3 Individual Present Professional Trustees of 2 Trusts v An Infant Prospective Beneficiary of one Trust & Ors

This is a judgment which I give in private. I have before me an application which arises in the course of a Beddoe application. I shall first explain what a Beddoe application is, if only to illustrate what protection trustees have even where no Beddoe order is made.

In Re Beddoe Downes v Cottam [1893] 1 Ch 547, the Court of Appeal heard an appeal from Kekewich J that dealt with a trustee’s costs of his unsuccessful defence to an action in detinue in relation to the custody of deeds. The old Chancery practice (see page 554) had been to give a trustee his costs out of the trust estate almost as of course but the then more recent order 65, Rule 1 of the then RSC, made the award of costs a matter of discretion even in trust cases.

At page 557 Lindley LJ said:

“But a trustee who, without the sanction of the Court, commences an action or defends an action unsuccessfully, does so at his own risk as regards costs, even if he acts on counsel’s opinion.”

A little later at page 558 he said:

“But, considering the ease and comparatively small expense with which trustees can obtain the opinion of a Judge of the Chancery Division on the question whether an action should be brought or defended at the expense of the trust estate, I am of opinion that if a trustee brings or defends an action unsuccessfully and without leave, it is for him to shew that the costs so incurred were properly incurred. The fact that the trustee acted on counsel’s opinion is in all cases a circumstance which ought to weigh with the Court in favour of the trustee; but counsel’s opinion is no indemnity to him even on a question of costs. This was decided in Stott v Milne (1884) 25 Ch D 710.”

At page 562 Bowen LJ said this:

“The principle of law to be applied appears unmistakeably clear. A trustee can only be indemnified out of the pockets of his cestuis que trust against costs, charges, and expenses properly incurred for the benefit of the trust - a proposition in which the word “properly” means reasonably as well as honestly incurred. While I agree that trustees ought not to be visited with personal loss on account of mere errors in judgment which fall short of negligence or unreasonableness, it is on the other hand essential to recollect that mere bona fides is not the test, and that it is no answer in the mouth of a trustee who has embarked in idle litigation to say that he honestly believed what his solicitor told him, if his solicitor has been wrong-headed and perverse. Costs, charges, and expenses which in fact have been unreasonably incurred, do not assume in the eye of the law the character of reasonableness simply because the solicitor is the person who was in fault. No more disastrous or delusive doctrine could be invented in a Court of Equity than the dangerous idea that a trustee himself might recover over from his own cestuis que trust costs which his own solicitor has unreasonably and perversely incurred merely because he had acted as his solicitor told him.

If there be one consideration again more than another which ought to be present to the mind of a trustee, especially the trustee of a small and easily dissipated fund, it is that all litigation should be avoided, unless there is such a chance of success as to render it desirable in the interests of the estate that the necessary risk should be incurred. If a trustee is doubtful as to the wisdom of prosecuting or defending a lawsuit, he is provided by the law with an inexpensive method of solving his doubts in the interest of the trust. He has only to take out an originating summons, state the point under discussion, and ask the Court whether the point is one which should be fought out or abandoned. To embark in a lawsuit at the risk of the fund without this salutory precaution might often be to speculate in law with money that belongs to other people.”

A.L. Smith LJ concurred.

The practice of seeking directions from the court, as these citations suggest, already existed (see also the argument of Mr Cottam at page 549). The Beddoe practice was, no, doubt, thereafter followed on very many occasions without further mention in the reports but it was, in one practical respect, challenged in Re Moritz [1960] 1 Ch 251 per Wynn-Parry LJ. In that case counsel for the trustees, Mr John Knox (later Knox J) argued inter alia that there was a settled practice that where an application, there by summons, is made by trustees for directions of the Beddoe kind, then the proposed defendant beneficiaries under the relevant trust should not necessarily see all the evidence relating to the dispute. The trustees there had denied the defendants a sight of the exhibits to the affidavits.

Mr John Balcombe (later Balcombe LJ), counsel for the beneficiaries, the proposed defendants, accepted that his clients as beneficiaries should be defendants to the summons which was asking for such directions but argued that he should be entitled to attend throughout to present arguments to the court, including ones based on the so-far denied exhibits, and that it should be in the discretion of the Judge whether those arguments were heard in the presence of parties other than the trustees who sought the directions of the court. He took the obvious point, to which Bowen LJ had referred in Re Beddoe, that where one was considering beneficiaries and where their trust estate might bear the expense of the proposed litigation, it was beneficiaries’ money that was being spent or being proposed to be spent.

