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.
GEMPRIDE LTD v BAMRAH & ANOR [2018] EWCA CIV 1367
BILL OF COSTS : CPR 44.11 : MISCONDUCT : MISCERTIFICATION
“It may be … that Ms Bamrah relied entirely on Lawlords for costs advice and assistance. But she was the solicitor who signed the certificate. It was on her certificate – the certificate of an officer of the court – that the paying party and the court itself would rely. The paying party and court would have no way of knowing of any deficiencies in the advice she may have been receiving: and she had (with regard to the paying party and court) to bear responsibility for the signed Bill: a Bill she in fact had herself spent one and a half hours in considering. She cannot entirely disassociate herself (vis-à-vis the paying party and court) from responsibility for her certificate by seeking to cast all the blame on her costs draftsmen. Indeed to adopt such an approach would, in my opinion, represent an unfortunate erosion of the underpinning rationale for a signed certificate in a Bill.” Davis LJ [178]
This was an appeal to the Court of Appeal against the Order of His Honour Judge David Mitchell (sitting with District Judge Langley as an assessor) dated 19 December 2016, allowing an appeal against the Order of Master Leonard sitting as a Deputy District Judge dated 5 March 2014 in which the Master as part of the detailed assessment, exercising powers under CPR rule 44.11, disallowed Falcon Legal’s profit costs above the litigant-in-person rate because Ms Bamrah on behalf of the firm:
(i) had certified the bill of costs filed and served for assessment with an hourly rate substantially in excess of that which she as a client was contractually bound to pay the firm; and
(ii) had given an answer to a Point of Dispute on that bill that was untrue or misleading, namely that she did not have before the event legal expenses insurance (“BTE insurance”) available in respect of the costs of the claim.
The First Respondent (“Ms Bamrah”) was admitted as a solicitor in December 1999. Since 3 July 2008, she had been in practice as a sole practitioner under the style Falcon Legal Solicitors (“Falcon Legal”). The firm was incorporated in 2012, but continued to trade under the same name.
Falcon Legal acted for Ms Bamrah as claimant in a successful personal injury claim against the Appellant (“Gempride”).
Gempride was ordered to pay Ms Bamrah’s costs.
CPR rule 44.11(1) and (2) (until 1 April 2013, numbered rule 44.14(1) and (2)) provide:
(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.
“Legal representative” is defined in CPR rule 2.3(1) to be, and to be only, a:
(a) barrister;
(b) solicitor
(c) solicitor’s employee
(d) manager of a body recognised under section 9 of the Administration of Justice Act 1985; or
(e) person who, for the purposes of the Legal Services Act 2007, is an authorised person in relation to an activity which constitutes the conduct of litigation (within the meaning of that Act)”.
It was common ground on the appeal that “unreasonable” and “improper” had the same meanings as they have in the wasted costs provisions, for the reasons given by Dyson LJ in Lahey v Pirelli Tyres Limited [2007] EWCA Civ 91 at [29] and it was considered appropriate to look to wasted costs authorities for guidance on the scope of “unreasonable or improper” conduct in the context of CPR rule 44.11.
Section 51(7) of the Senior Courts Act 1981 defines “wasted costs” as:
“… any costs incurred by a party—
(a) as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative; or
(b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay.”
The meaning of “improper, unreasonable or negligent” for the purposes of these statutory threshold criteria was considered “not open to serious doubt” by the Court of Appeal in Ridehalgh v Horsefield [1994] Ch 205, where the phrase was considered in the context of the predecessor of CPR rule 46.8, namely RSC Order 62 rule 11.
The Master of the Rolls in Ridehalgh defined “improper” and “unreasonable” as follows:
“‘Improper’ means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct which would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code.
‘Unreasonable’ also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner’s judgment, but it is not unreasonable.”
It was also common ground that rule 44.11, unlike the wasted costs jurisdiction, does not apply when the conduct is no more than “negligent”.
Finally, Ridehalgh confirmed that a solicitor does not abdicate his professional responsibility when he delegates or subcontracts work that he is retained to do, even when he seeks advice from another legal representative such as counsel.
In Bailey v IBC Vehicles Limited [1998] 3 All ER 570 Judge LJ said:
“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”.
In a concurring judgment, with which Butler-Sloss LJ expressly agreed, Hennry LJ said:
“RSC Order 62 rule 29(7)(c)(iii) [now CPR PD 47 paragraph 5.21] requires the solicitor who brings proceedings for taxation to sign the bill of costs. 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 or an officer of the court must be that breach of that trust should be treated as a most serious disciplinary offence.”
Taking into account all relevant principles, the following propositions were determined to be relevant to this appeal [para 26]:
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.
On 10 July 2008, Ms Bamrah visited a client in a block of flats owned by Gempride. Whilst leaving, she tripped over a doorstop in the floor, and fell heavily on her right side. She suffered considerable soft tissue injuries to her right hand, arm and shoulder.
On 16 January 2009, Gempride’s insurers (AXA Insurance (“AXA”)) admitted liability on its behalf.
Ms Bamrah accepted a Part 36 offer of £50,000 on 12 April 2013 on the basis that Gempride would also pay her costs.
Ms Bamrah had a household insurance policy that included BTE insurance with ARC Legal Assistance Limited (“ARC”). The policy was restricted to
(i) costs incurred with ARC’s prior consent,
(ii) prior to the issue of proceedings, the costs of an approved panel solicitor only, and
(iii) solicitor’s costs at the rate of £135 plus VAT per hour.
However, Ms Bamrah wished to handle her own claim, through her own firm. On 18 November 2008, ARC confirmed that the insurance policy “will only cover legal fees incurred by panel solicitors prior to the issue of legal proceedings“; and that if Ms Bamrah wished Falcon Legal to continue to act for her:
“… [S]ubject to our final assessment of the claim and agreement with you as to costs, we will be able to indemnify costs that you and the third party incur after the court proceedings are issued…. Until such time, Underwriters are not liable for any such costs incurred in this case.”
