Certifying a Bill of Costs really is No Empty Formality

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Posted on: June 26th, 2018 by Elena Kostova

The case of Gempride Limited v Jagrit Bamrah and Lawlords of London Limited [2018] EWCA Civ 1367 deals with responsibility for accuracy of Bill of costs, Points of Reply, subsequent submissions and possible sanctions

Background

Ms Bamrah sustained injuries following a tripping accident whilst visiting a client. Ms Bamrah conducted litigation initially by herself as a sole practitioner under the style Falcon Legal Solicitors. The matter was transferred to David Stinsons & Co in 2012. The damages claim ultimately concluded by way of Part 36 offer and acceptance of £50,000.

Following conclusion Ms Bamrah for Falcon Legal instructed the Second Respondent (“Lawlords”), a firm of costs consultants and draftsmen, to draft a bill of costs for the period to 12 August 2012 (when Stinsons were instructed) for assessment. Lawlords are not authorised to conduct litigation, nor to exercise a right of audience.

Instructions were sent to Lawlords advising the CFA hourly rate was £232 per hour but due to Defendant conduct issues (as perceived by the Claimant) the same had been increased to £280 per hour. There was no contemporary documentary evidence of any agreement to change the hourly rate, although Falcon Legal’s computerised time costs system recorded an hourly rate of £232 to about March 2012 and £280 thereafter.

The costs draftsman prepared a bill applying hourly rate of £280 throughout which Ms Bamrah certified as accurate. In Points of Dispute the Defendant offered £241 per hour which the Claimant accepted.

Another issue related to the funding of the matter. The Claimant had a household insurance policy whose panel of solicitors were Irwin Mitchell. Ms Bamrah wished to conduct her own matter and approached the Insurer but was advised that instruction of another firm of solicitors would not be covered under the terms of the BTE policy until the point when proceedings are issued. Ms Bamrah completed the Risk Assessment, Funding Options Checklist and CFA herself. In the Funding Options Checklist Ms Bamrah confirmed there was other funding available but in response to a question why the same was not used she indicated permission to use has been requested but refused.

In the course of the assessment process the Defendant requested details of other available methods of financing but the Claimant replied that BTE insurance funding had not been available.

At first instance, Master Leonard found that Ms Bamrah had certified a misleading bill of costs. In respect of the accuracy of the replies on alternative funding, he noted that Mr Bamrah was responsible both as client and as solicitor for the factual accuracy of her replies. Master Leonard found that there had been misconduct under CPR 44.11 and disallowed Falcon Legal’s profit costs above the litigant-in-person rate.

On the first appeal, His Honour Judge Mitchell reversed the decision – Ms Bamrah was not responsible for the acts and omissions of Lawlords because, although they were her agents for the purposes of the detailed assessment they had acted contrary to their instructions. In respect of the allegations that the reply to the Point of Dispute 3 was false, the judge found that the statement that BTE insurance was not available was true and accurate. Further, it was found that Ms Bamrah never had any intention to mislead or deceive the Defendant or the Court.

In the Court of Appeal

            Ground A: Agency

On consideration of the matter it was held that Judge Mitchell did err in holding that Falcon Legal ceased being liable for the acts of their agents Lawlords because Lawlords failed to comply with their instructions and indeed acted contrary to those instructions.

Importance was stressed 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.

            Ground B; Dishonesty/ Intention to Deceive

It was held that Judge Mitchell erred in proceeding on the basis that as a matter of law Gempride was required to prove that Ms Bamrah was dishonest, i.e. that, she had intention to deceive Gempride and/or the Court.

Further, it was noted the judge failed to consider whether Ms Bamrah’s conduct, although not dishonest, was nevertheless “unreasonable or improper”.

            Ground C: Hourly rate

Given the hourly rate exceeded that which Ms Bamrah was contractually obliged to pay Falcon Legal, it was held that the judge erred in finding there was no unreasonable or improper conduct on her behalf in certifying the bill of costs.

It was considered that the conduct in certifying a bill in these circumstances was unreasonable or improper conduct within the scope of CPR rule 44.11.

            Ground D: Availability of BTE Insurance

The judge construed that as the Claimant chose not to use the BTE insurance as the firm she wished to instruct is not covered by the policy, the policy was not available to that litigant. It was considered the judge erred in finding that Ms Bamrah’s statement that BTE was not available to her was accurate on this basis.

Reference was made to initial documents completed by Ms Bamrah and it was considered the same demonstrated her understanding regarding available funding to include the BTE insurance.

            Ground E: Costs of attendance

It was held that the judge had erred in finding that the costs recovered by Ms Bamrah should include the costs of her personal attendance at the appeal hearing.

As Ms Bamrah had solicitors on the record, she attended as a party and 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.

            Ground F: Costs below

As Ms Bamrah’s conduct was considered to be within the parameters of unreasonable and improper, it was considered the Court should make an order under CPR rule 44.11, reducing the level of the costs recoverable by Ms Bamrah.

After careful consideration Lord Justice Hickinbottom formed the view it would be disproportionate to maintain the Master’s order preventing recovery of profit costs higher than litigant-in-person rates. Instead, half of the profit costs in Part 1 of the bill otherwise assessed by the Court were disallowed under CPR rule 44.11.

Are more sanctions to follow?

The decision is of particular importance to Solicitors and in my view the most important point is to get it right from the outset- ensure costs draftsman are property briefed and costs are properly claimed before certifying. Otherwise, on assessment there is a risk of criticism by the Court but also a sanction such as 50% reduction to the assessed costs.

Further, whilst a costs draftsman should be exercising due care when preparing a bill, this case has reinforced that it is ultimately the signing solicitor’s responsibility to ensure the bill is accurate.

In relation to subsequent conduct in negotiations and preparation of further documents extra care is again required to ensure the receiving party is not open to criticism.

It is particularly important to note that the Court needs to be satisfied there was unreasonable or improper conduct but there is no requirement for a finding of dishonesty which would be a tougher hurdle to overcome. In this matter findings of dishonesty were not open to the Court of Appeal as the findings of fact in the lower Court stood. However, it is anticipated future arguments will not be limited to unreasonable or improper conduct.

The underlining principle to bear in mind is that prevention is always better than a cure.

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