27 August 2015Print This Post

Law firm loses 50% of costs for hiding existence of second CFA and BTE

Birmingham

Birmingham: District judge disapproved of conduct

A district judge has decided to halve the costs awarded to claimant solicitors for unreasonable and improper conduct in concealing from the paying party the existence of a previous conditional fee agreement and before-the-event (BTE) insurance.

District Judge Griffith, sitting at Birmingham County Court, said: “The word ‘improper’ is not limited to situations where there would be a significant breach of professional conduct, but encompasses conduct which can be regarded as improper according to a consensus of professional or judicial opinion.

“Although I have not been referred to a professional code of conduct, I would be surprised if the conduct of the claimant’s solicitors which I have described, has not fallen foul of some provision of the rules which govern solicitors.

“Misrepresenting the position in a bill of costs intended for consideration by an opponent in litigation and use at a court hearing in order to gain practical advantage, can be regarded as improper conduct. It is, in any event, likely to be so regarded by a consensus of solicitors or judges, in my view.”

The claimant solicitors in the case were Rapid Solicitors, based in Hull, which was acquired by Neil Hudgell Solicitors in October last year.

Managing director Neil Hudgell told Litigation Futures: “The conduct that is the subject of this ruling predates our involvement in the case.

“As a result of this and other conduct by Rapid, the brand has been consigned to history.”

Delivering judgment in Kerins v Heart of England NHS Trust, DJ Griffith said the case involved a medical negligence claim which settled in September 2013.

The defendant argued that costs should be disallowed entirely because of abuse of process and misconduct under CPR 44.11.

DJ Griffith said the claimant, Ryan Kerins, entered into two conditional fee agreements with Rapid, one signed in April 2012 even though the BTE policy was known about at the time, and one in March 2013 when proceedings began and he was able to choose Rapid as his solicitors under the policy. The notice of funding, served in July 2013, only referred to the first CFA, however.

The claimants’ costs bill, as originally drafted, was for £127,885, but, following an “unofficial response” from the defendant, was reduced to £49,369.

Neither bill referred to the second CFA nor to the BTE cover, and they were only disclosed four days before the hearing.

Given the lack of a notice of change of CFA under CPR 44.15, the district judge said the success fee in the case was not recoverable, as the claimant had conceded.

DJ Griffith said he was “of the firm view” that the claimant could be criticised “with regard to the way that the existence of the second CFA and the available BTE funding was intentionally kept secret from the defendant. They had ample opportunity to put right the position they had misrepresented, but failed to do so”.

The judge said an inaccurate portrayal of the funding position could “serve to strengthen the claimant’s arguments” in justifying the success fee and weaken the defendant’s position.

DJ Griffith concluded that not only was Rapid’s conduct of the case improper under CPR 44.11, but it was also unreasonable.

“The court very much disapproves of conduct of this type in these days of openness between the parties. There is an obligation on legal representatives to assist the court and present the client’s case fairly and without misrepresentation.”

However, he said it would be disproportionate to disallow all of the costs, and so disallowed 50%.

By Nick Hilborne

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