Jemma Trust Company Ltd. v Liptrott & Anor (No.2)

This is my final judgment, having heard evidence, considered documents and listened to submissions from Counsel in relation to a total of 79 bills rendered by Messrs Kippax Beaumont Lewis as Solicitors for the executors Messrs Peter D’Arcy Liptrott and John Forrester of the estate of the late Sir Geoffrey Hulton Bt. These bills total £592,983.40, and come before me pursuant to an order made by Master Moncaster in February 2002 in the course of administration proceedings brought by the residuary beneficiary of the estate Jemma Trust Co Ltd (effectively the deceased’s nephew Mr Hugh Butterfield).

THE BACKGROUND

The background to this long running and complicated dispute was set out in considerable detail in my original judgment, which was handed down on 16 September last year, and is also referred to by the Court of Appeal in their judgment, on a direct appeal from that decision, which was handed down on 24 October 2003 [2003] EWCA Civ 1476. It is neither necessary nor desirable for me to go into any more detail about the background, but certain aspects of the matter will be referred to later in this judgment.

EXCLUDED ITEMS

A number of items which might normally be expected to be contained in some of the bills above, notably counsel’s fees, are excluded, because these were paid direct by the executors, and not put into the form of a bill. They therefore do not fall within the scope of this assessment. They may however fall to be assessed if Master Moncaster makes an order to that effect in the on-going Chancery proceedings. Since reserving judgment, I have been told that Master Moncaster has indeed made such an order, and I have seen it, and, so far as it may be appropriate, "approved" the same. However the assessment of those fees is for another occasion.

In addition there are some further bills from Kippax Beaumont Lewis to the estate for work done by Mr Liptrott as the executor which were not the subject matter of the original reference by Master Moncaster. I understand that Master Moncaster has now directed that those bills too should be assessed, and no doubt they will come before me in due course, but obviously do not form any part of the assessment I have to conduct on this occasion, though their relevance is considered later in this judgment.

THE NEGLIGENCE PROCEEDINGS

There are proceedings by Jemma Trust Ltd against the estate for negligence. I have little knowledge of these proceedings, and indeed have deliberately not enquired too deeply into them, but only sufficiently to satisfy myself that there is no overlap between issues which are properly dealt with in those proceedings, and matters which I can properly deal with in the course of this assessment. I was told by Justin Fenwick QC, who appeared before me to make closing submissions on behalf of the Defendant, that there are two separate sets of proceedings, that they are consolidated, and are due to be heard in March 2004.

BRABNERS CHAFFE STREET’S BILLS

Although Mr Liptrott is the legally qualified executor (with Mr Forrester) of the estate, the day to day work of winding up the estate was carried out by a Mr Marriott, who was employed by Messrs Kippax Beaumont Lewis until some time in 2000, when he left and joined Messrs Brabners Chaffe Street. As the estate has still not been wound up, ten years after the death of the deceased, further bills have been rendered by Brabners Chaffe Street to the executors, and those bills too are being challenged by the Claimant. However, those bills, as I understand it, are bills based on hourly rates only without any value element, unlike the bills which I have to consider in this case.

I have directed a preliminary issue to be heard in February 2004 as to whether the bills sought to be assessed are interim statute bills or not. Again, the existence of these bills is something which I will need to consider in passing later in this judgment.

THE HISTORY OF THE DETAILED ASSESSMENT PROCEEDINGS

This is set out in paragraphs 11 to 16 of my original judgment, down to the date when I heard the preliminary issues early in September 2002.

My decision, in favour of the Claimant, that it is not permissible for solicitors to charge a value element, in addition to a full hourly rate for non contentious business, was taken by the Defendants direct to the Court of Appeal, which overruled me in their judgment referred to above, and in which they gave me, and indeed the profession generally, valuable guidance as to how this case, and indeed other cases of the same nature, should be approached in the future.

In addition to that issue the question of the hourly rate which I have allowed was also challenged in the Court of Appeal. My reading of the Court of Appeal decision is that, if the hourly rate which I had assessed was to be considered to be inclusive of an element representing value, then it was too low, but, at the end of the day, what I had to do is to arrive at a figure that is fair and reasonable to both parties, bearing in mind the Court of Appeal’s decision that such business can now be charged for either on a time only basis, or a value only basis, or a combination of the two. If, therefore, I attribute in my final judgment a value element in addition to an hourly rate (as I do), there is no need for me to revisit the hourly rates already fixed.

It is to be observed that the Court of Appeal judgments were handed down on 24 October 2003, although the oral submissions had been heard by them on 21 and 22 July 2003. Understandably anxious that the matter should not be kept totally in abeyance pending the outcome of the Court of Appeal judgments, I was asked, earlier last year, to fix a date for the hearing of submissions in considering the individual bills in the light of the Court of Appeal judgments, which, it was hoped, might be available earlier than turned out to be the case.

As it happened, the dates finally fixed were in the week immediately following the Court of Appeal judgments, though that had not been the intention when those dates were fixed.

Eight days were allocated for the consideration of the bills. After much time was spent on the first day dealing with the first bill, it became apparent that proceeding in that way would inevitably cause an overrun in the eight day estimate, and was not necessarily the most productive or sensible way of approaching the assessment of these bills.

Accordingly, it was agreed that I should read the numerous files which had been left with me, during the ensuing seven days, and, at appropriate times, should hear from the three principals concerned: Mr Kippax, Mr Liptrott and Mr Marriott, so that they could be asked questions in the light of my reading.

In fact Mr Liptrott gave evidence at the beginning of that period, and Mr Kippax and Mr Marriott towards the end. I did have a number of questions for all three witnesses, but obviously I also allowed Mr Kenny, and his costs draftsman Mr Hiesman, to put questions to the witnesses.

