Solicitors in Westminster, London
The Court of Appeal Decide; When can executors charge for their time? Da Silva v Heselton and others
On 30 June 2022, the Court of Appeal dismissed the second appeal made by Mrs Sandra Heselton in relation to the estate of Ms Gladys Townsend who died in 2003. LBMW partner Ed Henderson, acted on behalf of the successful respondent.
The Key Issue
The case concerned an executor’s powers to charge for work done or time spent in administering the Estate. The judgment is of significance to private client and trust practitioners when drafting wills and when advising whether an executor and trustee is entitled to charge for estate administration work.
The relevant clause in the Will allowed trustees:
“who shall be engaged in any profession or business [to] charge and be paid […] all usual professional and other fees […] 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.”
The question put to the court was whether the above clause meant that a trustee:
- who happens to be engaged in a profession or business can charge for time spent on administering the estate, irrespective of whether that had any connection with their profession or business (the “wider view”); or
- can only charge for services rendered to the estate in the course of their profession or business (the “narrower view”).
The issue arose in this case because the current administrator, Mr Bunton, challenged the right of the former executor, Mrs Heleston, to have charged the Estate for her time in arranging the rental of the deceased’s property.
The High Court Decision
When brought before Mr Stephen Lloyd sitting as Deputy Master, it was held that the narrower view was correct. The Deputy Master noted the lack of evidence put forward by Mrs Heselton in relation to what her profession and business was and how this was relevant to the Estate administration. He was therefore not satisfied that the Mrs Heselton’s activities in administering the estate were done in the course of any business she was conducting.
The First Appeal
Mrs Heselton’s first appeal was dismissed by Mr David Rees QC, sitting as Deputy High Court Judge. He rejected the wider view and concluded that an executor could only charge for work done or time spent in the administration of the estate if that work fell within the scope of their profession or business. Mrs Heselton was however granted permission to appeal to the Court of Appeal.
The Second Appeal
Mrs Heselton’s second appeal has now also been dismissed by the Court of Appeal (Nugee LJ giving the lead judgment). It was determined that the charging clause should be interpreted narrowly. It was held that the will only permitted an executor who was engaged in a profession or business to charge for their time spent or work done in connection with the administration of the estate if the time spent is done in the course of that profession or business. So, Mrs Heselton’s role as practice manager in a firm of solicitors and her role as director of an arts café were not sufficient to allow her to charge the Estate for her time spent in connection with the Estate property.
There were three grounds of appeal:
- The Deputy Judge erred on the question of construction
- In the alternative, the Deputy Judge wrongly concluded that the question whether the work done by Mrs Heselton had fallen within the scope of her profession or business had already been determined by the Deputy Master
- The costs orders in both lower Courts were challenged
The majority of the appeal focused on the first ground. It was agreed that the charging clause included any profession and was not limited to a profession or business which was directly relevant to estate administration. Nugee LJ used the example of an executor who is a builder. If the Estate included property which needed work to make it more readily saleable, the executor could charge his usual rates for carrying out such work. However, that executor would not have a usual hourly rate for estate administration work and therefore could not charge for administration work which was outside of his profession or business as a builder.
Nugee LJ held that the clause enabled those who are engaged in a profession or business to charge their usual fees for work done in the course of that profession or business. Where the executor has the relevant professional skill or business experience, it makes sense for them to charge for their time because if they did not carry out the work, the Estate would need to pay another person in the same profession or business to do so. On the other hand, it would not make sense to pay an executor for work that they do where they have no relevant professional skill or business.
Reference was made to section 28 of the Trustees Act 2001, which supports the view that charging clauses can be relevant to work done by a lay executor, but only where the executor is acting in a professional capacity and in the course of a profession or business.
Nugee LJ concluded that:
“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.”
The key points of the case are relevant for private client and trust practitioners both when drafting wills and when dealing with estate administration. It highlights the importance for practitioners to understand a testator’s intentions in relation to why particular executors are to be appointed and when they want executors to be able to charge for their time, so that the charging clause accurately reflects these intentions.
When dealing with estate administration, practitioners should also ensure that executors are only charging their time within the parameters of the charging clause and that the work done or time spent:
- is in connection with the administration of the estate;
- falls within the scope of their profession or business; and
- the work attracts or incurs their usual professional fees.
Lastly, it was noted in both appeals that Mrs Heselton lacked evidence proving what her profession or business was, how this was relevant to the Estate and what work had been done for which she was charging time. Executors should be able to evidence what their profession or business is, it’s relevance to the administration, the work they carry out and the associated fees.