Folds Farm Trustees Limited & Anor v Oliver Alister Sydney Cutts & Ors

In trust litigation, trustees are generally entitled to reimbursement from the trust fund for expenses properly incurred when acting for the trust. The same reasonableness requirement applies, by analogy, to beneficiaries seeking their costs from the fund in an application for approval of a trustees’ decision. Such applications will commonly fall within category 1 of Re Buckton, creating a presumption that the trustees and beneficiaries recover their costs from the fund. That presumption may be displaced where a beneficiary’s unreasonable conduct generates substantial additional costs. The court should assess the conduct in the context of the limited supervisory role in a blessing application. A costs budget requirement directed to possible costs capping does not, without an express sanction or wider purpose, remove the usual entitlement.

The trustees sought approval of their decision to appoint the Farm, a trust asset, to the first defendant beneficiary. The main judgment approved that decision. This judgment determined the consequential costs issues.

The court considered the trustees’ statutory indemnity, the procedural rules governing trustee costs, and the analogous treatment of beneficiary costs under the Re Buckton categories. It also considered whether opposition by beneficiaries, the conduct of the litigation, and non-compliance with a costs-capping practice direction justified departures from payment out of the trust fund.

1. Trustees’ costs. Under Trustee Act 2000, s 31(1), trustees are entitled to reimbursement from the trust funds for expenses properly incurred when acting on behalf of the trust. The relevant provisions of the Civil Procedure Rules 1998 supplement that statutory right. The trustees’ costs were to be paid from the fund on the indemnity basis if not agreed.
2. Beneficiaries’ costs. Beneficiary costs in an approval or blessing application are determined by analogy with the three categories in Re Buckton. Applications brought by trustees for guidance or proper protection in administering the trust commonly fall within category 1. The usual result is that necessary parties’ costs are paid from the trust fund, subject to reasonableness.
3. Reasonableness. Mere opposition, including strong opposition, does not justify an adverse costs order. Unreasonable conduct which generates substantial additional costs may justify requiring the beneficiary to bear those costs.
4. Costs capping. The costs-capping practice direction required notice and a budget to enable consideration of a costs-capping order. It imposed no sanction affecting entitlement to costs and had no wider purpose. Failure by beneficiaries to file budgets was therefore irrelevant after the opportunity for costs capping had passed.
5. Alister was ordered to pay £15,000 towards the trustees’ costs and to bear his own costs up to 22 March 2024; his later costs were payable from the trust fund. No order was made as to Victoria’s costs. Charlotte and Cecilia were each entitled to 80% of their costs from the fund, with the remaining 20% borne by the fund in the first instance but deducted from any appointment or distribution to them.

First-instance costs judgment following the court’s main judgment dated 15 January 2024 approving the trustees’ decision. No appellate history is stated.