IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 5 JULY 2001
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BETWEEN:
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R Horne (Mackrell Turner Garrett) for the Claimants
The First Defendant appeared in person
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This is an application made on 24 May 1996 by Mr Kenneth Watson for permission to be paid for the services which he claims to have provided to the estate of the late Mr Lorenzo Perotti (“the deceased”) over the past 15 years. He asks me to assess the payment at about £52,000 plus VAT.
The facts in summary form are as follows.
Mr Watson qualified as a solicitor in 1975 after a career in business. He was then employed by Mackrell & Co. He became a partner in the firm and remained as such until his retirement from practise in April 1994. In August 1983, he took instructions from the deceased in connection with his will. He drew up a will which the deceased signed on 23 August 1983.
Under the will, the deceased appointed a friend, Mr Mario Impanni, as his executor. Apart from two bequests of some personal effects and two bequests of £5,000 each, he left his house to his sister, Mrs Salvi, and the residue of his estate on the same trust as if he had died intestate. The will contained no professional charging clause. The will was witness by Mr Watson and Mr Impanni.
The deceased died on 11 April 1984. Mr Impanni was in Italy and it was decided that Mr Watson’s senior partner, Mr Peter Rudolph, would be appointed attorney/administrator in relation to the estate. Accordingly, on 31 July 1994, letters of administration in respect of the deceased’s estate were granted out of the Principal Registry of the Family Division of the High Court to Mr Rudolph as “the lawful attorney ... of Mario Impanni for his use and benefit and until he shall obtain probate of the ... will”.
At this stage, the estate was recorded as having a gross value of under £100,000.
Mr Rudolph died on 25 August 1985 and on 4 February 1986 letters of administration were granted to Mr Watson in the same terms as those granted to Mr Rudolph. The value of the estate was recorded in those letters of administration as £212,000.
The administration of the estate was not at all a straightforward matter, and certainly not as straightforward as might have been expected on these bare facts. There were three main reasons for this. First, there were unexpected features, in particular it turned out that the deceased had £700,000 in a Swiss bank account which had been concealed from Mr Watson when the will was drawn up, and indeed was concealed from Mr Watson and Mr Rudolph for some time after the deceased died. This led to a problem, as to the deceased’s domicile at the date of his death.
Secondly, from 1984 onwards, one of the deceased’s nephews and one of his residuary beneficiaries, Mr Angelo Perotti (“Mr Perotti”), took a particularly aggressive stand, and, indeed, an unreasonable attitude in many respects in relation to the administration of the estate.
Thus, as early as January 1985 Mr Perotti wrote to Mr Rudolph, informing him that:
I have every intention of taking legal proceedings against Mr Mario Impanni, certain other people and yourself, Mr Peter Rudolph. I cannot specify the exact charges as I have yet to ascertain the correct wording for these said charges. I shall be conducting these legal proceedings myself, so any communication concerning my uncle’s will should be made in writing and directly with me.
Thereafter, he wrote a substantial number of further letters to Mr Rudolph and then to Mr Watson in a not dissimilar vein.
These threats duly led to proceedings which were issued by Mr Perotti against Mr Watson and were heard by Rimer J over a period of more than four weeks, and culminated in a full and detailed judgment, which the learned judge handed down on 26 March 1997. I shall call them “the main action”.
The third confusing factor was, as Rimer J put it, Mr Watson “displayed shortcomings in the administration of the estate” and also “failed to bring any high degree of skill to the administration of the estate”. However, Rimer J acquitted Mr Watson of any dishonesty and, indeed, refused to remove him as the administrator.
It is accepted on behalf of Mr Watson, in accordance with the finding of Rimer J in the main action, that neither he nor Mr Rudolph was entitled to charge the estate for the management and the professional services they each provided to it. That is because of the well-known principle that a solicitor or other professional who is an executor, administrator or trustee cannot charge in the way that he would charge for his usual professional services in connection with the estate or trust save to the extent that the trust deed or will specifically provides (in a so-called professional charging clause) or the court in its discretion otherwise permits.
