National Westminster Bank PLC & Ors v Ludlow Trust Company Limited & Ors

Under section 41(1) of the Trustee Act 1925, the court may appoint a new trustee where appointment is expedient and it is difficult, inexpedient or impracticable to make the appointment without the court’s assistance.

Expediency requires consideration of the existing trustees’ suitability and willingness to continue, together with the proposed trustee’s suitability. A professional trustee’s commercial decision to withdraw from trust administration may make continued trusteeship unsuitable where the business and relevant expertise have been transferred elsewhere. A new trustee’s limited track record does not prevent appointment if the evidence establishes adequate expertise, resources, financial position, insurance and safeguards for beneficiaries.

The claimant banks, each trustee of trusts administered within the NatWest Group, sought orders appointing Ludlow Trust Company Limited as trustee of 61 remaining trusts. The application followed a commercial decision to divest the group’s trust administration business and the transfer of most trusteeships by deeds of retirement and appointment.

The application was unopposed. It concerned discretionary trusts, life interest trusts, life insurance policy trusts and custodian trusts, including charitable trusts. The central issues were whether appointment of Ludlow was expedient, whether appointment without court assistance was difficult, inexpedient or impracticable, and whether consequential vesting orders should be made.

1. Appointment of new trustee. The court granted the orders under section 41(1) of the Trustee Act 1925. The statutory power required satisfaction of two cumulative conditions: appointment had to be expedient, and appointment without the court’s assistance had to be difficult, inexpedient or impracticable.
2. Expediency. The claimant banks had divested themselves of the trust administration business, including the relevant staff and expertise, and were no longer equipped to operate as professional trustees of the remaining trusts. Retaining the trusteeships would also deprive the trusts of economies of scale and was likely to increase administration costs. Those matters made replacement expedient.
3. Ludlow’s lack of an established track record did not prevent appointment. The court relied on the careful competitive selection process, Ludlow’s experienced senior professionals, the transfer of the existing administration team, its developing financial position, the arrangements for fees and notice, and its professional indemnity and cyber insurance. The evidence showed that the protection available was not obviously inadequate or out of line with the market.
4. For custodian trusts, Ludlow satisfied section 4(3) of the Public Trustee Act 1906 and rule 30 of the Public Trustee Rules 1912. Section 4(2)(f) enabled a custodian trustee to apply for appointment of a new trustee. Section 64 of the Trustee Act 1925 extended the relevant power to trusts under the Settled Land Act 1925. The proposed appointments did not offend section 41(4), since the relevant estates had long been administered and the court was not appointing executors or administrators.
5. Need for court assistance. Extensive repeated attempts had been made to contact those with powers of appointment. Some persons lacked capacity, some trusts had no clear appointing machinery, and others had not executed deeds despite communications. It was therefore impracticable to effect the changes without the court.
6. Consequential vesting orders under sections 44 and 51 of the Trustee Act 1925 were reasonable and proportionate and were granted. The hearing was properly held in private under CPR rule 39.2 because it concerned confidential financial information and uncontentious trust administration. The judgment and order remained public, while the detailed schedule of trusts and land was withheld.