What is the position when executors charges are not agreed?
This issue was recently considered in Mussell v Patience.
In this case the executors sought a declaration from the court that the final estate accounts were correct, despite the beneficiaries challenging the legal costs incurred.
The beneficiaries had refused to agree the estate accounts and the executors did not want to distribute the estate until the accounts were accepted. The beneficiaries objected to the executors' solicitors charges, taking the view that the estate accounts and supporting documentation failed to provide sufficient evidence to establish that the charges were reasonable. They challenged 26 payments to two different law firms on this basis.
It was noted by the court that while some of the solicitors' invoices provided detailed information as to how the charges were calculated and the work they related to, other invoices contained no information at all. The executors maintained that this was of no consequence, but no explanation appears to have been given as to why more detailed information could not be provided in respect of those invoices.
The judge acknowledged that there was no clear precedent in place for adjudicating these disputes. He therefore set out a test to be applied where an executor's charges are disputed.
He said that when accounting to beneficiaries an executor must show:
- That the sum concerned was indeed spent, and
- That it was spent in the fair execution of the estate administration.
An executor therefore need only provide an invoice or receipt to support any payment. Where the payment relates to services provided on an hourly rate basis, the invoice need not disclose the number of hours worked or the hourly rate used. Nor is the executor required to provide a detailed breakdown of exactly what work has been done.
So, if an executor can show that an expense was incurred in the fair execution of the estate administration, it is unlikely that a beneficiary will be able to dispute it.
This places the onus on the beneficiary who wishes to oppose the executor's charges to produce evidence to rebut the inferences in 1 and 2 above. How this should be done was not addressed by the judge.
The decision is logical to the extent that executors should be entitled to recover legal charges from the estate. However, it is unsatisfactory from the point of view of a beneficiary who believes that those legal charges have not been fully explained or justified.
We must be careful not to read too much into the decision. Cases should be viewed on their individual merits and in Mussell v Patience the fact that the administration had been continuing for more than 20 years and had involved extensive litigation is likely to have been a key factor in the judge's decision. The judge also referred to the fact that the amount of detail that solicitors are required to provide a client in relation to their charges has changed considerably over the last few years. Had the invoices been more recent then the outcome may well have been different.
It is also important to remember that where the sum in dispute relates to Solicitors charges then the detailed assessment procedure can also be called into play.
Nevertheless critics will feel that the court's decision fails to offer reasonable protection to beneficiaries who wish to object to executors charges, especially in view of the fact that they, and not the executors, are ultimately responsible for footing the bill.
If you are involved is a dispute over executors charges and require legal assistance then give us a call on 0808 139 1599 or send an email with brief details to firstname.lastname@example.org