The High Court of England and Wales has, in the case of Mussell v Patience (2018 EWHC 430 Ch), ruled that an executor who receives and pays for legal advice during the administration of an estate need only show that the estate’s money has been spent on ‘proper estate business’.
The case involved the estate of Louis Patience, who died in 1997. The beneficiaries were his four adult children and his executors were his daughter, Anita Mussell and his then solicitor, David Williams. The executors subsequently obtained a grant of probate and began to administer the estate.
Before the assets were distributed, however, a dispute arose between the executors and two of the beneficiaries, Christopher and Veronica Patience. The beneficiaries objected to some 26 payments contained in the estate accounts for the payment of legal fees from two different firms. They objected on the basis that the entries in the estate accounts and the supporting documentation did not contain enough information to confirm whether or not the charges incurred were ‘reasonable’. Additionally, they argued that it was for the executors to show that the legal fees were reasonable.
Following failed mediation and subsequent court action, the executors asked the court to confirm that the estate accounts were correct and give direction that the estate be administered accordingly.
The judge, Matthews HHJ, considered the evidence contained in the estate accounts as well as the various invoices from the two law firms. It is important to note that the invoices spanned a period of 20 years, following the death of the testator in 1997. As such, some invoices merely contained the name of the estate, the addressee of the invoice, a statement from the firm that the charge incurred was a ‘professional charge’ and the amount due. Others included a more detailed breakdown of costs and, in addition to the details prior, details of work completed, time spent in completing the work, details of the fee earner and their rate; it may come as no surprise that the beneficiaries did not object to these invoices.
As a previously untested point of law, neither party was able to refer Matthews HHJ to a legal test for challenging an entry in an executor’s account. Matthews HHJ concluded that the executors did not need to justify at the outset that the vouchers were reasonably incurred or reasonable in amount – those are matters which should be reserved for solicitors’ costs.
Instead, an executor need only show:
1. That the sum concerned was indeed spent; and
2. That it was spent in the fair execution of the estate administration.
An executor should be able to show this by supplying, for example, a voucher proving payment and showing some connection to the estate. However, the invoice need not provide a detailed breakdown of the total charged, such as the number of hours worked or the solicitor’s hourly rates. Accordingly, Matthews HHJ invited the two beneficiaries to reconsider their objections.
The case signifies the first effort to resolve the question as to the correct legal test to apply in challenging an entry in an executor’s account. Whilst the decision will be welcomed by those executors whose expenses are being challenged, it will not be greeted with such enthusiasm by the beneficiaries seeking to challenge those costs. Nonetheless, it is clear that each case will be decided upon its own merits, and further guidance is welcomed in this previously untested area of law.
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