In the present case, I have to consider three questions. First, is there jurisdiction to grant Mr Watson the relief he seeks? Secondly, if there is, should I exercise that jurisdiction in his favour? Thirdly, if so, should I assess his remuneration myself and, if so, in what amount?
The application is opposed by Mr Perotti, representing himself, and certainly one (and possibly two) of the other five original beneficiaries in respect of the residue of the estate.
Of the remaining two or three beneficiaries, two appeared to support Mr Watson’s application in writing, but subsequently seem to have withdrawn that support. I think it fair to proceed on the basis that all the beneficiaries would prefer Mr Watson not to charge, because that is in their interests, albeit that I think it would be wrong to assume that any of them would oppose it with the same degree of force as Mr Perotti himself.
When Mr Roger Horne (who appears for Mr Watson) stood up to open the case, Mr Perotti applied to strike out the application. I indicated to him that I thought that it would be more appropriate to consider Mr Watson’s application. It appeared to me that to divide the matter up would not be a sensible use of court time, and to hear it in one go would not be prejudicial to Mr Perotti, because all the arguments he wished to put forward to strike out could be considered at the same time as the other arguments.
It should also be recorded that I had reserved judgment, but, shortly before I was due to give judgment, Mr Horne, provided me with some further written submissions on one issue. Mr Perotti wanted time to consider those further written submissions, and I thought it right to adjourn the matter so that he could do so. He has now provided a full written answer to that submission, which I have considered.
I should also mention that Mr Perotti wished to cross-examine Mr Watson. Bearing in mind particularly the unusual facts of this case and the nature of the application, it seemed to me that Mr Perotti should have the right to cross-examine Mr Watson, and I so ordered. Nonetheless, I thought it right to ensure that Mr Perotti did not seek to re-open issues which had already been determined by Rimer J following the long hearing in front of him.
Mr Perotti initially appeared to me to ask a number of inappropriate questions; as a result, he felt that I was interrupting him too much and his cross-examination took rather longer than one might have hoped. Overnight he had the opportunity to re-formulate his questions and I believe that he had every opportunity to put those points which he properly needed to put. Some of them were telling points.
Mr Perotti raises two preliminary points, which would have been his arguments in the striking out application. First he says that the application was issued on 24 May 1996, but Mr Watson’s affidavit in support was only served in January 1997, much later than required under the Rules of the Supreme Court (RSC) which were then in force and much later than indicated by Mackrell & Co in their letter accompanying the application.
There has been no evidence of any prejudice to Mr Perotti or the executors as a result of the late affidavit and no evidence of any dishonesty or crafty dealing on the part of Mr Watson in this connection. To dismiss an application, if it was otherwise justified, on this point and thereby to deprive Mr Watson of any relief to which he would otherwise be entitled would seem grossly disproportionate.
It is, of course, regrettable that a solicitor, applying for an indulgence, which is what Mr Watson is doing, has not complied with the rules, but I cannot overlook the fact that it was by no means uncommon for affidavits or witness statements to be served later than the RSC stipulated.
Secondly, Mr Perotti says that these proceedings represent an abuse of process. The issues that were argued before Rimer J in the main action should have included the instant dispute and, he says, it is an abuse of the process for Mr Watson now to seek to raise it. It should be recorded that Mr Perotti feels very strongly about this, because certain points which he has wished to raise in separate proceedings have been struck out by the Master on the grounds that they should have been raised in the earlier proceedings before Rimer J.
I am quite satisfied that there is nothing in the point. The present application was issued before the main action started before Rimer J; further, during the course of that hearing Rimer J gave specific directions in the present application which ensured that it would not come on until after he had given judgment.
