GLASGOW HARLEY TRUSTEE LIMITED v MCLAUGHLIN [2019] NZHC 3385

GLASGOW HARLEY TRUSTEE LIMITED v MCLAUGHLIN [2019] NZHC 3385

Court held trustees entitled to indemnity from the trust for reasonable costs of the Beddoe application because defending the second cause of action (challenge to the trust's future) was in the best interests of the trust; however indemnity was reduced to exclude costs attributable to hostile/substantive litigation and excessive items. Beneficiaries were partially indemnified (50% of their claimed reasonable costs) and interested parties were awarded modest indemnities. Determination of the validity and full effect of the trustee indemnity clause in the deed reserved for substantive proceedings.

Citation
[2019] NZHC 3385
Parties
Applicant (trustee): GLASGOW HARLEY TRUSTEE LIMITED; Applicant (trustee): John McLaughlin; Respondent (beneficiary): Mark James McLaughlin; Respondent (beneficiary): Andrew Ashley McLaughlin; Interested Party: Brett McLaughlin; Interested Parties: Respondents' Children
Court
High Court
Jurisdiction
New Zealand
Judgment Date
18 December 2019
Procedural Posture
Trust Litigation (beddoe Application Under Trustee Act 1956) / Costs Determination Following Beddoe Application
Outcome
Costs awarded as apportioned between parties with reductions for costs attributable to hostile/substantive litigation; some matters reserved to substantive proceedings
Legal Topics
Beddoe Application, Trustee Indemnity, Breach of Trust, Costs From Trust Fund, Apportionment Between Directions and Substantive Costs, Section 71 Trustee Act 1956, Section 38 Trustee Act 1956
Trusts Civil Procedure Costs Law Beddoe Application Trustee Indemnity Breach of Trust Costs From Trust Fund Apportionment Between Directions and Substantive Costs +2 more

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Parties

GLASGOW HARLEY TRUSTEE LIMITED

Applicant (trustee)

John McLaughlin

Applicant (trustee)

Mark James McLaughlin

Respondent (beneficiary)

Andrew Ashley McLaughlin

Respondent (beneficiary)

Brett McLaughlin

Interested Party

Respondents' Children

Interested Parties

Procedural Posture

Trust Litigation (beddoe Application Under Trustee Act 1956) / Costs Determination Following Beddoe Application

Legal Issues

  1. 1 Whether trustees, beneficiaries and interested parties are entitled to indemnity from the trust for costs of the Beddoe application
  2. 2 Whether parties acted reasonably in making or opposing the Beddoe application
  3. 3 Proper apportionment between costs incidental to the Beddoe application and costs attributable to hostile/substantive litigation

Ratio Decidendi

Court held trustees entitled to indemnity from the trust for reasonable costs of the Beddoe application because defending the second cause of action (challenge to the trust's future) was in the best interests of the trust; however indemnity was reduced to exclude costs attributable to hostile/substantive litigation and excessive items. Beneficiaries were partially indemnified (50% of their claimed reasonable costs) and interested parties were awarded modest indemnities. Determination of the validity and full effect of the trustee indemnity clause in the deed reserved for substantive proceedings.

Court Disposition

Costs awarded as apportioned between parties with reductions for costs attributable to hostile/substantive litigation; some matters reserved to substantive proceedings

Orders

  • Award $207,025 to the Trustees (legal costs) payable from the Trust
  • Award disbursements of $62,143.43 to the Trustees payable from the Trust