When the original Judgment was handed down last year, there were a number of questions that were left unanswered, it was hoped that the appeal would provide guidance and answer these remaining queries.
Firstly, for those that aren’t aware, what was the case about?
The case centred around the costs incurred in dealing with the administration of what was described as a “straightforward” estate.
The Claimant in the matter was a beneficiary of a will, and he was seeking an assessment of bills delivered by the Defendant Solicitors to the Executor of the Will. The Court had to decide whether the bills should be assessed and the terms of any assessment.
The invoices were sent by the Defendant to the Claimant in September 2021. They were accompanied by breakdowns in the form of time sheets. There were 6 invoices, the first dated October 2019 and the last dated August 2021. It appeared to the Court that the sums were transferred by the Defendant from the Estate to meet the costs in the bills immediately after delivery or on delivery of the bills during the course of the retainer.
However, the Defendant’s original costs estimate for their fees was between £10,000.00 – £15,000.00 plus VAT and expenses. The total of the charges raised by the Defendant in the bills was £54,410.99 plus VAT and expenses – an increase of the top end estimate of over 250%. It is important to note at this juncture that the estate had a gross value of around £2,881,000.00 so the sums billed do not seem particularly high against that backdrop. However, the Claimant argued that the administration of the estate was simply not complicated and the costs were, as he put it, grossly excessive.
Now turning to the issue of the right to assessment. The Claimant was seeking an assessment under the Solicitors Act 1974, by way of a Claim Form issued in April 2022 (some 8 months after the last invoice was delivered). The Claim Form asserted that the Claimant was relying on Section 70 of the Solicitors Act 1974. In that section, it deals with applications for assessment by those chargeable with a bill. However it was clear and ultimately agreed, that the Claimant was, for the purposes of Section 71 (3) of the 1974 Act a “person interested in any property out of which the trustee, executor or administrator has paid, or is entitled to pay, the bill” and not a person chargeable with the bill. The invoices were payable out of the estate and accordingly, Section 71 (3) applied and the Claimant was entitled to seek an assessment under this section.
How easy has it been historically to challenge a Solicitor’s bill as a beneficiary?
As many of you will know, it has become quite a task to challenge Solicitors fees incurred in administering an Estate. So much so, that I would say it has become easier to bat off challenges made by beneficiaries than it is to launch a challenge. It has long been my view that when you take the cases of Tim Martin Interiors Ltd v Akin Gump LLP [2011] EWCA Civ 1574 and Mussell v Patience [2018] EWHC 430 (Ch) you essentially go full circle, in that one case tells you to go through one process, and the other case tells you to follow another with limited success at the end. I know I am not alone with this thought process, however, there has been the absence of a case challenging costs in the circumstances that this current case provides, so is this the case we have been waiting for to give beneficiaries the unfettered ability to challenge Solicitors costs? Not quite. It does, however, provide us with some very encouraging views of the judiciary on the issues and does make the pathway to challenges much clearer than they were.
What can we take away from this case?
This case provided us with the clarification that the commentary in the Tim Martin case was distinguishable and that beneficiaries are in fact entitled to apply to the Court and request for the costs to be assessed. This was due to the fact that there were material differences between applications under section 71(3) and those under section 71(1) due to the different nature of the interests of those individuals, i.e. beneficiaries. This really is encouraging news for those wanting to challenge costs as a beneficiary.
However, the question was raised as to whether, if there was fully informed consent by the Executor in approving invoices, this would impact whether there had been appropriate approval or agreement of the fees raised. There was limited commentary from the Court of Appeal on this point, which is a really significant point. However, the following paragraph was provided ;
“57… First, although the starting point is that an assessment under section 71(3) is an assessment as between solicitor and client, I accept that the ultimate interest to be protected on an assessment under section 71(3) is that of the estate and/or the beneficiaries. Second, I consider it to be material that section 71(3)(b) makes express provision permitting an order that payments be made “to or by the applicant, to or by the solicitor, or to or by the executor, administrator or trustee”, which underscores the broader nature of the enquiry under section 71(3) when compared with an assessment under section 70 or section 71(1). Third, it seems appropriate that separate consideration should be given to the position of the beneficiary and the estate in circumstances where the executor/trustee carries no risk because of their ability to pay the solicitor out of the trust property. Fourth, the decisions in In re Brown and Hazard v Lane both contemplated and allowed the beneficiary to challenge the bill even though an executor had approved it.”
It is clear that the Court wants to protect the interests of the beneficiaries , however, it remains to be seen whether invoices or fees approved by an Executor (on the basis there is clear evidence that there was informed consent – with evidence of the same) will be available to be challenged.
Where does this case leave those wanting to challenge Solicitors costs that have been approved by an Executor?
The door is firmly open, that is clear to see. This case has clarified the issue with regards to Tim Martin. This now makes a challenge possible, and is an improvement on the previous limited position that beneficiaries were in. However, whilst the door is firmly open, the obstacles once you go through that door are still very much there. There are still issues with time limits, approvals and of course the usual issues that come with challenging Solicitors fees. Subsequently, whist this case is a good start, it is not quite the carte blanche approval for challenges that beneficiaries were perhaps hoping for.