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Beddoe Order, Beneficiaries, trust, Trustees

Certainty and protection

The purpose of a Beddoe application as set noted in Representation of X Trustees re D and E Trusts is to “.. provide certainty and protection to a trustee by predetermining the question of whether costs incurred in third party litigation were reasonable and should be borne out of the trust fund.”

In considering whether  such an application should be granted, as noted in Representation of X Trustees re D and E Trusts is whether “the proposed actions of a trustee are the right one.”

This expression of the essential elements of a Beddoe application provides a useful touchstone for an application that while on its face is reasonable, can become mired in the views of opposing parties. 

Representation of X Trustees re D and E Trusts also considered the appropriate procedure in an application where the court must be fully informed in circumstances where laying bare the case for both sides can be inappropriate due to the nature of a Beddoe application.  This is succinctly set out in Representation of X Trustees re D and E Trusts at [28] as follows:

28.      The Court followed the approach set out in the case of Re Moritz [1959] 3 All E.R. 767 referred to in the case of E, R, O and L Trusts [2008] JRC 053, where Sir Michael Birt, then Deputy Bailiff, stated (at paragraph 22) that the approach in Jersey is as follows: 

“Even where a beneficiary has an adverse interest (e.g. he will be the opposing party in litigation which the trustee proposes to commence) it is still usually appropriate to convene that beneficiary to the application for directions. However, as it made clear in Re Moritz [1959] 3 All E R 767, the Court may in such circumstances order that some or all of the written material produced to the Court by the trustee or other beneficiaries is not supplied to the adverse party and may also require the adverse party to leave the Court whilst it hears the trustee and other beneficiaries about the strength or weaknesses of the course of action which is proposed.  Such a procedure is frequently adopted in this Court.”

While the decision in Representation of X Trustees re D and E Trusts is a decision of the Jersey Royal Court; the comments made are in line with considerations that apply in New Zealand and other jurisdictions.

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