James & Anor v Louisewilliams & Ors

The court may remove trustees and appoint replacements where their continuation is likely to prejudice the proper administration of the trust or the welfare of beneficiaries. Loss of confidence or friction alone is insufficient. The question is objective and fact-sensitive. Potential conflicts, likely litigation and disproportionate costs may justify intervention, particularly where a more harmonious and economical administration is realistically available. Beneficiaries cannot simply compel trustees to exercise a statutory power of appointment in accordance with their wishes, but the court may itself appoint new trustees where the removal criteria are satisfied.

The claimants were the executors of the estate of Thomas Edward Weetman and were due to become trustees of trusts created by his will. The trusts principally concerned company shares and property proceeds held for family beneficiaries. The beneficiaries sought the claimants’ replacement, principally because Mr Mountford was perceived to be aligned with the company and Mr James had acted jointly with him despite earlier concerns about that position.

The application was made within Part 8 proceedings concerning administration of the estate. The central issues were whether the circumstances justified removing or replacing the proposed trustees, whether the court could select replacement trustees, and whether the proposed family trustees assisted by their probate solicitor would better serve the trusts.

1. Application granted. New trustees were appointed in place of the claimants, with the appointment taking effect on completion of the estate administration. Permission to apply was granted for consequential directions.
2. The governing principle was the welfare of the beneficiaries and the proper execution of the trusts. Removal did not require proof of misconduct. It was sufficient that continuation in office was likely to become detrimental to the trust administration. The court applied the principle in Letterstedt v Broers (1884) 9 App. Cas. 371.
3. Loss of confidence, mistrust or hostility was insufficient by itself. There had to be an objectively demonstrated risk that relations would obstruct, or might obstruct, administration. The court applied the approach in National Westminster Bank v Lucas [2014] EWCA Civ 1632, while distinguishing that case because the present evidence disclosed a particular potential conflict between company and family interests.
4. The court had inherent jurisdiction to remove trustees and appoint replacements. Although Trustee Act 1925, section 32 vested a power of appointment in the existing trustees, beneficiaries could not use a direction application to compel its exercise in their preferred way. Where removal was justified, however, the court could choose the replacement trustees. The distinction was explained by reference to Re Brockbank [1948] Ch 206.
5. In selecting replacements, the court could consider likely harmony, conflicts of interest, litigation risk and the cost of professional trustees. Trustees holding a substantial shareholding must take an informed interest in the company’s affairs and obtain sufficient information for proper decisions, as stated in Bartlett v Barclays Bank [1980] Ch 515. Family beneficiaries assisted by an experienced probate solicitor offered the better prospect of economical administration.