Challenging Costs by Beneficiaries

A personal representative (PR) is the primary person with the rights and responsibilities in administration of an estate.

As a beneficiary of an estate, there is a limit to what you can expect and ask for from the Estate during the administration.

There is usually no absolute right to the following, which is generally at the discretion of the PR

• a copy of the Will (before a Grant of Probate has been obtained)
• disclosure of any entitlement under the Will
• disclosure of documents and other information
• estate accounts

A beneficiary however can potentially still

a) Bring a professional negligence claim
b) Make a Complaint
c) Ask for the costs incurred by solicitors to be assessed

Detailed assessment of solicitors’ costs

A client who is liable to pay or has paid a solicitors costs can apply for assessment of those costs under the Solicitor Act 1974 (SA 1974).

There are strict deadlines – usually a month after delivery of the bill, to make an application. If an application is made before/after expiry of 12 months then a court has discretion to order assessment (if there are ‘special circumstances’)

S71 also allows a third party, including a PR (s 71(3)) to request a bill to be subject to detailed assessment, as if they were the client.

The court was recently invited to clarify whether a beneficiary (as an interested third party) could utilise s71(3) to challenge the costs incurred by solicitors instructed by PRs of the estate who had approved and paid such costs from the funds in the estate.

Kenig v Thomson Snell & Passmore LLP (2024)

Mr Daniel Kenig (and his sister) were beneficiaries of their mother’s estate pursuant to a will made on 13 February 2019.

Thomson Snell & Passmore LLP (TSP) were instructed by the sole executor of the estate to administer the estate.

Their original costs estimate was between £10,000 and £15,000 plus VAT and disbursements.

Their fees totalled £54,410.99 plus VAT and disbursements for work carried out between October 2019 and August 2021. The executor approved and paid for these from estate funds

Mr Kenig applied for an assessment in April 2022 (some 8 months after the last invoice)

The first judge found for Mr Kenig in February 2023, who considered that

a) The bills called for an explanation
b) There were special circumstance to allows assessment, including
i) the discrepancy from the original estimate
ii) the speed at which the estimate was exceeded
iii) the absence of information to justify the discrepancy
iv) specific matters in the bills which gave rise to possible concerns

He emphasised that the relationship under s71(1) was based in contract whereas s71(3) was a fiduciary duty owed to beneficiaries by a PR

The discretion afforded under s71(3) was wider – “the orders that the court may make pursuant to a section 71(1) assessment are limited to “the same order (if any) as it might have made if the application had been made by the party chargeable with the bill.”

The appeal was heard in October 2023 and judgment handed down in January 2024

The court of appeal set out the differences between an assessment by a person who has paid or is liable to pay under section 71(1) (e.g. an executor) and third parties (who have an interest in any property out of which a bill has been paid or is payable from) under section 71 (3) (e.g. a beneficiary)

They accepted that this case was distinguished from the case of Tim Martin Interiors Limited v Akin Gum LLP (2011) (which concerned a s71(1) assessment) and instead should following the ruling of Re Brown (1867) instead.

The time limits under s70 did not apply to an assessment under s71(3) in the same way

They also went on to confirm the fact that executors had approved the bill was one factor (even if a major one) to take into consideration but did not in itself preclude a challenge

The special treatment afforded under s71(3) was because

First, although the starting point is that an assessment under section 71(3) is an assessment as between solicitor and client, I accept that the ultimate interest to be protected on an assessment under section 71(3) is that of the estate and/or the beneficiaries.

Final Words

Executors (and their legal representatives) should be cautious in their dealings with beneficiaries given the fiduciary duties owed

If possible it would be useful to keep them informed (and maybe obtain their consent) of major decisions and potentially costs incurred for the administration of the estate so there is no surprises or room for argument later

Beneficiaries are not without recourse given that ultimately they have a vested interest in how an estate has been administered.

Our expert dispute resolution team provides comprehensive legal advice and representation to individuals and businesses across a range of areas, including estate administration, probate, and contentious probate. If you are facing challenges in estate administration or require assistance with a dispute, our specialist lawyers can help. Contact us today on 0330 822 3451 for a confidential consultation or request a callback.