Pullan v Wilson & Ors

This cases raises interesting, and difficult, questions concerning the reasonableness of the remuneration charged to a number of family trusts by a professional trustee. There is no dispute about the relevant underlying principles; but I have been taken to no authority which assists in applying them to the circumstances of a qualified accountant, and his assistants, when acting as a trustee of family trusts and as the non-executive director of companies in which the trusts hold substantial shareholdings.

By a Part 8 claim form issued on the 11^th February 2010 the claimant, Mr. Alistair Mark Pullan (known as Mark) sought relief as follows: An order for the taking of all necessary accounts and inquiries to determine the amount, if any, by which the fees charged by the first defendant to the Pullan family trusts during the period of his trusteeships exceed the proper and reasonable remuneration to which he was entitled as a trustee. The claimant further seeks the making of all necessary directions for the taking of such accounts and inquiries, including for the provision of information and documentation by the first defendant. The claimant further seeks an order that any excess found following the taking of such accounts and inquiries be repaid forthwith by the first defendant to the Pullan family trusts together with interest thereon at such rate and for such period as the court determines.

The claimant is represented by Mr. Tom Smith (of counsel), instructed by Forsters LLP. Simplifying matters considerably, the claimant is one of the beneficiaries of ten family trusts, eight of which have interests in a number of family companies. The claimant works full-time for the companies and he is the de facto managing director of the principal company. Before the 12^th March 2007 the three trustees were the claimant’s parents together with Mr. Iain Longman, a chartered accountant with Sagars, a Leeds based accountancy firm; and the trusts were administered from Leeds. On the 12^th March 2007 Mr. Longman retired as a trustee, and the first defendant, who is also a chartered accountant with his own firm, Wilson & Co., with offices in both Leeds and London, was appointed as a trustee in his place. Mr. Wilson is represented by Miss Sarah Haren (of counsel), instructed by C.W. Harwood & Co. Mr. Wilson acted as a trustee until the 4^th November 2010. He also acted as a non-executive director of three of the companies. Mr. and Mrs. Pullan retired as trustees on the 21^st December 2007 and were replaced by the second defendant, Mr. John Riches, a solicitor and partner in Withers, and the original third defendant, Mr. Robert Marsland, a non-professional trustee. The third defendant has since retired as a trustee and has been replaced by Mr. Christopher John Heselton Adams, also an accountant based in Leeds. The second defendant was originally represented before me by Mr. Richard Wilson (of counsel), instructed by Withers. Mr. Richard Wilson attended at the start of the trial but he soon withdrew upon the claimant confirming that no relief was sought against anyone other than the first defendant.

On the first day of the trial, Tuesday the 21^st January 2014, I made an order substituting Mr. Adams for Mr. Marsland as the third defendant to the claim. I directed that the order should be served upon Mr. Marsland and Mr. Adams forthwith, and that they have permission to apply on short notice during the course of the trial. I reserved the costs. I made a further order varying the terms of an order made by Master Moncaster to which I will return in a moment. Any further references in this judgment to Mr. Wilson will be to the first defendant, Mr. David Wilson, rather to Mr. Wilson of counsel.

By an order dated 21^st July 2010, Master Moncaster ordered (amongst other things) by paragraph 3 that:

By agreement, on the first day of the trial I varied that order pursuant to CPR 3.1(7) so as to substitute in each of paragraphs 3 and sub-paragraph 4.5 of the order the words: "to the end of the first defendant's appointment as trustee in November 2010" for the words: "to the date hereof".

By paragraph 4 of his order, Master Moncaster directed that for the purposes of taking the account:

The single joint expert appointed pursuant to Master Moncaster's order was one of the chartered accountants proposed by the first defendant, Wilson Cotton of Smith & Williamson's London office. His substantive report is dated 20^th December 2011, although he has supplemented it by a further report dated 27^th March 2013 responding to questions submitted on behalf of the first defendant. Mr. Cotton's conclusions are summarised at paragraph 8.6 of his report, headed: "Summary and Conclusion". I quote:

The claimant accepts and relies upon the views expressed by the single joint expert subject to one point relating to the amount to be deducted in relation to company related work. He says (at paragraph 14 of Mr Smith’s written skeleton opening):

As to the latter objection, founding himself upon paragraph 2.15.6 of Mr. Cotton's supplemental report which reads:

Accordingly, Mr. Pullan's primary position is that a total adjustment of £113,451.25 and £29,600 (that is to say a total of £143,051.25) should be made in relation to the company work. The claimant's alternative position is that at the very least the time charged in respect of Mr. Jorden's hours (£29,600) should be deducted (which is Mr. Cotton's position).

Miss Haren, for the first defendant, agrees that the court must consider: (1) the reasonableness of the rates charged by the first defendant and for his assistants; and (2) whether any adjustments should be made for company time. In addition, she submits that a further issue arises as to whether the claimant is barred from challenging the first defendant's charges by having concurred, or at least acquiesced, in those charges.

Following on from the production of Mr. Cotton's original report, the first defendant has produced the report of his own expert, Mr. Parr, a senior tax partner of Baker Tilly Tax & Advisory Services LLP based in Leeds. His report is dated 18^th January 2012 and is supportive of the first defendant's basis of charging. The claimant, in his turn, has produced a report dated 29^th April 2013 from his own expert, Giles Bates at Wingrave Yeats, a seven partner practice based in Mayfair, London. Mr. Bates is supportive of Mr. Cotton's approach. All three experts signed a joint statement on 18^th December 2013. It is sufficient for me to cite only paragraphs 1.5 through to 1.9:

An oddity of this case is that although a considerable number of witness statements were produced during the course of these proceedings (to be found in bundles E and F), no live evidence was given before me. The first defendant himself produced no less than six witness statements, although a further witness statement has been handed in to me this morning.

By contrast, the claimant has produced only witness statement, and that was confined to the issue of the propriety of adducing additional expert evidence beyond that of the single joint expert. Instead, the claimant has relied principally upon the evidence of two fee earners with the conduct of this litigation at Forsters, Ms. Caroline Bassett, who made one witness statement, and Ms. Emily Exton, who produced five witness statements.

As I pointed out at the start of the trial, the consequence of this approach is that I must treat the first defendant’s evidence on matters of fact as unchallenged, although there are issues as to where this leaves the court on certain matters. I should record that I would have derived considerable assistance from factual evidence from the claimant on the issue of whether Mr. Wilson had ever discussed his hourly rate with the claimant or his parents, or whether his solicitors had been acting under a misapprehension when they said (more than once) that this had been agreed, at least in relation to period one.

This is a document-heavy case, although no direct reference was made to many of the documents, particularly in the later bundles (such as the timesheets). The trial began at 10.30 a.m. on Tuesday 21^st January 2014 when Mr. Richard Wilson made a brief appearance for the second defendant. Mr. Smith had produced a 41 page opening skeleton; and he proceeded to address me in opening for some two hours. Miss Haren had produced a 13 page opening skeleton and, at the beginning of her opening address, she also handed in a ten page chronology and commentary upon the principal contemporary documents. She addressed me for about an hour either side of the luncheon adjournment.

