The case was a dispute about a revoked enduring power of attorney and appointment of a solicitor under a lasting power of attorney.  The rules on costs of a litigant in person who was also a solicitor were considered by the Court of Protection.

What is the Chorley Principle?

The Chorley Principle confirmed that solicitors successfully defending proceedings in person were entitled to recover the same costs as if they had employed a solicitor and they were not restricted to their out-of-pocket expenses. It was an exception  to the common law rule that self-represented litigants could not recover costs.

In the recent case of (Halborg v EMW Law, LLP [2018] 1 WLR 52), when giving judgment, Sir Terence Etherton, Master of the Rolls, re-stated the Chorley principle: The common law principle established by the Chorley case may be summarised as being that:

(1) a solicitor who acts for himself as a party to litigation can recover not only his out of pocket expenses but also his profit costs, but he cannot recover for anything which his acting in person has made unnecessary.

(2) the reason is not because of some special privilege but on the purely pragmatic grounds that:

(a) there has been an expenditure of professional skill and labour by the solicitor party.

(b) that expenditure is measurable.

(c) the solicitor party would otherwise employ another solicitor and, if successful, would be entitled to recover the costs of that other solicitor.

(d) since he cannot recover for anything which his acting in person has made unnecessary, the unsuccessful party will have the benefit of that disallowance and so would pay less than if the solicitor party had instructed another solicitor.

Case Background

The case of JH v CH & SAP,  was a dispute about the applicant’s capacity to revoke an enduring power of attorney made in favour of the first respondent (the applicant’s daughter) and to execute a lasting power of attorney appointing the second respondent instead. The daughter was a solicitor and, at the time, employed by KSN solicitors. However, she did not instruct KSN, but did the relevant work on behalf of the Protected Party.

In a costs hearing the Court of Protection held that the costs of the solicitor who, in her capacity as attorney, had acted as a litigant in person for a period during court proceedings, could not be assessed under the Chorley principle.

The Court of Protection held that the principle applied only where the solicitor litigant had instructed, expressly or impliedly, a firm, including their own firm, to act for them. The evidence was that the solicitor had not instructed the KSN.

Regarding costs, there were 3 periods of time to be considered. The 1st was during which the solicitor was acting on behalf of the Protected Party pursuant to the latter’s original retainer of the firm of KSN.  Here the court ruled that the costs were not inter partes litigation costs but were a matter between the firm and their client or her estate.

The 2nd period was where the solicitor acted in person on behalf of the Protected Party.  The Court did not agree that the Solicitor should be entitled to all costs  pursuant to the usual order in these proceedings, as set out in the CoP rules. The Court also confirmed that those costs should be assessed pursuant to the Chorley principle as she was employed by the solicitor’s firm while acting in the course of her employment. The court could see no basis for ordering the costs incurred to be assessed as if they were client/solicitor costs as between the applicant and KSN

The 3rd period was during which the solicitor acted as a litigant in person. Therefore, costs could be recovered as litigant in person.

The case was a dispute about a revoked enduring power of attorney and appointment of a solicitor under a lasting power of attorney.  The rules on costs of a litigant in person who was also a solicitor were considered by the Court of Protection.

What is the Chorley Principle?

The Chorley Principle confirmed that solicitors successfully defending proceedings in person were entitled to recover the same costs as if they had employed a solicitor and they were not restricted to their out-of-pocket expenses. It was an exception  to the common law rule that self-represented litigants could not recover costs.

In the recent case of (Halborg v EMW Law, LLP [2018] 1 WLR 52), when giving judgment, Sir Terence Etherton, Master of the Rolls, re-stated the Chorley principle: The common law principle established by the Chorley case may be summarised as being that:

(1) a solicitor who acts for himself as a party to litigation can recover not only his out of pocket expenses but also his profit costs, but he cannot recover for anything which his acting in person has made unnecessary.

(2) the reason is not because of some special privilege but on the purely pragmatic grounds that:

(a) there has been an expenditure of professional skill and labour by the solicitor party.

(b) that expenditure is measurable.

(c) the solicitor party would otherwise employ another solicitor and, if successful, would be entitled to recover the costs of that other solicitor.

