The Friendly Trust's Bulk Application

This ‘bulk application’ dated 24 September 2015 is made by The Friendly Trust (‘the trust’). It concerns several subsisting orders appointing its office-holders as property and affairs deputies and a number of new deputyship applications.

The Friendly Trust is a not-for-profit organisation formed in 1996 to help people with disabilities. It had 52 active deputyships in September 2015.

The Co-ordinator of The Friendly Trust is Ms Alison Brunt who has completed the application and filed statements on the trust’s behalf.

The vast majority of routine uncontested deputy applications made by not-for-profit organisations, and by local authorities seeking the appointment of a local not-for-profit organisation, are considered and dealt with by authorised court officers (‘ACOs’).

Consistent with that, this application was dealt with initially by an authorised court officer, Mr James Batey, and documents filed by the trust bear the title ‘James Batey’s applications’.

Authorised court officers are civil servants who although not legally qualified are authorised by the Senior Judge or the President to exercise the jurisdiction of the court in such circumstances as are set out in the relevant practice direction.

Part of the application is routine. The trust asks that all existing orders are amended so as to record the deputy as being ‘The postholder of Co-ordinator of The Friendly Trust’. (I note that in one email the trust requests the alternative wording, ‘the Holder of the Office of the Co-ordinator of The Friendly Trust’).

The bond company which provides the deputy’s security is content for the orders to be amended in this way given that it is a matter of administrative convenience only and does not affect any person’s rights or obligations. I have therefore asked an authorised court officer to liaise with the trust and to issue an order which provides for the preferred form of wording to be read into existing orders.

The second part of the application is more difficult. Ms Brunt, the Coordinator of the The Friendly Trust, also sought a general bulk order that the Friendly Trust is permitted to charge fixed costs up to the amount allowed to solicitors in the relevant practice direction, so that the trust ‘can continue to provide a Deputyship service on viable terms’. Furthermore, ‘The Applicant requests that this permission to charge is retrospective in relation to all existing Deputy orders as well as applying to future orders’.

The way in which the second part of the application was formulated is problematic for at least three reasons.

Firstly, as this case neatly illustrates, there is no common understanding of what the term ‘bulk application’ means or when one is authorised by the rules and appropriate.

Ms Brunt says that the Public Guardian advised her to make a bulk application, she then discussed this with Mr Batey, and he told her that she did not need to give notice of the application to the persons who would be adversely affected by it.

I do not share that view. The second part of the application goes well beyond administrative convenience and affects the rights, obligations and financial position of many individuals. It is not sufficient to exhibit a list of ‘Court of Protection involvements’ to the application as a substitute for naming and notifying or serving those directly affected by it. In the first place, the rules provide for notification or service unless dispensed with by order. Secondly, the Mental Capacity Act 2005 provides that a decision-maker must, so far as reasonably practicable, permit and encourage the relevant person to participate as fully as possible in decisions affecting them. Thirdly, the decision-maker must have regard for their wishes and feelings and any other factors they would be likely to consider. Fourthly, the rules of natural justice require that people are informed of applications and proposed decisions that affect them. Fifthly, each incapacitated person is an individual with their own interests and financial circumstances. It is not be assumed that what is in the best interests of people generally, or has a general benefit in terms of cost or administrative simplicity, is in the best interests of any particular individual. Sixthly, the approach is difficult to reconcile with Article 6 of the European Convention on Human Rights.

A list of ‘Court of Protection involvements’ exhibited to the application named 111 clients ‘involved’ with the Court whereas the application itself stated that the trust has only 52 active deputyships. Who was affected by the application, and would be affected by any order, needed to be firmly established and the persons notified. The suggested bulk order approach without any notification meant this was not properly considered.

Given these considerations, I required the applicant to serve all persons affected by the application and the court was notified on 20 April 2016 that they had been served in accordance with my direction. Only 28 notification forms were filed.

I queried this because of the previous reference to 111 ‘Court of Protection involvements’ and 52 deputyships and the fact that the trust was seeking a bulk order which applies ‘to all existing Deputy orders …’

The answer was that, ‘We thought we COP14’ed [notified] everyone who was still alive and could afford to pay... I apologise if we have missed anyone who should be included.’ That position is inconsistent with an application for a ‘bulk order’ which is to apply ‘to all existing Deputy orders …’ and not simply those persons who (at present) the trust considers can afford to pay. Furthermore, as will be seen, some of the persons notified have very small estates indeed and may well not be able to afford the higher sum claimed.

The second reason for finding the formulation of the application to be a problem is the seeking of a bulk order that applies ‘to future orders’ as well. In relation to future applications, the trust is at liberty to apply for whatever costs order it thinks appropriate in a future case at that time. The person affected, and anyone else notified, may then object if they wish. I have no power to bar those people from seeking a different costs order when their case comes before the court and in any case such a provision would be unfair. Nor can I bind another judge to exercise their discretion in a particular way in relation to a case that does not yet exist.

The third reason for finding the application’s formulation to be problematic is the ambiguous use of the word ‘retrospective’ (‘The Applicant requests that this permission to charge is retrospective in relation to all existing Deputy orders …’).

Was that simply an application to vary 52 (or 111) past orders so that from the date of my order onwards the trust has authority to charge the new amount? Or was it an application to rewrite the original orders retrospectively so that each of them is now to be read as if it authorised the deputy to charge the higher solicitor’s fixed costs at the time it was made? The effect of that would be that each affected individual is suddenly liable to pay an additional deputy fee for each year the deputyship has been in force — the additional annual fee being the difference between that permitted by order actually in force at the time and the order now deemed to have been in force. Or, lastly, was the deputy asking the court in an indirect way to relieve it from any liability it has or may have incurred in the past on account of charging fees in excess of those permitted by the orders in force at the time, i.e. an application similar to that made in unauthorised gifting cases?

The answer to these questions has only slowly became apparent to me because regrettably the relevant history was not set out in the trust’s application or in Ms Brunt’s witness statement in support, and the court was not provided with copies of the 52 (or 111) orders which the application related to.

