https://www.bailii.org/ew/cases/EWHC/Ch/2023/1568.html
This judgment from His Honour Judge David Hodge KC on 30th June 2023, concerned an application for summary judgment on a Part 8 claim by Mrs K Brassington (KB), a solicitor who acted as a professional deputy in the Court of Protection (CoP) for clients lacking in mental capacity.
[One is appointed as that kind of Deputy, after making an application, and one is paid scale fees if one is a professional person for taking on the role. So it is a form of income generation by firms of solicitors and people are remunerated as employees or as independent consultants by the firm for taking on that role in their own names.]
In February 2016, the defendant, Knights, a solicitors’ firm (Knights), employed KB with the job title of ‘partner’ but she was in fact a salaried employee.
KB brought several existing clients for whom she had been appointed deputy, with her, and remained with Knights until November 2022, when she resigned.
Knights then claimed KB was personally liable for unrecoverable time costs outside scale fees, termed as ‘work in progress’ (WIP) on her deputyship files and claimed a retaining lien over them unless and until it received payment of the WIP.
KB contended that when preparing letters of retainer with Knights (which in their effect were documents sent from Knights by KB to KB on behalf of her deputyship clients, in respect of each of her deputyship files) that she had no choice but to use their standard template which defined that she could only provide her services to her CoP clients by purchasing legal services from Knights as if she were the firm’s direct client.
In March 2018, a standard-form CoP order appointed KB to act as a property and affairs deputy for a new deputyship client (‘P’). The order entitled her to either fixed costs for specific tasks, or the capped costs assessed by the Senior Courts Costs Office (SCCO).
KB contended that it was Knights’ insistence on treating the value of work she had done exceeding the cap, as WIP, instead of writing them off, which had led to the situation whereby they were seeking them from her personally.
Knights refuted this, stating KB had been free to draft her own deputyship retainer letters and that they had no standard deputyship retainer template. The files were opened in the name of P but the letters were addressed to KB so in saying ‘You remain liable’ there was an issue as the meaning.
Having given her notice, KB was placed on immediate gardening leave. Knights notified her that her deputyship files could be released pending “payment of our work in progress and all outstanding invoices”; thereby claiming a retaining lien, contingent upon payment of the WIP, by her, before she could take the files to her next place of employment. KB was informed by Jessica Neyt (JN), Knights’ Client Services Director (CSD) that all the retainers she had prepared outlined “monthly billing and say that you, as our client, remain responsible for payment of our fees and disbursements in full at all times even if recovery is to be made by a third party.” In December 2022?, Knights asked KB for “proposals for payment of our total current work in progress of £211,632.76” of which £166,468.97 was deemed WIP. KB asserted no other deputy had ever been required to make such a payment to the firm.
Counsel for KB contended that Knights’ approach was “unprincipled and unprofessional” and that the issue was “one of law and construction” as to whether the terms of the engagement letters prepared by KB made her personally liable for the unbillable WIP. Further, that the matter was “eminently suitable” for summary determination and should be determined in the interests of all parties, particularly P. Counsel for Knights noted that, dependent upon its claim for unpaid WIP, Knights had refused to deliver KB’s deputyship files over which they claimed a retaining lien. However, as KB had not terminated Knights’ retainers and its junior staff had continued to manage the associated routine deputyship matters, Knights accepted it could not exercise its lien over the files whilst it continued to act and that KB was free to access any documents required to assist her in her role as deputy.
KB issued her Part 8 claim, seeking six declarations including that she was not personally liable to pay for time recorded on any deputyship file as WIP and that Knights was not entitled to a lien over any deputyship file. On 28 April 2023, Knights contended that the dispute should proceed as a Part 7 claim and that “the precise estoppel arguments” advanced by KB needed to be set out. On 15 May 2023, KB issued an application for summary judgment on the whole of her claim on the basis that Knights had no real prospect of defending it and that Knights should pay her costs on an indemnity basis. A further witness statement from KB responded to JN’s evidence and included a report from the costs lawyers instructed by Knights, showing that the irrecoverable WIP was not out of the ordinary when compared to other Knights’ solicitors.
At the outset, HHJ Hodge KC noted that he had no outstanding concerns around issuing a summary judgment without hearing from any Ps for whom KB acted or from her co-deputies who may be affected by the persuasive weight of any ruling handed down.
He also set out CPR 24.2 which provides that the” court may give summary judgment… if — (a) it considers that — (ii) that defendant has no real prospect of successfully defending the claim or issue”.
He indicated an intention to use the principles set out in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15] which noted “(2) A ’realistic’ claim is one that carries some degree of conviction… a claim that is more than merely arguable… it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction …”
HHJ Hodge KC then clarified the effect of MCA s.19 (6) as confirmed by para 8.55 of the Code of Practice: “a deputy is to be treated as ‘the agent’ of the person who lacks capacity… Being an agent means that the deputy has legal duties (under the law of agency) to the person they are representing. It also means that when they carry out tasks within their powers, they are not personally liable to third parties.”
Turning to the instant matter of costs, HHJ Hodge KC noted the OPG and SCCO guidance stated that hourly rates set by firms should match those set by the SCCO and that general management activities should be carried out by a lower fee earner. According to counsel for KB, Knights’ standard default hourly rates did not distinguish between ‘routine’ (non-legal) and legal services and were more than the SCCO’s guideline rates. HHJ Hodge KC further noted Knights’ view that KB’s “distinct personal appointments are issues and responsibilities for [KB] alone and not Knights.” Also, regarding “the vulnerability of [KB’s] patients” “[KB] accepted her patient’s appointments as their deputy, and these are her responsibilities. We are not involved in [KB’s] patient relationships or her duties and responsibilities to the OPG or her patients” despite having employed her. Counsel for KB asserted these were “startling claims.”
