The court will protect independent trustees who act sensibly

Anecdotally, it is harder and harder to find people willing to act as unpaid, “independent” trustees, who cannot benefit from the trusts they manage. One possible reason is the perception that there is unacceptable risk for the trustees, with no reward other than the warm glow which comes from having done a favour for friends or family. Trustees may take heart, then, from two recent High Court decisions on the costs of litigation.

Costs decisions can be technical and dry. These are worth paying attention to because they show the court willing to back trustees robustly who act sensibly, while punishing those who behave unreasonably. 

Where trustees are concerned there are two key general rules about the costs of legal proceedings:

1. The loser pays the winner’s costs

2. Trustees’ costs are paid by the trust (even if they are the loser), unless those costs are “improper”

The point of the rules is to encourage people to settle disputes without coming to court and to protect trustees who cannot simply walk away from their obligations to their trusts. Trustees’ costs might be improper if the trustees are thinking about their own interests, rather than the trust’s interests.

Smith & others v Campbell & others was a case about beneficiaries trying to effect “regime change” in the trustees of a Will trust. The claim followed a complete breakdown in relations between the beneficiaries of the trust and the trustees. Originally, the claim had been for a complete removal and replacement of all the trustees. In the end, there was a “partial win” for the beneficiaries in that two of the four trustees were replaced. 

Summarising the costs decision, the judge said the claimants’ “claim was materially exaggerated, and the majority of the cost of the proceedings was incurred in litigating allegations of breach of trust and misconduct against the Trustees that were either withdrawn or have been dismissed”. The claimants had “unreasonably” failed to try and address the dispute before making the claim and were “primarily responsible” for the failure to mediate, which the court said might have reduced costs. Meanwhile, “the Trustees reasonably and properly resisted the numerous allegations of breach of trust and misconduct made against them, and made an early, good faith and reasonable attempt to address the Claimants' legitimate concerns about the breakdown in the relationship”.

The decision was that the claimants would pay their own costs, and the trustees could have their costs paid out of the trust.

Harris & another v Quantick & another was about another Will. The executors were a law firm. Two of the three directors of the firm applied for probate and were named personally on the grant of probate. Those directors then left their firm amid a dispute with the third director, who promptly applied for his own grant of probate. It proved impossible for the three to work together to finish the estate administration. 

The two outgoing directors eventually applied to court to be removed as executors, so that they could step away completely. That application was granted by the court as being in the best interests of the estate. But there was then a dispute about who should pay the costs, including the costs of arguing about costs.

By the time of the final cost hearing, matters were so out of control that the costs in dispute were more than the value of the estate itself. The court said that the cost to the estate of getting the order could have been as little as £3,000. The two claimant directors had certainly not acted perfectly but their conduct in making the application was reasonable overall. However, their approach to costs after the court had made the order was more in their interests than that of the estate, because it had essentially become a personal dispute between the three directors. Most of their costs related to this period.

On the other hand, the third director behaved “in a highly unreasonable, obstructive and badgering manner, to an extent quite outside the norm”. The court went on to say that his “interest in these proceedings has been in his personal capacity, and to the extent he has incurred costs it has been in defending his own interests”.

The decision was that the two directors’ costs of getting the court order would be paid by the estate. All of their remaining costs would be paid by the third director personally, but not from the estate because the estate got no benefit from the argument about costs. The third director would also have to pay all of his own costs.

The decisions in Smith and Harris show the courts backing trustees who act sensibly in the face on unreasonable litigation (Smith) and in the interests of the trust (Harris up to the point the order was made) and penalising those who act unreasonably or for their own benefit (Harris). Independent trustees should take comfort.

Trustees should remember the possibility of making an application to court for directions (sometimes called a Beddoe application, after a 19^th century case). If the court approves the trustees’ proposed course of action, then it will usually also ensure that their costs will be paid out of the trust. Having that certainty upfront is generally better than relying on the court’s cost discretion after the event. We have considerable experience in advising on these types of applications for trustee clients.

Smith & others v Campbell & others [2026] EWHC 144 (Ch)

Harris & another v Quantick & another [2026] EWHC 137 (Ch)