Summary

The purported protector of a trust was refused permission to re-amend his defence and bring a counterclaim in proceedings challenging the validity of his appointment. The application for re-amendment had been made very late, jeopardising the trial date, and raised significant new issues without any explanation for the delay. The counterclaim stood no realistic prospect of success since the protector was acting without the concurrence of his co-protector and therefore lacked standing to claim the relief sought.

Facts

The second defendant, the purported protector of two settlements, applied for permission to re-amend his defence and bring a counterclaim in an action brought by the claimant beneficiaries challenging the validity of his appointment as protector.

The settlements were established upon discretionary trusts in favour of a class of beneficiaries which included the settlors' children and remoter issue. The claimants were the settlors' children. By deeds of appointment made in 2003, the trustees established a protectorship regime. Under that regime, the protector was able to give or withhold consent to any exercise by the trustees of their powers of appointment, remove any trustee from office, and appoint new trustees and protectors. In 2004, the settlors appointed the third defendant as the first protector of each settlement. In 2013, the second defendant (the protector) was appointed to act jointly with the third defendant. Relations between the settlors and their children broke down. The claimants brought proceedings challenging the validity of the protectoral regime and seeking a declaration that the 2003 appointments were void. Alternatively, they sought a declaration that the protector's appointment was invalid or, in the further alternative, an order for his removal. The protector defended the claim and the trial was fixed for early April 2016. The protector made the instant application in July 2015, raising significant new issues as to the alleged maladministration of the trusts and seeking removal of the current trustees. The application was heard on 15 December 2015.

Held

(1) Late applications to amend attracted a much stricter approach by the court, particularly if the result of granting permission to amend would be to lose or jeopardise the trial date, Quah v Goldman Sachs International [2015] EWHC 759 (Comm) applied. The question had to be judged at the time when the application was heard, not when the application was issued. However, the proposed amendments in the instant case had to be characterised as very late. There was no realistic way in which the trial date could have been held, even if permission to amend had been granted at the conclusion of the hearing on 15 December 2015. Given the issues raised by the proposed re-amendments, much fuller particularisation would be needed before they could satisfy the stringent criteria laid down in Swain Mason v Mills & Reeve [2011] EWCA Civ 14, Swain Mason considered. As it was, the trustees were being asked to face what amounted to an entirely new cross-application for their removal which had previously formed no part of either the claim or the protector's original defence. Moreover, the protector had not explained why he had raised those issues at such a late stage. Furthermore, even if the allegations against the trustees were to be formulated with the necessary particularity, there would then have to be an adequate opportunity for the trustees, the third defendant and the claimants to respond. It followed that permission for the re-amendments had to be refused (see paras 42-43, 46-48, 51, 66 of judgment).

(2) Since the protector was alone in seeking the removal of the trustees, without the concurrence of the third defendant, he had no standing to seek that relief. Moreover, it was implicit in the Trustee Act 1925 s.41(1) that nobody other than a trustee or beneficiary had standing to seek the appointment of new trustees under that Act. Since the claimants and their adult children had made it clear that they had confidence in the trustees, it was fanciful to suppose that the court would be willing to remove them on the application of the protectors even if they were acting jointly. In any event, there was no evidence which might suggest that the trustees were guilty of misconduct such as to jeopardise the interests of possible future beneficiaries. Thus, the protector lacked standing to bring the relevant claims and his proposed counterclaim offered no reasonable prospect of success (paras 57-59, 65).

(3) A full review of the trusteeship and protectorate was needed and the immediate priority was for the protector's status to be resolved by the court. Until his standing to act had been confirmed, there would be no justification for having a trial of the issues raised by his re-amended defence (para.67).