view of the Attorney General's stance. However this cannot strengthen the Bank's position oh costs because this court only accepted that the Bank was entitled to advance the argument for charity for the purpose of defending the Bank's own interests. Whilst the Attorney General did hot seek to prevent the Bank from arguing in favour of charity at the trial or on appeal it cannot in all the circumstances be said that Bank had the authority to support charity on the Attorney's behalf as the sole protector of charity.

43. We have already held the Bank's case on the private trust issue to have been speculative. Indeed oh appeal leading counsel for the Bank virtually abandoned this argument. We do not therefore feel able to give any weight to it as a factor in favour of tile Bank on the costs issue.

44. Mr. Chang, for the Bank, stressed that it had challenged the plaintiff's representation order on appeal largely as a result of the concern it seemed to cause this court: see [1990] 1 HKLR 497 at pp. 516 C-D and 524G. Nevertheless the decision went against the Bank, whose decision it was to take the point, and we can see no reason why the costs of the 11 days of argument should not follow the event.

45. We therefore conclude that this is not an exceptional case where the Bank as unsuccessful trustee appellant should have its costs of the appeal out of the trust fund. On the contrary we hold that the appeal must be dismissed with costs subject to what follows below.

46. The first defendant applied for his costs of the appeal and produced written submissions, contending in substance that he had adopted a neutral stance on the appeal as a trustee and that his arguments as a representative party on behalf of the members of the Ip Cheong Kong Tong had not been advanced for his own interest. Mr. McDonnell for the plaintiff produced a draft minute of the order he proposed to be made. This provided for the first defendant's party and party costs to be paid by the Bank and for the difference between his common fund and party and party costs to be paid out of the trust fund in court. Mr. Chang had nothing to say on this matter. We consider that the order in the case of the first defendant should be as proposed by Mr. McDonnell on the footing that the first defendant was served with the notice of appeal and being a trustee of the trust properties (in respect of which an order for sale was challenged and executed during the appeal) ought to have appeared in court on the appeal: see Re Stuart, Johnson v. Williams [1940] 4 A11 ER 80 (C.A.).

47. The second defendant had been joined in the plaintiff's action as a former trustee but the plaintiff did not pursues his claims against her at the trial. Her only interest in the case at the trial had been as the representative (under the order made on Day 16 of the trial) of the members of the Loan Associations. She had been served with the notice of appeal but her appearance in her representative capacity could serve no useful purpose since the interest she had represented at the trial could not have been affected in any way by the outcome of the appeal. She did not seem to regard herself as an effective party to the appeal and told the court that she had only attended because there was an application for the sale of the trust properties and she held the title documents. We did not understand her to be asking for costs and we make no order in her favour notwithstanding that Mr. McDonnell suggested that she should have the same order as we have made in the case of the first defendant.

48. The Bank must pay the Attorney General's party and party costs and the difference between his common fund and party and party costs must come out of the trust fund in court. The Attorney General was served with the notice of appeal and his appearance by leading counsel at the hearing of the appeal was reasonable and proper both as a party interested in the outcome of the appeal and by reason of the fact that on the second day of the hearing of the appeal the court had required his attendance by counsel to assist it in connection with the reasons for the Attorney General's pleaded denial of charity and his views on the charity issue and the exclusive role of the Attorney General as the protector of charity.

49. Initially the Attorney General had been concerned to keep down the costs of the appeal. On the first two days of the hearing of the appeal he had been represented by junior counsel who indicated that he wished to take no part in the argument, leaving the issues to be argued by counsel for the Bank and the plaintiff respectively.

50. As it was in response to the court's request to hear counsel for the Attorney General that leading counsel appeared on behalt of the Attorney General from the third day of the hearing of the appeal onwards, we do not consider that the Bank should bear more than his party and party costs. The difference between those costs and the Attorney's common fund costs, which were incurred at the instigation of the court for the benefit of the trust estate, will have to be paid out of the trust fund. In the absence of any evidence casting doubt on the ability of the Bank to pay the Attorney's party and party costs we do not accede to Mr. Marshall's submission that those costs should initially come out of the trust fund.

51. We accept Mr. McDonnell's submission that the Bank, having failed in its appeal, should pay tile plaintiff's party and party costs. We also agree that the difference between the plaintiff's common fund costs and his party and party costs should be paid out of the trust fund in court. The plaintiff was the representative of the settlor's estate (under the judge's order) when tile Bank filed its notice of appeal on or about the 22nd June 1988. On the 22nd May 1989 (the day before the hearing of the appeal began) the plaintiff obtained a grant pendente lite as administrator of the settlor's estate limited to the settlor's immovable property in Hong Kong. On the same day the plaintiff obtained the judge's leave to re-amend the amended writ in his action to add his new capacity: see [1989]1 HKLR p. 505I - 506A.