I then heard from the three expert witnesses, beginning with Mr. Cotton, who was in the witness box for a total of some two hours 25 minutes (from about 2.55 to 4.30 on day one, and from 10 a.m. to 11.05 a.m. on day two). Mr. Bates then gave evidence for about 50 minutes (from 11.15 to 12.05); and Mr. Parr for just under one hour ten minutes (between about 12.15 and 1 o'clock, and 2 o'clock to 2.25). At the request of the parties, I then adjourned for them to prepare their closing submissions until the following morning at 10 a.m. A written transcript of the evidence and proceedings up to this point was obtained and has been circulated to the parties and the court.

On day three of the trial, Mr. Smith addressed me in closing for about two hours 20 minutes. After a short break to take further instructions, Miss Haren produced an 18 page written closing; and she then proceeded to address me for about two and a quarter hours. Mr. Smith replied for about 20 minutes on the afternoon of day three and for a further 30 minutes on the morning of day four. I then adjourned to consider my judgment, which I announced I would deliver, as I am now doing, at 10.30 a.m. on Tuesday 28^th January 2014 (because I was engaged on other judicial duties on Monday 27^th January).

I begin by setting out the relevant legal framework, which is largely uncontroversial. The general rule governing the remuneration of trustees is set out in Lewin on Trusts, 18th edition (2008). Paragraph 20-141 sets out the general rule governing the remuneration of trustees:

“The office of trustee is gratuitous. While a trustee is entitled to be indemnified against the costs and expenses properly incurred by him as a trustee, he is not entitled to any allowance for his trouble and loss of time, nor is he entitled to payment for any professional or other special services rendered by him, even though payment for such services would properly be made to a person who is not a trustee. This rule is based on the conflict of duty and interest principle: if the trustee were allowed to perform the duties of the office and to claim remuneration for his services, his interest would be opposed to his duty to take care that no improper charges are made, and as a matter of prudence the court will not allow the trustee to place himself in that situation. The general rule is, however, subject to important exceptions. A trustee is entitled to remuneration for his services in so far as remuneration is authorised by:

(1)

a charging clause contained in the trust instrument read with section 28 of the Trustee Act 2000,

(2)

section 29 of the Trustee Act 2000,

(3)

an order of the court,

(4)

statutory provisions apart from the Trustee Act 2000 applicable to certain kinds of trustees, or

(5)

the beneficiaries.

Sections 28 and 29 of the Trustee Act 2000, since they came into force on 1^st February 2001, have a considerable impact on the remuneration of trust corporations and professional trustees, and exceptions (3) and (5) have become of much less importance than formerly.”

Where there is provision in the trust instrument for remuneration of a professional trustee, section 28(2) of the 2000 Act provides that he is entitled (save where the trust instrument makes inconsistent provision) “to be treated as entitled under the trust instrument to receive payment in respect of services even if they are services which are capable of being provided by a lay trustee”.

Where there is no remuneration provision in the trust instrument, section 29(2) of the 2000 Act provides that a professional trustee may receive reasonable remuneration where the other trustees have so agreed in writing. Section 29 provides (as relevant) by sub-section (2) that (subject to sub-section 5) a trustee who (a) acts in a professional capacity, but (b) is not a trust corporation, a trustee of a charitable trust or a sole trustee, is entitled to receive reasonable remuneration out of the trust funds for any services that he provides to or on behalf of the trust if each other trustee has agreed in writing that he may be remunerated for the services. By sub-section (3), “reasonable remuneration” means, in relation to the provision of services by a trustee, such remuneration as is reasonable in the circumstances for the provision of those services to or on behalf of that trust by that trustee. By sub-section (5), a trustee is not entitled to remuneration under section 29 if any provision about his entitlement to remuneration has been made (a) by the trust instrument, or (b) by any enactment or any provision of subordinate legislation. It is implicit in section 29(2) that the trustee’s firm is entitled to receive reasonable remuneration for services provided by his firm if the other trustees agreed in writing that the trustee may be remunerated.

The majority of the trust instruments in the present case contain express clauses permitting remuneration of professional trustees, although there is some variation in the drafting. There are three trust instruments which do not contain such clauses. For these three trusts, remuneration would be available under, and subject to, s.29 of the 2000 Act.

One of the settlements contains a professional charging clause permitting the usual professional or proper charges for business transacted, time expended and acts done by the trustee or any partner of his in connection with the trusts, including acts which a trustee not being in a profession or business could have done personally. Two of the trust instruments contain provision for the trustee to charge and be paid all professional or other reasonable and proper charges for any business done or services rendered or time spent by the trustee or his firm in connection with the trusts, powers or provisions of the deed, whether or not within the usual scope of his profession or business and although not of a nature requiring the employment of a professional or business person. Two of the trusts contain provisions entitling a trustee to charge and be paid all normal professional or other charges for business done, services rendered or time spent personally or by such trustee’s firm in the administration of the trusts, including acts which a trustee not engaged in a profession or business could have done personally. Another of the settlements has that same provision, except that it commences:

“Any trustee (not being the Settlor or any person who previously has added property to the trust fund (whether directly or indirectly) or spouse for the time being of the Settlor or any such person)”.

The last of the settlements contains a provision entitling a trustee acting in a professional capacity to receive reasonable remuneration out of the trust fund for any services that he provides on behalf of the trust.

Notwithstanding the variation in the wording used in the trust provisions and in s.29 of the 2000 Act, Mr. Smith accepts that the first defendant could only be entitled to remuneration that was proper and reasonable. Accordingly, Mr. Smith submits that the account is to be taken in respect of all of the trusts on the basis of a single test, namely whether the fees exceed the proper and reasonable remuneration to which the first defendant is entitled as trustee. Miss Haren accepts that there is no significant difference between the scope of the various charging provisions in the present context.

Assuming that there is no express contrary provision in the trust instrument, a beneficiary is entitled to have the charges made by a professional trustee investigated, and the trustee will be liable to account for any charges made insofar as they are unreasonable or excessive. This is in accordance with the procedure in equity for the taking of an account against a fiduciary to ensure the due administration of a fund which he holds.

I was referred to the observations of Lewison J in the case of Ultraframe (UK) Ltd. v. Fielding [2005] EWHC 1638 (Ch) at para.1513, under the heading “Liability to account”. I quote:

“The taking of an account is the means by which a beneficiary requires a trustee to justify his stewardship of trust property. The trustee must show what he has done with that property. If the beneficiary is dissatisfied with the way that a trustee has dealt with trust assets, he may surcharge or falsify the account. He surcharges the account when he alleges that the trustee has not obtained for the benefit of the trust all that he might have done, if he had exercised due care and diligence. If the allegation is proved, then the account is taken as if the trustee had received, for the benefit of the trust, what he would have received if he had exercised due care and diligence. The beneficiary falsifies the account when he alleges that the trustee has applied trust property in a way that he should not have done (e.g. by making an unauthorised investment). If the allegation is proved, then the account will be taken as if the expenditure had not been made; and as if the unauthorised investment had not formed part of the assets of the trust. Of course if the unauthorised investment has appreciated in value, the beneficiary may choose not to falsify the account: in which case the asset will remain a trust asset and the expenditure on it will be allowed in taking the account.”

