LORD JUSTICE CUMMING-BRUCE: I have asked Lord Justice Fox to deliver the first judgment on this appeal.
LORD JUSTICE FOX: This is an appeal from Mr. Justice Walton. It is concerned with the jurisdiction of the court to authorise the payment out of trust property of remuneration to a trustee.
By a Settlement of 1st April 1958, made between the 16th Duke of Norfolk, as settlor, of the one part, and Lord Perth, George Bellord (who has since died) and Schroder Executor and Trustee Company Ltd. (SETCO), as trustees, of the other part, certain property was settled upon, in effect, discretionary trusts during a lengthy period (which might, in fact, endure until January 2038).
The provisions for remuneration of the trustees are contained in clauses 11 and 12 of the Settlement and are as follows:
"11. Any trustee hereof who shall be an individual engaged in any profession or business shall be entitled to charge and be paid all professional or other reasonable and proper charges for any business done or time spent or services rendered by him in connection with the trusts of this settlement ... whether or not of a nature requiring the employment of a person so engaged and no trustee shall be liable to account for any benefits received by him through the employment by the trustees of any firm or company of which he is a member or officer or in which he is otherwise interested".
"12 (i) Schroder Executor and Trustee Company Ltd. hereinafter called 'the Company' shall be entitled to remuneration for its services as trustee hereof ... in accordance with its usual scale of fees in force at the date hereof.
(ii) The Company may employ or consent in employing Messrs. J. Henry Schroder & Co. (hereinafter called 'the Bank') to act as banker to the trust and the Bank may make advances to the trust estate as fully and with the like protection and rights including non-accountability for profits made as a banker as if the Company were not a trustee hereof
(iii) Lord Perth shall not be liable to account for any remuneration or other benefits received by him either from the Company or from the Bank".
The 16th Duke died in 1975; I shall refer to him as the settlor.
The property settled by the 1958 settlement consisted in the main of three items:
(a) The issued share capital of Fitzalan Howard Estates Ltd. The main asset of that company was the settlor's life interest in certain freehold land.
(b) An agricultural estate in Yorkshire of some 3,000 acres.
(c) The South East block of the settlor's Strand estate in London. That estate consisted of four blocks of property lying between the Strand and the River.
As a result of certain transactions (including the winding up of Fitzalan Howard Estates Ltd.) the trustees became entitled to certain agricultural estates and cash.
In 1966 the settlor added to the Settlement the north east block of the Strand Estate. In 1968 the settlor added the South West block of the Strand Estate in exchange for some of the agricultural land.
This concentration of the greater part of the Strand Estate in the hands of the trustees led to the substantial redevelopment of the Strand Estate which took place in recent years.
This development as the judge found, involved the trustees in work which was entirely outside anything which would reasonably have been foreseen when they accepted office.
The originating summons was issued by Lord Perth and SETCO as plaintiffs. The relief sought by the summons was, in essence, twofold:-
(i) The payment of an annual sum to Lord Perth as remuneration for his services as trustee. Clause 11 of the Settlement had never applied to Lord Perth.
(ii) The establishment of a new scale of charges for SETCO. Under the Settlement SETCO's remuneration was as follows:
(i) an Acceptance Fee which was paid when the Settlement was created;
(ii) a Management Fee of 2/- (10p) per £100 of capital held in trust (the capital being valued at book values in the last audited accounts);
(iii) a Change of Investment Fee of 2/- per £100 on the amount involved in the transaction;
(iv) a Withdrawal Fee of 5/- per £100.
The summons so far as SETCO is concerned asked, so far as material, for remuneration as follows:
(i) A sum in respect of services performed prior to the issue of the Summons (the services being services alleged to be outside the ordinary scope of a trustee's duties);
(ii) Sums in respect of its services to the trust during the two years ending 31st March 1976 and 1977 (which were periods after the issue of the Summons but before the hearing);
(iii) An increase in the management fee to 40 pence per £100. on the aggregate amount of the market values of the trust property. The investment fee and the withdrawal fee were to be left broadly as they were under clause 12 of the Settlement.
