When will trustees lose their indemnity for costs? (Price v Saundry)

Table of contents

• What are the practical implications of this case?
• What was the background?
• What did the court decide?
• Case details

Article summary

Private Client analysis: The Court of Appeal has clarified when the court should deprive a trustee of their usual indemnity out of the trust fund under section 31 of the Trustee Act 2000 (TrA 2000) for costs of litigation. To make such an order, the court must have found misconduct which is unreasonable in the circumstances—it must be more than a mere mistake, but need not be dishonest. Merely defending a removal claim which is not ultimately decided will not justify an order, but where the court found breaches of trust causing loss to the fund that should justify depriving the trustee of their indemnity. The fact that an inter partes costs order has been made, and that a Part 36 offer had not been met, were both factors pointing towards the indemnity being removed. Written by Aidan Briggs, barrister at New Square Chambers.