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SECTION 23 |
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23.1 |
Introduction |
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| (a) |
The Court of Protection is an office of the Supreme Court and exercises
jurisdiction in respect of the protection and management of the property and affairs of
persons of who, by reason of mental disorder, are incapable of managing their own affairs
("patients").
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| (b) |
The relevant statutes and rules include the Mental Health Act 1983Acts, the
Enduring Powers of Attorney Act 1985 and the Court of Protection Rules 2001, relevant
passages of all of which are set out and annotated in Volume 2 of the Supreme Court
Practice.
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| (c) |
The Judges of the Court of Protection include the Master and his Deputies, from
whom an appeal lies to the Judges of the Chancery and Family Divisions. A judge, the Master,
or any nominated officer authorised under section 94 of the Mental Health Act 1983Acts, may
exercise the functions of the court.
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| (d) |
This Section of the Guide is published with the assistance and approval of the
Master of the Court of Protection.
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23.2 |
Orders and Directions as to Costs |
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| (a) |
All orders as to costs are at the discretion of the court and nothing in this
guidance should be interpreted as removing or restricting the Court's discretion in any way.
(b) There are three methods of quantifying costs:
·
| | | Agreed costs,
·
| | | Fixed costs,
·
| | | Detailed assessment of costs.
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23.3 |
Agreed Costs |
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| (a) |
Agreed costs are not generally available. The procedure is now governed by
the Practice Note of 11 October 2004. As a general principle, all bills of costs must be
assessed, except where fixed costs are available. The procedure to assess bills below £3,000
should be used for all bills where professionals used to seek agreement.
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| (b) |
The Court of Protection recognises that in certain circumstances it would not
be in the client's best interests to request an assessment, for example where the cost of
assessment is disproportionate to the amount of the bill. The court may agree costs in such
circumstances, as long as the fixed costs provisions do not cover the work. If solicitors
consider that a costs assessment would not be appropriate, they should apply to the court
setting out the reasons and requesting the court to agree the bill. Any request must be
accompanied by a narrative bill setting out the hours spent and the level and status of the fee
earner concerned, together with fee notes and vouchers for any disbursements. The court
may also exercise its discretion to agree costs at any time whether or not it is in the context of
a formal application.
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23.4 |
Fixed Costs |
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| (a) |
The Master of the Court of Protection specifies the amounts allowed under the
categories of fixed costs in consultation with the Law Society. The rates are published
annually in practice notes issued by the Master. The amounts allowed under each category
are maximum amounts. Where there are reasonable grounds for thinking that costs will not
exceed the maximum amount allowed, solicitors may take a lower figure without further
reference to the Court or the PGO. For example if the professional reasonably believes the
general management costs for the year will not exceed £400, then they may take that figure
without drawing a bill.
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| (b) |
Solicitors may also take fixed costs for general management pro-rata if the
period covered by the bill is less than one year, for example where the patient dies or the
receiver retires before the anniversary date.
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| (c) |
Although fixed costs are set in consultation with the Law Society and apply
mainly to the work of solicitors, accountants may elect to take an amount not exceeding fixed
costs for any work covered in categories II III and VII below. The court may also apply the
fixed costs procedure to any other non-solicitor if it is appropriate to do so, and it is open to
any other professional to apply to the court for authority to receive fixed costs at any time.
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| (d) |
The categories of fixed costs are:
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| Category I |
Work up to and including the date upon which the First General
Order or Short Order is entered
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| Category II |
| (a) |
Preparation and lodgment of a receivership account
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| (b) |
Preparation and lodgment of a receivership account which
has been certified by a solicitor under the provisions of the
Practice Notes dated 13 September 1984 and 5 March 1985
reported at [1984] 3 All ER 320 and [1985] 1 All ER 884
respectively
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| Category III |
General management costs in the first year
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| (a) |
where there are lay receivers and the court has authorised
the receiver to employ solicitors to carry out work not usually
requiring professional assistance under rule 87 of the Court of
Protection Rules 2001
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| (b) |
where there are professional receivers
| | | General management work in the second and subsequent years
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| (c) |
where there are lay receivers and the court has authorised
the receiver to employ solicitors to carry out work not usually
requiring professional assistance under rule 87 of the Court of
Protection Rules 2001
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| (d) |
where there are professional receivers
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| (e) |
Where a professional is dealing with the affairs of an
individual under an order of the court, and the assets of the
individual are less than £16,000, then the professional may take
a general management fee of 2.5% of the patient's assets on the
anniversary of the order appointing the professional to act (plus
VAT).
