Barrett v Rutt-Field & Ors

The Claimant is the niece of Doreen Alice Barrett, who died on 23 December 1999, and who by her last will, dated 14 October 1994, appointed the First and Second Defendants as her executors. The Third Defendant is the firm of solicitors of which the Second Defendant is a partner. The First Defendant is a Roman Catholic priest, and I was told that the Claimant is a stockbroker, and who lives in Scotland.

The gross value of the deceased’s estate was £279,068.51, which included the value of the freehold property in which she was living at her death, 24 Highcliffe Way, Wickford, Essex, valued at £117,000. Thus, at least in modern terms, this was a modest estate.

Between 24 May 2000, and 14 March 2001, the Third Defendant rendered a number of interim accounts to the First and Second Defendants as executors of the deceased’s estate, together with a final account rendered on 14 March 2001. The total of these accounts, including VAT, is £26,108.88.

The Claimant, who lives in Edinburgh, employed Scottish solicitors to correspond with the Defendants over these bills, and ultimately Essex solicitors were appointed as their agents, and they issued an application, on 5 March 2002, in the Colchester District Registry of the High Court of Justice, seeking an order for detailed assessment of the interim accounts and the final account as set out below:

The matter was fully prepared for, and argued before Deputy District Judge Holmes, sitting in Colchester on 24 April 2003. By his Order he ordered detailed assessment of all the bills, pursuant to Part III of the Solicitors Act 1974, laid down a timetable for the conduct of those proceedings, ordered them to be transferred forthwith to the Supreme Court Costs Office, and, by paragraph 7 of his Order, directed that there should be no order for costs in respect of the hearing before him.

I have been supplied by Mr Stark, as one of the documents attached to his admirable skeleton argument, with a copy of the Deputy District Judge’s judgment. It seems to me that the kernel of his decision is to be found in the last two paragraphs, which read:

The matter was registered as being transferred here from the Colchester District Registry on 6 September 2002, and, for some reason which is not apparent, it was listed for hearing before an authorised costs officer, Mr Baker. That was of course an error, because only Costs Judges and District Judges are authorised to deal with detailed assessments of bills rendered by solicitors to their clients (see CPR 47.3(1)(c). Nevertheless the matter was listed for hearing before Mr Baker on 26 November 2002 with a time estimate of 2 hours.

The day before that hearing Mr Stark, the costs draftsman for the Claimant, contacted the office saying that both sides sought an adjournment because of my decision in Jemma Trust v Liptrott & Forrester in September 2002, which was then known to be under appeal direct to the Court of Appeal.

Mr Baker, realising that this was a Solicitors Act case, ordered it to be transferred to a Costs Judge, and, by coincidence, the case was re-balloted to me. Both parties then sought for the hearing before me to be postponed until the Court of Appeal handed down their judgment on the appeal from my decision, to which I agreed.

That judgment was formally handed down on 24 October 2003, and this case was subsequently listed before me for hearing on 31 December 2003.

At my request both parties supplied helpful skeleton arguments, and, of course, I had the benefit also of the District Registry file and the witness statements, etc, filed there, as well as the solicitors’ complete file of correspondence.

On 31 December the matter was admirably argued before me by Mr Stark on behalf of the Claimant, and Mr West on behalf of the Defendant, both being highly experienced costs draftsmen, and in the case of Mr West someone, who he told me, had had ten years’ experience in the Remuneration Section of the Law Society, which was relevant to the issues I had to decide. Mr West was accompanied by Mrs Matthews, who was the partner who had actually wound up the estate, and she was able to locate important documents quickly, and generally to assist from her first hand knowledge of the case.

Having found the issues difficult I reserved judgment, and it is this reserved judgment which now follows.

The issues before me seem to me to be as follows:

I have already referred to the documentation supplied, and inevitably I was referred to the judgment of the Court of Appeal in the Jemma Trust case, as well as to three other cases by the Claimant, and a number of non contentious cases decided in the 1970’s, by Mr West.

The first issue I have to decide is whether the Claimant is the client, so as to have all the protection afforded to a client by the Solicitors (Non Contentious Business) Remuneration Order 1994, which of course governs this matter. It is common ground that, apart from some modest specific and pecuniary legacies, the entire residue of the deceased’s estate was left to her niece, the Claimant, and therefore she had a very real and personal interest in the outcome, but that of course does not answer the question of whether she is entitled to be treated as a client.

