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England and Wales Court of Appeal (Civil Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Brealey v Shepherd & Co Solicitors [2024] EWCA Civ 303 (26 March 2024) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2024/303.html Cite as: [2024] EWCA Civ 303, [2024] 3 WLR 585, [2024] WLR(D) 146 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
Mr Justice Cavanagh
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE COULSON
and
SIR NICHOLAS PATTEN
____________________
PETER IAN BREALEY |
Claimant/ Respondent |
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- and - |
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SHEPHERD & CO SOLICITORS |
Defendants/Appellants |
____________________
Andrew Williams and John Meehan (instructed by Jones & Co Solicitors) for the Respondent
Hearing date: 20 February 2024
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Crown Copyright ©
Sir Nicholas Patten:
"(2) Subject to subsection (5), a trustee who—
(a) acts in a professional capacity, but
(b) is not a trust corporation, a trustee of a charitable trust or a sole trustee,
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.
(3) 'Reasonable remuneration' means, in relation to the provision of services by a trustee, such remuneration as is reasonable in the circumstances for the provision of those services to or on behalf of that trust by that trustee ....
...
(4) A trustee is entitled to remuneration under this section even if the services in question are capable of being provided by a lay trustee.
(5) A trustee is not entitled to remuneration under this section if any provision about his entitlement to remuneration has been made—
(a) by the trust instrument, or
(b) by any enactment or any provision of subordinate legislation."
"(5) For the purposes of this Part, a trustee acts in a professional capacity if he acts in the course of a profession or business which consists of or includes the provision of services in connection with-
(a) the management or administration of trusts generally or a particular kind of trust, or
(b) any particular aspect of the management or administration of trusts generally or a particular kind of trust,
and the services he provides to or on behalf of the trust fall within that description."
"(1) Subject to the following provisions of this section, this Act applies in relation to a personal representative administering an estate according to the law as it applies to a trustee carrying out a trust for beneficiaries."
"'personal representative' means the executor, original or by representation, or administrator for the time being of a deceased person;"
"7.10 To meet these concerns, the Commission has decided to adopt a modified approach. One option that was put forward in the Consultation Paper, not in relation to trusts generally, but only as regards charitable and pension trusts, was that the trustees collectively should have power to authorise one (or more) of their number to charge for his or her professional services to the trust. The trustees would then have to determine in each case whether it was appropriate to allow any of their number to be remunerated. In doing so they would need to consider all the circumstances — including the nature of any benefit which the testator or settlor had conferred upon the particular trustee or trustees in question. The trustees would not be obliged to apply any rigid rule of construction in making their decision, but would exercise their discretion in the interests of the trust.
7.11 This approach has additional advantages. The Commission considers that, as a matter of principle, in the absence of an express charging clause, trustees should actively consider whether one of their number should be remunerated. Before permitting any trustee to charge for his or her services, the trustees as a whole would have to consider whether this would be to the advantage of the trust. They would need to consider, for example, whether that trustee is the most appropriate person to provide particular services to the trust (and, if so, whether he or she should reasonably be expected to do so free of charge), or whether it would be better to employ an agent. Nevertheless, the Commission does not think that this approach would be suitable where the trustee in question is a trust corporation. In addition, it would not be appropriate in cases where there is a sole trustee which is not a trust corporation, because the safeguard of collective scrutiny of the trustee's actions could not operate."
"37. There is no charging provision in the will and there is no agreement by the beneficiaries to Mr Shepherd charging fees as an executor. The fees have not been approved by the other executors within the terms of the Trustee Act and therefore the only route left for Mr Shepherd would be an application of the Boardman jurisdiction. Having looked at the decision of Re Barbours Settlement Trusts, it seems to me that the requirement for a formal application supported by evidence was rather stronger in that case than it would be here. Nevertheless, reference to the Boardman jurisdiction is essentially an appeal to the court to exercise its inherent jurisdiction and that automatically requires there to be material put before the court on which to exercise that discretion.
38. The extent of the material before the court here appears to amount to little more than a suggestion of some form of estoppel acting upon the claimant having paid Mr Shepherd's fees in other proceedings and the fact that the claimant was aware of Mr Shepherd's involvement during the administration of the estate.
39. I do not see that the first aspect can possibly support a discretion which is to be used sparingly, particularly given the lack of any real information in respect of the point raised. Similarly, the fact that the claimant knew of Mr Shepherd's involvement cannot, without more, justify a charge to the estate. 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."