According to a case transfer note prepared by Mr Batey on 27 November 2015, it appeared (but was not recorded in the application itself) that Ms Brunt had been advised by Mr Alan Eccles, the Public Guardian, to make this application at or after a meeting between Mr Eccles and the Friendly Trust, ‘which came from an OPG assurance visit’. Mr Batey’s note continues:

I would be surprised if the opinion expressed in the final paragraph of that note is correct. Who is ‘a solicitor’ is defined by statute (see e.g. Solicitors Act 1974) and the work undertaken by The Friendly Trust is not undertaken by or under the supervision of a solicitor. Furthermore, as will be seen, the practice direction leaves the issue of whether to extend its provisions to not-for-profit organisations at the court’s discretion. The best a non-solicitor deputy can hope for is that, when making a deputy order, the court will exercise its discretion to allow a non-solicitor deputy fixed costs at the solicitor rate.

Because Mr Batey’s note referred to the Public Guardian, on 14 December 2015 I directed the Public Guardian to file a statement setting out his view in relation to the applications. The relevant part of his position statement of 18 January 2016 reads:

The Public Guardian questions whether it is in the best interests of The Friendly Trust’s clients to charge the proposed higher fee rate permitted [to] solicitors as opposed to that which is charged by a local authority.

There is no evidence provided of the current costs that are incurred by The Friendly Trust in the general management of their deputyship cases, or the costs of other services which they provide, that such a rate would apply.

There is also no other evidence which has been provided which would justify the higher rate of remuneration.

The Public Guardian is concerned that without such evidence, the proposed fee rate could be disproportionate in relation to the services that are provided by The Friendly Trust.

The Public Guardian would also wish to ensure that The Friendly Trust’s fee charging regime for its clients is sufficiently transparent.

It is therefore the Public Guardian’s view that he is unable to support this application, or express his view on a level of fees which he considers more appropriate, without further evidence being provided by the applicant.

The Public Guardian also asks that the Court consider the implications of their decision on the application of the Fixed Costs Practice Direction of 2011 and whether such a decision sets a precedent that could be followed by similar organisations.

Ms Brunt filed a statement in response on 31 December 2015 in which she informed me that:

During an assurance visit on 4 July 2014 Mr Dunkley from the Office of the Public Guardian (‘OPG’) advised her that the trust ‘could charge up to the rates allowed to solicitors acting as Deputy’.

An OPG paper circulated prior to a meeting with the OPG on 14 August 2014 contained the advice that, ‘Non-solicitor deputies may claim costs as classified under the guidance for solicitors but these are maximum amounts that may be claimed and the deputy must be able to justify the amount charged if required’.

At the meeting on 14 August 2014, ‘Senior OPG staff also explained that in some cases the Deputy can apply to have costs assessed. This would clearly be a matter for the Court, and guidance would be sought following the meeting, but hourly rates between £80 to £120 were mooted by the OPG’.

At her meeting with the OPG on 22 April 2015, to follow up the issues discussed with Mr Dunkley in July 2014, ‘Mr Eccles said that The Friendly Trust was not entitled to charge at the rate allowed to solicitors. If fixed costs were applicable, The Friendly Trust should only charge at the rate allowed to local authorities. I said, at the time, that the local authority rate would not cover the cost of providing the service’.

Ms Brunt says therefore that the advice she received from the OPG on 22 April 2015 concerning allowable charges differed from that given to her between 4 July 2014 and that date.

In a further statement dated 11 January 2016, Ms Brunt informed me that charging by the trust is discretionary and that many service users are not charged. The Friendly Trust does ‘not levy an hourly rate’. Rather,

In an email dated 24 February 2016, Ms Brunt then states:

In a further statement filed by the Public Guardian on 24 February 2016, Mr David Richards states:

The Public Guardian submitted his position statement dated 18 January 2016.

Further to this position statement, District Judge Anselm Eldergill requested via email on 24 February 2016 for the Public Guardian to provide further information, namely:

Information about a meeting between the Public Guardian and The Friendly Trust (TFT) in April 2015;

How TFT’s application emerged out of an OPG assurance visit;

How TFT came to the view in the first place that it could charge the solicitor's rate;

Did TFT receive advice to this effect;

How long had TFT been charging such rates; and

Any minutes of the meeting with Ms Brunt.

Alan Eccles and Angela Johnson met TFT officers, including Mrs Brunt, on 22 April 2015 to discuss the issues below. There were no formal minutes taken. TFT had shared with us their draft charging policy which proposed remuneration at the solicitors’ fixed costs rate.

TFT’s application was made at the request of the OPG following a lengthy investigation following a complaint from the executor of a deceased client about the terms on which investment advice was obtained. The investment advisor had made a charitable donation to TFT which the executor felt was contingent on the advice being accepted. The donation was later repaid to the estate.

We found that the client was referred to TFT by Torfaen Borough Council who paid them £995 per annum for each client. The cost to the Council was then “recharged” to The Friendly Trust and repaid to the Council from the client’s funds.

We carried out detailed case reviews and commissioned an assurance visit. The assurance visit found that TFT were very client focussed but there were concerns about the charging arrangements with Torfaen, charitable donations, and whether their approach to investing client funds was compliant with best interests principles.

The assurance visit showed that TFT were not aware of the fixed costs rules or the basis on which deputies can be remunerated. They did not realise that they had no authority to use client funds to repay the £995 annual charge to Torfaen. They had only used client funds to repay Torfaen where the client had substantial assets. They immediately ceased this practise [sic] following the visit.

The issue of charitable donations linked to client investments has since been resolved satisfactorily.

The Public Guardian does not know how The Friendly Trust came to the view that it could charge fixed costs at the solicitors’ rate or whether it received advice to this effect. At the meeting in April 2015 we pointed out that the figure of £1,050 p.a. proposed in their draft charging policy is well above the local authority deputy remuneration laid down in the Practice Direction on Costs. We suggested that, when the Court sets remuneration for third sector deputies, it may prefer to use the local authority rate as a yardstick.

It is unknown if TFT received any further advice beyond that mentioned … above.

The Public Guardian has no evidence that The Friendly Trust has been charging at the solicitors’ rate of fixed costs. Our understanding is that they are only proposing to do so in the future if agreed by the Court.

Ms Brunt responded to this statement on 25 February 2016:

This statement is made at the invitation of Judge Eldergill and in response to a second statement from the Public Guardian.

April 2015 Meeting between OPG and TFT:

The Friendly Trust draft charging policy - then as now - proposed remuneration at less than the solicitors’ fixed costs rate but more than the local authority rate.