Mr Perotti is relying on the well-known principle in Henderson v. Henderson 3 Hare 100 at 115. That is not a technical principle, as the House of Lords recently explained. In Johnson v. Gore Wood & Co (a firm) [2001] 2 WLR 72, Lord Bingham of Cornhill at p 90C, indicated that it was appropriate to strike out in such a case where the second action involved “misusing or abusing the process of the court”. To much the same effect at 118D, Lord Millett indicated that a strike out would be appropriate if the second action were “oppressive or an abuse of process”. That seems to me, with respect to Mr Perotti, to be a complete non-runner in the present case.
The third point raised in relation to jurisdiction is that I have no power to grant Mr Watson the relief he seeks as he witnessed the will and a witness cannot benefit from the will, even indirectly, in particular by virtue of a court order. In my judgment, that is not the law. The relevant provision is s 15 of the Wills Act 1837, which effectively vitiates “any beneficial ... interest ... given” by a will to a “person [who] attests to the execution” of that will.
I assume in Mr Perotti’s favour that the right to charge for professional services to the estate could fall within that provision, a proposition supported by Re Pooley 40 Ch D 1, but one which may be worthy of re-visiting in an appropriate case, particularly in light of the discussion in the Court of Appeal in Re Duke of Norfolk’s Settlement Trusts Perth (Earl) and another v. Fitzalan-Howard and others [1982] Ch 61, at pp 77F to 78B.
In the instant case, Mr Watson is not seeking to enforce any right or interest “given” by the deceased’s will. He is seeking to recover professional fees, or their equivalent, because there is no charging provision in the will. In other words, he is seeking the exercise of the court’s discretion because nothing is “given” in the will to him.
In this connection, it seems to me that it can be said that this case is effectively a fortiori the facts in Re Royce’s Will Trusts; Tildesley v. Tildesley and Others [1959] 3 All ER 278. I cannot put it better than was put by Romer LJ at the end of his judgment in that case at p 283C:
In the present case, the second defendant [that is, the witnessing applicant] was functus officio as an attesting witness long before it could be said of him in any sense that he was ‘interested under the will’. If that is right, and in my judgment it is, s.15 cannot have any application to the case.
Fourthly, two other grounds of opposition to the court having jurisdiction in this case have been raised, namely the facts are not exceptional, and that Mr Watson is seeking to charge for work done in the past.
To my mind, those arguments are swept away by the reasoning of the Court of Appeal in Re Duke of Norfolk’s Settlement Trusts Perth (Earl) and another v. Fitzalan-Howard and others [1982] Ch 61 and, indeed of Judge Paul Baker QC sitting as a Deputy Judge of this Division in Foster and others v. Spencer [1996] 2 All ER 672. The former case is binding on me; the latter case is not, but in light of the reasoning in the former case I would respectfully agree with the views expressed by Judge Baker. Those cases satisfy me that I have jurisdiction in the present case.
In Norfolk, Fox LJ said at 76B:
... There can, in my view, be no doubt that there is an inherent jurisdiction, upon the appointment of a trustee, to direct that he be remunerated ...
At pp 78G to H, he said this:
As to principle, it seems to me that if the court has jurisdiction, as it has, upon the appointment of a trustee to authorise remuneration though no such power exists in the trust instrument, there is no logical reason why the court should not have power to increase the remuneration given by the instrument. In many cases the latter may involve a smaller interference with the provisions of the trust instrument than the former. Further, the law has not stopped short at authorising remuneration to a trustee only if he seeks the authority at the time when he accepts the trusts.
In Foster it was argued that the court should not exercise its jurisdiction in relation to a trustee whose services were no longer required. At 681A to C, Judge Baker said this:
I regard this as too narrow a reading of the decision of the Court of Appeal. It fails to take account of the passages in the judgment of Fox LJ where he expressly indorses earlier cases allowing remuneration for past services ... Where, as in this case, there were no funds out of which to pay remuneration at the time of their appointment, nor was a true appreciation of the extent of the task possible, a prospective application would be impracticable, if not impossible. The refusal of remuneration on the grounds suggested by [counsel] would result in the beneficiaries being unjustly enriched at the expense of the trustees. The right of the trustee to remuneration for past services cannot depend upon the circumstances that at the time he seeks it, his services are further required so that he is in a position to demand remuneration for the past as a condition of continuing in office.