At page 254 Wynn-Parry J said:

“Speaking for myself, so far as I know, it has been the practice of this court, without exception, over a great many years, that where, in such a case as this, application is made by a trustee ex necessis where there are disputes, for directions from the court as to whether or not proceedings should be brought against the defendants, those defendants are not entitled to be heard upon that application. The court acts upon such evidence as is placed before it and it expresses itself one way or the other.”

At page 255 he continued:

“As I understand it, the practice in this Division is that where a trustee finds it is compelled to ask for the directions of the court as to whether or not certain proceedings should be taken, while it is proper and indeed necessary to join the parties against whom the proposed relief is sought, those parties should not be present in Chambers when the matter is debated; and they should not be furnished with the evidence upon which the court is asked to act… Very frequently, the leave to proceed is limited, for instance, up to discovery, but it would seem to me to be a quite unjustified inroad upon what I conceive to be a very useful practice if I were to allow this application and to allow the two defendants not merely to be present at the beginning of the proceedings when the originating summons is heard, but to remain there throughout those proceedings and to have all the evidence on which the trustees are asking the court for its directions. I know of no precedent for it, and, in my view, it is completely against the established practice.”

So much for procedural background. Ahead of a Beddoe application, which is shortly to be made by Leading Counsel on behalf of the Trustees of two settlements, I have before me an application by Mrs A, the proposed second defendant, a beneficiary under one only of the two trusts in issue, which I shall call the “1958 Settlement” and 1978 Settlement” respectively. She is a former trustee of both the trusts that are in issue and a person against whom significant relief is intended to be sought in the proposed proceedings intended to be brought as the main proceedings by the Trustees.

Mrs A’s informal application moved by Leading and Junior Counsel is twofold and is firstly concerned with disclosure. She argues that she should be able to see not necessarily all, but more than has so far been made available to her, of the material upon which the Claimants, as the present Trustees of both trusts, intend to invite me to act in granting or withholding and if, appropriate, in framing Beddoe relief.

Her Counsel ask to see instructions to the Trustees’ Counsel from the Trustees’ solicitors, the opinions of Counsel which were the response thereto and, I understand, some valuation material. The parties have arranged that as yet I should not see any such material. Mrs A’s Counsel points out there is no evidence on the Trustees’ part of any assessment yet made by them of what can be disclosed without their suffering injustice or prejudice, only that a blanket application has been made of that part of Re Moritz that speaks of the beneficiary not being furnished with the evidence (a conclusion against disclosure closer to absolute than Mr Knox had asked for).

A novel point emerges from Mrs A’s Counsel’s reliance, in aid of more disclosure, upon Article 6, the right to a fair trial, in Part I of the Schedule to the Human Rights Act 1998. That provides:

“In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly but the press and public may be excluded from all or part of the trial in the interest of morals, public order or national security in a democratic society, where the interests of juveniles or the protection of the private life of the parties so require, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice.”

It will be seen from that that a determination is required if Article 6 is to apply. That requirement introduces the question of whether a Beddoe application leads to a ruling that can properly be described as a determination of a beneficiary’s civil rights and obligations. That must depend in part upon what relief is sought in the particular Beddoe application which is in point.

Here the Beddoe application is made by a claim form which in turn refers to a witness statement. The witness statement, so far as material, says the Trustees believe that it is appropriate that the Court:-

“(a)

…

(b)

…

(c)

sanction[s the trustees] to commence proceedings against the Previous Trustees as the former trustees of the 1958 Settlement for equitable compensation and other relief arising out of the Scheme referred to below and as set out in more detail in the draft Particulars of Claim exhibited at Exhibit 1;

(d)

…

(e)

sanction[s the trustees] to expend funds and sell assets of the 1958 Settlement and 1978 Settlement to fund the cost of those proceedings;

(f)

…

(g)

…

(h)

[issues] directions as to how the costs of this application and the costs of any proceedings, if and to the extent that the same are sanctioned or directed, are to be apportioned and borne by:

(i)

the trust fund subject to the 1958 Settlement;

(ii)

Y’s Fund subject to the 1978 Settlement; and

(iii)

the Unappointed Fund subject to the 1978 Settlement.”

