Contentious Trusts Case Summaries - February 2017

Patrick Pettigrew & others v Edwin Edwards [2017] EWHC 8 (Ch)

This recent case provides trustees with a useful reminder of those circumstances in which a court is likely to refuse them cost relief in the form of a Beddoe Order.

The background facts to this case are as follows. The deceased died in April 2003 and her will was proved by the trustees as her executors in October 2003. The first and second trustees were the deceased's sons from her first marriage with the third trustee being the solicitor who drafted the will and a promissory note. Under the will the deceased left her residuary estate to the trustees as trustees upon trust to pay income to the life tenant (the deceased's fourth husband) for his life and, subject to specific gifts, upon trust for first and second trustees in equal shares (they were the only beneficiaries post life tenant's death). The estate was valued at approximately £500k including a promissory note signed by the life tenant to the deceased in sum of £100k. It represented a loan made by the deceased to the life tenant in relation to works at his property. It was originally intended that the deceased was to get an interest in the property but once the deceased knew she was dying this was altered to a loan. The loan was to be repaid after death. On the deceased's death she had not actually paid the whole £100k so the outstanding balance was treated as a liability of estate.

Post death and administration of the estate, the trustees sought security for the loan but none was forthcoming. They subsequently sought repayment of the loan but that was also refused. Consequently they withheld income otherwise due to the life tenant in satisfaction of the loan. In May 2016, the life tenant issued a Part 8 claim seeking directions that payments be made to him whilst the trustees filed a defence and counterclaim in relation to repayment of the loan.

The court was asked to consider whether in these circumstances the trustees could be awarded a Beddoe Order in relation to their costs for the litigation.

In his judgment Master Matthews made it very clear that the issue of Beddoe relief is very fact specific and will be determined by the facts of the specific case before it. Master Matthews also made clear that a court will be very reluctant to provide trustees with any Beddoe relief where to do so may cause injustice to the other party further down the line.

In this case, Master Matthews broke the case down into two parts...