Solicitors remain responsible for acts and omissions of costs draftsman acting outside scope of instructions
In certifying an inaccurate claim for costs, solicitors remain responsible for acts and omissions of costs draftsman
On 10th July 2008 the First Respondent - Ms Jagrit Bamrah, a Solicitor, visited a client in a block of flats owned by the Appellant. When the First Respondent left her client’s flat she tripped over a doorstop at the floor, fell heavily on her right hand side and sustained soft tissue injuries to her right hand, arm and shoulder.
A Letter Before Claim was provided on 13th November 2008 and on 16th January 2009 the Appellant’s Insurers, AXA Insurance (‘AXA’) admitted liability on their behalf.
There were a number of exchanges on quantum, the First Respondent issued protective proceedings on 20th June 2011 and notwithstanding the fact that the Claim Form indicated a value of not more than £50,000.00 the First Respondent served a schedule of loss totalling £750,000.00, later increased to in excess of £900,000.00.
The Appellant – Gempride Ltd made several offers of settlement including a Part 36 offer in the sum of £50,000.00 on 18th March 2013 and this offer was accepted out of time on 12th April 2013.
Costs issues and Detailed Assessment –
The First Respondent, a solicitor working independently, had a household insurance policy which included before the event (‘BTE’) insurance and following the accident she contacted her insurer. The First Respondent spoke to their panel solicitors, Irwin Mitchell, and in a subsequent letter it was pointed out to the First Respondent that the policy only covered fees incurred by Irwin Mitchell and not another firm of solicitors.
The First Respondent made it clear that she wished to deal with the claim herself through her own firm, Falcon Legal Solicitors (‘Falcon Legal’), stated that her hourly charging rate was £232.00 and sought authority to instruct her own firm.
On 20th November 2008 the First Respondent entered into a Conditional Fee Agreement (‘CFA’) with Falcon Legal and signed the CFA (subsequently found to be void as the First Respondent was a sole practitioner and was unable to contract with herself) for both the firm as the service provider and herself as the client. The CFA provided for a success fee of 100% and an hourly rate of £232.00.
Falcon Legal wrote to ARC on 11th June 2011 seeking permission for the firm to deal with the claim after proceedings were issued and on the same day wrote to AXA informing them that they continued to seek legal expenses insurance and of the existence of a CFA. ARC refused authority for Falcon Legal to act. Proceedings were issued by Falcon Legal who obtained ATE cover of £100,000.00 for a premium of £2,724.20 and on 12th August 2012 the conduct of the claim was transferred from Falcon Legal to David Stinson & Co (‘Stinsons’).
On 10 June 2013, the First Respondent instructed the Second Respondent, Lawlords Costs Consultants (‘Lawlords’), to draft a bill of costs for the period up to 12th August 2012. In her letter of instruction the First Respondent, referring to the hearing of 22nd June 2012, stated as follows – ‘………….the hourly rate for this claim was increased to £280.00 per hour……. All work was carried out [by] Ms Bamrah at the hourly rate of £232.00 pursuant to a [CFA] date 10/07/2008. Accordingly please recover all costs incurred in this matter including the maximum success fee.’
The Second Respondent provided a draft bill of costs by email dated 8th July 2013 and covering letter which stated – ‘Given the conduct of the defendant and the complexity of this matter in respect of the medical evidence and quantum we have applied a rate of £280.00 per hour throughout and a success fee of 100%.’
The parties exchanged points of dispute and replies, Stinsons filed a request for a detailed assessment and the matter was fixed for a hearing on 18th November 2013 to proceed as a directions hearing. On 15th November 2013 the Appellant served additional points of dispute urging for the success fee to be disallowed as the CFA and risk assessment had not been disclosed.
At the hearing before Master Leonard on 18th November 2013 the Appellant agreed not to pursue a point raised in the points of dispute concerning alternative methods of funding, the Second Respondent (representing the First Respondent) agreed to disclose a copy of the CFA and risk assessment and the matter was listed for a hearing of the preliminary issues on 12th April 2014.