As I made clear when the closing submissions were made to me on 26 November, I was, and remain, somewhat concerned at the way this particular aspect of the matter was conducted. It seemed to me that all three witnesses, none of whom was sworn, were asked questions which were perfectly legitimate questions, because they arose out of matters which appeared on their respective files, but of which they had little, or no, advance notice, and, more importantly, had not previously been given the opportunity to deal with in the form of a witness statement.

As I explained, and as I think all parties are well aware, cross examination of witnesses in the course of detailed assessment proceedings, is unusual, though it is by no means unprecedented. It is the practice within the Supreme Court Costs Office to seek to contain such cross examination to the absolute minimum necessary to decide disputed issues. The necessity for such evidence will normally arise in connection with the question of whether there is a retainer, and if so what that retainer is, in disputes between a solicitor and his client. I normally insist that such disputes are put into written form, in the form of a witness statement, and that the witness concerned is tendered for cross examination. In that way both the witness, and the cross examiner, know what to expect.

In this case, as already indicated, there were no such witness statements, and some of the questions clearly took the witnesses by surprise, and were, if I may use the expression, somewhat combatative. Most of these questions were put by Mr Hiesman, and were based upon his very careful perusal of the files of Kippax Beaumont Lewis, which he had spent many days going through. My concern was that Mr Heisman might have selected, from the many examples which were open to him, those which he thought were most damaging to the Defendant and most helpful to the Claimant, and put those to the witness.

When I put this to the advocates on 26 November, they both seemed to suggest that it was a matter for me to decide the weight to place on the individual answers given to those questions.

In addition to the transcripts of the hearings before me in October, and early November of this year, I was also supplied with transcripts of hearings before me in April of this year when I dealt with property bills, which, it was suggested, could be dealt with in advance of any decision by the Court of Appeal on the then pending appeal.

I have already indicated that I had the opportunity to, and did, go through the files which were left with me during the eight day period in October and November, but in addition I was addressed on the first morning of that eight day period by both Mr Fenwick and Mr Post as to how I should approach my task in the light of the Court of Appeal judgments. The parties also asked, and I agreed, that they could make closing submissions to me after I had read all the papers, and heard the "evidence", and two skeletons were provided shortly in advance of that hearing, which lasted just under half a day on 26 November.

It will thus be seen that I had a wealth of information, both oral and written, to assist me in my decision. Indeed, it could perhaps be said that I was supplied with too much information, though in a case of this complexity that is perhaps an unwise complaint to make!

THE LEGISLATIVE AND REGULATORY BACKGROUND

In non contentious business solicitors’ remuneration is now governed by the Solicitors’ (Non Contentious) Remuneration Order 1994, which was made pursuant to Section 56 of the Solicitors Act 1974, and came into force on 1 November 1994. Although the first two of the bills I had to consider were rendered on 27 April 1994, and therefore fell to be considered under the predecessor of the statutory instrument quoted above, the change in wording is so negligible that the Court of Appeal took the view, which clearly is right, that all parties should proceed on the basis of the 1994 Remuneration Order.

Although they quoted paragraphs 2 and 3 in their judgment, and part of paragraph 3 is quoted in Mr Nicholas Bacon’s (Junior Counsel for the Defendants) skeleton for the 26 November hearing, it is I think useful if I were to set out in this judgment the relevant parts of paragraphs 2 and 3 of the Order, which are as follows:

"8.

Solicitors’ remuneration in relation to non-contentious business is governed by The Solicitors’ (Non-Contentious Business) Remuneration Order 1994 which was made pursuant to section 56 of the Solicitors Act 1974 and came into force on 1st November 1994. The first two of KBL’s eight bills were rendered on 27th April 1994 and therefore it is the predecessor statutory instrument which, strictly, applies to them but nothing turns on the slight difference of wording in the instruments and we need quote only parts of paragraphs 2 and 3 of the 1994 Order:-

" 2. In this Order:-. . . .

"entitled person" means a client or an entitled third party;

"entitled third party" means a residuary beneficiary absolutely and immediately (and not contingently) entitled to an inheritance, where a solicitor has charged the estate for his professional costs for acting in the administration of the estate, and either

(a)

the only personal representatives are solicitors (whether or not acting in a professional capacity); or

(b)

the only personal representatives are solicitors acting jointly with partners or employees in a professional capacity;

. . . . . .

3.

A solicitor's costs shall be such sum as may be fair and reasonable to both solicitor and entitled person, having regard to all the circumstances of the case and in particular to:-

(a)

the complexity of the matter or the difficulty or novelty of the questions raised;

(b)

the skill, labour, specialised knowledge and responsibility involved;

(c)

the time spent on the business;

(d)

the number and importance of the documents prepared or perused, without regard to length;

(e)

the place where and the circumstances in which the business or any part thereof is transacted;

(f)

the amount or value of any money or property involved;

(g)

whether any land involved is registered land;

(h)

the importance of the matter to the client; and

(i)

the approval (express or implied) of the entitled person or the express approval of the testator to:-

(i)

the solicitor undertaking all or any part of the work giving rise to the costs or

(ii)

the amount of the costs."

It is thus apparent that the amount or value of any money or property involved in the estate being administered is a matter to which regard is to be had in assessing the fair and reasonable remuneration to which solicitors are entitled."

The Court of Appeal in their two judgments (those of Longmore and Mance LJJ) deal with the proper construction of those Regulations, both with reference to the facts of this particular case, but also generally for the future guidance of the profession, it being accepted that this case went to the Court of Appeal because it raised matters of more general application than simply the facts of this particular case.

