[Sorry for the awful audio this week!]

“Why don’t we pay everybody’s legal fees from the trust funds?”  

A council caused a property to be sold following non-payment of rates levied on it. Once council was satisfied, the balance was paid into Court.  Fine. So who gets it?  

A dispute erupts between two parties (in their capacity as LPR of two separate deceased estates) claiming an entitlement.   

Once that’s decided, there’s a dispute about – you guessed it! – legal costs.  s93(3) of the Trustee Act 1923 (NSW) includes a provision that the Court may order that – when there’s litigation about the management or admin of a trust – the parties’ legal costs can be paid from the trust funds.  

If a trustee applies to the Court for resolving an uncertainty and joins a beneficiary as a contradictor, it’s not unusual (even if the beneficiary fails) for all parties’ legal costs to be paid from the trust funds.  

However, truly adversarial litigation may well bring different cost consequences: [3].  Here the parties were in dispute as to whether the trust funds fell into the respective estates they represented.  

The Court found that the dispute was adversarial in nature meaning that orders were made for the payment of one party’ costs by the other party – rather than from the trust funds: [8].