The Remuneration Order in paragraph 2 refers to the expressions "entitled person" and "entitled third party". "Entitled person" means a client or an entitled third party. "Entitled third party" means a residuary beneficiary absolutely and immediately (not contingently) entitled to an inheritance, where a solicitor has charged the estate for his professional costs of acting in the administration of the estate and either:

Mr West, speaking from his experience in the Remuneration Section of the Law Society, explained to me how this definition came about, and was introduced in 1994. He told me, and I am quite prepared to accept and take judicial notice of this contention, that, prior to that date, many beneficiaries under wills sought to have the bills rendered to the estate by the solicitor for winding up that estate made the subject of an application for a Remuneration Certificate. The Law Society became inundated with such applications, and decided to seek an amendment to the Remuneration Order to limit the category of persons who could challenge bills in those circumstances by way of remuneration certificate procedure.

It is clear that on the strict definition set out in the Remuneration Order, the Claimant is not "an entitled third party", because one of the two executors is not a solicitor.

Accordingly, it was submitted to me, very strongly by Mr West, that the "client" in this case was Father Benjamin Rutt-Field, the first named Defendant.

Mr Stark sought to contend that Mr Rutt-Field, if he was the client, owed a particular duty to the Claimant over and above that of an ordinary executor, to ensure that she received the proper proportion of the estate, not unduly diluted or reduced by what might be considered to be excessive charges.

Attractively though the argument was presented, I cannot accept Mr Stark’s argument that Mrs Barrett, the Claimant, can be treated as the client, though undoubtedly, on the wording of Section 71 of the Solicitors Act 1974, she was entitled to make the application that she did, the definition there being different from that contained in the Remuneration Order.

The basis of this submission was the letter sent by the Third Defendant to the Claimant on 18 January 2000. Because of the fundamental importance of this letter I set out its wording in full below:

Mr Stark placed the greatest possible reliance on not only that letter, but also on the documents which accompanied it. One of these was the standard terms and conditions of business. It is unnecessary for me to quote the document in full, but I set out below Section 4, headed "Fees" from that document:

The background to this letter is that the deceased had of course died less than a month before then, and indeed immediately before Christmas. The evidence appears to suggest that the Claimant, and another member of the family, went to her aunt’s house as soon as they knew that she had died, and no doubt made immediate arrangements with the undertakers. Father Ben, the lay executor, was only notified on 29 December, and he promptly instructed Mrs Matthews to act.

However, the Claimant was very concerned that the maximum possible value should be obtained for the house in which the deceased had been living. Bairstow Eves, a local firm of estate agents, were instructed and took the view that a realistic valuation was in the range £110,000 to £115,000, but the Claimant insisted on the property being marketed in the sum of £120,000.

Mr Stark submitted that this acceptance by the executors of the "demand" of the Claimant meant that she was in the position of a quasi client, and ought therefore to have had the same protection as would an entitled person.

He also placed heavy reliance on the fact that the letter of 18 January specifically asked the Claimant to sign and return one copy of the letter, and to supply a copy of her birth certificate (paragraph 4).

In those circumstances both Mr Stark and I were anxious to know what response was received from the Claimant to that letter and its enclosures, and Mrs Matthews produced to me the original letter written by the Claimant on 20 January in respect of which she waived privilege.

As that privilege has been waived I think I can quote the letter in full, which reads as follows:

Mr West argued firstly that there was no such thing as a "quasi client", and that anyway it was quite clear that the Defendants were not treating the Claimant as their client. He contrasted the wording of the letter sent on 18 January to the Claimant with the different wording of the letter sent on 14 January by Mrs Matthews to the First Defendant, and again I think it is necessary to quote this letter in full:

Mr West drew my attention to the very different wording of that letter, and in particular the very first paragraph:

This, he says, contrasts sharply with the first paragraph of the corresponding letter to the Claimant, which reads:

I accept Mr West’s submission that there is a clear distinction drawn in these two letters between the position of Father Ben, as the executor, and the Claimant, as the ultimate, and no doubt extremely interested, and involved beneficiary. He submitted that it was "best practice" to supply the information which was supplied to the Claimant by these solicitors in accordance with the guidance from the Law Society, but that by doing so they in no way elevated her position into one of a "quasi client".

In view of the very "tight" wording of "entitled third party" and the very precise wording of the letters which I have quoted above, I am satisfied that the Claimant in this case cannot be treated as a quasi client.

Neither advocate could quote any authority for saying that there was such a legal "animal" as a "quasi client", and I do not believe there is such a creature, and therefore, on this point, the challenge by the Claimant fails.