I agree.
Accordingly, I conclude that I have jurisdiction to grant Mr Watson the relief he seeks and I turn to consider the issue of whether I should do so.
At first instance in Norfolk, Walton J said that the power to allow an executor, administrator or other trustee to charge for his services should be “exercised sparingly” on the ground that it was a “wholly exceptional” jurisdiction (see [1979] Ch 37 58). This appears to have reflected the accepted view at the time, see, for instance, Re Worthington (deceased), ex parte Leighton and another v. Macleod [1954] 1 WLR 526 where, at p 528, Upjohn J said much the same thing in very similar words. However, the Court of Appeal in Norfolk took a different view and said, at [1982] Ch 75 that Walton J:
... took too narrow a view of the inherent jurisdiction.
At 79C to D, Fox LJ went on to explain the basis for the court’s jurisdiction. He said this:
The basis, in my view, in relation to a trustee’s remuneration is the good administration of trusts. The fact that in earlier times, with more stable currencies and with a plenitude of persons with the leisure and resources to take on unremunerated trusteeships, the particular problem of increasing remuneration may not have arisen, does not, in my view, prevent us from concluding that a logical extension of admitted law and which is wholly consistent with the apparent purpose of the jurisdiction is permissible. If the increase of remuneration be beneficial to the trust administration, I do not see any objection to that in principle.
Fox LJ then said this at 79F to H:
... In exercising the jurisdiction the court has to balance two influences which are to some extent in conflict. The first is that the office of trustee is, as such, gratuitous; the court will accordingly be careful to protect the interests of the beneficiaries against claims by the trustees. The second is that it is of great importance to the beneficiaries that the trust should be well administered. If therefore the court concludes, having regard to the nature of the trust, the experience and skill of a particular trustee and to the amounts which he seeks to charge when compared with what other trustees might require to be paid for their services and to all the other circumstances of the case, that it would be in the interests of the beneficiaries to increase the remuneration, then the court may properly do so.
I turn to the factors in favour of exercising my jurisdiction. First, the administration of this estate involved, not merely more work, but far, far more work than would have been anticipated at the time the will was drafted and executed, or indeed at the time that letters of administration were taken out. The effect of the estate owning the relatively very large sum of £700,000 in Switzerland did not merely involve the estate being much larger, but it resulted in the question of the deceased’s domicile at date of death having to be considered.
Rimer J, as I will mention, thought that this was a matter which should properly have been investigated and which was properly (albeit perhaps not expeditiously investigated) by Mr Watson. Mr Perotti’s contention that this was an inappropriate course to take thus appears to me to have been disposed of by Rimer J. Further, Mr Perotti’s unreasonable and persistent badgering of Mr Watson and Mr Rudolph would also have been unexpected and involved them in work.
The fact that considerably more work was involved for a trustee, administrator or executor than he would have expected when accepting the role is a factor which militates in favour of the court exercising its discretion, as was emphasised by Judge Baker in Foster and others v. Spencer [1996] 2 All ER 672, in the passage I last read. It is also supported by what he immediately went on to say in that case at 681D:
The services rendered by the trustees were wholly outside their contemplation when appointed.
He then went on to refer to the work he had to do in brief terms and continued:
This proved far more difficult than would normally be expected and made great demands on the expertise ... and on the time of all of them. I have no doubt that if they had realised what they were in for, they would have declined to act unless remunerated in some way.
Anyone who even glances at the judgment of Rimer J would have no doubt that the same thing could be said in spades about Mr Watson in the present case.
Secondly, the fact that Mr Watson and Mr Rudolph overlooked the fact that they could not charge is relatively comprehensible in the present case. They had taken out letters of administration in respect of the estate as attorneys for Mr Impanni. They apparently therefore thought that they could charge on the basis that they were not the real administrators, but were agents for Mr Impanni. That was wrong, as Rimer J held, but the fact that it was a relatively understandable error is perhaps underlined by the fact that a Deputy Judge hearing an application in the main action in 1992 expressed the same view in fairly confident terms.