A letter from the Public Guardian following the meeting includes the following passage:

At the meeting I expressed my concern that the Local Authority rate would be insufficient to cover the actual cost of providing the service.

Following the April 2015 meeting The Friendly Trust's bulk application was discussed with James Batey from the Court of Protection who suggested that when I submit the application I mark it for his attention.

It is my understanding that Torfaen County Borough Council have accepted responsibility for the "recharging" to which the Public Guardian refers and that they are taking steps to repay the service users affected. It would be fair to say that The Friendly Trust's conduct in relation to this issue at the time was naive. As a small organisation we relied on the legal expertise of the local authority.

In cases where The Friendly Trust was being funded by the local authority to provide a service The Friendly Trust did not charge the service user or claim any costs from them. As stated previously, this arrangement has now ceased. In cases which are the jurisdiction of the Court of Protection / Office of the Public Guardian we are remunerated directly by service users when we are authorised by the Court. We justify such remuneration in our annual reports to the OPG.

As a charity set up by families of disabled people we had sought to fund our activities from local authorities and grant giving bodies and so provided a service which was free to individuals in most cases. In July 2014 Mr Dunkley pointed out that we could not continue to be funded for our Court of Protection service users from local authorities as this could be perceived as a potential conflict of interest. He drew our attention to the fixed cost rules and we adjusted our practice accordingly.

After the meeting with Mr Dunkley, I attended another meeting at the OPG in Birmingham in August 2014 which aimed to interest and recruit voluntary organisations in becoming Panel Deputy.

All of the voluntary sector attendees were sent the document which I have subsequently sent to Judge Eldergill in connection with this bulk application: "An introductory guide to applications fees and bonding".

A significant part of this meeting was taken up in the discussion of fees for acting as deputy, the fixed costs regime and applying for assessed costs. Minutes attached …

Please also see the notes from the [FA] presentation ... Part of the presentation highlighted the financial difficulties facing charitable organisations when providing this kind of service. It was also stated that in 2008 "OPG made representations to the Court which resulted in Order for costs which allowed [FA] to charge more than solicitors fixed costs for general management before having bills assessed."

I believe this is relevant to the Public Guardian’s point 12 on their first postion statement about a precedent being set.

Mr David Richards filed a further statement on 1 March 2016:

The Public Guardian submitted his position statement dated 18 January 2016 …

… District Judge Anselm Eldergill requested via email on 25 February 2016 for the Public Guardian … to provide further details of the precise arrangement with Torfaen Borough Council, including a copy of any contract …

Torfaen Borough Council (“the Council”) had a referral contract dated 1 April 2014 with The Friendly Trust (“TFT”) under which the Council paid TFT £995 per annum for each client referred them for a potential deputyship (“the contract”). The contract is attached …

Where the client had substantial assets, TFT used the client’s funds to repay the Council. This was the arrangement known as recharging. The Public Guardian has not been able to ascertain how “substantial assets” was defined.

The Public Guardian became aware of these arrangements upon receipt of an assurance visit report dated 16 July 2014. Following a meeting with TFT on 22 April 2015, TFT confirmed that they had ceased the practise of using client funds in this way. TFT have assured the Public Guardian that the recharging arrangements were unique to the Council although TFT get some referrals from other local authorities.

At the meeting with TFT on 22 April 2015 and, as confirmed in a letter dated 8 May 2015 to TFT, the OPG asked TFT for a list of those clients whose funds had been used in this way plus the amounts involved. It was agreed to delay provision of this information pending the Public Guardian’s meeting with the Council on 10 July 2015. There was then an administrative delay when OPG’s letter to the Council to confirm the outcome of the meeting did not reach them until September 2015, although we remained disappointed that the information remained outstanding.

In an email dated 1 March 2016 the Council sent the OPG a spreadsheet with details of the clients affected by the recharging arrangements including the amounts involved. This information has not yet been analysed. It is anticipated that the Public Guardian will seek repayments of all client monies used in this way. A copy of this email is attached …

The Public Guardian obtained a copy of the contract in September 2014. Whilst the Public Guardian had some concerns over parts of the contract, at the meetings with TFT and the Council, we explained that since TFT’s authority as deputy came from their Court Order, the Mental Capacity Act and the Code of Practice, we were not too concerned at the terms of the contract. The Council did tell us they had suspended use of the contract pending the meeting. At the meeting with the Council, we wondered whether a contract was in fact necessary. We also pointed out that the charging arrangements may have no statutory basis.

On 2 February 2016 the Council sent us a new draft contract provisionally dated 1 April 2016 which we have not scrutinised in detail. We have noted that the contract still provides for Torfaen to make a referral payment to TFT, although the amount is not specified. The draft contract between the Council and TFT dated provisionally dated 1 April 2016 is attached …

On 1 March 2016 the Council sent us another version of the contract with TFT which they say supersedes the version sent on 2 February. A copy of the latest version of the contract is attached …

It is not known whether TFT are proposing to make repayments of the fee the Council pays to them if they are allowed remuneration from client monies.

With regard to the ‘retrospective authority’ issue, on 30 June 2016 I asked Ms Brunt to clarify the following issue: ‘Where an ACO allowed you fixed costs have you claimed solicitors’ costs in any cases since receiving the order?’ Her response was that ‘The Friendly Trust have charged service users the rates set out in our own charging policy. This is not, and have never been as much as the maximum allowed under the Fixed Costs Practice Direction B.’

To me that answer suggested that in some cases the trust had charged at up to the solicitor’s rate in the practice direction and, following further communication, the trust states that it does seek ‘retrospective approval of charging.’

I take this to mean that the trust is seeking a bulk order which relieves it of any liability it has incurred in the past to persons under its deputyship on account of charging deputy fees in excess of the local authority fixed-costs rate.

Also with regard to the ‘retrospective authority’ issue, on 14 July 2016 I attempted to clarify with the OPG whether Ms Brunt had received advice that she could charge fixed-costs at the solicitor’s rate.

In Mr Richards’s absence, I received a reply from a member of the professional team responsible for supervising Ms Brunt at the time. He informed me that, ‘The position of the professional deputy team is (and I believe always has been) that a non-solicitor deputy may charge for costs as prescribed in practice direction 19B as a solicitor but only were the court order makes provision for the deputy to take fixed costs’. That view is completely at variance with the position taken by the Public Guardian himself at the meeting with Ms Brunt and by the OPG in the course of these proceedings.