Mr Stark sought to say that because only the original quotation contained in the documents accompanying the letter of 18 January 2000 warned the Claimant as to costs, the solicitors should not be allowed to exceed that estimate, at least by more than 15%, on the principle of the case of Wong v Vizards [1997] 2 Costs LR 204, as followed and approved by the cases of Anthony v Ellis & Fairbairn (A Firm) [2000] 2 Costs LR 277, and the much more recent decision, available on the SCCO page of the Court Service website, of Master Campbell in Slade & Slade v Boyes Turner Solicitors (judgment dated 17 October 2003).

Strictly, since I have decided the principal point against the Claimant, this issue does not arise for decision, but, as it was fully argued before me by the advocates, I think it right that I should express a view.

In all the three cases cited in paragraph 37 the client challenged the entitlement of the solicitor to charge more than estimates given for contentious business, whereas of course this case is entirely a non contentious case. I see no reason in principle why the rule, which is well set out in those three cases, and is well understood by the profession, should not be equally applicable to non contentious work.

I do not think there is anything in paragraph 41 of Lord Justice Mance’s judgment, in the Court of Appeal decision of Jemma Trust v Liptrott, that forces me to the opposite conclusion. Part of that paragraph reads:

Then in paragraph 42 of his judgment Lord Justice Mance concludes:

However, as indicated, having found against the Claimant on this point it does not directly arise.

Mr Stark submitted to me that if I was against him, as I have found, in respect of his submissions in relation to "client" and "quasi client" then I would need to be satisfied that Father Ben, as a lay client, was fully aware of the consequences of approving bills on the ultimate residuary beneficiary. He seemed to be suggesting that, because there was one clearly identifiable single sole residuary beneficiary, there was perhaps a higher duty on Father Ben than if there had been a multiplicity of such beneficiaries.

Mr West submitted that an executor, whether lay or professional, has his duties to perform, and I was told, and I think Mr Stark accepted, that Father Ben, though not a professional lawyer, had acted as executor in previous cases, and was aware of the duties and responsibilities of an executor. He would also be aware of his duty to all concerned to ensure that the lawyers did not seek to charge more than they might otherwise have done on the basis that he would not challenge their charges because he had no financial incentive to do so.

I think it would be an unwarrantable extension of the law and practice for me to hold that, in a situation such as this, a lay executor has a higher duty than he would have in other situations.

It is clear that the later estimate of greatly increased costs was put orally to Father Ben, and, though not confirmed expressly in the letter, was also included in the interim distribution accounts.

Accordingly, I am satisfied that the Second Defendant, on behalf of the Third Defendants, discharged her duty to her co-executor, the First Defendant, to keep him informed of increases in the costs likely to be incurred.

During the course of the hearing, when Mr Stark complained that the Claimant received no notifications of costs or of what was going on in relation to the estate between 18 January 2000, and the request two years later to approve the final distribution account, Mrs Matthews was able to locate letters in the file which indicated that interim distribution accounts were in fact sent to the Claimant. I have examined these, and they simply specify details of the numerous securities previously owned by the deceased, which were being transferred into the Claimant’s name.

No doubt by reference to the figures originally supplied, and these figures, the Claimant, particularly as she is a stockbroker, could have worked out what the costs were, but I think it is fanciful to suggest that by giving her these interim distribution accounts the Defendants were in fact giving her notice of their total costs.

If the Second and Third Defendants can be criticised at all in this case, it is perhaps for not continuing with what they describe as "best practice", by supplying copies of interim bills to the client on an "information only" basis. Of course, the question arises as to what would have happened if, having done that, the Claimant challenged those bills.

In an ordinary contentious situation, such as Wong v Vizards, the point behind the case must be that if the client had been fully informed of his financial exposure, he might have chosen either to abort the litigation, or, more likely, to transfer to a cheaper or alternative solicitor, but in a case of probate work, where the solicitors are winding-up an estate, that is not really an option open to the Claimant. Nevertheless, I do think it is best practice for the solicitors to keep the residuary beneficiary fully informed, as indeed Lord Justice Longmore says in paragraph 33 of his judgment in the Court of Appeal in Jemma Trust:

Both parties agreed that it would be helpful if I were to ask each of them in turn to consider the weight to be placed on the various sub-heads of paragraph 3 of the Remuneration Order in relation to the facts of this particular case.

Mr West did not suggest that this case was anywhere near as complex, or difficult, as the Jemma Trust case clearly was (and remains). However, he said it was of average difficulty, and therefore I should give appropriate weight to that factor. Mr Stark did not dissent from that view.

It was agreed between the parties that, in the context of the Remuneration Order, "specialised knowledge" meant knowledge of the estate. Clearly in Jemma Trust this played a significant part, and it was suggested that in this case it played some part, because Mrs Matthews was known to the deceased, and was selected by her as executor for that reason. Again, it was suggested that the skill, labour, etc, was average for a probate case. Mr West suggested it was slightly above average, Mr Stark that it was slightly below.