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| Category IV |
Applications under s.36 (9) or 54 of the Trustee Act 1925Acts or
section 20 of the Trusts of Land and Appointment of Trustees
Act 1996 for the appointment of a new trustee in the place of
the patient and applications under section 96(1)(k) of the Mental Health Act 1983Acts for the authority to exercise any power
vested in the patient whether beneficially, or as guardian or
trustee, or otherwise.
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| Category V |
Conveyancing costs, except where the sale or purchase is made
by trustees.
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| Category VI |
Work up to and including the date upon which an order
appointing a replacement receiver is entered.
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| Category VII |
Preparation of an Inland Revenue income tax return on behalf
of a patient.
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| (e) |
In most
straightforward
or routine receivership cases, solicitors will usually opt
to take fixed costs because they can be paid quickly and easily. However, the court recognises
that in some cases this will not be appropriate, therefore, in all categories of work, solicitors
may, if they prefer, apply for an assessment of their costs.
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23.5 |
Commencing Detailed Assessment |
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| (a) |
The detailed assessment of costs under orders or directions of the Court of
Protection is dealt with in accordance with the CPR. Solicitors should lodge a request for a
detailed assessment at the Supreme Court Costs Office (not the Court of Protection or the
PGO), using Form N258B if payable out of a fund, or Form N258 if payable by one party to
another, together with the authority for assessment, the bill of costs, all supporting papers and
a lodgment fee (currently £200, or £100 for bills below £3,000 fee 4 COP Rules as amended).
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| (b) |
The authority for assessing a Court of Protection bill of costs must derive from
an order or direction of the Court of Protection. The general rule is "one order-one bill" so the
request should not consolidate two or more orders in one bill. The exception is a bill for the
preparation of a receivership account, which may be included in a bill for general management.
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23.6 |
Bill Format |
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| (a) |
The bill of costs should be prepared in accordance with the model forms set
out in the CPD (see para 3.4, above) except where the short form bill (described below) is
appropriate. The bill should state correct title of the matter, the name and address, telephone
number and reference of the solicitor. The bill should list each chargeable item of work in
chronological order with dates. It should also show any relevant events even if it does not
constitute a chargeable item. If the bill is for general management it should state the year
covered (e.g. from 21 December 2004 to 20 December 2005).
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| (b) |
Where the amount of the bill does not exceed £3,000, excluding VAT and
disbursements the solicitor may request the Costs Office to assess the costs using the short
form bill. The procedure is the same as that for an application for detailed assessment, except
that solicitors may use a simplified form of bill, which will not require the services of a costs
draftsman. The cost of drawing a long form of bill will not usually be recoverable in cases
where a short form bill is appropriate. A copy of the model short form bill is set out in the
Appendix, below, para A-10.
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23.7 |
Authorities to Assess Costs |
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| (a) |
The First General Order is the authority to assess the costs of the application to
appoint the receiver. The Costs Office will treat costs of the application as ending on the
issue date of the First General Order (which may be some time after the actual date of the
order). The costs officer will treat any costs incurred after the issue of the order as general
management costs.
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| (b) |
If the order provides for fixed costs, but solicitors elect for assessment, it is not
necessary to apply to the Court of Protection for an amended direction. Instead, under a
general direction issued by the Court of Protection and dated the 25 July 1990, solicitors may
elect for assessment simply by lodging a bill with the Costs Office. The bill should contain a certificate stating that fixed costs have not been taken.
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| (c) |
If the application is for the assessment of general management costs, the costs
officer will need to know that the court has agreed that the professional receiver is to be paid
general management costs. When lodging the first year's general management bill, the
receiver should send a copy of the First General Order authorising him or her to be paid
professional costs. The Costs Office will keep a record so it is not necessary to send a copy of
the First General Order in subsequent years. Unless there are any special circumstances,
general management costs should be claimed annually, usually after passing the annual
account.
