Coutts & Co & Anor v Ludlow Trust Company Limited

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

Expediency may be established where the existing trustee is unwilling to continue, has relinquished the relevant trust business and no longer has the expertise to administer the trust. The proposed trustee’s suitability, the beneficiary’s interests, the position of any co-trustee and the financial consequences are relevant. A trust instrument requiring court consent during a beneficiary’s minority satisfies the second limb.

The claim was brought under Part 8 of the Civil Procedure Rules in connection with the administration of the TABC Trust. Coutts sought an order substituting Ludlow Trust Company Limited as trustee in place of Coutts. TEFG, the co-trustee, supported the application.

The trust held personal injury damages for a minor beneficiary. The trust instrument allowed changes of trustee with the beneficiary’s consent, but required the court’s consent while the beneficiary remained a minor. The central issue was whether the statutory conditions in section 41(1) of the Trustee Act 1925 were satisfied.

1. Order made. Ludlow was appointed trustee in substitution for Coutts under section 41(1) of the Trustee Act 1925. Consequential vesting provisions were appropriate and reasonable.
2. The statutory test has two limbs. It must be expedient to appoint the new trustee, and it must be inexpedient, difficult or impracticable to do so without the court’s assistance.
3. The expediency limb was satisfied. Ludlow was a trust corporation with experienced senior officers and trust administration staff inherited from Coutts and other NatWest Group banks. Its general suitability had been considered in National Westminster Bank PLC & Ors v Ludlow Trust Company & Ors [2023] EWHC 2532 (Ch). It was not in the beneficiary’s interests to retain an unwilling trustee. This was especially so because Coutts had divested itself of its trust business and no longer had the expertise to administer the trust.
4. The court also took account of TEFG’s support, his close interest as the beneficiary’s father, and the absence of any obvious financial disadvantage because Ludlow’s proposed fees were very similar to Coutts’s.
5. The second limb was clearly satisfied because the trust instrument required court consent to a change of trustees during the beneficiary’s minority.
6. A final anonymity order was made to protect the minor beneficiary, following review of the interim order.