England and Wales Court of Protection Decisions

IN THE MATTER OF Schedules 1, 2A and 3

		First Avenue House 42-49 High Holborn, London, WC1V 6NP
		24th September 2018

The hearing was conducted in public subject to a transparency order made on 13^th April 2017. The judgment was handed down to the parties by e-mail on 24^th September 2018. It consists of 25 pages and two appendices, and has been signed and dated by the judge.

The issues

1. This matter is a continuation of the litigation concerning the management by Matrix Deputies Ltd, DW and OM of the funds of various incapacitated persons. The background circumstances are set out in an earlier judgment reported as The Public Guardian v. Matrix Deputies Ltd & London Borough of Enfield [2017] EWCOP 14.
2. Since that judgment, there have been a number of developments within the Court of Protection litigation:

a. At a hearing on 11^th October 2017, orders were made calling in the security bonds in respect of 5 individuals. In respect of the other individuals, London Borough of Enfield was directed to file and serve a report quantifying the alleged loss to each by 7^th November. Matrix Deputies Limited, DW and OM were directed to file and serve a response by 14^th November and the Public Guardian by 21^st November. The matter was listed for attended hearing "to consider applications to call in the bonds for the persons named in Schedule 2A, Schedule 3, JWA and FCU" and to consider various matters as to costs.

b. At the hearing on 27^th November 2017, Matrix Deputies Limited was represented by Moore Blatch Solicitors and expressed its wish "to continue to liaise with LBE to ensure a smooth transfer of all relevant documents and information." DW and OM were formally joined as parties. LBE's application for interim call-in of the respective bonds was adjourned with further directions as to the filing and service of quantification reports by the Applicant, and responses from all parties. The matter was listed for attended hearing on 27^th February 2018 "to consider applications to call in the bonds for the persons named in Schedule 2A, Schedule 3, JWA and FCU." Directions were given for the filing of skeleton arguments "addressing the approach to calling-in of bonds." Various issues in respect of costs were also identified to be addressed at the February hearing.

c. The filing of the required documents did not run smoothly. The Public Guardian made an application for extension of time to file his reports. An order granting that application was made on 20^th February 2018.

d. Matrix Deputies Ltd filed a COP9 application (incorrectly dated as 23^rd February 2017, but treated as dated 23^rd February 2018) seeking that the orders calling in the security bonds in respect of DKI, PCI, FME, GLY and JST "are set aside."

3. There has also been related (but completely separate) litigation in the Chancery Division of the High Court, The Business and Property Court. The London Borough of Enfield applied for and obtained a freezing order, and subsequently orders which provided for funds held in Matrix Deputies Limited's AIB account to be transferred to an account in its own name.
4. There are now filed within these proceedings reports from London Borough of Enfield which quantify the alleged losses; and responses by Matrix Deputies Ltd, DW and OM which make clear that those alleged losses are disputed. At the hearing:

a. Matrix Deputies Ltd agreed to withdraw all applications before the Senior Courts Costs Office seeking an assessment of costs where the original deputyship order authorised only fixed costs;

b. Matrix Deputies Ltd's COP9 application was adjourned to be considered further "if it is still pursued and to the extent that it can in these proceedings" at the next hearing;

c. It was provided that the Court would hand down a reserved judgment on:

i. The approach to be followed on applications for the calling-in of bonds; and

ii. The rate(s) at which the appointed deputies were entitled to charge fees.

5. This judgment addresses the two reserved issues. I have had the benefit of written and oral submissions from the Applicant, and the First, Second and Fourth Respondents. By the conclusion of the hearing, the approach to calling in the security bond set out below was agreed by all parties present.

I. APPLICATIONS TO CALL-IN THE SECURITY BOND

6. It is standard practice for the court, when appointing a property and affairs deputy, to require the deputy to provide security. The framework of statutory provisions, Rules and Regulations which apply to the giving of security are set out in Appendix A to this judgment. Together they provide for a system whereby the usual means of giving security is by way of a bond endorsed by an authorised insurance company or deposit-taker (although the court has discretion to adopt other means if it sees fit).
7. In September 2016 the Public Guardian published a practice note (SD15) entitled "OPG's approach to Surety Bonds." The Note explains that the Public Guardian has made arrangements to facilitate the provision of bonds, commonly called "the Scheme", but also that deputies are not bound to enter into an arrangement within the Scheme and can seek their own arrangements. It sets out "what OPG expects from a bond provider, so that its surety bonds are suitable for deputies." In respect of enforcement of the bond, the Note provides as follows:

"Where a deputy fails in his or her duties, the bond can be enforced if required. Bond providers should understand the following:

The Court can call in all or part of the bond up to the limit secured. There is no requirement to prove fraud and the loss may not be quantifiable;

The Court may order an interim payment, ie that part of the bond is called in pending quantification of the loss;

•    The Insurer must pay on demand without further investigation;

•    Notification will be via a Court Order;

It is expected that Insurers will have the right to recover the amount they have paid out, plus their expenses, from the deputy. This is a matter for the insurer and in which the Public Guardian or Court play no part.

8. The history and process of requiring a Deputy to provide security has been helpfully considered by Her Honour Judge Hazel Marshall QC in Re H [2010] 1 WLR 1103. In that matter evidence was given about the workings of a security bond as follows:

"37. Mr. Lissaman explains the workings of the bond in his evidence. It is not an ordinary form of insurance, but operates like a commercial "first demand" bond. In other words, the premium buys a promise from a recognised bank or insurance company to pay up to the stated value of the bond upon a demand made in that respect in accordance with its terms, which usually require merely certification by the claimant that the conditions for payment have fallen in. In the case of a bond under this scheme, the promise is to pay the amount of any loss identified by the Public Guardian and certified by the court, up to the amount of the bond.

38. A bond is thus a very powerful protective instrument. The money is paid over almost immediately upon a loss being discovered, and without argument. The scheme provides for payment of forfeited bonds within two weeks. Any argument takes place between the bond provider and any party from whom it may have a right of recoupment, such as the defaulting deputy. The expense of taking action and the risk of non-recoupment are borne by the bond provider."

9. There can be no real doubt that the security bond scheme was devised and has always been understood to be a measure for the protection of P. Access to its benefits however is through the court. Regulation 36(2) of the Lasting Powers of Attorney, Enduring Powers of Attorney and Public Guardian Regulations 2007 (as amended) sets out the process.
10. The approach of the Court on an application to call-in the security bond was first considered by His Honour Judge Hodge QC in Re Gladys Meek [2014] EWCOP 1. In that matter, P's current deputy applied for an order calling in the bond of two former deputies following a decision of the Court of Protection not to ratify certain gifts they had made from P's funds (amounting to £204 495). Referring to the Re H decision, HHJ Hodge QC observed (at paragraph 38) that:

"Effectively, the bond scheme offers an alternative to a deputy bringing an action against a previous defaulting deputy to recover lost or stolen funds. It provides an immediate, and straightforward, mechanism by which the court can ensure that an incapacitous person is compensated for losses that have been incurred through the default of his deputy. It avoids the delay and expense which the incapacitous person would otherwise face in bringing proceedings against a defaulting deputy, who may be of questionable solvency, and enforcing any judgment obtained within those proceedings, The defaulting deputy does not get off scot-free, but he is instead likely to face proceedings brought by the bond provider."

11. Considering the circumstances in which the court may consider it appropriate to call in a security bond, HHJ Hodge QC:

a. noted (at paragraph 39) that "There is…no statutory guidance on the circumstances in which the court should call in a security bond;"

b. determined (at paragraph 41) that "the 'best interests' principle does apply to a decision by the court whether to call in a security bond….Such a decision is clearly one made 'for or on behalf of' the incapacitated person because the decision will affect the amount of the incapacitous person's estate. It therefore seems to me that such a decision falls to be decided by reference to the incapacitous person's 'best interests', pursuant to section 1(5) of the 2005 Act;"

c. subsequently (at paragraph 85) reiterated that "I have already indicated that in my view the appropriate test is the 'best interests' test. Even if that is not correct, I would accept that it is plainly a relevant factor. It cannot be in Mrs. Meek's best interests to require what is left of her dwindling resources to be expended on litigation when a straightforward alternative is available. I also accept that the whole purpose of requiring a deputy to provide security, the premiums for which are paid at the expense of the incapacitous party, is to put in place a cheap, quick and simple mechanism to reimburse the incapacitous party's estate in the event of a deputy's default."

d. concluded (at paragraph 93) that "…the appropriate course the Court of Protection should take in cases of default by a deputy is to call in the security bond almost as a matter of course…. The whole purpose and object of the security bond is, as has been submitted, to provide a speedy and effective source for remedying any default on the part of a deputy. Enforcement of the security bond in those circumstances should be viewed almost as a matter of course."

