Court of Appeal Expands Scope of Solicitors' Bill Assessments for Beneficiaries Under Solicitors Act 1974

Introduction

The case of Daniel Kenig v Thomson Snell & Passmore LLP [2024] EWCA Civ 15 discusses the scope and application of the Solicitors Act 1974 with particular emphasis on the provisions governing the assessment of solicitors’ bills on the application of third parties. The Court of Appeal delves into the nuances of sections 70 and 71 of the Solicitors Act 1974, which deal with the assessment of a solicitor’s bill by the party charged with the bill and by third parties, respectively.

Key Facts

Daniel Kenig, a beneficiary of his mother’s will, challenged fees charged by Thomson Snell & Passmore LLP—the solicitors retaining to administer the estate—for being substantially higher than the initial estimate provided. He applied for an assessment under section 71(3) of the Solicitors Act 1974, given that the solicitors’ fees had been paid out of the estate, and he was a person interested in the estate’s property.

The underlying dispute centered on whether a section 71(3) application could challenge the reasonableness of the solicitors’ fees in the same manner as an application under section 71(1), and whether the principles set out in the previous case of Tim Martin Interiors Ltd v Akin Gump LLP [2011] EWCA Civ 1574 were applicable.

Legal Principles

The case analysis focused on the interpretation of sections 71(1) and 71(3) of the Solicitors Act 1974:

• Section 71(1) allows a third party who has paid, or is liable to pay, a solicitor’s bill to apply for an assessment as if they were the party charged with the bill. This application must follow the same rules and procedures as would apply if the solicitor’s client had sought the assessment.

• Section 71(3) caters specifically to cases where a trustee, executor, or administrator has become liable to pay a solicitor’s bill and allows any person interested in the property out of which the bill is paid, or entitled to be paid, to apply for an assessment.

The court emphasized the distinction between these two types of applications, noting that section 71(3) applications encompass broader considerations due to the executor’s fiduciary obligations to beneficiaries and the potential use of estate funds to cover solicitors’ fees.

The central legal question was whether the ‘blue pencil test’ from Tim Martin—which limits disallowance to items entirely out of scope or incurred on a special arrangement basis under CPR 46.9(3)(c)—applies to section 71(3) assessments. The court held it does not, asserting that principles from the case of In re Brown (1867) LR 4 Eq 464 allow for a more extensive query that can encompass quantum deductions when assessing bills under section 71(3).

Outcomes

The Court of Appeal dismissed the appeal brought by Thomson Snell & Passmore LLP, upholding the decision of Costs Judge Brown, which permitted a section 71(3) assessment. The court confirmed that assessments under section 71(3) are not limited to the narrow restrictions set out in Tim Martin. Instead, it recognized the independent interest of the beneficiary, which may warrant a broader assessment scope, potentially extending to quantum as well as scope.

The judges also signalled that executor’s approval of a bill could be a major, and sometimes determinative, consideration in assessing a bill but is not necessarily conclusive, emphasizing the importance of protecting a beneficiary’s interest.

Conclusion

The decision in Daniel Kenig v Thomson Snell & Passmore LLP [2024] EWCA Civ 15 reinforces the unique position of beneficiaries under section 71(3) of the Solicitors Act 1974 and acknowledges their entitlement to a more expansive range of challenges to a solicitor’s bill than parties only entitled to apply under section 71(1). The judgment clarifies that the principles established in Tim Martin are not directly transposable to section 71(3) assessments and establishes precedent for future cases where beneficiaries are challenging the fees paid out of an estate to solicitors.