Ms Bamrah, determined to have her own choice of solicitor and purported to enter into a Conditional Fee Arrangement (“CFA”) with Falcon Legal, completing the Risk Assessment, Funding Options Checklist and CFA herself.
In the Funding Options Checklist, in response to the question, “Is any ‘other funder’ available?”, Ms Bamrah responded, “Yes” and, in response to the follow up question, “If yes why has it not been used”, she said, “Refuse to fund until proceedings issued”. To the question, “Is a Before the Event Legal Expenses Insurance policy available?”, she responded, “Yes”, but indicating that permission to use it had been requested but refused.
The CFA was in the form of the Law Society’s standard terms for a personal injury CFA adapted for the purposes of the case and provided for a basic charge hourly rate of £232 per hour, reviewable annually.
On 11 June 2011, shortly prior to expiry of the primary limitation period, Falcon Legal wrote to ARC seeking authority for the firm to handle to claim after proceedings had been issued: and, on the same day, they wrote to AXA in the following terms:
“… [P]lease note that whilst we are still pursuing our client’s legal expense insurers for appropriate funding of the proceedings, however, in the meantime we continue to conduct this claim under a [CFA] that provides for success fee. A Notice of Funding will be forwarded shortly.”
ARC refused to authorise Falcon Legal to conduct the litigation.
The claim was issued against Gempride, by Falcon Legal, on 20 June 2011.
Ms Bamrah applied for a policy of after the event legal expenses insurance (“ATE insurance”) with ARAG Legal Services that day, obtaining cover of £100,000 plus disbursements for a premium of £2,724.20.
By June 2012, it was clear that Ms Bamrah’s expert medical evidence was not going to be accepted by Gempride. As a result, Ms Bamrah recorded that the risk had increased from “medium-high 75%” to “High!! 75%-100%”.
At a hearing on 22 June 2012, Counsel for Ms Bamrah agreed to an order for extensive disclosure of documents by her, which she considered was beyond his instructions, unnecessary and disproportionate.
On 12 August 2012, the claim was transferred by Falcon Legal to another firm of solicitors, David Stinson & Co (“Stinsons”), and the ATE insurance was also transferred. Ms Bamrah entered into a new CFA with Stinsons, with a success fee of 20%. The agreed hourly rate for Mr Stinson – also a sole practitioner – was £217.
On 10 June 2013, Ms Bamrah for Falcon Legal instructed Lawlords, a firm of costs consultants and draftsmen, to draft a bill of costs for the period to 12 August 2012 (when Stinsons were instructed) for assessment. As law costs draftsmen, not costs lawyers, Lawlords are not authorised to conduct litigation, nor to exercise a right of audience.
Stinsons instructed a different firm of costs draftsmen; and it was agreed that Stinsons would be responsible for coordinating the two parts of the bill (Part 1 being the costs incurred to 12 August 2012 and Part 2 being the costs incurred thereafter).
With the letter of instruction to Lawlords, Ms Bamrah enclosed the CFA, including the Risk Assessment, and all the BTE insurance correspondence. In the letter, she said, of the 22 June 2012 hearing:
“Unfortunately, [Counsel] went beyond our instructions for case management directions that he was instructed to obtain at the hearing on 22 June 2012. It appears that Counsel unilaterally agreed an order for extensive disclosure of documents that were either not relevant to liability or causation and were clearly disproportionate. Liability had been admitted. Although causation had been partly disputed we feel that the best way to proceed would have been for the experts of like discipline to hold discussions and prepare a joint statement for the court, rather than subjecting the Claimant to unreasonable search of historical records.
“Given the defendant’s unreasonable behaviour and the type of evidence they required the hourly rate for this claim was increased to £280.00 per hour. Please note that Ms Bamrah is a sole practitioner and she is also the Claimant in this matter. All work was carried out [by] Ms Bamrah at the hourly rate of £232.00 pursuant to a [CFA] date 10/07/2008. Accordingly please recover all costs incurred in this matter including the maximum success fee.”
There was no contemporary documentary evidence of any agreement to change the hourly rate, although Falcon Legal’s computerised time costs system recorded an hourly rate of £232 to about March 2012 and £280 thereafter.
On 28 June 2013, Lawlords, who were still preparing the draft bill, wrote to Ms Bamrah saying:
“We have ensured whilst preparing the bill that your profit costs have been maximised in order to reflect the level of work undertaken and the defendant’s poor conduct.”
Lawlords sent the draft bill to Ms Bamrah by email on 8 July 2013, with a covering letter saying:
“Given the conduct of the defendant and the complexity of this matter in respect of the medical evidence and quantum we have applied a rate of £280.00 per hour throughout and a success fee of 100%”.
The covering letter asked that, once Ms Bamrah had checked the bill:
“… [P]lease sign the certificate of accuracy and upon return of the signed [bill] we will arrange a copy to be sent to [Stinsons’] costs draftsman]”.
It was Ms Bamrah’s case that the day after Lawlords’ email of 8 July 2013 she had spoken with them and had been assured by their Mr Shaw that their suggested approach did not offend the indemnity principle. It was in dispute whether this phone call ever took place. Mr Shaw had no recollection of it and Ms Bamrah had made no note. It was her position (as set out in her witness statement on the first appeal) that:
“The whole point of my instructing Lawlords, and agreeing to pay them, was so that I could and would rely on their expertise and advice, and they would (as they did from about 10 June 2013) take control of, and responsibility for, conduct of the relevant detailed assessment proceedings, so that I would have to devote minimal time and effort to such proceedings”
A number of amendments were requested to be made to draft bill. In the meantime, Ms Bamrah signed and returned the certificate of accuracy. This was in the form of Precedent F of the Schedule of Costs Precedents annexed to CPR PD 47 as follows:
“I certify that this bill is both accurate and complete and… in respect of Part 1 of the bill the costs claimed herein do not exceed the costs which the receiving party is required to pay me/my firm.”
Stinsons put the two parts of the bill together, ready for lodging and service. On 26 July 2013, Mr Shaw sent Stinsons a copy of the CFA by email, but saying that they should not disclose it to Gempride without “coming back to [him]“. Mr Stinson confirmed that he would not serve a copy of the CFA with the bill, but “in [his] experience it is almost always asked for in the Points of Dispute“.