12. As to quantification of the call-in, on the facts of the case HHJ Hodge QC further concluded (at paragraph 95) that the bond should be called in for the full amount of the bond (in that case, £275 000):

"It is acknowledged by [the defaulting deputies] that they owe Mrs. Meek £250 000. I am entirely satisfied that the balance of £25 000 represents loss suffered by Gladys Meek's estate as a result of the defaults of [the defaulting deputies.] When one looks at the figures to which I have already made reference, I have no doubt whatsoever that the unnecessary expenditure in legal costs that has been, and will be, incurred by the panel deputy exceeds the sum of £25 000, and therefore the full amount of the bond ought to be called in."

13. It is clear that the decision in Re Meek expressly considered the replacement deputy's application to call-in the bond as a quicker, cheaper alternative to civil litigation (paragraph 38) for making good a loss to P. There was no dispute as to the default, given the earlier proceedings. Unsurprisingly therefore, the judgment does not specifically address what is required for the court considering an application to call in the security bond to be satisfied of a deputy's default.
14. On that point, in the current litigation, the parties were invited to consider the more recent decision of HHJ Purle QC in Re M [2017] EWCOP 24. In that matter:

a. a deputy (E) had put in place a bond of £16 000 in respect of her appointment as deputy for M. A Local Authority made an application to call in the bond. The alleged failure to carry out deputyship duties was a refusal on the part of the deputy to make certain payments to the Local Authority (paragraph 20);

b. against a complicated background of welfare and judicial review proceedings, HHJ Purle QC concluded that there was no basis for the claim the Local Authority sought to advance as the basis for calling in the security bond (paragraphs 24-25). He further questioned the propriety of the procedure which the Local Authority had adopted:

i. He identified that "The calling in of the bond requires the prior determination of whether or not E as Deputy is liable for loss caused to M by virtue of her failure properly to carry out her duties. The guarantor is only liable if E is liable. Thus it must first be established (a) that E failed properly to carry out her duties; (b) that this failure occasioned loss to M's estate." (paragraph 27);

ii. He pointed out that the Local Authority's complaint of non-payment by the Deputy did not give the local authority any cause of action against E, nor did it cause M's estate any loss. The local authority would at best be "a third party creditor of M…they have no cause of action against E." (paragraphs 28 - 30);

iii. He readily accepted that "once liability is established, or admitted under the bond, the calling in of the bond is a matter which the Court of Protection or the Public Guardian can effect" but emphasised that in the matter before him liability was not admitted and expressed the view that "… in a case of a disputed liability,… there should be a determination of that dispute with pleadings and the procedural safeguards that proper case management provides. …for the Court of Protection to determine such a dispute (which is a necessary pre-requisite for the calling in of the bond) would be beyond its narrow function and power of making best interest decisions…" (paragraph 34).

15. At first blush it may appear that Re Gladys Meek and Re M are in conflict in their approach to applications to call in the security bond and/or civil litigation. On fuller consideration, I am satisfied that there is no conflict because:

a. Re Gladys Meek concerned a call-in application properly made on behalf of P by her replacement deputy; Re M concerned the rather different point of third parties attempting to use the call-in procedure as a means of satisfying an unproven debt;

b. In so far as HHJ Purle QC sets out procedural requirements at paragraph 34, he is referring to the determination of third party claims on the funds of P. It is by now widely understood that the determination of third party claims is outside the jurisdiction of the Court of Protection.

16. Neither Re Gladys Meek nor Re M considered how the Court should approach a call-in application properly made on behalf of P when the alleged default and/or loss is disputed, as in the matters currently before me.
17. In her position statement Counsel for Matrix Deputies Ltd suggested that this situation is equivalent to Re M :

"There have been no findings by the Court as to any defaults… the alleged defaults and any consequential losses to the Ps estates are in dispute. These disputes will need to be adjudicated upon properly if they are to be pursued by LBE. If losses are identified and found, only then will the Court of Protection be in a position to consider if there should be any calling-in of bonds and if so, to what extent….There should be careful pleadings and responses and ultimately a determination by a court as to the alleged losses if any and their extent. This outside the realms of the Court of Protection's powers as set out in sections 16 and 18 of the 2005 Act" (paragraphs 33, 34 & 40).

18. Ultimately (and in my view, rightly) Ms. Davies did not pursue that argument. In my judgment, a situation where a deputy disputes alleged default/loss within call-in proceedings properly brought on behalf of P is not equivalent to a third party attempting to use the procedure to enforce an unproven debt. Such comparison overlooks the very purpose of the bond procedure, namely (as set out by HHJ Hodge QC, and with which statement I agree) "to put in place a cheap, quick and simple mechanism to reimburse the incapacitous party's estate in the event of a deputy's default." The place for 'careful pleadings' and 'determination' is within proceedings which may subsequently be brought by the bond provider against the deputy to recoup any sum called-in. The security bond process envisages that the time and expense of taking civil action and the risk of non-recoupment are borne by the bond provider - an approach for which P pays in the annual bond premium.
19. How then is the Court of Protection, considering an application to call in the security bond properly brought on behalf of P, to be satisfied that there has been loss to the estate, attributable to the default of the deputy? If the default and/or loss is not admitted, what does it take for the Court to be satisfied?
20. In my judgment, the approach of the Court should be – as, in my experience, it has been to date – as follows:

a. The person bringing the application (usually the new deputy but potentially the Public Guardian or the personal representatives of P's estate after P's death) should be required to provide a report identifying the alleged loss, with documentary evidence in support exhibited as appropriate. That report must be served on the deputy alleged to have caused the loss (but need not be served on the bond provider);

b. The allegedly defaulting deputy should have opportunity to consider that report and to file a written response;

c. The court will make a summary determination, with or without oral submissions as the court sees fit. The burden of establishing the loss is on the person bringing the application, on a balance of probabilities. The determination will 'summary,' not in the sense of 'summary judgment' but rather in the sense of 'summary assessment of costs' and as opposed to a full forensic examination;

d. The summary assessment must quantify the loss sufficiently for all parties and the bond provider to be clear about how much money is to be paid under the bond. If the loss is less than the full amount of the bond, then quantification should be in the form of a specific amount ("£x") or by reference to an ascertainable amount (eg "the new deputy's costs of the investigation and call-in proceedings as assessed by the SCCO.") If the assessment is that the loss exceeds the full amount of the bond, it will be sufficient to state that and provide for the bond to be called in for its full amount.

21. In my judgment, if any other approach of more formal procedure were to be adopted by the court, the bond scheme would be effectively denuded (to use a term from Re Gladys Meek – paragraph 44) to the point where it ceased to meet its purpose. The restitution to P would be significantly delayed and significantly more expensive.
22. However, for reasons of fairness and natural justice, in my judgment it must follow from such summary procedure that an order to call in the bond does not amount to a final determination of civil liability on the part of the defaulting deputy. The process for such determination is the bond provider's claim for recovery in the civil courts. The decision to bring such proceedings is the bond provider's alone, with neither the Court of Protection nor the Public Guardian having any involvement. If the Deputy disputes the default and/or alleged loss, the argument will be conducted and determined in the conventional procedures of the civil courts, which are not bound by the COP's summary assessment of loss. It is of course possible that the civil court could reach a conclusion different to the Court of Protection's summary assessment, and the bond provider may not be able to recover the full extent of the amount it has paid out. In my view that is consistent with the nature of the insurance contract and with experience to date.
23. In the proceedings presently before me, all parties present at the hearing were ultimately in agreement with the procedure outlined for the court's consideration of the applications to call-in the security bonds. However, before the court can proceed to the summary assessment in each case, an issue about the rate at which Matrix Deputies Ltd, DW or OM were entitled to charge fees according to the terms of the various deputyship orders has to be addressed.

