Kerry Underwood

SOLICITOR’S UNREASONABLE AND IMPROPER CONDUCT AND DETAILED ASSESSMENT

with 4 comments


In Gempride Ltd v Bamrah and another [2018] EWCA Civ 1367, 21 June 2018

the Court of Appeal allowed an appeal against a Circuit Judge’s decision to overturn the order of a Costs Master who had disallowed the claimant her costs, utilising the provisions of CPR 44.11, having found misconduct on her behalf in relation to detailed assessment proceedings.

Here the claimant was a solicitor whose own firm initially acted for her in a personal injury claim and the Master found that she had certified a misleading bill of costs and had given untrue information about the funding of the case.

The personal injury case settled for £50,000 shortly after proceedings had been issued.

The claimant had claimed over £900,000.

The appeal by the solicitor against the Master’s order occupied a Circuit Judge for 13 days and the Circuit Judge allowed the solicitor’s appeal, finding that the claimant’s solicitor was not responsible for the errors of her costs draftsmen who had prepared the bill.

This was on the basis that they had not acted according to her instructions, that she had not acted dishonestly and that her statement in relation to the funding of the case was correct.

The Circuit Judge ordered the defendant to pay the claimant’s costs, including her own costs of attending the appeal, and these exceeded £950,000.

The claimant was a sole practitioner and she instructed herself under a Conditional Fee Agreement and throughout, the paying party, the defendant, had questioned the hourly rate and also whether Before-the-Event insurance was available.

The Court of Appeal allowed the defendant’s appeal and held that the claimant’s conduct had been unreasonable and improper for the purposes of CPR 44.11 and disallowed half of her costs of the original action.

The Court of Appeal held that unreasonable and improper conduct did not require dishonesty.

Here the claimant had retrospectively increased the hourly rate that being charged to herself and stated that her costs draftsmen had advised that this was proper.

The Court of Appeal held that her conduct in allowing a bill to be submitted with a rate that she knew exceeded the contractual rate had been at least reckless.

In any event the firm was responsible for the conduct of the costs draftsmen, who are agents for the claimant’s solicitor.

The Court of Appeal said that it was “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”.

The Court of Appeal also held that the claimant, who gave evidence at the appeal before the Circuit Judge, could not claim the costs of attending that hearing as a solicitor, as she was attending as a party.

The decision runs to 186 paragraphs and sets out in a clear and helpful way the approach that the court should take when considering whether to make an order under CPR 44.11, following misconduct in relation to detailed assessment proceedings.

It reinforces the long held principle that the signing of the certificate on a bill of costs by a solicitor is a most serious matter.

 

The Court of Appeal also said:

 

Parliament requires that those who conduct a litigation or exercise a right of audience on behalf of others are subject to a rigorous regulatory scheme, and have an overriding duty to the court.” (Paragraph 4).

 

The decision also sets out in some detail the restrictions on conducting litigation or exercising a right of audience without being entitled to and points out that this is a criminal offence under Section 14 of the Legal Services Act 2007, a fact which seems almost routinely to be ignored by courts and McKenzie friends.

The Court of Appeal also set out the relevant provisions of the Legal Services Act 2007 and provided, amongst other things, that authorised persons should maintain proper standards of work and that persons who exercise before any court a right of audience, or conduct a litigation in relation to proceedings in any court, by virtue of being authorised persons should comply with their duty to the court to act with independence in the interest of justice.

 

An authorised person is therefore subject to not only regulation by a professional regulator (which includes provision for sanctions for professional misconduct) but also supervision directly by the court.”(Paragraph 9).

 

The Court of Appeal reinforced the decision and comments in

 

Bailey v IBC Vehicles Limited [1998] 3 All ER 570 :

 

“As officers of the court, solicitors are trusted not to mislead or to allow the court to be misled. This elementary principle applies to the submission of a bill of costs.”

 

A solicitor is required to sign the bill of costs and:

 

In so signing he certifies that the contents of the bill are correct. That signature is no empty formality. The bill specifies the hourly rates applied, and the care and attention uplift claimed. If an agreement between the receiving solicitor and his client… restricted (say) the hourly rate payable by the client, that hourly rate is the most that can be claimed or recovered on taxation….The signature on the bill of costs under the rules is effectively the certificate by an officer of the court that the receiving party’s solicitors are not seeking to recover in relation to any item more than they have agreed to charge their client under a contentious business agreement.

The court can (and should unless there is evidence to the contrary) assume that his signature to the bill of costs shows that the indemnity principle has not been offended….

… [T]he other side of a presumption of trust afforded to the signature of an officer of the court must be that breach of that trust should be treated as a most serious disciplinary offence.”

 

 

The Court of Appeal then set out the relevant provisions in Section 51(6) of the Senior Courts Act 1981 dealing with wasted costs and the text of CPR 44.11 which reads:

 

 

“(1) The Court may make an order under this rule where –

(a) a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order; or

(b) it appears to the court that the conduct of a party or that party’s legal representative, before  or during the proceedings or in the assessment proceedings, was unreasonable or improper.

