Nathan James Smith & Ors v Ian Patrick Campbell & Ors

The removal or replacement of trustees is governed by the beneficiaries’ welfare and the proper administration of the trust as a whole. The jurisdiction is fact-sensitive but is not an unfettered discretion to impose whatever outcome appears fair.

Friction or hostility alone is insufficient. It becomes material where it gives rise to a reasonable concern that the trust will not be administered objectively, impartially and properly. The court should consider each ground and each trustee separately, then evaluate the claim in the round. The settlor’s choice of trustees, the beneficiaries’ wishes, continuity, expertise and additional cost are relevant but do not displace the governing test.

The claimants sought the removal of four trustees of a discretionary will trust established by Graham Cheslyn-Curtis. They relied on alleged failures concerning notification of beneficial interests, trust accounts, impartiality, oversight of a company owned by the trust, use of trust property by a non-beneficiary, and a breakdown in relations.

The claim was heard on written evidence. Neither party sought cross-examination. The central issues were the applicable test for trustee removal, the treatment of disputed factual evidence, and whether the evidence justified removing some or all of the trustees.

1. Applicable jurisdiction. The statutory jurisdiction under section 41 of the Trustee Act 1925 coexists with the court’s inherent supervisory jurisdiction. The governing test, derived from Letterstedt v Broers (1884) 9 App Cas 371, is whether removal or replacement would be in the best interests of the beneficiaries as a whole, with a view to securing proper administration of the trust.
2. The court must consider each ground individually and each trustee separately, before standing back to assess the claim overall. The settlor’s selection of trustees, the beneficiaries’ wishes, continuity, expertise and cost are relevant factors, but do not alter the governing test.
3. Misconduct is neither necessary nor invariably sufficient. A breach of duty may justify removal, especially where dishonesty or risk to trust property is involved, but a technical or historical breach may carry little weight. Conversely, removal may be justified without proved misconduct if continuation would impede proper administration.
4. Friction or hostility is relevant only insofar as it adversely affects beneficiary welfare or trust administration. Paddy’s strongly hostile assessment of the claimants created a reasonable concern that he could not exercise the required objectivity and impartiality. Malcolm’s express agreement with those views created a similar concern.
5. Under the general rule identified in TUI UK Ltd v Griffiths [2023] UKSC 48, disputed factual evidence will generally not be resolved solely from untested witness statements where cross-examination has not occurred. The court may, however, decide matters by reference to contemporaneous documents. A good arguable case of misconduct may engage the jurisdiction, but removal still depends on the beneficiaries’ welfare and proper administration.
6. The court rejected the remaining grounds, including the alleged failure to provide accounts, alleged unfair distributions, alleged lack of company oversight, the occupation of trust property by Barbara, and the asserted company-law defects. It removed Paddy and Malcolm, retained Sarah and Maldwyn, and directed that an independent professional trustee be appointed alongside them. Further submissions were invited on consequential orders and the suitability of Mills & Reeve Trust Corporation.