On the face of things, that relief would not be likely to determine any civil rights or obligations. If, for example, the Trustees had sold trust assets to fund proceedings, that would not of itself preclude their being later required to make good those assets as a personal liability, nor does the sanction by the Court of the commencement of proceedings expressly involve that the trustee should thereafter proceed with them free of any risk of personal liability and costs in the proceedings thus authorised.

However, it is common ground between Counsel, including Counsel for the infant beneficiary under the 1978 Settlement, that whilst the relief sought may need to be amended to fit the case as all have understood it to be, sanction to the Trustees to commence the proceedings, at all events unless the contrary is actually specified, will carry with it (subject to a caveat I shall come on to) immunity to the Trustees from any personal liability as to the costs of such authorised proceedings and indemnity to them therefor out of the trust estate.

The caveat, which I think is also common ground, is that the position may be otherwise if the trustee had failed to make a sufficient disclosure at the Beddoe stage. That is put shortly in McDonald v Horn and Ors [1995] 1 CR 685 695 per Hoffman LJ (as he then was), where, in a passage concurred in byHirst and Balcombe LJJ, he said:

“In the case of a fund held on trust, therefore, [“therefore” is explained by his immediately previous citation of sub rule 2 of order 62, rule 6 of the then Rules of the Supreme Court] the trustee is entitled to his costs out of the fund on an indemnity basis, provided only that he has not acted unreasonably or in substance for his own benefit rather than that of the fund. Trustees are also able to protect themselves against the possibility that they may be held to have acted unreasonably or in their own interest by applying at an early stage for directions as to whether to bring or defend the proceedings. This procedure, sanctioned by the decision of the Court of Appeal in Re Beddoe, Downes v Cottamhttp://www.lexisnexis.com/uk/legal/search/runRemoteLink.do?service=citation&langcountry=GB&risb=21_T1852698054&A=0.5367688310764642&linkInfo=GB%23CH%23year%251893%25page%25547%25vol%251%25sel2%251%25sel1%251893%25&bct=Aat 557, requires the trustee to make full disclosure of the strengths and weaknesses of his case. Provided that such disclosure has been made, the trustee can have full assurance that he will not personally have to bear his own costs or pay those of anyone else.

I do not take the “full disclosure of the strengths and weaknesses of his case”, in Hoffman LJ’s phrase, to be in all cases the only kind of disclosure which may be appropriate if protection conferred on the trustee by a Beddoe order is to be absolute. There disclosure was in terms of disclosure to the Judge hearing the Beddoe application, but if, on the facts of the case and under a ruling by a Judge, disclosure to a party beneficiary has been declared to be appropriate, why should not failure to disclose to that beneficiary not potentially have the same result, namely, an undoing of the apparent protection of the trustee, as a failure to disclose to the Judge? After all, one of the functions of disclosure to the beneficiary is to ensure that the disclosure to the Judge is as full as is appropriate in the circumstances and is correct.

The Trustees’ Counsel sought to elevate the passage in McDonald and other statements as to usual Beddoe practice into a submission that so long as the directions given by the Judge to the trustees at the Beddoe stage are duly performed and observed, the trustees are entitled to their costs out of the trust estate and thus to be free of personal risk as to costs as of right. I confess to a little unease at the notion of something being an “as of right” “entitlement” and its yet being simultaneously subject to a condition possibly as subjective and as broadly defined as “full disclosure of the strengths and weaknesses of his case”.

I do wonder also whether “disclosure” adequately covers all cases where inroads are, in justice, proper to be made into the total assurance of his costs which Beddoe relief will normally give a trustee. What, for example, if the trustee adequately discloses the strengths and, more particularly, the weaknesses of which he has knowledge but not the weaknesses which, had only he made a sufficient inquiry, he would have known of? What if he makes material factual mistakes which do not come to the notice of the Judge who hears the Beddoe application? Such cases, one might hope, will be exceptional. I would accept that in the usual run of cases it matters not whether the trustee acquires an entitlement to his costs as of right, as the Trustees’ Counsel argues, or, as I would prefer to put it, acquires an exceptionally strong, almost irrefragable case for them, as to which there would be a very heavy burden on whoever later sought to say otherwise. I explore the difference between those two positions not out of misplaced or even out of justified pedantry, but because the difference may have an effect on the Article 6 argument.