I asked Mr Richards whether I was right to conclude from that response that ‘the professional deputy team has been advising non-profit-organisation deputies that if they have an order authorising fixed-costs they can charge solicitor's fixed costs, contrary to Mr Eccles's view and that of the court and SSCO? Or that some members of the team have?’ He informed me on 21 July 2016 that,

It has taken a long time to establish the relevant history and I have been concerned by some aspects of the application and what I have read. For example:

The ‘bulk application no notification approach’. (I accept that the trust was advised to make the application in this way.)

Considerable ambiguity in relation to the orders sought.

The seeking of a bulk costs order that was to apply ‘to future orders’.

The seeking of ill-defined ‘retrospective orders’ (‘The Applicant requests that this permission to charge is retrospective in relation to all existing Deputy orders …’).

A failure to disclose the relevant history in the application and supporting statement.

A lack of information and precision about who will be affected by a bulk order and in what ways (see the references to 111 clients ‘involved’ with the Court of Protection, 52 active deputyships and 28 clients who can afford to pay).

The orders the trust sought to have amended on a bulk basis were not attached so that it was impossible to know the extent to which the bulk order sought departed from the existing orders.

A lack of evidence to justify the higher rate of remuneration in relation to the services actually provided by the trust.

The way in which the trust’s charging policy of £1080 per individual per year is calculated. This is based on a calculation exhibited to the court which divides the trust’s projected expenditure for 2016/17 by its ‘average full-time caseload’ of 350 cases to give an ‘annual cost per case’ of £1082.19, rounded down to £1080 (the ‘proposed individual service user charge for 2016-2017’).

The recharging arrangement with Torfaen Borough Council and the other concerns of the Public Guardian in relation to their assurance visit, e.g. ‘The assurance visit showed that TFT were not aware of the fixed costs rules or the basis on which deputies can be remunerated. They did not realise that they had no authority to use client funds to repay the £995 annual charge to Torfaen’.

The fact that as recently as March 2016 the Public Guardian tells me that it anticipates seeking the repayment of all client monies used in the recharging arrangement.

The quality of some OPG advice and guidance. The position adopted by the professional deputy team is likely to have given the impression that not-for-profit organisations could charge solicitor’s fixed-costs. Furthermore, given that backdrop, the Public Guardian’s introductory guide to applications fees and bonding is ambiguous in relation to who may and may not charge solicitor’s rates. If OPG staff have not been adhering to the Public Guardian’s position in relation to solicitor’s fixed-costs that inevitably raises safeguarding issues.

The fact that the trust asks me to accept that ‘as a small organisation we relied on the legal expertise of the local authority’ (and presumably still does) while seeking payment at the solicitor’s fixed-cost rate on the basis that it provides a service equivalent to that of a solicitor.

For the above reasons, I accept the following submissions of the Public Guardian:

There is no evidence provided of the current costs that are incurred by The Friendly Trust in the general management of their deputyship cases, or the costs of other services which they provide, that such a rate would apply.

There is also no other evidence which has been provided which would justify the higher rate of remuneration.

The Public Guardian is concerned that without such evidence, the proposed fee rate could be disproportionate in relation to the services that are provided by The Friendly Trust.

The Public Guardian would also wish to ensure that The Friendly Trust’s fee charging regime for its clients is sufficiently transparent.

On the evidence before me, I find that the trust performs a very valuable service to the local community. However, I also find that overall its understanding of a deputy’s functions and the quality of its deputy work is not equivalent to that of a solicitor deputy.

Nor, based on what I have seen, do I think that it has been demonstrated that overall it provides a higher quality of service than a public authority.

While there is always a discretion to allow a deputy more than the local authority fixed-costs rate in a particular case, I do not think that a bulk order allowing up to solicitor’s fixed costs in every case is justified on the basis that the level of service provided by the trust is equivalent to that provided by a solicitor deputy.

The Applicant is unrepresented and the bulk application concerns a significant number of people with low-value estates who fall outside the legal aid scheme and cannot afford legal representation or the services of the Official Solicitor. It has not been practicable to join those notified or affected by it as parties or to identify a suitable unpaid rule 3A representative for so many individuals. Their interests have been protected to a considerable extent by the Public Guardian’s involvement. I have proceeded inquisitorially out of necessity, giving directions and receiving and passing on statements electronically. I have been able to draw on the valuable submissions of the trust, the Public Guardian and the SCCO summarised in this judgment. I have not, however, had the benefit of legal argument.

The relevant law is found in the Mental Capacity Act 2005, the Court of Protection Rules 2007 (supplemented as necessary by the Civil Procedure Rules 1998) and in practice directions issued under section 52 of the Mental Capacity Act 2005.

The 2005 Act generally provides that costs are a matter for the court’s discretion (s55(1)) and that the court has full power to determine by whom and to what extent the costs are to be paid (s55(3)).

Section 19(7) of the 2005 Act provides that:

As can be seen, there is a statutory right to reimbursement of expenses. However, it is the court’s order appointing the deputy which provides any legal authority for remuneration.

Rules 167 and 168 of the Court of Protection Rules 2007 provide as follows:

By rule 155, the term ‘detailed assessment’ means ‘the procedure by which the amount of costs or remuneration is decided by a costs officer in accordance with Part 47 of the Civil Procedure Rules 1998 (which are applied to proceedings under these Rules, with modifications, by rule 160)’. The term ‘fixed costs’ is ‘to be construed in accordance with the relevant practice direction,’ which is Practice Direction PD19B – Fixed costs in the Court .

The legal position can be summarised in the following way. The order appointing a deputy for property and affairs needs to specify what remuneration (if any) the deputy is allowed because the court’s order constitutes the only authority the deputy has to be remunerated for carrying out the deputised functions. The options are that the order may:

Provide that the deputy is only entitled to the reimbursement of expenses and not include a right to charge remuneration (the usual arrangement in practice where a family member, such as a spouse, partner or child is appointed).

Provide that the deputy may charge a rate (e.g. an hourly rate) specified in the order.

Fix the amount which the deputy is to be paid (which therefore may be higher or lower than the fixed fee specified for the time being in the practice direction).

