Daniel Kenig v Thomson Snell & Passmore LLP
| Jurisdiction | England & Wales |
| Judge | Lord Justice Stuart-Smith,Lord Justice Nugee,Lord Justice Coulson |
| Judgment Date | 18 January 2024 |
| Neutral Citation | [2024] EWCA Civ 15 |
| Year | 2024 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2023-000440 |
[2024] EWCA Civ 15
Lord Justice Coulson
Lord Justice Stuart-Smith
and
Lord Justice Nugee
Case No: CA-2023-000440
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
SENIOR COURTS COST OFFICE
COSTS JUDGE BROWN
Royal Courts of Justice
Strand, London, WC2A 2LL
Robert Marven KC and Alicia Tew (instructed by Thomson Snell & Passmore LLP) for the Appellant
Roger Mallalieu KC and Simon Teasdale (instructed by SCS Law) for the Respondent
Hearing date: 18 October 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 18 January 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
Mr Kenig, the respondent, and his sister are the beneficiaries of a will made on 13 February 2019 by their mother, Mrs Cunnick. The appellant firm of solicitors [“the Solicitors”] were retained and instructed by the sole executor of the will to administer Mrs Cunnick's estate. The Solicitors' original costs estimate for their fees was between £10,000 and £15,000 plus VAT and expenses. In the event, the total of their charges included in a series of invoices dated between 17 October 2019 and 2 August 2021 was £54,410.99 plus VAT and expenses. The Solicitors transferred sums from the estate to meet the claims for costs in the bills either upon delivery or immediately after delivery of the bills in the course of their retainer.
Mr Kenig wishes to challenge the fees charged by the solicitors and has applied to the Court for an assessment under section 71(3) of the Solicitors Act 1974 (“the 1974 Act”), he being 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 being a person chargeable with the bill. To that end he issued these proceedings on 25 April 2022, some 8 months after the last invoice was delivered to the executor. The Solicitors oppose Mr Kenig's application, arguing that (a) the principles that should be applied on any such assessment are those identified by the Court of Appeal in Tim Martin Interiors Ltd v Akin Gump LLP [2011] EWCA Civ 1574; and (b) application of those principles means that any assessment of their bills on the application of the beneficiaries would be fruitless and therefore should not be allowed. The Solicitors' overarching submission is that, in a case such as the present, it is not open to a beneficiary to challenge legal fees that have been paid from the proceeds of the estate.
On 1 February 2023, Costs Judge Brown ordered that there should be a section 71(3) assessment of the solicitors' eight bills. He explained his decision in a detailed judgment handed down that same day: [2023] EWHC 181 (SCCO). He rejected the submission that a section 71(3) assessment would be governed by the principles set out in Tim Martin. Even if Tim Martin was directly applicable, he was of the view that there would still be a realistic prospect that material deductions might be made from the Solicitors' bills; and he exercised his discretion in favour of ordering an assessment.
The Costs Judge gave the Solicitors permission to appeal on the grounds of their arguments about Tim Martin. Other grounds were refused permission and have not been pursued. The written and oral submissions of both parties were of sustained high quality. However, for the reasons set out below, I would dismiss the appeal.
The statutory framework
The Solicitors Act 1974 (“the 1974 Act”)
Part III of the 1974 Act deals with the remuneration of solicitors. Section 69 establishes formal requirements for a statutory bill; and section 69(1) lays down the general rule that no action shall be brought to recover any costs due to a solicitor before the expiration of one month from the date of compliant delivery to the party to be charged with the bill personally.
Section 70 makes provision for assessment of a solicitor's bill on the application of the party chargeable or the solicitor; and section 71 makes provision for assessment of a bill on the application of third parties i.e. any persons other than the party chargeable or the solicitor. Resolution of the issues in this appeal requires us to focus on the similarities and differences between sections 70 and 71 and the consequences of those similarities and differences.