Thirdly, there is no doubt that a lot of work has been done. The work in question is said to justify a payment of over £50,000 and, as I will remark, that is a figure which does not seem unreasonable and is supported by evidence.
To deprive Mr Watson and Mr Rudolph of any charge at all would be harsh. Insofar as there are valid reasons for criticising them, there is obviously a powerful argument for saying that this should be reflected in a reduction in the sum they are awarded rather than by depriving them of anything.
I turn to the factors against exercising my discretion in Mr Watson’s favour. First, Mr Watson drew up the will so that he and Mr Rudolph, his former partner, as lawyers, were very well placed to appreciate that it contained no charging clause; indeed, he was responsible for its absence. I think this is a factor, but I regard it as a relatively minor point as he was not an executor, he thought the estate would be small and simple, and he may well have thought it was unnecessary to have a charging clause. As I have mentioned, he apparently thought that the letters of administration he took out did not prevent him charging.
Secondly, the estate has been severely depleted in value, possibly to nothing, by litigation. In my judgment, this is virtually exclusively the fault of Mr Perotti and not that of Mr Watson. I do not propose to go into the details of the history, but the salient factors as I see them are these.
At the end of a very long hearing lasting over four weeks and a concomitantly long judgment, Rimer J concluded that 75 % of Mr Watson’s very substantial costs should be paid by Mr Perotti and, in default of these being recovered from Mr Perotti, Mr Watson was to be entitled to take them from the estate. The balance of Mr Watson’s costs were to be borne by himself. That decision was upheld by the Court of Appeal, who indeed upheld all Rimer J’s conclusions on the merits.
Rimer J also ordered that Mr Watson:
... ought not to be disallowed his indemnity out of the assets of the deceased in respect of such [his] costs ... whether incurred down to the date of this order or that shall be incurred hereafter of and incidental to:
1. all applications, appeals and other proceedings of whatsoever nature in this action;
2. all appeals, applications and proceedings of whatsoever nature in this action;
3. the taxation of costs in this action.
Additionally, a substantial amount of costs has been incurred in connection with freezing Mr Perotti’s assets and applying successfully for his committal for contempt. That is a point which I will advert to in more detail later, but at this stage it suffices to say that it seems unattractive, to put it at its lowest, for Mr Perotti to criticise someone for issuing proceedings which result in his ending up in prison for contempt. There have been a number of other applications, appeals and hearings involving Mr Perotti and Mr Watson. On the great majority of them Mr Perotti has failed.
Thus, if litigation has depleted the estate, the blame is really on Mr Perotti: insofar as the proceedings are the fault of Mr Watson, the estate has not suffered: note the 25 per cent. of his own costs that he has to pay; he cannot look to the estate for that.
The position is summarised by Sir Martin Nourse, giving the judgment of the Court of Appeal on 2 February 2001 upholding Rimer J’s order of 26 January 1997. Sir Martin said this in para 33 of his judgment:
The principle here is clear. A trustee or personal representative is entitled to be indemnified out of the trust property or estate for all expenses which he has properly incurred in carrying out his functions as trustee or personal representative ... If an order for costs is made in his favour in contested litigation, it can only be, if at all, in exceptional cases that the trustee or personal representative is not entitled to be indemnified. Here the effect of the judge’s decision is that Mr Watson acted properly in incurring three-quarters of the costs as between himself and Mr Perotti. If and to the extent that he cannot recover them against Mr Perotti, he is entitled to be indemnified out of the estate.
The word “them” in that last sentence refers to the three-quarters, not the quarter costs.
Accordingly, I do not think there is anything in this point.
Thirdly, it is said that, while it may not have been unreasonable for Mr Watson to obtain a freezing order and a search order against Mr Perotti and even to apply to commit him for contempt, Mr Watson wrongly incurred these costs, in effect on behalf of the estate, thereby landing the estate with a very substantial liability for costs, which Mr Perotti puts at £90,000.
