Brealey v Shepherd & Co – executor remuneration when there is no charging clause

In the case of Brealey v Shepherd & Co [2024] EWCA Civ 303, the High Court Judge determined that written consent from the non-intermeddling executor was necessary under section 29(2) Trustee Act 2000 and declined to exercise jurisdiction to award remuneration.

The first-instance ruling in this case is now bolstered by the Court of Appeal's decision, expected to shape future cases in trustee and executor remuneration.

I have set out below the factual background to the case and the legal principles arising from it.

Background

This case concerned the estate of the late Mrs Ann Brealey (“the Deceased”) who died on 15 April 2014. The reason for the dispute was her last Will, dated 21 March 2014 (“the Will”), which had been created by the Defendants, Shepards & Co Solicitors (“Defendants”).

The Will appointed the Deceased’s brother, Mr Hayward (“Mr Hayward”), a solicitor who helped with the creation of the Will, Mr Shepherd (“Mr Shepherd”) and the partners at the Defendant firm, who at the Deceased’s death was Mr Smyth ("Mr Smyth").

The Deceased left her residuary estate to be divided between her son, Mr Brealey (“the Claimant”) as to 30% and her daughter-in-law and grandchildren as to receive the remaining 70%, in equal shares.

Probate was granted to Mr Hayward and Mr Shepherd on 23 June 2014, with power reserved to the other executor Mr Smyth. The value of the estate was certified as £878,680.

The main asset within the estate was the Deceased’s home, where the claimant also lived. The Claimant refused to leave the Deceased’s home, thereby necessitating legal proceedings brought by the executors in order to obtain possession. There was also a dispute about the recovery of a loan of £40,000 which the Deceased had made to the Claimant. In order to deal with these matters and also more generally with the administration of the estate the executors entered into various retainers with the Defendant. Separate retainers were subsequently entered into in respect of the repayment of the loan and the recovery of possession of the Deceased’s home.

The present dispute was brought forward by the Claimant and made a broad challenge to the level of costs claimed and to the approach taken by the Defendant firm to the administration of the estate.

Costs

The question emerged as to whether Mr Shepherd was entitled to charge professionally for his time spent on the administration of the estate in the absence of an appropriate charging clause in the Deceased’s Will.

The issue here is whether the fees claimed can properly include a charge by Mr Shepherd for acting as an executor during the period when the administration of the estate (for which he was responsible and for which he also charged) was being dealt with by Ms Sibley, another partner in the firm.

In the absence of a charging clause the Defendant must rely either on the provisions of section 29 of the Trustee Act 2000 or in the alternative on the court exercising its inherent jurisdiction to permit Mr Shepherd to be remunerated for his time and services out of the estate.

Section 29 (2) states “a trustee who acts in a professional capacity is entitled to receive reasonable remuneration out of the trust funds for any services that he provides to or on behalf of the trust, if each other trustee has agreed in writing that he may be remunerated for the services.” The judge held that the written consent of Mr Smyth, the non-intermeddling executor was required under s. 29(2) and therefore section 29 cannot be upheld. 

The Cost Judge declined to exercise the court's inherent jurisdiction and stated there is no charging provision in the Will and there is no agreement by the beneficiaries to Mr Shepherd for charging fees as an executor. The judge also confirmed if the testator has no charging clause in her Will, then it is up to the professional executor to demonstrate why fees should be paid rather than for the beneficiaries to prove that they should not. 

The Appeal Court found that the Costs Judge had been correct. There was no charging clause in the Will and remuneration under section 29 is only available to an executor acting in a professional capacity if each of the executors has agreed in writing.

This case highlights the requirement for explicit consent from all executors for a professional executor to charge for their services.