Even if a Judge grants Beddoe relief so that the trustee concerned will feel that he has sufficient assurance safely to proceed without personal risk as to cost, that trustee will not necessarily then proceed in the manner foreshadowed before the Judge who had granted the relief. Very often the very grant of the Beddoe relief leads to a compromise. But even where the proceedings are launched or are continued, a trustee will not, in my view, as a matter of inescapable necessity, get his costs out of the trust estate. If, for example, it transpires that the picture which the trustee painted before the Judge in order to get the Beddoe relief was materially inaccurate and that the inaccuracy was the trustee’s fault, the trustee could, in my judgment, and without inconsistency with McDonald v Horn, find himself vulnerable in costs. In that sense, the Beddoe hearing, strictly speaking, determines nothing relevant.

Despite the Beddoe authority, contemplated main proceedings may, of course, fail on the merits as they later turn out to be. In such a case, consistently with the earlier Beddoe relief, the losing trustee’s costs would come out of the trust estate. The beneficiary’s fund would be diminished by way of his having to bear the trustee’s costs. But, even there, it cannot, in my view, sensibly be said that what will have been determined at the Beddoe stage were the beneficiary’s civil rights and obligations. At the Beddoe stage the beneficiary’s rights may have been proleptically affected, even severely affected, in the sense that they thereafter might transpire to be enjoyed in relation to a smaller fund than it otherwise would have been the case, or even to a fund reduced to nothing. That apart, the rights will have remained exactly as they always were. The beneficiary may, for example, be a life tenant or the object of a discretionary power. But whatever were the rights and obligations in relation to the net trust estate as from time to time constituted which he thereby enjoyed under the law, they would have remained exactly as they had been before the Beddoe ruling.

Thus, as life tenant of the 1958 Settlement, Mrs A will continue to be entitled, as her Counsel points out, to the net income, if any, of that Trust estate. If Article 6 were to regulate not merely the determination of rights but every effect touching upon their enjoyment or quantum then Article 6 would be engaged every time a trustee sold one investment or bought another or paid a costly bill, for example, for a solicitor’s, valuer’s or accountant’s advice. That cannot be. I am accordingly unconvinced by the argument on Mrs A’s behalf where it is based on the Human Rights Act.

There is somewhat peripheral support for my view to be found in Re The Trust of X Charity [2003] 1 WLR 2751 where, albeit in a different context (as to a hearing being in private under CPR PD 39.1.5(10) and in relation to a charity). Sir Andrew Morritt, Vice-Chancellor, said at paragraph 12 inter alia:

“This, essentially administrative, jurisdiction is designed to provide guidance to the fiduciary as to the proper exercise of his powers in the problematic circumstances with which he is faced. Only rarely could it be said to determine the rights of anyone.”

Re the Trust of XCharity was not itself a Beddoe case although it did concern Article 6. I am far from sure that the Vice-Chancellor was intending to say anything in application outside the very particular area with which he was dealing. But, if he did so intend, then there is a little peripheral support for my view that I am not here dealing with a determination properly-so-called.

Mrs A’s Counsel says that the Beddoe relief amounts to a determination of the Trustees’ so-called rights. But that is no more than a mirror argument, now from the Trustees’ position rather than from Mrs A’s, of the one I have already dealt with. Moreover, I am far from sure how far one party can complain of the breach of someone else’s rights when that someone else is present and makes no corresponding complaint. Thus this new argument does not help him. He goes on to say that the corollary of that is that a determination is made of there being a civil obligation upon the beneficiary. That is not so. There is no obligation on the beneficiary, only, at most, a determination of a prospective liability or obligation not on the individual but, so to speak, on the fund.

So much for Article 6. But it still falls to me to consider the Beddoe practice more fully. Mrs A’s Counsel, with some justice, says that, if he has to do, he can do without Article 6. He can rely on equality of arms within the overriding objective and equity’s traditional approach to disclosure. I have, accordingly, been presented with arguments based on Marley v Mutual Security Merchant Bank [1991] 3 All ER 198; Re Evans [1986] 1 WLR 101; Alsop Wilkinson v Neary [1996] 1 WLR 1220; Re Eaton [1964] 1 WLR 1269 and Craig v Humberclyde Industrial Finance Group [1999] 1 WLR 129. I have also been taken to passages in Lewin on Trusts, 17th Edition, paragraphs 21-46, 21-19, 21-106.

