Solicitors in Westminster, London
Executors: When profession counts
Executors: When profession counts
The issue of the case was whether an executor, who was involved in a profession or business which was ‘unrelated to the administration of trusts or estates’, could rely on the professional charging clause.
Catherine Pugsley and Laura Southern report on executors’ misplaced reliance on charging clauses
It is generally held that the job of a trustee or executor is a gratuitous one and therefore no remuneration is granted for their work (Lewin on Trusts). Nevertheless, the existence of charging clauses, the role of statute and the power of the court provides some exceptions to this general rule. Arguably, these exceptions are relied upon too heavily by trustees and executors who wish to be rewarded for the time spent during the administration of an estate or trust. Such a clause was put to the test in Da Silva v Heselton .
The case of Da Silva had initially been heard in the High Court in 2019 before Deputy Master Lloyd. The case was appealed in 2021 and Deputy High Court Judge David Rees dismissed the appeal.
Facts of the case
Mrs Heselton, the former executor, appealed against the High Court decision that she had not been entitled to charge the estate for the work she had done during her period of administration. The High Court had agreed with the claim by the personal representative, Mr Brunton, that Mrs Heselton had not been entitled to charge the estate under the charging clause in the will.
The appeal judgment explores the right, or in this case lack of, for trustees and executors to charge for their services during the administration. Read with s28 of the Trustee Act 2000, a charging clause in a will can permit executors to charge for work they do during the administration of an estate. Nevertheless, their existence does not guarantee remuneration for their services and time. Instead, they often lull the executor into a false sense of reliance and a presumption that they can charge for the work they carry out during the administration. More often the courts will interpret these clauses restrictively and not permit the remuneration.
In Da Silva, the deceased appointed her friend Mrs Heselton, in her will, as an executrix and trustee of her estate. Mrs Heselton later claimed that she was entitled to charge for the work she carried out as executrix during the administration because of the existence of a charging clause. Mrs Heselton attempted to charge a monthly fee of £300 primarily for managing the letting of the deceased’s house, the total of which during the period of administration would have been £43,350 had the charges been permitted. For comparison, the rental income earned from the estate during this same period was £48,900. The issue of the case was whether an executor, who was involved in a profession or business which was ‘unrelated to the administration of trusts or estates’, could rely on the professional charging clause.
The charging clause itself contained typographical errors but was drafted to state that any of the trustees:
… who shall be engaged in any profession or business [should be able to] charge and be paid all usual professional and other fees… for work or business introduced transacted or done or time spent by him [or] his firm in connection with the administration of my estate.
Trustees were defined as those who would become an executor or trustee under the will. Therefore, if the clause was considered to be capable of being relied upon, Mrs Heselton would be able to charge for work done as a trustee and executrix.
In 2019 Mr Brunton made an application to declare that Mrs Heselton was not a professional executor and should not be entitled to charge for work she had done in the administration. This application was dealt with by Deputy Master Lloyd, who concluded at para 8 that a charging clause is not ‘restricted’ to a trustee who is a lawyer or accountant but does extend further to someone simply ‘engaged in business’. The business should have ‘relevance’ to the administration of estates. Additionally, the time spent on the administration, for which the executor is seeking to charge, should be ‘part and parcel of that business’. Deputy Master Lloyd assessed the evidence Mrs Heselton presented to support her assertion that she was engaged in a profession or business. The evidence that she provided was held to be vague and lacking in detail and therefore did not demonstrate that her work in the administration was in the course of her business. For that reason, Deputy Master Lloyd made the declaration for Mr Brunton.
Mrs Heselton appealed these grounds, claiming that it was incorrect to conclude that the charging clause required that the executors’ businesses or professions must be relevant to estate administration. She claimed instead that the clause entitled executors to remuneration for the services they provide even if the profession or business ‘does not pertain to trust administration at all’ (Lewin on Trusts).
On appeal Deputy High Court Judge David Rees considered the meaning of the charging clause in light of:
- the natural and ordinary meaning of the words used;
- the overall purpose of the document;
- any other provisions of the document;
- the facts known or assumed by the parties at the time that the document was
- executed; and
- common sense.
It was held that the true meaning of the clause was to allow a trustee to charge for ‘all usual and professional fees’, but these fees must be for work done or time spent in connection with the administration of the estate. Further, this phrase determined which work was chargeable and the costs involved. There must be a relationship between the ‘scope of the profession’ and the work done by the trustee in the administration. Therefore, if the trustees carry out work which would arise in the usual scope of their profession, even if it does not involve trust or estate administration, they can charge for this work. The trustee must be able to show that the work done would attract a ‘usual professional [or] other fee’. This point is crucial to the case and, as we will see below, concurs with the conclusion in Re Orwell’s Trust : the executor can only charge a fee where they are engaged in business which is useful and related to the administration. Mrs Heselton was not able to satisfy these criteria.
Ability to charge
Charging clauses and s28 Trustee Act 2000
Section 28 of the Trustee Act 2000 allows for a charging clause to be deployed and on occasion this has been successful. The trustee must be acting in their ‘professional capacity’. A trustee is said to act in their professional capacity if they act in the course of a profession or business which consists of the provision of services in connection with the administration or management of trusts generally. In Re Orwell’s Trust the will contained a charging clause which allowed trustees, but not executors, to charge fees. However, the court held that a literary executor, who was a director and shareholder of a company concerned with literary agents, was entitled to rely on the charging clause to charge for his services carried out which were solely related to the administration thanks to his specialist knowledge. Here the charging clause could be relied upon by a professional executor who successfully charged for their work because their skill was useful to the administration.
