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

Ground 6 – breakdown in relations / hostility

The final ground relied upon by the Claimants is a breakdown in the relationship between themselves and the Trustees, and what they say is the hostility shown towards them by Paddy, and (to a lesser extent) the other Trustees.

In this regard, it is undeniably the case that the relationship between the Claimants – on the one hand – and the Trustees – on the other – has deteriorated. There is no need to rake over the causes of the deterioration in the relationship again – the summary of facts at paragraphs 10 – 43 of this judgment and my discussion and disposal of grounds 1 – 5 have already done so in some detail. In very broad summary, the fundamental cause of the breakdown in the relationship has been the complete falling out between the Claimants and the other directors of Millpledge, and in particular Paddy, culminating in the Claimants’ removal as directors of the company. The Claimants consider that Paddy has orchestrated their ouster from the position that Graham wanted them to hold on the board of Millpledge, and that the other Trustees have either supported him in doing so, or at least been supine in failing to prevent him from doing so. The Trustees, by contrast, consider that removal of the Claimants as directors of Millpledge was necessary and legitimate.

Were the matter left there, I do not consider that any of the foregoing grounds of removal, either individually or collectively, would have justified the court’s intervention. In addition, and as I have already explained, mere friction or hostility in the relationship between trustees and beneficiaries does not, without more, justify the removal or replacement of the trustees: the key issue is whether the trustees can be trusted to continue to administer the trust properly in the interests of the beneficiaries of the trust as a whole, notwithstanding any difficulties in the relationship.

However, the matter is not left there, because in his first witness statement in response to this claim – which was filed and served in the weeks following the sudden issuing of the claim following Nathan and Leah’s removal as directors of Millpledge – Paddy made the following remarks about the Claimants. He said this:

“The Trustees have not been willing to place the personal interests of individual Discretionary Beneficiary’s ahead of the interests of other Discretionary Beneficiaries, and nor have we been willing to set aside Graham’s wishes. The Claimants have grown frustrated at not getting their own way all of the time, and this sense of entitlement is plain for all to see in their statements, and in the way that they have continually placed their own individual interests ahead of the interests of others.

The Claimants have shown themselves to be entitled and greedy, with their sole focus being the acquisition of money and control. The Claimants have refused to accept the structure of the Trust and that they are not in control of Graham’s estate, and this has always been a source of extreme frustration to them.

Nathan and Leah’s sense of entitlement morphed into complacency where the Company was concerned, and it is this complacency and their deep-rooted greed which drove Nathan to pursue an agenda against me as Chairman, and against the Board as a whole, and which ultimately resulted in Nathan’s termination from the Company as both a director and employee and Leah’s termination as a director of the Company too.

Sadly, Nathan and Leah’s complacency was jeopardising and disrupting the performance of the Company and in turn, the performance of the Trust. This being the case, the Trustees were left with little option but to terminate Nathan and Leah as directors.”

In essence, Paddy has formed the view as a result of their company level battle that Nathan and Leah are self-interested, entitled, complacent, acquisitive, and greedy. Paddy’s view is that Nathan and Leah’s actions have been driven by their complacency and, as he has called it, their “deep-rooted greed.”

In his second witness statement, filed some months later, Paddy sought to contextualise the remarks he made about the Claimants, saying that “my first statement was prepared following a difficult period of over 12 months in which Nathan had caused considerable disruption and problems within the Company, which as Chairman of the Company, I have been obliged to resolve, including taking the decision to dismiss Nathan and Leah as directors of the Company… Having come through this difficult period, we were then served with these court proceedings very shortly afterwards, and without any prior notice. I will readily admit that these court proceedings caught me off guard, and as someone who believes himself to be a rational and reasonable man, I was disappointed and somewhat hurt that Nathan and Leah had taken the drastic step of issuing court proceedings, without having first taken the time to sit down with me and my co-trustees, to talk through, and hopefully alleviate their concerns from a trust perspective. I was also upset to note that most of the issues raised in Nathan and Leah’s witness evidence were directed against me, and include allegations that relate to my performance as Chairman of the Company…. I therefore admit that I was shocked, saddened, and rather offended by what was said in these court proceedings. My comments [in] my first witness statement were a result of all of the above. Now that more time has passed, I recognise that I expressed myself in that moment more emphatically than I intended.”