Here a lot of time was spent on the business, but largely, it was said, because of the very large number of separate holdings which the deceased had in different companies, etc. Mr Stark suggested that this was very routine work, and I think from my reading of the papers that is largely so, but it had to be done, and I think Mr Stark accepted that if there were 67 shareholdings to be transferred, this would inevitably involve much more work than if there was one shareholding to be transferred. Therefore, I think a certain extra element should be added in respect of this sub-head.

I mentioned to the parties that in the Jemma Trust case there is a 198 page opinion of Leading Counsel, and that must point to a situation of complexity and difficulty, and would add weight to paragraph (d). It was not however suggested in this case that there is anything quite in that league, although, inevitably, there were a number of documents which had to be prepared and considered. Both advocates suggested that the word "average" was appropriate for this sub-head.

Both parties agreed that this played no significant part in this matter, since the work was done locally, and it seemed that the charge-out rate being made by Mrs Matthews was lower than that recognised in the local District Registry for litigious work.

Similarly, with paragraph 3(g) this plays no significant part here, because there is no challenge to the charge for the conveyancing of the property previously occupied by the deceased.

The parties accepted that a distinction could be drawn between litigation which would never be brought before the court, unless it was important, and a probate matter which had to be dealt with, but there is an importance to the client because, of course, Father Ben did not have to accept the executorship, and, having accepted it, it would be important to him to see that it was done professionally and properly, but I do not place very great weight on that.

This of course will not apply here in the light of my findings above.

In his final submissions Mr West submitted to me that if I looked at the decisions in the 1970’s, namely Property and Reversionary Investment Corporation Ltd v Secretary of State for the Environment [1975] 1 WLR 1504; [1975] 2 All ER 436, Treasury Solicitor v Regester [1978] 1 WLR 446; [1978] 2 All ER 920, and Maltby v D J Freeman (A Firm) 1 WLR 431; [1978] 2 All ER 913 would suggest that there is no right figure, but a sort of range of figures open to me as a Costs Judge to accept, and that I ought not to reduce the bill by a small amount, of say £500 to £1,000, which might be considered in another context to be "mere tinkering".

For instance, Donaldson J, in his judgment in Property and Reversionary ends with the following paragraph:

In Treasury Solicitor v Regester the same very learned Judge ended his judgment with the following paragraph:

It is to be noted that both the above cases are "property cases", and the only case comparable with this (prior of course to the Jemma Trust case) is the third of the three cases, namely Maltby v D J Freeman, where the last two paragraphs of the judgment of Mr Justice Walton read:

Even in the latest case of Jemma Trust v Liptrott & Forrester the Court of Appeal, whilst giving invaluable guidance to me in the heavy task of assessing the appropriate level of costs in that case, and to the profession generally, came to the conclusion that the ultimate test was what was a fair and reasonable charge overall. Thus, Lord Justice Longmore concluded, in paragraph 31 of his judgment:

Again, Lord Justice Mance says in the last sentence of paragraph 49 of the judgment:

I have given very careful consideration to all the submissions made to me, and have tried to deal with the main ones in the preceding paragraphs of this judgment. I have also had the opportunity to read the correspondence file, and to note the business like approach of Mrs Matthews to queries which arose during the course of the assessment, and I have come to the conclusion that the total charge made in this case, though it may seem high to the Claimant, was not an unreasonable one applying the test in paragraph 3 of the Remuneration Order and as directed by the Court of Appeal judgments in Jemma Trust, and I am not therefore prepared to make any reduction to the bills, which will accordingly stand assessed as delivered.

At the end of the argument, and in the hope of avoiding a further hearing, I asked the parties if they would be content that the costs should follow the event, and both said that they would, though it is clear that the costs incurred before the Deputy District Judge are excluded, because he made no order in respect of them, and that any abortive costs in relation to the hearing before Mr Baker must be excluded.

Subject to that, it is clear that, because I have made no reduction to the Defendant’s bills, the Claimant has failed to have more than 20% reduced from them, and must pay the costs. Revised costs schedules have been submitted to me by request, and, having considered these, I assess the Defendants’ costs at £7,500 inclusive of disbursements and VAT, which sum is payable within fourteen days of the formal handing down of this judgment, subject to any applications in respect thereof that may be made to me by the parties if they attend that hearing.

If the parties accept this, and have no further applications to make, there will be no need for either party to attend when this judgment is formally handed down.