PRELIMINARY OBJECTION ON BEHALF OF THE DEFENDANTS

In his skeleton for the hearing on 26 November Mr Bacon raised a point which, it seemed to be common ground, had never been raised before, either in the Court of Appeal or before me, namely that on the proper interpretation of the Order I could not properly come to a final decision until the estate was finally wound up, and all the bills had been rendered. This is contained in paragraphs 30 to 36 of Mr Bacon’s skeleton, but at the hearing on 26 November Mr Fenwick seemed to accept that perhaps the application of that objection in its full rigour would be unattractive to me, and unsatisfactory for all concerned. He therefore suggested a sort of middle course, namely that if, having completed the task given to me by the Court of Appeal, I came to the conclusion that the bills as delivered were reasonable, then I could, and should, say so, and there would be no need to go further. If, on the other hand, I considered they were too high, then again I could and should say so, but would make no final finding until I had heard and disposed of the outstanding bills, and the estate was wound up.

Needless to say Mr Post, who appeared on behalf of the Claimant on the 26 November, did not support that view, but considered that I ought to proceed on the basis of the bills before me, in accordance with the Order made by Master Moncaster.

I ruled in favour of the Claimant in this respect, and, for the sake of completeness, set out my reasons, in summary form, below.

(A) There was nothing in the order of the Court of Appeal that permits me to adopt the approach suggested by, or on behalf of, the defendant. The order of the Court of Appeal was that the assessment of the bills rendered by the executors to the estate should be assessed by me in the light of the guidance given by the Court of Appeal in their two judgments. They did not, as they could have done, say that I should not deal with them until the totality of the bills had come before, and been assessed by, me.

Mr Post submitted that I could not do what was asked of me in that respect by the Defendants anyway, because of the wording of paragraph 3, which states: "a solicitor’s costs", and does not say "all the solicitor’s costs". He instanced a case of an ongoing family trust where the solicitors were perhaps sacked after a couple of years, but the trust might go on for a generation or more, and it would be totally impracticable if the court was unable to assess the solicitor’s costs in that situation. I agree with Mr Post’s submissions and interpretation, and consider that I should, and must, deal with these bills on their merits, but in addition it seems to me the alternative is simply too appalling to contemplate.

There are, of course, two other bills from Mr Liptrott to be considered, but also a number of bills from the executors to Messrs Brabners Chaffe Street which I have referred to earlier in this judgment, and so far as the latter are concerned they only come before me by way of preliminary issue in February, and presumably, after that, there will have to be a full hearing.

In addition there are of course the negligence proceedings, and it is instructive to note that I was told, by both sides, that when the matter was brought before Master Moncaster again, only a week or so before the hearing before me on 26 November, he refused to make an order which would have allowed tax clearance certificates to be obtained, thereby enabling the estate to be finally wound up pending the outcome of the negligence proceedings.

As indicated these are listed for hearing in March. As Mr Fenwick pointed out it is by no means certain that they will be fought, and as I pointed out even if they are fought, there may well be an appeal, and clearly that must postpone the finally winding up of the estate for a period which, in my judgment, must be at least 18 months from now, and could be much longer.

WHAT PRECISELY DID THE COURT OF APPEAL DECIDE?

As already hinted earlier in this judgment the Court of Appeal seems to have dealt with, as it had to, the merits of this particular case as brought before it, but also sought to give general guidance as to the profession for dealing with this sort of problem in the future. I am only concerned with the specific guidance given to me by the Court of Appeal in this case.

There were two judgments in the Court of Appeal, the first delivered by Lord Justice Longmore, representing the views of him and the Presiding Judge, Lord Justice Peter Gibson, and a second, concurring, judgment from Lord Justice Mance.

Lord Justice Longmore, after dealing with the appropriate scale, and the updating of the old Maltby v D J Freeman scale, concluded his judgment on this point in paragraph 31, which reads:

"31.

It seems to us that, in agreement with Mr Fenwick’s suggestion, some increase in the bands should be allowed for inflation occurring between 1978 when Maltby was decided and 1993 when the bills in the current case were rendered. We do not disagree with Mr Post’s figures for the 1993 position; one would then have the following bands, applicable to cases such as this:

(1)

Up to £750,000

(2)

£750,000 - £3 million

(3)

£3 million - £6 million

(4)

above £6 million.

That would suggest that the appropriate figures for bills rendered for work done in 2003 would be:-

(1)

£1 million

(2)

£4 million

(3)

£8 million

(4)

£12 million.

There was no dispute that if a regressive scale was right at all (as we think it is) the appropriate percentages should be 1½%, ½%, ¹/₆% and ¹/₁₂%. That will then lead to the following figures:-

£750,000 x 1.5% = £11,250

£2.25 million x 0.5% = £11,250

£3 million x 0.1666% = £5,000

£3.362 million x 0.08333% = £2,800

£30,300

We would, however, emphasise the importance of looking at the final figure in the round in order to ensure that the appropriate factors are taken into account in every individual case to arrive at no more than a fair and reasonable remuneration overall."

On the face of it therefore, the Court of Appeal seems to be saying to me that the value element for these bills should be £30,300, and yet, immediately after that, they are saying that I have to take into account everything before arriving at a final figure to ensure that that final figure is "ensures no more than a fair and reasonable remuneration overall".

In paragraphs 45 and 46, Lord Justice Mance quotes the figures which add up to £30,300 (paragraph 45), and then says:

"46.

This compares with the figure of £142,412.50, which the appellants have charged on a percentage basis taking an estate value of £9,362,000, and with further fees of some £386,459 (it being unclear whether or not they include VAT) which they have charged on an hourly basis. The knowledge that there would be charges totalling £30,300 (or even £142,412) cannot have added to the "certainty" of the position of the person billed, bearing in mind the far greater exposure to future hourly fees. This is not a case, like Maltby, where the value element could give some guidance as to the appropriate overall costs; the appellants here made clear throughout that they were charging on a dual basis."

He goes on to conclude in paragraph 47:

"47.