II. ENTITLEMENT TO RAISE FEES: AT WHAT RATE?

24. In respect of most of the individuals with whom the court is concerned in these proceedings, the losses identified in the Applicant's reports are limited to the charging of fees in excess of the fixed costs stipulated by Practice Direction 19B for public authorities. The First, Second and Third Respondents contend that they were entitled under the deputyship orders to charge fees at the higher, solicitors' rate.
25. For convenience, the relevant statutory provisions, Rules and Practice Direction are set out in Appendix B to this judgment. The Court of Protection Rules were amended with effect from 1^st December 2017 but there was no change in the substantive content of the relevant provisions, so they are set out and I shall refer to them by their current numbering. The version of Practice Direction 19B which is included in Appendix B is that which was in effect at the time relevant to these proceedings (1^st February 2011 until 30^th March 2017). The current version of Practice Direction 19B may be found in the Court of Protection Practice 2018.
26. It is clear from s19(7) of the Mental Capacity Act 2005 that, whilst a deputy has a statutory right to reimbursement of expenses, it is the order of appointment which provides any legal authority for remuneration. The orders made in the individual cases within this litigation are not all the same. For example:

a. KAB 12351709: it is provided at paragraph 4 of the deputyship order made on 14^th January 2014 that the deputy "is entitled to receive fixed costs in relation to this application, and to receive fixed costs for the general management of [KA's] affairs."

b. JAM 12472113: it is provided at paragraph 4 of the deputyship order made on 3^rd November 2014 that the deputy "is entitled to receive fixed costs in relation to this application and to receive fixed costs for the general management of [JA's] affairs. If the deputy would prefer the costs to be assessed, this order is to be treated as authority to the Senior Courts Costs Office to carry out a detailed assessment on the standard basis."

27. The nub of the issue between the parties is how orders in those terms are to be interpreted in the light of the distinction in Practice Direction 19B between fixed costs for solicitors and fixed costs for public authorities.
28. Before considering the arguments in the current litigation, it is necessary to descend into some detailed consideration of Practice Direction 19B, and how orders for the remuneration of a deputy have been made by the court to date. I have been referred by the parties to the decision of District Judge Eldergill in The Friendly Trust's Bulk Application [2016] EWCOP 40 and, since the hearing, the decision of Mr. Justice Charles in Re AR [2018] EWCOP 18 has been handed down. (The parties have been given opportunity to make representations in the light of Re AR but each of them chose not to do so.)
29. The nature of a deputyship order, including authorisation for remuneration: In Re AR the then Vice-President expressly considered the nature of a deputyship order, including authorisation for remuneration. He said, at paragraph 24:

"Senior Judge Hilder points out in Various Incapacitated Persons and the Appointment of Trust Corporations as Deputies [2018] EWCOP 3 (see paragraph 9 of her judgment) that s. 16(3) of the Mental Capacity Act 2005 (the MCA) provides that the decision to appoint a deputy is a "best interests" decision and is therefore made by reference to the individual facts of a particular case. This also applies to decisions on remuneration made under ss. 16(5) and 19(7) of the MCA and the COP Rules and Practice Directions."

30. To the extent that District Judge Eldergill said otherwise in The Friendly Trust judgment (paragraph 87), that statement cannot be considered correct. (It is fair to note that the judge clearly did consider the individual's best interests to be important "in a general sense insofar as it would not be a proper exercise of the court's discretion to make a costs order that is contrary to the person's best interests. For example, by authorising a more expensive fee-structure than is fair and necessary.")
31. The Rules as to orders for remuneration: Rule 19.13(1) sets out three types of order for remuneration which the court may make. The list is clearly not exhaustive ("the court may make such order as it thinks fit, including….").
32. In Re AR Charles J considered (at paragraph 32) that it was clear from Rule 19.13(1) that:

"i. there is no presumption that a deputy should be appointed on the basis that his charges are governed by PD 19B; and that

ii.The adoption of this course is one of the options open to the COP when appointing a deputy."

33. Rule 19.13(3) provides that the court may order a detailed assessment of the remuneration. I do not find any basis within the rule for construing this provision as limited to circumstances where no, or any particular, other type of provision for remuneration is ordered. I note that the template orders approved by Charles J in Re AR provided both for costs at a fixed amount and for the deputy to obtain SCCO assessment if preferred.
34. Practice Direction 19B: Over time, the wording of Practice Direction 19B has changed. For present purposes, the following points are important to note:

a. In all its iterations, the twin pillars of Practice Direction 19B are solicitors and public authorities. (The Practice Direction prescribes two fixed rates of remuneration: one is headed "Remuneration of solicitors appointed as deputy for P", the other is headed "Remuneration of public authority deputies.")

b. The original version, which was in force until 1^st February 2011, made no provision for fixed costs and expenses in respect of anyone other than solicitors and office holders in public authorities. The term 'professional deputy' was used as a synonym for a solicitor deputy.

c. The second version, which was in force from 1^st February 2011 until 30^th March 2017, continued to include the phrase 'professional deputy' in places and included the following provision:

"2. The practice direction applies principally to solicitors or office holders in public authorities appointed to act as deputy. However, the court may direct that its provisions shall also apply to other professionals acting as deputy including accountants, case managers and not-for-profit organisations."

I shall refer to this as "the discretion provision."

d. As to detailed assessment of remuneration, the second version of the PD includes the following provisions:

"Claims generally

5. The court order or direction will state whether fixed costs or remuneration applies, or whether there is to be a detailed assessment by a costs officer. Where a court order or direction provides for a detailed assessment of costs, professionals may elect to take fixed costs or remuneration in lieu of a detailed assessment.

Payments on account

6. Where professional deputies elect for detailed assessment of annual management charges, they may….

Remuneration of solicitors appointed as deputy for P

…

11. In cases where fixed costs are not appropriate, professionals may, if preferred, apply to the Supreme Court Costs Office for a detailed assessment of costs. However, this does not apply if P's net assets are below are (sic) £16 000 where the option for detailed assessment will only arise if the court makes a specific order for detailed assessment in relation to an estate with net assets of a value of less than £16 000."

There is no reference to detailed assessment in the sections dealing with "Remuneration of public authority deputies." Paragraph 15 states:

"Remuneration of public authority deputies

15. The following fixed rates of remuneration will apply where the court appoints a holder of an office in a public authority to act as deputy..."

e. The current version, in effect from 1^st April 2018, replicates the discretion provision and the references to/absence of references to detailed assessment. It also includes the following provisions:

"Outsourcing of work by public authorities

19. Where public authorities outsource deputyship work, it is expected that the rates charged will be no more than that which would have been charged to the client if the public authority had remained as deputy."

(which I shall refer to as 'the outsourcing provision'); and, at paragraph 16:

"These rates should be applied regardless of who carries out the function within the public authority."

The parties' positions

35. In Mr. Paget's written position statement, the Applicant contends that in all of the matters currently under consideration the deputies were "only entitled to fixed costs in the absence of a properly assessed SCCO certificate. Those costs should be incurred at the local authority rate." In oral submissions, that position was expanded somewhat to include the following contentions:

a. In not specifying which of the rates fixed by Practice Direction was to apply, the deputyship order was defective;

b. In the absence of explicit authorisation to charge the higher rate, the deputies were only entitled to charge the lower rate because

i. none of them is a solicitor;

ii. it has never been asserted that they were appointed because of the complexity of the estate; and

iii. the appointments were made in the process of Local Authority outsourcing;

c. If the deputy was unhappy with that interpretation of the order, the deputy's remedy was to apply for amendment.