Section 29 Trustee Act 2000
Under s29 of the Trustee Act 2000 a trustee or lay trustee can receive reasonable remuneration, where they act in their professional capacity and the other trustees have agreed to this remuneration. As it was held that Mrs Heselton was not acting in a professional capacity, as defined under s29, she could not rely on this ground.
Order by the court
Further, where there is no charging clause in the will or trust deed, the court has indicated that they can intervene and award remuneration. This was established in Brealey v Shepherd  where a solicitor, who was also the executor, attempted to charge for their role as executor during the administration of the estate even though their firm also charged a separate fee for the administration. In this instance there was no charging clause in the will and no agreement from the beneficiaries that the executor could charge.
Interestingly, the judge considered whether it would be inequitable for the beneficiaries to benefit from the skills and work that the executor had done while the executor worked gratuitously. Even though in this instance the court did not exercise the power, it was considered that in extreme circumstances the court would intervene and award remuneration.
Brealey also offered a useful comparison between the types of work where the executor can charge. The judge distinguished between the fee for simply acting as an executor and the fee for work involved in the administration of the estate. The judge rejected the proposed fees by the claimant for his role as executor. The fees for his role as a solicitor in the technical administration needed explanation and further assessment. This is an important point for practitioners. It is an indication that the work that they are doing must be clearly distinguished and recorded so that if there is ever any question over the fees that are charged, they can be clearly distinguished too.
Where there is no charging clause in the will an executor can enforce recovery of out-of pocket expenses only under s31 of the Trustee Act 2000. The beneficiaries can agree to pay the executor a fee for the administration beyond this, but there is no obligation to and this must be agreed by all of the beneficiaries.
Lessons to be learnt
From Da Silva it appears that the court will have regard for the profession or business with which the executor is engaged, and this will help determine whether they may be able to rely on a charging clause in the will. It may be useful to employ an example here: imagine that a practising land agent was appointed as an executor in a will which contained a charging clause drafted as follows:
Any trustee of this will being a solicitor or other person engaged in any profession or business may be employed or act in that profession or business and shall be entitled to charge and be paid all professional or other charges for any business or act done by that trustee or that trustee’s firm in connection with the trusts of this will.
The deceased’s estate in this example is largely comprised of quantities of arable land which the land agent had experience of dealing with throughout their career. In this instance, it would be likely that they could rely on the charging clause for their work done in the administration if this work would usually be charged for in the course of their profession. This conclusion follows the discussion of the court in Re Orwell’s Trust: the court is likely to permit an executor to be able to charge a fee for their work in the administration if this work relates to the business which the executor is professionally engaged in and work for which they would usually charge. In addition, if there was not a charging clause then, following the case of Brealey, the court may use its power to award remuneration, as the land agent would have professional experience of dealing with that particular land and it would be inequitable for the beneficiaries to profit from the knowledge and expertise of the land agent.
Evidently, the importance of clear construction of a charging clause in a will or trust is vital so that there can be no room for doubt or interpretation of what was intended by the settlor or testator. Even though the courts can give effect to charging clauses, it is more common that they are construed restrictively. Professional executors or otherwise should be warned not to rely on the existence of a charging clause in a will or trust as a guarantee of remuneration.
It is prudent for practitioners to encourage their client to discuss with them the role of the proposed executor, before appointment, and their ability, or lack of, to charge for the work that they do. In Da Silva it was clear that the judge considered the facts understood by the parties at the time the document was executed. In addition, it may be sensible for the client to consider the reason why they are appointing a particular person as a trustee or executor. Is it because they hold the necessary professional skills which are needed in the administration of the estate, or because they have professional skills which relate to a specific aspect of the estate? Only then can their professional services be remunerated and the court, where appropriate, may intervene to award remuneration when it is challenged by other parties.
Lee Bolton Monier-Williams instructed Michael Paget for the fourth defendant/respondent, Peter Brunton, in Da Silva both in  and 
Lewin on Trusts (20th ed, 2020), Volume 1, Part 3 – ‘The Trustees’, Chapter 20, Section 1, ‘General’
Brealey v Shepherd & Co No. 2  EWHC B26 (Costs) (to be reported in the next issue of the Wills and Trusts Law Reports)
Da Silva v Heselton & ors (2019) unreported High Court Deputy Master Lloyd 28 August
Da Silva v Heselton & ors  EWHC 3079 (Ch) (to be reported in the next issue of the Wills and Trusts Law Reports)
Re Orwell's Trust  1 WLR 1337
Catherine Pugsley and Laura Southern, 'Executors: When profession counts', (March 2022 #231) Trusts and Estates Law & Tax Journal, https://www.lawjournals.co.uk/2022/02/14/trusts-estates-law-and-tax-journal/executors-when-profession-counts
First published in Legalease Law Journals March 2022 #231 – Law Journals
The contents of this article do not constitute legal advice and are provided for general information purposes only. The contents are copyright of Lee Bolton Monier-Williams LLP. All rights reserved.