Provide that the deputy is entitled to remuneration at the rate fixed by the practice direction.

Provide that the deputy is entitled to remuneration at the rate fixed by the practice direction and also permit the deputy the right to elect to have a detailed assessment of their costs if the deputy considers that their costs exceed the amount fixed by the practice direction.

The detailed assessment option in paragraph (e) is subject to a caveat in the case of low-value estates. Where the incapacitated person’s net assets are under £16,000:

Public authority deputies appear to have no right under the existing practice direction to a detailed assessment of their costs as an alternative to taking the annual fixed fee specified in the practice direction.

Solicitor deputies have no right to such a detailed assessment unless the court specifically orders one (i.e. on application based on the merits of the particular case, rather than as a general right).

The applicable fixed costs practice direction is Practice Direction PD19B – Fixed costs in the Court .

The authority for this practice direction derives from:

Section 52 of the Act (‘Directions as to the practice and procedure of the court may be given in accordance with Part 1 of Schedule 2 to the Constitutional Reform Act 2005,’ etc), and

Rule 168 of the 2007 Rules (see above).

The court in Bovale Ltd v Secretary of State for Communities and Local Government [2009] EWCA Civ 171, [2009] 3 All ER 340, [2009] 1 WLR 2274 considered the status of practice directions and the circumstances in which a judge may depart from them. The issue of a practice direction is the exercise of an inherent power of the court even when made under statutory authority. However, this does not mean that a judge dealing with an application can simply vary practice directions or alter rules with general effect; they are binding on her/him. In particular, a judge’s wide case-management powers in individual cases cannot be construed ‘as giving the power to individual judges or any court simply to vary the rules or practice directions generally’ ( Bovale , para. 26). If there is a gap in the rules and practice directions, there is no impediment to a court making the order that is most appropriate to the case before it under its case management powers, or prescribing or suggesting a procedure which should be followed.

Practice Direction PD19B currently provides that if the court’s order authorises fixed costs:

Solicitor deputies may charge general management fixed costs of £1,500 plus VAT for the first year and £1,185 for subsequent years. They can also claim fixed costs for work in connection with the initial application to appoint a deputy of £850 plus VAT and £235 plus VAT for preparing the annual report.

Public authority deputies can charge a fixed fee of up to £700 for general management work in the first year and £585 for subsequent years. They can also claim £670 for work in connection with the initial application and £195 for preparing the annual report.

The annual general management fixed costs for public authority deputies are therefore 46% of the solicitors’ rate for the first year and 49% for subsequent years (excluding the VAT element).

These figures are modified in the case of low-value estates. If the incapacitated person’s net assets are under £16,000, a solicitor’s annual management fixed costs are limited to 4.5% of the value of incapacitated person’s estate (a maximum of £719.95 if the estate is worth £15,999) and public authorities are limited to 3% (£479.97 in such a case).

Furthermore, where the person’s net assets are under £16,000, public authorities have no right under the practice direction to a detailed assessment of their annual costs as an alternative to taking this reduced fixed amount. Solicitor deputies have no right to a detailed assessment unless the court specifically orders one (i.e. on application based on the merits of the particular case, rather than as a general right).

There is no VAT chargeable in public authority appointments so this is a further saving to the incapacitated person (assuming clients pay the VAT in solicitor deputy cases).

The practice direction is revised periodically so as to enable the fixed costs rates stated in it to be increased, to allow for inflation and other relevant considerations. The draft new practice direction increases the existing amounts but maintains different rates for solicitor deputies and local authority deputies.

As far as I can ascertain, there has been only one significant change in the wording of PD19B that is relevant to this case during the period with which I am concerned.

Consistent with the position historically (see below), the original Practice Direction PD19B, which was in force until 1 February 2011, made no provision for fixed costs and expenses in respect of anyone other than solicitors and office holders in public authorities. The fixed solicitor rates were higher than the public authority rates and the term ‘professional deputy’ was used as a synonym for a solicitor deputy.

Subsequent PD19B practice directions, from February 2011 onwards, have included the following additional paragraph:

That paragraph indicates that (a) solicitors are distinguished from not-for-profit organisations and (b) the court has a discretion (‘may’) to extend the solicitor and local authority fixed costs provisions in the practice direction to not-for-profit organisations. In other words, the court’s order may at its discretion provide that a not-for-profit organisation deputy or ‘other professional’ shall be entitled to fixed costs at the solicitor or local authority rate. To my mind, it is impossible to read that paragraph as saying that not-for-profit organisations are ‘entitled’ to fixed-costs at the solicitor rate or are to be treated as if they were solicitors.

Indeed, following the revision in February 2011, it was commonly understood that not-for-profit organisations were usually standing in for a local authority so that, unless specified otherwise, it was the local authority rate which applied. Clearly that is no longer a common understanding. It follows that today court deputy orders which authorise a not-for-profit organisation deputy to have the benefit of fixed-costs without specifying the rate are defective.

The inclusion in 2011 of a reference to ‘not-for-profit organisations’ recognised the fact that local authorities were increasingly outsourcing deputy work to such bodies (while others were outsourcing it to local solicitors or asking the court to appoint a panel deputy).

Running alongside this development, some individuals without legal qualifications have formed companies offering the service previously provided by local authorities to citizens whose estate is of relatively low value.

Nowadays some local authorities are at pains to point out that the 2005 Act requires a deputy to consent to being appointed so that they cannot be required to take on the duty.

That is true but such statements need to be understood in the context of the legislative history. Section 48 of the National Assistance Act 1948 imposed a statutory duty on local authorities to take reasonable steps to protect an incapacitated person’s moveable property (including therefore chose in action ) following admission to a hospital or care home where no other suitable arrangements could be made, e.g. by family members.

The problem initially was that the 1948 Act did not invest local authorities with sufficient powers to discharge this duty. Consequently, the Mental Health Act 1959 amended the 1948 Act so as to enable a local authority to defray any expenses incurred by its officers in relation to acting as a receiver (the old term for a deputy).

The duty set out in section 48 of the 1948 Act is now to be found in section 47 of the Care Act 2014, as part of a local authority’s safeguarding duties.

Although local authorities often say that they have no statutory duty to act as a person’s deputy, it can be seen that this is something of a simplification. Deputyship was only ever a means by which a local authority could fulfil a statutory duty.