36. Matrix Deputies Ltd (and by extension, DW and OM) on the other hand contend that they were entitled to charge fees at the solicitors' rate. That contention is based on a number of assertions:

a. London Borough of Enfield did not outsource its property and affairs deputy services to Matrix Deputies Ltd but rather Matrix Deputies Limited "was contracted to deal with the complex cases for LBE clients/patients/service users;"

b. Matrix Deputies Ltd is "a company specialising in providing services for deputyships and appointeeships;"

c. It charges VAT for its services;

d. At all times it had professional indemnity insurance in place

e. Some of the deputyship orders have provided for fixed costs or, if preferred, authority for the SCCO to carry out detailed assessments. (Since the various iterations of the Practice Direction do not provide for public authorities to be enabled to apply for SCCO assessment, it is inferred that orders which included such provision can only mean that the entitlement was to fixed fees at the solicitors' rate);

f. In a number of cases the SCCO has approved fees at the solicitors' rate;

g. The Public Guardian has never previously disputed the entitlement to that rate when set out in annual reports;

h. The independent reports obtained by the Applicant within these proceedings referred to Matrix being a professional body and entitled to charge professional fees.

37. The Public Guardian's position rested on the following contentions:

a. Any of the orders currently under consideration should be interpreted as authorising only the public authority rate of fixed fees, unless it expressly authorises the higher rate;

b. Even if an order expressly includes authority for SCCO assessment, unless it also expressly authorises the higher rate, the 'fixed rate' authorisation should be interpreted as meaning 'at the public authority rate;'

c. If a non-specifying order goes on to permit SCCO assessment, that second limb of the order is "simply otiose" because:

i. The Practice Direction only applies the assessment option within the 'solicitors' rate so, if the lower, public authority rate is applied, there is no entitlement to assessment; and

ii. Insofar as paragraph 85(e) of The Friendly Trust judgment identifies as an option an order which provides for both fixed rate remuneration and detailed assessment, it should be read as limited to professional deputies.

d. Where an SCCO assessment has actually been obtained, even if without court authorisation, it would not be proper to 'go behind' that and the certified costs should be allowed; but where there has not been SCCO assessment, the mere reporting in the annual report to the Public Guardian of the charging of fees at the higher rate without challenge is not sufficient to allow the higher rate fees to stand.

38. Having heard oral submissions, it seems to me that determination of the issue between the parties requires the following questions to be answered:

(1) If an order merely authorises "fixed costs" without specifying at what rate, does that necessarily imply fixed costs at the lower, public authority rate?

(2) If an order authorises "fixed costs" without specifying at what rate but also authorises the deputy to obtain assessment from the SCCO, what is the effect of the second limb of the order? Is it 'simply otiose'? Does it necessarily imply fixed costs at the higher, solicitors' rates?

(3) Where a single deputy holds various appointments, some of which include authorisation to charge fees at the higher fixed rate, and some of which authorise merely "fixed costs" without specifying the rate, can that deputy infer that all his appointments are made on the same basis such that where the rate is not specified, the higher rate can be implied?

(4) If an order did not include authorisation to obtain SCCO assessment, but such assessment was obtained anyway, is the deputy entitled to charge the assessed fees?

(5) Where an order does include authority to obtain SCCO assessment, can the deputy rely on that authority once the estate has fallen below £16000, or is the deputy required to seek specific further authority for assessment?

Taking each of those questions in turn:

(1) If an order merely authorises "fixed costs" without specifying at what rate, does that necessarily imply fixed costs at the lower, public authority rate?

39. In the course of The Friendly Trust proceedings, District Judge Eldergill considered a view apparently expressed by a court officer that

"In the absence of a specific order saying that the local authority rates apply, then in my view, the solicitor rates apply."

The judge's response to that was:

"23. I would be surprised if the opinion expressed…is correct. Who is 'a solicitor' is defined by statute (see eg Solicitors Act 1974) and the work undertaken by The Friendly Trust is not undertaken by or under the supervision of a solicitor. Furthermore, as will be seen, the practice direction leaves the issue of whether to extend its provisions to not-for-profit organisations at the court's discretion. The best a non-solicitor deputy can hope for is that, when making a deputy order, the court will exercise its discretion to allow a non-solicitor deputy fixed costs at the solicitor rate."

40. Later in the judgment, specifically considering the discretion provision, the District Judge observed that

"61. That paragraph indicates that (a) solicitors are distinguished from not-for-profit organisations and (b) the court has a discretion ('may') to extend the solicitor and local authority fixed costs provisions in the practice direction to not-for-profit organisations. In other words, the court's order may at its discretion provide that a not-for-profit organisation deputy or 'other professional' shall be entitled to fixed costs at the solicitor or local authority rate. To my mind it is impossible to read that paragraph as saying that not-for-profit organisations are 'entitled' to fixed costs at the solicitor rate or are to be treated as if they were solicitors."

41. I agree with District Judge Eldergill's response and interpretation. To my mind, it is impossible to read the discretion provision as saying that any non-solicitor professionals acting as deputy (including accountants and case managers as well as not-for-profit organisations) are 'entitled' to fixed costs at the solicitor rate or are to be treated as if they were solicitors. Providing for such entitlement is in the discretion of the court ('may').
42. By the very nature of discretion, how it is exercised cannot be assumed. The wording of the discretion provision clearly envisages that, if the higher rate is to apply to 'other professionals' a court direction will be made – "the court may direct that". Logically therefore, where an order appointing a non-solicitor does not specify the solicitor's rate, an authorisation to receive 'fixed costs' must necessarily imply the lower, public authority rate. In my judgment, the answer to the first question is 'YES'.
43. Such an approach is consistent with the general approach taken to interpreting costs clauses in court orders, and with the approach taken in The Friendly Trust (paragraph 97).
44. Moreover, in the particular circumstances of the appointments with which the court is presently concerned, there is nothing which would justify any other assumption. Any reference in forms COP1 or COP4 to DW's qualification as an accountant cannot, as DW would have it, be determinative because the court is not obliged to direct that an accountant be entitled to remuneration at the higher rate. Although DW asserts that he did not regard himself as 'standing in' for the Local Authority the context of the appointments under consideration was (as set out in paragraph 7 of the earlier judgment) the Applicant's 'outsourcing' of deputyship functions. As envisaged at paragraph 93(b) of The Friendly Trust judgment and latterly spelled out in paragraph 19 of the current version of PD19B, the starting point in those circumstances will be the public authority rate.

(2) If an order authorises "fixed costs" without specifying at what rate but also authorises the deputy to obtain assessment from the SCCO, what is the effect of the second limb of the order? Is it 'simply otiose'? Does it necessarily imply fixed costs at the higher, solicitors' rates?