Moreover, the relative smallness of the figure arising from a percentage calculation based on the updated bands given in paragraph 30 is capable of leading to questions about the utility of such a basis of charging, at least in a case such as this. If one considers what percentage uplift on the basis hourly rate would have been necessary to achieve an extra £30,300, without any separate charge based on a percentage of value, the answer also appears to be a little under 10%. All these points may of course suggest to the costs judge that some other bands or percentages or a different approach should be adopted in the circumstances of this case, but they do appear to undermine any general suggestion that charging on a dual basis offers any particular advantage to the client in terms of certainty."

In his detailed skeleton Mr Bacon suggests various methods of approaching the calculation, all of which indicate that the figure of £30,300 should have attached to it very little, if any, weight. In paragraphs 48 and 49 of his skeleton he deals with the points which I have mentioned above, and concludes in paragraph 50:

"50.

It is clear from these comments that little emphasis if any is being placed on the £30,300."

Mr Post, on the other hand, said that that was the figure that I had been directed by the Court of Appeal to find, but he accepted that at the end of the day I had to comply with the wording of the statutory instrument, and had to assess the costs at:

"such sum as may be fair and reasonable to both the solicitor and entitled person having regard to all the circumstances of the case …,"

My overall reading of the two judgments of the Court of Appeal is that, at the end of the day, it is for me to take all factors into account in arriving at what I consider to be the appropriate figure. Applying the so called updated Maltby regressive scale is one of those factors, but by no means the only, or indeed the decisive one. I am persuaded by Mr Bacon’s skeleton, and Mr Fenwick’s advocacy, that that is correct, and that I am in no sense bound by such a low figure, if, as I do, I find that it does not represent a proper assessment of the value element in this matter.

THE COMPETING CONTENTIONS OF THE PARTIES

These are conveniently set out in the skeletons, which I found extremely helpful. In summary Messrs Fenwick/Bacon submitted that the bills, as delivered, were fair and reasonable taking into account all the circumstances, both to the client and solicitor, and ought not be reduced at all. On the other hand Mr Post suggested that I should make two types of reduction, firstly specific disallowances, and secondly unspecified work in Mr Marriott’s bills. Thirdly he suggested that there were three specific bills which I did look at as individual bills , namely those numbered 2687, 1174 and 2411, where I ought to make specific deductions. Then he dealt with what he described in his skeleton as general disallowances.

It seems to me that it would be helpful for me to deal with the individual points, or objections, put in the objection by Mr Post, and then conclude with my overall assessment and decision, and that is how I propose to proceed in the rest of this judgment.

Objection 1 - Individual bill points

I have decided to make no reductions in respect of any of these bills for the following reason. They were taken somewhat at random by Mr Hiesman, and examined as such, but, although I can see the force of the arguments put forward in respect of each of the individual bills, it seems to me that it would be wrong to make deductions for these specific bills when many other bills were not considered at all. Originally, as indicated in paragraph 13 above, the detailed assessment proceeded on the basis that each bill was going to be considered in turn, but that approach was discarded as soon as it became apparent how long this exercise would take. The attempt to persuade me in the skeleton to disallow certain items from individual bills based on points put (without advance warning) to witnesses seems to me wrong, and I therefore do not think it appropriate so to do.

Objection 2 - Unrecorded time

Mr Post boldly suggested that if the time was not recorded in attendance notes, then it should simply be disallowed. He referred, in paragraph 11 of his skeleton to the well known authorities in relation to unrecorded time, but, as he rightly and readily conceded, all those cases relate to contentious matters. In such cases it is obviously right that the solicitor should record not just his time, but what he was doing in relation to it, so that the propriety of the bill can be ascertained and tested.

The question which I have to resolve in this case is whether the same principle should apply to non contentious work. I suggested during the hearing of 26 November, and indeed at earlier hearings as was pointed out to me by Mr Fenwick, the approach of solicitors to non contentious work has always been different from that to contentious work.

This may be because such work tends to be remunerated by way of scale and/or value, but it may also be because it is simply not cost effective to record all the steps that are taken on an individual file in a probate matter which covers a considerable period because of the vast amount of detail that is necessary.

Mr Post suggested in his submissions that in a very substantial estate, or one where issues are raised, then it is incumbent on the solicitor to keep proper records. However in this particular case Mr Liptrott was a co-executor with Mr Forrester, who had been the deceased’s land manager for many years, and there was no particular reason for either of them to record routine matters which were well known to both of them.

The difficulty with the secondary argument is that it is hard to see when Mr Liptrott should have started keeping records in this case. Should it have been when Major Reynolds first started "being difficult", should it have been when Mr Butterfield threatened to have him removed as executor? If not at what other time should the taking of notes have been initiated?

It has always been the situation, even in contentious business, that a solicitor may be able to establish his entitlement to payment, other than by means of an attendance note. Certainly the absence of any attendance notes will tell against the solicitor, but there can be other evidence. For instance, if the solicitor has failed to keep an attendance note of a conference with counsel, but counsel’s fee note indicates that there was a conference and that it lasted the same length of time as the solicitor claims, then that would normally be acceptable evidence that there was a conference of that duration. In this particular case there are of course time sheets, and the time incurred by both Mr Liptrott and Mr Marriott is recorded thereon. It has been objected that there is no detail as to why a particular meeting took say 5 hours rather than 2 hours, and that of course is true, but that does not seem to me to be justification for disallowing the time simply because there are no detailed attendance notes.

In addition Mr Fenwick referred me to an unreported case of Pesskin v Mischon de Reya [2003] EWHC 1745 (CR) a decision in 2003 of Mr Justice Etherton. At my request he has provided me with a transcript of that judgment. It is a detailed and lengthy judgment running to no less than 184 paragraphs delivered following a professional negligence action lasting some three weeks in the second half of June last year.

