Gempride Limited v Bamrah (1) Lawlords of London Limited (2) [2018] EWCA Civ 1367



Judge: Davis LJ and Hickinbottom LJ

Citation: [2018] EWCA Civ 1367

Summary:

Solicitors remain responsible for those to whom they sub-contract, especially where the sub-contractor is not a legal representative and as such owes no duty to the Court.

Longer text:

A Claimant who was a solicitor and sole practitioner tripped and fell when visiting the premises of the Defendant.  The Defendant’s insurers admitted liability and there followed protracted negotiations concerning quantum. When proceedings were issued, the Claim Form indicated that the claim exceeded £25,000 but not £50,000.  When the Claimant served her Schedule of Loss, this amounted to £750,000 and was subsequently increased to over £900,000.  In the event, the Defendant’s Part 36 offer of £50,000 was accepted by the Claimant.  The Claimant had a household insurance policy that included BTE insurance, which required her to instruct the Insurer’s Panel of Solicitors.  She was informed that if she instructed another firm of solicitors, their fees would not be covered by the insurance.  The Claimant wished to handle her own claim through her own firm and purported to enter into a CFA with her own firm.  She signed the CFA for both the firm and on her own behalf.  By the time the matter reached the Court of Appeal it was accepted that that contract was void.  The Defendant was not informed of the existence of the CFA.  Her own insurance company having refused to cover her legal fees, the Claimant took out ATE cover at a premium of £2,724.20.  The Claimant subsequently instructed an independent firm of solicitors under a new CFA.  The original hourly rate agreed by the Claimant and her firm was £232 per hour.  This rate was unilaterally increased to £280 per hour and costs draftsmen drew up a bill accordingly.  The Claimant certified the bill as accurate.  She responded to one of the points of dispute, stating “BTE legal expenses cover was not available”.

At the hearing before the Costs Judge, it was found that the Claimant had certified a misleading bill of costs (in respect of the hourly rates) and had given untrue information with regard to funding (the lack of BTE cover).  The profit costs were reduced to the litigant in person rate.  The Claimant appealed and, on appeal, the Judge held that the Claimant was not responsible for errors made by the costs draftsmen, who, she alleged, had not acted in accordance with her instructions.  The Judge found that the Claimant had not acted dishonestly and that the statement on BTE funding was correct.  The appeal was allowed, with costs against the Defendant.

The Defendant appealed to the Court of Appeal, which held that solicitors remained responsible for the conduct of anyone to whom they sub-contracted work, especially where the sub-contractor was not a legal representative.

In relation to CPR Rule 44.11, the Court stated:

“(1) A solicitor, as a legal representative, owes a duty to the Court and remains responsible for the conduct of anyone to whom he sub-contracts work that he (the solicitor) is retained to do.  That is particularly so where the sub-contractor is not a legal representative and so does not himself owe an independent duty to the Court; (2) 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; (3) mistake or error of Judgement, or negligence, without more, will be insufficient to amount to ‘unreasonable or improper’ conduct; (4) 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 to be in breach of any formal professional rule nor dishonest; (5) 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’; (6) even where the threshold criteria are satisfied, the Court still has a discretion as to whether to make an Order; (7) 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.” (paragraph 26).

It followed from that that the Appeal Judge below had failed to consider the legal relationship between the firm and the costs draftsmen, the draftsmen were not authorised and had not held themselves out to be. The Judge had further erred in considering that if the Defendant did not prove that the Claimant had intended to mislead, it could not show that her conduct fell within Rule 44.11.  Unreasonable or improper conduct did not require dishonesty.

With regard to the hourly rate, in certifying that the bill of costs was accurate, the Claimant’s conduct had been unreasonable or improper.  Her acceptance of the offer of £241 an hour was incapable of sensible explanation.  Her conduct in allowing the bill to be submitted with a rate that she knew exceeded the contractual rate, had been at least reckless.

The Judge had again been in error with regard to insurance.  While alternative funding was available but not taken up, that raised the issue for the paying party of whether the receiving party had acted reasonably in funding the litigation with prospective additional liabilities.  The Claimant had not intended to mislead, but the Defendant had almost inevitably been misled.  An Order was made under Rule 44.11 disallowing half the costs claimed.

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