Character judgements or hostility can end a trusteeship
The High Court established that, while specific allegations of breach of duty may fail to justify removal, profound, any expressed hostility between a trustee and the beneficiaries is sufficient grounds for court intervention to secure the future proper administration of the trust.
Facts:
The case concerns a claim brought by beneficiaries to replace the executors and trustees of a discretionary trust established by the will of the late Graham Cheslyn-Curtis, who died in 2018. The main asset of the trust is the Millpledge Group, a successful veterinary medical products business of which Mr. Cheslyn-Curtis was the sole owner.
Graham’s estate was valued in the region of £8.2m. He appointed four people as his executors and trustees, specifically his trusted business associates, Paddy Campbell and Malcolm Taylor, and Sarah Cheslyn-Curtis and Maldwyn Worsley-Tonks as family members. The residuary estate was left to the trust for the benefit of a class including Graham’s long-term partner, Suzanne Smith, and her children, Nathan Smith and Leah-Jane Styring (the claimants), as well as Graham’s son, Guy Cheslyn-Curtis. Graham had provided a detailed Letter of Wishes outlining his “worldview”: he wanted Millpledge to continue, and for Nathan and Leah to be appointed as directors, mentored by Paddy and Malcolm, with the profits being substantially reinvested. Nathan and Leah were appointed as directors shortly before Graham’s death.
Following Graham’s death, the relationship between Nathan and Leah (who were beneficiaries and directors) and Paddy (Trustee and Chairman of Millpledge) comprehensively broke down due to disputes over company matters, including a cap on “profit share” payments and general hostility.
This conflict rapidly escalated, resulting in Leah’s removal as a director in July 2023 and Nathan’s termination as an employee and removal as a director in March 2024. The claimants viewed their ouster as having been orchestrated by Paddy and opposed by the other directors. Five weeks after Nathan’s dismissal, the claimants initiated proceedings to have all four trustees replaced with a professional trust corporation, doing so without any prior warning or pre-action correspondence.
Decision:
The High Court ruled to partially remove and replace the Trustees of the Trust. The Deputy Master rejected all six individual allegations of misconduct or breach of duty made by the claimants against the trustees based on a lack of evidence and the fact that the trustees were simply following the Settlor’s wishes.
However, the Court found that the hostility expressed by Paddy Campbell (and supported by Malcolm Taylor) toward the claimants constituted a breakdown in relations that required judicial intervention to protect the welfare of the beneficiaries and the proper administration of the Trust. The Judge concluded that the deeply negative views formed by Paddy and Malcolm about the claimants’ characters, and not merely their actions, meant that they would find it “very difficult” to carry out their duties with the required objectivity and impartiality.
Implications:
This case carries significant implications for three key areas of trust law: the duty of impartiality, the power of the Settlor’s wishes, and the practical standards for removing trustees.
The most important implication is the reinforcement of the principle that, while mere friction or hostility between a trustee and a beneficiary does not automatically constitute grounds for removal, the expression of deep-seated hostility is grounds for removal, even if no formal breach of trust has occurred. The Judge focused entirely on the future risk to the proper administration of the trust. This sets a high standard for trustees of discretionary trusts, particularly those who hold personal or family relationships with the beneficiaries. The power to distribute income or capital must be exercised with complete objectivity, and an expressed belief that a beneficiary is “greedy” is seen as inherently compromising that objectivity.
The case provides a useful illustration of how the Court balances the Settlor’s intentions with the paramount need for the beneficiaries’ welfare. Ultimately, the Settlor’s wishes were partially upheld and partially overridden. The Court honoured the desire for family continuity by retaining Sarah and Maldwyn. However, it overrode the appointment of Paddy and Malcolm because their hostility had become a threat to the trust’s viability, proving that the welfare of the beneficiaries always trumps the Settlor’s wishes when the two are in conflict.
The case affirms that a claimant does not need to prove misconduct on the balance of probabilities if the resulting animosity is sufficient. The existence of a “good arguable case” for intervention, particularly where hostility is proven, can be enough to engage the Court’s discretion, provided the intervention is in the beneficiaries’ best interest.