Shepherd & Company Solicitors v Mr Peter Ian Brealey
| Jurisdiction | England & Wales |
| Judge | Mr Justice Cavanagh |
| Judgment Date | 19 December 2022 |
| Neutral Citation | [2022] EWHC 3229 (KB) |
| Docket Number | Case No: QA-2021-000278 |
| Court | King's Bench Division |
[2022] EWHC 3229 (KB)
Mr Justice Cavanagh
sitting with
COSTS JUDGE Brown
as Costs Assessor
Case No: QA-2021-000278
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
ON APPEAL FROM MASTER ROWLEY
Royal Courts of Justice
Strand, London, WC2A 2LL
Rupert Cohen (instructed by Shepherd & Co, Solicitors) for the Appellant
John Meehan (instructed by Jones & Co, Solicitors) for the Respondent
Hearing date: 12 October 2022
This is an appeal against the judgment of Master Rowley, sitting as a Costs Judge, dated 29 November 2021. The judgment was handed down in third party assessment proceedings that were brought by the Respondent, a beneficiary of the estate of his mother, Mrs Ann Brealey, pursuant to section 71(3) of the Solicitors Act 1974. In that judgment, Master Rowley held that the Appellant was not entitled to be paid the fees that had been levied by the name-partner in the Appellant, Mr Robin Shepherd, for work that he had done in his capacity as executor of the estate of Ann Brealey. The Respondent had accepted that Mr Shepherd was entitled to charge for work done by him in relation to the day-to-day administration of the estate, but said that, in the absence of a charging clause in his mother's will, Mr Shepherd was not entitled to charge for acting in his capacity as an executor. Master Rowley held that any fees which are claimed as work done by Mr Shepherd as a solicitor in relation to the administration of the estate will require an explanation at the next stage of the detailed assessment hearing (which has yet to take place).
Master Rowley had previously dealt, in a judgment dated 7 June 2021, with the permissible scope of the challenges that could be mounted in third party assessment proceedings such as these, in light of the judgment of the Court of Appeal in Tim Martin Interiors v Akin Gump LLP [2011] EWCA Civ 1574 (“ Tim Martin”). The judge held that “The limited “blue-pencil” test approach referred to in Tim Martin prescribes the extent of the challenges that can be raised by the claimant to the defendant's bills of costs in these proceedings.” (judgment, para 39).
For convenience, I will refer to the Appellant as the Defendant, and to the Respondent as the Claimant.
I will first summarise the facts and the judgment of Master Rowley dated 29 November 2021, and I will then set out the relevant statutory provisions. I will then deal with the issues which arise in this appeal, in the following order:
(1) Should the appellate court admit witness statements from Mr Anthony Hayward, another executor of the will, who was Mrs Brealey's brother (and so, the Claimant's uncle), and from Mr Edward Smyth, the only other partner in Shepherd & Co, apart from Mr Shepherd, at the time that the will was executed?;
(2) Ground 1: Did Master Rowley misapply the test in Tim Martin and/or did the judge err in failing to take into account the fact that the charges sought for the time of Mr Shepherd are sought by the Defendant firm, not by Mr Shepherd himself?;
(3) Ground 2 (referred to as 2(1) in the grounds of appeal): Was the judge wrong not to conclude that the Defendant was entitled to payment for the time spent by Mr Shepherd in his capacity as executor, pursuant to section 29 of the Trustee Act 2000, because the only other executor, Mr Hayward, had agreed in writing to his remuneration?;
(4) Ground 3 (referred to as 2(2) in the grounds of appeal): Should the judge have exercised the court's inherent jurisdiction to permit the recovery of the fees for the time spent by Mr Shepherd, given what was said to be the unjustified windfall that would otherwise accrue to beneficiaries as a result of the unremunerated services of Mr Shepherd? The Defendant submitted that the judge misdirected himself in law, by finding that the jurisdiction should only be exercised sparingly and in exceptional circumstances. In the alternative, the Defendant submitted that the judge's decision not to exercise the court's inherent jurisdiction was wrong; and
(5) Ground 4 (referred to as ground 3 in the ground of appeal): If, contrary to the Defendant's primary submissions, the judge was right to disallow Mr Shepherd's fees when acting in the capacity as executor, should the disallowance be restricted to the profit the Defendant made on Mr Shepherd's time, and not the cost of providing the service for which charge is sought? This ground was not advanced before Master Rowley. (The Appellant contends that this ground was advanced before Master Rowley inasmuch as it is subsumed within Ground 3, but in my judgment this is a new point, or a new refinement, which was taken for the first time on appeal.)