Having read through the judgment I have come to the conclusion that only three paragraphs are of relevance to the issues I have to decide, and then only tangentially. In paragraph 81 the Judge said this:

"81.

In reaching these conclusions that, on a balance of probability, the meaning and effect of Article 29.2 was explained to Mr Pesskin both on 3 September 1997 and 22 September 1997, I have taken due account of the following further points. In the ordinary course, it would be surprising if a solicitor acting for Mr Pesskin, on such a transaction as the Innisfree investment in the Healthgate Group, did not write to Mr Pesskin recording important points on the draft documentation, including the meaning and effect of Article 29.2 and its potentially draconian consequences. In the present case, the written advice from the Defendants to Mr Pesskin was exiguous in the extreme. The letter of 26 August 1997 from Ms Gestetner, to which I have referred earlier, was extremely brief. There was no letter confirming the advice given at the meeting on 3 September 1997 or which in any way attempted comprehensively to advise Mr Pesskin on the alterations by the Defendants to the travelling draft which they sent to Lovells following that meeting. The absence of such written confirmation of advice was not best practice. The seventh edition (1996) of The Guide to the Professional Conduct of Solicitors issued by the Law Society states in 13.04:

"6.

Solicitors should consider whether it is appropriate to confirm in writing the advice given and instructions received. Confirmation in writing of key points will both reduce the risk of misunderstanding by clients and assist colleagues who may have to deal with the matter."

82.

If that recommended course had been followed in the present case, the huge cost of these proceedings would, on my findings, have been avoided. There were, however, special circumstances, in relation to this aspect, governing the relationship between Mr Pesskin and the Defendants. Ms Gestetner’s evidence was that Mr Pesskin preferred communications by telephone or in meetings rather than by letter, and that he did not like to receive detailed letters from the Defendants. She recalled that he said at a meeting that he did not want to be bothered with letters of advice, as he was a lawyer and could read legal documents, and letters only increased costs. Mr Gordon also gave evidence that Mr Pesskin’s preference was that he should ordinarily not receive written advice and correspondence. I accept that evidence. I further accept the evidence of Ms Gestetner that she and Mr Gordon were in the habit of taking Mr Pesskin carefully through each page of the draft documents in meetings, precisely because they were not in the habit of advising him extensively in writing.

83.

Mr Pesskin placed considerable reliance, as I have said, on the absence of any reference to Article 29.2 in the contemporaneous notes of Mr Gordon and Ms Gestetner, whether such notes recorded telephone conversations with Mr Pesskin or discussions at meetings with Mr Pesskin or otherwise. In a case in which, for whatever reason it is not the practice of the solicitor to confirm in writing advice on key points, it would seem, at the least, to be good practice for a solicitor to record such key points in his own notes for same reasons that were stated in 13.04 para 6 of the seventh edition of The Guide to the Professional Conduct of Solicitors which I have quoted above, and which are repeated in the current edition of the Guide. Surprisingly, neither the seventh nor the current edition of the Guide makes any such recommendation. Again, if key points had been recorded by Mr Gordon and Ms Gestetner in the present case, then, on my findings, these proceedings would almost certainly have been avoided."

It seems to me that the Judge in that case was commenting that the vast expense of that litigation could have been avoided had the solicitors kept more detailed attendance notes, but for reasons which he gave at length in his judgment he concluded that the plaintiff had failed to establish his case, notwithstanding the relative paucity of attendance notes for critical meetings.

Whilst I accept that what the Judge in that case said in relation to the wisdom of recording attendance notes in potentially critical situations is important, and that perhaps the Law Society’s Guidance on the topic could be tightened up, I have come to the conclusion that, whilst very grateful to Mr Fenwick for drawing my attention to the case in question, it does not really assist in this case.

In the Pesskin case it was possible to pinpoint a particular omission that might have been recorded in writing, whereas in this case it is simply argued that because there are no attendance notes over a protracted period the Defendants should not be entitled to charge for that time.

Objection 3 – Failure to delegate appropriately

Mr Post suggested that in a case of this nature there is certain routine work which could and should have been delegated to lower charging fee earners which would have reduced the amount of the bills. Mr Fenwick pointed out that delegation does not always achieve the objectives that it is intended to do. Firstly, the person delegating has to explain to the delegated person what is required of him or her, secondly the delegated person has to understand sufficient of the underlying facts to be able to do the job intelligently and economically, and thirdly the person delegating has to check the work done by the delegated person. Mr Fenwick suggested that in this particular case it would not have been cost effective to have delegated, and indeed took a specific example of where it would not have been so effective. This related to the difficulties over the funeral and the headstone raised by Mr Butterfield. Clearly it was not simply a question of ordering flowers for the funeral, it went deeper than that, and Mr Liptrott, with his knowledge of the estate, was probably in a better position to deal with it than to seek to delegate it. Therefore I do not think that the allegation of insufficient delegation can be sustained.

Objection 4 – Failure properly to organise the files

This seems to me to be a very minor and unimportant objection. The executor, Mr Liptrott, kept all the correspondence on one file, and it was suggested to me that it would have been better if he had kept separate files for say income tax, estate duty, etc, etc, but, as Mr Fenwick pointed out, had that happened, there would inevitably have been letters that related to more than one aspect, and the question would have been how to file such letters, and indeed where to find that particular problem. I do not therefore think that any criticism can be levelled against the executors in respect of their organisation of the files.

Objection 5 – Failure to implement a computer accounting system

This again seems to me to be a relatively minor issue. It seems clear that the accountants recommended the SAGE software package at the end of the first year after the deceased’s death, and this was not implemented, but from my reading of the files, I am not satisfied that this added to any great extent to the overall expense, and therefore charging made for this work.

