Jersey: Principles Applicable To Legal Costs Incurred In Trust Related Proceedings In Jersey By Trustees, Other Fiduciaries And Beneficiaries

Last Updated: 8 January 2014
Article by Nigel Sanders

Most Read Contributor in Jersey, September 2016

In its decision in Des Pallieres v JP Morgan Chase & Co the Jersey Court of Appeal has provided a clear view of the principles that apply to costs awards in trust proceedings for parties acting in a fiduciary capacity.  The Court of Appeal's decision was preceded earlier this summer by the Royal Court's decision in Re Dunlop Settlement  in which the costs incurred by a beneficiary in trust related proceedings were considered, and which itself serves as a useful summary of the principles that will be applied.

The key point that emerges from the Court of Appeal's judgment is that the principle of indemnity is paramount with regard to the costs incurred in trust proceedings by a trustee or other person with fiduciary functions in respect of a trust.  The Court of Appeal confirmed that persons exercising fiduciary functions are entitled to an implied equitable indemnity in respect of costs reasonably incurred by that person in the exercise of those functions.  That indemnity is equivalent to the statutory indemnity enjoyed by a trustee and, accordingly, will lead as a matter of principle, to a prima facie entitlement to recover costs on a full trustee indemnity basis.  That right of indemnity (whether express or implied) can only be lost in circumstances where the trustee is guilty of misconduct or acting unreasonably.

The Royal Court's decision in Re Dunlop has confirmed the principle that beneficiaries convened to trust proceedings are also prima facie entitled to have their costs paid out of the trust fund on the indemnity (as opposed to standard) basis (which therefore is not the full indemnity to which a fiduciary would be entitled).  Similarly, that entitlement can be lost in circumstances where the beneficiary acts unreasonably.


The proceedings in Des Pallieres involved an application for disclosure by Mr Des Pallieres (BDP) against JP Morgan Chase & Co (JPM).  JPM was the settlor of an employee benefit trust (EBT) of which BDP (a former employee) was a beneficiary (including of a sub-trust within the EBT).  JPM had a power to remove and appoint trustees and appoint a protector, which were agreed to be fiduciary powers.

The history of the proceedings, which were brought pursuant to Article 51 of the Trusts (Jersey) Law, was somewhat convoluted due to the way in which BDP had initially sought to raise hostile issues within an application for disclosure against both JPM and the trustee of the EBT.  The hostile elements of the claim had been removed, and the application had proceeded to hearing as a trust directions application (albeit one commenced by JPM as beneficiary).

Royal Court decision

In the Royal Court, it was accepted that BDP would have a right to seek disclosure against JPM in connection with the exercise of its fiduciary powers.  However, JPM had never exercised its powers of appointment or removal.  The Court ultimately held that the documents of which BDP sought disclosure were in part available from the trustee or, in many cases were an attempt by BDP to obtain pre-action disclosure in respect of matters that BDP had indicated he might pursue JPM.  Accordingly, the disclosure orders sought were refused.

The Royal Court awarded JPM its costs on the full trustee indemnity basis, but granted leave  to BDP to appeal because the Court considered the question of how to categorise the nature of the proceedings (applying the principles in Re Buckton) which involved considering whether they were hostile or not to be a difficult one;  the Royal Court also thought it important for the Court of Appeal to consider the somewhat novel area of law involving the position of a settlor with fiduciary powers. 

By way of reminder, in Re Buckton it was held that there are 3 principal categories of proceedings: (1) applications by trustees for directions or guidance on a question of construction; (2) a similar kind of application brought by someone other than the trustee; and (3) hostile claims by a beneficiary.  Cases in categories (1) and (2) are necessary for the administration of the trust and, therefore, the costs of all parties will ordinarily be directed to be paid from the trust fund.  Cases in category (3) will typically result in costs orders following usual litigation principles - ie, the loser pays.

BDP argued that because the application he made was essentially one for pre-action disclosure - despite being brought under Article 51 and despite the hostile elements being removed - the costs should be awarded on the basis of hostile proceedings (Buckton category (3)).  He therefore argued that they should not be ordered to be paid from the EBT (or more particularly, BDP's sub-fund) but should be ordered to be paid by him personally on a standard hostile litigation basis. 

