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

The court granted the Claimants' unopposed Part 8 application under section 41 of the Trustee Act 1925 to appoint Ludlow Trust Company Limited as trustee of the 61 Remaining Trusts and made consequential vesting orders under sections 44 and 51 of the Trustee Act 1925. The judge applied the statutory tests: that it was expedient to appoint a new trustee and that appointment was impracticable without the court's assistance. Key factors were the Claimants' commercial decision to divest their trust administration business, the thorough selection process leading to Ludlow's appointment, Ludlow's transfer of experienced staff, arrangements limiting fee increases for two years, and the availability of professional indemnity and cyber insurance. The court also considered the Public Trustee Act 1906 provisions relevant to custodian trustees and concluded that Ludlow met the statutory requirements. The hearing was held in private under CPR r.39.2.

This was a first instance, unopposed Part 8 application in which three banks (the Claimants) who had previously administered a large portfolio of private client and charitable trusts sought court orders to appoint Ludlow Trust Company Limited as successor trustee to 61 remaining trusts. The Claimants had decided in 2019 to divest their trust administration business and, following a competitive process, entered a Framework Transfer Agreement with Ludlow in November 2020 to transfer the administration business and to procure the appointment of Ludlow as trustee where required.

The court was asked to determine whether orders under section 41 of the Trustee Act 1925 should be made (and consequential vesting orders under sections 44 and 51). The procedural posture was that the application was unopposed, Mr Fairhead was appointed as a representative for interested persons, and written evidence only was before the court.

Issues before the court included:

• Whether it was expedient to appoint Ludlow as trustee of the Remaining Trusts, taking account of suitability, resources, fees and insurance;
• Whether it was inexpedient, difficult or impracticable to effect appointments without the court's assistance given the Claimants' efforts to obtain deeds of retirement and appointment;
• Whether Ludlow satisfied the Public Trustee Act 1906 requirements for custodian trustees in respect of certain trusts; and
• Whether the hearing should be held in private under CPR r.39.2.

The judge concluded that the statutory tests under section 41 were satisfied. On expediency, the court accepted the Claimants' commercial decision to withdraw from trustee business, found Ludlow to be a suitable successor following a comprehensive selection process and the transfer of experienced staff, and accepted safeguards on fees and insurance. On impracticability, the court accepted the repeated and extensive attempts made to obtain consent and that, in a number of cases, consent could not practicably be obtained (including because of incapacity or uncertainty as to who had appointment powers). The court therefore appointed Ludlow as trustee of the 61 Remaining Trusts and made the ancillary vesting orders. The judge ordered the hearing to be in private and noted that the costs of the transfers were to be paid by Ludlow under the Framework Transfer Agreement.

This first instance application succeeded. The court made the orders sought: Ludlow Trust Company Limited was appointed as trustee of each of the 61 Remaining Trusts under section 41 of the Trustee Act 1925 and consequential vesting orders were made under sections 44 and 51 of the Trustee Act 1925. The court's rationale was that the appointment was both expedient (given the Claimants' divestment, Ludlow's suitability, staff transfer, fee and insurance arrangements) and that appointment could not practicably be achieved without court assistance despite extensive attempts to obtain consents. The hearing was ordered to be in private under CPR r.39.2.