The whole point of a Beddoe application from the Trustees’ point of view is, in a case such as this, to achieve a position for them as close as may be to assuredly complete protection against the Trustees becoming personally and unrecoupably liable in costs, either for their own costs or the costs of others. If I am right in thinking that, even if Beddoe relief is granted, the protection which a trustee acquires is not truly absolute in the sense that Beddoe relief could later be departed from, then an important factor which could weaken or undo protection of a Beddoe order is if that “full disclosure of all relevant matters”, which is now required by PDB 64.7.1, is not made. That recent phrase echoes the point made, before the CPR, in McDonald v Horn supra. It is a phrase which, even more plainly, would appear to be able to include disclosure not just to the Beddoe Judge but, for example, to a beneficiary who is a prospective opponent in the main proceedings and who will have a concern to ensure that the disclosure to the Judge made by the Trustees is, indeed, fair and adequate.

If there is want of that full disclosure, the whole Beddoe application can become close to pointless and that suggests that the trustees should err, if at all, if only for their own sake, on the side of disclosure. The modern notion of all cards being laid, in general, face up on the table, points in the same direction. Added to that is the fact that advices received by trustees as such are, in effect, trust property to which all beneficiaries are, broadly speaking, prima facie entitled.

Those principles manifestly do not alone regulate disclosure in a case such as this as, if free sway were to be given to them, there could be very obvious injustice to the Trustees. For example, trustees’ prospects of recovering a not unjust £X could be harmed by disclosure to a prospective opponent of an opinion which advised acceptance of anything over two-thirds £X; an opinion that mentioned that the Trustees would be in difficulty if the facts turned out to include fact R might encourage the appearance of fact R where otherwise it might not have been asserted. There will, indeed, be many cases in hostile trust proceedings brought by trustees against a defendant beneficiary in which the defendant should not be better able to overcome legal professional privilege than he would were he not a beneficiary.

Mrs A’s Counsel, in pressing for the widest possible disclosure, says that this case is exceptional. In many cases there will, alongside the beneficiary from whom information is sought to be withheld, be fellow beneficiaries, not themselves threatened as parties in the main proceedings, to whom the Trustees in such cases may, therefore, without difficulty make full disclosure. Exceptionally, as Mrs A’s Counsel said, and quite rightly, Mrs A is the only 1958 Settlement beneficiary interested to oppose the Trustees’ proposed main proceedings. No one but she has an interest in insuring that the court is truly fully informed at the Beddoe stage as to 1958 Settlement considerations, at any rate on the beneficiary side.

I do not see the presence or absence of fellow beneficiaries who could be given full disclosure and who might, therefore, check and oversee the Trustees’ disclosure to the Judge, is really material. They might choose not to oppose the Trustees out of indifference or for some unsatisfactory or improper reason and without any interest to ask for full disclosure to them or to examine it for shortcomings on the Trustees’ part even if they obtain it or have it thrust upon them. Moreover, in one sense, as I have touched on, those keenest to see an adequate disclosure on the Trustees’ part should be the Trustees themselves (at all events if I am right in saying that without giving it they may jeopardise the efficacy of the Beddoe relief which they obtain).

Beddoe relief is not invariable and uniform; it has to be tailored at the Judge’s discretion to the facts of the particular case (see Re Evans supra at page 106h to 107). That was what was done in Re Eaton supraat page 230(i) per Wilberforce J. That case showed that there is no immutable rule that defendants should not be furnished with the evidence on which the court is asked to act. Indeed, in that case, leading counsels’ opinions and instructions to counsel were supplied to the defendant even before the Beddoe hearing, page 231(d)-(f).

Redaction also offers a route that may be convenient. It is far more common and easier to arrange than it used to be. In Eaton it was left to the trustee claimant to consider with his advisers what was “possible” to be disclosed (see page 231(c)-(d)), a term not further explained but one meaning, presumably, possible to disclose without real injustice or disadvantage to the trustee, bearing in mind, perhaps also, that sooner or later a fuller disclosure in respect of some documents might, in any event, become necessary under the ordinary provisions for disclosure, now part 31 of the CPD.

