Manchester Messenger February 2024
In the February edition of the Manchester Messenger, the monthly magazine of the Manchester Law Society, Colin Campbell and Nick McDonnell provide a legal costs update.
The most important case this month by a mile is the judgment of the Court of Appeal in Kenig v Thomson Snell & Passmore [2024] EWCA Civ 15, the case being yet another involving the Solicitors Act 1974. If ever a reminder was needed of the words of Vos MR that “I have no doubt that the 1974 Act is in urgent need of legislative attention”, Kenig must be it. One reason for that is that the judgment draws heavily on a Victorian authority (Re Brown (1867) LR4 Eq 464 and even a decision given under King George III, Hazard v Lane (1817) 3 Mer 285! Surely, in 2024, the profession should no longer need to be relying on authorities going back to the days of the horse and cart? In Kenig, the issues, in a nutshell, concern whether, and to what extent, it is open to a beneficiary of a will to challenge legal fees approved by an executor and charged by solicitors to the estate for administering it. This Court of Appeal decision concerns an interlocutory point as to whether the beneficiary is entitled to an order to have those legal fees assessed.
Upholding Master Brown’s decision below, to order the detailed assessment of eight bills on an application by a beneficiary, the Court of Appeal found that he had been right to draw a distinction between s.71(1) (which permits a person other than the party chargeable with the bill, to apply for an order for assessment) and s.71(3) (which enables “any person interested” such as a beneficiary, to obtain an order for assessment where an executor is liable to pay a bill).
That distinction had not been drawn by Sir Timothy Lloyd in Tim Martin Interiors v Akin Gump [2012] 2 Costs LR 325 and his assumption that there was none, had been wrong. It followed that the beneficiary could have bills of £54,410.99 assessed (against estimates given of £10,000–£15,000). The importance of this result is that even if executors have approved the charges, they are still answerable to the beneficiary, as an “interested” person, since the larger the bill, the greater will be the sum by which any testamentary gift will be diminished. That is in contrast to s.70(1) under which the third party (such as a borrower under a mortgage or a tenant under a lease) cannot make any inroads into the fees charged if the party chargeable (such as a bank or landlord) has approved the solicitor’s bill.
Next Part 36. In Morton v Morton [2023] EWHC 3223 (Ch), HHJ Halliwell declined to award the offerors of a successful and effective Part 36 offer the benefits under CPR 36.17(4). The offer had been made at a very late stage of the proceedings, several months after judgment following trial, and on the eve of the taking of accounts. Moreover, it had related to the whole of the proceedings and not merely to the taking of the accounts and was plainly tactical. It followed that it would be unjust for the offeree to pay the additional benefits under the rule, so the Judge declined to allow them.
For a case illustrating the importance of who terminates the retainer as between the solicitor and client, in Sellars v Simkins [2023] EWHC 3296 (Costs), Master Gordon-Saker, gives interesting guidance. The client had terminated a Conditional Fee Agreement “lite” before the case had been concluded by a win (or loss) and gone elsewhere. That gave the solicitors a choice, to “twist”, in which case the firm’s charges would be limited to the costs recovered from the opponent on a win (there was no success fee), or to “stick”, and to claim their costs straightaway. The firm had done the latter, which meant that their fees were not restricted to the amount which might subsequently be recovered from a losing opponent. It followed that, subject to a s.70 Solicitors Act assessment of those costs on the indemnity basis, there was no cap on what the firm could charge its former client.
Finally, for a case on pre and post judgment interest where the relevant currency was euros, see Phones 4U Ltd v EE Ltd and others [2023] EWHC 3378 (Ch). Roth J held that the rate of interest applicable should be related to the currency in which the judgment was given, and that the appropriate rate for borrowing in euros should, accordingly, be the European Central Bank rate.
As always, these are a selection of the principal recent cases which are likely to be of use to practitioners and if any further information is required, please contact either Nick McDonnell or Colin Campbell at Nick.McDonnell@kain-knight.co.uk or Colin.Campbell@kain-knight.co.uk
Download here.
