And So To Beddoe: Trustee Indemnities For Litigation Costs

A recent decision of the Cayman Islands ('Cayman') Grand Court ('Court') considered how to balance the competing interests of a trust which partly owned an asset and a claimant looking to enforce judgment against that asset. It also reviewed if and when a claimant could appear or make representations when trustees applied for a 'Beddoe' Order to indemnify the trustee against all and any costs and expenses which it might properly incur in the process.

In the Matter of the Trusts Law (2011 Revision) and In the Matter of the Grand Court Rules Order 85 Rule 2

Why ask the Court?

Under s.48 of the Trusts Law (2011) trustees can apply to the Court for an opinion, advice or direction on the management of trust money. So long as the trustees have not concealed matters from the court when they made their application, once the Court has sanctioned a course of action the trustee is protected against personal liability to the beneficiaries.

Do trustees need permission to defend their trust?

No. However trustees have been advised to apply to the court to sanction getting involved in litigation on behalf of their trust since the 1893 England and Wales Court of Appeal decision in In re Beddoe, Downes v Cottam [1893] 1 Ch 547 (CA) . The principle explained in that case was that:

"a trustee who...