Wales v Wales (No 3)

In Wales v Wales (No 3), the court dealt with a complex dispute involving the trustees and capital beneficiaries of four trusts. The conflict centred around financial records and accounts of the trusts, with the trustees applying to the court to pass the accounts and wind up the trusts. The dispute extended to whether unpaid income to an income beneficiary should be considered a liability of the trusts. The plaintiffs, who were trustees of the trusts, were replaced following a removal application made by some capital beneficiaries. The proceeding was dismissed by consent except for the issue of costs. The central legal issues before the court were whether the former trustees were entitled to costs of the proceeding from the trusts, excluding the costs of the removal application, and whether the costs of the income beneficiaries should be paid by the trustees personally.

The court considered the nature of the trustees' duties and the circumstances under which costs could be claimed. It was determined that the former trustees were entitled to costs from the trusts, excluding those associated with the removal application, as these were not part of the dismissed proceeding. However, the court ruled that the trustees personally should not bear the costs of the income beneficiaries, as these were not liabilities of the trusts but rather a separate matter concerning the income beneficiary's claim. The reasoning of the court was grounded in the distinction between the costs related to the winding up of the trusts and those pertaining to the income beneficiary's claim, which were not the responsibility of the trustees in their personal capacity.

Ultimately, the court ordered that the former trustees were entitled to their costs from the trusts, excluding the costs related to the removal application. Conversely, the trustees were not required to pay the costs of the income beneficiaries personally. This decision underscored the importance of differentiating between costs attributable to the winding up of the trusts and those related to separate claims by beneficiaries. The court's ruling provided clarity on the allocation of costs in complex trust disputes and reinforced the principles governing trustees' responsibilities and entitlements.