For present purposes the most relevant provisions of sections 70 and 71 (with occasional emphasis added) are:
70 Assessment on application of party chargeable or solicitor.
(1) Where before the expiration of one month from the delivery of a solicitor's bill an application is made by the party chargeable with the bill, the High Court shall, without requiring any sum to be paid into court, order that the bill be assessed and that no action be commenced on the bill until the assessment is completed.
(2) Where no such application is made before the expiration of the period mentioned in subsection (1), then, on an application being made by the solicitor or, subject to subsections (3) and (4), by the party chargeable with the bill, the court may on such terms, if any, as it thinks fit (not being terms as to the costs of the assessment), order—
(a) that the bill be assessed; and
(b) that no action be commenced on the bill, and that any action already commenced be stayed, until the assessment is completed.
(3) Where an application under subsection (2) is made by the party chargeable with the bill—
(a) after the expiration of 12 months from the delivery of the bill, or
(b) after a judgment has been obtained for the recovery of the costs covered by the bill, or
(c) after the bill has been paid, but before the expiration of 12 months from the payment of the bill,
no order shall be made except in special circumstances and, if an order is made, it may contain such terms as regards the costs of the assessment as the court may think fit.
(4) The power to order assessment conferred by subsection (2) shall not be exercisable on an application made by the party chargeable with the bill after the expiration of 12 months from the payment of the bill.
(5) …
(6) …
(7) Every order for the assessment of a bill shall require the costs officer to assess not only the bill but also the costs of the assessment and to certify what is due to or by the solicitor in respect of the bill and in respect of the costs of the taxation.
(8) If after due notice of any assessment either party to it fails to attend, the officer may proceed with the assessment ex parte.
(9) Unless—
(a) the order for assessment was made on the application of the solicitor and the party chargeable does not attend the assessment, or
(b) the order for assessment or an order under subsection (10) otherwise provides,
the costs of an assessment shall be paid according to the event of the assessment, that is to say, if the amount of the bill is reduced by one fifth, the solicitor shall pay the costs, but otherwise the party chargeable shall pay the costs.
(10) The costs officer may certify to the court any special circumstances relating to a bill or to the assessment of a bill, and the court may make such order as respects the costs of the assessment as it may think fit.
…
71 Assessment on application of third parties.
(1) Where a person other than the party chargeable with the bill for the purposes of section 70 has paid, or is or was liable to pay, a bill either to the solicitor or to the party chargeable with the bill, that person, or his executors, administrators or assignees may apply to the High Court for an order for the assessment of the bill as if he were the party chargeable with it, and the court may make the same order (if any) as it might have made if the application had been made by the party chargeable with the bill.
(2) Where the court has no power to make an order by virtue of subsection (1) except in special circumstances it may, in considering whether there are special circumstances sufficient to justify the making of an order, take into account circumstances which affect the applicant but do not affect the party chargeable with the bill.
(3) Where a trustee, executor or administrator has become liable to pay a bill of a solicitor, then, on the application of any person interested in any property out of which the trustee, executor or administrator has paid, or is entitled to pay the bill, the court may order—
(a) that the bill be assessed on such terms, if any, as it thinks fit; and
(b) that such payments, in respect of the amount found to be due to or by the solicitor and in respect of the costs of the assessment, be made to or by the applicant, to or by the solicitor, or to or by the executor, administrator or trustee, as it thinks fit.
(4) In considering any application under subsection (3) the court shall have regard—
(a) to the provisions of section 70 as to applications by the party chargeable for the assessment of a solicitor's bill so far as they are capable of being applied to an application made under that subsection;
(b) to the extent and nature of the interest of the applicant.
(5) If an applicant under subsection (3) pays any money to the solicitor, he shall have the same right to be paid that money by the trustee, executor or administrator chargeable with the bill as the solicitor had.
(6) Except in special circumstances, no order shall be made on an application under this section for the assessment of a bill which has already been assessed.
(7) If the court on an application under this section orders a bill to be assessed, it may order the solicitor to deliver to the applicant a copy of the bill on payment of the costs of that copy.
Section 70 establishes a graduated scheme, depending on when an application is...
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