(iv) Additional remuneration for any services performed by SETCO after the date of the order on the originating summons, which are exceptional or outside the ordinary scope of a trustee's duties - such additional remuneration to be of such amounts as should from time to time be certified in writing as reasonable by Messrs. Coopers & Lybrands (or another firm of chartered accountants of similar standing) having regard to the difficulty of the work and to the time spent on it.
The evidence is that the general level of SETCO's fees is low compared with that of similar institutions and that the new scale proposed would still be below that charged by such institutions, especially the Public Trustee. There is also evidence that the amount of work transacted by SETCO as a trustee of the Settlement is such that SETCO is incurring a substantial and continuing financial loss in consequence of its trusteeship. That, it is said, is because the amount of work now involved in administering the trust is so greatly in excess of anything contemplated when the trust was established.
The judge came to the conclusion that he had jurisdiction to authorise the payment of additional remuneration, both to Lord Perth and to SETCO, in respect of work which they had done in the past which was outside the scope of any duties which could reasonably have been expected to be rendered by them as trustees. He made" certain orders authorising payments accordingly. Those orders are not appealed from and I need not refer to them further.
The judge also decided, however, that he had no inherent jurisdiction to authorise for the future any general increase in SETCO's remuneration as provided by clause 12 of the Settlement. It is against that decision that this appeal is brought.
The living beneficiaries do not oppose SETCO's application for an increased scale of remuneration. The only beneficiaries who in fact appear on this appeal are the 6th and 7th defendants (the latter of whom was a minor when the proceedings started but is now of full age). They appear by Mr. Ian Homer. As unborn beneficiaries may be affected, the court invited Mr. Homer to act as amicus and he has addressed to us a full and helpful argument in support of the judge's decision.
At the request of the parties this court will decide the question of jurisdiction only. We are not asked to decide whether, if any jurisdiction exists, it should be exercised. The originating summons has accordingly been amended to ask for a declaration that the court has jurisdiction (whether under its inherent jurisdiction or under section 57 of the Trustee Act 1925 or otherwise) to authorise SETCO to charge remuneration at a rate higher than that to which it has previously been entitled under clause 12 of the Settlement. I should mention that, before the judge, the discussion extended to the inherent jurisdiction only.
I turn to consider the inherent jurisdiction. That depends, in the main, upon authority. An examination of a number of decisions is, therefore, necessary.
I start with Robinson v. Pett, 2 P. Wms. 24-9, which was decided in 1734- by Lord Chancellor Talbot. In that case the issue was whether "an executor who had renounced but had yet been assisting in the trust according to the request of the testator should have any additional consideration, when he had an expressed legacy (£100) for such, his assistance". The application was refused. The Lord Chancellor, after saying that it was an established rule that a trustee should have no allowance for his care and trouble said "But further: in the present case the testator has by his will expressly directed what should be the defendant's recompense for his trouble in case of his refusing the executorship viz. that he still should have the £100 legacy, to which I can make no addition". Thus the Lord Chancellor felt that he was not entitled to increase the benefit given by the trust instrument to the trustee.