Objection 6 – Failure to progress the administration

Mr Fenwick submitted that this is dangerously close to the allegations of negligence, and indeed mentioned that I myself had made that suggestion at earlier hearings, as appears from the transcripts. When I come to deal with my assessment of the case overall, I intend to deal with this aspect, but it is sufficient at this stage to say that I do not think that the executors are to be penalised for the long delay which has occurred in the winding up of this estate. Indeed I would prefer to say that they should not be penalised for the long period that has elapsed since the deceased’s death without the estate being wound up, which expression more accurately and neutrally describes what has happened.

Objection 7 – Duplication between work done by Mr Marriott and Mr Liptrott

In paragraph 16 of his skeleton and closing submissions Mr Post said this:

"16.

Mr Liptrott as executor and Mr Marriott as solicitor to the executors often undertook the same tasks. They frequently attended the same meetings. As a solicitor executor Mr Liptrott should either have undertaken routine legal tasks himself or should have left all legal tasks to Mr Marriott, and restricted his activities to the non-legal aspects of executorship. His approach fell between those two stools, meaning that both he and Mr Marriott appear to have undertaken many hours of work that was duplicated."

In response to that suggestion, Mr Liptrott said in evidence that it was never anticipated by the testator that he, Mr Liptrott, would be responsible for the winding-up of the estate, but that he would pass this to someone else within the office, that person in fact being Mr Marriott.

On the whole I think that both of these persons did their respective duties, Mr Liptrott’s duties as executor and Mr Marriott’s as the solicitor dealing with the actual day to day winding up of the estate. Nevertheless I do think that there was a degree of overlap between what each was doing, and this will be reflected in my final conclusion.

EFFECT OF THE ABOVE POINTS

In his skeleton, in paragraph 18, Mr Post suggested that taking the above issues cumulatively it would appropriate to make a 30% disallowance in the hours claimed by the Defendants in this case. Mr Fenwick in his submissions said that that was a totally arbitrary percentage, and that, even were I to hold that Mr Post was right in each and every one of those objections, that of itself could not possibly justify a reduction of 30% in the time. I accept Mr Fenwick’s submissions in that respect. This is not a case for adding up the successful objections and then making a global reduction.

VALUE

Mr Post on behalf of the Claimant does not seek to suggest that the figure of £30,300 referred to by Lord Justice Longmore in his judgment should be determinative, but emphasises the point, which is quite clear from the reading of the entirety of their Lordships judgments, that care needs to be taken not to allow the Defendants double recovery by firstly increasing the hourly rates to include a greater element of value than they presently include, and secondly by increasing the value element itself.

Mr Bacon in his submissions suggests, by the application of various different tests, that the figures claimed in the present bills are in fact correct and there ought to be no reductions, in particular in paragraph 14 of his skeleton Mr Bacon says:

"So that in end the value element charge of £216,043.10 is fully justifiable. We address the arguments in support of the justification for the overall charge on the value element later in this skeleton."

This appears in paragraphs 23 to 29 of his skeleton:

"23.

There is now no doubt that solicitors can charge value in addition to charges based purely on time. What must always be borne in mind is that the "solicitor is entitled only to what is fair and reasonable remuneration, taking all relevant factors into account" [para 23 of Court of Appeal judgment]. Indeed, quite apart from upholding the principle that value can be billed in addition to time, the Court of Appeal said in this particular case that the amount of time spent on the administration whilst not being insignificant is not to be treated as determinative of the reasonableness of the overall charge. [para 25 of judgment].

24.

It is and was appropriate for KBL to charge a value element (initially) at the rates recommended by the Law Society provided that it is remembered that, at the conclusion of the business, the question is whether the overall remuneration is fair and reasonable taking into account all the relevant factors set out in the Order. [para 29 of judgment]. Nothing that the Court of Appeal has said undermines in any way KBL’s initial valuation or assessment of value based on the 0.75% and 1.5% guidance.

25.

It is only once the business is completed that the determination of the fair and reasonable figure can be ascertained. [para 24 of judgment]. There is an obligation on the solicitor to review the matter as a whole at the end of the business so as to ensure that he has claimed no more than is fair and reasonable. [para 33(2)].

26.

Whilst a regressive scale may be appropriate it is vitally important to have in mind the final figure in the round in order to ensure that the appropriate factors are taken into account in every individual case to arrive at no more than a fair and reasonable remuneration overall. [para 31 of judgment]. Different bands and percentages will be appropriate depending upon the case [para 33(4)]. See also pages 2-18 of the transcript 28^th to 30^th October 2003.

27.

There is no hard and fast rule that charges cannot be made separately by reference to the value of the estate; value can, by contrast be taken into account as part of the hourly rate; value can also be taken into account partly in one way and partly in the other. [para 33(3)]

28.

It may be helpful at the end of the business for the solicitor or, if there is an assessment, for the costs judge, when a separate element of the bill is based on the value of the estate, to calculate the number of hours that would notionally be taken to achieve the amount of the separate charge. That may help to determine whether the overall remuneration claimed or assessed is fair and reasonable within the terms of the Order.

29.

It is open to the Court when assessing the "fair and reasonable sum" to cost out the time spent on the matter by reference to the solicitors expense rate and calculate "uplift" by ascertaining the difference between that sum (the cost to the solicitor of the time spent on the matter) and the final figure claimed. The difference will be the "uplift". The uplift or mark up as it is known in the context of contentious business when added to the cost of the time spent can then be judged by reference to the requirement that this total figure must represent "such sum as may be fair and reasonable."

As to the final figure Mr Post says this in paragraph 26 of his skeleton:

"In relation to that issue it is proper to have regard not only to the total amount charged by these solicitors to date (£647,627.56), but also the £140,000 odd charged by counsel, the sum of more than £134,000 charged by the accountants and the sum of more than £196,000 charged by Messrs Brabners, the firm to which Mr Marriott has moved. The effect of all those elements is that the sum charged to the estate to date by the lawyers and accountants is some £1.1 million."

