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Beddoe Order, Beneficiaries, Indmenity, Trustee liability, Trustees, Trusts

Damp Squib

Being a trustee is increasingly more skittles than beer. “Beddoe orders” are an avenue for trustees to pursue or defend proceedings without facing personal liability.

McCallum v McCallum concerns an appeal against partial Beddoe orders. At the opening of his novel Anna Karenina, the Russian novelist Tolstoy writes “All Happy families resemble one another, but each unhappy family is unhappy in its own way.” A similar sentiment may well apply on the context of trust disputes. Accordingly, the facts of McCallum (for more background see Disclosure of legal advice), while important in the context of that case, do not necessarily advance or detract from the consideration regarding the merits of Beddoe orders. 

As observed noted at [28] in McCallum:

The legal history of when and how trustees’ costs should be met is considerable. The starting point as noted in Butterfield v Public Trust at [20] is that:

This is subject to an important caveat, as noted in New Zealand Maori Council v Foulkes where the High Court observed at [21] that:

The ability to seek costs in trust litigation is largely centered around the nature of the proceedings and whether the trustees’ stance is functionally “administrative” or “hostile.” There are different approaches to differentiation variously referred to in Buckton, Alsop and the learned authors of Lewin, which are set out in McCallum.

An important aspect of Beddoe orders, as noted in McCallum is not so much the order itself, but the consequences where no such order is sought.

Hostility abounds in the context of trust litigation on the presumption that hostility is the antithesis of confirmation that costs can be met from the trust. However, as set out in McCallum:

Importantly:
On the subject as to whether Beddoe applications are contrary to New Zealand’s principles of natural and open justice the response of the Court as set out succinctly at [48] was:
This must be correct. The role of the trustee is to act always for the benefit of the beneficiaries with reward only generally as permitted by the terms of the trust and with increasing risk in a changing trust landscape. However, where trustees have over-riding self interest, at this point the trustee should not generally be looking to the trust fund to finance the trustee’s pursuit of litigation.

References:

  • McCallum v McCallum [2021] NZCA 237
  • McCallum v McCallum [2020] NZHC 907 (judgement appealed)
  • Pratley v Courteney [2018] NZCA 436
  • Butterfield v Public Trust [2017] NZCA 367
  • New Zealand Maori Council v Foulkes [2015] NZHC 489
  • Alsop Wilkinson v Neary [1996] 1WLR 1220
  • Re Buckton [1907] 2 Ch 406
  • Re Beddoe [1893] 1 Ch 547

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