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| (d) |
Any other solicitor in the matter will need to send the direction of the court,
usually a letter, authorising the receiver to employ a solicitor to do work not usually requiring
professional assistance (see para 23.9, below). They should also lodge a copy of the First
General Order so that the Costs Office can record who is receiver and note any specific
directions.
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| (e) |
Costs for preparing the receiver's annual account are assessed after passing the
receiver's account. Solicitors should enclose with their bill a copy of the letter from the PGO
sent out when the account has been passed.
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| (f) |
In all cases, where fixed costs are available, solicitors should confirm, when
lodging their bill for assessment, that they have not taken fixed costs for the work. The
simplest way of doing this is to add an endorsement to the bill.
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23.8 |
The Detailed Assessment |
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| (a) |
The Costs Office will deal with most assessments on a provisional basis by
post. If the solicitor is not satisfied with the assessment he must inform the costs officer
within 14 days of receipt of the provisional assessment. The Costs Office will then fix a date
for hearing. In practice the costs officer will deal with any enquiries by telephone or letter.
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| (b) |
If the order provides for costs to be paid other than from the patient's estate,
the solicitor must provide a statement of parties and Notice of Commencement. The Costs
Office will send an appointment for the hearing to all parties. Rule 47.17A of the Civil
Procedure Rules 1998 provides that a trustee, receiver or any other party managing the
patient's fund or litigation, is a person who will be treated as having a financial interest in the
outcome of a detailed assessment, therefore solicitors must provide their name, address and
reference, in case the costs officer decides they should be sent the bill of costs or notice of
assessment. As a matter of good practice, solicitors must serve a copy of the bill on the
receiver prior to lodgement, as this will help to allay disputes where the receiver is unaware
that costs have been claimed from the patient's estate until receipt of the final costs certificate.
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| (c) |
After completion of the assessment, the solicitor must complete the summary
on the bill certifying the castings as correct, and return the original bill to the Costs Office for
the issue of the costs certificate. There is no fee for sealing the certificate.
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23.9 |
Solicitors and Other Professional Persons Carrying out Receiver's Work |
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| (a) |
Rule 87(1) of the Court of Protection Rules 2001 states that no receiver for a
patient, other than the Official Solicitor, shall, unless authorised by the Court of Protection, be
entitled at the expense of the patient's estate to employ a solicitor or other professional person
to do any work not usually requiring professional assistance.
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| (b) |
The court may authorise professionals to be paid costs formally by way of an
order or informally for example by letter. Although this guide describes the procedure in
relation to solicitors' costs, the Court of Protection and the Costs Office will treat other
professionals in a similar way.
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| (c) |
The Court of Protection has discretion to order assessment on either the
standard or indemnity basis (rule 43 (remuneration) and rules 84 89 (costs) COP Rules).
Definitions of standard and indemnity bases of costs are set out in para 2.4, above.
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| (d) |
As a general principle, the court will require assessment of costs on the
standard basis. This is because the legal definition of the standard basis will only allow costs
that are proportionate to the matters in issue. There is no test of proportionality in the
definition of the indemnity basis, which precludes the costs officer from taking into account
the amount of money involved, the financial position of the client and the complexity of the
case.
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| (e) |
Following the Practice Direction issued by the Master of the Court of
Protection on 2 March 2005, all orders providing for costs made on or after 1 April 2005 will,
unless the court specifically directs otherwise, provide for assessment on the standard basis.
This includes orders issued on or after that date providing for fixed costs, where the
professional elects to seek an assessment pursuant to the general direction dated the 25 July
1990.
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| (f) |
The Court of Protection retains the discretion to order costs on the indemnity
basis. Solicitors may apply to the court for an order for costs on the indemnity basis, if they
feel the circumstances of the case justify it. However, solicitors undertaking work in
expectation of receiving costs on the indemnity basis do so at their own risk that such an order
may not be made.