One of the difficulties with his submission is that of course it runs counter to the arguments he addressed to me in relation to the question of when I should finally resolve this question (paragraphs 26 to 31 above), and that this assessment should be deferred until I have considered all the bills and I have already decided that I should resolve the issue of these solicitor’s bills, notwithstanding the outstanding issues between the parties.

At the very end of his detailed and lengthy final submissions Mr Bacon, after arguing in paragraph 73 that I should defer the final determination, which submission I have rejected, concludes with the following two paragraphs:

"74.

If the Court is minded to assess the fair and reasonable sum at this stage, we strongly contend that this is a case which clearly justifies and demands the level of charges that have been levied by KBL. This was an enormously difficult administration requiring particular skill and expertise, considerable diligence and an abundance of patience as part of the reaction to the way and manner in which Mr Butterfield chose to conduct himself. It is a case clearly deserving of an exceptional "B" figure uplift (not that that would be required to justify the value elements charged) and is unquestionably a case deserving even on the most basic of analysis a 75% notional "B" figure. That being the case the amounts charged are unquestionably reasonable and capable of being shown as such.

75.

The Costs Judge has seen the level of work and responsibility undertaken in this case and we rely upon his experience to impose on this case a perfectly rational allowance of at least 75% by way of notional B figure uplift to the expense rates already allowed. To allow any less than that wholly undermines and fails to pay sufficient or any regard to the genuine difficulties, responsibilities and amongst all, the high degree of professional skill and expertise deployed by KBL in the winding up and administration of this estate."

MY ASSESSMENT OF THE DOCUMENTS AND EVIDENCE

As indicated earlier in this judgment I have been supplied with a wealth of information and have had ample time to go through Mr Liptrott’s and Mr Marriott’s files, and indeed, so far as relevant, those of Mr Kippax, and I have had the benefit of hearing evidence from all three of those witnesses.

My overall assessment is that although the administration of this estate has taken longer than the residuary beneficiary would have wished, this is not the fault of the Defendants for the following reasons.

Firstly, the estate was and remains, complex. Primarily consisting of land, there were numerous problems and difficulties which arose in connection with it. There were questions of planning permissions, of options to sell, to mention only two. These were not by any means susceptible to an early resolution, and in my judgment it would have been wrong for the executors to have rushed into winding-up this estate simply "to get if off their hands". They both felt, quite understandably, a great loyalty to Sir Geoffrey and wanted to carry out his wishes as they understood them to be, but, of course, in accordance with their duties as executors.

I also observed all three of these gentlemen in the witness box, although, as already indicated, the evidence they gave was unsatisfactory, in the sense that it was unstructured and unprepared for. Having said that I am quite satisfied that each of them was doing his very best to deal with and conclude a very substantial, and in some ways very complex, estate.

That of itself would necessarily have resulted in substantial costs, but there were two additional factors, which in my judgment substantially increased the costs which have been incurred. The first is the "intervention" of Major Reynolds. This is touched on in paragraph 50 above. Major Reynolds of course became the guardian of Lady Hulton, and it is clear that he was zealous to protect her interests in general, and in particular to ensure there was a steady income stream to keep her in the manner to which she had become accustomed during her late husband’s life time. All that is entirely proper and perfectly commendable, but from my reading of the correspondence files it is quite clear that on several occasions Major Reynolds went much beyond that and sought to "interfere" in the administration of the estate.

Major Reynolds had a number of firms of solicitors, and one at least of those firms advised him that he was going too far, and appeared to have been sacked for their pains. Later however the same firm was reinstated, and confirmed that they had once again explained to Major Reynolds how much information he could request and how far the executors were obliged to deal with his requests.

I am satisfied that there was a substantial amount of additional correspondence generated as a result of Major Reynold’s requests, some at least of which in my judgment were unreasonable requests.

Whilst it could perhaps be suggested that in that situation a trustee or executor could simply ignore unreasonable requests, that would be a dangerous course to adopt, and in my view Mr Liptrott, and to a lesser extent Mr Marriott, were perfectly justified, and indeed it was right that they should deal with numerous letters they received from Major Reynolds on their merits, even though they privately no doubt felt that he was interfering where he had no business to be doing so.

To some extent the same criticisms can be mounted against Mr Butterfield. Two points need to be borne in mind concerning Mr Butterfield’s conduct. The first is that until Lady Hulton’s death he did not have a vested interest, but only a contingent interest in the residuary estate, though the correspondence from him seems to proceed on the basis that he will inevitably become, as indeed he did, entitled to a vested interest, and accordingly that he could behave as if he were already the ultimate beneficiary of that entitlement.

Secondly, it would appear that Mr Butterfield himself, in his professional capacity, does work of this nature in relation to off-shore trusts, and so felt himself able to write robustly to the executors telling them how they should run the winding-up of the estate.

Reference has already been made to Mr Kippax’s involvement which became necessary because of an express threat by Mr Butterfield to apply to remove Mr Liptrott as executor. As Master Moncaster points out in his judgment, in February of this year, those criticisms were not justified.

For instance Master Moncaster says in paragraph 6 of his judgment:

"6.

The relationship between Mr Butterfield and the two defendants has for some reason been very strained. Partly that may be because Mr Butterfield himself is an expert in trust administration, having devoted his whole career to it offshore and therefore he is not the ordinary client or beneficiary prepared to put himself in the hands of his trustees because he knows as much and I think he considers he knows more about the matters in question than they do. By the start of the story as far as I am concerned in September last year one can see the unhappy state of relations by a letter written by Mr Butterfield to Mr Stephen Marriott."