52. In one or other or both of his capacities (assuming they can co-exist) the plaintiff has recovered the trust fund for the benefit of the settlor's estate. However the provisional view of the trial judge was that the plaintiff was not beneficially entitled to any part of the settlor's intestate estate. On the footing that the effect of this court's decision (upholding the decision of the trial judge) is to invalidate the trusts created by the settlor and to restore the trust fund to his estate, to which the plaintiff may well not prove to be beneficially entitled, it seems to us that the plaintiff should in his representative capacity, have the benefit of his common fund costs payable out of the estate to the extent that such costs exceed the amount of his party and party costs payable by the Bank. This was also the approach adopted by the judge below which we have upheld.

53. Mr. McDonnell urged this court to go further and accept (as the judge below accepted in relation to the appeal to this court) that tile principles applied by the English Court of Appeal in Wallersteiner v. Moir (No. 2) [1975] Q.B. 373, regarding the costs of a shareholder suing in a derivative action, were applicable to justify this court in making an order (expressed to be subject to any order the Privy Council might make) that the plaintiff be entitled to be indemnified in any event out of the trust fund in court for any costs incurred by him, as the person appointed by the trial judge to represent the settlor's estate and as the administrator pendente lite of that estate, in respect of any appeal to the Privy Council from the order of this court made on this appeal.

54. We are not prepared to make such an order. We are unable to accept that anything in the Wallersteiner (No. 2) case supports it. It seems to us that, at least as between the plaintiff and the Bank, these proceedings have always been hostile proceedings in form and substance. Until the plaintiff obtained his representation order on Day 6 of the trial he could not have obtained relief an he was at risk as to costs. When he obtained his representation order he continued to conduct the same hostile proceedings on behalf or the settlor's estate although he had not obtained a grant. When he did obtain a limited grant pendente bite on the 22nd May 1989 he was able to defend the Bank's appeal as the settlor's personal representative.

55. If the settlor's estate (by analogy with the company in the Wallersteiner (No. 2) case) had had any assets other than the chose in action being sued upon by the plaintiff in these proceedings the plaintiff could have made a Beddoe application in the administration of the settlor's estate for leave to defend the Bank's appeal to this court and to be indemnified out of the settlor's estate as to his costs reasonably and properly incurred if the appeal had succeeded. Likewise the same course could now be adopted in relation to the Bank's proposed appeal to the Privy Council against the order of this court on this appeal.

56. The practical difficulty about the latter application clearly is that the settlor's estate has no known assets other than the trust fund, to which this court has held it is entitled, but subject to the Bank's right of appeal to the Privy Council which the Bank, at present, intends to exercise. Even if, (which seems questionable because the attitude of the other persons who claim to be the next of kin of the settlor is not known) the court would look favourably upon such an application, we cannot see how it could now, or at any time before the hearing of the Bank's appeal to the Privy Council, authorise the plaintiff to indemnify himself in future out of the trust fund in the event of the Privy Council allowing the Bank's appeal and holding that the trusts created by the settlor are valid.

57. The effect of such a decision by the Privy Council would be that there would be nothing, in the event, for the Beddoe order to bite on. It would nave been a futile order. We therefore conclude that the indemnity order which Mr. McDonnell asks this court to make would be equally futile, and none the less so because it would be expressed to be made subject to any overriding order the Privy Council might think fit to make and would be followed by an early petition for confirmation to the Privy Council.

58. Mr. McDonnell contended in his written submissions that if the Bank's appeal to the Privy Council were to succeed the plaintiff ".... should still be indemnified on the basis that there was an obvious need for the nature and validity of the trusts to be determined by the Court particularly in view of the history of the matter, including the 1977 action, the Gainer action and the disagreements between the trustees, and for that purpose Koo Chi's estate had to be represented." In our opinion this is a matter which we should leave well alone: the plaintiff having launched hostile proceedings in his personal capacity which he was able to sustain from Day 6 of the trial by reason of his representation order and, after judgment, by obtaining a limited grant pendente lite in respect of the settlor's estate (which could not indemnify him in respect of his costs in the event of the proceedings being unsuccessful) must now look to the Privy Council to decide whether his costs are to come out of the trust fund if the Bank's appeal should be wholly or partially successful. The question will not arise at all if the Bank's appeal fails. We are not persuaded that we should make any qualified interim order in favour of the plaintiff.

59. Likewise we are not disposed to make any order regarding the payment of any costs to the plaintiff by the Bank or out of the trust fund in court, or any undertakings relevant thereto which might exonerate or purport to exonerate the plaintiff from making repayment in the event of the Bank's appeal being successful.