Points of Dispute were served on 19 August 2013. Lawlords prepared draft answers and sent to Ms Bamrah by email on 28 August 2013 “for approval and signature“. Those of relevance were:
Point of Dispute 1 noted that there had been disclosure of neither the CFA itself, nor the alternative of specific information provided for by CPD paragraph 32.5(1)(d).
The proposed reply was:
“In accordance with CPD 32.5(1)(d), the Claimant provided a statement of information setting out the definition of ‘win’ and the Part 36 provision. Compliance has therefore been achieved.”
Ms Bamrah approved that response.
Point of Dispute 3 queried what other methods of financing costs were available other than those involving additional liabilities [i.e. success fee and ATE insurance premium] and why were they not used.
The proposed reply was:
“Mrs Bamrah was fully aware of her obligation to make enquiries into the availability of any pre-existing legal expenses cover and all other methods of funding. BTE legal expenses cover was not available therefore the appropriate method of funding in this case was put in place, a CFA…”.
Ms Bamrah approved that response.
Point of Dispute 7 alleged that the claimed hourly rates were unreasonably high and offered a composite Grade A Outer London rate of £241.00.
The proposed reply was:
“The Claimant will accept the rate offered.”
Mr Shaw’s email to Ms Bamrah covering the draft responses said:
“You will see from the points that the Defendants have attacked various aspects of the costs claimed. The hourly rate of £280 has been objected to and £241ph offered which in the replies I have accepted as I don’t believe you will obtain a higher rate on assessment. If you object I can always amend the replies.”
Ms Bamrah raised no objection and approved the draft reply.
A directions hearing took place before Master Leonard on 18 November 2013, at which:
i) In the light of the response to Point of Dispute 3, Gempride confirmed that they would not pursue any point on alternative funding.
ii) Lawlords agreed to provide a copy of the CFA and supporting documents, which were in the event sent by Stinsons to Gempride that day.
iii) The Master directed that there should be a hearing of preliminary issues as to the status of Ms Bamrah and the validity of the CFA, fixed for 12 April 2014.
iv) He also directed that any witness evidence relied on by Ms Bamrah in relation to those preliminary issues be served by 14 February 2014, and any evidence relied on by Gempride to be served within a month thereafter.
On receipt of the relevant documentation including the Funding Options Checklist Gempride’s solicitors raised two issues:
Gempride issued an application seeking:
(i) to resile from their concession regarding the unavailability of alternative funding, and
(ii) an order that Ms Bamrah’s claim for costs be dismissed or alternative relief granted under CPR rule 44.11 on the basis of that, in certifying her hourly rate throughout as £280 and replying to the Points of Dispute to the effect that she had no alternative funding, her conduct was “unreasonable or improper” within the meaning of rule 44.11.
The application was heard by Master Leonard on 13 January 2014. Ms Bamrah was represented by Mr Ocego of Lawlords. It later transpired that Ms Bamrah had not been told of the hearing date. Lawlords did not lodge any evidence on her behalf or ask her if she wished to rely upon any evidence despite the Master’s Order of 18 November 2013 expressly giving her the opportunity to do so.
In a reserved judgment handed down on 5 March 2014, the Master allowed the application on each of the two grounds. In relation to the hourly rate, he noted Mr Ocego’s explanation that:
“[Ms Bamrah] took the view that the difficult work undertaken merited a higher rate and decided retrospectively to revise [Falcon Legal’s] hourly rates upwards to £280 for the entire period covered by part 1 of the bill…
… [She] had taken the view that the hourly rates agreed between her, as the client, and [Falcon Legal] could be adjusted at will. If that were the case there would be no contractual agreement binding upon [Ms Bamrah] to pay any particular hourly rate, and so no proper basis for the certification of an hourly rate of £280.”
The Master 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. As a result, Gempride had made an offer on hourly rates that was higher than Ms Bamrah was obliged to pay, which Ms Bamrah purported to accept.
In respect of the accuracy of the replies on alternative funding, he noted that Ms Bamrah was “responsible both as client and as solicitor for the factual accuracy of her replies to [Gempride’s] Point of Dispute“. He continued:
“49. It is not open to [Ms Bamrah] to record for her own purposes, as she did, that BTE funding was available to her but to tell the paying party, as she did, that it was not. Nor can she say that because it was not available to her on terms acceptable to her, it was not available at all.
50. I am reminded by Ms Scott for [Gempride] that there is no process of disclosure in detailed assessment proceedings. A paying party cannot expect to inspect as of right a receiving party’s [CFA] or his records of enquiries as to alternative sources of funding. Unless there is good reason to conclude that replies such as those served by the [receiving party] may be inaccurate the paying party will be expected by the court to accept them.
51. The clear and obvious purpose of an enquiry such as that at general point 3 is (a) to allow a paying party to ascertain whether a receiving party claiming the cost of a CFA and an ATE premium made a choice not to use an alternative, less expensive method of funding and (b) to take a position on whether that choice was reasonable. The equally clear statement in [Ms Bamrah’s] reply to general point 3, to the effect that BTE cover was unavailable, was not true and no amount of sophistry can make it true.”
The Master found that Ms Bamrah’s answer to the Point of Dispute was untrue; and that
“as a personal injury practitioner she was in a position to understand the significance both of general point 3 and her answer to it“
He concluded:
“If [Ms Bamrah’s] conduct admits of a reasonable explanation, in the absence of some evidence from her I have no idea what it might be.”
The Master made no express finding that Ms Bamrah had been dishonest. Having found her conduct to have been “unreasonable or improper” he considered that complete disallowance of her costs would be unduly harsh, but he disallowed the claimed profit costs in Part 1 of the bill insofar as they exceed the fixed hourly rate recoverable by litigants-in-person.
Ms Bamrah appealed.
