In the latest instalment of the HHH Employee Trust case the
Royal Court has rejected a beneficiary's challenge to costs
recoverable by a non-trustee fiduciary which were incurred on the
trustee indemnity basis and agreed by the trustee.
The court confirmed that the beneficiary's proper route to
challenging the fiduciary's costs lay in challenging the
trustee's agreement to pay the costs. Once a costs award
has been made to a non-trustee fiduciary, the fiduciary is a
creditor and it is the trustee's responsibility to settle the
trust's debt at the appropriate level. The
beneficiary's right to redress is limited to challenging the
reasonableness of the trustee's action in agreeing the level of
Although the Royal Court and the Court of Appeal had made obiter
comments in previous judgments suggesting that a disaffected
beneficiary could challenge the non-trustee fiduciary's costs
directly, the Royal Court confirmed that this had been a mistake in
approach and that the principle of non-intervention prevents the
court from stepping in to make its own decision as to what the
correct level of costs should be.
This contrasts with the ability of a beneficiary to challenge
trustee costs (the procedure for which is set out in the Alhamrani
 JLR 527) and for good reason: The supervision of
trustee costs is in a category of its own because in paying trustee
costs out of the trust fund the trustee sits on both sides of the
transaction – it is both creditor and the keeper of the purse
strings and therefore is inherently conflicted. That is not
the case where a non-trustee fiduciary requests its costs and the
trustee determines the extent of the costs payable.
Help for trustees facing potential costs challenges by
The court went on to provide helpful guidance for trustees who
are asked to settle costs claims but who either cannot agree the
quantum or have good reason to suspect that the quantum will be
challenged by disaffected beneficiaries.
The court suggested that a trustee facing either one of those
quandaries could ask the court for an order that the costs be
assessed by the court's taxation officer, so that the issue can
be determined without a further full set of expensive court
proceedings. If the matter is referred to the taxation
officer, the taxation officer will seek the views of the fiduciary
and of the trustee before reaching their decision. The court
indicated that in future cases it would typically look to build in
a referral to taxation in the event that the parties are unable to
Ogier acted for the successful fiduciary.
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