In 1810 Marshall v. Holloway, 2 Swanston 4-32, came before Lord Eldon. The judgment itself is not of assistance on the present question but the order, of which there is a full report, is of value. The material part is as follows: "... and, it being alleged by the said Plaintiffs, the trustees, that the nature and circumstances of the estate of the said testator require the application of a great proportion of time, by and on the part of the said trustees for the due execution of the trusts of his said will, in regard to his estate, and that they cannot undertake to continue the execution of the trusts without the aid and assistance of the said Faithful Croft, as a co-trustee, he having, during the life of the said testator, had the principal and confidential management thereof, and being better acquainted therewith than any other person, and therefore it will be for the benefit of the said testator's estate that he should continue to be a trustee thereof; and the said Faithful Croft, alleging that due attention to the affairs and concerns of the said testator will require so much of his time and attention as will be greatly prejudicial to his other pursuits and concerns in business, and therefore that he would not have undertaken to act therein, but under the assurance that an application would be made to this court to authorise the allowance and payment of a reasonable compensation out of the said testator's estate for such his labour and time, and that he cannot continue to act therein without such reasonable allowance being made to him, it is ordered that it be referred to the said Master to settle a reasonable allowance to be made to the said Faithful Croft out of the testator's estate for his time, pains and trouble in the execution of the said trusts for the time past, and, in settling such allowance, the said Master is to have regard to the legacy of two hundred pounds given and bequeathed to the said Faithful Croft by the said Will of the said testator, on the execution of the trust reposed in him: and it is ordered, that the said Master do inquire whether it will be for the benefit of the said testator's estate that the said Faithful Croft should continue to be a trustee under the said will, and to receive a compensation for the future employment of his time and trouble; and in case the said Master shall be of opinion that it will be for the benefit of the said testator's estate that the said Faithful Croft should be continued a trustee, then the said Master is to settle a reasonable allowance to be made to the said Faithful Croft therein".
I make two observations on that order. First, it authorised the payment of remuneration in respect both of past and future services as trustee. Secondly, it appears to have authorised additional remuneration to that given by the will since the master was directed to take into account in respect of past services, the legacy of £200 given to Croft by the will; it is, I think, a reasonable inference that Lord Eldon regarded the £200 as remuneration for undertaking the trusteeship.
In Brocksopp v. Barnes,(1820) 5 Haddocks 90, the will appointed executors and trustees but gave them no remuneration. Barnes, one of the trustees, petitioned the court for payment out of the estate of an amount as recompense for his loss of time, personal trouble and expenses in the management of the estate. The Vice Chancellor held that, while Barnes was entitled to his out-of-pocket expenses, he was entitled to no more "since a trustee is not entitled to compensation for personal trouble or loss of time". The Vice Chancellor added "If the nature of the trust be such that a trustee ought not to undertake it without compensation a special case must be made to this court before the trust is accepted". If that proposition is to" be applied strictly, it would preclude such an application as SETCO makes in this case. And indeed it would also preclude the order made by Lord Eldon in Marshall v. Holloway since Croft was already a trustee when the order was made.
In Morison v. Morison in (1854), 4 Mylne & Gray 215, Lord Chancellor Cottenham said at page 224 that it would not be doubted that the court could appoint an executor or trustee as a consignee (which I take to be an agent to manage trust property abroad) with the usual profits. He regarded Marshall v. Holloway as authority for that.
Bainbridge v. Blair in (184-5) 8 Beavan 558, is a case of importance. The testator, by his will, appointed Mr. Blair and two others to be trustees and executors, and he gave Mr. Blair a legacy of £200 "as compensation for his trouble in acting as one of the executors of the will". The estate was involved in much litigation, in which Mr. Blair acted as attorney for the trustees. He claimed, out of the trust property, the amount of his various bills of costs. The Taxing Master held that Mr. Blair was only entitled to his disbursements and was not entitled to any remuneration for his services. Lord Langdale, Master of the Rolls, upheld that. But at page 596 he said this:
"It is very different from the case where a trust being in the course of execution and many things remaining to "be done, which can be done beneficially only by a particular trustee who cannot, from his situation, do it without grievous personal loss, and that party comes to the court and states that he is in a situation and is willing to do these things but that he cannot consistently with his own interest proceed with such duties and gratuitously devote his time for the benefit of the trust. In such-a case it is competent for the court considering what is beneficial to the cestuis que trust and is calculated to promote their interest, to take the matter into consideration and to give proper remuneration to that person who alone by his own exertion can produce that benefit".
This seems to me to be an explicit recognition by Lord Langdale that, even where a trustee has accepted the trusts, the court would have jurisdiction, if it was in the interests of the beneficiaries and if the trustee felt unable gratuitously to devote his time to trust affairs, to authorise payment of remuneration to him.
