London Capital & Finance Plc v Global Security Trustees Ltd [2019] EWHC 3339 (Ch) (10 December 2019)

London Capital & Finance Plc v Global Security Trustees Ltd [2019] EWHC 3339 (Ch) (10 December 2019)

GST should be removed as Security Trustee because its board failed to appreciate and address conflicts of interest, lacked relevant experience, and was tainted by association with LCF's former management and borrowers. The wishes of the bondholders strongly supported removal. The court's inherent jurisdiction to remove a trustee is engaged and the welfare of the beneficiaries is paramount. GST's role is now largely redundant following the appointment of Administrators, and its continued involvement would not benefit the bondholders.

Citation
[2019] EWHC 3339 (Ch)
Parties
Claimant: London Capital & Finance Plc (in Administration); Defendant: Global Security Trustees Limited
Jurisdiction
England and Wales
Judgment Date
10 December 2019
Procedural Posture
Claim for Removal and Replacement of Trustee / Judgment After Hearing on Application for Removal of Trustee
Outcome
GST removed as Security Trustee; appointment of new trustee deferred pending further evidence.
Legal Topics
Removal of Trustee, Inherent Jurisdiction of Court, Conflicts of Interest, Security Trustee, Beneficiaries' Interests, Trustee Act 1925 S.41, Standing to Apply for Removal, Role of Administrators, Bondholder Protection
Trusts and Equity Insolvency Company Law Removal of Trustee Inherent Jurisdiction of Court Conflicts of Interest Security Trustee Beneficiaries' Interests +4 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 8 Party arguments 2 Amounts and remedies 10
Sign in to unlock

Parties

London Capital & Finance Plc (in Administration)

Claimant

Global Security Trustees Limited

Defendant

Procedural Posture

Claim for Removal and Replacement of Trustee / Judgment After Hearing on Application for Removal of Trustee

Legal Issues

  1. 1 Whether GST should be removed as Security Trustee for LCF bondholders
  2. 2 Whether the court should exercise its inherent jurisdiction to remove GST
  3. 3 Whether GST is conflicted or unsuitable to act as trustee

Ratio Decidendi

GST should be removed as Security Trustee because its board failed to appreciate and address conflicts of interest, lacked relevant experience, and was tainted by association with LCF's former management and borrowers. The wishes of the bondholders strongly supported removal. The court's inherent jurisdiction to remove a trustee is engaged and the welfare of the beneficiaries is paramount. GST's role is now largely redundant following the appointment of Administrators, and its continued involvement would not benefit the bondholders.

Court Disposition

GST removed as Security Trustee; appointment of new trustee deferred pending further evidence.

Orders

  • GST is removed as Security Trustee with immediate effect, subject to further submissions on timing if necessary.
  • Administrators to lodge further evidence regarding four identified candidates for new Security Trustee, including likely costs.