On behalf of the Claimants, Mr Burton submitted that in his first witness statement Paddy displayed outright hostility towards the Claimants. He submitted that these were not the remarks of a person who is a fit and proper person to act as a trustee of the Trust. He submitted that Paddy’s second witness statement contextualising his remarks was “too little, too late”, and that the hostility displayed towards the Claimants by Paddy gave rise to a reasonable concern on their part that, were he to remain in office, the Trust would not be fairly and properly administered in a manner that took into account their interests as beneficiaries. Mr Burton also submitted that the same concern applied to all of the other Trustees, who had not disassociated themselves from Paddy’s remarks (with Malcolm having stated that he agreed with the paragraphs of Paddy’s witness statement containing these remarks, but without repeating their content himself; and with Sarah and Maldwyn having not explicitly disagreed with Paddy’s remarks). In essence, Mr Burton characterised the Trustees as being aligned with one another, and being aligned against the Claimants.

On behalf of the Trustees, Mr Learmonth KC submitted that this was a case in which the beneficiaries had, by their conduct, provoked an angry initial reaction from one of the Trustees, but not a situation in which the Trustees as a body were hostile towards the Claimants. Rather, he characterised the situation as being analogous to the position in Isaac v Isaac [2005] EWHC 435 (Ch), in which relations between the trustees and beneficiaries had become very strained as a result of disputes at company level, but which strained relationship would not have caused the court to replace the trustees in office.

As to Paddy’s particular remarks, Mr Learmonth KC submitted that, in circumstances in which the Trustees had not acted in breach of duty or otherwise improperly in any fashion (with which conclusion I agree), the claim was seeking to “pull itself up by its bootstraps”, in that the Claimants had made many untrue and unfair allegations against Paddy, but now based their claim on Paddy’s angry reaction to those very allegations. Mr Learmonth KC suggested that the service of the claim (via process servers) without any forewarning had created a degree of shock and anger on the part of the Trustees, and of Paddy in particular, and that his angry reaction could be explained in large part by reference to the provocative allegations made by the Claimants against him, many of which have either not been pursued or have not been substantiated. Mr Learmonth KC also noted that, following Nathan and Leah’s removal as directors of Millpledge, much of the source of the contention in the relationship between the Claimants and Paddy has now been resolved.

Having already considered and rejected the various allegations of misconduct made by the Claimants against the Trustees, I am sympathetic to the submission that the issuing and service of these proceedings without any forewarning, and the fact that the Claimants’ evidence contains a broad array of accusations of improper and/or inappropriate conduct against the Trustees, and in particular against Paddy individually, constituted provocative behaviour on the Claimants’ part. I also understand why Paddy may have reacted angrily to that provocation.

Nevertheless, the distinct impression that I am left with from his evidence is that he has formed a deeply negative view, not simply of the Claimants’ actions, but of their character as individuals. In my judgment it is fair to say that the views he has expressed show outright hostility towards the Claimants. In his subsequent witness statement, Paddy did not retract these views, or apologise for having expressed them – he simply said that he had expressed himself “more emphatically than [he] intended.”

Whatever the provocation, in my judgment the trenchant and deeply negative views expressed by Paddy about the Claimants give rise to a reasonable concern that he will find it very difficult to carry out his duties as one of the trustees of the Trust with the objectivity and impartiality required. It seems to me that this is a case which has gone beyond mere friction and hostility, and is a situation in which the hostile views about the Claimants formed and expressed by Paddy could well have an adverse impact on the proper administration of the Trust. For example, Paddy’s view that the Claimants are motivated by “deep-rooted greed” could well adversely impact on his consideration of any request made by the Claimants to receive a distribution from the Trust.

I have therefore formed the view on ground 6 that some intervention by the court is needed to safeguard the welfare of the beneficiaries and to ensure the proper administration of the Trust. I now turn to undertake the overall evaluative exercise, in the course of which I will consider the precise nature of that intervention.