Then, after going into the matter in considerable detail in connection with the costs application, Master Moncaster says this, in paragraph 34 of his judgment:

"34.

Then, after that hearing, nothing of substance, as I have said, seems to be thought by the parties to be left, and I just have to decide the question of costs. On that history it seems to me that the trustees have not been unreasonable. They have been doing their best to deal with a very difficult beneficiary. They have not been guilty of misconduct. It is extremely unfortunate that the administration of the estate has proved so very difficult but in the period with which I have been concerned that difficulty has been increased many fold by the badgering of the defendants by the beneficiary. I can understand to some extent his frustration but his intervention has only made matters far worse and has not made them better and has caused quite disproportionate amounts in costs to be run up which I am afraid are going to fall upon his trust fund. I repeat I am not concerned with fixing the quantum of the costs, this is a matter for the Costs Judge.

My reading of the files entirely endorses what Master Moncaster said in the penultimate sentence of paragraph 34 of his judgment.

MY CONCLUSION

This was never an easy case to assess, and whilst I am extremely grateful to the Court of Appeal for the specific guidance that they have given me as to how I should approach my task, in my judgment it remains a very difficult one.

I have concluded that taking fully into account the guidance which the Court of Appeal has laid down before me it is unnecessary for me to revisit the hourly rates which I fixed because I can, and am now going to, determine the final amount of the bills on the basis of what is fair and just to both parties.

In paragraphs 7 and 8 of his skeleton Mr Bacon sets out his understanding of the present claims:

"7.

The total invoices delivered by KBL in relation to the administration of the estate between 25 November 1993 and 30 July 2003 (last invoice delivered to date) amount to £604,751.54 plus VAT. We refer to Attachment No.1 herewith setting out a list of the invoices and their totals. For the purposes of the present argument (that is to assess the fair and reasonable solicitors charges) we have to take out disbursements charged within the £604,751.54 which leaves a total of £592,983.40 plus VAT for KBL’s charges.

8.

The total value element of the charges up to July 2003 is £226,019.55 (including value on the property bills). The value element on the properly bills (which invoices are included in arriving at the total of £604,751.54) is £9,976.55 including services increments which have been allowed (see page 3 of 1^st April 2003 transcript). The value element on administration of estate work (excluding property) included in the £604,751.54 is £216,043.10. The table below sets out that latter sum:

Analysis of Value Element Bills
Date	Bill No.	Amount
27/04/1994	1116	£30,450
27/04/1995	1001	£30,450
27/11/1996	2559	£6,871.55
27.04/1994	1118	£30,450
25/04/1995	963	£30,450
28/11/1996	2570	£6,871.55
15/03/2000	2687	£34,500
26/07/2000	1174	£46,000
Total		£216,043.10"

The hourly rates allowed, multiplied by the number of hours claimed, gives a total of £376,940.30, to which has been added value to the total of £216,043.10. Left out of account is of course VAT, and also counsel’s fees and later bills.

I consider that a 5% reduction in the total hours claimed is appropriate to reflect the fact that I believe there is a degree of duplication between the work done by Mr Liptrott and of Mr Marriott. This reduces the claim for timed hours to £358,093.29.

Turning to the question of value, I think that the actual wording of paragraph 3 of the remuneration order needs to be considered sub-section by sub-section in order to arrive at a correct valuation.

Paragraph 3(a) refers to the complexity of the matter or the difficulty or novelty of the questions raised. This is a factor which in my opinion was important in this case.

Next paragraph 3(b) refers to skilled labour, specialised knowledge and responsibility involved that has to be considered, and, here again, this was in my judgment high.

The next sub-paragraph, paragraph 3(c), deals with time spent on the business, and I have already touched on that and reduced the claimed time by 5% for the reasons given.

The remuneration order then requires, paragraph 3(d), the number and importance of the documents prepared or perused without regard to the length to be considered. There are certainly an extremely lengthy, albeit draft, opinion of Mr Venables QC, and other important documents which had to be considered, so I place a high value on that aspect of the case.

As to the place where and the circumstances in which the business was transacted I do not think this played any significant part here. The estate was being wound up by solicitors local to the land and to the parties, and no great travel, either overseas or indeed in this country, was involved, and that should therefore not attract much by way of addition to the value element.

Paragraph 3(g) similarly the fact that not all the land was registered does not in my opinion add very much to the burden on the solicitors to justify an increase in value.

I am next enjoined to consider the importance of the matter to the client (paragraph 3(h)). Clearly if "the client" means Mr Butterfield, then it was extremely important to him, as he made very clear in correspondence from the outset. However, it was equally important in a sense to the executors and to Mr Marriott to ensure that the work was properly carried out, and this should be reflected in the value.

Finally (paragraph 3(i)), I am told to give consideration to the approval, express or implied, of the entitled person to:

"(i)

the solicitor undertaking all or any part of the work giving rise to the costs; or

(ii)

the amount of the costs."

It is common ground that no estimates were given to Mr Butterfield or Jemma Trust in advance, or indeed, so far as I can see from my reading of the papers, to any other party. The Court of Appeal in their judgment, in particular the general guidance to the profession given by Lord Justice Longmore, puts at the very head of their list of recommendations the strong advice that, in situations such as this, residuary beneficiaries should be consulted, and of course that was not done in this case.

I have come to the conclusion after taking into account all the factors laid down by the remuneration order, all the submissions made to me by the advocates, and on my perusal of the documents, consideration of the transcripts and evidence given by the witnesses, that the fair and reasonable charge for these bills, which is both fair and reasonable to the solicitors, as well as to Jemma Trust, is the total sum of £500,000. This of course equates to a value element of £141,906.71, which is considerably in excess of the £30,300 which the application of an updated regressive Maltby v D J Freeman scale would suggest, but I do not think that the application of such a scale would produce the right result in this case.