In Forster v. Ridley, (1864) 4 De Gex Jones & Smith 452, the Court of Appeal authorised payment of remuneration, retrospectively, to trustees of a will who, for two years had managed the testator's leaseholds and carried on his business.
Re Freeman's Settlement,(1888) 37 Chancery Division, 14-9, was a petition to the court to appoint two Canadians and an English agent to be trustees and to authorise payment to the English agent of commission on rents of various farms receivable as receiver and manager. Mr. Justice North authorised the appointment and remuneration upon the production of an affidavit as to the propriety of the remuneration.
There are a number of more modern authorities, to which I should now refer. I put aside for the moment Re Salmen, 107 Law Times, 108, to which I shall refer later.
In Re Masters, (1953) 1 WLR 81, Mr. Justice Danckwerts, after holding that the court had jurisdiction under section 42 of the Trustee Act 1925 to authorise proper remuneration to be paid to a corporate body appointed by the court to be administrator and trustee of the estate of the intestate, went on to comment upon the inherent jurisdiction. He said at page 83: "Apart from the statutory jurisdiction conferred by section 42 of the Trustee Act 1925 it is quite plain there is inherent jurisdiction in the court to authorise remuneration of a trustee whether appointed by the court or not. Authority for that is to be found in Re Freeman's Settlement Trusts and Marshall v. Holloway". He then referred to Re Macadam, (1946) Chancery 73* and an unreported case in which he had appeared at the Bar, and concluded: "There is in my view no doubt whatever about the inherent jurisdiction of the court to authorise remuneration". I should observe that, in Re Masters the Trustee corporation which was seeking remuneration had been appointed administrators in 1949. The summons seeking remuneration was not issued until April 1951.
In re Worthington, (1954-) 1 WLR 526, was an application by an administrator for remuneration. Mr. Justice Upjohn, at page 525, said that the law was clear. "He cannot charge for work done as administrator and must give his services gratuitously. On the other hand it cannot be doubted that the court has a jurisdiction to direct that remuneration shall in a proper case be allowed to the administrator. That appears from the recent decision in Re Masters and from the statement of Lord Cohen in Re Macadam ... It is clear equally that although the court has a jurisdiction to allow remuneration to a trustee that jurisdiction should be exercised sparingly and in exceptional cases".
Mr. Justice Upjohn, at page 528, referred to Lord Langdale's judgment in Bainbridge v. Blair as giving an example of the sort of circumstances in which the jurisdiction could be exercised, namely the case of a trustee who said that he would be prepared to carry out certain matters for the trust but that he was not prepared to spend the time unless he received some remuneration.
Re Barbour's Settlement (1974) 1 WLR 1198, was an application to the court to approve terms of compromise of a dispute relating to beneficial interests under the trust. There were included in the terms of compromise provisions which increased the existing scale of remuneration of the corporate trustee of the trust; the existing scale was the scale authorised in the settlement itself in 1942. Mr. Justice Megarry, having expressed doubts, inter alia, upon the propriety of including such a provision in terms of compromise of a dispute quite unrelated to the question of remuneration, the proposal to increase the remuneration was abandoned. The judge, however, said this at page 1203: "Let me add that I am not saying that such an application if properly supported by compelling evidence is doomed to failure. The words 'exceptional cases' used by Mr. Justice Upjohn in re Worthingten may require further explanation. I very much doubt whether that phrase was intended by the judge to exclude disastrous consequences following from inflation merely because inflation is not an exception but, unhappily, the rule. Yet there must at least be proper evidence before the court of consequences of such weight and gravity as to justify the exercise of the jurisdiction".
In Re Codd's Will Trust, (1975) 1 WLR 1139, the Westminster Bank was the sole trustee of the will. The Bank's authorised remuneration under the will was £10 a year. It applied for authority to charge remuneration in accordance with its usual scale for trust business. The beneficiaries did not resist the application. Mr. Justice Graham said that it was in the interest of the trust as a whole that the remuneration should be increased, and he allowed the application.