Local authorities have a statutory duty under the Care Act to protect an incapacitated person’s property in certain circumstances and applying for deputyship may be the only practical means by which they can discharge that duty unless they can outsource the work. Furthermore, only the work, not the statutory duty, can be outsourced.

In the course of these proceedings the Ministry of Justice has been in the process of revising the existing fixed costs practice direction. A new Practice Direction 19B is expected shortly and hopefully it will address and resolve some of the existing difficulties.

The current draft Practice Direction PD19B includes the following proposed change to the practice direction, essentially (it seems to me) in order to re-emphasise what was intended in 2011:

I must decide this case according to the current practice direction but it is sensible to consider whether what I say is likely to hold good shortly and whether I should adjourn the making of a final decision.

This Applicant has not been legally represented and in order to keep costs down the application has proceeded inquisitorially. As part of the court’s inquiries, I requested a statement from the Senior Courts Costs Office and on 3 March 2016 received the following, very helpful, response:

Having regard to the above considerations, it is appropriate in the interests of justice for me to summarise, and where necessary make clearer, the approach I have taken, so that any errors can be ascertained and corrected on appeal.

It is the court’s order which provides legal authority for remuneration.

Most uncontested property and affairs deputy orders are now made by Authorised Court Officers.

The section of Practice Direction PD19B which deals with solicitors fixed costs and their rates is headed in bold, ‘Remuneration of solicitors appointed as deputy for P’ — not ‘Remuneration of solicitors, not-for-profit organisation and other professionals appointed as deputy for P’.

The practice direction continues the historical distinction of prescribing different fixed rates for solicitors and local authorities. Solicitors are routinely entitled to higher fixed costs than public authorities. This is because they commonly manage higher value or more complicated estates, have greater legal expertise and higher professional and staff costs than local authority deputy departments. Since 1948 the nature of a local authority’s statutory duties has meant that historically they are deputised to manage lower-value estates which local solicitors would be unwilling to manage for economic reasons.

The practice direction does not provide that not-for-profit organisations, accountants, etc are entitled to the solicitor fixed rate and nothing in paragraph 2 indicates an intention that the court will routinely direct that the solicitor rates ‘provisions’ shall apply in not-for-profit organisation cases rather than the public authority rates ‘provisions’.

This is not a gap in the practice direction. Rather, the practice direction explicitly leaves to the court’s discretion in each case the issue of whether and how to apply the practice direction provisions to a not-for-profit organisation deputy.

A ‘one size fits all’ bulk order approach of the kind sought here is inconsistent with the exercise of discretion.

Because some local authorities now outsource low-value deputy work to not-for-profit organisations, such organisations inevitably manage more low-value estates of the kind managed historically by local authorities than do solicitors. However, some organisations do also take on higher value cases, which again points away from a bulk order approach that prescribes a single fixed rate in all cases managed by such an organisation.

The fact that paragraph 2 of Practice Direction PD19B leaves to the court’s discretion whether and how to extend its fixed-costs provisions to not-for-profit organisations on a case-by-case basis is consistent with the Act and the rules. These give the judge or ACO a discretion to make one of a number of costs orders, i.e. to make that order most appropriate to the particular case.

The court order appointing the deputy may:

Provide that the deputy is only entitled to the reimbursement of expenses and not include any power to charge remuneration (the usual arrangement in practice where a family member, such as a spouse, partner or child is appointed).

Provide that the deputy may charge a rate (e.g. an hourly rate) specified in the order.

Fix the amount which the deputy is to be paid.

Provide that the deputy is entitled to remuneration at the rate fixed by the practice direction (where appropriate, extending the application of the fixed costs practice direction to other professionals acting as deputy including accountants, case managers and not-for-profit organisations).

Provide that the deputy is entitled to remuneration at the rate fixed by the practice direction and also permit the deputy the right to elect to have a detailed assessment of their costs if the deputy considers that their costs exceed the amount fixed by the practice direction.

The detailed assessment option in paragraph (e) is subject to a caveat in the case of low-value estates. Where the incapacitated person’s net assets are under £16,000:

Public authority deputies have no right under the existing practice direction to a detailed assessment of their costs as an alternative to taking the annual fixed fee specified in the practice direction.

Solicitor deputies have no right to such a detailed assessment unless the court specifically orders one (i.e. on application based on the merits of the particular case, rather than as a general right).

The making of a deputyship costs order therefore involves the exercise of discretion based on the facts of the particular case before the judge or ACO. Those facts include the financial circumstances of the individual, the complexity of the case, whether the case is outsourced local authority work, whether it is done under a contract with a local authority, who will be undertaking the duties and the various other circumstances relevant to particular case. While cost orders are not governed by section 4, the court’s decision also includes considering the individual’s best interests in a general sense insofar as it would not be a proper exercise of the court’s discretion to make a costs order that is contrary to the person’s best interests. For example, by authorising a more expensive fee-structure than is fair and necessary.

The Friendly Trust asks me to make a bulk order authorising it to charge costs up to the solicitor’s rate in the practice direction because ‘the local authority rate is so low as to be uneconomic’.

With regard to their representations about the affordability of deputy work, the prescribed rates of remuneration set out in the practice direction involve public and court policy considerations that are not properly within my remit. If I were to extend generally the solicitor’s rate to The Friendly Trust, out of sympathy for their general submission that local authorities and organisations which accept their outsourced work are finding the local authority rates to be uneconomic, then inevitably all other such organisations would expect to be treated equally and to be authorised to take fixed-costs up to the solicitor’s rate. That would undermine and defeat the practice direction.

The fixed costs rates prescribed in the practice direction are revised periodically following a consultation exercise carried out by the Ministry of Justice and the rates are then approved by the President of the Court of Protection. A judge cannot properly make a bulk order that has the intention or consequence of increasing or decreasing the prescribed fixed rates with general effect.

Likewise, the power to fix the amount which a deputy is to be paid cannot be exercised in a general way with the intention of generally increasing by the back door the fixed-rates prescribed in a practice direction.

Rather, the judge or ACO must consider carefully the facts of the case before them, together with any costs submissions, and then exercise their discretion appropriately by making that order from the options listed above most appropriate in that case.