45. The premise behind this question is that it is not open to the court in the same order to authorise fixed costs at the lower, public authority rate but then also authorise the alternative of SCCO assessment.
46. No basis for such an assertion has been set out to me but I understand it to be rooted in the absence of any provision in Practice Direction 19B for assessment of the costs of a public authority deputy.
47. I accept that the Practice Direction has from the outset been formulated on the basis that solicitor deputies may seek assessment but public authorities may not. There is no basis in the Rules identified for this but it is not difficult to conceive of the policy reasons behind such an approach. As District Judge Eldergill pointed out (paragraphs 66 – 70) public authorities owe certain statutory duties and are generally appointed to manage low value estates. It is appropriate that the remuneration regime be applied so as to keep costs within limits.
48. The discretion provision provides for the court to apply "its provisions" (that is, the provisions of the Practice Direction) to "other professionals." It does not specify that any particular provisions may be applied; and it does not provide that the court may only apply the provisions of one pillar of the Practice Direction or the other in their entirety. It leaves the decision as to which provisions are to be applied completely in the discretion of the court.
49. At paragraph 5 of the Practice Direction it is provided that "The court order or direction will state whether fixed costs or remuneration applies, or whether there is to be a detailed assessment by a costs officer." "Or" usually suggests mutual exclusivity. However, and as noted in paragraph 33 above, it would not be consistent with the Rules to read this 'or' as meaning that an order may not provide for both fixed costs and assessment. Rather, in my judgment, it should be construed as denoting that an order to apply fixed costs and an order to permit detailed assessment are the products of distinct decisions.
50. In the absence of any reference to assessment in the context of public authority rates, I have considered whether the wording of paragraph 15 ("the following fixed rates of remuneration will ...emphasis added) apply where the court appoints a holder of an office in a public authority to act as deputy") should be considered to exclude any possibility of assessment if the public authority rate is applied. I have concluded that it should not. Exactly the same wording is used in respect of solicitors at paragraph 9, apparently without causing any difficulty to the subsequent provision (at paragraph 11) for application for assessment if the deputy prefers.
51. It follows from these conclusions that there is nothing in the Practice Direction which requires the court only to provide for assessment if it applies the solicitors' rate of fixed costs. It is open to the court to apply the lower, public authority rate and also provide for assessment if the deputy prefers.
52. For the reasons set out in the preceding 3 paragraphs, I am not persuaded by the contentions made on behalf of the Public Guardian set out at paragraph 37(c) (i) above. Furthermore, it seems to me that a reading of the whole of paragraphs 84 and 85 of The Friendly Trust judgment makes clear that District Judge Eldergill did not consider option (e) to be limited as the Public Guardian contends. Rather, he considered that the discretion provision leaves it to the court to decide "whether and how" to extend the fixed costs provisions to non-solicitor, non-public authority deputies. Option (e) replicates the wording of the first part of option (d) without restriction to the circumstances set out in parenthesis. It would appear from paragraph 86(a) that District Judge Eldergill distinguished the availability of assessment to solicitors and public authorities only in the context of estates with a net worth less than £16 000.
53. Moreover, in my judgment, the suggestion that an express provision in an order should be considered "simply otiose" is deeply unattractive. The order is the source of the authority for remuneration. Express provisions cannot be simply ignored. Charles J considered the effect of sealed orders in Re AR (at paragraph 27), and concluded that even orders with "fundamental flaws" could be relied on by the deputy in question and by the Public Guardian in the performance of his regulatory function until further orders setting them aside were made. Even if the Public Guardian's contention that the court may not order assessment alongside fixed costs at the lower rate was correct (which I have decided it is not), that same approach must apply. "Simply otiose" is simply not tenable.
54. Mr Paget's position on behalf of the Applicant is somewhat different to the Public Guardian's. He accepts that the court may apply the lower, public authority fixed rate and also provide for assessment if preferred but he says that such an approach would be "incoherent." I do not agree.
55. As I have noted elsewhere (Various Incapacitated Persons and the Appointment of Trust Corporations as Deputies [2018] EWCOP 3 at paragraph 10), over the course of the first decade of the Mental Capacity Act 2005 there has been rapid development of the legal and commercial landscape from which deputyship applications are made. Where once a binary conception of paid deputies as either solicitors or local authorities was a reasonable reflection of reality, the permutations are now significantly more varied. "Accountants, case managers and not-for-profit organisations" are recognised in the later versions of the Practice Direction but nowadays, the Court of Protection routinely receives deputyship applications from others, including Trust Corporations and individuals who offer deputyship services on a commercial basis.
56. Clearly the court is not obliged to provide for authorisation of a deputy by reference to the fixed fees of the Practice Direction. Rule 19.13 expressly sets out alternative options of remuneration at a "fixed amount" or a "specified rate." However, each of these alternatives may be perceived as having some practical disadvantages. Authorisation of remuneration of a "fixed amount" means it is more likely that there will need to be future applications to court (with attendant cost to P) because in a particular year the vicissitudes of life present more demands on the deputyship than usual, or simply to update the amount to reflect rising costs over time. To some extent these difficulties can be addressed by index-linking (as in Re AR) but the orders, and the steps necessary to quantify authorised fee, necessarily become more complex. Authorisation of a "specified rate" on the other hand does not inherently carry any limit on how much of that specified rate would be reasonable. These disadvantages are mitigated if remuneration is by reference to the Practice Direction fixed rates, which are updated periodically.
57. I note that the interplay of remuneration options for non-solicitor, non-public authority deputies was considered in the advice of the Senior Courts Costs Office which was set out in The Friendly Trust judgment:

"I am aware that it was a stated aim of the Fundamental Review of the Supervision of Court Appointed Deputies by the Public Guardian in 2014 to introduce a wider diversity of organisations to the panel of deputies, including organisations beyond the legal sector. It therefore seems likely that we see an increase in the number of non solicitor deputies over the forthcoming years….

The second group of non solicitor deputies are so called 3^rd sector deputies, including charities and not for profit organisations. We see very few bills from such organisations, possibly because they have been tied to fixed costs and the court has been reluctant to make orders for detailed assessment….

With regard to the orders for costs sought by not for profit organisations I personally would not concede that they should be entitled to solicitors rates, on the basis the fee earners are unlikely to be legally qualified, they do not have the same overhead as solicitors, are likely to be dealing with smaller and less complex estates and are by definition not for profit organisations. I do not see any problem however allowing them to elect for detailed assessment in appropriate cases, on the basis it would then be left to the Costs Officer to make a judgment as to the appropriate rate."

58. It would seem that the SCCO would not consider coupling lower rate fixed costs with permission to elect assessment if preferred as 'incoherent' either. It seems to me that, in appropriate cases, this combined approach offers the obvious advantage of flexibility whilst still pegging remuneration rates to the lower level (providing a baseline to which no doubt the Costs Officer would have regard when making any assessment.) It allows the court scope to recognise the reality of the modern deputyship landscape.
59. It follows that an order which authorises "fixed costs" without specifying at what rate but also authorises the deputy to obtain assessment from the SCCO, does not necessarily imply fixed costs at the higher, solicitors' rates. In my judgment, the answer to the second question is NO.
60. Before considering the next question, it is important to address a particular submission made by DW. In the context setting out his position in respect of availability and meaning of an authorisation for assessment, DW referred to a document entitled The Senior Courts Costs Office Guide, dated October 2013 (a copy of which is exhibited to his statement dated 21^st February 2018.) He explained that "we were under the impression from the SCCO that paragraph 23(7)(b) applied."
61. The full text of section 23.7 of the SCCO Guide is as follows:

23.7 Authorities to assess costs

(a) The Costs Officer will treat the costs of the application for appointing a deputy for property and affairs, as ending on the issue date of the order appointing the deputy (which may be some time after the actual date of the order). The Costs Officer will treat any costs incurred after the issue of that order as general management costs.

(b) If the order provides for fixed costs but a professional deputy elects for assessment, it is not necessary to apply to the Court of Protection for an amended direction. Professional deputies may elect for assessment simply by lodging a bill with the SCCO. The bill should contain a statement stating that fixed costs have not been taken.

(c) If the application is for an assessment of general management costs, the Costs Officer will need to know that the Court has agreed that the professional deputy is to be paid general management costs. When lodging the first year's general management bill, the deputy should send a copy of the order authorising him or her to be paid professional costs. The SCCO keeps a record so it is not necessary to send a copy of that order in subsequent years. Unless there are any special circumstances, general management costs should be claimed annually, usually after the passing of the annual account.

(d) In all cases where fixed costs are available, professional deputies should confirm when lodging their bill for assessment that they have not taken fixed costs for the work. The simplest way of doing this is to endorse a statement to this effect on the bill."

62. DW's professed reliance on paragraph 23(7)(b) strikes me as somewhat disingenuous. To have got as far as paragraph 23(7), DW would presumably also have read earlier parts of section 23 of the Guide, notably:

a. 23.2 (a): All orders as to costs are at the discretion of the Court of Protection and nothing in this guidance should be interpreted as removing or restricting the Court's discretion in any way;

b. 23.4 (c): Usually the Court Order or direction will state whether fixed costs or remuneration applies, or whether there is to be a detailed assessment by a Costs Officer. Where a Court Order or Direction provides for a detailed assessment of costs, professional deputies may elect to take fixed costs or remuneration in lieu of detailed assessment;

c. 23.5 (a): …The form [seeking detailed assessment] should be accompanied by the following documents:

(ii) the document giving the right to detailed assessment.

63. Matrix's position is that it provided copies of the relevant deputy orders to the SCCO in each case but Mr Paget produced a document (B610 from the bundle for the removal proceedings) from Laura Wade, a costs lawyer instructed by Matrix. From that document it would appear that, on occasion at least, Matrix submitted to SCCO a copy of its own guidance document but not a copy of the deputyship order setting out the particular authorisation as to fees (or absence thereof.)
64. DW's account of reliance on paragraph 23(7)(b) of the SCCO guidance effectively means that, regarding himself as "a professional deputy", he applied for assessment regardless of what the deputyship order actually provided (or did not provide.) In my judgment, it was not open to him to do that, as a less selective reading of the SCCO guidance and paragraphs 41-42 above make clear.

