TRUSTS; COSTS; BLESSING APPLICATION; NATURE OF BLESSING APPLICATION; COSTS ON THE TRUSTEE BASIS; BENEFICIARIES COSTS AND RIGHT TO CHALLENGE QUANTUM OF TRUSTEE’S COSTS
Representation of IQEQ (Jersey) Limited re Amazon Trust [2026] JRC 072
The Royal Court awarded the trustee its costs out of the trust fund on the trustee basis in respect of a successful blessing application. Addressing in particular an objecting beneficiary, who was acting in person, Commissioner Birt further explained the nature and point of a trustee’s blessing application as a matter of Jersey trust law (Denaxe Ltd v Cooper [2023] EWCA Civ 752, an English non-trust case, was not raised). The Court also explained the beneficiary’s ability to challenge the quantum of the trustee’s costs, notwithstanding the Court’s decision on the incidence of costs, and the mechanism available to the beneficiary for doing this.
In Representation of IQEQ (Jersey) Limited re the Amazon Trust [2025] JRC 083 the Court held that (subject to a technical amendment) it was willing to approve the decision of the Representor to enter into a consent order whereby it settled certain claims which had been brought by the former trustee in respect of its fees. Commissioner Birt now considered the question of costs. It was contended that notwithstanding the blessing if its decision the trustee should be deprived of its indemnity for costs out of the trust fund.
Held:
- The applicable legal principles.
(a) The starting point is Article 28(2) of the Trusts (Jersey) Law 1984 which provides: “(2) A trustee may reimburse himself or herself out of the trust for or pay out of the trust all expenses and liabilities reasonably incurred in connection with the trust.” The principles applicable on the question of the circumstances in which a trustee may be deprived of its right of reimbursement are well-established: Re Appledore Trustees Limited [2023] JRC 156 at [30]-[40] in which a number of the other leading cases were referred to, including Re Appledore Trustees Limited [2023] JRC 156, Re Piedmont Trust [2016] (1) JLR 14, [2016] JRC 016, Alhamrani v JP Morgan Trust Company Limited [2007] JLR 527, [2007] JCA 164, B v Erinvale Ptc Limited [2021] JRC 021 and Re Y Trust [2011] JRC 155A. The position is also helpfully described in Lewin on Trusts (20th edition) at 48-006 to 48-007.
(b) In summary, a trustee is entitled to be reimbursed for the expenses and liabilities that it has reasonably incurred in connection with the trust. The concept of a ‘reimbursement’ implies full repayment and a trustee has the right to full reimbursement of his expenditure properly incurred on behalf of the trust; see Alhamrani per Vos JA at [39].
(c) However, a trustee may be deprived of his indemnity if he has acted unreasonably or been guilty of misconduct. As Commissioner Clyde-Smith said in Y Trust at [32], that is a high hurdle.
2. Decision as to trustee’s costs of fee dispute.
(a) It was clear from the submissions on behalf of the beneficiaries that they strongly disagreed not only with the decision of the trustee to accept the former trustee’s revised offer but also with the court’s decision to approve the trustee’s decision in the blessing application. However, for the reasons set out in the main judgment, the court granted the blessing application and approved the trustee’s decision to accept the revised offer and enter into the consent order (as varied). The Court’s decision as to costs must therefore be made on the basis of that decision of the court.
(b) On the facts, should not be deprived of its indemnity for costs out of the trust fund in relation to the fee dispute.
3. Decision as to trustee’s costs of blessing application; nature of blessing application.
(a) In respect of the blessing application the Court had held in its blessing judgment that, given the vigorous opposition of the beneficiaries to the decision to settle the fee dispute and their threat of litigation against the trustee, the Court held that this was undoubtedly a momentous decision and that it was reasonable for the trustee to wish to obtain the blessing of this Court.
(b) It was submitted by a beneficiary that it was nevertheless pointless to bring the blessing application because the trustee did not have to act in accordance with the court’s decision and it would have been equally reasonable for the trustee to have refused to agree to the revised offer and the Court would have approved that decision.