Having received and considered the funding options checklist and CFA, the Appellant raised further issues concerning alternative methods of funding and the hourly rate stated in the CFA. On 18th December 2013 the Appellant issued an application seeking a) to resile from their concession regarding the unavailability of alternative funding, and b) an order that the First Respondents claim for costs be dismissed or alternative relief granted under CPR rule 44.11.
The application was heard on 13th January 2014 and was allowed. Master Leonard found that the First Respondent had both certified a misleading bill of costs and was responsible for a factual inaccuracy in the reply to general point 3 of the points of dispute where it was stated that BTE insurance was unavailable. Having found that the First Respondent’s conduct was ‘unreasonable and improper’ the Master disallowed profit costs claimed in Part 1 of the bill insofar as they exceed the fixed hourly rate recoverable by litigants-in-person.
On the first appeal before His Honour Judge Mitchell in Central London County Court the decision was reversed for several reasons, crucially that Ms Bamrah was not responsible for the acts and omissions of Lawlords because as they had failed to act according to her instructions.
The Appellant appealed to the Court of Appeal and the appeal was upheld on five grounds.
Ground 1 – The court found that Judge Mitchell had erred when he approached the issue of ‘unreasonable and improper’ on the basis that if the Appellant had not proved that the First Respondent had intended to mislead the Appellant or the Court, then it had necessarily failed to prove that her conduct fell within CPR rule 44.11. The Court found – ‘unreasonable or improper conduct does not have dishonesty as a necessary ingredient, and Gempride had not restricted its allegations to ones necessarily involving dishonesty on her part. The judge regrettably failed to consider whether Ms Bamrah's conduct, although not dishonest, was nevertheless "unreasonable or improper". That was an error of law.’
Ground 3 – The Court found that Falcon Legal were responsible for the conduct of the Second Respondent and that Judge Mitchell had erred in his consideration of the legal position of the Second Respondent in a number of ways stating – ‘In all the circumstances, on the basis of Ms Bamrah's own case, I consider that in certifying that Part 1 of the bill of costs was "accurate" and that "the costs claimed… do not exceed the costs which the receiving party is required to pay me/my firm" Ms Bamrah's conduct was unreasonable or improper conduct within the scope of CPR rule 44.11.’
Ground 7 – The Court found that the First Respondent did not intend deliberately to mislead the Appellant or the Court by her response in the points of reply but that the Appellant was misled – ‘It was almost inevitable that it would be. As the Master commented, although the position was rectified when the CFA documents were later disclosed, costs could have been compromised on the basis that there was no alternative funding available without Gempride being any the wiser.’
Ground 8 – The Court stated – ‘………..it seems to me to be an important matter of principle that solicitors on the record – and other authorised litigators and "legal representatives" for the purposes of the CPR – understand that they remain ultimately responsible for the acts and omissions of those to whom they delegate parts of the conduct of litigation, particularly where those to whom such work is delegated are not authorised. It is only in that way that the supervisory jurisdiction of the court can be effectively maintained.’
Ground 10 – The Court stated - ‘In my judgment, there is no answer to this ground. Mr Singh suggested none. Ms Bamrah had solicitors on the record. She was represented in court by Leading Counsel, as well as those solicitors. She attended the appeal as a party, not as a legal representative. In those circumstances, the fact that she is a lawyer does not entitle her to claim her costs of attendance, let alone to do so at her own professional rate.’
Ground 11 – While Jackson LJ had not granted permission to appeal on this ground and Counsel for the First Respondent submitted that the Court did not, therefore, have jurisdiction to revisit the refusal of permission to appeal the Court disagreed with Counsel’s submission stating – ‘Without any express ground of appeal, this court has jurisdiction to make orders consequential upon the result of the substantive appeal, including orders in relation to the costs of the appeal and the costs below. We have jurisdiction to do so in this case. It is clear from Jackson LJ's clarification of 7 March 2018 that he did not intend to exclude that jurisdiction, and indeed he confirmed that it would be open to Gempride to seek a consequential variation of the costs order below dependent upon the outcome of the substantive grounds of appeal.’ The Appellant was allowed permission to seek a consequential variation of the costs order.