June saw a number of costs law cases of some interest and importance being heard in the higher courts and none more so than the Court of Appeal case of Gempride Ltd v Bamrah (2018) EWCA Civ 1367 . This covered amongst other matters, hourly fees, agents, Before the Event Insurance (BTE) and CPR r.44.11
The facts of the case were relatively without complexity. The Claimant was a sole practitioner in her own solicitors practice. The Claimant visited a client at some flats owned by the Defendant. She tripped over a doorstep at the property and fell injuring her right hand, arm and shoulder. There were no bony injuries, but there were soft tissue injuries.
On 13 November 2008, the Claimant wrote a letter of claim to the Defendant understanding it to be the owner of the relevant premises. Liability was fairly swiftly accepted by insurers of the Defendant. On 20 June 2011, the Claimant issued protective proceedings in the Croydon County Court, with the Claim Form indicating that the value of the claim exceeded £25,000 but not £50,000. Her schedule of pecuniary loss served over a year later claimed nearly £750,000. This was increased to just over £900,000 on 8 January 2013.
The Defendant through their insurers made a Part 36 offer of £50,000 on 18 March 2013. The Claimant accepted that offer late, on 12 April 2013, on the basis that the Defendant would also pay her costs.
So far, all straightforward. From now on things got more complicated as the costs recovery process was initiated.
1. Hourly rates claimed in the bill of costs were greater than those agreed. The claimant had entered into a conditional fee arrangement with her own firm at a specified hourly rate of £232 per hour. This rate was later increased to £280 per hour. The Claimant felt that the Defendant’s unreasonable conduct had had added an extra layer of complexity to the matter.
2. The Claimant had contended in replies to Points of Dispute raised by the Defendant that there was no BTE insurance available to the Claimant. In fact there was such insurance, albeit containing a stipulation that the Claimant had to use a firm of solicitors specified by the Insurer, if she wished to avail herself of the cover under the policy. She wanted to use her own firm to act for her and indeed did so. In the CFA, the claimant had recorded that there was BTE available, but on terms that she did not wish to be bound by.
3. Ms Bamrah instructed Lawlords, a firm of costs draftsmen, to prepare a bill of costs for her. She had instructed Lawlords on previous occasions for other clients of her firm. The draftsman prepared a bill which claimed an hourly rate of £280 throughout. Although the claimant had raised queries of a number of matters in the draft bill she had signed the certificate on the bill to confirm that it was accurate.
At the SCCO Master Howarth held that;
1. The Claimant had certified the bill with an hourly rate of £280 charged throughout even though that was a rate substantially in excess of what she as a client was contractually bound to pay the firm.
2. The Claimant was responsible for the answers provided in response to the Points of Dispute raised by the defendants as to whether there was BTE available or not. The Claimant said in her reply to the points that there was no BTE available. The court held that it was not open to the Claimant to record for her own purposes in her CFA checklist that BTE was available but that she had chosen not to avail herself of it because of the terms attached to so doing, on the one hand, whilst then on the other hand, denying its existence, when it came to answering points of dispute on whether there was or wasn’t a BTE policy available to her.
3. The Master held that the Claimant’s behaviour had been unreasonable. She had provided misleading information in relation to the existence of BTE and had breached her duty to the court by certifying a bill as being accurate when it was not. The combined effect of this was that it led to the defendants making concessions on the hourly rate and the issue of alternative funding. Accordingly the Master held that the Claimant’s conduct was unreasonable and improper within the meaning of r.44.11 (1) (b). The Claimant’s profit costs were to be disallowed so far as they exceeded the fixed hourly rate recoverable by litigants in person.
The First Appeal
The matter went to appeal first before HH Judge Mitchell who totally reversed the findings of the Master in the SCCO as follows;
1. He found that the Claimant 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 acted contrary to them.
2. In respect of the proceedings before the Master, he concluded that there had been “serious procedural or other irregularities”, namely that Ms Bamrah was not given an opportunity to file and serve evidence
3. He found that Ms Bamrah’s statement that BTE was not available was ‘true and accurate.”
4. He concluded that in applying the £280 hourly charge throughout the bill, Lawlords had ‘misunderstood’ Ms Bamrahs instructions.
5. Ms Bamrah had not been guilty of any ‘unreasonable or improper’ behaviour.
The Claimant’s appeal was therefore allowed.
In the Court of Appeal
The Defendant then appealed to the Court of Appeal. In allowing the appeal, the Lord Justices found that;
1. The firm of costs draftsmen were agents of the Claimant’s firm ie Ms Bamrah the Claimant and under the law of agency she was responsible for the actions of the costs draftsman. The costs draftsman was not a legal representative.
2. Judge Mitchell had erred in proceeding on the basis that before being satisfied that Ms Bamrah had been guilty of unreasonable or improper conduct for the purposes of CPR rule 44.11, the Defendant had to prove that she had intended to deceive the defendant and the court.
3. Given that the hourly rate exceeded that which the claimant was obliged to pay her solicitors, the judge erred in deciding that there had been no improper or unreasonable conduct by her in certifying the bill of costs.
4. The judge erred in finding that there had been no misrepresentation (and thus no unreasonable or improper conduct) by Ms Bamrah with regard to the availability of BTE Insurance.
5. The Claimant had attended the appeal before the judge as a claimant, not a lawyer. She was not entitled to her costs of attendance, let alone her costs of attending as a solicitor.
6. The sanction applied by the court was that she only be allowed to recover one-half of her profit costs (to be assessed) under Part 1 of the Bill with the other half of such profit costs being disallowed.
There has already been a flurry of commentary on this case, with it being described as a ‘watershed’ decision. Certainly on the facts of this perhaps slightly unusual case, it can be argued that the Court of Appeal judges came to the right decision.
Is it though a case that should have solicitors quaking in their boots?
The director of the firm on behalf of the Defendant Gempride said after the CA decision;
“The Judgement firmly reasserts the solicitor’s responsibility for the detailed assessment process. Solicitors are accountable for the actions of their costs draftsmen.”
We can wholeheartedly agree with this last comment. It reasserts a responsibility that was always there. It has probably taken a slightly unusual case on the facts to simply reassert basic principles.
1. As a solicitor, use a costs firm with whom you are able to have a good, interactive relationship. It doesn’t mean that you have to be on the phone or email to each other all the time. However those solicitors and costs draftsmen who work together in a mutually supportive relationship, are not only likely to avoid any of the pitfalls highlighted by this case, but are simply likely to get the best results either by negotiation with the paying party or on assessment.
2. No matter how good your costs draftsman or costs lawyer is, what this case does highlight is that what goes out in the final bill, goes out in your name. Not only that, you are certifying it’s accuracy in all respects. It shouldn’t be a case of ‘I expect my costs provider to prepare the bill without any input from me.’ If as a solicitor you do take a rubber stamp approach to certifying bills, then there is a disaster somewhere along the line waiting to happen. Even in the best solicitor-costs draftsman relationships, there can be misunderstandings as to intentions.
3. Any problems with the way a matter has been conducted through to settlement of damages should be met head on by the costs expert and his/her solicitor client. Retain a good costs draftsperson and be prepared to take on board their advice, which they should provide in timely fashion having received instructions and gone through the paperwork.
The ‘Bamrah’ case may yet have further to run. According to the Lawgazette, Miss Bamrah told them that she intends to apply for leave to appeal to the Supreme Court and that she will take action against her costs consultants.
If you want to build a good relationship with an experienced firm of costs drafstmen and costs lawyers, why not get in touch with us here at R Costings? Call us on 01480 463499 or email firstname.lastname@example.org