(3) Where a single deputy holds various appointments, some of which include authorisation to charge fees at the higher fixed rate, and some of which authorise merely "fixed costs" without specifying the rate, can that deputy infer that all his appointments are made on the same basis such that where the rate is not specified, the higher rate can be implied?

65. This question can be dealt with shortly. Each order represents a 'best interests' decision on the facts of the particular case. It must be read in its own terms. It is not open to a deputy to 'read across' from the terms of one appointment any inference for another appointment. Therefore, even if a deputy holds appointment A with authority to charge fees at the higher rate, he cannot imply that rate into appointment B where the order did not specify the rate.
66. In any event, I note that none of the orders with which the court is presently concerned expressly authorised fixed remuneration at the higher rate; and as decided above, no inference to that effect can be drawn from a provision for assessment. It follows that, across the range of appointments currently under consideration, there is no basis for cross-appointment inference even if it were permissible (which it is not.).

(4) If an order did not include authorisation to obtain SCCO assessment, but such assessment was obtained anyway, is the deputy entitled to charge the assessed fees?

67. On occasion, even though the deputyship order gave no authority to obtain SCCO assessment, an application for assessment has been made, and the SCCO has issued a Final Costs Certificate (eg JBE 12350925, where a costs certificate in the sum of £1 343.80 inclusive of VAT was issued on 25th June 2016, a copy of which is at D113 of the hearing bundle.)
68. Matrix contends and the Public Guardian accepts that, where an SCCO assessment has been undertaken, that assessment should stand and the deputy be treated as entitled to receive the certified costs. On behalf of the Applicant, Mr. Paget does not agree to such an approach. He points out that the assessment of a bill by a costs officer does not mean that the fee is legitimate – the costs officer deals in quantum, not liability; and the certification of an amount does not amount to authorisation to take that sum from P's funds.
69. In my judgment, Mr. Paget's view is correct. The authority to charge the fee comes from the court order alone. If by whatever means an SCCO assessment has been obtained, the assessment itself cannot give authority to charge the fee. The answer to the fourth question is NO.
70. Matrix now concedes that, where the deputyship order is worded as in KAB, there should be no application made for assessment; and further agrees to withdraw any such applications that it has made which are as yet undetermined (apparently KAB 12351709 itself, FCU 12502246, RSA 12151528, FWI 12260789, MSA 12245746 and BFA 12534749).
71. Where a deputy has already taken a fee in the amount assessed, in the absence of authorisation for that assessment the deputy will need to make an application for relief of any liability which attaches to the taking of the unauthorised fee. In that application, the deputy may seek to rely on the SCCO assessment as demonstrating some independent, reasonably contemporaneous acceptance of the reasonableness of the fee, but it will be a matter for the court to decide whether or not it is appropriate to grant the application and effectively authorise the fee retrospectively. Factors which will be relevant to the consideration of the application include (but are not limited to):

a. the circumstances of the original deputyship appointment;

b. the explanation of what steps the deputy had taken in the discharge of his functions in the relevant period and why fixed fees were not considered appropriate;

c. the explanation of why assessment was sought without prior authorisation;

d. the size of P's estate; and

e. the amount of the assessed costs.

72. There is no such application for relief from liability currently before me. The arguments to be in any such application may be different to those which were made in support of the contention that the entitlement to charge the fee already existed and so it seems to me that the Respondents should be allowed an opportunity to make such an application if they so wish. However, in the spirit of the overriding objective set out in Rule 1 and the conclusions drawn above, I encourage them to take a realistic view of these already extended proceedings.
73. In a similar vein to their (now rejected) contention that they may rely on an unauthorised SCCO assessment, Matrix contends that, where a report has been submitted to the Public Guardian setting out a claim for fees at the higher rate, and that report has not been challenged by the Public Guardian, they should be treated as entitled to claim the higher rate fee, irrespective of whether or not the deputyship order included specific authority to claim the higher rate. The Public Guardian does not accept that, and neither do I. The absence of a challenge to an account filed for supervisory purposes is not the same as a court authorisation to charge the fee. At best, the deputy may point to the absence of prompt challenge in support of a claim for relief from liability.

(5) Where an order does include authority to obtain SCCO assessment, can the deputy rely on that authority once the estate has fallen below £16000, or is the deputy required to seek specific further authority for assessment?

74. There was some discussion at the hearing as to whether an order permitting SCCO assessment, which was granted at a time when an estate exceeded £16000, may still form the basis of authority for assessment when the estate subsequently falls below £16000.
75. Practice Direction 19B refers expressly to estates of net value less than £16 000 in the provisions relating to fixed remuneration at the higher, solicitors' rate (which, I note, is the basis to which the Respondents have claimed to be entitled.) In that context, it is in my judgment plain from paragraph 11 of the Practice Direction that if "detailed assessment in relation to an estate with net assets of a value of less than £16000" is to be an available option, there must be "a specific order" for such. The "However" indicates that the threshold of £16 000 net worth marks a threshold at which a different approach is expected. Either the deputy accepts fixed costs at the specified rate, or the deputy must specifically obtain court authorisation for assessment.
76. There is an obvious logic to this approach in the protection for P of a basic level of funds. When funds are reduced to £16 000, in the ordinary run of events the demands of deputyship, and therefore the reasonableness of seeking costs higher than the stipulated percentage rate, are likely to be few. It is a sensible protective measure to require that any deputy who does seek assessment in those circumstances, with the attendant costs of the procedure and the aim of higher charges, should be obliged to explain to the court why.
77. I have determined that the court may permit assessment where it authorises fixed remuneration at the lower, public authority rate. I acknowledge that the provisions of the Practice Direction relating to the lower, public authority rate do not include an equivalent provision to paragraph 11. In my judgment, that absence of provision should be seen in the wider context of the binary conception of the Practice Direction ie in the context of public authorities a different approach to assessment at all, rather than a different approach to estates of less than £16 000. Once the court has determined that, for a non-solicitor non-public authority it is appropriate in a particular case to include the option for assessment, it must follow on grounds of consistency that the same approach as provided in paragraph 11 is to be applied.
78. The answer to question 5 is that NO, the deputy cannot continue to rely on an earlier authority to seek assessment once the estate falls below £16 000; and YES, the deputy must at that point either accept the stipulated percentage or seek further, specific authority.

In summary

79. Drawing together the answers to each of the questions identified:

(1) Yes, if an order authorises "fixed costs" without specifying at what rate, that necessarily implies the lower, public authority rate;

(2) No, if an order authorises "fixed costs" without specifying at what rate but also authorises the deputy to seek assessment from the SCCO, that does not imply the higher, solicitors' rate. It is open to the court to provide for fixed costs at the lower rate and also the option of assessment in a particular case if it sees fit.

(3) No, a deputy may not 'read across' from the terms of one appointment into the terms of another. Each order stands on its own as a 'best interests' decision on the facts of a particular case.

(4) No, an assessment obtained from the SCCO without authority is not sufficient to establish entitlement to claim the assessed fee. At best, the deputy may seek to rely on such assessment in support of an application for release of liability in respect of any fee charged at the assessed rate. Any lack of challenge from the OPG to a report submitted to it by the deputy does not constitute authorisation to charge the reported fee.

(5) Yes, once an estate falls below £16 000, specific authorisation is required to obtain assessment of costs. The deputy may not continue to rely on an authorisation of assessment which was granted when the net value of the estate was greater than £16 000.

NEXT STEPS

80. In the light of these conclusions, there will be a further hearing listed before me, with a time estimate of one day. On that occasion the court will consider all the matters set out in the order of 27^th November 2017 which remain outstanding.

POST SCRIPT

81. DW and OM were not named in the first published judgment in this matter. They had not taken part in the hearing and had had no opportunity to make representations on the question of whether they should be named. Both DW and OM are now formally joined as party to the proceedings. After this hearing, all parties were given an opportunity to address the question of whether DW and OM should be named in this second judgment.