(c) It was correct that the trustee did not have to act in accordance with the Court’s decision but this submission misunderstood the purpose of blessing applications. Where a trustee takes a ‘momentous’ decision (i.e. one of real importance for the trust), it has the right to apply for the Court’s blessing. If such blessing is granted, this has the effect of confirming that the trustee’s decision does not constitute a breach of trust and that accordingly the trustee will not be liable to any beneficiary for breach of trust in respect of the decision. It is open to a trustee to take a decision and not to seek the Court’s blessing, but in that event it would be open to a beneficiary to claim (whether successfully or not would depend on the circumstances) that the decision constituted a breach of trust. It is not therefore pointless for a trustee to seek the blessing of the Court in respect of a momentous decision and the blessing application in this case was not ‘worthless, useless and an unnecessary expense’ as the beneficiary contended. As to the point that the trustee might have been able to reach some other reasonable decision which the Court might also have blessed, that may or may not be so; but it could not be relevant as to whether the decision which the trustee actually took and for which it sought the Court’s blessing was or was not reasonable and whether it acted reasonably in seeking the court’s blessing.
(d) There was nothing unreasonable about the manner in which the trustee had conducted the blessing application and accordingly no reason to deny the trustee its trustee indemnity on the trustee basis in respect of the legal costs incurred in respect of the blessing application.
4. Objecting beneficiaries’ costs. Although not raised in the submissions, the objecting beneficiaries were prima facie entitled to their costs in connection with the blessing application out of the Trust. A beneficiary who participates in a blessing application is entitled to his or her costs on the indemnity basis out of the trust unless such beneficiary has behaved unreasonably in connection with the application. As in this case they were litigants in person, they might not be aware that this is the position and accordingly it was right to raise the matter of the Court’s own volition.
5. Possibility of challenge to amount or scope of trustee’s costs. By way of further clarification, bearing in mind that the objecting beneficiaries were litigants in person:
(a) An order that costs may be paid out of a trust fund on the ‘trustee basis’ means merely that such costs may be paid out of the trust fund in accordance with the trustee’s legal entitlement to an indemnity. It is a common order in blessing applications and similar litigation.
(b) A trustee is in law entitled to reimbursement of all expenses ‘reasonably incurred’ in connection with the trust. This requires that (i) it was reasonable to incur the expense in question, and (ii) the expense was reasonable in amount.
(c) Even where a Court makes such an order, it is open to a beneficiary to bring proceedings challenging the trustee’s right to reimbursement of particular costs or expenses on the ground that they were not reasonably incurred. As stated by the Court of Appeal in Alhamrani v JP Morgan Trust Company Limited [2007] JLR 527, [2007] JCA 164 at [66], that is a high hurdle. The test is not whether, on a taxation, the Greffier thinks that the fees were incurred at the right level; it is rather that they were reasonably incurred. They may only be disallowed if they were unreasonably incurred. In other words, it is only if something falls outside the band of reasonable actions that it should be disallowed. Furthermore, as stated at [62] and [66(iv)] of Alhamrani, any doubt as to whether it was reasonably incurred or of a reasonable amount must be resolved in favour of the trustee.
(d) The Court’s finding that the trustee should be entitled to its costs out of the trust on the trustee basis did not prevent a beneficiary from bringing proceedings alleging that particular costs have been unreasonably incurred. Accordingly, it would be open, as a matter of procedure, for the beneficiaries in this case to bring proceedings requesting that the court order a taxation of the costs which the trustee has incurred in connection with the fee dispute and/or the blessing application.
(e) If, on any such application, the court were to order a taxation, the Greffier would be bound by the decision in this judgment that it was reasonable for the trustee to incur legal costs and that the conduct of the fee dispute and the blessing application was reasonable, but it would be open to him to find that particular items of the costs were unreasonable in amount, e.g. if a fee earner of the trustee’s lawyers had spent six hours on a matter where the Greffier considered that a maximum of one hour was required.
Bridgeford A. WDJL, 13 – 19 April 2026