Latest news
Services
People
News and Events
Other
Blogs

"Outside the norm" Court of Protection proceedings and costs being assessed on the indemnity basis

View profile for Rebecca Franks
  • Posted
  • Author

The Public Guardian v Matrix Deputies Limited (1) and London Borough of Enfield (2) [2017] EWCOP 14

Rule 156 of the Court of Protection Rules 2007 states that where the proceedings concern P's property and financial affairs the general rule is that the costs of the proceedings or of that part of the proceedings that concerns P's property and affairs, shall be paid by P or charged to his estate. As costs in Court of Protection matters are generally being paid from P's estate the assessment is carried out on the standard basis (meaning that any doubt as to whether costs are reasonable and proportionate will be resolved in favour of the paying party (P)).  However, the above case highlights the fact that the Judge can, and will, accept a departure from the general rule and can also order that costs be assessed on the indemnity basis, where it is considered appropriate.

 

The proceedings

The proceedings in the above case concerned some 44 individuals whose property and affairs were either already managed by a Court appointed deputy or who were the subject of an application for such an appointment at the time of the claim.  A further 8 individuals were also previously the subject of the proceedings but they passed away during the course of the litigation and, as such, the Court only retained a residual jurisdiction in respect of costs.

There was a common link between all of the individuals concerned and the involvement of Matrix Deputies Limited (Matrix) or persons who worked for that organisation, DW and OM. 

The Public Guardian made applications for: the discharge of Matrix, DW and OM as deputy; the refusal of any pending applications; and the appointment of either the local authority or a panel deputy instead.  The grounds for the applications were that Matrix failed in its duty of care to the individuals and that the general conduct of Matrix and pattern of behaviour gave rise to serious concerns in relation to its management practice.  Following investigations by PwC (a large and well known firm) it was considered that the allegations fell broadly into the following categories:-

  • Excessive fee charging
  • Inappropriate/inadequate arrangements for holding/recording client funds and transactions
  • Conflicts of interest arising from inappropriate relationships with other bodies
  • Failure to provide information requested/comply with Orders for disclosure

The appointments of DW and OM were discharged, however, Matrix contested the applications against them.  Matrix continued to contest the applications against them until a matter of days before the hearing when agreement was reached with the Public Guardian.  Issues of costs remained as between Matrix and the local authority.

 

Costs

The Public Guardian and Matrix agreed to bear their own costs with no costs being claimed from any of the individuals' estates.  The judge noted that this was a departure from the general rule (Rule 156).  But, having regard to Rule 159 (which sets out factors which the Court will take into account when deciding whether to depart from the general rule), the Judge was satisfied that the circumstances of the case justified a departure.

However, the position on costs was not agreed between Matrix and the local authority.  The local authority sought an Order that Matrix pay its costs, including work in relation to the investigative process, on the indemnity basis. 

The local authority’s costs amounted to approximately £250,000.  The bulk of that sum related to the PwC reports prepared.  The local authority pointed out that the investigations had to be done and that two reports were required because of Matrix's failure to supply full documentation (as directed) in a timely manner. 

Matrix contended that it should not bear responsibility for any of the local authority's costs and put forward a number of arguments, to include the fact that the local authority "acted with vigour" in the litigation and that Matrix “was never obstructive with compliance”.  Matrix also asserted that, if fully litigated, the great number of allegations made would have been defended (the Judge understood this to mean successfully defended); and the late decision not to contest was "made on a commercial basis to avoid costs".

The judge stated that he was wholly unimpressed with the arguments made on behalf of Matrix and went on to state:-

'They [Matrix] fail to take any account of the fact that the proceedings were brought by the Public Guardian, not by London Borough of Enfield.  They overlook the fact that full disclosure was only obtained after an application for an enforcement-type order.  They fail to grasp the importance of "failures in administration" by a Court-appointed deputy who bears significant legal obligations to get such administration right precisely because they are doing it on behalf of a person who is unable to do it for themselves and therefore vulnerable'.

The Judge confirmed that the purpose of indemnity costs is not to punish the paying party but to provide the receiving party with a more generous measure of recoverable costs.  It was pointed out by the representative of the local authority that indemnity costs should be awarded where the case is "outside the norm". 

The Judge held that this case was wholly "out of the norm" of proceedings before the Court of Protection, in light of the number of protected persons involved in the litigation, the scope of the allegations, the investigative steps required and the nature of the admitted breach of duty by the paid deputy.  The Judge was therefore satisfied that the local authority should recover its costs against Matrix on an indemnity basis.

 

Conclusion

This case highlights the Court’s discretion as to costs and also shows a willingness to depart from the general rule where the circumstances of a claim justify such a departure (taking into account the factors set out in Rule 159 of the Court of Protection Rules 2007).  It is also clear that the Court will look into all of the circumstances surrounding the litigation and, in particular, whether the proceedings were "outside the norm" when establishing whether costs should be assessed on the standard or indemnity basis.

Comments