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7 - Derivative Actions on Behalf of the Trust

Beddoe Orders for Beneficiaries

from Part II

Published online by Cambridge University Press:  19 April 2018

Richard C. Nolan
Affiliation:
University of York
Kelvin F. K. Low
Affiliation:
City University of Hong Kong
Tang Hang Wu
Affiliation:
Singapore Management University
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Summary

A Beddoe order is a pre-emptive cost order which authorises trustees to pursue or defend a court action. Once the order is granted, the trustees would be indemnified from the trust fund in relation to the legal costs incurred even if the trustees are ultimately unsuccessful in the legal proceedings. Under orthodox trust law, the court will generally not grant such a pre-emptive cost order in favour of beneficiaries. This chapter challenges this orthodoxy. The thesis of this chapter is that in appropriate circumstances and consistent with the philosophy of ensuring that the trust is properly governed, the court should similarly invoke its inherent jurisdiction and grant a Beddoe order in favour of beneficiaries who are instituting a suit against trustees for a breach of trust. The argument in this chapter is that the guiding principle should be whether the grant of such an order would be in the best interest of the trust estate. Without the benefit of a Beddoe order, there is the real danger that such legal actions may end up being thwarted due to a lack of funding.
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Publisher: Cambridge University Press
Print publication year: 2018

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