LEAVE TO AMEND PLEADING SEEKING REMOVAL OF TRUSTEE – NEW ALLEGATION OF BREACH OF TRUST WHICH AS A SUBSTANTIVE CLAIM WAS ARGUABLY TIME-BARRED
Representation of C re P Trust [2025] JRC 028
One question which arose in this application for leave to amend a Representation which sought both the removal of a trustee and made allegations of breach of trust was whether new allegations of breach of trust which are prescribed can be introduced into the pleading in support of the removal application. The Court observed that disagreement between beneficiaries is not a sufficient ground for the removal of trustees. Something more is required which has to meet the threshold that the trust property will not be safe or that the trust will not be properly executed in the interests of the beneficiaries. Each case will be determined on its own facts in order to see how far back a trustee seeking a removal might go and whether what would be prescribed breaches of duty might be taken into account Past breaches of duty alone about which no beneficiary had complained, and which claim to alleged breach of trust is prescribed, without something more, did not meet the threshold. Leave for the relevant amendment was therefore refused.
The Representor, seeking the removal of the trustee and alleging breach of trust, sought leave to re-amend the Representation. A question arose as to whether certain further allegations of breach of trust could be added in support of the removal application in circumstances where a substantive claim for those breaches would be out of time.
Held:
(1) Leave to amend pleading. The litigation had been commenced over four years ago, the last round of amendments had taken place two and a half years ago, and the parties had been through an extensive discovery exercise and a complex exercise of filing extensive evidence. This was therefore a late application to amend and as such one to which more stringent considerations applied. Applying settled principles for leave to amend (having regard in particular to Trico Limited v Buckingham [2019] JRC 163) some of the proposed amendments were permitted and others refused.
(2) Time-barred (prescribed) allegations of breach of trust in support of removal application.
(a) As regards the new allegations of breach of trust, the matters raised had been known to the Representor for some considerable time and a claim would therefore arguably be prescribed. A direct allegation of breach of trust would be struck out on the basis that it was arguably prescribed (Bagus Investments Ltd v Kastening [2010] JLR 355).
(b) The amended allegations were not formulated as a claim for breach of trust. The test for a removal of trustee was set out in Erinvale Ptc Limited [2021] JRC 241 at paragraphs 33 to 37. Erinvale did not address directly what should happen in respect of allegations of misconduct that were time-barred but which are relied upon to justify a removal of a trustee.
(c) The approach of the Representor would allow any dissatisfied beneficiary to try to seek to remove a trustee on the basis of past misconduct whenever it occurred, even though the time for bringing any such claims for breach of duty had long since passed. Such an approach would allow one beneficiary in disagreement with the others to try to cause disruption by having the trustee removed. Yet disagreement between beneficiaries is not a sufficient ground to the removal of trustees as is clear from Erinvale and other authorities. Something more is required which has to meet the threshold that the trust property will not be safe or that the trust will not be properly executed in the interests of the beneficiaries. That something more might be fraud (in which case a claim for breach of trust would not be prescribed) or dishonesty or a lack of fidelity. Each case will be determined on its own facts in order to see how far back a trustee seeking a removal might go and whether what would be prescribed breaches of duty might be taken into account Past breaches of duty alone about which no beneficiary has complained, and which claim to alleged breach of trust is prescribed, without something more, did not meet the threshold.