Jemma Trust Company Ltd v Liptrott and Others
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr. Justice Hart,Mr. Justice Hart |
| Judgment Date | 17 June 2004 |
| Neutral Citation | [2004] EWHC 1404 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH/2004/PTA/0092 |
| Date | 17 June 2004 |
[2004] EWHC 1404 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM THE SUPREME COURT COSTS OFFICE
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr. Justice Hart
Sitting With
Costs Judge Wright (sitting as an Assessor)
Case No: CH/2004/PTA/0092
Mr Jeremy Morgan QC and Mr Andrew Post (instructed by The Owen-Kenny Partnership) for the Claimant/Appellant.
Mr Justin Fenwick QC and Mr Nicholas Bacon (instructed by Messrs. Kippax Beaumont Lewis) for the Defendants.
Hearing dates: 4 th May 2004
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is an appeal by the claimants ("Jemma") against three decisions made by Costs Judge Rogers in a judgment made in the course of a detailed assessment of costs dated 2nd February 2004. That detailed assessment had taken place following the reversal of an earlier decision by the Costs Judge on a preliminary issue by the Court of Appeal on 24 th October 2003 ( [2003] EWCA Civ 1476, now reported at [2004] 1 All ER 510).
Sir Geoffrey Hulton died on 20 November 1993. His estate was worth a little less than £10m. The first and second defendants are the executors of the estate. The first defendant, Mr Liptrott, is a former partner in Kippax Beaumont Lewis, solicitors ("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. Jemma is the trustee of the Igloo Trust of Jersey to whom the residuary beneficiary ("Mr Butterfield") has assigned his interest.
The detailed assessment (which had been ordered by Master Moncaster in administration proceedings by an order dated 26 th February 2002) was of 79 bills rendered by the third defendants (KBL). Exclusive of disbursements the total sum claimed by KBL amounted to £592,983.40. Of that sum £216,043.10 had been charged by certain of the bills as a 1.5% charge on the value of the assets being administered (at the date of death some £9.5m) ("the value charge"). The balance (of £376,940.30) was ascribed to charges made for time spent ("the time charge") by KBL's fee earners, namely Mr Liptrott as partner in the firm and Mr Marriott an employed barrister. In his ruling on the preliminary issues, handed down on 16 th September 2002, Master Rogers had held that KBL were not entitled to make the value charge. He had also held that the hourly rates on the basis of which the time charge had been calculated were reasonable ones for KBL to claim.
The Court of Appeal addressed itself to three issues: (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? (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 Maltby v DJ Freeman & Co (a firm) [1978] 2 All ER 913, [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?
On the first issue the Court of Appeal held that it was open to such solicitors "to make a separate charge based on value, provided always that one remembers that the solicitor is entitled only to what is fair and reasonable remuneration taking all relevant factors into account": see per Peter Gibson and Longmore LLJ at paragraph 23. Mance LJ agreed with this conclusion (see paragraph 48) while expressing reservations as to the merits and utility of charging on the dual basis (see paragraphs 39–47).
On the second issue the Court of Appeal held that "it will usually be right to reduce the value element percentage by reference to a regressive scale" (see paragraph 29); and that the appropriate bands in 1993 values, and percentages, would be (1) up to £750,000 at 1.5% (2) £750,000-£3m at 0.5% (3) £3m-£6m at 0.1666% and (4) above £6m at 0.08333% (see paragraph 31). They seem to have been of the view that a regressive scale would be right in the present case ("…if a regressive scale was right at all (as we think it is)…[emphasis supplied]) but emphasised:
"the importance of looking at the final figure in the round in order to ensure that the appropriate factors are taken into account in every individual case to arrive at no more than a fair and reasonable remuneration overall"
On the third issue, Peter Gibson and Longmore LJJ said this at paragraph 32:
"We have already made clear our view that the judge has assessed too low an hourly rate, if he was right to conclude that a valuation element should not appear separately in the bills. If the value element is addressed separately, the Law Society guidance contemplates an uplift factor of 25% to 33% over the expense rate. By adopting KBL's skeleton argument, the judge gave KBL that rate but no more, at any rate for the years 1994–1996. The last years seem to be assessed at slightly more, but only minimally so. In these circumstances we are not satisfied that the judge has given any sufficient allowance for the value of the estate at all. The parties agreed that, in the event of this conclusion being reached, the matter would have to be remitted to the costs judge. He will be able to consider our judgment, as a whole, and make his final assessment in the light of it. "
The matter was thus referred back to the Costs Judge to proceed with the detailed assessment in the light of the guidance given by the Court of Appeal. The detailed assessment then took the procedural course which I examine in more detail below. Of the various decisions which he made in the course of the judgment dated 2 nd February 2004, the three against which Jemma appeals are:
i) His decision to allow a value charge of £141,906.71 (which was the effect of his decision to assess the bills in the reduced sum overall of £500,000):
ii) His decision to make no reductions for time spent in relation to individual bills, other than to apply a 5% reduction for duplication in the work of Mr Liptrott and Mr Marriott. This decision was said to be the result of procedural unfairness on the part of the Costs Judge; and
iii) His decision to make no reduction on the ground of the inadequacy or absence of attendance notes justifying particular items claimed within the time charge.
For the purposes of this appeal an order had been made for the judge hearing it to sit with assessors, Costs Judge Wright and Mr Tony Girling being appointed for that purpose. Unfortunately, owing to some mistake in diarisation, Mr Girling was unable to be present when the appeal came on for hearing. The parties invited me (and I agreed) to sit solely with the assistance of Master Wright.
The Value Charge Issue
The legislative background is described in paragraph 8 of the Court of Appeal's judgment. Subject to the qualifications there mentioned (and which are not material) the relevant provisions are to be found in the Solicitors' (Non-Contentious Business) Remuneration Order 1994, SI 1994/2616 which was made pursuant to s 56 of the Solicitors Act 1974 and came into force on 1 November 1994 which (so far as material) provides as follows:
"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."
For ease of exposition I will refer to each of those lettered sub-paragraphs as factors (thus "factor (a)" means the content of that sub-paragraph and so forth).
The process by which Master Rogers arrived at his final assessment (which resulted in his allowing a value charge of £141,906.71) was as follows. He decided that it was unnecessary for him to revisit the hourly rates which he had fixed by his original decision on the preliminary issue "because I can, and am now going to, determine the final amount of...
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