In respect of the burden of proof, the accounting party must be prepared to document each item, and presumptions may be made against him if he has not kept proper records. Accordingly, it is said at para 20-014 (at p.595) of Snell’s Equity, 32^nd edition (2010) that:

“The court will lean particularly hard against a professional who has kept inadequate records or anyone who destroys records in bad faith.”

Miss Haren submits that, as with any other form of relief, a beneficiary may debar himself from challenging a trustee’s remuneration if there has been concurrence or acquiescence in the remuneration charged. It is clear that mere delay of itself is not a bar to relief: see Lewin at paras 39-105 and 39-106. There must be something more such as, in the present context, concurrence or acquiescence. Miss Haren relies upon the statement of principle by Wilberforce J in Re Pauling’s Settlement Trusts [1962] 1 WLR 86 at p.108, which is cited at para 39-117 of Lewin. I quote:

“The … court has to consider all the circumstances in which the concurrence of the cestui que trust was given with a view to seeing whether it is fair and equitable that, having given his concurrence, he should afterwards turn round and sue the trustees; … subject to this, it is not necessary that he should know that what he is concurring in is a breach of trust, provided that he fully understands what he is concurring in, and … it is not necessary that he should himself have directly benefited by the breach of trust.”

I must also address the scope of the challenge to the first defendant’s remuneration. In his notice of objection dated the 22^nd October 2010, and directed by para.4(3) of Master Moncaster’s order, the period on which the claimant’s claim was said principally to focus was the period identified throughout as period two, from the 1^st February 2008 to the 30^th September 2009. Prior to the 1^st February 2008, the first defendant was said to have charged on the basis of agreed estimates. Since the 1^st October 2009, the first defendant’s charges had been the subject of a “cap”, limiting fees to £10,000 per month (exclusive of VAT). In opening, Mr. Smith expressly excluded period one from the subject of the claimant’s challenge. Miss Haren’s closing position was that it would not be fair or reasonable to look at period two in isolation from later periods because the first defendant and his assistants had substantially undercharged during those periods. This was a point developed by Miss Haren in cross-examination of Mr. Cotton, at transcript day 1, p.61, line 10 to p.63, line 2, and it is quantified in Mr. Cotton’s supplementary calculations. Mr. Smith’s response is that the first defendant should not effectively be allowed to set off time undercharged after period two from sums overcharged during that period because after period two a limit had been set on the level of the first defendant’s remuneration. I accept that submission. What I am directed to determine is the amount (if any) by which the fees charged by the first defendant to the Pullan family trusts “exceed the proper and reasonable remuneration to which he was entitled as a trustee”. After period two that remuneration was subject to a monthly charging limit (or cap); and the first defendant was not entitled to any remuneration in excess of that limit. To the extent that he has provided services to a value in excess of that limit, the first defendant cannot say that he is entitled to claim for the value of those services by way of a set-off against any amount by which he may have overcharged for services provided during an earlier period.

I should add that I would not accept the further submission (which, ultimately, I am not sure was pressed by Miss Haren) that the claimant is precluded from pursuing any of the challenges to the fees charged by the first defendant which are formulated in Mr. Cotton’s expert report. I accept Mr. Smith’s submission that ever since the service of Ms Exton’s third witness statement (dated the 17^th January 2012) it has been clear to the first defendant that the claimant was founding his claim upon the contents of that report: see para 3 of Ms Exton’s third witness statement. Moreover, paras 73 and following of the claimant’s notice of objections criticised the first defendant’s general approach to charging, and (at para 88) specifically raised the issue of the over-recording of time.

Miss Haren rightly emphasised that the claimant has chosen to put in no evidence of his own, relying instead upon the hearsay evidence given by his solicitors, Ms Bassett and Ms Exton, who, on any relevant factual matters, could only speak to what the claimant had told them, and thereby denying the first defendant any opportunity of cross-examining the claimant. In the absence of any challenge to the first defendant’s evidence by way of cross-examination, Miss Haren invited me to proceed on the basis that certain facts had been established, as outlined at para 6 of her written closing. Subject to certain qualifications suggested by Mr. Smith, I accept Miss Haren’s invitation.

I therefore proceed on the following basis:

Before addressing the issue of the reasonableness of the hourly rates charged by the first defendant (£400) and his assistants, mainly Mr. Jorden (£250), it is necessary for me to comment upon the three expert witnesses. Mr. Smith submitted that Mr. Cotton and Mr. Bates were both experienced professionals, who had been seeking to assist the court within their particular areas of expertise. Mr. Parr was said to fall into a different category. He was said to lack relevant expertise in the field of acting as a trustee, being very much a tax accountant. He was said to have viewed his role as being to assist and advance the first defendant's position, rather than assisting the court, as evidenced by his failure to mention in his report that before the merger of his former firm with Baker Tilly in April 2008, his hourly charging rate had been only £200 rather than the £400 mentioned at paragraph 2.5.1 of Mr. Parr's report. This was said by Mr. Smith to be highly material information for the court when Mr. Parr had been relying upon his own hourly rate as a comparator; and his explanation for his failure to mention it (at transcript day two, pp.44-45) was said to be plainly unsatisfactory. Mr. Smith submitted that it had been deliberately left out of the report because Mr. Parr thought that it would be unhelpful to the first defendant's case. Mr. Parr's evidence was said to be of very little utility because he had not investigated the work actually carried out; and he had opined about the rate for a tax adviser even though, on the first defendant's own evidence (see paragraph 5 of his fifth witness statement dated 9^th May 2012) his role "did not in practice require extensive tax advice". Mr. Parr was also said to have adopted a wrong approach because his "firmly held view" was "that the charge-out rate is appropriate to the particular person and should not vary with the work done": see transcript day two at p.50, lines 12-15.

In summary, Mr. Parr was said to lack relevant expertise, to lack independence, to have addressed the wrong question, and to have done so superficially, disregarding both the work actually performed and its context. Miss Haren's comments on the three experts are set out at paragraphs 10-15 of her written closing submissions. I have, of course, borne them in mind.

I found Mr. Cotton to be an excellent witness. He had appropriate expertise, and he was well qualified to express opinions on the areas covered by his evidence, both written and oral. He gave thoughtful and considered evidence, both in terms of its contents, and also the manner in which it was delivered. I found Mr. Cotton to be entirely independent and non-partisan. Although of less assistance to the court, I found Mr. Bates to possess relevant expertise and appropriate objectivity, and to provide appropriate support for Mr. Cotton's conclusions.

I am satisfied that both Mr. Cotton and Mr. Bates were seeking to assist the court, and in that they succeeded. I cannot say the same for Mr. Parr. I found him to be lacking in independence and objectivity. He was argumentative and overly dogmatic in his opinions. He was unreceptive to, and failed to engage with, questioning from Mr. Smith, frequently beginning his answer even before the question had concluded.

I would not accept the criticism that Mr. Parr had no trust expertise because he has in fact acted as an adviser to trustees. But I would accept all of Mr. Smith's other criticisms of Mr. Parr. His expertise was specifically as an adviser on tax matters; and he told me (at transcript day two, p.54, lines 32 to 38) that his understanding was that he had been asked: "...to opine on what the hourly rates for tax advisers were. [He] was not asked to opine as to whether they were doing appropriate work... The reasonableness of the rate depends on their skills as tax advisors".

