A High Court judge was wrong to conduct a “mini fraud trial” without witnesses in deciding to strike out a claim over unpaid fees brought by a firm of solicitors, the Court of Appeal has ruled.
Lord Justice Vos said it was “most unsatisfactory” that Kevin Prosser QC – sitting as a deputy judge of the Chancery Division – had decided that a solicitor was lying and that other witnesses were untruthful without their being cross-examined.
“Of course, it can very occasionally be appropriate to conclude that there has been fraud without oral evidence being heard but, in this case, the judge relied on forensic deduction in a case where oral evidence at least might [his emphasis] have put a different complexion on the allegations made,” he said.
Alpha Rocks Solicitors v Alade [2015] EWCA Civ 685 concerned bills in two separate matters, one for £131,514 and the other for £43,732.
Mr Prosser acknowledged that the step he was taking was draconian, but held that the abuses which he had identified both involved a serious misuse of the court’s procedure, rendered further proceedings thoroughly unsatisfactory, and created a serious risk that a fair trial of the claims would be impossible.
He found the deliberate exaggeration in the first bill to be 115 hours of work on trial bundles because the opposing party had prepared them. The judge rejected the evidence from one of the firm’s partners that it had prepared parallel bundles.
In relation to the second bill, the judge found that it was drawn up knowing it to be inaccurate in a number of respects as to the work done and the fee-earners in respect of whom charges were made, relying on the evidence adduced by the solicitors themselves from their costs consultant.
Overturning the decision, Lord Justice Vos, giving the lead ruling with which Lords Justice Fulford and Moore-Bick agreed, said: “It is perfectly apparent from a reading of the judgment itself that the judge forgot his own repeated warnings to himself about not conducting a mini-trial and about the draconian nature of what he was contemplating doing.
“He did conduct an inappropriate mini fraud trial without hearing any witnesses. He decided that a solicitor was lying and that other witnesses were untruthful without their being cross-examined. In my judgment, that was a most unsatisfactory state of affairs…
“Moreover, while the judge said that the abuses he had identified were a serious misuse of the court’s procedure, he did not consider whether it was proportionate to strike out the entirety of the claims… on the basis of alleged exaggerated and inaccurate claims amounting to no more than a relatively small percentage of them.”
Vos LJ acknowledged that the case against the solicitors on the preparation of the bundles “may look and have looked very bleak”, but said it was “not appropriate” to find that the bill was fraudulently exaggerated without cross-examination.
“Moreover, I cannot really see why the now admitted inaccuracies in the [other] bill cannot properly and fairly be dealt with on a detailed assessment.”
Vos LJ said Mr Prosser should have realised “that striking out was too blunt an instrument to deal with the heavily conflicting evidential accounts of the parties”.
He concluded: “Even bearing in mind the need for litigation to be conducted efficiently and at proportionate cost, I do not think that it was clear at the stage the proceedings had reached that the solicitors had forfeited their right to have an adjudication of their claims to the [fees] and a detailed assessment of their bills.”
He ruled that the solicitors should, in the light of the strike out arguments, be given an opportunity to reduce their bills if they wanted to and then the case should go back to a Chancery judge for directions.