Peter Ian Brealey v Shepherd & Co Solicitors

Under the Trustee Act 2000, a professional trustee or executor cannot use the statutory remuneration route unless every other current trustee or executor has agreed in writing. Inactivity, failure to prove the will or non-intermeddling does not remove an executor from that class, and partnership agency cannot satisfy the statutory consent requirement. The court’s inherent jurisdiction to authorise remuneration remains available where there is no charging clause, but it is an exception to the gratuitous nature of trusteeship. The court must balance beneficiary protection against good administration and require a properly evidenced justification. “Sparingly” describes the controlled nature of the discretion, not a separate rigid threshold of exceptional circumstances. An appellate court will not interfere with a permissible refusal based on inadequate evidence.

Mr Brealey, a beneficiary of his late mother’s estate, brought third-party assessment proceedings under section 71(3) of the Solicitors Act 1974 challenging fees charged by Shepherd & Co Solicitors, including fees claimed by Mr Shepherd, one of the executors.

The will contained no charging clause. The Costs Judge held that the statutory remuneration route required the consent of all current executors and declined to exercise the court’s inherent jurisdiction because the application lacked sufficient evidence. On the first appeal, Cavanagh J upheld that approach: [2022] EWHC 3229 (KB). The firm brought a second appeal concerning the meaning of the statutory consent requirement and the proper approach to the inherent jurisdiction to authorise remuneration.

Appeal dismissed. The Court of Appeal unanimously upheld the Costs Judge’s refusal to permit remuneration for Mr Shepherd’s services as executor.

1. Statutory remuneration. Section 29(2) of the Trustee Act 2000, applied to personal representatives by section 35(1), requires written agreement by each other trustee before a professional trustee or executor may receive reasonable remuneration. “Each other trustee” means all current trustees or executors. It includes an executor who has not proved the will, taken part in the administration or intermeddled. Section 35(1) does not limit the class of personal representatives to those actively administering the estate.
2. Partnership agency. Section 5 of the Partnership Act 1890 cannot replace the statutory requirement for the written agreement of each trustee or executor. The absence of Mr Smyth’s agreement was therefore fatal. It was unnecessary to decide whether the retainers, invoices or later costs breakdown could otherwise have constituted written agreement, or whether agreement could operate retrospectively.
3. Inherent jurisdiction. The jurisdiction must be exercised consistently with the gratuitous nature of trusteeship and the fiduciary duty to protect beneficiaries, while recognising the importance of good administration. The reasoning in Re Duke of Norfolk’s Settlement Trusts [1982] Ch 61 provides the relevant balancing approach. The court may consider the reasons for the absence of a charging clause, the basis on which the trustee accepted office, the nature of the trust or estate, the trustee’s skill and experience, the amount sought and what alternatives might cost.
4. Exceptional and sparing exercise. The descriptions in Re Worthington [1954] 1 WLR 526 and Guinness Plc v Saunders [1990] 2 AC 663 are not a separate rigid threshold. The jurisdiction is exceptional because it departs from the underlying rule and must be exercised sparingly as a controlled discretion. The Costs Judge was entitled to refuse relief where no evidence explained the missing charging clause, the basis on which Mr Shepherd accepted office or why the claimed remuneration was justified. That was a permissible discretionary decision and disclosed no misdirection.

• Court of Appeal (Civil Division): The second appeal was dismissed unanimously. The court upheld the Costs Judge’s refusal to authorise remuneration and agreed with the first-instance High Court ruling.
• High Court, King’s Bench Division: Cavanagh J dismissed the first appeal and held that section 29(2) required the consent of all current executors: [2022] EWHC 3229 (KB).
• Costs Judge Rowley: By order dated 29 November 2021, the Costs Judge held that the statutory consent requirement applied and declined to exercise the inherent jurisdiction because the application was insufficiently evidenced.