In the joint experts' report, Mr. Parr had stated that he considered that the experts had been asked to opine "on what was a reasonable charge-out rate rather than the question of whether the hours charged were appropriately charged". In my judgment, that was to take too narrow a view of the experts' role. I reject Mr. Parr's evidence and opinions in so far as they conflict with those of Mr. Cotton. In particular, I reject Mr. Parr's view (at transcript day two, p.50) that the work done is irrelevant to the charge-out rate.

Against, that background, I turn to my assessment of the appropriate hourly charging rates. In my judgment, it is appropriate, and necessary, to proceed in two stages: First, by considering the hourly rates on the footing that they were not communicated to the claimant; Secondly, by then considering whether they were so communicated and, if so, considering whether this makes any difference to the rates actually charged for the first defendant and his assistants.

In his report, Mr. Cotton had concluded that a fair and reasonable set of hourly rates would have been £275 for the first defendant and £160 for his assistants, although (at paragraph 6.4.16) he had said that he would have expected a regional sole practitioner to charge between £250 and £300 an hour. At transcript day one, p.74 lines 31 to 37 Mr. Cotton had accepted that £300 would have been as reasonable a rate for the first defendant to have charged as £275. For the claimant, Mr. Smith submitted in closing that the appropriate hourly rate for the first defendant was the £300 per hour spoken to by Mr. Cotton at transcript day two, pp.13-14 which, Mr. Smith submitted, was consistent with the comparable evidence for non-tax advisors practising outside London. Mr. Smith supported Mr. Cotton’s assessment of the rate to be applied to the first defendant’s assistants.

Miss Haren submitted that Mr. Cotton’s position on the question of rates had moved considerably since his first report. She relied upon the contents of the experts’ joint statement, in which all three experts had concluded that “reasonable rates to be charged … for David Wilson himself acting as a tax advisor would be in the range of £325 to £400 per hour” and that “the appropriate rate might be at the higher end of that range”.

Miss Haren submitted that, unless one was charging in excess of the top end of any acceptable range of rates, it could not be said that a charge was unreasonable. Miss Haren also submitted that Mr. Cotton’s evidence that the rate charged would be affected by the nature of the work in fact undertaken ignored his own evidence (which was common to all three experts) that they all operated a single charge out rate unless (which was not suggested by the first defendant in the present case) it was appropriate in all the circumstances to charge a “premium” (or, in the case of Mr. Bates, a pro bono) rate for particular work.

As regards the first defendant’s assistants, in their joint statement Mr. Cotton and Mr. Bates had expressed the opinion that an hourly rate of between £165 and £200 would be appropriate, which was to be contrasted with Mr. Parr’s range of between £210 and £260 per hour. Miss Haren relied upon Mr. Cotton’s acceptance in questioning (transcript day one, p.75, lines 29 to 30, and correcting an obvious error in transcription) that, as a standard charge out rate, £250 may not have been “unreasonable” for Mr. Jorden, although I note that Mr. Cotton had added “… but the question is whether it was reasonable for him to carry out that work”.

Miss Haren was also able to pray in aid Mr. Cotton’s acknowledgment (transcript day one, p.74, lines 49 to 53) that, in arriving at an hourly rate of £160 for Mr. Jorden, Mr. Cotton had been influenced by the misapprehension that this had been Mr. Jorden’s normal charge out rate.

During the course of her submissions, Miss Haren made the following points (amongst many others): A trustee may, of course, charge for his services even if they are capable of being provided by a lay trustee. This is said to highlight the flaw in the claimant’s case that a reasonable rate must be judged by reference to the particular task being undertaken by the trustee. If a professional trustee is appointed as a trustee of a trust whose administration requires no professional skill or expertise, he is nonetheless entitled to charge for his services. There is said to be no support for the proposition that, in charging for such services (that is to say, for services which could have been provided by a lay trustee and so free of charge), he is not entitled to his normal professional rate.

According to Miss Haren, the logic of the claimant’s position that the reasonableness of the rates (as opposed to the overall fees charged) should reflect (1) the nature of the work in fact done, and (2) the hours in fact spent, is that the court conducting an account would have to consider each and every task which a trustee undertook, and the overall number of hours, in order to see whether it justified charging out at the rate which the trustee had.

It is said by Miss Haren that that simply cannot be correct. Not only would it be an unduly onerous task for a court to undertake, but a trustee would never be certain that the rate he had charged was reasonable. If the work turned out to be easier than expected, he would risk his rate being reduced; but so too if, as here, the hours involved in conducting this trusteeship were greater than expected.

According to Miss Haren, the wider ramifications of a finding that a professional who charges his normal and reasonable rate for the sort of work he normally undertakes is not entitled to charge that rate under the charging clause would be far-reaching. It would mean that a professional could never safely assume, when accepting a trusteeship on the basis of his normal professional charging rate, that that rate will not later be challenged by a beneficiary at some unforeseen future time.

Miss Haren referred me to para 14 of the first defendant’s responses to the claimant’s notice of objections. There, it was said on behalf of the first defendant that, with the benefit of hindsight, it is unlikely that he would have accepted the role of trustee and non-executive director if he were not allowed to charge on a normal time spent basis, charging his time in 15 minute units and administration time. It said that the first defendant would certainly not have accepted a monthly cap of £10,000 on fees for what was, in effect, an open ended commitment to undertake work.

Miss Haren submitted that, if someone was employed to do a task, one could not expect to pay him less than his usual rate for that task, regardless of whether his expertise was required for the whole of it. I asked Miss Haren whether she was submitting that one must take one’s trustee as one found him. Miss Haren’s response was to submit that the first defendant had been selected for a reason, and that this was because of his expertise, and he must be paid for it accordingly.

Miss Haren also counselled the need for caution when considering a challenge to a professional trustee’s fees. She submitted that there were, in effect, two competing principles. The first was that a trustee should not be permitted to exploit his position to charge unreasonably. But the second was that a beneficiary should not be able to use a challenge to a trustee’s fees in order to exert pressure on the trustee to act differently. In order to be able to carry out their functions effectively, trustees needed to be confident that courts would not too readily carry out retrospective assessments of their fees, particularly where the fees were agreed by the other trustees, and the beneficiary in question was being kept informed by way of trust accounts of the amount of fees being charged. Again, I bear all of those submissions in mind.

In my judgment, the starting point must be the letter of engagement, an example of which is to be found at bundle C2, divider 22, at pp.401 and following, although I note, and bear in mind, that this was, in terms, directed to the terms of Wilson & Co.’s engagement other than those relating to the first defendant’s fiduciary appointment as trustee. Miss Haren relied upon para 3.2, which stated that:

“The amount of our fees will be by reference to the time spent and the hourly rates for the person engaged on the assignment”.

Mr. Smith emphasised para 3.4, which stated that:

“Our fees are based on the degree of skill involved and the time necessarily taken in performing the work”.

An accompanying letter (at bundle C2, divider 22, p.399) made it clear that the first defendant would be assisted on a day-to-day basis by Graham Hirst although, in the event, it was Mr. Jorden (who had the same hourly charging rate) who in fact provided most of the assistance.