At first sight, it was very questionable for Mr Watson to have put the estate in a position of incurring these costs. While he was, understandably, concerned to ensure that he could recover as much of the costs as possible from Mr Perotti and he was also concerned (rightly as it turned out) that Mr Perotti would be salting away or dissipating his assets, what was the benefit to the estate? It seems to me that that is not a fair criticism of Mr Watson. On the contrary. The purpose of the exercise was to prevent Mr Perotti from disposing of assets because Mr Perotti was trying to avoid meeting the costs order which Mr Watson had obtained. Bearing in mind that Mr Watson was entitled to recover 75 % of his costs from Mr Perotti, failing which he was entitled to look to the estate for those costs, it appears to me that any reasonable step taken to ensure that Mr Perotti did not reduce his liability for those costs was ultimately for the estate’s benefit rather than for Mr Watson’s benefit.
Assuming in Mr Perotti’s favour that the whole exercise cost £90,000, the exercise still seems to me to have been self-evidently worthwhile because it resulted in Laddie J, on the contempt application, rejecting Mr Perotti’s contention that he held a flat on trust for his daughter: Laddie J concluded that he owned the flat beneficially. It is clear that on even the most pessimistic valuation that flat is worth over £100,000.
Accordingly, on a cost-benefit analysis, the exercise was, on its face, to put it at its lowest, justified.
As to the contempt application, it would have had the effect of bringing home to Mr Perotti that he should not take any further steps to dissipate his other assets, with similar indirect benefits to the estate.
It is right to recall that the order for committal on the contempt application, which has been satisfied by Mr Perotti going to prison, is subject to an appeal, but I have to deal with matters as they currently are and, having read Laddie J’s judgment, it seems to me that even if the Court of Appeal were to form a different view it is almost impossible to conceive that it could be said that the procedures adopted by Mr Watson could not reasonably be said to have been undertaken for the benefit of the estate.
Fourthly, Mr Watson has been criticised in a number of respects by Rimer J for the way in which he managed the administration of the estate. I have already quoted a couple of observations of a general nature. Going through his judgment, I have counted at least fourteen different criticisms of Mr Watson’s administration of the estate, ranging from “an error ... albeit only of a relatively minor nature” to a finding that Mr Watson was, on one aspect,“guilty of wilful default”.
Insofar as Mr Watson has wrongly caused the estate loss or damage, the estate has a claim, there is therefore obviously a strong argument for saying that if that claim is allowed, as Rimer J allowed it in one or two cases, then to take that loss into account when deciding how to exercise my discretion (or how much to award if I do exercise my discretion in favour of Mr Watson) would involve double counting or, to use Judge Baker’s expression, unjust enrichment for the estate.
Insofar as Mr Watson has caused the estate loss or damage and the estate has no claim, that would obviously be a factor in respect of which there would be a powerful argument for taking into account the factor when deciding whether and if so how to exercise my discretion. But nothing to suggest that there is any such item has been put before me.
However, I accept that where a trustee, executor or administrator can be shown to have been guilty of delay or incompetence, there is an argument for saying that the court should not exercise its discretion to award him any sum on account of the work he has done. It can be argued with considerable force that the court is not in the business of exercising its discretion to assist inept and inefficient professionals, especially when they are solicitors and officers of the court.
However, as I have said, although critical in a number of respects of Mr Watson, Rimer J, in his judgment to which I am much indebted, did say that, after careful consideration of all the criticism of his evidence, that Mr Watson had carried out a significant amount of valuable or justified work for the estate.
In connection with domicile, the learned judge said at p 78 of the transcript:
In my judgment, Mr Watson had a duty to the estate and all its beneficiaries to investigate the matter properly and he did so.
On the following page there is this:
There is no evidence as to precisely what the costs attributable to this aspect of the administration were, but as Mackrell’s total claimed costs were in the order of £44,000 the costs can only have been a proportion of this, say half.