82. The Applicant and the Public Guardian "see no reason why [they] should not be named." Matrix Deputies Ltd and OM have made no representations on the point. DW asks that he is not named, on the basis that he "was discharged from the first hearing…. and had no opportunity to defend myself against the false allegations of Enfield Borough Council."

83. I have regard to Practice Guidance: Transparency in the Court of Protection: Publication of Judgments [2014 COPLR 78, and in particular paragraph 20 of that Guidance which sets out that:

"In all cases where a judge gives permission for a judgment to be published:

(i)Public authorities and expert witnesses should be named in the judgment approved for publication, unless there are compelling reasons why they should not be so named;

(ii) The person who is the subject of proceedings in the Court of Protection and other members of their family should not normally be named in the judgment approved for publication unless the judge otherwise orders;

(iii) Anonymity in the judgment as published should not normally extend beyond protecting the privacy of the adults who are the subject of the proceedings and other members of their families, unless there are compelling reasons to do so."

84. I am satisfied that there are no compelling reasons such as to justify the extension of anonymity to DW and OM. They may be identified in any report of these proceedings. They are Derek Williamson and Onias Mangena.

HHJ Hilder

24^th September 2018

Appendix A: Statutory Provisions, Rules and Regulations relating to Security Bonds

A. Mental Capacity Act 2018 s19(9)(a):

"The court may require a deputy to give to the Public Guardian such security as the court thinks fit for the due discharge of his functions."

B. Court of Protection Rules 2017 Rule 24.3:

"(1) This rule applies where the court makes an order or gives a direction

(a) conferring functions on any person (whether as a deputy or otherwise); and

(b) requiring that person to give security for the discharge of those functions.

(2) The person on whom functions are conferred must give the security before undertaking to discharge those functions, unless the court permits the security to be given subsequently.

(3) Paragraphs (4) to (6) apply where the security is required to be given before any action can be taken.

(4) Subject to paragraph (5), the security must be given in accordance with the requirements of regulation 33(2)(a) of the Public Guardian Regulations (which makes provision about the giving of security by means of a bond that is endorsed by an authorised insurance company or an authorised deposit-taker).

(5) The court may impose such other requirements in relation to the giving of security as it considers appropriate (whether in addition to, or instead of, those specified in paragraph (4)).

(6) In specifying the date from which the order or direction referred to in paragraph (1) are to take effect, the court will have regard to the need to postpone that date for such reasonable period as would enable the Public Guardian to be satisfied that –

(a) if paragraph (4) applies, the requirements of regulation 34 of the Public Guardian Regulations have been met in relation to the security; and

(b) any other requirements imposed by the court under paragraph (5) have been met.

(7) "The Public Guardian Regulations" means the Lasting Power of Attorney, Enduring Powers of Attorney and Public Guardian Regulations 2007 (SI 2007/1253)"

C. The Lasting Powers of Attorney, Enduring Powers of Attorney and Public Guardian Regulations 2007 (as amended by The Lasting Power of Attorney, Enduring Powers of Attorney and Public Guardian (Amendment) Regulations 2010 and The Lasting Power of Attorney, Enduring Powers of Attorney and Public Guardian (Amendment) Regulations 2013):

Persons required to give security for the discharge of their functions

33 (1) This regulation applied in any case where the court orders a person ("S) to give to the Public Guardian security for the discharge of his functions.

(2) The security must be given by S –

(a) by means of a bond which is entered into in accordance with regulation 34; or

(b) in such other manner as the court may direct.

(3) For the purposes of paragraph 2(a), S complies with the requirement to give security only if –

(a) the endorsement required by regulation 34(2) has been provided; and

(b) the person who provided it has notified the Public Guardian of that fact.

(4)For the purposes of paragraph (2)(b), S complies with the requirement to give the security –

(a) In any case where the court directs that any other endorsement must be provided, only if –

i. That endorsement has been provided; and

ii. The person who provided it has notified the Public Guardian of that fact;

(b) In any case where the court directs that any other requirements must be met in relation to the giving of the security, only if the Public Guardian is satisfied that those other requirements have been met.

Security given under regulation 33(2)(a): requirement for endorsement

34 (1) This regulation has effect for the purposes of regulation 33(2)(a).

(2) A bond is entered into in accordance with this regulation only if it is endorsed by –

(a) an authorised insurance company; or

(b) an authorised deposit-taker.

(3) A person may enter into the bond under –

(a) arrangements made by the Public Guardian; or

(b) other arrangements which are made by the person entering into the bond or on his behalf.

(4) The Public Guardian may make arrangements with any person specified in paragraph (2) with a view to facilitating the provision by them of bonds which persons required to give security to the Public Guardian may enter into.

(5)In this regulation –

"authorised insurance company" means –

(a) A person who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance;

(b) An EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to that Act, which has permission under paragraph 15 of that Schedule to effect and carry out contracts of insurance;

(c) A person who carries on insurance market activity (within the meaning given in section 316(3) of that Act); and

"authorised deposit-taker" means –

(a) A person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits;

(b) An EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to that Act, which has permission under paragraph 15 of that Schedule to accept deposits.

(6)The definitions of "authorised insurance company" and "authorised deposit-taker" must be read with –

(a) Section 22 of the Financial Services and Markets Act 2000;

(b) Any relevant order under that section; and

(c) Schedule 2 to that Act.

Security given under regulation 33(2)(a): maintenance or replacement

35(1) This regulation applies to any security given under regulation 33(2)(a).

(2) At such times or at such intervals as the Public Guardian may direct by notice in writing, any person ("S") who has given security must satisfy the Public Guardian that any premiums payable in respect of it have been paid.

(3) Where S proposes to replace a security already given by him, the new security is not to be regarded as having been given until the Public Guardian is satisfied that –

(a) the requirements set out in sub-paragraphs (a) and (b) of regulation 33(3) have been met in relation to it; and

(b) no payment is due from S in connection with the discharge of his functions.

(4)The Public Guardian must, if satisfied as to the matters in paragraph (3), provide written notice of that fact to S within 2 weeks of being given notification in accordance with regulation 33(3)(b) in relation to the new security.

Enforcement following court order of any endorsed security

36(1) This regulation applies to any security given to the Public Guardian in respect of which an endorsement has been provided.

(2) Where the court orders the enforcement of the security, the Public Guardian must

(a) notify any person who endorsed the security of the contents of the order; and

(b) notify the court when payment has been made of the amount secured.

Discharge of any endorsed security

37(1) This regulation applies to any security given by a person ("S") to the Public Guardian in respect of which an endorsement has been provided.

(2) The security may be discharged if the court makes an order discharging it.

(3) Otherwise the security may not be discharged –

(a) if the person on whose behalf S was appointed to act dies, until the end of the period of 2 years beginning on the date of his death; or

(b) in any other case, until the end of the period of 7 years beginning on whichever of the following dates occurs first -

(i) if S dies, the date of his death;

(ii) if the court makes an order which discharges S but which does not also discharge the security under paragraph (2), the date of the order;

(iii) the date when S otherwise ceases to be under a duty to discharge the functions in respect of which he was ordered to give security."

(3A) Where S has replaced a security ("the original security")previously given by S and the Public Guardian has provided notice in accordance with regulation 35(4), the original security shall stand discharged 2 years from the date on which that notice was issued unless discharged by earlier order of the court upon application under paragraph (2).

(4)For the purposes of paragraph (3), if a person takes any step with a view to discharging the security before the end of the period specified in that paragraph, the security is to be treated for all purposes as if it were still in place.

(5)For the purposes of paragraph (3A), if a person takes any step otherwise than under paragraph (2) with a view to discharging the original security before the end of the period specified paragraph (3A), the security is to be treated for all purposes as if it were still in place.

Appendix B: Statutory Provisions, Rules and Practice Directions relating to Fees

A. Mental Capacity Act 2005 section 19(7)

The deputy is entitled –

(a) To be reimbursed out of P's property for his reasonable expenses in discharging his functions, and

(b) If the court so directs when appointing him, to remuneration out of P's property for discharging them.

