Procter v Procter & Ors

Where existing legal trustees create a significant risk of conflict, deadlock, self-interest or failure to protect beneficiaries, the court may remove them and appoint an independent trustee. Vesting legal title in that independent trustee may be appropriate where leaving title with one beneficiary, or vesting it jointly in beneficiaries, would undermine the proper administration of the trusts. The court may also appoint an independent trustee to investigate and regularise the management of trust property where concerns about rents or other aspects of administration justify intervention, even without reaching final conclusions on the underlying facts.

The Fourth Defendant, a corporate trustee of three family trusts, applied for the removal and appointment of trustees in relation to legal title to various parcels of freehold land. Legal title was generally held by the First Defendant as surviving personal representative, although beneficial interests were held by the corporate trustee and members of the family in differing proportions.

The application followed earlier decisions removing the First and Second Defendants as trustees of the family trusts and appointing the Fourth Defendant as independent trustee. The central issue was whether legal title should be vested in the Fourth Defendant alone, rather than in one or more of the individual beneficiaries.

1. Application granted. The court ordered the removal of the existing trustees of the legal title, appointed new trustees and made vesting orders in accordance with the relevant schedule.
2. The court applied the principle in Letterstedt v Broers [1884] UKPC 1. It was highly undesirable for the First Defendant to remain sole legal trustee where conflicts existed and there was a risk that beneficiaries’ interests would not be protected.
3. It would likewise be inappropriate to vest legal title jointly in the Claimant and the First Defendant, or in the siblings generally, where that could produce conflict or deadlock. The court considered the appointment of an independent corporate trustee to be consistent with its earlier conclusion that the individual siblings should not act as trustees of the family trusts.
4. The concerns were supported by examples of conduct affecting trust property, including the handling of an Agricultural Holdings Act arbitration and the Claimant’s conduct concerning a partnership lease. Further concerns about the collection, increase and use of rents justified independent investigation and regularisation, without the court reaching a final view on the underlying position.
5. Vesting orders were not sought for every parcel. The parties had liberty to apply, and consensual vesting or conveyance might avoid the need for further court intervention.