I would be uneasy at ruling and, indeed, am not invited to rule in any specific way after my privately considering particular documents that had not been seen by Mrs A’s advisers because that would run me into the difficulty of my becoming aware of something that was unknown to and, were I to rule against disclosure, possibly unknowable by a party, a situation which, Beddoe and like cases apart, is generally sought to be avoided by any Judge. But, rather as did Wilberforce J in Eaton, I can give an outline and general reaction even without seeing the particular papers disclosure of which is here in issue. Thus, as to the very latest valuation evidence, I have not understood what disadvantage the Trustees might suffer were that to be disclosed unless, which is not yet clear to me, it may affect compromise. If it does not, then such evidence will be likely to come out later if proceedings are pursued, whatever I now decide. If, however, the valuation might seriously affect or restrict the Trustees’ role in negotiating a compromise, I would regard the Trustees as properly able to withhold it at this stage. By the time argument concluded I took the Trustees’ Counsel to accept both that some disclosure, perhaps with redaction, may be appropriate under this heading and that, if there were to be main proceedings, disclosure in them of that valuation evidence would probably have to be given.

As for counsels’ opinions, subject to appropriate redaction where the Trustees’ position on compromises, strategy or tactics might be materially and unfairly weakened or when the opinion, if disclosed, might prompt the assertion against the Trustees of a fact otherwise unlikely to be asserted, or if there are any other topics, disclosure of which would be likely materially and unfairly to weaken the obtaining by the Trustees of the relief which they seek in the main substantive proceedings, the Trustees should incline in favour of disclosure, if only to avoid the whole Beddoe procedure later becoming, from their point of view, pointless for want of adequate disclosure. Again, I apprehend that the Trustees’ Counsel foresaw that some disclosure might well be appropriate. As for instructions to counsel, given, again, a similar ability to redact, there should, subject to a corresponding ability to withhold in some cases, be an inclination to disclose.

As for information relating to possible future leasehold enfranchisement by Mrs A, although argument touched this subject it transpired that instructions on it and advices as to it related only to the 1978 Settlement, the one in which Mrs A has no beneficial interest. Even so I shall touch on the subject. Mrs A is already in the hands of experienced counsel and solicitors and many questions as to leasehold enfranchisement have already been posed. I find it difficult to contemplate that there may be matters in the Trustees’ advices received or in their other papers which will put her, as against the Trustees, at some special unfair advantage or which will unfairly lead her to avoiding some disadvantage. It is not, for example, very likely that she might find from the Trustees’ papers that she has to serve a notice by such and such a date or procure someone else’s service of a notice or provide evidence of her own of such and such a kind or by some particular date or advice of any other kind on this subject which is not already well known to her and is the subject of advice already given to her. Of course, my contemplation here may be quite wrong. But unless the Trustees feel able to conclude that some material tactical or other disadvantage would be likely to be unfairly suffered by the Trustees from disclosure, material on this subject should be disclosed to any 1978 Settlement beneficiary who presses for it.

A further factor in favour of disclosure is this: its absence may inhibit the proposed infant defendant’s Counsel and his other advisors in their use of what has already been disclosed to them for fear of their revealing, however unintentionally, to their natural ally Mrs A that which they have already been given but have been given only in strict confidence; they may have to limit what otherwise would quite properly be the way in which they would have wished to act.

So far, save as to leasehold enfranchisement, I have concerned myself with arguable disclosure relating to the 1958 Settlement and its affairs. As for the 1978 Settlement material, Mrs A has no position as a beneficiary. As for 1978 Settlement material, her position, broadly speaking, is no better, so far as concerns disclosure, than that of any third party defendant to hostile proceedings. She will, subject to the points I next mention, have to wait for disclosure of 1978 material until it becomes appropriate under the CPR unless the Trustees freely decide to give her material ahead of that time.

The one point is this: the Trustees may find, when considering, by way of implementation of such guidance as I am giving, what it is that they need to disclose and what can properly be redacted or withheld, that there is paper which mingles 1958 and 1978 materials. In principle, the 1978 material can at this stage be redacted altogether as against Mrs A. But if doing that renders the otherwise disclosable intermingled 1958 material unintelligible or misleading, then the Trustees will need to disclose the 1978 material along with the 1958 material in order to make such 1958 material that has to be disclosed intelligible and not misleading. That, it seems to me, will be the proper approach because otherwise the Trustees would be entitled to profit from an admixture which, if not their fault, was their chosen course.

As, mutatis mutandis, did Wilberforce J, I stand the questions of disclosure over to enable both sides to consider how to act in the light of such indications as I have given, the Trustees first considering what to disclose and what, if anything, to redact in the light of the above. At this stage I leave to the Trustees the identification of what, consistently with the guidance I am giving, is to be disclosed and what redactions are appropriate. They are professional trustees and I have no reason to fear that they will be unable, properly and in a balanced and disinterested way, to approach such matters.