Much time and effort in this litigation could have been avoided had the applicable hourly rates to be charged by the first defendant and his assistants been identified to the other trustees, and to the principal beneficiaries, before the first defendant accepted the position of trustee. At the very least, those hourly rates should have been recorded in terms in the engagement letter. If this unhappy litigation serves no other useful purpose, I trust that it will serve as a warning to trustees, to those appointing them, and (where appropriate, as it would have been in the present case, given the background of disputes and ongoing litigation between the trustees and their beneficiaries) to the principal beneficiaries to clarify the precise basis of a trustee’s charges and remuneration in advance. In my judgment, the ability to do so, by taking this simple step, provides the answer to many of the points made by Miss Haren in closing to which I have previously made reference.

In my judgment, a professional trustee is not necessarily entitled to charge by reference to his normal or standard charging rates (or those of his assistants), at least unless these have been specifically identified and approved before the relevant work is undertaken. To hold otherwise would be to deprive a court of equity of any effective control over a trustee’s remuneration.

I accept the evidence of Mr. Cotton and Mr. Bates that one must have regard to the nature and the value of the services which are performed, and to the propriety, reasonableness and proportionality of using the services of the level of fee earner who is providing them. In my judgment, it is no answer to a challenge to the level of fees charged by a professional trustee, or by an employee or consultant engaged by a professional trustee, that the trustee only retains the services of particularly skilled fee earners (including himself) who are charged out at a commensurately high (but appropriate) hourly rate if they are too highly skilled (and thus, too expensive) for the work which they are being required to perform. To hold otherwise would be inconsistent with the trustee’s duty to avoid any conflict between his duties to the trust and his personal interests.

I acknowledge the utility of one’s normal charging rates, and the number of hours spent, but only as an initial reference point. In closing, Miss Haren submitted that it was important to bear in mind that in taking an account, the court was not conducting an inter partes assessment of costs in litigation. But, in my judgment, this analogy has both relevance and utility. One has to have regard to the reasonableness, and the propriety, of the remuneration claimed; and this imports elements of proportionality, in terms both of the time spent, and of the level of skill and expertise required.

Both Mr. Cotton (transcript day two, pp.15 to 16) and Mr. Bates (transcript day two, pp.34 to 35) acknowledged the propriety of reducing or writing off time charged, rather than discounting the relevant fee earner’s standard hourly charging rate, in order to reflect the time spent on a particular task and the level of skill required. In my judgment, they were right to do so. Ultimately, no matter the number of hours spent, and the charging rate of the fee earner involved, there is a right level of fee for a particular piece of work which requires an evaluative assessment rather than a strict arithmetical calculation.

Mr. Cotton remarks upon the total number of hours charged by the first defendant and his assistants to the trusts, upon the very high percentage of total hours charged by the first defendant himself rather than his assistants, and also upon the percentage of the likely turnover of the first defendant’s practice that all of this work represented. Between December 2006 and November 2010 almost half the number of hours charged to the trust represented work performed by the first defendant: see para 4.10.3 of Mr. Cotton’s first report. At para 7.2.11 Mr. Cotton surmises that his must have represented somewhere between 30 and 50 percent of the first defendant’s annual turnover. At para 2.14.3 of his second report Mr. Cotton calculates the percentage as equating to nearly 40 percent. In his written opening (at para 11) Mr. Smith calculated that in October 2008 over 60 percent of the first defendant’s entire chargeable time was recorded to the trust. In answer to questions from the Bench at the end of his evidence (at transcript day 2, pp.15 to 18), Mr. Cotton noted the “very substantial” number of hours that the first defendant had charged to the trust; and he expressed the opinion that, bearing in mind his practice, the appropriate hourly rate for the first defendant to have charged for the number of hours work that he did performing trustee functions would have been somewhere between £325 and £360. On this basis, Mr. Cotton would have expected an hourly rate for the first defendant’s assistants in the rate of between £165 to between £180 and £200.

I acknowledge that, ultimately, the decision is one for the court. But, in my judgment, upon the evidence in the case as a whole, and bearing in mind all the particular considerations urged upon me by both Mr. Smith and Miss Haren, I accept this range of figures to which Mr. Cotton spoke at the end of his evidence. Miss Haren’s submission that remuneration is not unreasonable unless it exceeds the top end of the acceptable range of figures has a superficial plausibility about it; but, in my judgment, it fudges the real issue upon which the court is engaged, which consists in determining the extent to which the fees charged exceed the proper and reasonable remuneration to which the first defendant was entitled as a trustee. Although there may be a range of possible - and I stress “possible” - rates of reasonable and proper remuneration, the court is required to determine what was the reasonable and proper rate to charge on the facts, and in the circumstances, of this particular case. That involves an exercise of evaluative judgment.

In the present case, given the very substantial number of hours charged, both absolutely and relative to the total number of hours charged by the first defendant and his assistants, in my judgment it would be appropriate to accept a figure towards the bottom end of Mr. Cotton’s range. I therefore adopt a figure of £330 per hour. On that basis, I would adopt an hourly rate of £165 for the work of the first defendant’s assistants.

Mr. Cotton considers that a discount of 7.5 percent should be applied to the hourly rates to reflect excess administration and other non-productive time, which is said to be amply evident in the time records. His reasoning is set out at paras 8.2 to 8.3 of Mr. Cotton’s original report and at paras 2.2 and 2.16 of his supplemental report. There was no challenge to this discount in the questions put to Mr. Cotton, and it is not addressed in the other expert reports. This lack of challenge is not surprising since there seems to me to be no answer to Mr. Cotton’s analysis. I therefore accept that a discount of 7.5 percent should be applied to the total figure resulting from the application of the correct hourly rates to the time charged.

However, I have so far been proceeding on the footing that no hourly rates had been communicated to the claimant or to the trustees before July 2008. I must now consider whether this hypothesis is correct and, if not, whether it makes any difference to the rates that should be allowed to the first defendant and his assistants. It is in this area that I have found myself considerably disadvantaged by the lack of any direct written evidence from the claimant and any oral evidence from either the claimant or the first defendant. I cannot refrain from recording that a small part of the time taken up by oral submissions could have been more usefully deployed in a few minutes of factual evidence.

The position on the evidence is wholly unsatisfactory. The first defendant’s recollection, as recorded at para 16 of his fourth witness statement dated the 11^th April 2012, is that:

“I do not think I ever discussed my hourly rate with the claimant or with Mr. and Mrs. Pullan.”

I have no direct evidence from the claimant himself; but the evidence of his solicitors has consistently been that the first defendant’s hourly rate of £400 was agreed for the initial “landscaping” period, when the first defendant would be familiarising himself with the trusts. I refer to (1) para 48 of Ms Bassett’s witness statement dated the 11^th February 2010; (2) para 10 of the claimant’s notice of objections dated the 22^nd October 2010; and (3) Forsters’ letter to Mr. Cotton dated the 10^th January 2011 written by Ms Exton. In this letter Ms Exton clearly states that:

“It is Mark’s position that it was in the context of this estimate …”

that is to say, the first defendant’s original fee estimate of £80,000 to £100,000 for the initial landscaping period:

“… that the hourly charge rate of £400 was agreed.”