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| (g) |
It is not possible to define exactly what circumstances might persuade the court
to agree to assessment on the indemnity rather than standard basis. There are an infinite
variety of situations that might justify the making of such an order and the judge has wide
discretion in relation to the ordering of costs. The onus is therefore on the solicitors to
persuade the court that costs should be paid on the indemnity basis.
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23.10 |
Non-Professional Receivers |
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| (a) |
In cases where the receiver is not a professional person, he or she is required to
carry out the full range of receivership duties. These duties are set out in the Receiver's
Handbook published by the Public Guardianship Office and the Receiver's Declaration that
applicants submit on applying for appointment as receiver.
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| (b) |
On occasions, the receiver may wish to employ at the client's expense a
solicitor or other professional person to do work not usually requiring professional assistance.
If a receiver engages a solicitor to assist in this way, the receiver or solicitor must apply to the
court for authorisation under rule 87 of the COP Rules.
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| (c) |
Where an authorisation under rule 87 has been granted the solicitor must
provide a copy of it to the Costs Office when submitting a bill for assessment. If no such authority has been obtained, the costs officer will disallow the claim, although they may still
apply `out of time' to the Court of Protection, for directions under rule 87. The court will
usually provide retrospective authorisation where the professional has acted in good faith, for
example in cases of emergency or where urgent action is required to protect the client's
property. In most cases the court would expect the professional to seek advance
authorisation.
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| (e) |
The court considers the completion of annual accounts to be work that
sometimes requires professional assistance and therefore solicitors do not need to apply for
directions under rule 87 if they are instructed by a receiver to prepare annual accounts.
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23.11 |
General Management Work |
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| (a) |
The Court of Protection's jurisdiction extends only to the management and
administration of the client's financial affairs. The court cannot give directions concerning
aspects of clients' affairs that are not financial. It follows that solicitors will only be allowed
costs for work relating to the client's financial affairs.
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| (b) |
If the costs officer disallows an item in a bill that the solicitor feels is properly
chargeable as work relating to financial affairs, they should raise this upon review of the
provisional assessment and if that is unsuccessful, take the question to appeal. Neither the
court nor the PGO can intervene in the assessment process since this function is reserved to
the Supreme Court Costs Office by reason of rule 86 COP Rules.
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| (c) |
If the receiver is a solicitor or other professional person then, subject to the
terms of the order appointing them as receiver, they may be paid costs for the whole of the
receivership duties, as long as those duties relate to the management of the client's financial
affairs. The interpretation of those duties may cause difficulties for professional receivers, as
some of the duties listed in the Receiver's Handbook (published by the PGO) and the
Receiver's Declaration do not relate directly to financial affairs. As a general rule the court
would not expect professional receivers to undertake the non-financial duties of a receiver,
but would expect the receiver to take reasonable steps to ensure that, wherever possible those
duties were undertaken by someone else.
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| (d) |
On occasions some non-financial activities, such as visits to clients or
attendance at case conferences, may be necessary in order to safeguard a client's financial
affairs. In such cases, the costs officer may accept well-founded arguments that such general
management costs should be allowed on assessment. If the circumstances of the case are
unusual and require the receiver to be actively involved in the management of the client's
day-to-day affairs, then the receiver should draw this to the costs officer's attention in a
covering letter submitted with the bill. The costs officer would also expect that any
receivership work, be it legal or non-legal, be undertaken by an appropriate fee earner in the
firm, which may not necessarily be the appointed receiver.
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23.12 |
Costs of Sale or Purchase of Property |
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| (a) |
The assessment of costs of sale or purchase of a property will normally take
place at the conclusion of the transaction unless the court has made other directions. The
estate agent's charges should appear in the completion statement and not as a disbursement on
the bill.
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| (b) |
If the sale was by trustees of a jointly owned property, the Costs Office will
assess the costs of the application to appoint new trustees; but the conveyancing costs can
only be approved by the trustees.
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23.13 |
Deceased Patients |
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If the patient dies when the assessment of costs are pending, the solicitor should inform the
Costs Office, who will suspend the assessment until after the court gives final directions. The
solicitor must serve a copy of his bill upon the patient's personal representative upon resumption
of the assessment process.
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