It was accepted by Judge Mitchell that as Ms Bamrah had been personally denied the opportunity to file evidence before the Master by Lawlords’ failure to discuss the hearing with her, the appeal should be by way of full rehearing. It was a substantial part of Ms Bamrah’s case that Lawlords were responsible for the conduct of the detailed assessment. In her statement of 6 March 2015, she said:
“5.6 Lawlords was responsible for, and undertook the task of, preparing the Bill of Costs and all other documents, pleadings, and evidence, required for the detailed assessment proceedings.
5.7 Lawlords was responsible for (and undertook the task of) ensuring that the relevant provisions of the [CPR] were complied with, and any other legal requirements were met, and any duty owed by me/Falcon [Legal] (in the detailed assessment proceedings) to the court or Gempride was discharged.
5.8 Such duties included a duty on Lawlords not to mislead me, Gempride or the court…
…
5.12 …. Lawlords misled me, Gempride, and the court, and breached its duties, and were guilty of incompetence and negligence, which resulted in the adverse conclusions reached by Master Leonard in his judgment…
5.13 … The whole point of my instructing Lawlords, and agreeing to pay them, was so that I could and would rely on their expertise and advice, and they would (as they did from about 10 June 2013) take control of, and responsibility for, conduct of the relevant detailed assessment proceedings, so that I would have to devote minimal time and effort to such proceedings”.
The appeal was heard by Judge Mitchell, sitting with District Judge Langley as an assessor, over thirteen days between May and September 2016. Reserved judgment was handed down on 14 November 2016 (“the main judgment”). This was later supplemented by two judgments in respect of consequential matters, handed down on 18 November 2016 and 13 January 2017 respectively.
i) Contrary to the finding of the Master, the judge found 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 acted contrary to them.
ii) 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.
iii) The judge proceeded on the basis that the Master had in effect made findings of dishonesty against Ms Bamrah. He found that Ms Bamrah had not acted dishonestly, in the sense that she had deliberately inflated her hourly rate to a rate to which she knew she was not entitled and/or represented that BTE insurance was not available when she knew that was.
iv) In respect of the hourly rate, the judge accepted that the certified rate was “unlawful”, in the sense that it was more than the rate Ms Bamrah was obliged to pay Falcon Legal. However, he found that she had made no false representations about the hourly rate to the court or to Gempride, any false representations having been made by Lawlords and quite contrary to their instructions. He made express findings that Ms Bamrah did not sign the bill with any intent to mislead, and was not dishonest in relation to the rate and certification of the bill. In respect of the hourly rate, there was thus no misconduct within the scope of CPR rule 44.11.
v) In respect of the allegation that the reply to the Point of Dispute 3 was false, the judge found that (i) the statement that BTE insurance was not available was true and accurate, and (ii) in any event, in making that reply, Ms Bamrah never had any intention to mislead or deceive Gempride or the court.
vi) Thus, Ms Bamrah had not been guilty of any conduct that was “unreasonable or improper” within the scope of CPR rule 44.11.
Judge Mitchell consequently allowed the appeal and dismissed Gempride’s application under CPR rule 44.11. He ordered Gempride to pay Ms Bamrah’s costs of the application before the Master and the appeal on an indemnity basis. Those costs were to include “her personal costs of attendance at the appeal proceedings“, which was clarified by District Judge Langley on 12 January 2017 to mean “‘full lawyer’s costs’ for her time of attending all the hearings which took place during the appeal proceedings“. The costs claimed were approximately £950,000.
Gempride appealed.
Gempride sought to appeal on 11 grounds, but were granted permission to proceed by Jackson LJ on five:
Ground A (originally Ground 8): Agency
The judge erred in finding Ms Bamrah was not liable for the conduct of Lawlords on the conventional principles of agency.
Ground B (originally Ground 1): Dishonesty/Intention to Deceive
The judge 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, Gempride was required to prove that she had had an intention to deceive the court and/or Gempride.
Ground C (originally Ground 3): Hourly Rate
Given the hourly rate claimed exceeded that which Ms Bamrah was contractually obliged to pay Falcon Legal, the judge erred in finding that there was no unreasonable or improper conduct by Ms Bamrah in certifying the bill of costs.
Ground D (originally Ground 7): Availability of BTE Insurance
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.
Ground E (originally Ground 10): Costs of Attendance
The judge erred in ruling that the costs recovered by Ms Bamrah should include “her costs of personal attendance at the appeal hearings”
…
101. In my view, not only did Judge Mitchell err in holding that Falcon Legal ceased being liable for the acts of their agents Lawlords because Lawlords failed to comply with their instructions and indeed acted contrary to those instructions, but he unfortunately failed properly to grapple at all with the legal relationship between Falcon Legal and Lawlords. He 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 (see [63]), and the fact that Mr Shaw and Mr Ocego “were not only holding themselves out as costs draftsmen, but also as costs lawyers” (see [98]), 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.
102. 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‘” (see [100]). 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.
103. 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.
104. The reverse side of that coin is that, because the solicitor has responsibility for the conduct of those to whom he subcontracts work for which he as a solicitor has been retained, then he is able to charge for that work at an appropriate rate as profit costs (together with any success fee uplift under a CFA) and not simply as a disbursement
as Falcon Legal did in respect of Lawlords’ work on the costs assessment in this case (see paragraph 62 above).
105. Of course, where a legal representative is found to have been responsible for the conduct of an agent, particularly if not personally guilty of any unreasonable or improper conduct, that may be relevant to sanction. For example, in a particular case the court may consider it is appropriate to disallow all or part of the costs attributable to that agent.
106. In any event, for the reasons I have given, I consider that Ground A is made good:
the judge did err in law in finding that, if and insofar as they did not comply with her instructions and/or acted contrary to those instructions, Ms Bamrah could not be liable for the conduct of Lawlords by the principles of agency.
107. It has been well-established since Ridehalgh that conduct may be “unreasonable or improper” without any finding of dishonesty. Mr Bacon submitted that Judge Mitchell erred in proceeding on the basis that, as a matter of law or at least in the circumstances of this case given the way in which Gempride put its application, Gempride was required to prove that Ms Bamrah was dishonest, i.e. that, in relation to the hourly rate and/or the availability of BTE insurance, she had an intention to deceive Gempride and/or the court.