Mr. Smith submits that this was an error of understanding on the part of the claimant’s solicitors. It was the total level of charges that was agreed, but the hourly rate was not. He relies on the first defendant’s own evidence. Mr. Smith says that it is not open to the first defendant to run any case that there was an express agreement as to the hourly rate. When I questioned whether it was open to the claimant to contend that the hourly rate was not agreed, Mr. Smith’s answer was that it was the first defendant who was making a positive allegation, and that this was contrary to his own evidence. Mr. Smith submitted that, on the evidence as a whole, the court could not conclude that there was such an agreement. In any event, any such agreement related only to period one, which was no longer in issue. Finally, Mr. Smith made the valid point that there was no evidence that the claimant had agreed any rate for the first defendant’s assistants.

I bear in mind that the burden of proving an agreement as to his hourly rate rests upon the first defendant as the accounting party. Nevertheless, I am satisfied, on the evidence, that the first defendant has discharged this burden. The first defendant’s evidence is that he simply does not think that he discussed his hourly rate with the claimant or his parents, who were then the other two trustees. The claimant’s evidence (through his solicitors) is that this was agreed. In the absence of any direct evidence from the claimant or his solicitors on the point, I cannot accept that two such experienced, and senior, trust solicitors as Ms Bassett and Ms Exton had misunderstood their client’s instructions on such a crucial matter. Further, an agreement as to the first defendant’s hourly rate is consistent both with the inherent probabilities of the matter, and with the letter from the first defendant to Mr. and Mrs. Pullan of the 27^th June 2007 (at bundle C2, divider 28, p.648) in which the first defendant states that he has now had a meeting with the claimant regarding his professional fees and had “agreed the level of my charges with him”. I accept that this letter makes no reference to agreement on the first defendant’s hourly rate; but, given the inherent uncertainty of the number of hours to be worked, it is difficult to see how the level of charges could have been agreed without some discussion about the first defendant’s hourly rate. I accept Mr. Smith’s point that this agreement was directed to the initial “landscaping” period; but, as Mr. Smith was so keen to observe in the course of other submissions, the reduction in the envisaged level of work after this period would be reflected in a reduction in the number of hours charged rather than in the rate at which they were charged. I am therefore satisfied that the first defendant has established, on the balance of probabilities, that his hourly rate was agreed.

In my judgment, this affects the rate at which the first defendant’s remuneration should be allowed. It does so for two reasons. First, as Mr. Cotton observed (at transcript day 1, p.67, lines 16 to 18), awareness of the rates being charged would be good evidence that those rates had been reasonable. Secondly, the claimant’s knowledge of the rate being charged by the first defendant, and his failure to raise any objection to the level of the first defendant’s charges until the middle of June 2009, amounts, in my judgment, to acquiescence in the level of those charges which debars the claimant from raising any challenge to them. On this basis, I find that £400 was a reasonable and proper hourly rate of remuneration for the first defendant to charge. Although there was no agreement as to the hourly rate for the first defendant’s assistants, in my judgment the agreement as to the first defendant’s hourly rate must feed into the reasonableness of the rate which it would otherwise be reasonable and proper for the first defendant to charge for the services of his assistants. On the evidence as a whole, and in particular the evidence of Mr. Cotton and Mr. Bates at para 1.9 of the joint report, I find that an hourly charging rate of £200 per hour would constitute reasonable and proper remuneration for the first defendant’s assistants. This is at the top of the range to which Mr. Cotton spoke in his evidence at transcript day 2, p.18. The 7.5 percent discount for administration and other non-productive time will, of course, apply to these hourly rates of £400 and £200.

Finally, I turn to the charge that the first defendant wrongly charged the trusts for company work which related to his separate directorships of the companies, and for which he was receiving separate remuneration from the companies for acting as a director. This was addressed at para 8.5 of Mr. Cotton’s first report and para 2.15 of his supplemental report, where Mr. Cotton in terms confined his adjustment to £29,600 (representing Mr. Jorden's time charges of £32,000 less 7.5%).

Founding himself upon paragraph 2.15.6 of the later report, which I have previously cited, in his questioning of Mr. Cotton (at transcript day one, pp.56 to 60) Mr. Smith secured Mr. Cotton's agreement to the logic of the proposition that the time charged in respect of company work by the first defendant (and amounting to 446 hours), as well as the time charged by Mr. Jorden, should not have been charged to the trust. In the course of her questioning of Mr. Cotton, Miss Haren valiantly sought (with some success) to move Mr. Cotton from this position at transcript day two, pp.5-8 (where Mr. Cotton eventually conceded that the distinction drawn in his report between the first defendant's own time and that of his assistants was a legitimate one).

Mr. Smith's submissions on this issue are to be found at paragraphs 120-131 of his opening skeleton argument; and he reiterated, and elaborated upon them, in his oral opening, in his closing speech, and in his reply to Miss Haren. Mr. Smith also placed reliance upon the provisions of s.176 of the Companies Act 2006 (the duty not to accept benefits from third parties). This provides as follows:

I accept Mr. Smith's submission that it would be inappropriate to distinguish for present purposes between time charged to the trusts by the first defendant and by Mr. Jorden for work carried out in connection with the companies. In answer to questions from Miss Haren, Mr. Cotton accepted (at transcript day two, p.4, lines 26-43) that he had disallowed Mr. Jorden's time on the basis that there was no letter of engagement addressed to the companies. Since the issue here is one of the propriety of charging the trusts, rather than the companies, I cannot see the relevance of the absence of an engagement letter directed to the companies. I have already rejected Miss Haren's invitation to find that there was any express agreement that time spent on company matters in excess of the time represented by the first defendant's remuneration for acting as a non-executive director would be charged to the trusts. But I do not accept Mr. Smith's arguments that (1) in the absence of such agreement there was no proper basis for this work being charged to the trusts, or (2) that in circumstances where the first defendant was receiving remuneration from the companies to cover company related work, there was no basis for him also to receive payment in respect of company related work from the trusts. There was no express agreement that such work would not be charged to the trusts; and provided, and to the extent, that the first defendant's remuneration as a non-executive director was set off against time that would otherwise have been charged to the trusts, there is no element of double recovery.

I accept Miss Haren's submissions that the first defendant was appointed as a non-executive director of three of the (I think) six companies in which the trusts had an interest solely because he was a trustee, and for the benefit of the beneficiaries; and that he is entitled to remuneration from the trusts for work carried out in connection with the companies to the extent that this was not covered by his remuneration as a non-executive director. The fact that time was charged by the first defendant and his assistants to company specific activity codes does not meant that it was work carried out for the companies, rather than for the trusts which held significant shareholdings in those companies. In questioning by Mr. Smith, Mr. Cotton twice referred (at transcript day one, p.59) to a "slight" or "obvious blurring” between the first defendant's roles as a trustee and as a director. In answer to questions from Miss Haren, Mr. Cotton accepted (at transcript day two, p.8, lines 24-28) that in so far as the first defendant was both a trustee and a director, because of his dual interest it was not easy to say that work was specifically attributable to his directorship, as opposed to his trusteeship. This was a point that the first defendant had made in his own evidence: see, for example, paragraph 14 of his fourth witness statement dated 11^th April 2012 where he said:

For these reasons, I am satisfied that no adjustment should be made for company work in respect of either the first defendant or Mr. Jorden. On this basis, I cannot see that s.176 of the Companies Act is engaged. The relevant benefits were conferred, not by reason of the first defendant being a director, or doing anything as a director, but rather because he was a trustee and was acting as such. In any event, in my judgment a breach of s.176 would not operate so as to disentitle the first defendant to remuneration at all. Rather, it would operate to render him accountable to the company in accordance with s.178.

