Scottish Widows instigated a "dawn raid" on the houses of two of its former senior fund managers Tom Laidlaw and Mike Channing to seize personal documents, days before they took over the running of a £500m property trust which had sacked Widows as manager.

Widows then waited till it had cleared a £1.35m compensation cheque paid by Cordatus, the company set up by Laidlaw and Channing, before immediately launching a move to take over the trust and liquidate it.

The extraordinary moves were revealed yesterday as the UK Balanced Property Trust published its blow-by-blow account of how Scottish Widows Investment Partnership (SWIP) and Scottish Widows Unit Funds (SWUF) struck back after the loss of the trust in a beauty parade with Cordatus earlier this year. It said Widows' "conduct has been unwarranted and unnecessarily aggressive", and that its sacking was "entirely related to strategy and performance track record".

According to industry sources, SWIP lost the mandate largely because it had failed to replace Laidlaw and Channing, its head and deputy head of property who left in July 2006, and the trust's manager Mike Cunningham who left in November, and because it was represented at the pitch by an interim head of property who had no experience of property and failed to impress the trust's four independent directors, all with long industry experience.

In its circular yesterday, the Guernsey-registered trust said: "On 20 April 2007, SWIP undertook dawn raids' on the home addresses of Tom Laidlaw and Mike Channing and the business premises of Cordatus Partners under section 1 of the Administration of Justice (Scotland) Act 1972."

Documents and hard drives were removed after SWIP told the court it expected to raise actions against Laidlaw and Channing "for solicitation of the company as a client of SWIP and solicitation of Michael Cunningham as a senior employee of SWIP these legal proceedings are still ongoing."

Laidlaw commented: "That was something that was very personal, to turn up at your houses at 9.15 on a Friday morning and go through everything, that felt very personal and unnecessary. It had been made clear to SWIP by many other people, by the board's legal adviser and by the chairman of the board who is chairman of the Guernsey Financial Services Commission, that it was the board who solicited us."

Laidlaw added: "We didn't solicit either the client or the manager and there is nothing anywhere in our system that will suggest that. It is a major distraction and you have to question the motivation behind it. I gave Scottish Widows 21 years of my life there isn't a person in the world that would turn down a contract like UKPBT if they were offered it."

The trust said that in October 2006 it had sought comfort from SWIP that Cunningham was suitably incentivised and committed to SWIP for the long term, to be told that Cunningham had agreed to an increased notice period of six months. "That was not true on 6 November, Michael Cunningham resigned from SWIP on three months' notice."

It said "11 senior individuals involved in the establishment, management, administration and marketing of the company" had resigned from SWIP since the trust launched in March 2002, and in December following a pitch by SWIP, the board became "very seriously concerned as to whether SWIP was willing to commit suitable and sufficient resources" to the trust, which is invested in some 93 properties with an average size of £4m.

SWIP was proposing to restructure the trust to invest in "prime properties", which the trust believed would cost 7.25% of the proceeds, result in conflict with other SWIP funds, and threaten the dividend.

A month later SWIP changed its description to "properties that had better quality tenants, longer lease lengths and higher rental income yields" which the trust says was "in direct contradiction with the fundamentals of property investment - better quality tenants and longer lease lengths are associated with lower rental income yields", adding: "By this point the board had lost faith in SWIP".

Meanwhile, the trust had held discussions about Cordatus, but strictly through its chairman Peter Arthur, the former Edinburgh Fund Managers and F&C executive. It awarded Cordatus the mandate on February 15. "The support of (all other) shareholders for the change in investment manager was unanimous and it was only SWIP that objected to the change," the trust said. The improved terms negotiated, including the trust taking a 25% stake in Cordatus for £100,000, enabled it to announce an increase in the projected dividend.

On May 18, the day after receiving the £1.35m compensation, SWUF announced that it was using its 10.5% holding in the investment trust to requisition an extraordinary meeting at which it would seek to install three directors, then push through a reconstruction. Shareholders could exit for cash at asset value, or roll over into a "similar" trust run by SWIP.

The trust said yesterday that the SWUF proposals would equate to a liquidation worth 160.6p a share, but it had already received potential offers from other bidders for the entire portfolio worth 165.3p.

A source close to the trust said: "These are global institutions that are bigger than Lloyds, they are not going to be frightened off. We have to get the best price for shareholders."

It is believed that SWIP may have offered to drop the legal proceedings in the event of its proposals being accepted.

A spokesman for Scottish Widows said: "SWIP are not commenting on the personal action." He said the circular was largely "hot air", and the timing of the requisition "a red herring". He said SWUF had clearly been a credible manager with strong performance or would not have been invited to pitch.

But the trust said: "SWIP cannot claim the performance track record as its own as a significant part of this performance was generated by the property managers at Cordatus Partners."

It said it was "confident of securing a higher value offer for shareholders than the opportunistic offer from Scottish Widows".

Jim McConville, chairman of SWUF, responded last night that his was "the only offer on the table".