Costs News

28 June 2018
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Solicitors ultimately responsible for acts of costs draftsman, Court of Appeal emphasises

Solicitors who instruct cost draftsmen and others “remain ultimately responsible for the acts and omissions of those to whom they delegate parts of the conduct of litigation, particularly when those to whom such work is delegated are not authorised”, the Court of Appeal said last week in a major ruling on misconduct in assessment proceedings.

Gempride Ltd v Bamrah & Anor [2018] EWCA Civ 1367 saw the claimant, Jagrit Bamrah, settle her personal injury claim for £50,000. A personal injury solicitor herself, the firm she ran – Falcon Legal – acted for her as claimant for part of the claim.

In the detailed assessment, the bill of costs was prepared by an unregulated costs draftsman at the costs firm Lawlords, and certified by the solicitor even though it claimed hourly rates in excess of those that had been agreed.

The replies to the points of dispute also asserted that before-the-event (BTE) insurance was not available, when in fact it was, had Ms Bamrah been willing to accept the insurer’s terms.

At first instance, Master Leonard in the Senior Courts Costs Office found there had been misconduct in certifying the bill and replies, and under the conduct provisions of CPR 44.11 limited part of the claimant’s bill to the litigant in person rate.

The Court of Appeal recounted that Master Leonard “found that Ms Bamrah had certified a misleading bill of costs because, on the most favourable interpretation of her actions, she took the view that the hourly rate payable by her to Falcon Legal was adjustable at will”.

The master made no express finding that Ms Bamrah had been dishonest, although the Court of Appeal noted that he “clearly regarded her conduct as more than ‘an honest mistake’”.

On the first appeal, His Honour Judge Mitchell in Central London County Court reversed the decision for several reasons, most notably that 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 not only failed to act in accordance with her instructions but actually acted contrary to them.

The Court of Appeal found that HHJ Mitchell erred not only in reaching this conclusion, but also because “he unfortunately failed properly to grapple at all with the legal relationship between Falcon Legal and Lawlords”.

One of Lawlords' directors, Graham Shaw, supervised one of its draftsman, Lee Ocego, who did most of the drafting and appeared at the main hearing before Master Leonard on 13 January 2014. Another Lawlords employee, David Owen, appeared for Ms Bamrah at a directions hearing before the master on 18 November 2013.

In an important passage, Lord Justice Hickinbottom said: “[HHJ Mitchell] considered the fact that Mr Owen was described as a ‘costs lawyer’ in the preamble to the order arising out of the 18 November 2013 hearing at which he appeared for Ms Bamrah, and the fact that Mr Shaw and Mr Ocego ‘were not only holding themselves out as costs draftsmen, but also as costs lawyers’, were important because they gave force to Ms Bamrah's submission that she was reasonably relied upon them for advice in relation to the cost assessment.

“Of course, they held themselves out as having some experience and expertise in costs matters; but the judge did not make any finding as to whether Lawlords were actually or apparently authorised litigators. Indeed, he does not appear to have considered that issue. In fact, it is common ground that they were not authorised; and there appears to have been no evidence that Lawlords held themselves out as being such.

“Judge Mitchell said that, if Mr Owen had been at the hearing on 13 January 2014, ‘it simply would have been unarguable to say that [he] was not her “legal representative”’. That is so; but not because he was a ‘costs lawyer’. He had the ability to conduct the litigation (the costs assessment) only because he was acting as an agent for Falcon Legal, and was able to appear for Ms Bamrah only as a "deemed employee" of that solicitors' firm.

“Although only an extension of the conventional principles of agency into the particular statutory field with which we are concerned, 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. Although an order under CPR rule 44.11 cannot be made against someone who is neither a party nor a legal representative, for the purposes of that rule the conduct of someone who is not an authorised litigator may be attributable to a legal representative on agency principles as explained in the authorities to which I have referred.”

Further, Hickinbottom LJ held that HHJ Mitchell had misdirected himself in saying that Gempride had to prove that Ms Bamrah had acted dishonesty for a CPR 44.11 application 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”, Ms Bamrah’s conduct was unreasonable or improper conduct within the scope of CPR 44.11.

HHJ Mitchell’s ruling on the BTE insurance was also wrong, said Hickinbottom LJ: “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.”

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’”.

But 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.

Nicholas Bacon QC and Katie Scott (instructed by Taylor Rose TWKW Limited) represented the appellant, with Kuldip Singh QC and Suzanne Rab (instructed by RadcliffesLeBrasseur) for the first respondent. The second respondent did not appear and was not represented.

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