Watson and Others v Perotti and Another

A judge who changes the reasoning underlying a financial order in a way that may disadvantage a party must give that party a fair opportunity to respond. That opportunity may be oral or, where appropriate, written. An appellate court may reassess a short, self-contained issue where the relevant material is before it, particularly where remittal would cause further disproportionate litigation. The Court of Appeal will reopen an earlier refusal of permission to appeal only in an exceptional case.

The appeal arose from an order made by Neuberger J permitting an attorney administrator to retain remuneration from an estate. The judge initially allowed £35,000 plus VAT, but later reduced the figure to £32,500 plus VAT after discovering that the claimed £52,000 already included VAT. The judge made the adjustment without giving the appellant a further hearing or inviting written submissions, despite his request for a hearing. The appeal concerned whether that procedure was permissible and, if not, whether the Court of Appeal should determine the correct figure.

1. Appeal allowed. The adjustment from £35,000 to £32,500 could not be treated as merely consequential upon correcting the VAT misunderstanding. It departed from the reasoning used in the original judgment.
2. Where a judge proposes to adopt a different reasoning process which may operate against a party, procedural fairness requires the judge to indicate the proposed course and allow oral submissions if requested, or at least written observations. The absence of that opportunity rendered the adjustment impermissible.
3. The Court of Appeal should itself reassess the remuneration because the issue was short, the material was available, and remittal was likely to produce further proceedings. A deduction of £5,000 for unrecoverable costs was retained. The deduction reflecting criticism of the administrator was reduced proportionately, and the allowable remuneration was fixed at £30,000 exclusive of VAT.
4. The order was to be amended so that £34,500, representing £30,000 plus VAT at 15 per cent, replaced the erroneous gross figure of £41,821.20. The amount of any further undertaking and interest had to be calculated by the judge after resolving the amount actually retained and crediting sums already paid.
5. The earlier refusal of permission to appeal on other issues was not reopened. Reopening such an order would be wholly exceptional, and this case did not meet that standard. The application for personal recording equipment was also refused. Costs followed the event.

• Court of Appeal (Civil Division): Appeal allowed from the order of Neuberger J. The remuneration was reassessed at £30,000 plus VAT, with consequential matters left for determination below.