s71(3) | Beneficiaries Who Pursued Unreasonable Solicitors Act Assessments Bear the Costs Personally

An indemnity costs order of £132,400 against beneficiaries who achieved a bill reduction of under £18,000 demonstrates the acute costs risks of unreasonable conduct in third-party assessments.

TUCKER V HOWE [2026] EWHC 208 (SCCO)

In Tucker v Howe, Costs Judge Leonard determined two consequential issues following a nine-day detailed assessment under section 71(3) of the Solicitors Act 1974 of costs billed by an estate administrator. The first was whether the claimant beneficiaries or the insolvent estate should bear the costs of the assessment, ordered on an indemnity basis and summarily assessed at £132,400 exclusive of VAT. The second was whether VAT was recoverable on those costs. On the burden of costs, the judge held the claimants were personally liable as beneficiaries who had applied for and pursued the assessment, not as executrices. The jurisdiction under section 71(3) is invoked by persons interested in the property, not by executors. He confirmed the exercise of discretion under section 51 of the Senior Courts Act 1981, noting the claimants’ unreasonable conduct and rejection of three settlement offers. On VAT, the court declined under CPR 47.14(6) to permit a new challenge to the main bill, but held substantively that VAT was recoverable on the assessment costs, rejecting the self-supply argument on the basis that the solicitor and his firm were separate legal entities.

I am unable to accept the proposition that this section 71(3) assessment has been initiated and pursued by the Claimants in their capacity as executrices. That is not only because they have made it entirely clear from the outset that they were acting in their capacity as beneficiaries (although that is relevant), or that they relied extensively upon their position as beneficiaries to broaden, as far as they could, the scope of their challenges to Mr Keeley's costs (although that is equally relevant). It is also because the statutory jurisdiction conferred by section 71(3) of the 1974 Act does not empower the court to make an order for assessment of a solicitor's bill on the application of a trustee, executor or administrator. It empowers the court to make such an order on the application of any person interested in any property out of which the trustee, executor or administrator has paid, or is entitled to pay, the bill: in this case, the beneficiaries of Mr Howe's will.

Citations

Kenig v Thomson Snell & Passmore LLP [2024] EWCA Civ 15 The Court of Appeal explained the distinction between assessments under sections 71(1) and 71(3) of the Solicitors Act 1974, confirming that section 71(3) allows the court broader discretion in ordering assessments and considering the interests of beneficiaries and the estate beyond what is permitted under section 71(1). In re Brown (1867) LR 4 Eq 464 The court recognised that beneficiaries could challenge a solicitor’s bill even if it had been approved by an executor, highlighting the broader scrutiny permitted under section 71(3) assessments. Hazard v Lane (1817) 3 Mer 285 The court confirmed that a beneficiary could dispute a solicitor’s charges despite an executor’s approval, illustrating the principle that beneficiary interests may warrant independent consideration during assessment. Ralph Arthur Archer v The Commissioners [1974] 1 VATTR 1 The case established that when solicitors act for themselves, the supply of services is not a taxable supply for VAT purposes, meaning no entitlement to recover VAT. D A Walker v The Commissioners [1976] VATTR 10 The tribunal held that self-supply by solicitors did not constitute a taxable supply for VAT, disallowing VAT recovery where no genuine third-party provision existed.

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

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Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Trustee indemnity trust fund litigation costs CPR 46.3 Chancery Division

Special circumstances section 70 Solicitors Act 1974 costs assessment application

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Key Points

The identity of the party liable for the costs of a detailed assessment under section 71(3) of the Solicitors Act 1974 is determined by the capacity in which the applicant pursued the assessment, not by their description in the underlying proceedings. Where beneficiaries apply for and conduct the assessment, they do so in their personal capacity as beneficiaries, not as executors or trustees, and the court may order them to bear the costs personally. [40-43, 46]
On a detailed assessment pursuant to section 71(3) of the Solicitors Act 1974, the court has a broad discretion under section 71(3)(b) and section 51 of the Senior Courts Act 1981 to order that the costs of the assessment be paid by the applicant beneficiaries personally, particularly where their conduct in the assessment has been found to be unreasonable. [38, 47-50]
Where a solicitor, in a personal or fiduciary capacity, instructs their own firm to act for them, the resulting supply of legal services is a taxable supply for VAT purposes. The separate legal identity of the solicitor and the firm means it is not a ‘self-supply’, and VAT is properly chargeable and recoverable on the costs. [60, 62-65]
A party wishing to challenge the VAT element of a bill of costs must raise that specific challenge in their Points of Dispute. A new point on VAT may not be raised for the first time after the conclusion of the assessment hearing without permission, in accordance with CPR 47.14(6). [58-59]
The court, when exercising its discretion on costs, may consider it unfair for an estate or non-participating beneficiaries to bear costs incurred by the unreasonable conduct of applicant beneficiaries in a detailed assessment, particularly where reasonable settlement offers were rejected. [48-50]

"I have already referred in this judgment to some of my reasons for ordering that the Claimants pay the costs of the assessment on the indemnity basis, and I do not need to restate them all here. I would however refer to the fact that it emerged, at the conclusion of the assessment, that the Claimants (without ever themselves making any attempt at negotiation) had rejected three attempts by Mr Keeley to settle the costs dispute upon receipt of a smaller sum than he was ultimately found to be due upon assessment. Had they engaged with his attempts at settlement it would have been possible to avoid the necessity for the court to spend nine days reducing his costs by less than £18,000 inclusive of VAT."