…
110. The context is crucial. Although Gempride clearly suspected that Ms Bamrah had been dishonest – and dishonesty was one interpretation of her conduct that it urged on the judge – dishonesty on her part was never an essential element of its allegations. The CPR rule 44.11 application was on its face made on the basis that the representations made by Ms Bamrah were “not true”, “misleading” and “at best reckless”. Whilst not excluding dishonesty, the application did not suggest that a finding of dishonest was necessary for its own success. Gempride’s case on misconduct at the start of the appeal was set out in Mr Cory-Wright’s skeleton argument below, especially at paragraphs 87-94. Dishonesty was not mentioned at all. That was consistent with the evidence of Mr Hines who, in his various statements in support of the application, did not suggest that the Gempride colours had been pinned exclusively to the mast of dishonesty. Importantly, Gempride’s case at the end of the appeal as set out in Mr Cory-Wright’s written closing submissions, particularly at paragraph 4, made clear that Gempride contended that Ms Bamrah knew or should have known that the representations she had made as to hourly rate to which she was entitled and to the availability of BTE insurance were untrue; and that that misconduct was that of Ms Bamrah personally “whether by reason of deliberate act or recklessness (as Gempride maintains)…” (emphasis added) or alternatively she was responsible for the conduct of Lawlords as her agents.
111. Mr Singh submitted that Ms Bamrah had put forward an explanation – he submitted, a reasonable explanation – for each representation, which Gempride could not gainsay. Ms Bamrah was entitled to rely on the advice of Lawlords, as experts in costs proceedings and in costs advocacy. It was Mr Singh who submitted below that, on that basis and in the circumstances of this case, unless Gempride could prove an intention to mislead on Mr Bamrah’s part, the CPR rule 44.11 application could not succeed. That submission was made in express terms in paragraphs 10.6 and 10.11 of his closing written submissions.
112. Reading his judgment as a whole, it seems that Judge Mitchell accepted Mr Singh’s submission on this issue. That is clearest at [50]-[52] of his judgment. Having set out the respective submissions of Mr Cory-Wright for Gempride and Mr Singh for Ms Bamrah – and having referred to Clydesdale Bank plc v Workman [2016] EWCA Civ 73, which does not appear me to have been greatly to the point – he continued at [52], in relation to the hourly rate issue:
“The improper conduct alleged in this case amounted to an allegation by Gempride of dishonesty i.e. Ms Bamrah inflated her hourly rate to a rate to which she knew she was not entitled, thus gaining a substantial financial advantage. This is the sort of conduct Lord Bingham had in mind in Ridehalgh v Horsefield… when he said ‘… conduct which would ordinarily be held to justify… striking off, suspension from practice, or other serious professional conduct…”. The above observations show the importance of proving that the conduct was deliberately misleading and anything else will not suffice…”.
113. In relation to the hourly rate, that approach is reflected throughout the judgment, e.g. at [107], where the judge said that Ms Bamrah indicating to Lawlords that the bill was wrongly inflated in any respect “would seem to be completely at odds with the allegation that she wilfully misled the court and Gempride in order to inflate her bill“. The judge concluded at [108]-[109]:
“108. We pause there to set out our conclusions on the factual issues concerning the hourly rate. We are quite satisfied that Ms Bamrah did not make any (or any false) representations about the hourly rate to the court or to Gempride about the hourly rate in part 1 of the bill. Any representations that were made, were made by Lawlords and were quite contrary to her instructions. At the very least they failed to clarify their instructions from Ms Bamrah. We have heard 7 days of evidence and we still have no explanation (which could only come from Lawlords) why Lawlords presented a bill which was unlawful and unsustainable. Indeed Ms Bamrah was unaware of what was going on, and they made no effort to tell her. She was quite literally kept in the dark. Further we are quite satisfied that she did not sign the bill with any intent to mislead Gempride, or the court.
109. Although Gempride made allegations of misconduct, they have failed to prove them. We are satisfied that Ms Bamrah has not committed any act which could be described as misconduct, or any act which could be said to be ‘improper conduct’ within the meaning of Ridehalgh. As we have been at pains to point out, such ‘improper conduct’ involved an allegation by Gempride that Ms Bamrah was dishonest, in that she tried to claim an inflated hourly rate. As Gempride have manifestly failed to prove that, we agree with Mr Singh that an attempt has been made to water down the allegations. This case was never about “unreasonable conduct” and, for the avoidance of doubt, we are quite satisfied that Ms Bamrah is not guilty of any unreasonable conduct. Indeed, on the evidence, Ms Bamrah has proved her innocence in respect of these allegations…”.
114. I will return to consider [108], which I do not find an easy paragraph, in relation to Ground C (see paragraph 118 and following below). However, taken in context, in my view these paragraphs amounted to a clear finding that the allegation that the certifying of the bill of costs with an hourly rate exceeding that to which Falcon Legal were entitled from Ms Bamrah was not unreasonable or improper conduct by Ms Bamrah was not proved because she did not sign the certificate with an intention to mislead Gempride or the court, i.e. she did not do so dishonestly. The same sentiments appear to have been expressed with regard to both issues at [102]-[103].
115. In my view, in approaching the scope of “unreasonable or improper” as he did, the judge did err. He approached the issue on the basis that, if Gempride had not proved that, in making the representations she made, Ms Bamrah did not intend to mislead Gempride itself or the court, then it had necessarily failed to prove that her conduct fell within CPR rule 44.11. That was not the case;
because “unreasonable or improper” conduct does not have dishonesty as a necessary ingredient, and Gempride had not restricted its allegations to ones necessarily involving dishonesty on her part. 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.
…
118. As I have indicated, I find [108] of the judgment – and other paragraphs which reflect the same point – difficult to construe. At the heart of the difficulty lies two different interpretations of Ms Bamrah’s own evidence.