(d) since he cannot recover for anything which his acting in person has made unnecessary, the unsuccessful party will have the benefit of that disallowance and so would pay less than if the solicitor party had instructed another solicitor.

Case Background

The case of JH v CH & SAP,  was a dispute about the applicant’s capacity to revoke an enduring power of attorney made in favour of the first respondent (the applicant’s daughter) and to execute a lasting power of attorney appointing the second respondent instead. The daughter was a solicitor and, at the time, employed by KSN solicitors. However, she did not instruct KSN, but did the relevant work on behalf of the Protected Party.

In a costs hearing the Court of Protection held that the costs of the solicitor, who, in her capacity as attorney, had acted as a litigant in person for a period during court proceedings, could not be assessed under the Chorley principle.

The Court of Protection held that the principle applied only where the solicitor litigant had instructed, expressly or impliedly, a firm, including their own firm, to act for them. The evidence was that the solicitor had not instructed the KSN.

Regarding costs, there were 3 periods of time to be considered. The 1st was during which the solicitor was acting on behalf of the Protected Party pursuant to the latter’s original retainer of the firm of KSN.  Here the court ruled that the costs were not inter partes litigation costs but were a matter between the firm and their client or her estate.

The 2nd period was where the solicitor acted in person on behalf of the Protected Party.  The Court did not agree that the Solicitor should be entitled to all costs  pursuant to the usual order in these proceedings, as set out in the CoP rules. The Court also confirmed that those costs should be assessed pursuant to the Chorley principle as she was employed by the solicitor’s firm while acting in the course of her employment. The court could see no basis for ordering the costs incurred to be assessed as if they were client/solicitor costs as between the applicant and KSN

The 3rd period was during which the solicitor acted as a litigant in person. Therefore, costs could be recovered as litigant in person.

 

In the recent case of The Office of Public Guardian v Andrew Riddle (Nos 1 and 2) Senior Judge Hilder had to decide if the professional Deputy could charge fees at the solicitors’ rate.

Background.

Mr Andrew Riddle is the managing director of ‘Professional Deputies’ that offers services that manage the property and affairs of adults who lack capacity. Mr Riddle is not a solicitor and Professional Deputies is not a Solicitors practice.

His primary position is that he should be able to charge fees at the solicitors’ rate, but he also had a secondary position in that he should be authorised to charge fees at a tailored rate, somewhere between public authority and solicitor rates.

The OPG’s position was that Mr Riddle should not be charging the solicitors’ rate until the Court of Protection makes an order to state otherwise.

Hearing

At the initial hearing, the Court was not satisfied that the deputy’s account of his qualifications and experience justified any conclusion that he should be remunerated at a higher rate than public authority deputies.

Judge Hilder held (at paragraph 104) that it would be appropriate to exercise the court’s discretion to extend the solicitors’ costs provisions to a non-solicitor deputy where that deputy demonstrates that they are also subject to professional obligations comparable to those integral to being a solicitor, and where that non-solicitor deputy accepts being held to the same standards as a solicitor. 

However, she considered the facts of the case and his experience and qualifications but was satisfied he did not fulfil these benchmarks.

She did acknowledged that Mr Riddle was not alone in requesting a review of the fixed rates under Practice Direction 19B, as the rates have not increased since 2010 and The Professional Deputies Forum argues that rates are now therefore 31% lower in real terms than they were in 2010.  She also noted that, there was a current review of solicitors’ guidelines rates in civil cases, which have also not been increased since 2010.

In paragraph 106, Judge Hilder observed that the rates of Practice Direction 19B should be similarly reviewed.  However, that does not provide any basis for unilaterally behaving as if the rates are other than as they are. Until there is a review, she could not give any weight to this part of Mr. Riddle’s argument as to do so would undermine the Practice Direction.

Senior Judge Hilder thereafter, made orders refusing Mr. Riddle’s applications for authorisation to charge fees at the solicitors’ rate and refused his applications for relief from liability for past charges. She also allowed Mr Riddle a period of time to make good his word and restore each estate to its rightful level.

