Jemma Trust Company Ltd v Liptrott and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mance |
| Judgment Date | 24 October 2003 |
| Neutral Citation | [2003] EWCA Civ 1476 |
| Docket Number | Case No: 2002 2588 A2 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 October 2003 |
[2003] EWCA Civ 1476
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SUPREME COURT COSTS OFFICE
(Costs Judge Rogers)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Peter Gibson
Lord Justice Mance
Lord Justice Longmore
Sitting With
Costs Judge Wright (Sitting as an Assessor)
Case No: 2002 2588 A2
JUSTIN FENWICK Esq QC and NICHOLAS BACON Esq (instructed by Kippax Beaumont Lewis) for the Appellant
ANDREW POST Esq (instructed by The Owen-Kenny Partnership) for the Respondent
RICHARD DRABBLE Esq QC and MATTHEW COLLINGS Esq (instructed by The Law Society) for the Interested Party, The Law Society
Lord Justice Longmore (giving the judgment of Lord Justice Peter Gibson and himself):
The third defendants, Messrs Kippax Beaumont Lewis ("KBL") are solicitors. They appeal against the decision of Costs Judge Rogers on a preliminary issue in the detailed assessment of the costs charged by KBL in relation to the administration of the estate of the late Sir Geoffrey Hulton Bt. KBL rendered to the estate bills which claimed two sets of charges; one set of charges was based on the time that they had spent administering the estate, the other on the value of the estate. Costs Judge Rogers held that they were not entitled to charge a percentage of the value of the estate at the same time as charging for the time they spent on the administration.
Sir Geoffrey Hulton died on 20th November 1993. His estate was worth a little less than £10 million.
The first and second defendants are the executors of the estate. The first defendant, Mr Liptrott, is a former partner in KBL. The second defendant was Sir Geoffrey's land agent. The executors instructed KBL to undertake the administration of the estate. No express agreement was made as to the terms on which KBL would act or, in particular, as to the basis on which they would charge the estate for their work. The claimant is the trustee of the Igloo Trust of Jersey to whom the residuary beneficiary has assigned his interest.
The first category of charge is based on the time actually spent by KBL's fee earners (Mr Liptrott, a partner in the firm, and Mr Marriott, an employed barrister) in relation to the administration of the estate. Those bills are said to have amounted to £386,459 (although it is not clear whether this includes VAT). However KBL have also rendered a separate category of charge which is not based on the time spent by the fee earners, but on the value of the estate. Those bills are said to amount to £227,689.31 plus VAT, a total of £267,534.93. Thus the total sum charged by KBL in relation to the administration of this £9.5 million estate is £653,993. (That figure is for KBL's own work alone; it does not include an additional £140,000 charged by counsel. It should also be noted that Mr Post, for the Respondent, asserted at the hearing that further bills had been rendered.)
The appeal relates primarily to the second category of charge, that rendered in relation to the value element. KBL's position before Master Rogers was that they were entitled to charge the estate, in addition to the sums charged for the time they spent on the case, 1.5% of the value of the estate, save for the value of the deceased's residence which was be charged at 0.75%. The residence was worth £265,000. 0.75% of that sum is £1,987.50. The balance of the estate on the basis of the defendants' valuation (as set out in their bills) was worth £9,361,668. 1.5% of £9,361,668 is £140,42Thus the total that should, on the face of it, have been charged for the value element, on the basis of KBL's own case, is £142,412.50. KBL have in fact rendered value element bills of £227,689.31. This is said to be because the estate has increased in value. But this is a matter for the costs judge and does not arise on the preliminary issues so far decided.
The issues on the appeal
Three issues arise on this appeal:
(a) are solicitors engaged in relation to the administration of an estate entitled, in the absence of any agreement with interested parties, to charge not only for the time they spend on the administration of the estate but also a scale fee based on the value of the estate? Costs Judge Rogers found that they were not because the element of value is (or should be) subsumed in the total hourly rate;
(b) if a solicitor is entitled to charge in this way, how should that value element fee be calculated? In particular should it be based on the reducing scale proposed in the case of Maltby v D J Freeman [1978] 1 WLR 431?