In summary, and for these reasons, I find that the first defendant is entitled to charge for his services at an hourly rate of £400, and for the services of his assistants at an hourly rate of £200, discounted in each case by 7.5%; and that no adjustment should be made in respect of services charged to company specific activity codes.

This is my extemporary judgment on the one outstanding issue of costs in this claim brought by Mr. Alistair Mark Pullan against (effectively) Mr. David Wilson under claim No. HC10C00479. I have earlier today delivered an extemporary judgment extending to some hour-and-three-quarters. For the reasons I there gave, I have found that the first defendant, Mr. David Wilson, was entitled to charge for his services at his claimed hourly rate of £400 and for the services of his assistants at an hourly rate of £200, discounted in each case by 7.5 percent. I have also found that no adjustment should be made in respect of services charged to company-specific activity codes by Mr. Wilson or his assistants. The effect of that judgment is that I have found that the fees charged by the first defendant to the Pullan family trusts exceeded the proper and reasonable remuneration to which he was entitled as a trustee by the sum of £20,348.50.

The question that now arises is who should bear the costs of these proceedings. It is common ground that the second defendant and both the original and substituted third defendants should be entitled to their costs of the proceedings as trustees out of the trust estate on an indemnity basis. The sole issue is as to the incidence of costs as between the claimant and the first defendant. The claimant is represented by Mr. Tom Smith (of counsel) and the first defendant by Miss Sarah Haren (of counsel).

Mr. Smith submits that the first defendant should pay the claimant’s costs. In support of that application he takes four points. First, he submits that in terms of CPR 44.2, it is the claimant who is the successful party. The court has found that Mr. Wilson, the first defendant, has overcharged to the extent of a sum of a little in excess of £20,000. Subject to any appropriate set-off that Mr. Wilson may seek to assert, there will be repayment to the trusts of that sum.

Secondly, Mr. Smith relies upon what he says is the reasonableness of the claimant’s conduct. He points to two letters, in October and December 2009, from the claimant’s solicitors (Forsters) before the issue of the Part 8 claim form in both of which the claimant indicated his willingness to consider a proposal in respect of the first defendant’s fees. After the proceedings had been issued, on the 22nd October 2010 Forsters made a without prejudice save as to costs offer, expressed to be an offer to settle under CPR Part 36. In it they asserted that it was the claimant’s view that the amount by which the single joint expert would find that the first defendant’s charges had exceeded the proper and reasonable remuneration to which he was entitled as trustee for the period to the 30th April 2010 was likely to be between £122,755 and £276,363. On that basis, the letter indicated that the claimant was willing to settle the whole of his claim on terms whereby (1) the first defendant was to pay, within 14 days of acceptance of the offer, £50,000 to the Pullan family trusts, (2) that the first defendant would be liable to pay the claimant’s costs on the standard basis, to be assessed if not agreed, up to the date of acceptance, and (3) that the first defendant should be under no liability to pay any interest on the settlement sum up to the date when it should fall due for payment. That settlement sum was said to represent a very considerable discount to the maximum amount of the claimant’s claim, as set out in his notice of objections.

Mr. Smith acknowledges that the claimant has not succeeded in recovering as much as the settlement sum of £50,000 but he says that there was no response to that offer from the first defendant, and nor did the first defendant seek to engage with Forsters in any attempts to settle the dispute until 23^rd December 2013, less than a month before the trial. At that time, the first defendant’s solicitors, C.W. Harwood & Co., wrote to Forsters on a without prejudice save as to costs basis. In the letter, they asserted that the first defendant had a claim against the estate which totalled some £44,812. In view of that, and of the very substantial costs the parties would need to incur to prepare and conduct the forthcoming hearing, the first defendant suggested that the claim should be withdrawn, with each side being responsible for their own costs. That offer was said to be in full and final settlement of the claim and any claim by the claimant and the trust against Mr. Wilson.

Forsters’ response to that letter was on 8^th January 2014. Again the letter was headed “Without prejudice save as to costs”. C.W. Harwood & Co.’s offer was rejected. Forsters did not accept that any other claim the first defendant might have against the estate or the trusts was relevant to the proceedings. Mr. Smith relies on the concluding paragraph of the letter, wherein Forsters state that the claimant had always been willing to explore the possibility of settlement, and remained willing to do so, but that any agreement would need to involve the first defendant making a repayment to the trusts, as well as a contribution to the claimant’s costs. In view of the length of time it had taken to get the matter to trial, those costs were now said to be substantial. Again, Mr. Smith cites the first defendant’s failure to engage over settlement thereafter.

Thirdly, Mr. Smith acknowledges that this is not a case for an issue based costs order because, he says, there is a considerable overlap between the matters that were in issue at trial. But he says that the majority of the costs involved in this trial were focused upon the reasonableness of the hourly rates charged, on which it is said that the claimant was successful. The court has rejected the evidence of Mr. Pullan for the first defendant, and has accepted the evidence of the single joint expert and of Mr. Bates, upon which reliance was placed by the claimant.

Fourthly, and finally, Mr. Smith cites the fact that this whole claim has been born out of what are said to be deficiencies in Mr. Wilson’s own letters of engagement, and the documentation by which he accepted appointment as a trustee and proceeded to charge the trusts for the services of himself and his accountancy practice. For all of those four reasons, Mr. Smith invites the court to award the claimant all of his costs of this litigation.

For the defendant, Miss Haren makes the following points. First, she asserts that it is the first defendant, and not the claimant, who is the substantial victor in this litigation, and he should therefore recover the majority of his costs. He is said to have won many of the issues.

Secondly, she says that, on the first defendant’s case, as set out in the witness statement of Mr. Wilson (his sixth dated 27^th January 2014, which was handed to me before I gave judgment this morning), it is Mr. Wilson’s case that, in fact, monies are owed by the trust to him, although Miss Haren rightly acknowledges that I am in no position to determine that issue today.

Thirdly, Miss Haren invites me to bear in mind the overall context, and the value of the sum to which the claimant has become entitled pursuant to my findings and order. Against total charges to the trusts in the order of £850,000, Mr. Pullan will recover (for the trusts) a sum in the order of £20,348, plus interest at 1.5 per cent from 4^th November 2010. That is said to represent something in the order of 2.35 per cent of the total bills rendered by the first defendant.

Fourthly, Miss Haren invites me to bear in mind the extent of the claimant’s recovery, as against the full value of his claim. She reminds me that in paragraph 132 of Mr. Smith’s opening skeleton argument, the claimant’s primary position was that he was entitled to recover £349,735.25. Alternatively, the claim was for the lesser sum of £236,284. In fact, the claimant’s actual recovery is less than 10 per cent of even the lower of those two alternative figures.

Fifthly, Miss Haren reminds me that an offer was made on behalf of the first defendant. She accepts that that offer was not beaten by the first defendant, but he came pretty close, she says, to doing so.

Sixthly, Miss Haren points to the fact that, although she does not know the precise level of the claimant’s costs exposure, his costs are likely to be wholly disproportionate to the sums that were in issue in this litigation.