When deciding how to exercise their discretion, judges and ACOs may often wish to consider the following points, together with all other relevant considerations:

Where the proposed deputy is a local authority or a not-for-profit organisation taking on a case outsourced to it by a local authority, and fixed-costs are sought, it is not likely to be appropriate to take the solicitor’s fixed rate in the practice direction as the starting point. If that was the intended starting point, one would expect it to have been explicitly stated in the practice direction by the President because it would have constituted a very significant change to long-established practice, and a significant departure from the previous practice direction. In support of this view, the solicitors rate section of Practice Direction PD19B is headed in bold, ‘Remuneration of solicitors appointed as deputy for P’ — not ‘Remuneration of solicitors, not-for-profit organisation and other professionals appointed as deputy for P’.

It is unlikely that the practice direction intended that an incapacitated person who lives in an area where the local authority has outsourced its deputy service should pay higher annual fixed costs than a person with the same value estate whose local authority still provides the service. The appropriate starting point is likely to be the local authority rate where a not-for-profit organisation is taking on a case referred to it by a local authority in the discharge of its historical duties under what is now section 47 of the Care Act 2014.

For the same reason, unless and until Practice Direction PD19B is revised so as to provide otherwise, in local authority cases and those outsourced by a local authority, it is not likely to be appropriate to take as the starting point the view that the deputy is authorised to elect a detailed assessment of their costs as an alternative to the fixed costs provided.

If a not-for-profit organisation considers that the order appointing it should authorise fixed costs at the solicitor’s rate, or provide for a detailed assessment of costs, or specify an amount higher than the usual practice direction fixed-rate, it must specifically seek such an order in its Form COP1 application. The application should be supported by a statement in Form COP24 setting out the reasons why local authority fixed-costs are inappropriate and insufficient in the circumstances of the particular case which is not based on the bald assertion that the current prescribed rates are ‘uneconomic’. The judge and ACO will then be in a position to exercise their discretion as to whether it is appropriate in the circumstances of this case to award the sum sought.

All deputy orders which authorise fixed-costs, other than those which appoint a solicitor or local authority as deputy, must explicitly state whether the solicitor’s or local authority rate applies.

Where an accountant is proposed as a person’s deputy, other than by a local authority, the case is likely to be a higher-value or more complicated estate of the kind usually deputised to a solicitor. Provided the applicant has provided evidence of suitable indemnity insurance, is otherwise suitable for appointment and such an appointment is in the person’s best interests, an appropriate starting point may be fixed costs at the solicitor’s rate together with the same right to a detailed assessment.

It is impossible to eliminate all anomalies within the existing legal framework. The most obvious of them occurs where a local authority applies for a panel solicitor or for a particular local solicitor (perhaps one with whom it has an arrangement) to be appointed in a low-value case suitable for a local authority deputy. One option is to reluctantly accede, with the consequence that the individual is charged considerably more than s/he would be if s/he lived in an area where the local authority or a not-for-profit organisation undertakes the work. Three other options may be to decline to make the order sought (leaving the local authority to reflect on how it will discharge its unfulfilled statutory duty), to award the deputy only the local authority fixed-costs rate or to require the local authority to explore alternative options and to file a statement setting out the results.

Where a local authority seeks solicitor’s costs based on an assertion that the deputy’s duties are to be undertaken by a local authority solicitor, the substance of what is proposed will need to be examined carefully.

I am aware that the other full-time district judges in the Court of Protection similarly apply the above approach to deputyship applications.

To my mind, there can be no justification for making a bulk deputy costs order which applies to all future cases.

There can also be no justification for making a bulk deputy costs order which rewrites original costs orders retrospectively so that each of them is to be read as if it always permitted the deputy to charge the incapacitated individual some higher rate than that permitted by the order actually made and in force at the time. The order that was made could have been appealed or been subject to a request for its reconsideration at the time.

Until recently it was commonly understood that not-for-profit organisations were most often standing in for a local authority so that it was the local authority fixed-rate in the practice direction which applied unless the order specified otherwise. Consistent with this historical context, existing deputy orders which allow a not-for-profit organisation fixed costs without explicitly specifying a rate should be interpreted as authorising the local authority rate.

Such an approach is also consistent with the general approach taken to interpreting costs clauses in court orders. For example, where an order does not specify whether costs are allowable on the indemnity or standard basis, it automatically defaults to the less generous standard-based costs.

Where a deputy has charged more than the sum authorised by the order appointing them, the deputy may apply to the court for an order relieving it from any liability it has or may have incurred in the past. The court may allow the application in whole or in part or refuse the application, in which case repayment would be required and in default consideration given to calling in the security bond.

Separately from any decisions the court makes in respect of charging outside the terms of its orders, the Public Guardian would no doubt review the cases in order to understand how that state of affairs came about and consider matters such as supervision and whether to apply for a new deputy to be appointed.

For the reasons already stated, I do not accept that the service provided by The Friendly Trust in these cases has been equivalent to that provided by a solicitor. I do not wish to rehearse the history but clearly there has been confusion about what the law has required of office-holders of The Friendly Trust and some arrangements have needed to be reworked or set to one side.

It is not for me to give general guidance as to when a bulk application is appropriate, what practice directions or rule changes may be necessary or whether the exercise of a discretion to allow costs which exceed the local authority rate falls outside Practice Direction PD3A. Those are issues for the President, Vice-President and Senior Judge to consider. All I can say is that the ‘bulk application’ approach in this case was patently unsuitable.

Having tried to distil the law and general considerations applicable to applications such as this, I turn now to each of the applications before me to see if the Applicant has established in any of these particular cases that a higher fixed-rate should be allowed than that fixed for local authorities.

I have considered very carefully whether simply to dismiss the application. In my view, there is much to be said for doing so and that is certainly the approach I would have taken had the application been referred to me at the outset. However, it was the court which advised The Friendly Trust to make the application in this way and the application was up-and-running by the time it reached me. The trust is now in an awkward legal and financial position and it is in the best interests of its deputy clients to see if something can be salvaged which avoids the need for an entirely new set of legal proceedings. That is a pragmatic approach to this particular case given the unenviable position in which the court finds itself.

As already noted, the trust eventually gave notice of the application to 28 people. In addition, a number of new deputyship applications have been filed while the proceedings have been in progress. These have been passed to me to consider so that a common approach is taken to the existing orders and the new applications.

