The Facts
In 2015, the claimants brought proceedings against the defendant companies, which held property on trust for them. The defendants were placed into administration on 19 January 2016 and, after refusing to consent to the continuation of the proceedings against the companies, the administrators sought their costs of dealing with the trust assets out of the trust assets in question.
The Decision
- The administrators were criticised for attempting to resolve the issues in relation to the trust property themselves rather than simply consenting to the proceedings. As a result, the Court was not prepared to follow established principles, such as those in Berkeley Applegate
- Amongst other costs, the Court said that investigating the ownership of misappropriated monies and how it should be split between trust beneficiaries and unsecured creditors was not covered, as this was for the benefit of the unsecured creditors. In addition, the costs of the litigation should be dealt with as per general costs principles and not - just because the litigation concerned trust property - the principles of Berkeley Applegate.
Comment
The case is a useful reminder to officeholders that the recovery of costs for dealing with trust property is discretionary and will not be available unless the work is properly for the benefit of the beneficiaries.
Gillan v HEC Enterprises Ltd (in administration) and Ors [2016] EWHC 3179 (Ch)
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