Various Incapacitated Persons, Re (Appointment of Trust Corporations As Deputies) [2018] EWCOP 3

Where concerns were raised when Trust Corporations apply as a Deputy for the Financial and Property affairs of a Protected Party.

A judgment was issued whereby the courts raised their concerns when considering an application that had been made to appoint a Trust Corporation as a Deputy, for the financial and property affairs of a Protected Party. Judge Hilder informed of the details required for the Court to be satisfied that the corporation is a fit and proper legal person to hold such appointment.

The case involved 36 applicants covering 11 different trust corporations, all of which are connected to solicitor practices.

The proposed Deputy (the Trust Corporation) is a Trust Corporation within the meaning of section 64(1) of the Mental Capacity Act 2005 and can lawfully act as such; and the Trust Corporation will inform the Office of the Public Guardian (OPG) immediately if that ceases to be the case.

The Trust Corporation will comply with the OPG’s published standards for professional deputies.

EITHER:

(i) The Trust Corporation is authorised by the SRA;

OR 

(ii) all the directors of the Trust Corporation are solicitors and it employs no one (save to the extent that it employs a company secretary); and

(iii) the Trust Corporation will retain its associated legal practice to carry out all practical work in relation to the management of the incapacitated person’s property and affairs; and

(iv) the Trust Corporation is covered by the professional indemnity insurance policy of its associated authorised legal practice on the same terms as that practice;

The Trust Corporation will notify the OPG immediately, if there is any change to any of the matters set out in paragraph 3 above.

The Trust Corporation must also ensure that it obtains and maintains insurance cover..

The Trust Corporation will lodge a copy of the insurance policy with the OPG on appointment and will inform the OPG immediately if there is any reduction in the terms or level of the insurance cover.

The note offered some explanations as to why a law firm might chose to create a Trust Corporation, these include:

  1. A Trust Corporation is designed to increase flexibility and improve services for clients. By creating a Trust Corporation, you can streamline the administration of estates and trusts to provide greater flexibility in the day-to-day administration of the files that it handles.”

From the Protected Party’s perspective, the benefits of appointing a Trust Corporation include:

1. Continuity – new trustees are never needed as a Trust Corporation never dies, goes on holiday, gets ill or retires. This can create substantial savings in professional fees: each time an individual trustee retires and a new trustee appointed, a deed needs to be created and the assets of the trust have to be transferred, whereas with a Trust Corporation, the appointment and retirement of directors will not affect the assets within particular trusts.

2. Availability – individual trustees aren’t always available due to holidays and other commitments, but a Trust Corporation will always be available.

3. Professionalism – Trust Corporation signatories will be senior members of the private client department of the firm who deal with trusts and estates every day.”

These identified benefits are procedural or financial. Whilst these are important, they are not the only aspects to consider. It was explained in the judgment that “each case will be different but Deputyships generally also require an appropriate person-to-person interaction with the protected person and often their family. Considered from that perspective, it can be seen that the benefit of continuity accrues also to the law firm – a client is retained for the long term, even if the individuals familiar with the case change firms.

Conclusion

A Trust Corporation can apply to be on the Office of the Public Guardian’s panel of deputies, but there is no ‘panel’ of Trust Corporations which have demonstrated compliance with legal requirements to act. Information necessary to satisfy the Court as to suitability must therefore be ’built into’ the application process itself.

 If you have any queries, please do not hesitate to contact Georgia Clarke (georgia.clarke@clarionsolicitors.com) or the team at COPCosts@clarionsolicitors.com.

 

Proportionality in the Court of Protection

You will have all heard about the ‘Jackson Reforms’, which so far, have not been something that Court of Protection practitioners have had to be too concerned about – until now.

As part of the ‘Jackson Reforms’, a new test of proportionality was introduced. Proportionality now trumps reasonableness and ‘necessity’. Even if a cost was reasonable and was necessary, it can be disallowed on the basis of proportionality. The purpose of this reform was to tackle disproportionate claims for costs.

The case of BNM and MGN Limited (see https://clarionlegalcosts.com/2016/06/10/who-needs-fixed-costs/#more-876) is an interesting case to consider in relation to the new test of proportionality, where a bill of costs was reduced from £167,389.45 to £83,964.80 on the basis of proportionality. This is one of the first cases to really demonstrate the power of CPR 44.3 (2) (‘Jackson test of proportionality’), which states:

Where the amount of costs is to be assessed on the standard basis, the court will –

(a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and

 (b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.

