Pullan v Wilson & Ors

A professional trustee is not necessarily entitled to charge normal or standard professional rates. Reasonable remuneration requires an evaluative assessment of the nature, value, propriety and proportionality of the services, including whether the fee earner is too highly skilled for the work. Hourly rates should be identified and approved before work is undertaken where possible. Knowledge of agreed rates, followed by delay in objecting, may amount to acquiescence and bar a challenge. Work connected with companies may properly be charged to trusts where the trustee acts to protect trust shareholdings, provided there is no double recovery. The account is assessed by reference to proper and reasonable remuneration, and later work subject to a cap cannot be set off against earlier overcharging.

The claimant, a beneficiary of family trusts, sought an account of remuneration charged by the first defendant, a chartered accountant who had acted as professional trustee and as a non-executive director of companies owned by the trusts. The claim concerned whether the hourly rates charged for the first defendant and his assistants were reasonable, whether time spent on company matters was properly chargeable to the trusts, and whether the claimant had acquiesced in the charges.

The court also determined the incidence of costs after finding that the fees exceeded proper and reasonable remuneration by £20,348.50.

1. Remuneration. The court held that a professional trustee is not necessarily entitled to charge normal or standard professional rates unless those rates have been specifically identified and approved before the work is undertaken. The court must assess the proper and reasonable remuneration by reference to the nature and value of the services, the level of skill required, and the propriety, reasonableness and proportionality of the work performed. The number of hours and standard rates are initial reference points only. The assessment is evaluative rather than arithmetical: Pullan v Wilson & Ors [2014] EWHC 126 (Ch), paras [53]-[61].
2. The appropriate rates, absent agreement, would have been £330 per hour for the first defendant and £165 per hour for his assistants, subject to a 7.5 per cent discount for administrative and non-productive time. However, the first defendant proved that his own rate of £400 had been agreed. The claimant knew of that rate and did not object until June 2009. That amounted to acquiescence, debarring a challenge to the rate. The assistants’ rate was assessed at £200 per hour, also subject to the 7.5 per cent discount: paras [63]-[68].
3. Company work. Work connected with companies in which the trusts held substantial shareholdings could be work performed for the trusts where the trustee acted to protect the beneficiaries’ interests. The absence of a separate company engagement letter was irrelevant to the propriety of charging the trusts. The charges were permissible to the extent that the non-executive director’s remuneration did not already cover the same work. There was no double recovery, and Companies Act 2006, sections 176 and 178 were not engaged: paras [69]-[74].
4. Outcome and costs. The first defendant was entitled to charge £400 per hour for himself and £200 per hour for his assistants, each discounted by 7.5 per cent. No adjustment was made for company work. The fees nevertheless exceeded proper and reasonable remuneration by £20,348.50. The claimant was the successful party but had achieved limited success, and was awarded 25 per cent of his costs: paras [75]-[76], [100]-[104].

First-instance judgment in the High Court (Chancery Division). No appeal history is stated in the judgment.