At the second hearing, the judgement held that Mr Riddle had been good to his word, and that the Public Guardian did not now seek revocation of his appointment in those cases. The judgment also confirmed that Judge Hilder had refused his application to charge fees at anything other than the public authority rates.

It was also agreed that each party should bear their own costs, and the Judge rejected the claim for the Public Guardian to pay any part of his costs.

This case highlights that when non solicitor deputies are managing the property and affairs of those with incapacity; they should carefully check the specific terms in the Deputyship order to ensure their charging rates are in line with the order. If the Deputy has any doubts, they should contact the OPG and then if necessary, seek authority from the Court.

The judgement also gives the OPG the standing to challenge cases and bring these to the courts attention without the consequence of having a costs order made against them.

From 1^st of September 2020, it is estimated that hundreds of thousands of teenagers can access their Child Trust Fund money given to them when they were born. The UK Government introduced the Child Trust Funds scheme in 2005 with the aim of ensuring that every child has savings at the age of 18.

Child Trust Funds gave between £250 and £1,000 of Government cash to all children born between 1 September 2002 and 2 January 2011. Parents could add to the fund until the child turned 18, when they have access to the monies, plus interest.

However, there was no consideration for those who may not have the mental capacity to be able to access and manage their funds at the age of 18. It is predicted that tens of thousands of disabled children are affected and are disadvantaged.

If they do not have capacity, then their families or carers will need to apply to the Court of Protection to act as the child’s Deputy. It is estimated that the process can cost from £365.00 for the Court Application to £2,500.00 for solicitor involvement. This could potentially be a sum which may exceed the amount held in the Child Trust Fund in the first place. Furthermore, given the current position with COVID 19, there is potential for delays on applying which would add further pressure to Court resources.

Missing the deadline to access funds means that the money is switched into a new account by the Child Trust Fund provider, which are allowed to pay less interest under HM Revenue and Customs rules. There is a current campaign for change to the system to ensure that more children will be able access their funds without incurring large fees.

The hope is that the government will take a practical approach under these circumstances and that a procedure can be put in place which allows families to gain access to their children’s funds without the added expense and potential delay when applying through the Court of Protection.

The recent judgment by Hilder HHJ has ruled in the three linked cases of ACC, JDJ and HPP (ACC & Ors (2020 EWCOP 9)). The judgment concerns three separate sets of proceedings where each Deputy is connected by the same firm of solicitors. For ACC and HPP that Deputy is Irwin Mitchell Trust Corporation Ltd; for JDJ, the Deputy is a partner of Irwin Mitchell LLP.

In each case, the Deputy had embarked on litigation on behalf of the Protected Party and had instructed a further department within Irwin Mitchell to conduct the litigation. The common issue in each matter is whether, and in what circumstances, the Deputy can recover from the Protected Party’s funds which have been or are likely to be incurred in legal proceedings. There was no specific provision in the orders appointing the Deputy that either did grant or exclude authority to instruct another Solicitor or conduct proceedings.

Furthermore, due to the conflict of interest, each Protected Party’s in this matter was represented by the Official Solicitor as Litigation Friend. The Public Guardian was also been joined as a party to the proceedings.

It was accepted by the Official Solicitor that obtaining legal advice and instructing the Deputy’s own firm can sometimes fall within the general authority of the Deputyship order, but the order does not give authority to litigate. They argued it was in the Protected Party’s best interests that any advice be authorised specifically by the court and any advice sought is to be tendered out to different firms.

The Deputies position was that a property and affairs standard authorisation should be understood as including legal costs in relation to contentious matters but ‘falling short of conduct of litigation’. They contended “one of the advantages” of appointing a solicitor or solicitor-owned trust corporation as Deputy is that it provides the Protected Party with “ready access” of expertise from a full-service legal firm. They further contended where circumstances demanded urgent action, a Deputy should be able to issue proceedings and seek interim relief without specific prior authorisation from the court and thereafter, to apply for authority.

