TRUST; BEDDOE PROCEEDINGS; PRE-EMPTIVE COSTS APPLICATION
Representation of BOS Trustees Limited [2025] JRC 120
The Royal Court considered that an application by a beneficiary, for her costs in defending the trust assets to be met out of the trust assets, was properly brought within the trustee’s Beddoe proceedings and not part of the paraphernal proceedings in which the status of the trust assets was under attack. The Court further declined to accede to an application by the parties mounting that attack for disclosure of all the evidence filed by the beneficiary in support of her application within the Beddoe proceedings for that funding.
This was an application within proceedings (“the Beddoe Proceedings”) brought by way of Representation by BOS Trustees Limited (“the Trustee”) in its capacity as trustee of the Q Trust. The Beddoe Proceedings concern the question as to how the Trustee should conduct itself in relation to proceedings brought against it and a company. of which the Trustee was 100% shareholder as trustee (“the Paraphernal Proceedings”).
The Plaintiffs in the Paraphernal Proceedings are daughters of the settlor and a former wife and they are bringing current proceedings on behalf of her estate against the trustee and B, the settlor’s widow and a beneficiary under the trust. They allege that all or some of the assets purportedly settled into the trust by the settlor constitute or derive from assets that belonged to the settlor’s deceased wife as a matter of Country A marital property law, such that they belong to her estate rather than the trust. They are referred to below and in the current judgment as the “Plaintiffs” in respect of the Paraphernal Proceedings and as “the Parties Notified” in relation to the Beddoe Proceedings.
At the substantive hearing of the Beddoe Proceedings on 21 June 2024, the Court ordered that, amongst other things, the trustee adopt a neutral stance in relation to its engagement in the Paraphernal Proceedings and that the trustee be indemnified from the trust assets for doing so. This was on the basis that B was sui juris and capable of exercising a choice to defend the claim against the assets. It was further ordered that there be liberty to apply.
The precursor to the current hearing was B’s summons on 25 November 2024 (“the Funding Summons”) which sought orders that, on the basis that she cold not afford the costs, her legal costs of and incidental to the ongoing Paraphernal Proceedings be paid out of the assets of the trust. That summons was issued in the Paraphernal Proceedings but was amended on 12 December 2024 so as to be made in the Beddoe Proceedings. In essence, the Funding Summons sought to use the liberty to apply provision in the Court’s decision of 21 June 2024 to renew B’s application for funding.
Questions arose as to whether the Funding Summons was properly part of the Beddoe Proceedings or the Paraphernal Proceedings and whether the Plaintiffs/Notified Patties were entitled to see all the evidence regarding B’s application for funding out of the trust assets.
Held:
(1) Beddoe Proceedings or pre-emptive costs application?
(a) Lewin on Trusts, 20th edition, paragraph 48-132 states the function of an order made in a Beddoe application is to predetermine the question of recovery of costs of the main action from the trust fund by way of indemnity to the trustee as between the trustee and the beneficiaries. What is predetermined is a potential issue between the trustee and the beneficiaries as to whether costs of the main action should be recoverable by the trustee as expenses of the trust, not the issue of costs as between the trustee and the other party to the main action. At paragraph 48-135 and 48-136, Lewin goes on to consider the difference between a prospective costs application and a Beddoe application: “….the essential distinction between an order made in a Beddoe application and an order made on a prospective costs application is that the former does not predetermine the order for costs in the main action, while the latter does. The former is concerned with an issue between the trustee and the beneficiaries, while the latter is concerned with an issue between the parties to the main action. The former does not fetter the discretion as to costs of the judge dealing with the main action, but the latter does . . . 48-136. Since a prospective costs application is concerned with a direct issue between the parties to the main action as to the order for costs to be made in it, the application is not made in separate proceedings but by application in the main action itself. There is in general, in contrast to a Beddoe application, no objection to a prospective costs application and the substantive hearing of the main action being dealt with by the same judge.”
(b) The present application by B was properly made in the Beddoe Proceedings. It was an application for B to have recourse to the trust fund of the trust to fund the defence of the Paraphernal Proceedings. It did not determine the costs orders between the parties that fall to be made at the conclusion of the Paraphernal Proceedings, which will be a matter for the trial judge. It followed that the application made by the Parties Notified, to see, in unredacted form, the evidence filed by B is properly made within the Beddoe Proceedings.
(2) Disclosure to the Plaintiffs/Notified Parties.
(a) It was argued for the Plaintiffs that they were entitled to see all the evidence regarding B’s claim for funding because her claim in the Paraphernal Proceedings was a hostile claim from which it followed that the Plaintiffs were entitled to see all the evidence against them.
(b) Whilst that may be correct in respect of the Paraphernal Proceedings, it did not follow that the Beddoe Proceedings should be characterised in the same way. Whether one classifies a Beddoe application as an application by trustees for the blessing of a momentous decision to defend a claim, or as a request for the Court to order that the trustees may have recourse to the trust fund for reimbursement of legal costs in relation to a claim, such applications ordinarily concern only the trustees and the beneficiaries. The beneficiaries are likely to be the only persons given the opportunity to be heard in relation to the application. However, in cases such as the present, where there is a claim to the whole or a substantial part of the trust fund, different considerations may apply. Thus, the Plaintiffs in the Paraphernal Proceedings were given notice of the Beddoe application and will be entitled to express their views at the Beddoe hearing in due course. They did so in this case not as beneficiaries of the trust but as claimants to beneficiary status. Until such time as their claim is vindicated, they remained strangers to the trust. Their views were a relevant consideration for the Beddoe Court when assessing the merits of the application, but this did not without more turn the Beddoe Proceedings into “hostile proceedings”. They were an application by the trustee or a beneficiary concerning the administration of the trust, albeit prompted by hostile litigation.
(c) The authorities in support of his proposition that it was a fundamental principle of natural justice for a fair hearing to take place with all parties having equal access to the evidence on which it is to be decided, all concerned an issue being determined as between hostile parties.
(d) In addition, none of the cases concerned the Court’s jurisdiction in relation to the administration of trusts, in which it is not uncommon for parties to applications under Article 51 of the Trusts (Jersey) Law 1984 to provide certain evidence or information to the Court, with that evidence or information remaining confidential as against one or more parties to those proceedings, particularly when that evidence or information relates to a party’s financial means.
(e) The Court accordingly declined to make the order sought by the Parties Notified that all evidence filed by B and the Trustee in the Funding Summons be served on all parties to the application in unredacted form. The Parties Notified, together with D and E, would nevertheless be permitted to appear at the hearing of the Funding Summons and to make submissions.
Bridgeford A. WDJL, 14 – 20 2025