One of the duties of the trustees (i.e. personal representative) of an estate is to collect and realise the real and personal estate of the deceased and administer it according to the law. The duties to be undertaken by the trustees are onerous, and they are personally liable for loss to the estate resulting from any breach of those duties, including proceedings being wrongly brought/defended by them.
What is a Beddoe Order?
A Beddoe Order (named after the case of Re Beddoe [1983] 1 Ch 547) is a direction under the Civil Procedure Rules Part 64 to trustees (i.e. the PR) to take/defend proceedings affecting the estate at the expense of the trust fund in respect of any adverse costs order which may be made against the trustees.
The idea behind it is that the estate does not possess its own legal identity, making trustees personally named in any litigation, and it would not be fair for them to be personally liable for the costs.
By making a Beddoe application, the trustees are essentially asking the Court to decide whether they are acting reasonably and in the interests of the estate in bringing/defending the proceedings. The beneficiaries may also be parties to the application and express their views on it (as explained further below).
The Court can direct the trustees not to issue/defend the proceedings or to issue/defend the proceedings up to a certain stage, such as completion of disclosure.
What will the Court consider when making a decision?
The Court will consider the following factors when making a decision:
- The legal advice from a solicitor instructed by the trustees to provide an assessment of the merits and weaknesses of the trustee’s case;
- The risk of injustice to the trustees if the Beddoe Order is not granted;
- The evidence in support of the trustees’ case; and
- The estate’s account records the estate’s assets and liabilities.
It is essential that the trustees make full and frank disclosure to the Court. Otherwise, they may lose the protection that a Beddoe order affords them.
Can a Beddoe Order be contested?
The Court has a discretion to decide where the legal costs in relation to a Beddoe application should fall. In most cases where there is a Beddoe Order granted, the costs in relation to its application will usually be borne by the estate.
It will not be wise for the beneficiaries to argue against the Beddoe application unless there are good reasons to do so, as they may face the risk of generating substantial costs against the parties and having an adverse costs order against them (Green v Astor and Others [2013] EWHC 1857 (Ch)).
When is Beddoe Order needed?
If the trustees do not make a Beddoe application and they lose the proceedings they are engaged in, they may be personally liable for both their own and the other party’s costs.
Whilst it may be possible to establish that these costs were properly incurred and should be charged to the estate, making a Beddoe application removes any uncertainty as to the recovery of costs.
It is best for the trustees to make the Beddoe application at the outset of any proceedings, as the Court is unlikely to provide retrospective indemnities.
If all of the beneficiaries are capable adults and consent to the trustee’s proposed action, then a Beddoe application may not be necessary.
How can we help?
Ronny Tang is an Associate in our expert Dispute Resolution team, specialising in defamation claims, contentious probate and inheritance claims, Trusts of Land and Appointment of Trustees Act 1996 claims, Equality Act 2010 claims and Protection From Harassment 1997 claims.
If you need any advice concerning the subject discussed in this article, please do not hesitate to contact Ronny or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.
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