Trustees Entitled To Remuneration?

Trustees Have No Automatic Entitlement To Remuneration

Overview Of Trustees Entitled To Remuneration?

Trustees Entitled To Remuneration? Right? Wrong.

The inevitable question that will arise for Directors, Trustees, Executors, etc is why is it that they cannot be paid for their work in some instances. This has been considered in an earlier post on this Blog called Director Remuneration and Dividends or Russian Roulette?.

Some of the principles were considered in the context of a Will in the case of Da Silva v Heselton & Ors [2021] EWHC 3079 (Ch).

Mrs Heselton wanted to charge a fee for her work done whilst she was an Executor, which would have resulted in her hoovering up the bulk of the estate’s income during her period of stewardship. She relied upon a clause in the Will that gave rise to an entitlement of Trustees to charge subject to conditions.

The matter came before the Court which dismissed her appeal against an earlier decision rejecting her claim.

The following points were made by the Court about Trustee’s charging:

1. The role of a Trustee or Executor is essentially gratuitous ie. the starting point is you are not entitled to remuneration.
2. Exceptions exist to this rule when provided for in the instrument governing the entity or estate in question or if in the statute.
3. When a clause provides for remuneration, interpretation of the same is to be done using the ordinary natural meaning of the words.
4. Such a clause is to be viewed restrictively.

Relevant Extracts From The Judgment

The general rule is that the role of a trustee or executor is a gratuitous one (Lewin on Trusts 20th ed 2020 para 20-001). However, there are a number of well-recognised exceptions to this principle, and a trustee is entitled to payment for their services if such remuneration is permitted by the terms of the trust instrument or will, or by statute.

…

It is clear following the decision of the Supreme Court in Marley v Rawlings that the factors identified by Lord Neuberger PSC at paragraph [19] of his judgment are as applicable to the construction of a will as they are to a bilateral document such as a contract. As such, I am required to identify the meaning of the charging clause in the light of:

(i) the natural and ordinary meaning of the words used;

(ii) the overall purpose of the document;

(iii) any other provisions of the document;

(iv) the facts known or assumed by the parties at the time that the document was executed; and

(v) common sense.

The authorities are clear that charging clauses, like other clauses capable of benefitting a trustee or executor, should be restrictively construed. As such anything which is not clearly within the clause should be treated as falling outside it (see Bogg v Raper supra at [28]). However, I accept Mr O’Sullivan’s argument that, within that general principle, the approach to construction identified by Millett LJ in Bogg v Raper in relation to an exoneration clause is equally applicable to a charging clause. I consider the analogy between the two types of clause to be well made. Both give rise to the potential for conflict between the personal interests of the trustee or executor (either in being excused liability for breach of trust or being remunerated for their work) and the interests of the beneficiaries under the trust instrument or will. Both types of clause form part of the basis upon which the trustee, or the executor, accepts office.

Disclaimer: Trustees Entitled To Remuneration?

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