The rights of will beneficiaries to challenge the fees of the solicitor instructed by executors comes under scrutiny

Kris Kilsby is a council member of the Association of Costs Lawyers and Costs Lawyer at Paramount Legal Costs. His colleague Christine Marsh is one of the speakers at the Wills and Probate Conference on 13th March 2025 in Leeds. Book your tickets here

The decision of Costs Judge Brown in Daniel Kenig v Thomson Snell & Passmore LLP [2023] EWHC 181 (SCCO) is an important one for all solicitors who practise in the administration of estates because it could have just opened the door for beneficiaries to bring applications under s.71 of the Solicitors Act 1974.  

The claimant and his sister were the sole beneficiaries of their late mother’s estate in this matter. The defendant solicitors were retained by the sole executor of the will and the deceased’s brother, who played no active part in the application.

There was a formal engagement letter between the executor and the defendant solicitors which set out the likely costs to be incurred. Copies of this engagement letter were sent to both of the beneficiaries. The original costs estimate for the fees was between £10 - £15k plus VAT and expenses. However, the total invoices raised by the defendant solicitors amounted to over £54k, plus VAT and expenses. It should be noted that the gross value of the estate amounted to almost £3 million (£2,881,000).

The claimant sought to challenge the defendant solicitors’ bills and sought an assessment under the Solicitors Act 1974. The claim form was issued eight months after the last invoice was delivered.

Furthermore, the claimant sought to rely on s.70 of the Solicitors Act which was in fact the incorrect route to seek an assessment because s.70 relates to applications for assessment by those chargeable with the bill. Given the contractual relationship only existed between the executor and the defendant solicitors it could not be said that the claimant was the individual liable to be charged. Instead, the claim form should have intended to rely upon s.71(3) of the Solicitors Act 1974 which relates to a ‘person interested in any property out of which the trustee, executor or administrator has paid, or is entitled to pay, the bill’. Fortunately, this mistake was rectified and agreed between the parties and the hearing proceeded.

Costs Judge Brown considered the relevant sections and tests in the Solicitors Act and to be applied when considering whether to grant an application for an assessment.

The first test was to address the question: Are the invoices raised interim statute bills? The Solicitors Act requires that the bills are capable of assessment in the first place. If the bills are to considered simply to be requests for payments on account then the time periods, in effect reset, and therefore, the application of discretion is removed and an assessment can be awarded. Having considered the limited information contained within the invoices such as the short narratives and brief timesheet in addition to considering the likely knowledge held by the executor, Costs Judge Brown found that the invoices raised were interim statute bills capable of assessment.

The next consideration was to find whether there was a discretion afforded to order an assessment of costs or whether special circumstances were required in respect of the exercise of that discretion. Consideration was made of the estimate that was originally given and the correspondence that followed indicating that the estimate was to be exceeded. Costs Judge Brown noted that very little information was provided in respect of the additional sums that would be incurred or in excess of the estimate. In these circumstances where the costs claimed were four to five times larger than the original estimate it was considered that this warranted special circumstances to order an assessment and for an explanation to be provided. 

An argument was put forward by the defendant solicitors that any assessment would in effect be rendered useless due to the file being privileged between the defendant solicitors and the executor. This point was swiftly dealt with and dismissed as not posing any possible barrier to an assessment.

Costs Judge Brown then turned to the application of paragraph 95 in Tim Martin Interiors Ltd v Akin Gump LLP [2011] EWCA Civ 1574. The decision of the Court of Appeal, in effect, placed a restriction on the extent of the challenges that can be brought by a third party. Such an approach to assessment was referred to as a ‘blue pencil approach’ and in effect limited the challenges that can be brought to those which would have been available on a solicitor/own client assessment under s.70. However, Costs Judge Brown considered that Tim Martin should be distinguished when applications are brought under s.71(3) of the Solicitors Act. Part of the reasoning that underpinned this distinction was a historic review of the origins of S.71 and in addition to considering the real-world scenario of a solicitor appointed as executor instructing their own firm to act on behalf of the administration of the estate. In these circumstances it was considered that such a restriction should not be placed on the beneficiaries from being able to have the bills assessed.

A final argument raised by the defendant to block the request for an assessment was the delay by the claimant in making the application. The Costs Judge found that the delay, whilst a factor to consider when exercising their discretion, was not a significant factor and had not prejudiced by such a delay.

Having given consideration to all of the issues above Costs Judge Brown found that there were special circumstances in this case to justify an assessment of the bills. When reaching this conclusion, he confirmed that the ‘triggering event’ that starts the stopwatch is the date of service of bills on the executor, not on the beneficiaries. Whilst this weighed against the claimant in this matter, when all the circumstances were considered, including ‘serious concerns as to substantial overcharging’ an assessment of all the bills raised was ordered.

Following the result of this decision solicitors acting as executors and instructing their own firms cannot simply rely upon the exemption previously afforded to them by Tim Martin to approve their own costs. Instead, it will be necessary to ensure that accurate estimates for administering estates are provided and that, as far as possible, the beneficiaries are kept informed of the costs being incurred. Failure to do so may leave you open to challenges from disgruntled beneficiaries and, ultimately, a reduction in costs recovered.