PI Brief Update

Court of Appeal examines rules relating to the assessment of fees charged by solicitors - Nancy Kelehar, Temple Garden Chambers

24/01/24. Kenig v Thomson Snell & Passmore LLP [2024] EWCA Civ 15. Date of Judgment: 18/01/2024.

The Claimant/Respondent is the beneficiary of his mother’s estate. He sought to challenge the fees charged by the solicitors and applied to the Court for an assessment under section 71(3) of the Solicitors Act 1974 (“the 1974 Act”). He issued proceedings 8 months after the last invoice was delivered to the executor. The solicitors argued that it is not open to a beneficiary to challenge legal fees that have been paid from the proceeds of the estate.

At first instance, the Costs Judge addressed the questions of whether the bills called for an explanation and whether there were ‘special circumstances’, answering both questions in the affirmative. He referred to the scale of the “very substantial” discrepancy between the original estimate and the costs claimed; the speed with which the initial estimate was exceeded; the absence of information that either justified the discrepancy or came close to doing so; and specific matters in the bills that gave rise to possible concern.

The Costs Judge held that the restrictions set out in paragraph 95 of Tim Martin Interiors Ltd v Akin Gump LLP [2011] EWCA Civ 1574 did not apply to a section 71(3) assessment. Those restrictions are set out at paragraph 49 of Kenig. On appeal, the solicitors argued that: (a) the Tim Martin principles should be applied on any such assessment; and (b) application of those principles means that any assessment of their bills on the application of the beneficiaries would be fruitless and therefore should not be allowed.

The Court of Appeal conducted a detailed examination and comparison of the relevant provisions of sections 70 and 71 of the 1974 Act (set out at [7]). After considering the legislation and caselaw in detail the Court of Appeal held that:

• There is no statutory definition or description of what may amount to “special circumstances” such that the court can exercise its discretion. The circumstances need not be exceptional and the question whether special circumstances exist is essentially a value judgment.
• There are material differences between applications under section 71(3) and those under section 71(1) because of the different nature of the interests of the third party that the different sub-sections are intended to reflect.
• There is no rational basis for transposing the principles that apply to a section 71(1) assessment, as identified in [95] of Tim Martin, to the different circumstances of an assessment pursuant to section 71(3).
• The Costs Judge was correct to find that Tim Martin should be distinguished and that the relevant principles to be applied are derived from In re Brown.

Therefore, the appeal by the solicitors was dismissed and the Court of Appeal upheld the order that there should be an assessment of the bills under section 71(3).

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