Introduction

Brealey v Shepherd & Co Solicitors ([2024] EWCA Civ 303) is a pivotal case adjudicated by the England and Wales Court of Appeal (Civil Division) on March 26, 2024. This case addresses the contentious issue of whether a professional executor, in the absence of an explicit charging clause in a will, can lawfully charge fees for services rendered during estate administration. The primary parties involved are Mr. Peter Brealey, the claimant and beneficiary, and Shepherd & Co Solicitors, represented by Mr. Robin Shepherd, an executor and partner of the firm until his retirement in 2018.

Summary of the Judgment

The Court of Appeal dismissed the second appeal lodged by Shepherd & Co Solicitors, upholding the decision of Costs Judge Rowley. The central issue was whether Mr. Shepherd was entitled to charge fees for his time spent administering the estate of Mrs. Ann Brealey, despite the absence of a specific charging clause in her will. The court affirmed that under section 29(2) of the Trustee Act 2000, remuneration for professional trustees or executors requires the written consent of all trustees or executors. Since Mr. Smyth, another executor, did not consent by signing relevant documents, Shepherd & Co Solicitors could not claim remuneration for Mr. Shepherd's services. The appeal was dismissed on the grounds that the Costs Judge's decision was a proper exercise of judicial discretion, given the lack of necessary agreements.

Analysis

Precedents Cited

The judgment references several key cases that shape the legal landscape regarding fiduciary remuneration:

• Tim Martin Interiors Ltd v. Akin Gump LLP [2011] EWCA Civ 1574: Initially held that fee reduction under section 71(1) was limited, a stance overruled by Kenig v. Thomson Snell & Passmore LLP [2024] EWCA Civ 15 for section 71(3) claims.
• Boardman v. Phipps [1966] UKHL 2: Established strict scrutiny over trustees profiting from their roles, emphasizing duty over personal interest.
• Re Duke of Norfolk's Settlement Trusts [1982] Ch 61: Affirmed the court's inherent jurisdiction to adjust trustee remuneration based on good administration.
• Guinness Plc v. Saunders [1990] 2 AC 663: Highlighted limitations on inherent jurisdiction when fiduciary duties are breached.

Legal Reasoning

The court meticulously dissected the application of section 29(2) of the Trustee Act 2000, which stipulates that professional trustees or executors may receive reasonable remuneration only with the written consent of all trustees or executors. Mr. Cohen’s argument that consent should be required solely from active executors was rejected. The court held that the statutory language of "each other trustee" is unambiguous, necessitating consent from all appointed trustees or executors regardless of their active involvement. Furthermore, reliance on section 5 of the Partnership Act 1890 to deem inactive executors as parties to remuneration agreements was dismissed, as such agency does not satisfy the requirement for explicit written consent.

Impact

This judgment reinforces the necessity for explicit charging clauses in wills when professional executors intend to charge fees. It underscores the importance of obtaining unanimous consent from all executors or trustees to ensure transparency and protect beneficiaries from unauthorized remuneration claims. Future cases will likely reference this decision when addressing disputes over executor fees, especially in scenarios lacking clear charging provisions. The decision potentially discourages plaintiffs from challenging executor fees on the basis of reasonableness alone, instead emphasizing procedural compliance with statutory requirements for remuneration.

Complex Concepts Simplified

Conclusion

The Brealey v Shepherd & Co Solicitors judgment serves as a critical reference point for the remuneration of professional executors and trustees. By affirming the necessity of unanimous written consent under section 29(2) of the Trustee Act 2000, the court underscores the legal safeguards designed to protect beneficiaries from unauthorized fee claims. The decision emphasizes procedural rigor over substantive claims of reasonableness, thereby shaping the administration of future estates and trusts. Executors and trustees are now more clearly required to secure explicit consent for remuneration, reinforcing transparency and fiduciary accountability in estate administration.