119. Before Judge Mitchell, it was Ms Bamrah’s case that she was charging £232 per hour until 22 June 2012 when she increased it to £280 “on the basis of what she perceived as unnecessary requests for disclosure by Gempride’s solicitors” (paragraph 55 of his judgment of 4 November 2016). She said that the letter of instruction to Lawlords was intended to convey a prospective change in rate from June 2012. Mr Ocego maintained that he took the letter to mean that Ms Bamrah wanted to charge £280 for the whole of Falcon Legal’s part of the bill. Judge Mitchell found that “the letter was saying quite clearly that [Ms Bamrah] had charged £232 per hour pursuant to the CFA and as of 22 June 2012 she had increased her rate [to £280]” (see paragraph 58), and that Mr Ocego’s interpretation was “unsupportable” (see paragraph 59). He found that, contrary to Ms Bamrah’s instructions, Lawlords (through Mr Ocego) unilaterally took it upon themselves to use the £280 per hour rate throughout, as evidenced by their emailed letter of 8 July 2013 (referred to in paragraph 52 above). Thus, Judge Mitchell said (at [58] and [62]):
“…. It is the view of both of us that the letter [of instruction] was saying quite clearly that [Ms Bamrah] charged £232 per hour pursuant to the CFA and as of 22 June 2012 she had increased her rate.
…
… Ms Bamrah had made it plain in her letter of instruction that she was acting under a CFA with a recorded hourly rate of £232. Why on earth were Lawlords concluding £280 was an appropriate rate when the CFA said otherwise?”
120. Having referred to an email from Ms Bamrah to Lawlords on 20 December 2013 (in which she referred to the fact that the higher charging rate “was not applied until much later as the matter became more complex due to the historical fishing of the documents by [Gempride]“), the judge continued (at [81]):
“It is quite clear from the tenor of this email, and indeed other documents that Ms Bamrah was concerned to ensure she was not accused of charging a higher rate than that permitted by the CFA until the date the hourly rate was increased, which she identifies as 22 June 2012. By virtue of the fact this email was sent we are inclined to the view she did speak to Mr Shaw on or about 9 July 2013 about the rates being billed, because it was something which concerned her and offended the indemnity principle, of which she was all too well aware. However, we entirely agree with Mr Singh’s submission that even if the telephone call was not made, it does not affect the position.”
121. Thus, it seems that the judge found that Ms Bamrah’s consistent instructions were for Lawlords to use the rate of £232 until June 2012, but, contrary to those instructions, they used the rate of £280 throughout Part 1 of the bill. When she telephoned Mr Shaw on 9 July 2012, it seems that the judge understood her evidence to be that Mr Shaw understood that the use of £280 from the outset was an error, but he would explain to Gempride the true position (i.e. that the correct rate to June 2012 was £232 and not £280 as shown in the bill itself) during the course of the costs negotiations with them so that they were not misled. Thus, the judge went so far as saying (at [108] of his judgment) that “Ms Bamrah did not make any (or any false) representations about the hourly rate to the court or to Gempride…”.
122. However, even if the judge’s understanding of the evidence had been correct,
in my view Ms Bamrah would clearly have been guilty of improper or unreasonable conduct, most obviously because, when she received Gempride’s offer of £241 per hour throughout, she ought to have realised that the error in the bill had not been explained to Gempride who, for the period to June 2012, had offered more than she was contractually liable to pay Falcon Legal.
Her acceptance of that offer is incapable of any sensible explanation. Indeed, no competent solicitor would have considered that an explanation of the error could have been given. At least from that point in time, Ms Bamrah ought to have known that the indemnity principle had been compromised, and Gempride misled.
123. In his skeleton argument for this court, apparently in line with the findings of the judge, Mr Singh refers to the “error” in the bill and to its explanation. But, in his oral submissions to us as I understood them, Mr Singh said that Judge Mitchell had in fact got the wrong end of the stick so far as Ms Bamrah’s evidence was concerned. In her statement dated 6 March 2014, Ms Bamrah said that, on 9 July 2013, as she had various concerns with the bill, she telephoned Mr Shaw.
“11.9 Amongst other things, I specifically said to Mr Shaw that the hourly rate should be split as it was £232.00, then increased to £280.00. Mr Shaw told me not to worry, and that Lawlords would deal with it, and would leave the hourly rate as it was in the bill, but that he/Lawlords would sort this out with Gempride in the negotiations which Lawlords were going to have with Gempride (in an effort to reach settlement).
11.10 I understand from what Mr Shaw said that Lawlords were advising me that it was proper to claim an hourly rate of £280.00 throughout for Part 1 of the Bill of Costs, but that Lawlords would provide an explanation to Gempride which set out the factual position about the hourly rates of £232.00 and £280.00, and which explained that the rate of £280.00 had been applied by Lawlords in July 2013 when preparing the Bill, and which explained the reasons for Lawlords having applied such rate for all of the period in part 1 of the bill (the “explanation”).
11.11 Until some time after about 23 February 2014 [i.e. until after Master Leonard’s ruling], I believed that Lawlords had provided the explanation to Gempride. The thought that Lawlords would file and serve the Bill of Costs without having provided the explanation, or that Lawlords would mislead Gempride (or the court) never occurred to me until after I received the draft judgment of Master Leonard on or about 23 February 2014.”
124. That is clear enough; but Ms Bamrah’s cross-examination before Judge Mitchell (at page 28 of the 19 May 2016 transcript) put her evidence on the point beyond doubt. Ms Bamrah understood that Part 1 of the bill of costs was going to include an hourly rate for her time of £280 throughout, as Mr Shaw told her on the telephone on 9 July 2013 that it was appropriate and proper to claim that rate throughout – even retrospectively – because of the complexities in the matter. She approved and signed Part 1 of the bill on that basis. But for Mr Shaw’s assurance as to the propriety of claiming £280 throughout, she would have insisted that the rate of £232 was used for the first period of the bill to 22 June 2012. She understood that, during the course of negotiations with Gempride, Lawlords would explain, not that the rate claimed for the earlier period was in fact only £232 and the bill was wrong, but rather why the higher rate had been used throughout, i.e. because of the complexity of the case and the Gempride’s requirement for especially extensive disclosure.
