PT-2024-000315 - [2025] EWHC 3011 (Ch)

Ground 1 – alleged breach of the duty to notify

In his first witness statement, Nathan says that “[t]he first couple of board meetings after Graham’s death were most unusual. At the first meeting of the trustees/board of directors of the Company after Graham’s death, Leah and I told Paddy what Graham had indicated to us was the future for the Company and Paddy told us that we were not beneficiaries of the Trust and that there were no beneficiaries. That is of course incorrect, given the contents of the Will and the Letter of Wishes…”. Paddy does not directly address this allegation in his evidence, and the minutes of the relevant board meeting do not record this interaction.

The Claimants submitted that the Trustees were under a duty to familiarise themselves with the class of beneficiaries of the Trust, and a duty to notify the beneficiaries of their interest under the Trust. In his skeleton argument, Mr Burton submitted that Paddy had “lied” to Nathan and Leah about the true nature of their entitlement under the Trust. When I suggested to him that this would be tantamount to a finding of dishonesty against Paddy – which, for the reasons already articulated in this judgment, seemed to me to be impossible to make in circumstances in which that allegation had never been put to Paddy (it is not an allegation that Nathan himself even makes in his witness statement) – Mr Burton accepted that he was not seeking a finding that Paddy had acted dishonestly. Rather, he submitted that Paddy’s statement that Nathan and Leah were not beneficiaries of the Trust and that “there were no beneficiaries” was incompetent, and that it constituted a breach of the Trustees’ positive duty to notify Nathan and Leah of their interests under the Trust.

In response, Mr Learmonth KC accepted that, as a general principle of law, there is a duty on trustees to notify beneficiaries of their interest under a trust. He submitted that Paddy’s alleged statement had been made at the first board meeting following Graham’s death. He suggested – although, given the lack of Paddy’s evidence on the point, this was speculation – that there had been a misunderstanding on Nathan’s part. In any event, he noted that Leah’s evidence was that she had found Graham’s will online in May 2018, and was concerned that her name had been listed in a document that was available online. This demonstrated that the Claimants were aware, at least from May 2018, that they had been named as beneficiaries of the Trust created by Graham’s will. Mr Learmonth KC submitted that this was therefore a purely historical allegation, and that – 7 years on – it provided no justification for the removal of the Trustees from office.

In the absence of any written evidence from Paddy directly in response to Nathan’s allegation on the point, and in the absence of any cross-examination to test Nathan’s evidence, or to put the point to Paddy, it is impossible for me to draw any firm conclusions.

In my judgment, it is inherently implausible that Paddy would have told Nathan that he and Leah were not beneficiaries of the Trust and that “there were no beneficiaries.” Not only is that obviously untrue, but it would have been a bizarre thing to have said (whether deliberately or mistakenly), given that Nathan and Leah were named in the will as beneficiaries and clearly intended by Graham to receive benefit from the Trust. Nevertheless, given Nathan’s evidence, it does seem that something along the lines he alleges was said to him by Paddy at the first board meeting. It seems to me that the most likely explanation is that the conversation related to the fact that the Trust is a discretionary trust, under which no beneficiary has a fixed entitlement as such. Whether through a poor choice of words by Paddy, or through a misunderstanding, Nathan appears nevertheless to have understood Paddy to be saying that neither he nor Leah were beneficiaries of the Trust, and that the Trust had no beneficiaries. However, I recognise that this also involves an element of speculation on my part. Given the paucity of the evidence, this is about the best that can be made of the allegation.

If Paddy did tell Nathan that he and Leah were not beneficiaries of the Trust, I accept that, on a strict view, this could have constituted a breach of the Trustees’ duty to notify them of their interests under the Trust. However, I do not consider that, individually, this is a sufficient basis to warrant the Trustees’ replacement in office, or that the incident should be attributed any real weight in the overall evaluative exercise. I say that for the following reasons:

I therefore conclude that the matters raised under ground 1 do not justify or support the claim to replace the Trustees.