 This ‘Jackson test of proportionality’ is something that has primarily been having an impact on civil and commercial claims for costs, however, we (Court of Protection Costs team at Clarion) are now starting to see the new test being applied to Court of Protection cases.

Under the new test, the Senior Courts Costs Office must assess a bill of costs (line by line) and determine what is reasonable. Thereafter, the new test of proportionality can be applied. The Costs Officer has the power to stand back and ask ‘was this a proportionate sum to incur on this matter taking into account all the factors relating to the case’, and in some instances, the answer can lead to significant further reductions to a Bill of Costs.

Going forward, we believe that this is something that will have an impact on Court of Protection cases. Not only will your costs be assessed based on what was reasonably incurred, but the SCCO can also consider other factors, such as the value of the Protected Party’s estate and other non-monetary influences when considering whether the assessed (reasonable amount) is proportionate.

We considered a recent assessment whereby the Protected Party’s estate was worth approximately £46,000.00. The Deputy submitted a bill of costs totalling £12,200.00. The bill was provisionally assessed at £11,500.00, but was thereafter limited to £9,000.00 due to the issue of proportionality, as a result of the value of the estate.

There is no guidance as to what is proportionate in these cases, however, the Costs Officer has the authority to determine what is proportionate at their own discretion. It will be interesting to see how this is applied going forward and whilst this area is still developing, requests for reviews or appeals may be appropriate. Albeit the financial position of the Protected Party is key, other factors such as the conduct of the Protected Party, the complexity of the matter and any key elements (international and business) may be influential in justifying your claim for costs.

If this is something which you require assistance with, please do not hesitate to contact myself or our team at COPCosts@clarionsolicitors.com.

Philpott – Is it reasonable to claim for updating accounts ledgers?

It is common knowledge that the SCCO refer to certain case law when assessing Bills of Costs in Court of Protection matters. Although the Costs Officers assess your incurred costs using their own discretion as to what is reasonable and proportionate, there are a number of themes which can be identified from the assessments we are seeing. If something stands out in which case law has determined that it cannot be charged to the Protected Party, it will be reduced or disallowed upon assessment.

A more recent case has come to our attention as we have seen the case quoted more recently on provisionally assessed Bills of Costs. In the case of Philpott, the written judgement was not published, however the SCCO were able to share a few comments made by Master Haworth whilst delivering his judgement. Essentially, whereby time has been spent updating the Protected Party’s financial records or schedules of income and expenditure, this has been noted as an ‘office overhead’ in some instances.

During the delivery of his judgement, Master Haworth made the following comments inter alia:-

“It seems to me that the inputting of data into P’s ledger is not fee earning work.  At most it is bookkeeping which, to my mind, is an overhead of a solicitor’s practice.

This work has to be distinguished from for example, reviewing or perusing the data to come to a decision as to what then needs to be done with a P’s funds.  To my mind that may well amount to fee earning work for which the solicitors can charge separately at the appropriate rate. 

I know that I have a number of further appeals on similar lines which may well result in a written judgment from me in due course.  Nonetheless, it may be helpful for you to circulate this memo to the Costs Officers in the interest of consistency in the future.”

 Resultantly, we recommend that this task is delegated appropriately to a Grade D fee earner or non-fee earner where possible.

If you have any queries in respect of the above, please do not hesitate to contact the Costs Team at COPCosts@clarionsolicitors.com

 

Litigation costs in Court of Protection bills – are these recoverable?

It is extremely common for Deputies to be involved in ongoing litigation claims for Protected Parties. Deputies often become involved in interim payment applications and are usually asked to disclose details of the Protected Party’s affairs to the litigation solicitor to assist with the Schedule of Loss and other documentation. The main question that needs to be answered however is whether these costs can be claimed within the general management bill of costs.

Unfortunately, the answer is no…

Master Haworth considered a bill of costs where the Deputy had incurred costs through communications with the litigation solicitor to outline the Protected Party’s affairs to assist with an ongoing litigation claim. Master Haworth disallowed the costs that related to the litigation claim and he stated that “where the Deputy is being asked to provide information and/or schedules and/or documentation to support an interim payment application in an ongoing litigation these are not general management charges”.    

Master Haworth directed the Deputy to withdraw their bill of costs and to re-submit a new bill of costs which did not include the litigation costs to allow him to solely assess the general management costs that had been incurred.

