Costs News

15 December 2021
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SCCO judge stops senior partner from claiming costs as executor

A costs judge has prevented the former senior partner of a law firm from claiming tens of thousands of pounds in costs as executor of an estate.

Costs Judge Rowley (pictured) said that, in the absence of a charging clause in the will, it was “up to the professional executor to demonstrate why fees should be paid rather than for the beneficiaries to prove that they should not”.

The judge said any fees claimed by Robin Peter Shepherd, former senior partner of Shepherd & Co in Northamptonshire, as a solicitor rather than executor would need to explained at a detailed assessment hearing.

Delivering judgment in Brealey v Shepherd & Co [2021] EWHC B26 (Costs), Judge Rowley said Ms Brealey’s estate “was worth approximately £900,000”, most of it based on the sale of a single property.

“The administration could be provided by any reasonable fiduciary without incurring the fees claimed here and which equated to around 15% of the estate.”

Judge Rowley said most of the fees claimed by Mr Shepherd − he was told 70% − related to fees charged by the senior partner as executor, making it “a particularly important issue for the parties”.

Peter Ian Brealey, son and beneficiary of the late Ms Brealey, challenged the costs incurred in the administration of her estate.

Judge Rowley said the final substantive point of dispute concerned the involvement of Mr Shepherd, who was appointed executor alongside Ms Brealey’s brother.

It was common ground that there was no charging clause in the will, but there was a dispute over whether the beneficiaries had consented to Mr Shepherd charging for his work as executor.

Mr Brealey argued that the senior partner was not entitled to charge for his work as executor because there was neither a charging clause nor an agreement with the beneficiaries.

Counsel for the law firm argued that Mr Shepherd’s appointment as executor was “a personal appointment irrespective of him being a solicitor” and both executors were entitled to being reimbursed for their work.

For seven years, the beneficiaries and the late Ms Brealey’s brother were “aware that Mr Shepherd was charging for his fees”.

Judge Rowley said: “It might be thought, given the significance of the fees charged by Mr Shepherd, that he might have given a witness statement to explain the arrangements in this case.

“But he has not and therefore there is no explanation of, for example, why there was no charging clause in the will of Ms Brealey.

“It seems to me that I have to conclude that this was the intention of Ms Brealey on the basis that she should be taken to have put her name to a deed which accurately reflected her intentions. As a starting point, therefore, it would seem that Ms Brealey did not expect her executors to charge for their services.”

The judge said there was “simply nothing before the court” to suggest that Ms Brealey’s brother had “ever signed anything” to reflect his agreement to Mr Shepherd’s charges as executor, as required by the Trustee Act.

“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.”

Judge Rowley said the fact that the claimant knew about Mr Shepherd’s involvement could not of itself 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.”

The judge disallowed the fees of Mr Shepherd in his role as executor rather than solicitor. He added that any fees claimed as work done by Mr Shepherd as a solicitor would “require an explanation at the detailed assessment hearing”.

John Meehan (instructed by Jones & Co) for the claimant. Malcolm Goodwin (instructed by Shepherd & Co) for the defendant.

Comments

Sue Corbin   17/12/2021 at 13:34

Another sensible decision by Master Rowley. This case is just the tip of the iceberg. I'd never appoint a solicitor as an executor to a will. Let the beneficiaries select one and then they can control the charges.

Peter Ian Brealey   30/12/2021 at 11:07

At the conclusion of the case and any appeal I would be happy for the Association to interview me or my legal team on Teams for educational purposes. The case will be of interest to Charity legacy professionals querying accounts and chasing legacies where Administration drags on beyond the executors year without obvious reason. That’s likely to be in a years time as we await the Legal Ombudsman’s decision on a number of complaints about the Administration including the failure to provide the beneficiaries with Accounts despite annual request until August 2019 and then on pain of a preaction letter from Jones & Co. The beneficiaries did not approve the accounts and raised a number of queries. The types of issues a charity legacy professional might query after reviewing the estate accounts include:  whether a calculation is correct;  whether the terms of the will have been correctly applied;  whether the estate, for IHT purposes, is affected by any lifetime gifts;  any discrepancies in the values or composition of the estate assets between the final estate accounts and the schedule of assets and liabilities or forms IHT200/IHT205;  whether charity tax concessions have been correctly applied;  any deductions not authorised by the will or by agreement;  the level of fees;  whether money on deposit (in the client account) has been earning interest;  whether the calculation and apportionment of IHT is correct (in particular, where there are both exempt and non-exempt residuary beneficiaries);  the nature and extent of estate administration costs and expenses. My mother died on 15th April 2014 aged 77. She maintained her spark and independence of mind until her death. She died at peace with much love about her. Mr Shepherd wrote to the beneficiaries in May 2014 regarding approval of his contentious and non contentious legal costs. I declined to give that approval by email of 16th May 2014 listing a number of reasons which I expect lies on the Solicitors file. I am a well organised businessman and qualified Chartered Accountant. I reply to every correspondence by return. I indicated subsequently to Mr Shepherd in writing that charging for time spent as an executor was not approved but charging for time as his firms litigator was acceptable. I have had the benefit of professional advice throughout and did my best to openly communicate that advice to Mr Shepherd. Mr Shepherd was well regarded by my mother and has retired. His co-executor was her brother Tony. To thank my Uncle for his serving as her executor and for his advice my mother had me bring to her a painting from the family home which he admired to give to him. Tony received no compensation for his time as executor. In an earlier Judgement on the applicability of Akin Gump which limits the scope of third party assessments the Judge in this case who had the solicitors file before him confirmed nothing had been put before him to suggest my Uncle did anything wrong. I hope this comment about the case which has its interesting aspects professionally satisfies curiosity in the meantime.

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