In the case of Da Silva v Heselton, the England and Wales Court of Appeal (ECWA) recently dismissed Sandra Heselton’s claim to be paid for her time administering the estate of Gladys Townsend, despite the fact that the Will appointed Mrs Heselton as Executor, and included a clause authorising that: “any of my Trustees who shall be engaged in any profession or business to charge and be paid…all usual professional and other fees” (Da Silva v Heselton Re Estate of Gladys Dulcie Townsend, 2022 EWCA Civ 880).
The Appeal Court ruled that the charging clause did not apply where the Executor’s profession had nothing to do with estate administration. Lord Justice Nugee upheld the High Court’s decision that the Executor could not charge for her time spent in connection with the estate administration, despite the existence of a professional charging clause.
This landmark case confirms the restrictions on the ability of executors and trustees to charge fees for administering an estate, even if the relevant will contains a clause which could be interpreted widely to allow them to do so. Specifically, the ruling set out that fees cannot be charged in instances where the executor’s usual occupation does not involve estate administration (e.g., surveyors, accountants, financial advisors).
Ms Townsend died on 1 July 2003 leaving a will dated 28 June 2001, with Mrs Heselton appointed with one other as her executors and trustees. The Appeal arose after a beneficiary successfully applied under Section 50 of the Administration of Justice Act 1985 for Mrs Heselton’s removal as an executor. Her replacement, Mr Brunton then challenged whether Mrs Heselton could charge for the time she had spent arranging to rent out a property that fell within the estate.
The key issue before the High Court was whether a trustee engaged in a profession or business may charge for all work done or time spent on the administration of the estate, irrespective of whether that had any connection with their profession or business (the wider view); or whether they can only charge for services rendered to the estate in the course of their profession or business (the narrower view). Both Deputy Master Lloyd and Mr David Rees QC sitting as a deputy High Court judge (on appeal) opted for the narrower view.
The Court of Appeal gave permission for a second appeal on a point of general public importance. In a unanimous decision, the Court dismissed the appeal and confirmed the narrower view:
“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.” (emphasis added)
This decision reconfirms that lay executors are not usually remunerated for their time, and will be particularly relevant for those executors who are professionals, but for whom estate administration is not their principal occupation. It could come as a surprise that notwithstanding the words “including work done or business outside the ordinary course of his profession”, the trustee is not entitled to charge for work unless it falls within the course of his profession or business.
As a result, it may well be that executors named in Wills decide not to get involved with managing an estate themselves if they are not to be remunerated. Instead, and because lay executors can recover expenses, the likelihood is they will need to instruct solicitors to do the work for them (almost certainly at a greater cost to the Estate).
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