Key Findings In The Case

The Claimants pursued the detailed assessment in their capacity as beneficiaries of the estate of Mr Howe, not in their capacity as executrices, and therefore bore personal responsibility for the costs of the assessment, both as a matter of statutory jurisdiction under section 71(3) of the Solicitors Act 1974 and in substance based on their conduct and submissions throughout the proceedings [40–43, 46].
The Claimants acted unreasonably during the course of the detailed assessment, including by submitting hyperbolic and unjustified Points of Dispute, rejecting multiple reasonable offers to settle, and failing to engage in any negotiations, all of which led the court to order that they pay the costs of the assessment on the indemnity basis [24–25, 48–50].
The court found that where a solicitor, such as Mr Keeley, instructs their own firm to undertake legal work in connection with the administration of an estate, the retainer gives rise to a genuine third-party contractual relationship between the solicitor-client and the firm, such that VAT is properly chargeable and recoverable on those costs; the arrangement was not a ‘self-supply’ [60, 62–65].
The Claimants failed to raise any challenge to the VAT elements of the solicitor’s bill within their Points of Dispute and were therefore precluded from introducing such arguments after the conclusion of the assessment hearing, in accordance with CPR 47.14(6) [58–59].
In light of the insolvency of the estate and the fact that two of the four beneficiaries had not participated in or supported the assessment, the court found that it would be unfair for Mr Howe’s estate or the other non-participating beneficiaries to bear the costs caused by the Claimants’ unreasonable conduct, and confirmed that the Claimants should bear those costs personally [31, 49–50].

"Part 10 of the bill represents Mr Keeley's own time charges. There is however no question of self-supply, because Mr Keeley's services as administrator were supplied to the estate of Mr Howe. ... As for the costs of assessment. Mr Keeley was, as the former administrator of Mr Howe's estate, represented by counsel instructed by Freeths LLP. He was not representing himself. He has a liability to Freeths for the attendant costs, and they have an obligation to add VAT, as appropriate, to their fees and disbursements."

The Senior Courts Costs Office’s decision in Tucker & Anor v Howe [2026] EWHC 208 (SCCO) addresses two consequential issues arising from a nine-day detailed assessment of the costs of an estate administrator appointed under probate proceedings.

Background

The matter concerned the detailed assessment of costs under section 71(3) of the Solicitors Act 1974. The costs were those of Mr Mark Keeley, a solicitor and partner at Freeths LLP, who had been appointed as administrator pending suit of the estate of the late Mr Steven Howe. The appointment was made by order of HHJ Pearce on 16 October 2020 within probate proceedings brought by the executrices (the Claimants) to propound Mr Howe’s will against his daughter, the Defendant. Mr Keeley’s appointment authorised him to charge reasonable professional fees and terminated upon the final order in the probate claim.

The probate claim was compromised by a consent order in December 2021. Disputed matters of administration were later resolved by a further consent order made by District Judge Woodward on 21 February 2023. That order provided for the determination of the Administrator’s costs by way of a third-party detailed assessment pursuant to section 71(3) of the 1974 Act, setting out a timetable for the service of a bill, points of dispute, and the commencement of assessment proceedings in the Senior Courts Costs Office if agreement was not reached. The bill for assessment, served pursuant to that order, was drawn in the total sum of £147,436.33 across twelve parts, covering both contentious and non-contentious work under two separate contracts of retainer, together with Mr Keeley’s own professional time costs and counsel’s fees.

The assessment hearing took nine days of court time over three separate periods between April 2024 and February 2025. That duration was largely the result of 67 pages of Points of Dispute which employed the word “staggering” or “staggeringly” 54 times and the word “astonishing” 17 times. The court found none of that hyperbole justified. The bill was assessed at £129,686.76, just below 88% of the amount claimed. The court found the Claimants’ conduct to have been unreasonable to a high degree and ordered them to pay the costs of the assessment on the indemnity basis, summarily assessed at £132,400 exclusive of VAT.

The parties were unable to agree the terms of a final order, leading to a further hearing on two unresolved issues: whether the Claimants or the estate should bear the costs of the assessment, and the recoverability of VAT on those assessment costs. The question of costs liability had taken on particular significance because the estate of Mr Howe was insolvent, an Insolvency Administration Order having been made on 23 July 2025.

