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alter ego trust, Beddoe Order, trust, Trustee liability, Trusts

Never presume

H.W. Fowler’s opinion was that in using presume, the speaker believes the supposition is true and will believe it until he learns otherwise. In using assume, the speaker feels no certainty that his supposition is true or not.

In a legal context, presume means “to take as proved until contrary evidence is presented.” Ex. The defendant is presumed innocent.

Because of the association of the word presume with legal contexts, it carries a connotation of formality. For the fiction writer, presume would be the preferable choice in the speech of a remote or officious character. (Reference Daily Writing Tips).

There is a less elegant description of what it is to presume, that involves reference to an ass, the first person pronoun and the second person pronoun.

Moving on to trustees who regularly presume that they will be reimbursed for all costs (or more accurately, that all costs will be met from the trust).  In reality the correct position is that trustees commonly assume all costs will be met from the trust, but with no basis for this supposition other than, well why else would they be a trustee.

The harsh reality is that trustees have no absolute right of indemnity.  This point is sheeted home in  Triezenberg v Mason.  In that case, the trustees were seeking orders that trust funds meet legal fees.  As noted by Venning J. at [5] “The starting point is that a trustee may reimburse him or herself or pay or discharge out of the trust property all expenses reasonably incurred in or about the execution of the trust or powers of the trust”. See the Trustee Act 1956 at s 38(2).

The case helpfully references the principles that apply to the recovery of legal costs by trustees at [7].

Relevantly the decision considers the onus of proof, which is that, if the trustees’ actions appear regular, the burden to prove unreasonable falls on the party alleging this.  The concept of reasonable courses through all considerations of the subject and is the cornerstone as to when trustees can recover costs.  Being a trustee can be onerous, and at times, down right dangerous.  The quid pro quo is reimbursement of costs – but such costs must be properly incurred.  Trustees must not presume that all costs will be met.

Interestingly in Triezenberg v Mason notwithstanding that the reasonableness of the substantive application had not been decided, having formed a view that the trustees had acted reasonably (on the face of contested evidence) the trustees were entitled to an order that trust funds be made avilailable to meet their costs.

However, there was no corollary order to ensure “equality” between the parties.  The test being whether it could be satisfactorily evidenced that the trustees had acted unreasonably in taking advice and pursuing proceedings.

Sometimes it is said that it is better to seek forgiveness than to ask permission.  Trustees would be wise to never ever adopt this course of action.

Be reasonable.

Ask the court to confirm this.

Do not presume.

Do not assume.

References:

 

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