Hilder HHJ explained that proceedings have arisen because the court had concerns about what the Applicants regard as a reasonable interpretation of ‘general authority’. She added that the Applicants, the Official Solicitor and the Public Guardian all sought guidance. Whilst the three cases demonstrate a clear need for further amplification of the court’s approach, she confirmed that approaching the task should be taken with caution. ‘General’ authority is not susceptible to exhaustive definition (49). She then presented a series of questions which can be found in the judgment. These are as follows:

• What authorisation is required to conduct litigation on behalf of P? [51]
• What about further proceedings in the Court of Protection? [52]
• To what extent does ‘general authority’ encompass authority to take legal advice on behalf of P? [53]
• Where is the line drawn between seeking advice and conducting litigation? [54]
• What about urgent matters? [55]
• How should conflicts of interest be addressed? [56]
• What about cases where the deputy is not the instructing party? [57]
• What about acting as litigation friend? [58]
• What if P has capacity to give instructions for the work in question? [59]

A summary of conclusions to those questions are set out in the Appendix in the judgment, but the key observations below have caused a stir amongst professionals.

Specific authority is required to conduct litigation on behalf of the Protected Party [paragraph 51] except where the contemplated litigation is in the Court of Protection in respect of a property and affairs issue [52.4] or to seek directions in respect of a welfare issue [52.10].

Furthermore, where a Deputy has authority in respect property and affairs, such authority encompasses steps in contemplation of contentious litigation in the realm of that authority up to receiving the Letter of Response, but no further [54.4].

Hilder HHJ confirmed that ‘general authority’ of a property and affairs Deputyship order does not encompass seeking advice or other steps preliminary to litigation in respect of welfare issues; it does encompass making an application to the Court of Protection for further directions /specific authority in respect of welfare issues [54.6]. It also does not encompass steps in contemplation of an appeal against the decision of an Education, Health and Care Plan [54.8(b)].Professionals are concerned about delays at the court when obtaining this authority and the specific repercussions of this case concerning the recovery of legal costs. Hilder HHJ advised that, if circumstances arise where the protection of the Protected Party’s interests requires action to be taken so urgently that prior authority to litigate cannot reasonably be obtained, a Deputy proceeds at risk as to costs but may make a retrospective application for authority to recover costs from the Protected Party’s funds. There is no presumption that such application will be granted – each application will be considered on its merits [55].The concern of the potential conflict of interest when the Deputy instructs his own firm to carry out legal tasks is not a new issue, but one which has finally been clearly addressed in this judgment. Hilder HHJ confirmed that the Deputy must take ‘special measures’, including:

1. the Deputy may seek prior authority [56.7(a) – (e)];
2. the Deputy is required to seek – in a manner which is proportionate to the magnitude of the costs involved and the importance of the issue – three quotations from appropriate providers (including one from his own firm), and determine where to give instructions in the best interests of the Protected Party [paragraph 56.7(f)(i)];
3. the Deputy must seek prior authority from the Court if the anticipated costs exceed £2 000 + VAT;
4. the Deputy must clearly set out any legal fees incurred in the account to the Public Guardian and append the notes of the decision-making process to the return [56.7(f)(iv)].

Hilder HHJ further advised that specific authority is required to use the Protected Party’s funds to pay a third party’s legal costs, even if those costs relate to litigation for the benefit of the Protected Party [paragraph 57].Finally, if the Protected Party has capacity to give instructions for particular work, he will also have capacity to agree the costs of that work [59].

Hilder HHJ agreed that, in the three cases, the Deputies’ decisions to litigate were justified. Therefore, authority should be retrospectively granted to them. However, Deputies should not take this ruling to mean that authorisation will be granted after the event on other occasions. Judge Hilder stated that “appropriate authorisation should be secured in advance” due to the significant costs incurred in litigation (62.6). This judgment is significant in Court of Protection, providing clarity on litigation proceedings and referrals in house. It is a meaningful change for professional Deputies and we are yet to see the practical repercussions of the judgment. Where a Deputy is currently conducting litigation or will potentially be conducting litigation, we advise to apply to the Court to secure appropriate authorisation, as there is no guarantee that authorisation will be granted retrospectively. Whilst we have always recommended this, it is now essential that professionals obtain quotes from both internal and external practitioners when looking to obtain legal advice in another area of expertise, in order to justify the decision. This must be properly documented to avoid scrutiny in future. If Deputies do not adhere to the new processes in this case, there will be substantial costs repercussions.