Beneficiary Hostility

In New Zealand Beddoe applications are governed in the first instance by the High Court Rules, which do not extend to prospective costs orders by beneficiaries.

Representation of VG Trustee Limited re the B Trust (Re the B Trust) considers whether beneficiaries should have their costs met on account of a successful Beddoe application brought by the trustee.  Re the B Trust traverses the issue of beneficiary costs and differentiates between beneficiaries who have a position that may be contrary to that adopted by the trustee, but who can assist the court in the matter at hand; and disaffected beneficiaries whose conduct disrupts the administration of the trust.  

As noted in Lewin Trusts (20th edition) at 48-054:

“In a case where a trustee makes an application for directions in consequence of the conduct of a disaffected beneficiary intent on disrupting the administration of the trust, the beneficiary is at risk at least of being deprived of his costs and at worst of being ordered to pay all the costs of the application which was made necessary by reason of his conduct.”

In Green v Astor, a Beddoe application was necessitated due to a disaffected beneficiary’s hostility towards, and obstruction of, the estate’s personal representative in the context of the settlement of claims brought against third parties.

As noted at [24] to [25] of Re the B Trust:

24.   In Green v Astor, the Court considered that the disaffected beneficiary’s conduct meant that the application did not fall neatly within the Buckton categories and took it closer to hostile litigation.  In ordering the beneficiary to pay the costs of the application, the court (Roth J) said this (at paragraph 54):

“Where unreasonable conduct by a beneficiary is responsible for generating substantial costs on the part of a trustee or personal representative as regards an application to the court, it is appropriate that the burden of those costs should be borne by that beneficiary and not fall on the trust or estate and thus the beneficiaries as a whole…”

25.     The extent to which Mr Astor had generated unnecessary costs in relation to the application can be illustrated by the following comments made by Roth J in his judgment:

“It is a striking feature of the present case, where the argument on the substance of the issues lasted less than a day and where the proceedings involved only a few previous case management hearings, that the total costs including those which I was informed had been incurred by the first defendant (the only defendant to oppose the application) are over £900,000. Moreover, I was told that out of that total the claimant’s costs amounted to over £400,000. Albeit that was based on an expected five-day hearing whereas the application was disposed of in two days, this is nonetheless a staggering figure for an application of this kind, especially where the aspect of the estate at issue, while not small, was less than (and possibly significantly less than) £8 million.”

In Re the B Trust the position of the Royal Court of Jersey is expressed at [30] as follows:

In our view, Green v Astor, as applied in Re Erinvale, supports the proposition that unreasonable behaviour by a beneficiary in the context of an application for directions itself, may result in a beneficiary being deprived of their costs of the application, but does not support the proposition that in a Beddoe application regard should also be had to the behaviour of the beneficiary in relation to the claim that is the subject of the application.

References

• Representation of VG Trustee Limited re the B Trust [2024] JRC013
• High Court Rules, r. 19.4, r 19.4A
• Trusts (Jersey) Law 1984.
• Civil Proceedings (Jersey) Law 1956.
• Green v Astor [2013] EWHC 1857.
• Matter of the Representation of Erinvale PTC Limited [2022] JRC076.
• In re Piedmont [2016] JRC016.
• In the Matter of the Piedmont Trust and Riviera Trust [2021] JRC 250.