Factual and Procedural Background
This ruling arises from a Part 8 claim form issued on 14 October 2016 by the executors of the will of the late testator, who died on 7 April 1997. The first claimant is one of the four adult children and beneficiaries under the will, and the second claimant is a retired solicitor who was formerly a partner in the firm that drafted the will. Probate was granted to the claimants on 15 December 1997.
The claim seeks a declaration that the "final estate accounts" are correct and a direction for the estate to be administered accordingly. The claim is made against two other children of the testator who have declined to approve the estate accounts, while the first claimant and her sister have approved them. This is the third set of legal proceedings regarding the estate: the first was a claim by the second claimant against all four children, stayed by a Tomlin order following mediation; the second involved disputes among the beneficiaries themselves with executors as nominal neutral parties; and the current third proceeding is the Part 8 claim, where the present question arose.
Directions for trial were given by District Judge Rowe on 8 June 2017, noting that the defendants did not seek a ruling on compliance with the mediation agreement or on the transfer of certain land, but these issues were reasons for not agreeing the accounts. The trial was heard by HHJ Matthews with counsel representing both parties.
Legal Issues Presented
- What is the appropriate legal test for determining whether an entry in the executors' estate accounts can be challenged or struck out for insufficient supporting information?
- What level of detail must executors provide in solicitors' invoices to justify inclusion of legal costs in estate accounts?
- Whether executors must prove that legal charges were reasonably incurred and reasonable in amount at the stage of accounting to beneficiaries, or whether this is a matter for detailed costs assessment procedures.
Arguments of the Parties
Defendants' Arguments
- There is no presumption that a solicitor’s bill approved or paid by the client (executor) automatically binds third parties (beneficiaries).
- Liability of third parties depends on contractual or implied terms of their relationship with the executor.
- No implied term requires beneficiaries to indemnify executors for all legal expenses simply because they were approved or paid, regardless of reasonableness.
- The executor, as the party with possession of evidence, must demonstrate that legal expenses were legitimately incurred.
- The defendants objected to 26 entries relating to legal services invoices on the basis that insufficient information was provided to assess the reasonableness of charges.
Claimants' Arguments
- Executors have a contractual right to be reimbursed for legal expenses incurred in estate administration, with a rebuttable presumption that such costs are reasonable (citing CPR r 44.5(1)).
- Rules on detailed assessment of costs do not apply to settling accounts between executors and beneficiaries.
- The issue is whether legal costs were properly incurred as expenses of the executors in their office, not a detailed assessment of those costs.
- Supporting legal texts establish that executors are entitled to all expenses properly incurred in the fair execution of their trust, except those arising from their own default.
- Executors need only show the sum was spent and that it was spent in fair execution of estate administration, typically by providing invoices or vouchers.
- Executors are not required at the accounting stage to prove reasonableness of charges; this is a matter for the separate assessment of solicitors' costs system.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Chadwick v Heatley (1845) 2 Coll 137 |
Illustration of principles relevant to taking an account in estate administration. |
Used as an example to guide the parties and frame the issue as one of taking an account. |
| Re Wright's Trusts (1857) 3 K & J 419 |
Illustration of principles relevant to taking an account in trust and estate matters. |
Used alongside Chadwick v Heatley to support proceeding as taking an account. |
| Williams, Mortimer and Sunnucks, Executors, Administrators and Probate, 20th ed, [63-26] and [63-27] |
Established rule that trustees or representatives are entitled to all expenses properly incurred in the fair execution of their trust, except those from their own default. |
Relied upon to define "just allowances" and the standard for allowing expenses in estate accounts. |
| Trustee Act 2000, ss 31(1) and 35 |
Codification of the principle that personal representatives are entitled to proper expenses incurred in administration. |
Applied to confirm the legal basis for allowing expenses properly incurred by executors. |
Court's Reasoning and Analysis
The court recognized the claim as essentially a request for directions regarding estate administration, framed as the taking of an account to approve the executors' estate accounts despite objections from some beneficiaries. The court identified that no authority had been cited on the precise legal test for challenging entries in executor accounts and thus sought written submissions.
The court considered the nature and variety of solicitors' invoices spanning twenty years, noting changes in billing practices and the level of detail provided. The defendants objected to entries where insufficient information was provided to assess the reasonableness of charges.
After reviewing submissions and relevant legal principles, the court concluded that the executor's burden at the accounting stage is limited to showing (1) that the sum was spent and (2) that it was spent in the fair execution of the estate administration. This is normally demonstrated by vouchers or invoices indicating the charge was a professional charge to the executor in relation to estate administration.
The court emphasized that executors are not required at this stage to prove that charges were reasonable or reasonably incurred; such issues are properly addressed in the detailed assessment of solicitors' costs, a separate process. Requiring executors to engage in detailed assessment before accounting would be inefficient and wasteful.
Accordingly, the court held that the information required to support an entry need not exceed basic details in the solicitor's invoice showing the charge relates to professional services for estate administration. It is unnecessary to provide detailed breakdowns such as hours worked or hourly rates at this stage.
The court invited the parties to apply this test to the outstanding objections and to return any unresolved issues for further consideration, initially on paper.
Holding and Implications
The court ruled that for the purpose of taking an account in estate administration, executors need only provide vouchers or invoices demonstrating that sums were spent in the fair execution of their office, without the need to prove the reasonableness of legal charges at this stage.
The decision clarifies that the challenge to entries in executor accounts is limited to whether the expense was properly incurred in estate administration, not a detailed reasonableness assessment of solicitors' fees. This preserves the separate detailed assessment procedure for costs disputes, preventing inefficiency in estate accounting.
The ruling directs the parties to apply this test to the disputed entries and submit any remaining issues for further judicial consideration. No new legal precedent beyond this procedural clarification was established.