125. Indeed, on her case before Judge Mitchell, it was that understanding that (e.g.) explained why she did not query, but rather accepted, Gempride’s offer of a rate in excess of the £232. As I have indicated, in the counterfactual scenario suggested by [108] of the judgment,
it is clear that Ms Bamrah would have known, or ought to have known, that an improper rate had been maintained so far as Gempride was concerned; and it would have been unreasonable or improper conduct on her part to have accepted the rate offered in those circumstances.
126. Without making an express finding, Judge Mitchell seems to have been inclined to accept that the 9 July 2013 conversation between Ms Bamrah and Mr Shaw occurred; and, for present purposes, I am prepared to accept in Ms Bamrah’s favour that it took place as she recalled it. Ms Bamrah therefore knew that the £280 rate was being submitted to Gempride as an appropriate rate, because she had been advised by Mr Shaw that it was proper to claim it “throughout” including retrospectively. I also of course accept in her favour that, in agreeing to that course, Ms Bamrah was not being dishonest or intending to mislead, as the judge found.
127. Nevertheless, I consider her conduct in certifying the bill in these circumstances was unreasonable or improper. She certified Part 1 of the bill of costs as accurate and as complying with the indemnity principle. As emphasised in Bailey …. that certificate was of considerable moment, because Gempride were entitled (and, in the ordinary course of events, bound) to accept the matters certified as being true and accurate. As one would hope, Ms Bamrah was well aware of the indemnity principle – Judge Mitchell made an express finding to that effect (see [81]). It is therefore not easy to understand how, as a result of her conversation with Mr Shaw, she could sensibly have believed that it was proper retrospectively to increase the hourly rate in the bill. However, we are bound by the finding of fact of the judge that she did genuinely maintain that belief. Nevertheless, in my view, her conduct in allowing Part 1 of the bill to be submitted and then maintained with a rate which she knew was in excess of the contractual rate was at least reckless. The analysis which led her to that conclusion has certainly never been explained.
I consider that her conduct permitted no reasonable explanation and, in the light of the indemnity principle, no competent solicitor acting reasonably would have certified Part 1 of the bill of costs in the circumstances in which Ms Bamrah did so. For those reasons, her own conduct was unreasonable or improper for the purposes of CPR rule 44.11
128. In any event, for the reasons I have given under Ground A, in respect of the costs assessment,
Falcon Legal are responsible for the conduct of Lawlords; and Lawlords conduct as agents of Falcon Legal has to be judged as conduct of a legal representative because it is “solicitors’ work”.
129. In my view, the judge erred in his consideration of the legal position of Lawlords in a number of ways. I have already dealt with the agency issue. He also apparently proceeded on the basis that “the court has power under CPR 44.11 to impose sanctions on Lawlords because it is a party to the appeal“, as well as the power to make an order against it under section 51 of the Senior Courts Act 1981 and as a non-party (see [103]). However, although making findings and harsh comments about Lawlords, he made no express finding that their conduct would have been “unreasonable or improper” had it been the conduct of a legal representative. In my view, it was clearly so, for the reasons I have already given.
130. In all the circumstances, on the basis of Ms Bamrah’s own case,
I consider that in certifying that Part 1 of the bill of costs was “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 rule 44.11.
131. I consequently find Ground C made good.
132. Mr Bacon submitted that the judge erred in finding that the statement made by Ms Bamrah in response to Point of Dispute 3, that BTE insurance was not available to her, was an accurate statement.
…
135. The judge proceeded on the basis that … 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.
136. The question posed to Ms Bamrah in Point of Dispute 3, as to what other methods of financing costs were available without incurring additional liabilities, is a common question posed in detailed assessments where additional liabilities are claimed; and for obvious reasons. Where such alternative funding was available, but not taken up, that gives rise to the issue of whether the litigant acted reasonably in funding the litigation with prospective additional liabilities. That secondary issue is one which, again for obvious reasons, the paying party may wish to investigate with some care; but of course that question is not reached if alternative funding was not available. The receiving party cannot exclude the possibility of that investigation by himself assessing that he had acted reasonably in not choosing to fund the litigation by that alternative means. With respect to the judge, I do not consider that it is reasonably arguable that “availability” in this context can be construed differently. 137.
137. In any event, in this case, Ms Bamrah appears to have known full well what “availability” meant, because in the Funding Options Checklist which she completed at the outset of the CFA, in response to the question, “Is any ‘other funder’ available?”, Ms Bamrah responded, “Yes”, clearly a reference to the BTE insurance with ARC; and, in response to the follow up question, “If yes why has it not been used”, she said, “Refuse to fund until proceedings issued”. To the question, “Is a Before the Event Legal Expenses Insurance policy available?”, she responded, “Yes”, but indicating that permission to use it had been requested but refused.
138. Nor do I consider the fact that on 11 June 2011 Falcon Legal wrote to AXA referring to pursuit of legal expense insurers (see paragraph 40 above) to the point. That letter does not deal unambiguously with the question of availability of insurance; but, in any event, it is clear that, whatever they had gleaned from that correspondence over two years previously, Gempride was misled by the response to Point of Dispute 3 because as a result of it they agreed not to pursue any point about the availability of alternative funding – which they immediately sought to retract when they were told that such an alternative had been available.
139. I again of course accept the judge’s finding that, in making that response to the Points of Dispute, Ms Bamrah did not intend deliberately to mislead Gempride or the court; but as I have indicated there is the clearest evidence that Gempride was in fact misled. It was almost inevitable that it would be. As the Master commented, although the position was rectified when the CFA documents were later disclosed, costs could have been compromised on the basis that there was no alternative funding available without Gempride being any the wiser.
140. I find this ground also made good.
141. Mr Bacon submits that paragraph 7 of Judge Mitchell’s Order of 19 December 2016 is wrong in law, in that it ordered Gempride to pay Ms Bamrah her costs of personal attendance as a party to the appeal at the appeal hearing below. As she by then had other solicitors representing her, he submits that such costs are not recoverable.
