54 Mr Parker submits that the Court should not make an order as sought in paragraph 7 of the Association's draft orders.
55 An order reserving to the trial judge the power to revoke judicial advice authorising a trustee to have recourse to trust assets to defend a claim was made in Re Dallaway dec'd [1982] 1 WLR 756. In that case, one of ten beneficiaries of a testamentary estate claimed the whole of the estate; the other beneficiaries desired the executor to resist the claim. Clearly, if the claimant was entitled to the whole estate and received it, and if the other beneficiaries were unable to pay the executor's costs of the litigation, as appeared likely, there would be no fund from which the executor could indemnify itself. The executor was faced with the choice of taking the risk of having to pay the costs of the litigation from its own pocket or refusing to defend the claim at all.
56 The executor sought directions as to whether it was justified in defending the claim and an order that, even if the claim were successful, it was entitled to take its costs of the litigation out of the estate.
57 Sir Robert Megarry directed that the executor was justified in defending the claim and added, at 761-762:
"In giving that direction, I propose to include a provision that, subject to any order made by the trial judge, the bank will be entitled to be indemnified out of the estate for all costs for which it is liable, even if the defence or counterclaim, or both, are unsuccessful. It seems to me to be necessary to make this provision subject to any order of the trial judge because although as matters stand the bank, on the material before me, is fully justified in defending and counterclaiming, it is possible that material may emerge subsequently which will make it unreasonable for the bank to continue to defend or counterclaim; and if, despite that, the bank continued with the litigation, no order that I make now ought to protect it in relation to subsequent costs. In view of this possibility I propose that my order should take effect only until further order, giving all parties liberty to apply, and authorising the master to consider and deal with any such application."
58 The facts in Re Dallaway were very close to those in Evans v Evans [1985] 3 All ER 289. There, one of the testator's beneficiaries claimed the whole of the estate; the remaining beneficiaries wished the administrator of the estate to defend the claim. The administrator sought orders of the kind made in Re Dallaway . The judge at first instance made the orders. The claimant to the estate successfully appealed to the Court of Appeal, the result being that if the claim were to be defended, the defence would have to be funded by the beneficiaries.
59 The Court of Appeal did not quite say that Re Dallaway was wrongly decided; however, it distinguished the case on three grounds. First, the Court of Appeal said that Re Dallaway was a decision on its own facts; second, the Court noted that in Re Dallaway Megarry VC had serious reservations about the prospects of the claimant's success against the estate; third, the Court of Appeal observed that in Re Dallaway the alternative to an order that the executor have its costs out of the estate was that the other beneficiaries indemnify the executor for the costs of the litigation, which was "clearly unworkable" , whereas in Evans the other beneficiaries could be joined as defendants, which was, apparently, a practicable means of providing for the claimant's costs if the claimant were successful.
60 At p.293e, Nourse LJ said:
"In my view, in a case where the beneficiaries are all adult and sui juris and can make up their own minds whether the claim should be resisted or not, there must be countervailing considerations of some weight before it is right for the action to be pursued or defended at the cost of the estate. I would not wish to curtail the discretion of the court in any future case but, as already indicated, those considerations might include the merits of the action. I emphasise that these remarks are directed only to cases where all the beneficiaries are adult and sui juris. The position might be entirely different if, for example, one of the beneficiaries was under age."
61 In Alsop Wilkinson (a firm) v Neary [1996] 1 WLR 1220, Lightman J went further than the Court of Appeal in Evans in qualifying, perhaps to the point of disapproving, the course followed in Re Dallaway . At 1225, his Lordship said:
"In a case where the dispute is between rival claimants to a beneficial interest in the subject matter of the trust, rather the duty of the trustee is to remain neutral and (in the absence of any Court direction to the contrary …) offer to submit to the Court's directions, leaving it to the rivals to fight their battles."