Re Ojjeh

• Jurisdiction: Cayman Islands
• Judge: (Smellie, J.)
• Judgment Date: 06 April 1994
• Court: Grand Court (Cayman Islands)
• Date: 06 April 1994

Grand Court

(Smellie, J.)

IN THE MATTER OF THE OJJEH TRUST

N.R.L. Clifford for the applicant-beneficiary;

C.G. Quin, G. Giglioli and R.L. Nelson for the other beneficiaries;

N.R.F.C. Timms for the trustees.

Cases cited:

(1) Bodden (J.M.) & Son Intl. Ltd. v. Bodden (K.), 1990–91 CILR 214.

(2) Buckton, In re, [1907] 2 Ch. 406, observations of Kekewich J. applied.

(3) Ebanks v. Allen, 1986–87 CILR 180.

(4) McCallister v. Tortuga Club (No. 2), 1984–85 CILR 411, distinguished.

(5) Spurling Will Trusts, In re, [1966] 1 W.L.R. 920; [1966] 1 All E.R. 745.

Legislation construed:

Judicature Law (Revised) (Law 11 of 1975, revised 1976), s.30(3): The relevant terms of this sub-section are set out at page 122, lines 29–30.

Trusts Law (Revised) (Law 6 of 1967, revised 1976), s.45: The relevant terms of this section are set out at page 121, lines 38–40.

Rules of the Supreme Court, O.62, r.12(2):

‘On a taxation on the indemnity basis all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the taxing officer may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party. . . .’

Trusts-costs-summons for directions-court has discretion under Trusts Law (Revised), s.45 to award costs of trustees” summons for directions on indemnity basis from trust fund-Judicature Law (Revised), s.30 inapplicable-to exercise discretion favourably if costs incurred for benefit of trust or party participates with legitimate expectation of award of costs

Trusts-costs-summons for directions-costs awarded on indemnity basis under Trusts Law (Revised), s.45 to be taxed in absence of agreement under Rules of Supreme Court, O.62, r.12(2)

The parties to trust litigation sought orders in respect of their costs.

The trustees had applied for directions under s.45 of the Trusts Law (Revised) for the administration of the trust, in the light of foreign proceedings brought by the applicant-beneficiary involving the trust. It was deemed appropriate to give the beneficiaries notice of the proceedings since their attendance and representation were required for the proper resolution of the matters in issue and for the overall benefit of the trust. The applicant-beneficiary opposed the directions and the relief sought by the trustees and issued a cross-summons seeking, inter alia, declaratory relief. These proceedings are reported at 1992–93 CILR 348. The costs (except those of the minor beneficiary) were reserved.

The applicant-beneficiary sought an order for her costs in contesting the trustees” summons and her own cross-summons to be paid from the trust fund on an indemnity basis. The other beneficiaries and the trustees also sought orders in respect of their costs.

The applicant-beneficiary submitted that (a) the court had jurisdiction to award costs on an indemnity basis from the trust fund where the parties appeared on a trustees” summons for directions under the Trusts Law (Revised), s.45, since (i) the natural construction of s.45 did not require it to be read subject to the Judicature Law (Revised), s.30 and in any event it did not fall to be dealt with under s.30 because it was not litigation between party and party with which the section was exclusively concerned; (ii) s.30(3) required the section to be read subject to ‘any other law’ and since the Trusts Law was directly in point it necessarily took precedence; (b) the trustees” summons had prayed that the costs be met from the trust fund and she had participated in the legitimate expectation that all her costs, including those of her cross-summons, would be met; (c) in any event the court should exercise its discretion to order indemnity

since the trustees” summons was necessary for the administration of the trust and the costs of all the parties were necessarily incurred for the benefit of the estate; (d) in the event that the court declined jurisdiction, her costs should be paid by the trustees personally under the Judicature Law (Revised), s.30; and (e) if not agreed, her costs should be taxed in accordance with the procedure set out in O.62, r.12(2) of the English Rules of the Supreme Court.

The trustees submitted in reply that (a) there was a well-established line of authority that the power to award costs was entirely statutory and restricted to the scale in the Judicature Law; (b) any order for costs for the applicant-beneficiary should reflect the fact that the trustees were justified in seeking directions in the first place because of the applicant”s foreign proceedings and her cross-summons had caused expense which could have been avoided; and (c) their own costs should be met on an indemnity basis either as being for the benefit of the trust as a whole or as based on the agreement between the settlor and trustees reflected in the trust deed.

Held, awarding costs on the following bases:

(1) The Trusts Law (Revised), s.45 gave the court a discretion to award costs, arising out of a trustees” summons for directions, to be paid on an indemnity basis out of the trust fund. It was not necessary to read the section subject to the limitations as to taxation and amount imposed by the Judicature Law (Revised), s.30 and the Schedule, since (a) the present proceedings were not in the nature of a ‘suit,’i.e., litigious proceedings between party and party, and the costs did not therefore fall to be dealt with under s.30; and (b) s.30(3) required the section to be read subject to ‘any other law’ which clearly gave precedence to the Trusts Law (Revised) (page 121, lines 34–45;page 122, lines 17–32).

(2) In the exercise of this discretion, the court would award the beneficiaries generally their costs in responding to the trustees” summons for directions on an indemnity basis from the trust fund since the summons was necessary for the administration of the trust and the costs of all the beneficiaries were incurred for the benefit of the trust as a whole. In respect of the applicant-beneficiary in particular, the court had refused, when giving the directions, to pronounce on the merits of the foreign proceedings as they were irrelevant and it would be inconsistent to penalize her indirectly in costs for commencing them. Nor should she be penalized for opposing the summons and bringing her own cross-summons, since she had participated in the trustees” application upon the legitimate expectation that she would be awarded costs on an indemnity basis and in any case the trustees had...