Counsel for KB submitted that Knights’ claim of KB’s personal liability for WIP rested upon elements of the terms of engagement letters which she had prepared; that those letters could not be construed as casting any greater obligation upon KB personally than was imposed upon a deputy as agent for P; that the question was one of construing (or interpreting) the engagement letters within the broader context and that there was no ambiguity in the language used in the letters. Rather, Knights had simply misread the words used, adding that were there to be any ambiguity, KB’s interpretation (unlike Knights’) would accord with business common sense, which Knights did not.
Put simply, KB had acted by providing her professional services as an employed solicitor, not as a ‘client’ liable to pay costs, for whom she could never be more than an agent. Knights’ client was P and P engaged Knights through KB; KB acted as P’s deputy and statutory agent. There was no provision in the engagement letter capable of being read as creating any joint liability. Therefore, KB’s counsel requested the court: determine the correct interpretation of the engagement letters; give summary judgment on KB’s claim; and make the declarations proposed in their draft order.
Counsel for Knights refuted what it saw as the four arguments raised by KB:
- whether a CoP appointed deputy could be personally liable on a contract made within the scope of the deputyship (they asserted that commonly “standard terms of engagement of counsel require the solicitor to pay fees personally” by way of analogy.)
- whether (as a matter of construction) the retainer letters conferred personal liability upon KB for costs. Counsel contended the letters “could not be any clearer” in making KB liable.
- whether KB was Knight’s client. Counsel posited that it was KB who instructed Knights, who in turn provided their services as solicitor to her and that it was KB alone who could instruct Knights to take any steps or decide which actions were required, in practice.
- whether the court should interfere with Knights’ lien – counsel acknowledged the court could do so but that where a client had terminated the retainer, that was a weighty factor against doing so; that each deputyship continued to operate as before, and that Knights had no intention of terminating any of KB’s retainers.
In delivering his decision, HHJ Hodge KC noted he had “no hesitation in preferring” KB’s submissions and based “on the true construction of the engagement letters” finding that KB was “contracting solely as agent for P… [and] accepted no personal liability for Knights’ remuneration or expenses.”
He added that the issue for the court was to construe the terms of the engagement letters within their broader context. This context included the statutory framework, practice and guidance governing CoP deputyships; the fact that KB was acting both as a CoP deputy and as a solicitor employed by Knights, and the way in which KB’s previous deputyships with her former employer had been dealt with. HHJ Hodge KC further noted that, given its inconsistencies with the practice applied by the CoP and the SCCO, Knights’ (KB’s) original standard deputyship letter was not an apt document to govern the retainer of solicitors by a CoP-appointed deputy and that whilst “it is not for the court to re-write the contract… when construing a written contract, the worse the drafting, the more ready the court can properly be to depart from the natural meaning of the words the parties have chosen to use.” Wood v Capita Insurance Services Ltd.
As to the effect of the engagement letters upon the identity of the contracting parties (that is, whether KB was acting in a personal capacity, or solely as deputy and agent for P, or jointly for P and herself personally), HHJ Hodge KC found that KB was contracting with Knights solely in her capacity as deputy and as agent for and on behalf of P. This accorded with common sense; the provisions of s.19 (6) of the MCA (which treats the deputy as P’s agent); and the explanation of the effect of s.19 at para. 8.55 of the Code of Practice. It also matched the commercial reality of the retainer, i.e. P was Knights’ client and KB had neither assumed any personal liability for any irrecoverable costs incurred by Knights or given informed consent to such personal liability.
HHJ Hodge KC further noted it was unclear how the terms of KB’s standard original deputyship letter might render her liable to Knights for unpaid WIP which were sums already disallowed by the SCCO, if P was not liable for such sums as was conceded by all parties for the purpose of these proceedings. “I find it difficult to understand how the same words can bear different meanings, and produce different effects, for Mrs Brassington and for P.”
Regarding the lien, HHJ Hodge KC found that Knights could not assert any lien against KB because she was never Knights’ client or personally liable for any of their costs.
CASCAIDr Comment: In our view this represents an important case which serves to underline (in keeping with the already very clear Court of Protection rules), that one cannot be sued personally for being a deputy, on the debts of the individual thereby represented. As such, this would be highly relevant in cases where a local authority may be seeking to hold an Authorised Person who was also a deputy, liable for unpaid social care charges in the context of a direct payment, and as such provides an additional footing upon which to challenge such a stance.
We also think it is relevant to the question who the actual employer is when a deputy takes on an employment responsibility for a person lacking in capacity, because the real employer must be insured for employer’s liability. The deputy may be able to manage the responsibility but the real employer is still the person lacking in capacity, UNLESS one is going to say that employment is a special relationship outside the sphere of deputyship and power of attorney altogether?
When a person is appointed to act as an Authorised Person to hold and manage a Direct Payment for a person lacking in capacity, we think that the law would be found to be that that person acts as a Principal on contracts with a third party such as an employee or any other supplier of goods or services, even if the person is a Deputy for the person drawing on the services. We think that this is not a form of statutory agency, for the simple reason that the Care Act Direct Payment money is not the client’s money, but public money granted to the individual under statute for a specific purpose, such that the Authorised Person acts more in the nature of a trustee, than as an agent – they act FOR the BENEFIT of the individual rather than on behalf of the individual, and councils should be careful about how they word direct payment compacts with such people.