Personal representatives of a deceased person's estate have a right to scrutinise and challenge the cost of any solicitors they instruct to administer the estate. However, the recent Court of Appeal ruling in the Kenig v Thomson Snell and Passmore LLP case reaffirms the position that if beneficiaries have an interest in those costs they could also be entitled to challenge them.
This article looks into this case in detail, highlights the Court of Appeal’s decision and advises what a residuary beneficiary can take away from this.
When Daniel Kenig's mother Philippa Cunnick died, her will appointed Saul Biber as her sole executor. Daniel and his sister Laura Peggs were named as sole beneficiaries to the estate which was valued at £2,881,000. Saul appointed Thomson Snell and Passmore LLP to administer the estate. While their initial fee estimate suggested they would charge £10,000 - £15,000 plus VAT and expenses, the actual costs incurred totalled £54,410.99 plus VAT and expenses, over four times their estimate.
Daniel brought an application to the court to challenge the bill of Thomas Snell and Passmore LLP under s71(3) of the Solicitors Act 1974. This section sets out who is entitled to make an application for an assessment of a bill, being: “any person interested in any property out of which the trustee, executor or administrator has paid, or is entitled to pay, the bill”. As a beneficiary of the estate, Daniel therefore had an interest in the estate from which the bill of Thomas Snell and Passmore LLP’s would be paid.
The application was brought eight months after the last invoice was delivered to the executor. Under s70 of the Solicitors Act 1974, which sets out the time limits for this type of application, a bill usually can’t be challenged after 12 months. The court did not express a view on whether or not the costs incurred were excessive, but it ordered that the costs should be subject to an assessment. Thomson Snell and Passmore LLP appealed but the Court of Appeal upheld the first instance decision.
The Court of Appeal also confirmed that although s70 of the Solicitors Act 1974 imposes a 12-month time limit to challenge a solicitor’s bill, that time limit could be disapplied where the application is made by a residuary beneficiary. This is because they may not know whether or when the bills were raised or paid.
This decision reaffirms a residuary beneficiary’s right to challenge fees charged by solicitors instructed by the personal representatives.
As a footnote, it’s important to be aware of the costs rules that apply to a Solicitors Act assessment. The effect of s70(9) of the act, which sets out which party is liable to pay the costs of for the assessment process, is that unless the judge reduces the solicitor’s bill by 20% or more the applicant will be responsible for the costs of assessment. Formal assessment is therefore only a course of action to pursue where there is a reasonable chance of reducing the bill by 20% or more.
For further information, please contact the wills and inheritance disputes team.
