Matrix Round 2 – Here’s what happened next…

You might remember the case where the outsourcing of Deputyship duties went wrong?

In the second round of litigation in this case following the Court’s decision that Matrix had acted not in compliance with either its statutory or fiduciary duty (as mentioned in Lynne Bradey’s article Trust Corporation fails vulnerable clients) dealt with two aspects that were to be determined by Senior Judge Hilder, namely:

• At what rate Deputies are entitled to charge fees; and
• The procedure to be followed for calling in bonds.

What rates can Deputies charge?

Following termination of the Deputyship appointments, LBE the successor Deputy in the majority of cases sought orders to call in the security bonds.  LBE stated the calling in of the security bonds has to be limited to fees charged in excess of the fixed cost stipulated by Practice Direction 19B for Public Authorities.

The parties disagreed over what Matrix should have been paid but principally LBE and the Public Guardian contended that Matrix was limited to the lower Public Authority rates.  As imagined, Matrix contended it was entitled to charge fees at the higher solicitors’ rates.

It is important to note that in this particular case, some orders provided for fixed costs while others provided for fixed costs in addition to authorising the Deputy to seek a detailed assessment by the Senior Court Costs Office (SCCO).

The Court identified the following issues for determination.

1. If a Deputyship Order authorises fixed costs without specifying at what rate, does that imply fixed costs at the lower, Public Authority rate?
2. If a Deputyship Order authorises fixed costs without specifying at what rate but also authorises assessment from the SCCO, what is the effect of the second limb – does it imply fixed costs at the higher, solicitors’ rate.
3. Where a Deputy holds various appointments, some of which include authority to charge higher fixed rates, and some which authorise merely  fixed  costs without specifying the rate, can that Deputy infer that all appointments are made on the same basis i.e. that where the rate is not specified, they can charge the higher rate for every one?
4. If a Deputyship Order does not include authorisation to obtain an assessment by SCCO but the assessment was obtained in any event, can the Deputy charge the assessed fees?
5. Where the Deputyship Order includes authority for an SCCO assessment can the Deputy rely on that authority once the estate has fallen below £16,000 or are they required to seek specific authority?

District HHJ Hilder’s Judgement concluded the following:

• If an Order specifies fixed costs without saying at what rate, then it implies the lower rate.
• If an Order allows for assessment from by SCCO and had only specified fixed costs, that does not imply higher rates can be charged, without specific reference to higher rates.
• Each Order is specific and the Deputy must adhere to each Order regarding costs in each case. An Order is not transferable

If an assessment of fees was obtained without authorisation by the SSCO, the assessment itself did not give the Deputy the right to charge higher fees.

• Once the estate has fallen below £16,000 the Deputy should not rely on previous authority to seek assessment and would need to accept the stipulated percentage or seek specific authority from the Court of Protection

Calling in the Deputyship Bond

The Court clarified the practical procedure for calling in bonds.  The Court can order that bonds are called in, in whole or in part, where the Deputy has failed in their duty/duties and caused loss.

The insurer must pay on demand without further investigation, as it is a ‘first demand’ protective contract.

The difficulty is that the Court has to determine whether to order a bond to be called and to what value.

There is no statutory guidance and essentially ‘best interests’ should apply.  The purpose of the security bond is to provide a speedy and effective resource for remedying any default by the Deputy.

Following discussion at Court between the parties in this case, Senior Judge Hilder determined that the following procedure should apply where there is a dispute as to what the loss is.

• The party bringing the application for recall of the bond (either new Deputy, Public Guardian or personal representatives of an estate) are required to provide a report to the Court setting out the loss with documentary evidence.  This is to be served on the former Deputy.

The former Deputy is then entitled to respond by filing their own report and addressing points which have been raised.

• The Court will make a summary determination on the papers, with or without oral submissions.

• It was identified that the process was not  intended to be a full Court assessment of contractual losses/professional negligence allegations and that the burden of establishing loss will still be on the applicant (who wishes to call in the bond).

Comment

This case demonstrates a “cheeky” attempt to seek higher costs which fortunately was not successful. Although some of us would say it was already a “given” this case makes clear to all Deputies that an Order is not transferable and is a reminder regarding Deputyship rates the stipulated fixed costs too.

What is also helpful is how the process to call in a security bond is intended to be quick and clarifies it is pay out, argue later!