If, in the course of working through such indications as I have given, the Trustees feel that they can usefully raise or need to raise some more particular questions for further detailed guidance yet without giving away so much of a document as to make its actual disclosure redundant, I give them liberty to raise questions of that kind for further argument and further ruling. However, I would hope that what I have already said should suffice, especially if the Trustees have in mind that they could lose the benefit of the Beddoe relief, if any, which I may grant if it transpires later that they have failed to give effect to such guidance as I have given and which has remained unmodified on appeal. Correspondingly, if Mrs A on receiving whatever the Trustees now supply her with, feels she may be able to demonstrate that the disclosure is, even so, still inadequate and falling short of the guidance given, I give her leave to raise such more particular questions as may then be appropriate.

Mrs A’s Counsel argues that his client does have some claim to see 1978 material beyond the intermingling case which I have mentioned. One of the forms of relief which the Trustees will be seeking is a later apportionment of their costs between the 1958 Settlement Fund in which she has a life interest and the 1978 Settlement Fund in which she has no beneficial interest at all. A proportionate split of 70% to 1978, 30% to 1958, has been somewhat tentatively suggested by the Trustees. But, to the extent that that it is not truly an appropriate apportionment, Mrs A’s life interest may, she says, be unfairly reduced. Yet, so runs the argument, how can she present to the Court an informed view of what apportionment is fair if she has no sufficient information as to what the Trustees have done and have been advised to do and what they have spent in relation to the 1978 Settlement?

I am not persuaded by this argument. If, ultimately, she is able fully to emphasise, as she will be able to, how little has been spent in time and money in relation to the 1958 Settlement issues, I am unconvinced that the Judge will be unable to arrive at a fair apportionment even in the absence of detailed argument from her that far more will have been spent in relation to the 1978 Settlement. That more will have been spent in relation to the 1978 Settlement is, it seems to me, an issue on which the Judge will be able to form a view after raising it with the Trustees and his judgment thereon should be well-enough based, even without Mrs A’s presence or contribution from her.

I said earlier that the application before me, ahead of the Beddoe application, is firstly concerned with disclosure. I say no more as to that. The second thing is as to the way in which the Beddoe application is to be heard. That has occasioned a good deal less dispute. Once I have read out this judgment then, next, time will be needed to be given, firstly, to the Trustees to determine what to disclose, what to redact and to then disclose and what to continue completely to withhold.

Next after that, time will be needed for Mrs A’s advisers to consider their use of and, if necessary, response to the fresh material. The infant’s Counsel, who so far has many redacted passages in his skeleton argument, may also need time for fresh consideration. Once such time has been afforded then, when the Beddoe application is heard, the Claimants’ Counsel will open matters generally. Next Mrs A’s Counsel will reply in relation to matters affecting her as a beneficiary of the 1958 Settlement. Then the Court shall sit in the absence of all persons other than the Claimants, their Counsel and solicitors, the infant’s litigation friend and his Counsel and solicitors, to hear, under terms of strict confidentiality, submissions on all aspects of the application, including whether there are items falling to be dealt with under the next heading.

Then the Court shall invite Mrs A and her legal advisers to return, for any matters which have arisen in the course of the private hearing which can be discussed with them. The only other persons admitted to the hearing, which will be in private, are other beneficiaries of either Settlement and these are to be admitted only when what is being dealt with are the affairs of the particular Settlement of which they are beneficiaries. They are only to be present so long as those matters relating to that Settlement are in discussion.

After that it has been suggested that two matters should be left over until the Court has made its principal Beddoe decision. The two left over matters are the apportionment of the costs of this application and of any proceedings which the Court sanctions or directs as between the two Settlements. Left over also is an application for a new borrowing power to be conferred on the Trustees, a course which they wish for. As to those two matters the Trustees’ Counsel will open them and Mrs A’s Counsel will deal with them on the same sequence and in the same way, mutatis mutandis, as the sequence I have just described.

Finally I add this; I have not seen an order to this effect but I am told that another adult beneficiary has been added as a party to the Beddoe application. She has so far taken no part. The sequence for the hearing which I have described may need some amendment to accommodate her but that can be dealt with as an issue if and when it arises.