In the recent Court of Appeal judgment of Da Silva v Hesleton & Ors (2022) EWCA Civ 880, there has been a landmark decision as to the correct interpretation of a standard Trustee Remuneration Clause.

The clause is and has doubtless been used many times in Wills and Trust instruments.

In terms of the background to this matter, it related to the Estate of Gladys Townsend (Deceased), who passed away in 2003. By her will, she appointed Sandra Heselton and Ronald Armour to be the Executors of her Estate.

However, following court proceedings brought by Jacqueline Da Silva (the residuary beneficiary) in 2015, both executors were removed and a solicitor, Peter Brunton, was appointed as the replacement administrator.

Mr Brunton then applied for a declaration that Sandra Heselton had no right to charge remuneration to the deceased’s estate.

The will contained the following provision:

“MY TRUSTEES shall have the following powers in addition to their powers under the general law or under any other provisions of this will or any codicil hereto:-

…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 done 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”

Sandra Heselton gave evidence to the court that she was involved in a number of businesses, including property management, and claimed a flat fee of £300 per month for her work in administering the estate, which principally comprised of a residential property belonging to the estate having been rented out for over thirteen (13) years.

The Issue

The court’s task was to decide whether:

(i) a trustee engaged in a profession or business may charge for all work done or time spent on the administration of the estate, irrespective of whether that work had any connection with their profession or business (the wider view which Sandra Heselton argued should be taken); or

(ii) a trustee can only charge for services rendered to the estate in the course of their profession or business (the narrower view which Peter Brunton argued should be taken).

At first instance, Deputy Master Lloyd opted to take the narrower view, a decision shared by Mr David Rees QC sitting as a Deputy High Court Judge at the first appeal.

The Court of Appeal, however, then gave permission for a second appeal on a point of general public importance.

The Court of Appeal Judgment

Now, the judgment of the Court of Appeal has been handed down and, unanimously, the court has dismissed Sandra Heselton’s appeal and confirmed that the narrower view was the correct one.

It was stated as follows:

“a trustee or executor can rely upon the charging clause in the will to charge for work done or time spent in the administration of the estate only if that work falls within the scope of their profession or business in question; that is to say if it is work of a type which would attract or incur their usual professional fees.”

Further, the Court of Appeal made the following key points:

(i) A trustee who is a member of any profession, or engaged in any business, may in principle benefit from the clause in question, even if that business does not directly concern the administration of estates or trusts. This takes such clauses beyond the scope of section 28 of the Trustee Act 2000, which applies only to those engaged in trust administration;

(ii) A trustee may, however, only charge for work done in the course of their business, not for any work whatsoever done in the administration of the estate [40]. So, for example, a surveyor-trustee may charge for carrying out a valuation of estate property, but may not charge for attending meetings in relation to other matters. Similarly, a self-employed builder may charge if building work is required to an estate property, but not for any other work outside of his business.

(iii) The purposes of remuneration clauses is not to compensate executors for the loss of their time in carrying out the administration of the estate, but to reward work done which is valuable to and benefits the estate, for which a trustee would not otherwise be permitted to be paid.

(iv) The words “including work done or business outside the ordinary course of his profession” is designed to permit professionals from being denied remuneration for work which falls outside of their usual practice. For example, a surveyor who usually values only commercial property valuing residential property.

(v) The words “which he could or should have done personally …” is intended to avoid the argument that it was not strictly necessary for a professional (i.e. the executor) to have been engaged.

Summary 

This judgment will have a significant impact upon any professionals acting as executors and / or trustees for whom estate / trustee administration is not their principal occupation (e.g. IFAs, accountants, barristers, land agents, surveyors and businesspersons etc).

It is a little surprising that, notwithstanding the words “including work done or business outside the ordinary course of his profession”, the trustee is not entitled to charge for work unless it falls within the course of his profession or business.

No doubt the distinction between “the course of his profession” (necessary) and “the ordinary course of his profession” (not necessary) will be the subject of further disputes in the future.

Given that many of the initial tasks of estate administration (such as sifting through the deceased’s paperwork and documentation) would not attract a usual professional fee for anyone other than a Solicitor practising in estate administration, the question of remuneration may become necessary to consider at an early stage.

It may well be that professionals named as executors and trustees decide not to embark upon the process themselves, but to instruct solicitors instead to do the work for them. That will, though, no doubt come at a greater cost to the estate or trust in question.

We can help you

If you are appointed as an executor or trustee where estate or trust administration is not your ordinary business or profession, and you are concerned about your right to be remunerated, or you are a beneficiary of an estate or trust and have concerns about the remuneration being charged by the executor or trustee, then please do contact us. Our Contested Wills, Trusts and Estates Team is here for you. Visit https://www.porterdodson.co.uk/contested-wills-trusts-and-estates or call 01823 625841.

We handle a variety of disputes and issues surrounding estates, trusts and how they are administered. Further, we can offer high quality, cost-effective legal advice on such matters.