It is advisable that the Deputy’s costs which relate to the Protected Party’s litigation claim are not included within general management bills. Costs which relate to the litigation claim should be recovered within the litigation bill of costs. The Deputy should therefore outline their costs to the litigation solicitor to ensure that the costs are remunerated correctly.

If you require any further advice or assistance in relation to your Court of Protection costs, please do not hesitate to contact the Clarion Costs Team on COPCosts@clarionsolicitors.com or 0113 246 0622.

Costs after Death in the Court of Protection

The Deputy’s authority to recover their costs after the Protected Party’s death can be a grey area. In some cases, the Deputy will have authority to subject their costs to detailed assessment however in most incidents the Protected Party’s estate will be in probate whereby the Deputy’s costs will be agreed with the Executors of the estate.

Rule 165 under Part 19 (Costs) to the Court of Protection Rules 2007 states that the Deputy’s costs can be remunerated where “an order or direction that costs incurred during the Protected Party’s lifetime be paid out of or charged on his estate may be made within 6 years after the Protected Party’s death.” If there is no Order as to costs then the Deputy cannot be remunerated through detailed assessment.

When the Protected Party’s estate is dealt with by the Executors, two approaches can be adopted. If the Executors do not contest the Deputy’s costs, the Deputy will be invited to raise a final invoice which will then be settled from the Protected Party’s funds once the Grant of Probate has been drawn. Where the Deputy’s costs are disputed, the Executors can elect for the Deputy’s costs to be subject to detailed assessment.

In either of the above situations, the Deputy’s authority to administrate the Protected Party’s affairs will be discharged on the Protected Party’s death unless an Order is made to extend the Deputy’s powers.

If you require any further advice or assistance in relation to your Court of Protection costs, please do not hesitate to contact the Clarion Costs Team on COPCosts@clarionsolicitors.com or 0113 246 0622.

Welfare Costs within the Court of Protection

Rule 157 of the Court of Protection Rules 2007 states that “where the proceedings concern P’s personal welfare, the general rule is that there will be no order as to costs of the proceedings or that part of the proceedings that concerns P’s personal welfare”. Please note however there are exceptions to this rule.

If the general rule is applied, each party involved in Court of Protection proceedings which concern the P’s personal welfare are liable for their own costs. On the other hand, Rule 159 states that in some circumstances, the Court may depart from the general rule. Before an Order can be made, the Court of Protection will take into account these variables:

  • the conduct of the parties;
  • whether the party has succeeded on part of their case, even if they have not been wholly successful; and
  • the role of any public body involved in the proceedings.

In terms of the conduct of the parties, the Court of Protection will consider:

  • conduct before and during the court proceedings;
  • whether it was reasonable for a party to raise, pursue or contest a particular issue;
  • the manner in which a party has made or responded to an application or a particular issue;
  • whether a party who has succeeded in their application or their response to an application exaggerated any matter contained in the application or response.

It is important to note that even if one or more of the above variables are applicable to a case, the parties should not expect the Court to make an Order and therefore they should be able to bear their own costs.

Welfare Deputies

Deputies can be appointed to make decisions in respect of P’s personal welfare however these are only applicable to extreme cases. Paragraph 8.38 of the Code of Practice states that a “Deputy for personal welfare decisions will only be required in the most difficult cases where important necessary actions cannot be carried out without the Court’s authority, or there is no other way of settling the matter in the best interests of the person who lacks the capacity to make particular welfare decisions”.

Before a Welfare Deputy is appointed, the Court will consider the evidence and make decisions in relation to the following:

  • Deciding where P should reside;
  • Deciding what contact, if any, P should have with any specified person;
  • Making an Order prohibiting a named person from having contact with P;
  • Giving or refusing consent to the carrying out or continuation of a treatment by a person providing healthcare for P;
  • Giving a direction that a person responsible for P’s healthcare allows a different person to take over that responsibility;
  • Deciding whether P has the capacity to marry and the capacity to have sexual relations.

Where a Welfare Deputy is appointed, they are entitled to recover their costs from P’s estate on the basis that there is provision to do so within the Order. Practice Direction B (Part 19) to the Court of Protection Rules 2007 states “where the Court appoints a professional Deputy for personal welfare, the Deputy may take an annual management fee not exceeding 2.5% of P’s net assets on the anniversary of the Court Order appointing the professional as Deputy for personal up to a maximum of £500”.

If you require any further advice or assistance in relation to your Court of Protection costs, please do not hesitate to contact the Clarion COP Costs team on COPCosts@clarionsolicitors.com or 0113 246 0622.