B. Court of Protection Rules 2017, Part 19

Interpretation

19.1(1) In this part –

…

"detailed assessment" means the procedure by which the amount of costs or remuneration is decided by a costs officer in accordance with Part 47 of the Civil Procedure Rules 1998 (which are applied to proceedings under these Rules, with modifications, by rule 19.6);

"fixed costs" are to be construed in accordance with the relevant practice direction;

….

Remuneration of a deputy, donee or attorney

19.13 (1) Where the court orders that a deputy, done or attorney is entitled to remuneration out of P's estate for discharging functions as such, the court may make such order as it thinks fit including an order that –

(a) the deputy, donee or attorney be paid a fixed amount;

(b) the deputy, donee or attorney be paid at a specified rate; or

(c) the amount of the remuneration shall be determined in accordance with the schedule of fees set out in the relevant practice direction.

(2) Any amount permitted by the court under paragraph (1) shall constitute a debt due from P's estate.

(3) The court may order a detailed assessment of the remuneration by a costs officer in accordance with rule 19.10(b).

Practice Direction as to costs

19.14 A practice direction may make further provision in respect of costs in proceedings.

C.

D.

E. Practice Direction 19B (in the version in effect between 1 February 2011 and 30 March 2017)

PRACTICE DIRECTION – FIXED COSTS This practice direction supplements Part 19 of the Court of Protection Rules 2007

PRACTICE DIRECTION B – FIXED COSTS IN THE COURT OF PROTECTION

General

81. This practice direction sets out the fixed costs that may be claimed by solicitors and public authorities acting in Court of Protection proceedings and the fixed amounts of remuneration that may be claimed by solicitors and office holders in public authorities appointed to act as a deputy for P. Rule 167 enables a practice direction to set out a schedule of fees to determine the amount of remuneration payable to deputies. Rule 168 enables a practice direction to make provision in respect of costs in proceedings.
82. The practice direction applies principally to solicitors or office holders in public authorities appointed to act as deputy. However, the court may direct that its provisions shall also apply to other professionals acting as deputy including accountants, case managers and not-for-profit organisations
83. This Practice Direction applies where the period covered by the category of fixed costs or remuneration ends on or after 1 February 2011. The Practice Direction supersedes the earlier Practice Directions and Practice Notes relating to fixed costs issued by the Court of Protection. However solicitors and office holders in public authorities should continue to claim the rates applicable in the previous Practice Directions and Practice Notes, where the period covered by the category of fixed costs or remuneration ended before1 February 2011.

When does this practice direction apply?

84. Rule 156 provides that, where the proceedings concern P's property and affairs, the general rule is that costs of the proceedings shall be paid by P or charged to his estate. The provisions of this practice direction apply where the professional or deputy is entitled to be paid costs out of P's estate. They do not apply where the court order provides for one party to receive costs from another.

Claims generally

85. The court order or direction will state whether fixed costs or remuneration applies, or whether there is to be a detailed assessment by a costs officer. Where a court order or direction provides for a detailed assessment of costs, professionals may elect to take fixed costs or remuneration in lieu of a detailed assessment.

Payments on account

86. Where professional deputies elect for detailed assessment of annual management charges, they may take payments on account for the first three quarters of the year, which are proportionate and reasonable taking into account the size of the estate and the functions they have performed. Interim quarterly Bills must not exceed 20% of the estimated annual management charges - that is up to 60% for the whole year. Interim bills of account must not be submitted to the Senior Courts Costs Office. At the end of the annual management year, the deputy must submit their annual bill to the Senior Courts Costs Office for detailed assessment and adjust the final total due to reflect payments on account already received

Solicitors' costs in court proceedings

87. The fixed costs are as follows:

		An amount not exceeding
Category I	Work up to and including the date upon which the court makes an order appointing a deputy for property and affairs.	£850 (plus VAT)
Category II	Applications under sections 36 (9) or 54 of the Trustee Act 1925 or section 20 of the Trusts of Land and Appointment of Trustees Act 1996 for the appointment of a new trustee in the place of 'P' and applications under section 18(1)(j) of the Mental Capacity Act 2005 for authority to exercise any power vested in P, whether beneficially, or as trustee, or otherwise	£385 (plus VAT)

88. The categories of fixed costs, above will apply as follows:

•    Category I to all orders appointing a deputy for property and affairs made on or after 1 February 2011.

•    Category II to all applications for the appointment of a new trustee made on or after 1 February 2011.

Remuneration of solicitors appointed as deputy for P

89. The following fixed rates of remuneration will apply where the court appoints a solicitor to act as deputy:

		An amount not exceeding
Category III	Annual management fee where the court appoints a professional deputy for property and affairs, payable on the anniversary of the court order
	(a) for the first year:	£1,500 (plus VAT)
	b) for the second and subsequent years:	£1,185 (plus VAT)
	Where the net assets of P are below £16,000, the professional deputy for property and affairs may take an annual management fee not exceeding 4.5% of P's net assets? on the anniversary of the court order appointing the professional as deputy.
Category IV	Where the court appoints a professional deputy for personal welfare, the deputy may take an annual management fee not exceeding 2.5% of P's net assets? on the anniversary of the court order appointing the professional as deputy for personal up to a maximum of £500.
Category V	Preparation and lodgement of the annual report or annual account to the Public Guardian	£235 (plus VAT)
Category VI	Preparation of an HMRC income tax return on behalf of P	£235 (plus VAT)

90. The categories of remuneration, above will apply as follows:

•    Category III and IV to all annual management fees for anniversaries falling on or after 1 February 2011.

•    Category V to reports or accounts lodged on or after 1 February 2011.

•    Category VI to all HMRC returns made on or after 1 February 2011.

91. In cases where fixed costs are not appropriate, professionals may, if preferred, apply to the Supreme Court Costs Office for a detailed assessment of costs. However, this does not apply if P's net assets are below are £16,000 where the option for detailed assessment will only arise if the court makes a specific order for detailed assessment in relation to an estate with net assets of a value of less than £16,000.
92. Where the period for which an annual management fee claimed is less than one year, for example where the deputyship comes to an end before the anniversary of appointment, then the amount claimed must be the same proportion of the applicable fee as the period bears to one year.

Conveyancing costs

93. Where a deputy or other person authorised by the court is selling or purchasing a property on behalf of P, the following fixed rates will apply except where the sale or purchase is by trustees in which case, the costs should be agreed with the trustees:

Category VII

A value element of 0.15% of the consideration with a minimum sum of £350 and a maximum sum of £1,500, plus disbursements.

94. Category VII applies to any conveyancing transaction where contracts are exchanged on or after 1 February 2011.

Remuneration of public authority deputies

95. The following fixed rates of remuneration will apply where the court appoints a holder of an office in a public authority to act as deputy:

		An amount not exceeding
Category I	Work up to and including the date upon which the court makes an order appointing a deputy for property and affairs.	£670
Category II	Annual management fee where the court appoints a local authority deputy for property and affairs, payable on the anniversary of the court order
	(a) for the first year:	£700
	(b) for the second and subsequent years:	£585
	Where the net assets* of P are below £16,000, the local authority deputy for property and affairs may take an annual management fee not exceeding 3% of P's net assets on the anniversary of the court order appointing the local authority as deputy
	(d) Where the court appoints a local authority deputy for personal welfare, the local authority may take an annual management fee not exceeding 2.5% of P's net assets* on the anniversary of the court order appointing the local authority as deputy for personal welfare up to a maximum of £500.
Category III	Annual property management fee to include work involved in preparing property for sale, instructing agents, conveyancers, etc or the ongoing maintenance of property including management and letting of a rental property.	£270
Category IV	Preparation and lodgement of an annual report or account to the Public Guardian	£195

96. The categories of remuneration, above will apply as follows:

•    Category I to all orders appointing a deputy for property and affairs made on or after 1 February 2011.

•    Category II to all annual management fees for anniversaries falling on or after 1 February 2011.

•    Category III on the anniversary of appointment as deputy where the anniversary falls on or after 1 February 2011; or upon completion of the sale of a property, where the transaction was concluded on or after 1 February 2011.

•    Category V to reports or accounts lodged on or after 1 February 2011.

97. Where the period for which the annual management fee ends before an anniversary, for example where the deputyship comes to an end before the anniversary of appointment, then the amount claimed must be the same proportion of the applicable fee as the period bears to one year.