 |
|
|
 |
| <
back |
Monday 10th November 2003
Jemma Trust Company Ltd v PD Liptrott & Ors [2003] EWCA Civ 1476
Probate practitioners have waited with bated breath since September last year to see if it was still permissible to charge a fee based purely upon the value of the estate. Then cost judge Rogers ruled in the case of Jemma Trust that the solicitors who had dealt with the administration of estate of Sir Geoffrey Hulton were entitled to no value-based fee, despite the estate being worth approximately £10m. Although the solicitors had already billed £386,459 on a time basis, they sought a further 1.5% of the value of the estate, less residence, a sum in excess of six figures. Rogers’ view was that an additional fee based upon value alone was an anachronism and redolent of the days when time costing was unsophisticated. Further the principal authorities all dated from the 1970s and Rogers took the view, with some justification, the matter needed re-evaluating. Permission to appeal was granted and the law society made representations.
The resultant Court of Appeal decision in Jemma Trust Company Ltd v PD Liptrott & Ors [2003] EWCA Civ 1476 given on 24th October 2003 did not disappoint and gave some clear parameters to probate practitioners. The court did so by answering three rhetorical questions, the first two were of general importance:
i) are solicitors engaged in relation to the administration of an estate entitled, in the absence of any agreement with interested parties, to charge not only for the time they spend on the administration of the estate but also a scale fee based on the value of the estate?
The court answered this in the affirmative, even though the value element is now frequently incorporated into the hourly rate providing that the overall charge is still fair and reasonable remuneration. However, with an eye on the future, the court pointed out that it was now ‘much the best practice’ for a solicitor to obtain prior agreement as to the basis of his charges not only from the executors but also, where appropriate, from any residuary beneficiary. The value factor calculation should also be transparent on the face of any bill.
ii) If a solicitor is entitled to charge in this way, how should that value element fee be calculated? In particular should it be based on the reducing scale proposed in the case of Maltby v DJ Freeman [1978] 1 WLR 431?
The court held that a regressive scale was generally most appropriate. It also recognised that the considerable inflation which had taken place since 1978 had meant that the regressive scale had to be adjusted and the following revised scale was adopted:
Band % of Value Fee
< £750,000 1 ½ £11,250
£750,000 - £3 million ½ £11,250
£3 million - £6 million 1/6 £5,000
> £6 million , for each additional million 1/12 £833
Guidelines for figures above £6 million were not given but become decreasingly important. The court saw no reason why uplift upon the expense rate of 25-33% should not still be taken. (The normal expense rate of a fee earner is usually deemed to include an uplift of 50%).
The Court of Appeal then has made clear that the historic value element was not a dinosaur but a principle that can still be applied. An important note of caution though should be sounded; although the court set out a framework for probate fees, all methodology has to be subject to the test of fair and reasonableness. The scope for variation is apparent from Lord Justice Mance’s dissenting comments, although he accepted the broad thrust of the judgment.
|
| |
|
|
| |
| |
| |
Would
you like to receive our quarterly newsletter.
It's available by post or email, and contains all the latest
Kain Knight and industry news.
click
here to register |
|
| |
|
|
|