Court of Appeal decision

The Court of Appeal held that the costs order of the Royal Court was the correct one.  However, it also held that the question of which of the Buckton categories the application fell into, did not need to be answered when looking at a trustee's or other fiduciary's costs.  It held that JPM's entitlement to costs from the trust fund arose out of its implied right of indemnity as a party acting in a fiduciary capacity, irrespective of the nature of the proceedings.  Nugee JA expressed the view that he did not consider that a hostile claim by a beneficiary against a trustee would fall within the Buckton categories at all.

In reaching its judgment, the Court of Appeal focused on the nature of the application, rejecting arguments that JPM had been acting in its own interests in resisting the scale of the disclosure sought.  In doing so the Court gave helpful guidance on other kinds of litigation in which trustees or fiduciaries might be engaged in that capacity.  For example, if a trustee is sued for breach of trust unsuccessfully, the Court considered that the right of indemnity would still apply, although the beneficiary might be held personally liable to meet the trustee's costs on a standard or indemnity litigation costs basis - the trustee could thereafter seek to recover from the trust the unrecovered costs (such as after assessment/taxation).  Even if a breach of trust action were successful, it does not follow automatically that the trustee will have to bear the costs of the proceedings personally - for example, if an established breach were to be held to be minor or innocent the right of indemnity might still apply.

The Court of Appeal confirmed that the right of indemnity is one that can be lost in circumstances where the trustee or other fiduciary has been found guilty of misconduct.

Re Dunlop Settlement

The Court of Appeal in BDP v JPM cited with approval the costs judgment of the Bailiff in the Royal Court in Re Dunlop.  The factual background to the substantive decision in Re Dunlop is described in an earlier briefing .  In short, it involved the surrender of discretion by the trustee of the settlement and the authorisation by the Court of the trustee to enter into an agreement for the settlement of various claims in respect of the trust and its assets.

The Bailiff's judgment addressed the claim by one of the beneficiaries of the trust for recovery of her costs from the trust fund.  The beneficiary had opposed the decision that was reached in the proceedings.  The Royal Court referred to the Re Buckton principles and their application to beneficiaries' costs in trust litigation, as applied by the Court of Appeal in Jersey in Trilogy Management Limited v YT Charitable Foundation (International) Limited.  

As regards the Buckton categories, the Bailiff held that the application was an administrative one brought by the trustee and, therefore, fell within category (1).  As a consequence, the beneficiary had a prime facie right to an indemnity costs order unless deprived of that right through her own unreasonable conduct.  For numerous reasons (such as not taking part in a mediation, failing to comply with orders for the filing of evidence, filing a "palpably wrong" witness statement and persisting in her opposition) the Bailiff held that the beneficiary had acted unreasonably.  Rather than seeking to reach a view on an issues based cost award, the Bailiff adopted a broad approach and awarded her only half of her costs on the indemnity basis.


These decisions are important: they clarify and reiterate the principles which will be applied when the Courts in Jersey approach awards of costs in trust litigation.  The very clear message from the Court of Appeal with regard to the indemnity enjoyed not only by trustees but also other fiduciaries will bring some degree of certainty to those acting in such positions who are convened to trust proceedings.  The Royal Court decision also signals to beneficiaries that, if convened to a trust application they will likely recover their costs on an indemnity basis.  Equally important for trustees and beneficiaries alike, where a claim for breach of trust is brought unsuccessfully by a beneficiary, the starting point will be that the trustee will be able to look to its right of indemnity to recover its costs in full from the trust assets.

As a postscript, there is one area of potential ambiguity that arises from the judgments, namely the circumstances where the trustee's right of indemnity or the beneficiary's prima facie entitlement can be lost.  The Court of Appeal made reference to the loss of the right of indemnity where a trustee/fiduciary is found (as opposed alleged) to have been guilty of "misconduct".   The Bailiff had remarked in Re Dunlop that the Court of Appeal in Alhamrani v JP Morgan Trust Company (Jersey) Limited had found that a "trustee may lose its costs indemnity by acting unreasonably rather than the higher test of being guilty of misconduct."  Arguments over just how high the test that will be applied is, could still therefore arise in future cases.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.