Recovering costs under a professional charging clause

The recent case of Re Townsend (Deceased) [2021] raised a question about whether an executor who is engaged in a profession or business unrelated to the administration of trusts or estates can rely upon a common form of professional charging clause contained in a will to charge for time spent on the administration of the estate.

Background

The matter before the court was one point in a much wider dispute relating to the administration of the estate of Gladys Townsend (“Gladys”) who died on 1 July 2003 leaving property in both England and Wales and in Dominica.

Gladys left a will dated 28 June 2001 which appointed Sandra Heselton (“Sandra”) and Ronald Armour (a solicitor in Dominica) (“Ronald”) as her executors and trustees (“the Executors”). A grant of probate was issued in their favour on 2 December 2004.

In December 2015, Jacqueline da Silva, the residuary beneficiary under Gladys’ will issued a claim seeking, amongst other things, the Executors’ removal and the appointment of Peter Brunton (“Peter”), an English solicitor in their place.

An order removing the Executors was made on 2 June 2016. Sandra had consented to her removal. Ronald by then lacked capacity and so was unable formally to consent or object to his removal. Ronald died on 7 August 2017. Peter was joined as a defendant to the proceedings by an order dated 15 May 2018.

Sandra sought to charge the estate for her time and work for the period in which she had acted as an executor at a monthly fee of £300.00. In total she charged some £43,350.00.

On 4 June 2019 Peter issued an application seeking a declaration that Sandra was not entitled to charge the estate.

The charging clause

The relevant charging clause was set out at clause 11 of Gladys’ will. With typographical errors corrected, it provided as follows:

“MY TRUSTEES shall have the following powers in addition to their powers under the general law or under any other provision of this Will or any Codicil hereto …

(g)        for any of my Trustees who shall be entitled 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 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.”.

First instance decision

The matter came before Deputy Master Lloyd. Sandra provided some evidence that she had been engaged in a profession or business which he reviewed and in summary, included the following:

• A wholly unspecified “business” in which Sandra had been engaged since 1991 which enabled her to establish a law scholarship;
• Debt recovery companies which had been operating since about 1992. Sandra’s interests in those companies were unspecified;
• Practice manager for her husband’s firm of solicitors since 1992. It was unclear whether she was employed, self-employed or simply helping out her husband;
• A “French Art Café and Gallery” which she established in North London in 2014; and
• A claim that she was “engaged in business and the management of commercial and residential property” since before Gladys’ execution of her will.

He confirmed that he agreed charging clauses were not restricted to a trustee who pursued a profession such as a solicitor or accountant and extended to a person who was engaged in business but held that the business should have some relevance to the matter of administering estates and more importantly that the administration time spent should have been part and parcel of that business.

The Deputy Master concluded that he was not satisfied that Sandra’s activities in administering Gladys’ estate were done in the course of those businesses. Accordingly, he made a declaration in Peter’s favour. Sandra sought to appeal the decision.

Sandra’s case

At the appeal hearing, Sandra’s counsel argued that the Deputy Master was wrong to conclude that the charging clause required that the executor’s business or profession needed to be relevant to estate administration. He accepted that the clause in the will was in a common, standard form but sought to rely on a passage in Lewin on Trusts (20^th Edition, paragraph 20-016) which stated that a professional trustees charging clause is not confirmed to solicitors.

He went on to argue, amongst other things, that the Deputy Master’s construction was contrary to the plain meaning of the words used as interpreted according to the ordinary principles of construction.

Peter’s case

Peter’s counsel opposed the appeal. He argued that Sandra was not entitled to charge for her time spent performing her role as executor. His principal argument was that in the context of a clause such as the present one which entitles an executor to charge for work done “in connection with the administration of the estate”, the executor must be able to demonstrate that they are able to bring some expertise which will assist with the administration of the estate.

Discussion

Having heard argument from both parties’ counsel, the Deputy Master reviewed the specific words used in the clause. He noted the clause applied to a person engaged in “any profession or business”. He considered, on their face, these were wide words and he accepted that they were potentially capable of applying to a person who is engaged in any form of profession or business, even if the scope of that profession or business had no connection with the administration of estates. However, he did not consider that this meant the ability of a person to charge under the clause was not unconstrained.

In this respect, he considered the inclusion of the words “usual professional and other fees” were key to the meaning of the clause. These words, he said, governed not just the amount of the fee that could be charged but the nature of the work for which a fee may be charged. The words “usual professional and other fees” required there to be a link between the scope of the profession or business in question and the work that the trustee had carried out in connection with the administration of the estate and in respect of which he sought to charge.

He went on to say that the natural meaning of the words used in the clause required one to look at the work or business done and consider whether in the profession or business of the trustee in question a “usual professional or other fee” would be chargeable for such work.

Judgment

On the evidence the Deputy Master concluded that he was not satisfied Sandra’s activities in administering Gladys’ estate were done in the course of the businesses that she had identified. Accordingly, he dismissed her appeal.