In the case of Alastair Mark Pullan v David Wilson & 2 Ors (2014), the High Court ruled that a beneficiary’s failure to challenge a trustee’s fees earlier amounted to acquiescence and prevented him from challenging their reasonableness, despite the fact that they exceeded what would normally be considered appropriate.

Background

The Defendant was an accountant and tax advisor who had been appointed as a professional trustee in respect of 10 family trusts of which the Claimant was a beneficiary. The Defendant was also appointed as a non-executive director of three companies in which the trusts held shares.

The Defendant charged the trust £400 per hour for his services and £250 per hour for the service of his assistant. After a while, the Claimant objected to level of fees charged, despite the fact that he had initially agreed to the Defendant’s hourly rate. A joint expert produced a report which concluded that the hourly rates were excessive and a discount should be applied to reflect excessive administration time and the fact that some work related to the companies in which the Defendant was also a director.

The Claimant therefore issued proceedings against the Defendant, arguing that the amount charged to the trusts exceeded the proper and reasonable remuneration to which the Defendant was entitled.

Held

The High Court dismissed the Claimant’s case, deciding that although the hourly rate charged by the Defendant exceeded what would ordinarily be considered appropriate, the Claimant’s failure to challenge these fees earlier amounted to acquiescence and debarred him from challenging the reasonableness of the remuneration.

A professional trustee was not entitled to charge according to their normal and standard charging rates unless they had specifically identified and received approval for those rates to be charged. However, regard had to be had to the nature and value of the services provided.

On the basis of the evidence as a whole and given the substantial number of hours charged by the Defendant, his appropriate hourly rate would have been £330 and that of his assistants £165. However, the fact that the Claimant had agreed to the Defendant receiving an hourly rate of £400 at the beginning of his appointment meant that the Claimant was not now able to dispute these rates. Further, although the Defendant accepted that there had never been any agreement as to the rate to be charged by his assistants, the agreement in respect of the Defendant's rate fed into the reasonableness of the fee charged in respect of their work.

The Court did concur with the expert evidence that it was appropriate to apply a 7.5 per cent discount to those rates to account for excessive administration time. However, the Court was satisfied that there was no element of double recovery despite the fact that some work related to the companies in which the Defendant was also a director. The Defendant was therefore entitled to remuneration from the trust to the extent that any sums received from the companies did not cover the work he had done as director in the trusts' interests.

Comment

This case serves as a warning to the beneficiaries of a trust to agree a trustee’s rates from the outset. If proper consideration is not given at the outset of the terms of the appointment, then the beneficiaries may find themselves hit with a substantially larger invoice than originally anticipated, with no remedy even if the charges are excessive.