The Court of Appeal has handed down an extremely important decision this month, which has seen a successful Claimant have their Assessment Costs halved due to the issue of misconduct by claiming a higher hourly rate than she was entitled to.
In Gempride Ltd –v- Bamrah & Anor  EWCA Civ 1367 the Claimant commenced Detailed Assessment proceedings following a successful Personal Injury case. The Claimant was herself a Personal Injury Solicitor, and her Firm, Falcon Legal, acted on her behalf. Her claim settled for £50,000.00 against Gempride who owned the block of flats where she tripped over a doorstop while visiting a client.
The Bill of Costs was prepared by an external Costs Draftsman, and was certified by the Solicitor claiming Hourly Rates in excess of those that had been agreed. The Replies to the Points of Dispute also asserted that BTE Insurance was not available, when in fact it was, had the Claimant been willing to accept their terms.
At the Assessment Master Leonard found that there had been misconduct in certifying the Bill of Costs and the Replies, and under the Conduct Provisions of CPR 44.11 limited part of the Claimant’s Bill to the Litigant in Person Rate.
The Appeal was allowed because the Claimant was held not to be responsible for the acts and mistakes of the Costs Firm, as although they were her Agents, they not only failed to act in accordance with her instructions but in fact acted contrary to them.
On Agency, Lord Justice Hickinbottom said:
“At a time when new business practices mean that Solicitors are more frequently subcontracting work out to the unauthorised, 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…
“The reverse side of that coin is that, because the Solicitor has responsibility for the conduct of those to whom he subcontracts work for which he as a Solicitor has been retained, then he is able to charge for that work at an appropriate rate as profit costs (together with any success fee uplift under a CFA) and not simply as a disbursement.”
He went on to decide that in certifying the Bill of Costs as accurate and that “the costs claimed… do not exceed the costs which the receiving party is required to pay me/my firm”, the Claimant’s conduct was unreasonable or improper conduct within the scope of CPR 44.11.
Hickinbottom LJ also held that HHJ Mitchell had misdirected himself in saying that Defendant had to prove that the Claimant had acted dishonesty for an Application under CPR 44.11 to succeed;
“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.”
He went on to rule that in certifying the Bill of Costs as accurate and that “the costs claimed… do not exceed the costs which the receiving party is required to pay me/my firm”, the Claimant’s conduct was unreasonable or improper conduct within the scope of CPR 44.11.
He also concluded that HHJ Mitchell’s ruling on the BTE Insurance point was wrong:
“The Judge proceeded on the basis that, in this context, where an actual or proposed litigant has BTE insurance but chooses not to use it because the firm that he wishes to instruct will only do so upon terms that the policy does not cover, it can properly be said that BTE insurance is ‘not available’ to that litigant.
“I am persuaded that the judge erred in finding that the statement was accurate on this basis.”
In his judgment, Judge Mitchell was particularly critical of Master Leonard for proceeding with the CPR rule 44.11 Application without evidence from Ms Bamrah. He said that, although the Court had to proceed on the basis that Ms Bamrah was at no time dishonest, as that was the original finding of Master Leonard, “in my view her conduct was serious even within the parameters of ‘unreasonable and improper’”. Given the finding that Ms Bamrah was not dishonest, he considered that Master Leonard’s Order went too far; it would “do justice” to disallow half of the profit costs in the Bill of Costs for the damages claim.
The Hearing took 13 days and the Claimant also gave evidence. The Claimant’s costs now stood at £950,000.00. The Circuit Judge also ordered the Defendant to pay the Claimant’s costs of attending the Appeal where she had given evidence.
We certainly expect this case to be cited in Detailed Assessments going forwards. The Judgment asserts that Solicitors are ultimately responsible for the actions of their Cost Draftsmen in signing and certifying the Bill of Costs and/or Replies; these documents must be correct and accurate from the beginning, or sanctions will be imposed.
It appears that a stricter approach to Hourly Rates will now also be adopted, and breaches of the Indemnity Principle should not only be corrected, but penalised. Replies to Points of Dispute must therefore provide a full and accurate response and will now more than likely lead to sanctions rather than being resolved in the Receiving Party’s favour if incorrect.
A finding of dishonesty was not open to the Court of Appeal in this matter because the findings of fact in the lower Court stood…but another Court in another case may well find similar behaviour dishonest. It is therefore imperative that great care is taken from the outset.