In the present case the conclusions which Mr. Justice Walton reached were broadly, as follows: (i) Subject to (ii) below the only ground upon which the court has ever acted in relation to remuneration has been the necessity of obtaining the services of some particular individual trustee whose services were of special value to the trust or of obtaining the services of some particular kind of trustee (ii) It was indicated by Mr. Justice Eve in Re Salmen that remuneration might be awarded if the circumstances were such as to raise an implied promise to pay it on behalf of the beneficiaries, (iii) There has never been a case in which the court has ever altered the general level of remuneration fixed by the trust instrument, unless it be Re Codd's Will Trusts where there was no argument, (iv) The only conceivable ground upon which he would be justified in authorising any additional remuneration would be (ii) above. And while that justified the authorising of payments for work of a wholly exceptional nature, it gave no basis for any inherent jurisdiction to increase the level of SETCO's fees for the future.
In my opinion the judge took too narrow a view of the inherent jurisdiction.
There is, in my judgment, no doubt that the court has an inherent jurisdiction to authorise payment of remuneration to trustees. Mr. Justice Danckwerts in Re Masters, and Mr. Justice Upjohn in Re Worthington accept that. The older authorities lead me to the same conclusion. In Marshall v. Holloway Lord Eldon himself authorised remuneration for both past and future services. The existence of the jurisdiction is also supported by Morison v; Morison, Bainbridge v. Blair, Forster v. Ridley, and Se Freeman's Settlement.
The question is the extent of that jurisdiction. There can, in my view, be no doubt that there is an inherent jurisdiction, upon the appointment of a trustee, to direct that he be remunerated; that is accepted by Vice Chancellor Leach in Brocksopp v. Barnes and must be inherent in what is said in Re Masters and Re Worthington. Indeed, it is not really in dispute at all. In the present case, however, what is sought is the increase of remuneration authorised by the trust instrument. The judge said that there had never been a case in which that was done, unless it was Re Codd's Will Trusts, where the matter was not argued. I feel much doubt whether that proposition is in fact correct. Most cases relating to trustees' remuneration are dealt with in chambers and are not reported. My own impression and, I understand that of Lord Justice Brightman also, is that since the early 1950's orders have been made in chambers, under the inherent jurisdiction, authorising increases in remuneration given by the trust instrument. But I do not rely upon that. I will approach the matter as one of principle and on the reported cases. If it be the law, as I think it clearly is, that the court has inherent jurisdiction on the appointment of a trustee to authorise payment of remuneration to him, is there any reason why the court should not have jurisdiction to increase the remuneration already allowed by the trust instrument?
Two reasons are suggested. First, it is said that a trustee's right to remuneration under an express provision of the settlement is based upon a contract between the settlor and the trustee which the trustee is not entitled to avoid; the benefit of that contract is to be regarded as settled by the trust instrument for the benefit of the beneficiaries. I find that analysis artificial. It may have some appearance of reality in relation to a trustee who, at the request of the settlor, agrees to act before the settlement is executed and approves the terms of the settlement. But very frequently executors-and trustees of wills know nothing of the terms of the will until the testator is dead; sometimes in the case of corporate trustees such as banks, they have not even been asked by the testator whether they will act. It is difficult to see with whom, in such cases, the trustees are to be taken as contracting. 'The appointment of a trustee by the court also gives rise to problems as to the identity of the contracting party.
The position, it seems to me, is this. Trust property is held by the trustees upon the trusts and subject to the powers conferred by the trust instrument and by law. One of those powers is the power to the trustee to charge remuneration. That gives the trustee certain rights which equity will enforce in administering the trust. How far those rights can properly be regarded as beneficial interests I will consider later. But it seems to me to be quite unreal to regard them as contractual. So far as they derive from any order of the court they simply arise from the court's jurisdiction and so far as they derive from the trust instrument itself they derive from the settlor's power to direct how this property should be dealt with.
