Pullan v Wilson & Ors

The court applied established equitable principles governing trustee remuneration, including the Trustee Act 2000 (sections 28 and 29) and the court's inherent supervisory jurisdiction to take an account of a professional trustee's charges. The judge accepted the single joint expert's approach to assessing excessive rates and administrative time, applied a 7.5% discount for non-productive administration, and rejected any blanket disallowance of company-related time. The court held that where a professional trustee's normal hourly rates have not been previously approved they must be judged against the nature, value and proportionality of the services actually provided; but where a rate was communicated and acquiesced in by beneficiaries it may be conclusive.

Applying these principles the judge found that the first defendant's hourly rate of £400 and assistants' rate of £200 (each reduced by 7.5%) were to be allowed because the claimant had acquiesced in the principal trustee rate; no deduction was made for time charged to company-specific activity codes; and the overall overcharge to the trusts was £20,348.50. The claimant obtained a partial success and was awarded 25% of his costs.

This was a Part 8 claim by a beneficiary seeking an account and repayment in respect of fees charged by a professional trustee to a number of family trusts. The claimant alleged that hourly rates (£400 for the trustee and £250 for assistants), extensive administration time and charges for company work were excessive and improper.

Background and parties:

• The claimant is a primary beneficiary and de facto managing director of family companies. The first defendant is an accountant who was appointed trustee (and non-executive director of some group companies) in March 2007 and acted until November 2010.
• The claim followed Master Moncaster's order for an account; a single joint expert (Mr Cotton) was appointed and produced a report, to which the claimant largely adhered. The first defendant produced his own expert and the claimant a supporting expert; the three experts produced a joint statement.

Relief sought: An account to determine any excess of fees charged by the first defendant over proper and reasonable trustee remuneration and repayment of any excess with interest.

Issues framed:

• Whether the hourly rates charged by the first defendant and his assistants were proper and reasonable;
• whether discounts should be made for excessive administration and non-productive time;
• whether time charged in respect of company matters should be disallowed because it related to the first defendant's directorships and was separately remunerated;
• whether the claimant was barred from challenge by concurrence or acquiescence.

Court’s reasoning:

• The judge reviewed the applicable legal framework (Lewin on Trusts and the Trustee Act 2000, ss.28 and 29) and the principles for taking an account in equity.
• The expert evidence was evaluated: the single joint expert (Mr Cotton) and the claimant's expert (Mr Bates) were treated as independent and persuasive; the first defendant's expert (Mr Parr) was criticised for lack of independence and for addressing too narrow a question.
• The judge proceeded in two stages: first, assessing rates on the assumption they had not been communicated; and second, whether any agreed hourly rates had in fact been communicated and if that affected the assessment. The court concluded on the evidence (including contemporaneous correspondence and the solicitors' instructions) that the first defendant had established that his £400 hourly rate had been agreed for the initial period and that the claimant had acquiesced in it, so the claimant was debited by acquiescence on that rate.
• The judge accepted a 7.5% discount as reflecting excess administration and non-productive time. He rejected the proposition that company work should be automatically disallowed and found the trustee was entitled to charge for company-related work to the extent it was not covered by director's remuneration. No adjustment was made for company-coded time.
• Applying the allowed rates and discount to the time charged produced a figure showing the fees exceeded proper remuneration by £20,348.50.

Wider comment: The judge emphasised the utility of clear engagement letters and contemporaneous recording of agreed charging rates to avoid later litigation and to enable effective equitable supervision.

First instance: The claimant's Part 8 claim was allowed in part. The court directed that an account be taken and, on applying expert analysis and evidential findings, held that the first defendant was entitled to charge at £400 per hour and his assistants at £200 per hour, each subject to a 7.5% discount, and that no deduction should be made for company-related time. Applying those rates and the discount, the fees charged exceeded proper and reasonable remuneration by £20,348.50. The claimant was awarded 25% of his costs.