I have been assisted by Costs Judge Brown, as Costs Assessor. The Defendant was represented by Mr Rupert Cohen, and the Claimant by Mr John Meehan. I am grateful to both counsel for the conspicuously clear and helpful way in which they made their submissions, both orally and in writing.
Events after the judgment was circulated in draft
Before going further, I should refer to events that took place following circulation of my judgment in draft. In the normal way, I invited counsel to suggest corrections. Mr Cohen, counsel for the Defendant, responded by making further written submissions on three matters of substance. These written submissions from Mr Cohen, which included reply submissions in response to submissions filed by Mr Meehan, ran to some 17 pages in total and included detailed analysis of case-law authority. The Defendant's further submissions addressed three issues:
(1) They sought to persuade me that I was wrong to find that Master Rowley had been right to find, for the purposes of Ground 3, that the court's inherent jurisdiction to permit the recovery of the fees for the time spent by Mr Shepherd as executor should be exercised sparingly and in exceptional circumstances;
(2) They sought to persuade me that I was wrong to treat the appeal on Ground 3 as being an appeal against an evaluative judgment of a judge, rather than as an appeal on a point of law; and
(3) They sought to persuade me that I was wrong to regard Ground 4 as a new point which had been raised for the first time on appeal.
Mr Cohen acknowledged that, as the Court of Appeal made clear in Egan v Motor Services (Bath) Ltd [2007] EWCA Civ 1002; [2008] 1 All E.R. 1156, attempts to reargue the issues in the case once the judgment has been circulated in draft were appropriate only in the most exceptional circumstances, for example, where counsel feels that the judge (i) had not given adequate reasons for some aspect of his decision, or (ii) had decided the case on a point which was not properly argued or has relied on an authority which was not considered. Mr Cohen submitted that these circumstances applied to the present case. In particular, he said that I had failed to deal with a judgment that had not been mentioned in his skeleton argument but upon which he had focused in his oral reply submissions, namely Perotti v Watson [2001] All ER (D) 73 (Jul); [2001] Lexis Citation 1695. He said that this case was authority for the proposition that the court's inherent discretion to permit the recovery of a trustee's fees, even if no provision had been made for them in the trust instrument, was a broad discretion, or at least was not one that should only be exercised sparingly and in exceptional circumstances.
On behalf of the Claimant, Mr Meehan submitted that there were no exceptional circumstances that would make it appropriate for me to reconsider or redraft my judgment and went on to make submissions in the alternative as to why, if I was prepared to do so, the outcome should be the same.
I respectfully wholeheartedly endorse the sentiments expressed by the Court of Appeal in Egan, and by the Court of Appeal in the earlier case of Robinson v Fernsby [2003] EWCA Civ 1820, in which the Court deprecated the practice of counsel taking the opportunity afforded by the invitation to draw the court's attention to typographical and similar errors to make submissions on further arguments of substance. The very helpful and sensible practice of circulating the judgment in draft is not designed to give the losing side a chance to change the judge's mind. If there are errors or weaknesses in the judge's judgment, the remedy is to apply for permission to appeal.
In my view, the third matter that has been raised by Mr Cohen is simply an attempt to reargue a point on which he has been unsuccessful. I have not therefore addressed it in any detail in this judgment, save to the extent that I have added an observation in parentheses at paragraph 4(5) above.
As for the first and second matters, these are the ones to which Perotti v Watson relates. They are essentially different ways of making the same point, namely that the judge had erred in law in considering the exercise of the inherent jurisdiction, because he had approached it on the basis that it should be exercised only sparingly and in exceptional circumstances.
As it happens, I had not overlooked this point, when preparing the first draft of this judgment. I had considered Perotti v Watson, but had come to the view that, notwithstanding what is said in that judgment, the judge in this case was right to take the view that the inherent jurisdiction should only be exercised sparingly and in exceptional circumstances. I originally took the view that it was not necessary specifically to deal with Perotti v Watson in my judgment. However, in light of Mr Cohen's sustained submissions in reliance upon the case, and upon reconsideration, I accept that it is necessary to deal with the issue of the correct test to apply to the exercise of the inherent jurisdiction in greater detail than I had originally provided. I have, therefore,...
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