I appreciate that in Re Salmen Mr. Justice Eve, whose decision was upheld by the Court of Appeal, said in the course of his judgment that the jurisdiction must be founded upon some such proposition as that the circumstances of the case raise an implied contract on the part of the persons against whom the claim for remuneration is made, to pay such remuneration. I observe that Mr. Justice Upjohn in Re Worthington disagreed with that altogether. He said that the true rule was that the court had an inherent jurisdiction to authorise remuneration, even against creditors. He pointed out that the Court of Appeal did not consider the question of inherent jurisdiction; in the Court of Appeal the case was treated as governed by Re White, (1898) 1 Ch 297. I agree with that; Re White says nothing about contract. Further, I think it necessary to bear in mind that Re Salmen was a case of an insolvent estate (as was Re White). In such a case, the court might, whatever the jurisdiction, be unwilling to impose upon the creditors a liability to remunerate in the absence of some circumstances that made it equitable that the creditors should bear the remuneration. A provision in a will authorising trustees to charge does not bind the creditors. As Lord Justice Chitty said in Re White, "the declaration made by the testator is bounty on his part. No one can claim the bounty until the creditors are satisfied".
I do not regard Re Salmen as establishing a contractual basis for the remuneration of trustees, and I do not think such a basis is sound in principle.
I come to the second objection. It is said that the right to remuneration is a beneficial interest in the trust property and can only be varied by an order under the Variation of Trusts Act 1958 or, (in accordance with the principles established in Chapman v. Chapman (1954) AC 429) under a compromise of a dispute as to beneficial interests or by way of salvage.
I do not doubt that, to some extent, the right of a trustee to remuneration is to be regarded as a beneficial interest. Thus, in Re Pooley, 40 Chancery Division 1, it was held that a trustee who was an attesting witness of a will was not entitled to claim remuneration under the express provisions of the will because section 15 of the Wills Act 1837 precluded an attesting witness from claiming benefits under the will; the benefit of the remuneration clause was, in effect, a legacy. Again in Re Thorley (1891) 2 Ch 613, trustees were entitled to £250 per annum each under the provisions of the will while they carried on the testator's business. It was held that these benefits were legacies and subject to legacy duty.
And as I have mentioned, in Re White the benefits given by a trustee remuneration clause were treated as bounty.
In Re Thorley and Re White there were substantial reasons of policy why the remuneration should be treated as a beneficial interest. It would not be acceptable that a testator should be able to confer upon trustees such benefits as he might choose, in the guise of remuneration, to the disadvantage of creditors and in avoidance of death duties. I observe that when the law as to estate duty on marriage settlements was altered by section 53 of the Finance Act 1963 in consequence of the decision in Inland Revenue Commissioners v. Rennell, (1964) AC 173 , the exemption in relation to trustees' remuneration was restricted to "a reasonable amount".
But accepting that a trustee's right to remuneration may for certain purposes be treated as a beneficial interest in the trust property, I do not think that it comes within the principle laid down in Chapman v. Chapman as to the general inability of the court under its inherent jurisdiction to vary beneficial interests. The question of trustees' remuneration was not discussed in Chapman v. Chapman and, in my judgment, the law as to such remuneration, as it admittedly stands at present, is not consistent with the proposition that it is governed by the Chapman principles. Thus, there is no doubt that the court has, upon the appointment of a trustee, jurisdiction to authorise the payment of remuneration to him. But that is a variation of the existing beneficial interests because it entrenches upon the existing interests of the beneficiaries. There is no difference, in principle, in that respect between a power in the court to authorise remuneration upon appointment and a power to increase existing remuneration. In both cases the extent of the rights of the beneficiaries in the trust property is reduced.
Chapman v. Chapman, it seems to me, was concerned with the power of the court to authorise variations in beneficial interests as such. The present problem is different. It is concerned not with beneficial interests as such, but with the administration of the trust fund. When the court authorises payment of remuneration to a trustee under its inherent jurisdiction it is, I think, exercising its ancient jurisdiction to secure the competent administration of the trust property just as it has done when it appoints or removes a trustee under its inherent jurisdiction. The result, in my view, is that there is nothing in the principles stated in Chapman v. Chapman which is inconsistent with the existence of an inherent jurisdiction in the court to increase the remuneration payable to trustees under the trust instrument.