"It is an inflexible rule of a court of equity that a person
in a fiduciary position, such as the respondent's, is not,
unless otherwise expressly provided, entitled to make a
profit; he is not allowed to put himself in a position where
his interest and duty conflict. It does not appear to me
that this rule is, as has been said, founded upon principles
of morality. I regard it rather as based on the
consideration that, human nature being what it is, there is
danger, in such circumstances, of the person holding a
fiduciary duty being swayed by interest rather than by duty,
and thus prejudicing those whom he was bound to protect.
It has, therefore, been deemed expedient to lay down this
positive rule. But I am satisfied that it might be departed
from in many cases, without any breach of morality, without
any wrong being inflicted, and without any consciousness of
wrongdoing."
"It will be observed that the decision to make the allowance was founded upon the simple proposition that 'it would be inequitable now for the beneficiaries to step in and take the profit without paying for the skill and labour which has produced it.' Ex hypothesis, such an allowance was not in the circumstances authorised by the terms of the trust deed; furthermore it was held that there had not been full and proper disclosure by the two defendants to the successful plaintiff beneficiary. The inequity was found in the simple proposition that the beneficiaries were taking the profit although, if Mr. Boardman (the solicitor) had not done the work, they would have had to employ an expert to do the work for them in order to earn that profit.
The decision has to be reconciled with the fundamental principle that a trustee is not entitled to remuneration for services rendered by him to the trust except as expressly provided in the trust deed. Strictly speaking, it is irreconcilable with the rule as so stated. It seems to me therefore that it can only be reconciled with it to the extent that the exercise of the equitable jurisdiction does not conflict with the policy underlying the rule. And, as I see it, such a conflict will only be avoided if the exercise of the jurisdiction is restricted to those cases where it cannot have the effect of encouraging trustees in any way to put themselves in a position where their interests conflict with their duties as trustees."
"As to principle, it seems to me that if the court has jurisdiction, as it has, upon the appointment of a trustee to authorise remuneration though no such power exists in the trust instrument, there is no logical reason why the court should not have power to increase the remuneration given by the instrument. In many cases the latter may involve a smaller interference with the provisions of the trust instrument than the former. Further, the law has not stopped short at authorising remuneration to a trustee only if he seeks the authority at the time when he accepts the trusts. That, in my view, appears from the observations of Lord Langdale M.R. in Bainbrigge v. Blair, 8 Beav. 588, and from In re Masters, decd. [1953] 1 W.L.R. 81 in which it is clear that Danckwerts J. would have been prepared to make the order which he did (and which authorised payment of remuneration to an administrator who had taken a grant some years previously) under the inherent jurisdiction.
I appreciate that the ambit of the court's inherent jurisdiction in any sphere may, for historical reasons, be irrational and that logical extensions are not necessarily permissible. But I think that it is the basis of the jurisdiction that one has to consider. The basis, in my view, in relation to a trustee's remuneration is the good administration of trusts. The fact that in earlier times, with more stable currencies and with a plenitude of persons with the leisure and resources to take on unremunerated trusteeships, the particular problem of increasing remuneration may not have arisen, does not, in my view, prevent us from concluding that a logical extension of admitted law and which is wholly consistent with the apparent purpose of the jurisdiction is permissible. If the increase of remuneration be beneficial to the trust administration, I do not see any objection to that in principle.
As to authority, I do not find in the English authorities any decision which positively excludes any inherent jurisdiction to increase remuneration, unless it be Robinson v. Pett, 3 P.Wms. 249. But that was a case of a renouncing executor who was expressly given a legacy for his trouble if he did renounce. Lord Talbot L.C. said that he was unable to give him any more. I do not think Robinson v. Pett really touches the present case. On the other hand, Lord Eldon L.C.'s order in Marshall v. Holloway, 2 Swan. 432, seems to have increased the benefit given by the will, and in In re Barbour's Settlement Trusts [1974] 1 W.L.R. 1198 Megarry J. did not really doubt that, upon an application in proper form and supported by appropriate evidence, the court would have had jurisdiction to increase the remuneration of the corporate trustee.
I conclude that the court has an inherent jurisdiction to authorise the payment of remuneration of trustees and that that jurisdiction extends to increasing the remuneration authorised by the trust instrument. In exercising that jurisdiction the court has to balance two influences which are to some extent in conflict. The first is that the office of trustee is, as such, gratuitous; the court will accordingly be careful to protect the interests of the beneficiaries against claims by the trustees. The second is that it is of great importance to the beneficiaries that the trust should be well administered. If therefore the court concludes, having regard to the nature of the trust, the experience and skill of a particular trustee and to the amounts which he seeks to charge when compared with what other trustees might require to be paid for their services and to all the other circumstances of the case, that it would be in the interests of the beneficiaries to increase the remuneration, then the court may properly do so."
Lord Justice Coulson:
Lord Justice Newey: