Will a Trustee always be indemnified?

It has long been good practice to advise trustees or personal representatives who are thinking of bringing or defending proceedings on behalf of their trust or estate to obtain the protection of a Beddoe Order so that their costs are indemnified out of estate assets. 

That is not to say that in the absence of a Beddoe Order the trustees or personal representatives are deprived of such an indemnity and that has been confirmed by a recent case in the Court of Appeal Davies v Watkins .   The court held that there is still a presumption that trustees will receive such an indemnity in circumstances where they have conducted themselves properly and that any doubt as to proper conduct should be resolved in the trustees' favour.

Having said that, trustees who embark on litigation, certainly as a claimant, without observing the appropriate protocols (for example, sending a letter before action) and without the protection of a Beddoe Order do run the risk that they might be deprived of their indemnity from the estate as to costs.  One of the reasons for this is because under Part 64 of the Civil Procedure Rules, trustees and personal representatives can make an application to the Court as to any question which arises in the course of the administration of the trust.  This includes an application for directions before taking any steps in bringing or defending proceedings.  Very often, the Beddoe Application itself is made as part of any application under Part 64.  For that reason, although a trustee can be indemnified even if no Beddoe Order exists, best practice dictates that an application for such an Order should always be made.

For further information please contact Miles Farren on 0117 906 9304 or email miles.farren@michelmores.com