SHUFFLEBOTHAM & MILNER V SHUFF-WENTZEL [2025] EWHC 3321 (Ch)
The High Court has confirmed that classification of executor removal proceedings as ‘hostile litigation’ does not automatically deprive unsuccessful applicants of their trustee indemnity, provided their conduct in bringing the application was honest and reasonable.
The characterisation of proceedings as hostile litigation, rather than a claim brought for the benefit of the trust or estate, is a key factor in determining whether the unsuccessful party should pay the successful party’s costs personally, as opposed to those costs being paid from the trust fund. [22, 23]
Where proceedings are characterised as hostile litigation, the general principle that costs follow the event applies, and the unsuccessful party will be ordered to pay the successful party’s costs. [10, 14, 23]
A trustee’s right to an indemnity from the trust fund for costs incurred extends to costs which have been both honestly and reasonably incurred in the execution of the trust, and a doubt is to be resolved in the trustee’s favour. [18, 19, 32]
A trustee may lose the right to indemnity in respect of costs if they are improperly incurred, such as where the trustee acts for their own benefit or for the benefit of some beneficiaries against others. [19, 20, 30]
A trustee who is ordered to pay another party’s costs personally may still be entitled to recoup those costs from the trust estate via their right of indemnity, provided the costs were not improperly incurred. [18, 21, 28, 33]