Costs Issues Before the Court

Two discrete costs issues required determination. The first was the identity of the party liable to pay the costs of the detailed assessment proceedings. The Claimants argued the burden should fall on the insolvent estate, while Mr Keeley contended the Claimants were personally liable in their capacity as beneficiaries who had applied for the assessment. The second issue was whether Value Added Tax was properly recoverable on the costs of the assessment, with the Claimants arguing that the work constituted a non-taxable self-supply by Freeths.

The Parties’ Positions

On the burden of costs, Professor Watson-Gandy submitted for the Claimants that the central consideration in a section 71(3) assessment was the protection of the estate’s interests, relying on Kenig v Thomson Snell & Passmore LLP [2024] EWCA Civ 15. He argued that the Claimants had participated in their capacity as executrices fulfilling a fiduciary duty to the beneficiaries. He submitted that DJ Woodward’s consent order made no provision for personal liability and that CPR 46.2, which governs costs orders against non-parties, would have been required if such liability was intended.

Mr Latham argued for Mr Keeley that the Claimants had clearly applied for and pursued the assessment in their capacity as beneficiaries, a point reinforced by their own pre-action correspondence and by the legal arguments they had advanced to broaden the scope of the assessment. The Claimants’ representative, Mr Valls, had consistently corresponded on behalf of all the beneficiaries and demanded a detailed assessment in that capacity. The court retained an absolute discretion under section 51 of the Senior Courts Act 1981 and section 71(3)(b) of the 1974 Act. Given the court’s findings on the Claimants’ unreasonable conduct — conduct not attributable to the estate or the beneficiaries as a whole — it was appropriate to order the Claimants to pay the costs personally.

On VAT, Professor Watson-Gandy argued that where solicitors act for themselves in contentious business matters, the supply is not a taxable supply, citing the VAT tribunal decisions in Ralph Arthur Archer v The Commissioners and D A Walker v The Commissioners. It was submitted that Freeths’ bills were addressed to Mr Keeley at Freeths, and that estate accounts bore Freeths’ business address, indicating a self-supply. Mr Latham submitted that the point had not been raised in the Points of Dispute against the main bill and should not be permitted to be raised after the assessment had concluded. On the merits, he argued that Mr Keeley and Freeths were separate legal entities capable of entering into a retainer and that VAT was properly chargeable on Freeths’ supply of services to him.

The Court’s Decision

Burden of the Costs of Assessment

Costs Judge Leonard held that the Claimants were personally liable for the assessment costs in their capacity as beneficiaries. The court rejected the argument that they had acted as executrices, for several reasons. The Claimants had made it clear from the outset that they were acting as beneficiaries. They had relied extensively upon their position as beneficiaries to broaden the scope of their challenges to Mr Keeley’s costs. And the statutory jurisdiction under section 71(3) does not empower the court to order an assessment on the application of a trustee, executor or administrator; it empowers the court to do so on the application of any person interested in the relevant property — in this case, the beneficiaries of Mr Howe’s will.

The description of the Claimants as executrices in the heading of the proceedings and other procedural documents reflected the proper title of the probate proceedings in which the consent order was made. It had no bearing on the substance of the order or the capacity in which the assessment was pursued. The court held that CPR 46.2 had no application because the Claimants were already parties to the assessment proceedings, not non-parties. DJ Woodward’s order made no provision for the costs of the assessment because orders for assessment do not make such provision; the award and quantification of those costs was a matter for the assessing judge.

Even if the court was wrong on any of those points, it accepted Mr Latham’s submissions on the appropriate exercise of discretion. The Claimants had, without ever themselves making any attempt at negotiation, rejected three attempts by Mr Keeley to settle the costs dispute upon receipt of a smaller sum than he was ultimately found to be due on assessment. Had they engaged with those settlement attempts, it would have been possible to avoid the necessity for the court to spend nine days reducing the bill by less than £18,000 inclusive of VAT. It would be unfair for the estate, and potentially for Mr Ross Tucker and Mr Jamie Tucker (who did not participate in the assessment), to bear any part of the burden of the unnecessary costs incurred through the Claimants’ actions.

Recoverability of VAT

The court first held that the Claimants were barred from raising a VAT challenge to the main bill itself, having failed to raise the point in their Points of Dispute. CPR 47.14(6) provides that only items specified in the points of dispute may be raised at the hearing unless the court gives permission, and no such permission had been sought or granted.

On the substantive question of VAT on the costs of the assessment, the court found no basis for the self-supply argument. Mr Keeley and Freeths LLP are separate entities capable of entering into a contract of retainer. Freeths had provided services to Mr Keeley under two contracts of retainer, and VAT was payable on their charges in the usual way. The termination of Mr Keeley’s appointment as administrator did not affect this analysis. On Mr Keeley’s own time costs (Part 10 of the bill), the court held there was no question of self-supply because his services as administrator were supplied to the estate, not to himself. As for the costs of the assessment, Mr Keeley had been represented by counsel instructed by Freeths; he was not representing himself. He had a liability to Freeths for the attendant costs, and they had an obligation to add VAT to their fees and disbursements. The inclusion of Freeths’ address on bills or estate accounts was not to the point.

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