(c) Did the Judge assess an appropriate hourly rate, if he was right that no separate charge based on value should be made?
The significance of these issues extends beyond the present case. The most recent authorities as to solicitors' charges in relation to non-contentious work date back to the 1970s and the claimant's case, with which Costs Judge Rogers agreed, is that these do not properly reflect the realities of contemporary legal practice. As counsel for KBL has said in his skeleton argument the case has attracted considerable attention throughout the solicitors' profession, and the Law Society has been given leave to intervene in the appeal.
The Legislative Background
Solicitors' remuneration in relation to non-contentious business is governed by The Solicitors' (Non-Contentious Business) Remuneration Order 1994 which was made pursuant to section 56 of the Solicitors Act 1974 and came into force on 1st November 1994. The first two of KBL's eight bills were rendered on 27th April 1994 and therefore it is the predecessor statutory instrument which, strictly, applies to them but nothing turns on the slight difference of wording in the instruments and we need quote only parts of paragraphs 2 and 3 of the 1994 Order:-
"2. In this Order:-… .
"entitled person" means a client or an entitled third party;
"entitled third party" means a residuary beneficiary absolutely and immediately (and not contingently) entitled to an inheritance, where a solicitor has charged the estate for his professional costs for acting in the administration of the estate, and either
(a) the only personal representatives are solicitors (whether or not acting in a professional capacity); or
(b) the only personal representatives are solicitors acting jointly with partners or employees in a professional capacity;
3. A solicitor's costs shall be such sum as may be fair and reasonable to both solicitor and entitled person, having regard to all the circumstances of the case and in particular to:-
(a) the complexity of the matter or the difficulty or novelty of the questions raised;
(b) the skill, labour, specialised knowledge and responsibility involved;
(c) the time spent on the business;
(d) the number and importance of the documents prepared or perused, without regard to length;
(e) the place where and the circumstances in which the business or any part thereof is transacted;
(f) the amount or value of any money or property involved;
(g) whether any land involved is registered land;
(h) the importance of the matter to the client; and
(i) the approval (express or implied) of the entitled person or the express approval of the testator to:-
(i) the solicitor undertaking all or any part of the work giving rise to the costs or
(ii) the amount of the costs."
It is thus apparent that the amount or value of any money or property involved in the estate being administered is a matter to which regard is to be had in assessing the fair and reasonable remuneration to which solicitors are entitled.
The Judgment
On 17th August 2001 Master Moncaster ordered that the costs of the administration of the estate be assessed by the court. The matter was referred to the Supreme Court Costs Office and allotted to Costs Judge Rogers. Both the Claimant and KBL, through their advocates, submitted that the parties would be assisted by the determination of two preliminary points and an order was made on 24th June 2002 in the following terms:-
"A preliminary issue is to be tried as to the value element and the hourly rates applicable to the bills issued by Kippax Beaumont Lewis"
In his judgment on these issues the Judge considered the issues in the reverse order and so dealt first with the hourly rates claimed. The hourly rates claimed by KBL were £85 per hour in 1994 rising to £150 per hour in 2000; their rates were upheld by the Judge because, as it was put in KBL's skeleton argument which the Judge adopted, those rates constituted an increment of between 25–35% on the hourly rates used by District Judges in the Bolton area for the "Broad Average Direct Cost". They compared favourably with the rates allowed for Bolton County Court matters which started with the same base rate but then gave a 50% uplift for what used to be called "care and conduct".
The Judge then turned to the second preliminary point, viz. value, and decided that, in spite of authorities dating from the 1970s in which a percentage of the value of the estate was allowed, it was now anachronistic and wrong to include an element of value because hourly rates were invariably calculated on the basis of time recording material which was more sophisticated than in the 1970s. He held that a solicitor should therefore charge either on the basis of an hourly rate or on the basis of value but not both.
There is a tension between these two parts of the judgment because it is not clear, in the result, whether the judge has had...
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