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General

Beddoe late than never

In the Matter of the Stingray Trust relates to complex inter-jurisdictional trust proceedings hard in the Cayman Islands.  It is noted that the Cayman Islands, like the Jersey and Guernsey Islands provide a wealth of considered trust jurisprudence due to the number of cases heard and the similarity of the underlying statuary and common law with that of New Zealand.  While care must be taken in considering such decisions, given the small number of reported Beddoe order decisions in New Zealand, any contemporary decisions are of interest.

The interesting point in Stingray was that the trustee sought retrospective directions that proceedings could be defended and that the trustee was entitled to an indemnity for its costs.

Any trustee who commences or defends an action does so at the trustee’s own risk as to costs – even where acting on advice, if the trustee does so without a Beddoe order (so named after the case of Re Beddoe.

Less clear is when a Beddoe order should be obtained.  The learned authors of Lewin on Trusts (19th ed) note at 27-257 that although it is prudent for a trustee to make a Beddoe application before proceedings are engaged, if one is made later, the trustee will be allowed to retain the trustee’s costs out of the trust property if, had the application been made at the outset, it would have been granted.

What is clear is that a Beddoe application does not need to be unnecessarily involved or complicated.

What is less clear is whether the costs of a Beddoe application itself should be met from the Trust funds – and the costs of any party opposing.  Lewin on Trusts refers at 27-260 to “The costs of the parties to a Beddoe application …”

Also, how particularised must the claim be?  Should all costs be set out, or costs on a more general basis with the accepted position that any costs must be reasonably and properly incurred (a court surely could not sanction otherwise), but also costs must be proportionate.

The affidavit in support of the application must give full and frank disclosure of all material facts and the extent of costs so that proportionality can be determined.

The fundamental consideration remains that trustees have a duty to account to beneficiaries for any monies expended.  The relationship between trustee and beneficiary includes the inherent tension between protection of the Trust and adequate safeguards to protect the trustee in a proportionate manner.  Without such safeguards – who would be a trustee?  But, it too comprehensive – how is the beneficiary protected?

Significantly, in Stingray a late application on a Beddoe basis was not fatal as the enquiry of the court was directed at the underlying claim and the impact of this on the Trust.

References:

  • In the Matter of the Stingray Trust FSD 85 of 2017 and 248 of 2017 Grand Court of Cayman Islands 2018.09.17
  • Re Beddoe [1893] 1 Ch 547

 

 

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