Beddoe Orders

A Beddoe Order is an order made by the Court giving directions to a trustee to bring or defend legal proceedings that effect the trust, at the expense of the trust estate (fund).

Consequently, a “Beddoe Application” is the name of the application made by the trustees to the Court, for the Court’s direction (a Beddoe Order) as to whether or not the trustees should bring or defend legal proceedings.

The usual situation in which it is appropriate to make a Beddoe Application is where a trustee becomes involved in a “third party dispute”. A third party dispute has been defined as a dispute with persons otherwise than in the capacity of beneficiaries, in respect of rights and liabilities, for example in contract or tort, assumed by the trustees as such in the course of administration of the trust.

A Beddoe Application takes its name from the case of Re Beddoe, Downes v Cottam [1893] 1 Ch 547. Re Beddoe was a decision of the Court of Appeal which hears an appeal from Kekewich J who dealt with a trustee’s cost of his unsuccessful defence to an action in detinue in relation to the custody of deeds.

In Re Beddoe Lindley LJ commented, at pages 557-558:

“But a trustee who, without the sanction of the Court, commences an action or defends an action unsuccessfully, does so at his own risk as regards costs, even if he acts on counsel’s opinion….But, considering the ease and comparatively small expense with which trustees can obtain the opinion of a Judge of the Chancery Division on the question of whether an action should be brought or defended at the expense of the trust estate, I am of the opinion that if a trustee brings or defends an action unsuccessfully and without leave, it is for him to shew that the costs so incurred were properly incurred. The fact that the trustee acted on counsel’s opinion is in all cases a circumstance which ought to weigh with the Court in favour of the trustee; but counsel’s opinion is no indemnity to him even on the question of costs…”

When deciding to join as a party to the Beddoe Application, trustees should remain neutral in the proposed litigation and should not come across as partisan. Beneficiaries are usually necessary parties to the Beddoe Application because they are entitled to be heard on whether trust money should be spent or placed at risk in the main action.

To ensure that the trustee is properly protected in making the Application, the Trustees must give full disclosure of relevant matters (including both the strengths and weaknesses of the proposed action)

Lindsay J in 3 Individual Present Professional Trustees v An Infant Prospective Beneficiary [2007] EWHC 1992 (Ch) said at [33]:

“If there is a want of that full disclosure, the whole Beddoe application can become close to pointless and that suggests that the trustees should err, it at all, if only for their own sake, on the side of disclosure ….”

3 Individual Present Professional Trustees of 2 X v An Infant Prospective Beneficiary of X & Ors [2007] EWHC 1922 (Ch)
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This tab updated on 20 July 2015