Seventhly, Miss Haren points to the matters that were in issue in the litigation. She draws my attention to paragraph 7 of the claimant’s notice of objections, setting out the ambit of his originally pleaded claim. She says that the claimant has failed on his challenge to the use of 15 minute units for charging purposes. She submits that, on the issue of the hourly rates, the court has accepted £400 for Mr. Wilson, and has only adjusted downwards the hourly rate for his assistants from the claimed rate of £250 to £200. She reminds the court that the claimant was seeking to limit Mr. Wilson’s hourly charging rate to £275, and that of his assistants to £165. She also invites the court to accept that the question of the assistants’ hourly rates was always secondary to those of Mr. Wilson himself. So far as the charging for internal administration tasks is concerned, she acknowledges that the court has accepted the propriety of a 7.5 per cent discount; but she says it has done so only because that was the discount in fact applied by first defendant up to the end of period two; and this was never put in issue by the first defendant. There was no challenge to that in Mr. Cotton’s questioning. On the issue of the charging for the companies’ work, that point has been decided entirely in the first defendant’s favour. Miss Haren emphasises that the costs are likely to exceed the sums recovered by a considerable amount, and they may even exceed the amount that was put in issue by the claimant.

Eighthly, Miss Haren submits that the claimant raised a host of issues which needed to be addressed. She refers to paragraphs 71 and following of the Notice of Objections. She points to the fact that many of those issues, such as the analogy of Withers’ charges, were not accepted as valid by Mr. Cotton.

Ninthly, Miss Haren makes the point that Forsters’ Part 36 offer was made as long ago as 22^nd November 2010, and there has been no more recent Part 36 offer by the claimant. She also draws my attention to the fact that, under CPR 44.2(4), the circumstances to which the court is required to have regard do not extend to an offer to which costs consequences under Part 36 apply. I am not sure that there is any validity in that point given that, in the event, no costs consequences under Part 36 do apply to Forsters’ offer, even though it purported to be made under CPR Part 36.

Tenthly, Miss Haren points to the fact that the claimant put in no direct evidence himself, and nor did he deal himself directly with whether hourly rates had been agreed. She emphasises that the real cause of this litigation was the claimant’s failure to acknowledge that there was any agreement as to rates. As to that, I would observe that it was, in fact, the claimant’s evidence (through his solicitors, and which I accepted) that there was an agreement as to rates which was the relevant evidence on the issue. The first defendant had no recollection of any hourly rates having been agreed.

For those reasons, Miss Haren invites me to award a substantial, but unspecified, proportion of his costs of these proceedings to the first defendant.

Miss Haren raises a separate point upon a case management hearing that had taken place before Deputy Master Jefferis on 8^th October 2012. An earlier order made by Deputy Master Mark on 27^th February 2012 had provided for a case management conference to take place. In the event, that was listed before Deputy Master Jefferis on 8^th October. 45 minutes was allowed. In correspondence, the first defendant's solicitors (C.W. Harwood & Co.) invited the claimant's agreement to adjourn that case management conference on the footing that two hours would be required. The claimant's solicitors rejected that approach. In the event, the case management conference proceeded before Deputy Master Jefferis on 8^th October 2012 and had to be adjourned part heard for a further hearing before that Deputy Master. The Deputy Master expressly reserved the costs of the hearing to the adjourned hearing, which was, in the event, avoided because matters were agreed. That agreement was recorded in an order made by Deputy Master Jefferis on Wednesday 16^th January and sealed on 4^th February. Paragraph 10 of that order expressly reserved the costs of the hearing on 8^th October. Miss Haren invites the court to award those costs to the first defendant in any event because the hearing ran out of time and it was the claimant's solicitor's refusal to adjourn for a longer hearing that was the cause of that.

In my judgment, Mr. Smith is quite right to say that, in the event, since matters were agreed, because the outstanding matters were dealt with by consent, there was no relevant waste of court time. In my judgment, the appropriate order as to the costs reserved of the hearing before the Deputy Master on 8^th October 2012 is that they should form part of the costs in the case generally.

On those general costs, Mr. Smith had three submissions in reply. First, he observed that Miss Haren had not addressed the lack of engagement on the part of the first defendant in attempting to settle this litigation. That, he said, was a matter of conduct to which the court is entitled to have regard in exercising its discretion as to costs.

Secondly, Mr. Smith submitted that Miss Haren had downplayed the issue, and the importance, of the assistants' rates of charging. Their work represented 51% of the total time charged by the first defendant to the trusts.

Thirdly, Mr. Smith submitted that the acquiescence and concurrence point on which the first defendant, in the event, succeeded in (1) maintaining his own hourly rate of £400 and (2) securing a rate of £200 for his assistants had only been raised in Miss Haren's opening skeleton argument for the trial. It was a late point on which she had succeeded.

Those are the submissions. The court, of course, has a discretion as to costs. But if the court decides to make an order about costs, the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, although the court may make a different order. In deciding what order, if any, to make about costs the court is enjoined by CPR 44.2(4) to have regard to all the circumstances of the case, including (a) the conduct of all the parties, (b) whether a party has succeeded on part of its case even if that party has not been wholly successful and (c) any admissible offer to settle made by a party which is drawn to the court's attention and which is not an offer to which costs consequences under Part 36 apply. I bear all of those matters, and also all of the submissions that have been presented to me, in mind in the exercise of my discretion as to costs.

In this case, I am satisfied that the successful party is, indeed, the claimant. He has secured repayment to the trust of excessive remuneration in the sum of £20,348.50 with interest, subject to any set-off (which is not the subject of these legal proceedings). In doing so, the claimant has exceeded any offer made by the first defendant. I have no doubt, in those circumstances, that the successful party is, indeed, the claimant. In my judgment, it would not be appropriate to award the first defendant any part of his costs. That is particularly the case where this litigation was, in part, the consequence of the failure by the first defendant to state clearly in the letters of engagement, or any contemporaneous documentation, the basis of his hourly charging rate.

But this is not a case in which the claimant has been wholly, or even largely, successful. One only has to look at the extent of the claim formulated by Mr. Smith at the commencement of these proceedings, and then consider the extent of the claimant's limited recovery - less than 10% of even the lesser of the two alternative sums claimed - to see that this is a case in which the claimant has been far from completely successful.

On the issue of Mr. Wilson's hourly rate, the first defendant is the successful party. The issue of a discount of 7.5% was no more in issue at trial than was the conceded initial objection by the claimant to a 15 minute hourly charging rate. The issue on which the claimant has been successful is simply the extent of the fees charged for Mr. Wilson's assistants. The claimant wholly failed on the company charging issue.

How should I give effect to that limited degree of success? Essentially, the matter involves an evaluative exercise of the court's discretion, bearing in mind its knowledge of the way in which this case has proceeded, and been conducted and disposed of. Essentially, it involves a matter of feel, as to which precise mathematical calculation is impossible. In my judgment, bearing in mind all of the circumstances of the case, and of the way in which it has been conducted, and having regard to the submissions that I have summarised, the appropriate order as to costs is to award the claimant 25% of his costs of this litigation. There will have to be a detailed assessment if those costs are not agreed; and there is no application for an interim payment on account of those costs.