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General, Trustee liability

Trustees under further fire

Costs decisions could be considered pretty dull reading.  However, if you are a trustee of a trust, you might be wise to upskill on how you might fare on the costs front if involved in court proceedings, regardless of whether you are pursuing or defending.

While in some circumstances the trustee may be able to recover a costs award from the trust, see for example the recent decision in Mawhinney v Auckland Council this most definitely cannot be relied upon.

In Brownlee v McCaslin, which involved a beneficiary seeking to enforce her rights against the trustee, the trustee was ordered to personally meet the beneficiary’s costs.  In that case there was only one trustee so there was no question as to differing liability.

However, this will not always be the case.  In Devcich v AMI, a case involving an (eventually) unsucessful claim against an insurer in respect of fire damage where one of the trustees was found to have been responsible for the fire), all trustees were found liable for the insurer’s costs, but at differing levels.  Of concern to some professional trustees will be the fact that even the trustees who had no knowledge of one trustee’s fraud were liable for costs, although not on an indemnity basis (the highest level of costs) as was the case for the fraudulent trustee.

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