142. Mr Singh had no submission to make on the merits of this ground. He accepted that there was no authority in favour of a party to an appeal being able to recover the costs of his attendance at the hearing of that appeal; and, as I understood him, he accepted the well-established principle that a party cannot recover the costs of his own attendance at a hearing. However, he submitted that this court should not consider the ground of appeal, because the judge gave overt permission to apply in his Order of 19 December 2016, and the appropriate course would be for Gempride to apply to the county court to amend the order to exclude that part of paragraph 7, if it can be shown that it is wrong in principle.
143. However, Jackson LJ gave permission to appeal on this ground, and I do not consider that it would be appropriate or proportionate to send this issue back to the county court for further consideration. This matter has gone on for quite long enough.
144. In my judgment, there is no answer to this ground. Mr Singh suggested none. Ms Bamrah had solicitors on the record. She was represented in court by Leading Counsel, as well as those solicitors. She attended the appeal as a party, not as a legal representative. In those circumstances, the fact that she is a lawyer does not entitle her to claim her costs of attendance, let alone to do so at her own professional rate.
145. I would allow the appeal on this ground.
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158. For those reasons, I would allow this appeal.
159. In those circumstances, each party urged us not to remit the matter, but to make an appropriate order under CPR rule 44.11 ourselves. Given the history of this matter, I agree that that is the appropriate course.
160. Although we must proceed on the basis that Ms Bamrah was at no time dishonest, and the misconduct did not in the event result in costs being determined or settled on a false basis, in my view her conduct was serious even within the parameters of “unreasonable and improper”.
As this court made clear in Bailey (see paragraph 10 above), a solicitor as a legal representative holds a particular position of trust; and, on the basis of that trust, when a solicitor signs a bill of costs, he certifies that the contents of the bill (including the hourly rates due from the client) are correct. The court and the receiving party are entitled to rely upon that certificate; indeed, unless there are circumstances such as to raise suspicion, the paying party cannot go behind the certificate.
It is bound to accept it. In this case, although not doing so with any intention to deceive, in certifying Part 2 of the bill, Ms Bamrah certified an inaccurate bill with essential recklessness – appreciating the indemnity principle, but being persuaded by Lawlords on some unexplained basis that a retrospective increase in the claimed rate did not breach it – which led to Gempride offering to settle at an hourly rate higher than that which Ms Bamrah was obliged to pay Falcon Legal.
161. With regard to the representation concerning the availability of BTE insurance, although made without any intention to deceive, the misrepresentation did mislead Gempride into initially conceding the availability of alternative funding as an issue. Again, Gempride made that concession because it was entitled – and, in effect, bound – to accept the representation made by Falcon Legal on trust.
162. In the circumstances, I am in no doubt that the court should make an order under CPR rule 44.11, reducing the level of costs recoverable by Ms Bamrah in the personal injury action. Of course, those costs will in any event now be significantly reduced because of Ms Bamrah’s acceptance that the CFA was invalid: she will presumably not be able to recover any additional liabilities (such as the success uplift, or ATE insurance premium), and her claim will in effect be restricted to a quantum meruit. I leave aside all of those factors, which will be dealt with, if not by agreement, on the detailed assessment of costs.
163. I have carefully considered whether it would be appropriate to maintain the Master’s order, that Ms Bamrah be prevented from recovering profit costs at any rate greater than the rate appropriate to a litigant-in-person. However, in all the circumstances (and notably in the light of the express finding below that Ms Bamrah was not dishonest), I consider that such an order would be disproportionate. In my view, it would do justice to the case if the half the profit costs in Part 1 of the bill as otherwise assessed by the court be disallowed under CPR rule 44.11.
164. Therefore, subject to my Lord, Davis LJ, I would allow the appeal. I would quash the Order of Judge Mitchell dated 19 December 2016; and I would vary paragraph 2 of the Order of Master Leonard dated 5 March 2014 by deleting the first sentence thereof and replacing it with the following:
“Half of the profit costs that would otherwise be payable in Part 1 of the Claimant’s bill of costs shall be disallowed under CPR rule 44.11“.
….
170. I also would allow the appeal for the reasons given in the comprehensive judgment of Hickinbottom LJ, with which I entirely agree.
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177. … the judge clearly was wrong in principle (as explained by Hickinbottom LJ) in effect to disassociate Ms Bamrah from responsibility under CPR rule 44.11 by reason of the conduct of Lawlords. The judge clearly misunderstood and misapplied the law on ostensible authority in this regard. (Contrary to a suggestion made at one stage in argument, whether or not Lawlords had been made party to the proceedings by this stage is irrelevant for this purpose.) This error then, as I see it, infected the judge’s whole approach to certification and to the indemnity principle.
178. It may be (as Ms Bamrah had been concerned to emphasise in her witness statement) that Ms Bamrah relied entirely on Lawlords for costs advice and assistance. But she was the solicitor who signed the certificate. It was on her certificate – the certificate of an officer of the court – that the paying party and the court itself would rely. The paying party and court would have no way of knowing of any deficiencies in the advice she may have been receiving: and she had (with regard to the paying party and court) to bear responsibility for the signed Bill: a Bill she in fact had herself spent one and a half hours in considering. She cannot entirely disassociate herself (vis-à-vis the paying party and court) from responsibility for her certificate by seeking to cast all the blame on her costs draftsmen. Indeed to adopt such an approach would, in my opinion, represent an unfortunate erosion of the underpinning rationale for a signed certificate in a Bill.
179. Mr Singh pointed out that there was evidence that – as here – solicitors did sometimes sign off certificates to Bills before they were finalised. Maybe that is so. But such a practice will usually be unwise; and in any event it cannot derogate from the ultimate responsibility for the signed Bill as served. Besides, it is absolutely plain on the evidence that thereafter Ms Bamrah knew that an hourly rate of £280 throughout had continued to be claimed (and indeed an offer of £241 per hour was thereby procured). This, overall, in my view, was in truth a serious case of breach of the indemnity principle, even though (as found) there was no dishonesty on her part. It plainly amounted to improper and unreasonable conduct for the purpose of the Rule.
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