Fifthly and finally, Mr Perotti says that Mr Watson has delayed the winding up of the estate wholly unreasonably. I accept that there were aspects of Mr Watson’s work which took significantly longer than they should have done; for instance, the investigation of domicile, as Rimer J said. However, most of the delay in winding up the estate seems to me to have been caused by Mr Perotti’s substantially misconceived proceedings.
Mr Perotti challenges this, but again I adopt Rimer J’s considered thoughts on this topic. Having referred to the fact that Mr Perotti had commenced the main action, Rimer J said:
Thereafter, Mr Watson took no further steps to resolve the problem. That omission is not one for which he necessarily deserves any criticism.
He then went on to explain that the issue which still remained to be resolved could have been raised by Mr Watson in the action before him but was not. He then continued:
There was therefore something to be said for awaiting the outcome of Angelo’s action [the action before Rimer J] before proceeding further with regard to resolving the problems which had arisen for the administration.
In my judgment, any delay for which Mr Watson was responsible (and I am satisfied he was responsible for delay) caused little, if any, prejudice because the estate could not be wound up and distributed until the litigation initiated by Mr Perotti was out of the way. It was not out of the way in any sense of the word until the Court of Appeal gave its decision, from which I have briefly quoted, in February this year. Even since then, there have been a number of other applications and proceedings brought by Mr Perotti, including the proceedings against Mr Watson to which I have inferentially referred, namely those that were struck out by the Master.
Clearly if Mr Watson is entitled, as Rimer J held he was and the Court of Appeal agreed, to his reasonable costs of the proceedings out of the estate, it is not sensibly possible for him to wind up the estate until this apparently interminable set of litigation comes to an end.
I now turn to consider whether to exercise my discretion in light of these factors.
In my judgment, in the present case, despite the significant shortcomings of Mr Watson, it would not be right to refuse to exercise my discretion in his favour. The reasons said to justify exercising my discretion in his favour when taken together, are plainly powerful.
In my judgment, the only strong reason against me exercising my discretion in Mr Watson’s favour is the combined effect of the criticisms of his conduct made by Rimer J. The fact that Mr Watson has been found to be inept on a number of occasions is nonetheless not sufficient to persuade me that he should be deprived of the receipt of some money for the work he has done, bearing in mind the quantum of the work done, the express finding of Rimer J that much of the work was justified, the fact that where his ineptitude has caused the estate loss he has been ordered to pay compensation, the fact that Rimer J did not think Mr Watson’s conduct was enough to justify his removal, and the fact that his ineptness and other shortcomings can be taken into account when assessing the quantum.
In my judgment, if I accede to Mr Perotti’s suggestion that I should give Mr Watson nothing, he would have a significantly greater sense of justified grievance than would Mr Perotti and the other beneficiaries if I do that which I propose to do, namely to exercise my discretion in Mr Watson’s favour.
I turn then to the final question, quantum. First, ought I to fix the quantum? In my judgment, it would be appropriate for me to affix the remuneration if it were at all possible to do so, rather than adjourning this issue to the Master with consequential further delay and cost.
Mr Horne, for Mr Watson, has asked me to take that course and Mr Perotti has not objected, if I choose to exercise my discretion (as I do).
Judge Baker felt that he should assess the quantum of remuneration in Foster and, like him, I conclude in this case that I have enough information to form a view. I have seen the narrative to the bills, I have heard from Mr Watson, I have seen charging sheets, I have read Rimer J’s very full judgment and I have heard detailed submissions from Mr Horne, who has taken me through a number of documents, and from Mr Perotti, who has taken me through a number of other documents.
Furthermore, in light of the lamentable history relating to the litigation concerned with this estate, I should lean as hard as I can in favour of cutting down the need for any further costs on delay in relation to any litigation concerned with this estate.
I turn then to consider what I should allow (and all figures are exclusive of VAT).
First, the bills and time sheets for the work done up to 29 January 1992 show total hours charged of £35,750. A further draft bill has been produced in relation to the work done since that date for a sum of £8,631. This provides about £44,400. The total sum claimed, as I mentioned, is about £52,000 because an uplift has been included on that figure to take into account the Law Society’s recommendations as to how one should adjust charges for this sort of work by reference to the value of the estate.