In my view, therefore, neither of the two objections which have been raised as to existence of such a jurisdiction is well founded.
There remains the question whether, upon principle and authority, we can properly infer that the jurisdiction does exist.
As to principle, it seems to me that if the court has jurisdiction, as it has, upon the appointment of a trustee to authorise remuneration though no such power exists in the trust instrument, there is no logical reason why the court should not have power to increase the remuneration given by the instrument. In many cases the latter may involve a smaller interference with the provisions of the trust instrument than the former. Farther, the law has not stopped short at authorising remuneration to a trustee only if he seeks the authority at the time when he accepts the trusts. That, in my view, appears from the observations of Lord Langdale in Bainbridge v. Blair, and from Re Masters, in which it is clear that Mr. Justice Danckwerts would have been prepared to make the order which he did (and which authorised payment of remuneration to an administrator who had taken a grant some years previously) under the inherent jurisdiction.
I appreciate that the ambit of the court's inherent jurisdiction in any sphere may, for historical reasons, be irrational and that logical extensions are not necessarily permissible. But I think that it is the basis of the jurisdiction that one has to consider. The basis, in my view, in relation to a trustee's remuneration is the good administration of trusts. The fact that in earlier times, with more stable currencies and with a plenitude of persons with the leisure and resources to take on unremunerated trusteeships, the particular problem of increasing remuneration may not have arisen, does not, in my view, prevent us from concluding that a logical extension of admitted law and which is wholly consistent with the apparent purpose of the jurisdiction is permissible. If the increase of remuneration be beneficial to the trust administration, I do not see any objection to that in principle.
As to authority, I do not find in the authorities any decision which positively excludes any inherent jurisdiction to increase remuneration, unless it be Robinson v. Pett. But that was a case of a renouncing executor who was expressly given a legacy for his trouble if he did renounce. The Lord Chancellor said that he was unable to give him any more. I do not think Robinson v. Pett really touches the present case. On the other hand, Lord Eldon's order in Marshall v. Holloway seems to have increased the benefit given by the will, and in Re Barbour Mr. Justice Megarry did not really doubt that, upon an application in proper form and supported by appropriate evidence, the court would have had jurisdiction to increase the remuneration of the corporate trustee.
I conclude that the court has an inherent jurisdiction to authorise the payment of remuneration of trustees and that that jurisdiction extends to increasing the remuneration authorised by the trust instrument. In exercising that jurisdiction the court has to balance two influences which are to some extent in conflict. The first is that the office of trustee is, as such, gratuitous; the court will accordingly be careful to protect the interests of the beneficiaries against claims by the trustees. The second is that it is of great importance to the beneficiaries that the trust should be well administered. It is therefore open to the court to conclude, having regard to the nature of the trust, the experience and skill of a particular trustee and to the amounts which he seeks to charge when compared with what other trustees might require to be paid for their services and to all the other circumstances of the case, that it would be in the interests of the beneficiaries to increase the remuneration, and the court may properly do so.
Having regard to the view which I take as to the inherent jurisdiction, it is not necessary to consider the extent of the court's jurisdiction under section 57 of the Trustee Act 1925 or otherwise.
I would allow the appeal, and make the declaration sought by the amended summons so far as it relates to the inherent jurisdiction. The matter should, I think, be remitted to the Chancery Division to enable the trustees to make such application and upon such further evidence as they think fit.
LORD JUSTICE BRIGHTMAN: I entirely agree with the judgment of Lord Justice Fox and wish to add only a few words of my own.
In this appeal we are concerned with the power of the High Court to authorise a trust corporation, which has "been in office for some 20 years, to charge fees for its future services in excess of those laid down in the trust instrument. In his admirable submissions in the unwelcome role of advocatus diaboli which this court imposed upon him, Mr. Romer confined himself to that narrow issue. He did not dispute that the High Court can, in the exercise of its inherent jurisdiction, authorise a trustee to retain remuneration where none is provided by the terms of the trust. What the court has no jurisdiction to do, he submitted, was to authorise an increase in the general level of remuneration of a paid trustee by way of addition to the remuneration which is allowed by the trust, once the trust has been unconditionally accepted.
