Date updated: Tuesday 1st March 2022

As considered in our Legacy Team Bulletin of 30 January 2020, the issue of professional executors charging for their time spent in the administration of an estate remains a relevant issue and was recently considered by the High Court in Da Silva v Heselton (and Others) [2021] EWHC 3079 (Ch) and by the Senior Courts Costs Office of the High Court in Brealey v Shepherd & Co [2021] EWHC B26 (Costs).

If you have any queries in relation to the above or would like further information, please contact Sean Knight at seanknight@stoneking.co.uk.

The High Court held that an executrix who was engaged in businesses unrelated to the administration of estates or trusts could not rely upon a standard form of professional charging clause contained in a Will to charge for her time spent in the administration of an estate.

Background

Under the terms of a Will dated 28 June 2001, the appellant, D1, was made an executrix. The testatrix died on 01 July 2003 leaving property in England and Dominica, with the residue left to C. Notwithstanding the fact a Grant of Probate was issued on 02 December 2004, by 2015 the estate had still not been administered and proceedings were issued by C. By an order of 02 June 2016, D1 consented to her removal as executrix and was (along with her co-executor who had lost capacity) substituted by the respondent, D4 (a solicitor).

During the period of her time as executrix, D1 sought to charge a monthly fee of £300, totalling c.£43,350, contending that she was entitled to do so under the charging clause in the Will. The charging clause provided:

"MY TRUSTEES shall have the following powers in addition to their powers under the general law or under any other provision of this Will or any Codicil hereto:

(g) for any of my Trustees who shall be engaged in any profession or business [to] charge and be paid (in priority to all other dispositions herein) all usual professional and other fees and to retain any brokerage or commission for work or business introduced transacted or done or time spent by him [or] his firm in connection with the administration of my estate or the trusts powers or provisions of this Will or any codicil hereto including work or business outside the ordinary course of his profession and work or business which he could or should have done personally had he not been in any profession or business"

On 4 June 2019, D4 issued an application seeking a declaration that D1 was not entitled to charge the estate. The master held D1 could not charge under the clause. The master accepted that the charging clause extended to cover a trustee engaged in a non-trust administering business, but held that business must have some relevance to the administering of estates, and more importantly, time spent administering the estate must be part and parcel of that business. D1 appealed the decision.

The Court’s Decision

The judge accepted that the words “any profession or business” are wide words and potentially capable of applying to a person who is engaged in any form of profession or business, even if that profession or business had no connection with the administration of estates. However, an executor may only charge “all usual professional and other fees”, where those “usual…fees” must be for “work or business…done or time spent by him…in connection with the administration of my estate”. In this case, D1 was unable to demonstrate that her activities in administering the estate were done in the course of the businesses she had identified.

The judge noted that the construction advanced by D1 would have the arbitrary effect of allowing a lay executor/trustee engaged in a business wholly unconnected to the administration of estates or a trust to charge for their time spent as trustee, whilst a lay executor/trustee not engaged in such a business could not. That construction was inherently unlikely to have been the intention of the testatrix, as well as contrary to common sense. The appeal was therefore dismissed.

Considerations for Charities

The case raises a number of important considerations for charities benefiting under an estate administered by professional executors seeking payment under a charging clause in a Will. Charities may be able to challenge those charges and should bear in mind: 

  1. An executor/trustee must demonstrate that the work in question is such that it would attract a “usual professional or other fee” from someone who is engaged in their profession or business.
  2. An executor engaged in business other than administering estates and trusts seeking to rely on a charging clause should provide detailed evidence of their business and how their time spent in administration of the estate is done during the course of that business.
  3. An executor engaged in business other than administering estates and trusts will face difficulty demonstrating they can rely on standard form charging clauses to charge for time spent administering the estate. If a testator/testatrix wishes to provide for such a class of executor/executrix, they will have to depart from a standard form charging clause.
  4. Charging clauses will be construed restrictively, with any doubt resolved in favour of the beneficiaries.

 

You can read the judgment here.

The Senior Courts Costs Office of the High Court disallowed fees charged by a solicitor (‘Mr Shepherd’) in his role of executor (rather than his role as solicitor) because:

  1. There was no charging clause in the Will.
  2. There was no agreement by the beneficiaries to Mr Shepherd charging fees as executor. The court held that, in the absence of a charging clause in the Will, it was up to Mr Shepherd, as a professional executor, to demonstrate why fees should be paid rather than for the beneficiaries to prove that they should not. The fact that the claimant knew of Mr Sheperd’s involvement did not on its own justify a charge.
  3. Mr Shepherd’s fees as executor were not approved by the other executors within the terms of sections 28 and 29 the Trustee Act 2000; and
  4. There was insufficient information before the Court to allow it to exercise its inherent jurisdiction to authorise the remuneration of a personal representative in circumstances where it would be inequitable for beneficiaries to benefit from their skill and labour without paying for it.

In any event, this power should only be exercised in exceptional circumstances and, in this case, Mr Shepherd had given no explanation as to why his fees were justified (in addition to Mr Shepherd’s firm charging a separate fee for administering the estate).

Although the majority of Wills appointing a professional executor contain a charging clause, in the absence of one, the case helpfully sets out the arguments a professional executor may seek to argue to charge fees. If such a case arises, charities should request a breakdown of the executor’s fees and an explanation of the basis that they are charging.

You can read the judgment here.