Had this as well at first, I then cleared the other mobs that were around and went back to him. That seemed to get him unstuck and he acted as he should.
However, the one issue I can't seem to resolve is Lyris not reacting to enemies...
PAWS (Positively Against Wrip-off Stuff) - Say No to Crown Crates!. Outfit slots not being accountwide is ridiculous given their price. PC EU/PC NA roleplayer and solo PvE quester
I got it to work by logging out for 10 mins, logging back in and starting the quest again. Then I let Cadwell go first and let mobs attack him. Just stay back and don't do anything until he fights. You might have to attack the last two guards though. But if you just let him attack as much as possible it should work.
I got it to work by travelling to another player and then re-entering the instance. The mobs had respawned and then I just let Cadwell go in front do most of the fighting.