Daniel Kenig v Thomson Snell & Passmore LLP

A beneficiary may apply under section 71(3) of the Solicitors Act 1974 for assessment of solicitors’ bills paid from an estate. The court must consider the interests of the estate and beneficiaries, regardless of whether the executor applies.

Where there is a substantial unexplained discrepancy between an estimate and the bills, that discrepancy may constitute special circumstances. A beneficiary’s application is not barred merely because the executor approved or failed to challenge the bills, or because the beneficiary could have applied earlier.

The restrictions identified for section 71(1) applications in Tim Martin do not govern section 71(3) applications where the estate’s liability is being assessed.

The claimant was a beneficiary of his late mother’s estate. The defendant solicitors had been retained by the sole executor to administer the estate and rendered six invoices substantially exceeding their original estimate.

The claimant sought assessment under the Solicitors Act 1974. It was accepted that he was a person interested in property out of which the executor had paid, or was entitled to pay, the bills, so that section 71(3), rather than section 70, applied.

The issues were whether the invoices were statute bills, whether special circumstances justified assessment after payment and delay, whether privilege or confidentiality prevented an effective assessment, and whether the limitations discussed in Tim Martin applied to a beneficiary’s section 71(3) application.

1. Statute bills. Although the invoices and time sheets gave inadequate detail in places, the executor probably had sufficient information from the documents and his communications with the solicitors to know in broad terms what he was being charged for. The invoices were therefore interim statute bills capable of assessment.
2. Special circumstances. A substantial discrepancy between a solicitor’s estimate and the amount billed generally calls for explanation. Here the bills were approximately four to five times the initial estimate. The apparent simplicity of the estate, senior fee-earner involvement, administrative work charged at substantial rates and inadequate descriptions in the time records provided substantial grounds for believing that a significant reduction might be made. These matters constituted special circumstances.
3. Privilege and confidentiality. The executor’s ordinary administration documents were not shown to be privileged as against the beneficiaries in a way that prevented assessment. A costs judge can consider confidential or privileged material under the safeguards inherent in the assessment process. The possibility of a dispute between executor and beneficiary did not make assessment worthless.
4. Tim Martin. The restrictions identified in Tim Martin concerned a section 71(1) third-party application and did not govern this section 71(3) application. The statutory wording differed, the executor owed fiduciary duties to the beneficiaries, and the assessment concerned the estate’s liability. Re Brown remained binding authority for asking whether costs were proper, necessary or fit for administering the estate. The beneficiary could raise points which the executor could have taken, even if the executor could no longer take them in practice.
5. Delay and discretion. Section 71(4) conferred a discretion. The court had to weigh finality, delay, prejudice and all other circumstances in aggregate. It was not necessary for the beneficiary to prove circumstances making an earlier application impossible. The claimant’s attempts to obtain information, efforts to resolve the issue, reliance on an unwell costs specialist and lack of material prejudice justified the exercise of discretion in his favour.
6. Order. An assessment of all six bills was ordered.