Analysis
Each of the claimant banks were part of the NatWest Group and appointed as trustee of a number of trusts. Following the decision by the NatWest Group in 2019 to divest itself of its trusteeships and trust administration business, a bidding process was commenced seeking a replacement trustee for 3,946 trusts, both private and charitable, and the first defendant (Ludlow) was ultimately the successful bidder based upon a detailed scoring system. The trust administration business was transferred to Ludlow for £1 and Ludlow agreed to pay all of the claimants’ costs of transferring the various trusteeships, including those of applying to court.
The claimants then wrote to all settlors, co-trustees and beneficiaries of the trusts under their management inviting their consent to Ludlow’s appointment or inviting them to nominate an alternative replacement trustee. Deeds of appointment and retirement were executed in relation to the majority of the trusts, and 342 trusts were wound up entirely. 17 trusts governed by the law of Scotland were the subject of an application to the Court of Session in 2021 (see [2022] SCOH 3).
There remained 124 trusts whose settlors or co-trustees had not responded including discretionary, life interest, life insurance policy and custodian trusts (both charitable and private). The claimants applied for orders under s41 Trustee Act 1925 appointing Ludlow as trustee of each of those remaining trusts and making consequential orders for the vesting of the trust property. The second defendant solicitor was appointed to represent the interests of all those persons interested in the trust funds, and the managing trustees of the custodian trusts. The Attorney General was joined to proceedings but took no active part. The Charity Commission consented to the applications pursuant to s115 Charities Act 2011. By the time of the hearing 61 trusts remained for which orders were sought.
An application was made for the matter to be heard in private pursuant to CPR 39.2.
The issues to be determined were:
- (1) Was it expedient to appoint Ludlow as replacement trustee of the remaining trusts?
- (2) Was it inexpedient, difficult or impracticable for a new trustee to be appointed without the assistance of the court?
- (3) Should the matter be heard in private?
Held:
- (1) The first issue required consideration of both the suitability and willingness of the claimants to continue acting as trustees, and the appropriateness of Ludlow as replacement. The claimants, having already divested themselves of their trust administration business and the great majority of their trusteeships, were no longer equipped to operate as professional trustees. The few remaining trusts would not benefit from any economies of scale and so the costs of administration would increase.
- (2) Ludlow was a suitable replacement. It was selected following a fair and thorough selection exercise. Although in its first year of operation, it was moving towards profitability and had a senior team of experienced trust professionals, together with having inherited most of the trust administration team previously employed by the claimants. For those trusts of which the third claimant was the trustee, the new fee structure was very similar to the existing structure. Although some trusts would experience an increase in fees, Ludlow had committed not to increase fees from their present levels for the first two years of its trusteeship, and to notify all settlors and co-trustees before fees increased. Ludlow had professional indemnity cover of £5 million. Ludlow also met the requirements under s4(3) Public Trustee Act 1906, being a ‘banking or insurance company or other body corporate entitled… to act as a custodian trustee’.
- (3) It was impracticable to effect the changes of trusteeship without the court’s involvement. The claimants had tried conscientiously on multiple occasions to identify and contact all those with powers of appointment, including those now incapacitated for whom litigation friends have been obtained. For those trusts which remained, the orders sought would be made.
- (4) The matter was manifestly one which should be heard in private, involving confidential information as well as concerning uncontentious matters arising in the administration of trusts under CPR 39.2. Moreover, the interests of the individuals involved in privacy outweighed any wider interest in the case and so it was necessary to sit in private to secure the proper administration of justice. The judgment would nevertheless be published, omitting the schedules setting out the details of the particular trusts.
Order accordingly, including consequential vesting orders under ss44 and 51 Trustee Act 1925.
JUDGMENT SAIRA SALIMI: [1] These proceedings were brought under Part 8 of the CPR, as uncontentious matters relating to the administration of trusts. Each of the Claimants is a bank which is part of the NatWest Group, and each of them has been appointed as trustee of a number of trusts. They are seeking an …Continue reading "National Westminster Bank plc & ors v Ludlow Trust Co Ltd & ors [2024] WTLR 239"