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8 August 2022 | Case Study | Article by Roman Kubiak TEP

Court of Appeal confirms non-trust professionals can only be paid for trust administration work undertaken within their profession

The Court of Appeal has recently handed down its decision in the case of Re Townsend; Da Silva v Heselton and others [2022] EWCA Civ 880 where an executor and trustee named in a will sought to claim remuneration for services provided during the course of the administration of an estate.

Trustee remuneration (which also encompasses remuneration for executors and personal representatives) is dealt with under Part V of the Trustee Act 2000 which sought to resolve a number of issues around trustee remuneration. The explanatory notes and commentary to Part V states that:

“The provisions of this Act will govern the remuneration of “professional” trustees in two ways: first, by setting down rules of construction for express professional charging clauses in trust instruments; and secondly, by providing for the remuneration of certain trustees when there is no express professional charging clause in the trust instrument.”

Re Townsend was a case which dealt with the former.

The offending clause, found at clause 11 of the last will of a Ms Gladys Townsend, read as follows:
“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:-

(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 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.”

Such clauses, or versions of it, are regularly seen and incorporated into wills.

The trustee in question was a former executor, Mrs Sandra Heselton, who had been removed following an application under section 50 of the Administration of Justice Act 1985. Mrs Heselton had, on her own evidence, variously:

  • been employed at a law firm from 1988 to 1991;
  • been “self-employed ad engaged in business”;
  • had apparent interests in debt recovery companies;
  • been a practice manager at firms in which her husband was a partner; and
  • established a French art café and gallery.

During the course of her executorship, which lasted some 12 years, Mrs Heselton had sought to charge a flat fee of £300 per month, totalling £48,900. She relied upon Ms Townsend’s remuneration clause submitting that this had been “tailor-made specifically for her”, a submission which was rejected by the Deputy Master at first instance who, while accepting that the charging clause is not strictly limited to trustees acting in the course of a profession such as solicitors or accountants, did consider that:

“the business has to have some relevance to the matter of administering estates and, more to the point, that the administration time spent, for which it is sought to charge, should have been part and parcel of that business.”

At first instance, and on appeal to the High Court, this was successfully challenged by the incumbent administrator.

On appeal to the Court of Appeal, Mrs Heselton argued that:

  1. the Deputy Judge at the first appeal erred on the question of construction;
  2. in the alternative, that the Deputy Judge had wrongly concluded that the question of whether the work undertaken by Mrs Heselton fell within the scope of her profession or business had already been determined at first instance and that this point ought to have been remitted back; and
  3. challenging the original costs order made against Mrs Heselton.

Lord Justice Nugee, giving the leading judgment, with which Lord Justice’s Lewis and Arnold agreed, and considering Part V of the Trustee Act 2000, in particular section 28 which deals with trustee remuneration under a trust instrument, held that, the charging clause was specifically designed to remunerate those “engaged in a profession or business to charge their usual fees for work done in the course of that profession or business” (my emphasis).

While confirming that people who make wills are free to provide for any charging provision they wish in their wills, in this instance, the standard clause extended only to those engaged in the business of trust and probate administration.

The Lord Justices then went on to dismiss the second and third grounds very briefly, holding that the lower court had dealt with both matters properly.
The case is useful in affirming not only that solicitors and other professionals engaged specifically in trust and estate administration business are entitled to charge for trust and administration services but also that others who act in the course of their profession when engaged in any work relating to a trust or estate can only properly charge for that aspect of their work.

For instance, the example given in the judgment was of a self-employed builder executor who may charge their usual rates for building work needed on an estate property, whereas a dentist executor is unlikely to be able to provide any dentistry services to the estate.

Author bio

Roman Kubiak is a partner and head of the market leading Contested Wills, Trusts and Estates team.

He advises across the whole spectrum of private wealth disputes, with a particular focus on high value, complex and cross-border disputes including: trust disputes, breach of trust claims and applications to remove trustees; will disputes, particularly those with an international element; claims under the Inheritance (Provision for Family and Dependants) Act 1975; and claims for equitable relief under proprietary estoppel, constructive trusts and resulting trusts.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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