Manton & ors v Manton [2021] WTLR 245

WTLR Issue: Spring 2021 #182








The claimants were four of the five trustees of a trust. The defendant was the other trustee. The trust property included the share capital of a holding company (‘the holding company’) which in turn had a wholly owned subsidiary (‘the subsidiary’). A third company (‘the trading company’), the shares of which were also held by the holding company, occupied and traded from premises owned by the subsidiary, to which it paid rent. This, together, with distributions of profits, generated the majority of the income flowing to the trustees. In 2016, a revocable appointment of a life interest had been made by the trustees in favour of three of the trustees, including the defendant. All of the parties, in addition to being trustees of the trust, were, at one point, the directors of all of the companies (ie the holding company, the subsidiary and the trading company).

An acrimonious dispute arose between the defendant and the other directors of the trading company concerning various proposals made by the defendant as to the organisation of the business. As a result of this dispute the defendant established a separate company (‘the new company’) providing essentially the same services as the trading company. The sole shareholder and director of the new company was the defendant’s wife, and all of the clients of the trading company who had been served by the defendant moved across to the new company on its formation. A further consequence of the disagreement was that, in 2017, the defendant resigned from his position as director of the trading company.

The claimants sought the defendant’s removal as a trustee of the trust on the basis that, by his involvement in the new company, the defendant had placed himself in a situation in which there was a conflict between his personal interests and his fiduciary duties to the beneficiaries of the trust. The defendant resisted his removal on the basis that he denied that he had solicited the custom of clients of the trading company on behalf of the new company, and further that he denied that his involvement in the new company had caused loss to the trading company. He made plain that his desire to remain as trustee stemmed from his fear that, following his removal, the remaining trustees would exercise their power to revoke the 2016 appointment to him of a life interest in the trust.


There was no doubt that the defendant had placed himself in a position in which his personal interest conflicted with his fiduciary duties as trustee. The two companies were in direct competition for business and the defendant stood to benefit should the new company gain any business which might otherwise have gone to the trading company. That conflict had endangered the trust property, there being a plain and obvious risk that financial loss would be caused to the trust by the conflict. It was not necessary to show that financial loss had actually occurred.

The suggestions made by the defendant that he could continue as trustee without requiring any confidential information concerning the trading company, that the decisions relevant to the trading company would be taken at the level of its board (from which the defendant had resigned), that no decisions in respect of the trading company would fall to be taken at the level of the holding company, and that even should they do so, the defendant could be outvoted, did not reflect the reality of the relationships between the trustees and the corporate entities. The evidence was that the affairs of the trust and the companies were not rigidly divided into different fora, and it would be a significant inconvenience in the administration of the trust if it were necessary to separate out the discussions. In reality, discussions held by the trustees might well reveal the nature of the discussions being held at the level of the trading company. Indeed the defendant had sought to be provided with confidential information relating to the trading company on a particular point as a prerequisite for his involvement in the taking of a particular trust decision. Moreover the trust had potential claims against the defendant for breach of his duties, which the defendant, were he to remain as trustee, would be in a position to obstruct.

There was real hostility between the defendant and the rest of the trustees. Although personal hostility does not suffice to justify removal on its own, here the hostility brought with it a real risk that the administration of the trust would be adversely affected. The defendant’s wish to remain as trustee to protect himself against a potential revocation of his life interest was a further example of him putting his personal interests above the interests of the trustees as a whole. Accordingly, the defendant would be removed as trustee. No independent party would be appointed as a replacement for the defendant, as he had requested. Any such replacement, whether nominated by the defendant or not, might come under pressure, or might be seen as having come under pressure, solely to represent the defendant’s personal interests against those of the other beneficiaries.

JUDGMENT HHJ DAVID COOKE: Introduction [1] In this Part 8 claim, the claimants seek an order that the defendant be removed as a trustee of the Warren Manton Children’s Settlement (the Trust). All the parties are members of one family and have with their agreement been referred to throughout the proceedings by their first names …
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Counsel Details

John Brennan (St Philips Chambers, 55 Temple Row, Birmingham B2 5LS, tel 0121 246 7000, email instructed by Grove Tompkins Bosworth) (54 Newhall Street, Birmingham B3 3QG, tel 0121 236 9341, email for the claimants.

Jonathan Titmuss (Hardwicke Chambers, Hardwicke Building, New Square, Lincoln’s Inn, London WC2A 3SB, tel 020 7242 2523, email instructed by GunnerCooke LLP (55 Colmore Row, Birmingham B3 2AA, tel 03330 143 401, email for the defendant.

Legislation Referenced

  • Trustee Act 1925, s41