(2)  Where paragraph (1) applies, the court may –

(a) disallow all or part of the costs being assessed; or

(b) order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused the other party to incur”.

 

The Court of Appeal pointed out that the wasted costs jurisdiction is compensatory, whereas the CPR 44.11 jurisdiction is not:

 

 

“An order under CPR rule 44.11 can only be made against a party or a party’s legal representative. The jurisdiction is not compensatory: it is not necessary to show that the applicant has suffered any loss as a result of the misconduct. It is a jurisdiction intended to mark the court’s disapproval of the failure of a party or of a legal representative to comply with his duty to the court by way of an appropriate and proportionate sanction.

 

The Civil Procedure Rules do not define “unreasonable” law in proper conduct, although CPR Practice Direction 44, paragraph 11.2, provides:

 

 

Conduct which is unreasonable or improper includes steps which are calculated to prevent or inhibit the court from furthering the overriding objective.”

 

However, the Court of Appeal said that “unreasonable” and “improper” for the purposes of CPR 44.11 have the same meanings as they have been given in the wasted costs provisions and the numerous decisions under those provisions.

 

The Court of Appeal took the view that it was unlikely that the drafters of CPR 44.11 thought that a legal representative should be liable under those provisions in circumstances in which a wasted costs order could not be made, save for the point made above, that a wasted costs order is compensatory, whereas a CPR 44.11 order is punitive, and not compensatory.

 

The Court of Appeal then goes through the case law in detail in relation to the wasted costs criteria.

 

The Court of Appeal then set out the relevant propositions in relation to CPR 44.11

i) A solicitor as a legal representative owes a duty to the court, and remains responsible for the conduct of anyone to whom he subcontracts work that he (the solicitor) is retained to do. That is particularly so where the subcontractor is not a legal representative and so does not himself owe an independent duty to the court.

ii) Whilst “unreasonable” and “improper” conduct are not self-contained concepts, “unreasonable” is essentially conduct which permits of no reasonable explanation, whilst “improper” has the hallmark of conduct which the consensus of professional opinion would regard as improper.

 

iii)           Mistake or error of judgment or negligence, without more, will be insufficient to amount to “unreasonable or improper” conduct.

iv) Although the conduct of the relevant legal representative must amount to a breach of duty owed by the representative to the court to perform his duty to the court, the conduct does not have be in breach of any formal professional rule nor dishonest.

v) Where an application under CPR rule 44.11 is made, the burden of proof lies on the applicant in the sense that the court cannot make an order unless it is satisfied that the conduct was “unreasonable or improper”.

vi) Even where the threshold criteria are satisfied, the court still has a discretion as to whether to make an order.

 

vii) If the court determines to make an order, any order made (or “sanction”) must be proportionate to the misconduct as found, in all the circumstances.

 

By the time the costs issue reached the Circuit Judge on appeal, the claimant had instructed other solicitors, that is other than her own firm, and thus she had attended that hearing as a party, but not as a solicitor.

Thus the Court of Appeal’s finding on this point does not mean that a firm of solicitors conducting litigation for itself, or one of its partners etc., does not get solicitors’ costs of attending in the usual way.

The reason why the Court of Appeal said that it is of particular importance that solicitors are held liable for the conduct of anyone to whom they contract work when those subcontractors are not themselves authorised is that such unauthorised subcontractors do not owe an independent duty to the court.

 

 

 

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Written by kerryunderwood

July 4, 2018 at 9:22 am

Posted in Uncategorized

4 Responses

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  1. Kerry, I share your grave concerns about the significant risks posed by some McKenzie friends and especially those who charge. However I cannot agree with the proposition that Judges allowing them to exercise a right of audience aids and abets an offence under s14.

    s14 makes it an offence to carry out a reserved legal activity without being entitled to do so.

    s13(2)(b) says a person is entitled if they are an exempt person.

    s19(a) says a person is an exempt person if they are exempt by virtue of Schedule 3

    Sch 3 para 1(2)(b) says a person is exempt if they have a right of audience granted by that court in relation to those proceedings.

    So, going around the houses, if a Judge grants a person a right of audience that person becomes an exempt person and there is no offence being committed.

    It stands to reason the court should have that power in order to permit the proper use of McKenzie friends. The issue is about how and when that power is exercised.

    Nick Hanning

    July 4, 2018 at 9:59 am

    • Nick, you are absolutely right and I have amended the blog accordingly.

      Having said that, my view is that it can never be justified for a McKenzie friend to make a charge and that no judge should ever grant right of audience to a McKenzie friend who is making a charge.

      Kerry

      kerryunderwood

      August 29, 2018 at 11:26 am

  2. Reblogged this on | truthaholics and commented:
    “The reason why the Court of Appeal said that it is of particular importance that solicitors are held liable for the conduct of anyone to whom they contract work when those subcontractors are not themselves authorised is that such unauthorised subcontractors do not owe an independent duty to the court.”

    truthaholics

    July 5, 2018 at 12:43 am


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