It is convenient to take the new applications first.

There are ten such applications:

The local authority requested that the application be made by the trust. DSC lives in his own house worth £170,000. He has £80,000 in the bank and receives pension credit and Disability Living Allowance.

The court’s decision is that the deputy is entitled to receive fixed costs at the local authority rate in relation to the application and to receive fixed costs at the local authority rate for the general management of DSC’s affairs. Security was set at the basic bond level of £21,000.

A deputy order was made in 2011 at which time security was set at £130,000. That deputy is unable to continue and the local authority asked the trust to make the application and to take over as JB1’s deputy. The trust is already JB1’s ‘corporate appointee’. JB1 has Down’s syndrome and lives in a care home. She receives Severe Disablement Allowance and Disability Living Allowance, has £58,000 in the bank and £34,000 invested.

The court’s decision is that the deputy is entitled to receive fixed costs at the local authority rate in relation to the application and to receive fixed costs at the local authority rate for the general management of JB1’s affairs. Security was set at the basic bond level of £21,000.

WL lives in a care home. He lives in his own property and has £67,000 in the bank. He receives an occupational pension and the state pension. The trust was asked to make the application by the relevant local authority.

The court’s decision is that the deputy is entitled to receive fixed costs at the local authority rate in relation to the application and to receive fixed costs at the local authority rate for the general management of WL’s affairs. If the deputy would prefer their costs to be assessed then a detailed assessment is authorised. Security was set at £70,000.

DT lives in a care home. She has £1,000 in the bank and £2,000 of investments. She receives pension credit. She does not own a property. The trust was asked to make the application by the relevant local authority.

The court’s decision is that the deputy is entitled to receive fixed costs at the local authority rate in relation to the application and to receive fixed costs at the local authority rate for the general management of DSC’s affairs. Security was set at the basic bond level of £21,000.

A short order was made in JBO’s case in favour of the trust in 2004. Her capital has increased since then. She now has £11,000 of national savings bonds and £8,000 in the bank. The trust requests ‘permission to take a fee for our services, in line with our charging policy and not exceeding Court of Protection fixed costs’.

A deputy order was made. The court’s decision is that the deputy is entitled to receive fixed costs at the local authority rate in relation to the application and to receive fixed costs at the local authority rate for the general management of JBO’s affairs. Security was set at the basic bond level of £21,000.

MRA lives in a care home. She is a joint tenant of the matrimonial home which is valued at £120,000. Her husband still lives there. She has £57,000 in the bank and £87,000 of investments, and receives the state pension.

The court’s decision is that the deputy is entitled to receive fixed costs at the local authority rate in relation to the application and to receive fixed costs at the local authority rate for the general management of MRA’s affairs. If the deputy would prefer their costs to be assessed then a detailed assessment is authorised. Security was set at the basic bond level of £21,000.

JB lives in a care home. He has assets of around £45,000 at present but a ‘large debt is owed to the local authority in respect of outstanding care charges’.

The court’s decision is that the deputy is entitled to receive fixed costs at the local authority rate in relation to the application and to receive fixed costs at the local authority rate for the general management of JB2’s affairs. Security was set at the basic bond level of £21,000.

RTO has assets of approximately £125,000. He does not own a property and lives in sheltered accommodation. The trust was asked to make the application by the relevant local authority. The application has not yet been determined.

RM lives in a care home. He does not own a property. He has £21,000 in the bank and receives a state pension and occupational pension. The trust was asked to make the application by the relevant local authority.

The court’s decision is that the deputy is entitled to receive fixed costs at the local authority rate in relation to the application and to receive fixed costs at the local authority rate for the general management of RM’s affairs. Security was set at the basic bond level of £21,000.

EGR was in hospital when the deputyship application was made at the request of the relevant local authority. She receives the state pension and pension credit. She has property worth £100,000 and £340 in the bank. Financial abuse has been alleged and extra time may be required compared with a standard case.

The court’s decision is that the deputy is entitled to receive fixed costs at the local authority rate in relation to the application and to receive fixed costs at the local authority rate for the general management of EGR’s affairs. If the deputy would prefer their costs to be assessed then a detailed assessment is authorised. Security was set at the basic bond level of £21,000.

One of the persons given notice in April 2016 was in fact the subject of a new application. Therefore, only 27 existing cases were subject to notification. It will also be seen below that one of those persons is not subject to a deputyship order.

The new applications referred to above were easy to deal with. In each case the application file contained a COP1 application form and the other prescribed forms designed to give the judge or ACO the information which s/he requires to make an order; in particular, the COP1A Schedule of property and assets and a COP3 medical certificate.

A ‘bulk application’ of this kind gives the court none of that required information. Indeed, in this case it was not entirely clear which individuals it was meant to cover, let alone what their individual circumstances are, how much work is likely to be required of the deputy and so on.

With regard to the 27 existing orders, the COP14 notices filed by the trust did not provide the court with a Court of Protection case number — all simply state, ‘JamesBates bulk app’ — and nor was the court provided with copies of the original orders. Because the court advised the trust to make a bulk application of this kind, the Technical Specialist team in the court and I have gone to considerable effort to try to establish who is covered and what the current orders provide by way of costs.

Each case is briefly described below, together with the court’s preliminary view and directions as to what evidence or action is required before a final decision can be made. The trust must file a COP24 statement within 28 days which deals with each case in turn and includes the following information for each person:

Whether the trust wishes to continue with or to withdraw its application in respect of the particular individual;

Whether the case was referred to the trust by a local authority or the deputy was appointed following a local authority application;

The value of any property owned by the individual;

Their total level of savings and debts;

Any annual deficit in terms of expenditure over income.

Why in the circumstances of the particular individual’s case it is appropriate to allow fixed-fees at the solicitor’s rate, a fixed fee which exceeds the local authority fixed-fee or detailed assessment.

The names of each individual’s two most involved relatives or other persons, who can be served with any draft order that will (if sealed) have the effect of increasing the level of deputy costs payable in the person’s case or waiving their right to the repayment of any deputy fees charged in excess of that permitted by the order.

Any additional information specified in each case below.

Had the bulk application proceeded in the way envisaged and the proposed bulk order permitting solicitor’s costs granted without consideration of each individual’s circumstances then on the evidence presently before me it is likely that considerable injustice would have resulted.