Where the court appoints a trust corporation to be a trustee, it has a statutory power to authorise it to charge remuneration: Trustee Act 1925? section 42. The inherent power-of the court to authorise a prospective trustee to charge remuneration is exemplified by such cases as Re Freeman. The inherent power to authorise an unpaid trustee to charge remuneration, notwithstanding prior acceptance of the unpaid office, was regarded by Lord Langdale in Bainbridge v. Blair as undoubted.
If the court has an inherent power to authorise a prospective trustee to take remuneration for future services, and has a similar power in relation to an unpaid trustee who has already accepted office and embarked upon his fiduciary duties on a voluntary basis, I have some difficulty in appreciating the logic of the principle that the court has no power to increase or otherwise vary the future remuneration of a trustee who has already accepted office. It would mean that, if the remuneration specified in the trust instrument were lower than was acceptable to the incumbent trustee or any substitute who could be found, the court would have jurisdiction to authorise a substitute to charge an acceptable level of remuneration, but would have no jurisdiction to authorise the incumbent to charge precisely the same level of remuneration. Such a result appears to me bizarre, and to call in question the validity of the principle upon which it is supposedly based.
Two foundations for the principle are suggested. One is that the right to remuneration is based upon contract, and the court has no power to vary the terms of a contract. The contractual conception suffers from the difficulties explained in the judgment of Lord Justice Fox. It also seems to me, in the context of the present debate, to give little weight to the fact that a trustee whether paid or unpaid, is under no obligation, contractual or otherwise, to provide future services to the trust. He can at any time express his desire to be discharged from the trust and in that case a new trustee will in due course be appointed under section 36 or section 41 of the Trustee Act. The practical effect therefore of increasing the remuneration of the trustee (if the contractual conception is correct) will merely be to amend for the future, in favour of a trustee, the terms of a contract which the trustee has a unilateral right to determine. The interference of the court in such circumstances can hardly be said, in any real sense, to derogate from the contractual rights of the settlor or the beneficiaries if he or they are to be regarded as entitled to the benefit of the contract.
The other foundation suggested for the supposed principle is that the remuneration allowed to a trustee under the terms of the trust is a beneficial interest, and the court has no inherent jurisdiction to vary that beneficial interest save in special circumstances not here material; see Chapman v. Chapman. I agree that the remuneration given to a trustee by a will is an "interest" within the meaning of section 15 of the Wills Act 1837; that it is a "gift" upon a condition for the purposes of the legislation which formerly charged legacy duty upon testamentary gifts; and that an executor or trustee remunerated by the will cannot retain such remuneration against creditors if the estate turns out to be insolvent. There are obvious arguments why a testator should not be able to circumvent the provisions of the Wills Act, or avoid legacy duty, or defeat his creditors, by the award of remuneration to his executors or trustees. It does not follow that a remunerated trustee is to be considered as a cestui que trust for the purposes of the principles laid down in the Chapman case. If he were it is difficult, as Lord Justice Fox says, to see what right the court would have to authorise remuneration to be charged by a prospective trustee, since such authority will have the inevitable effect of adding a new beneficiary to the trust at the expense of the existing beneficiaries.
I would allow the appeal.
LORD JUSTICE CUMMING-BRUCE: I agree with the order proposed by Lord Justice Fox and with the reasons expressed in both judgments of my Lords.
(Order: Appeal allowed; declaration in form sought by summons; summons to go back to Chancery Division to enable trustees to file such evidence as they think fit; trustees' costs to come out of fund; such costs to cover costs incurred by adult defendants who did not appeal; trustees' costs, together with the costs of other parties, to be taxed on basis of costs of and incidental to appeal; respondents' costs to be on common fund basis)
