4 July 2022

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CPR misconduct rules do not apply to solicitor/client assessments, High Court decides

Detailed textual analysis prompts Mr Justice Morris to overturn costs judge’s finding of misconduct against law firm

The rules on misconduct in CPR 44.11 apply only to inter partes assessments and not solicitor/client costs assessments under the Solicitors Act 1974, the High Court has decided.

Mr Justice Morris, sitting with Senior Costs Judge Gordon-Saker, overturned a decision of Master James in the Senior Courts Costs Office to reduce by 75% the costs sought by Manchester firm John Poyser & Co.

He came to the conclusion on a textual analysis of CPR 44.11(1); sub-rule (a) deals with failure to comply with a rule etc "in connection with a summary or detailed assessment"; and sub-rule (b) covers unreasonable or improper conduct "before or during the proceedings or in the assessment".

In relation to (a), Morris J held that a solicitor/client assessment could not be a summary assessment, while for the purposes of parts 44 to 46, detailed assessment was defined, in CPR 44.1(1), as "the procedure by which the amount of costs is decided by a costs officer in accordance with part 47". A solicitor/client assessment under the 1974 Act and CPR 46.9 and 46.10 was not such a procedure.

In relation to (b), the "proceedings" referenced were those out of which the assessment proceedings arose “i.e. prior substantive proceedings between opposing parties”, the judge went on.

Morris J found further support for the conclusion that CPR 44.11 was concerned with inter partes assessments by noting that solicitor/client assessments apply to costs of both contentious and non-contentious work. “Non-contentious work, such as drafting a will or conveyance, do not amount to ‘proceedings’ within the meaning of that word in sub-rule (b).”

He continued that CPR 44.11(2)(b) expressly contemplated three distinct parties – the party at fault, that party's legal representative and any other party – whereas there were only two in a solicitor/client assessment.

Morris J said a number of further factors supported this analysis. First, “if CPR 44.11(1)(b) were to apply to a solicitor/client assessment, solicitors and licensed bodies would be subject to penalties potentially being imposed by costs judges for shortcomings in the provisions of their services to clients, in circumstances where other professional service providers are not.

“Such a power might be expected to have been conferred by primary legislation, rather, somewhat inadvertently, than by way of a civil procedure rule which applies primarily to a different situation (party and party assessment).”

Second, the legislative history indicated that the provision’s origins lay in the powers of a trial judge to award costs between opposing parties. “A trial judge has never had the power to order a solicitor to be entitled to only part of its fees due from the client under the retainer. Moreover at the time of the enactment of the 1974 Act, costs judges (taxing masters) had no powers in respect of misconduct.”

In the case, there were two elements to the alleged misconduct. The first was the money on account taken by Maria Williams, a solicitor working at the firm, from client Cynthia Spencer in cash. Ms WIlliams pocketed some of it and then sought to falsify documents to cover up her wrongdoing. She was struck off as a solicitor in 2020 as a result.

Morris J said the core dispute was whether the law firm gave Ms Spencer full credit for the money she had given Ms Williams.

Master James found a shortfall of £6,090 and went on to hold that there was other misconduct too, namely the hourly rates charged, and that both work relating to Ms Spencer’s complaint and time reading into the file by another fee-earner had been included within the bill.

The bill was for £80,000 in total, less the credit of £3,400 that the firm had calculated. Master James assessed it at £29,000 and, with £48,000 already paid by Ms Spencer, ordered the law firm to repay her the balance plus interest, totalling £21,000.

Morris J held that, even if his textual analysis was wrong, Master James was wrong to find misconduct. The evidence indicated that there was no continuing shortfall, “and that Mr Poyser genuinely sought to make good any relevant shortfall, and indeed substantially (if not wholly) achieved that objective by the discount given”.

Master James’s finding of overcharging was also not made out because the hourly rate of £217 was specified in the contractual retainer. The master may have been justified in disallowing the full rate on assessment, Morris J said, but where that rate had been agreed in the retainer, there was no basis for concluding that it amounted to misconduct “absent further analysis”.

Morris J set aside the final costs certificate and said the final amount would have to be recalculated taking into account Master James’s initial deduction of the bill to a reasonable sum. Subject to interest, this would mean Ms Spencer having to repay £13,000 to the law firm.

The judge noted that Ms Spencer was a vulnerable litigant and said the outcome was “likely to be a matter of considerable dismay and is a result for which she bears little responsibility”.

He continued: “The master erred in law in applying CPR 44.11. Further, whilst the master was further wrong to make findings of misconduct on the claimant's part, the claimant's conduct over time has been wanting and its explanations of this matter over time have sown confusion.

“The court has sympathy for the position in which she now finds herself. Whether she will be required or able to repay sums to the claimant is a matter not for this judgment.”

Mark Friston (instructed by John Poyser & Co Ltd) for the appellant/claimant. The respondent/defendant appeared in person unrepresented.