Secondly, £44,400 has actually been taken from the estate’s bank account, perfectly openly, by Mr Watson and his firm.
Mr Horne accepts, to my mind quite rightly, that although the claim is for £52,000 – odd it would, in the circumstances of this case, be optimistic for Mr Watson to expect me to order more than the £44,400 already taken.
Thirdly, on the face of it, if Mr Watson had been entitled to charge and was not open to any criticism, it appears to me difficult to resist the view that he would be entitled to £52,000. As I say, the work for which he claims is described by him, there has been an opportunity to cross-examine him, it is work in respect of which there are specific bills or draft bills and in respect of much of which there are time sheets. On the face of the bills and on the face of the time sheets and in light of the description of the work actually done, as described briefly by Rimer J as well as by Mr Watson, it does not seem to me that that is an unreasonable amount.
Fourthly, if I were to exercise in my discretion in circumstances where Mr Watson was not open to any criticism, I would think it right to accord him a sum of about £47,000. That is £5,000 less than the £52,000 which he would have been able to claim, if there had been a charging provision in the will.
Bearing in mind that he drew up the will with no charging clause and bearing in mind that he and Mr Rudolph accepted the role of administrators, it seems to me that, while it is understandable that they overlooked the fact that they were not entitled to charge, they were solicitors and it would be right, therefore, to reduce the £52,000 by the sum which they might reasonably have expected to incur by way of unchargeable costs; I must admit that is a spot figure, but I put it at £5,000. Were I exercising my discretion in circumstances where no criticism could be made of Mr Watson, I would therefore award him £47,000.
Fifthly, as I have mentioned, Rimer J was critical of Mr Watson in a significant number of respects. He made a number of errors and was responsible for some delays. Some of these errors were insignificant or small and some were substantial and may have caused damage, but in that connection he is liable to repay the estate. He was found guilty of wilful default.
In light of the substantial amount of work done by Mr Watson and the fact that there is no evidence of prejudice which has not been the subject of any compensation order resulting from his defaults and the fact that Rimer J considered that much of his effort, for instance in relation to the domicile issue, justified significant expenditure, I consider, as already indicated, that I ought, in exercising my discretion, to award him something.
However, when deciding how much is to be paid to him, I believe that it is right to take into account his failings and, in one case, his wilful default.
When resolving how to exercise its discretion to award remuneration to a professional trustee, especially a lawyer, the court would not, I think, be acting in accordance with justice, or with justified public expectation, or in accordance with fairness to the beneficiaries, if it did not take into account, when assessing the figure, the shortcomings of the professional person concerned, either by refusing to exercise its discretion at all, or when exercising its discretion.
As I have said, it seems to me that in the absence of his default a figure of around £47,000 (plus VAT) would be the appropriate sum to allow Mr Watson. In light of the comments I have just made, I think that is significantly too much. I have to balance, however, the fact that he has done a substantial amount of work and, while I have sympathy for the beneficiaries because the estate may have been very substantially depleted, the fault lies almost exclusively at the door of Mr Perotti, and not at the door of Mr Watson.
The deduction I make from the £47,000 to take into account Mr Watson’s failings must be a matter of judgment. What I have to do is to arrive at a figure which looks the right figure from the point of view of the beneficiaries in light of all the work done by Mr Watson, and in light of the disappointment and worries that he may have caused them, and in light of the fact that they expect to pay him for proper work, not for inept work. I also have to consider whether the deduction I make from the £47,000 is, from Mr Watson’s point of view, a reasonable deduction, bearing in mind his failings.
In my judgment, the appropriate deduction to make, from the £47,000 I would otherwise have awarded is £12,000. That produces a figure of £35,000 plus VAT. I think that is a reasonable figure for the estate to pay Mr Watson in all the circumstances. Accordingly, the figure I propose to award is £35,000 plus VAT.