Analysis
The proceedings concerned detailed assessment as part of a beneficiary’s challenge to the legal costs incurred in the administration of the estate of his late mother. The point of dispute considered in the judgment was the fees raised by one of the two executors, Mr Shepherd, who was a solicitor. It was common ground that the will did not contain a charging clause. Mr Shepherd relied on a number of arguments. He argued that his appointment was a personal one, irrespective of him being a solicitor, and that both executors were entitled to be reimbursed their expenses incurred in fair execution of the trust. In addition the executors were said to be entitled to retain Mr Shepherd’s firm to do work on behalf of the joint executors. It was also said that the beneficiaries were aware that Mr Shepherd was charging for his fees and that those fees were approved by both executors. That state of affairs existed for more than seven years. Finally he argued that where a party acts openly undertaking a fiduciary duty, they are entitled to be paid a reasonable fee for their work, relying on the case of Boardman v Phipps [1966].
Held:
- 1) The court had to conclude that absence of a charging clause was because the testator did not expect her executors to charge for their services.
- 2) Section 28 of the Trustee Act 2000 required that the majority of other trustees agree that the professional trustee be entitled to payment in respect of services. That would require at least two other trustees, and the agreement of the one other executor could not amount to a majority. Section 29 of the Trustee Act 2000 required such agreement to be in writing from every other trustee. It was doubted that approval of invoices by Mr Hayward, the other executor, could amount to an agreement in writing as required by the Trustee Act 2000. There was nothing before the court to suggest that Mr Hayward had ever signed anything to reflect his agreement as required by the Act. The requirements of the Trustee Act 2000 were not satisfied.
- 3) Reference to the Boardman jurisdiction was an appeal to the court to exercise its inherent jurisdiction and required material to be put before the court on which to exercise that discretion. The extent of material before the court was little more than the suggestion of some form of estoppel acting upon the claimant having paid Mr Shepherd’s fees in other proceedings and the fact that the claimant was aware of Mr Shepherd’s involvement during the administration of the estate. The first point was of no assistance in support of a discretion to be exercised sparingly. Knowledge of Mr Shepherd’s involvement did not, without more, justify a charge to the estate. It was for the professional executor to demonstrate why fees should be paid rather than for the beneficiaries to prove that they should not.
- 4) The charges rendered did not fall within the retainer documentation. The extent that they were payable by the executors could only be by way of a special arrangement which was open to challenge by the third party, such as the claimant. Tim Martin Interiors Ltd v Akin Gump LLP [2011] applied.
Continue reading "Brealey v Shepherd & Co (2) [2022] WTLR 27"