The Court of Appeal has handed down what one of the lawyers involved has described as a “watershed” ruling on the conduct of detailed assessment proceedings, which saw a successful claimant lose half of her profit costs for claiming a higher hourly rate than she was entitled to.
The court also stressed that solicitors who instructed cost draftsmen and others “remain ultimately responsible for the acts and omissions of those to whom they delegate parts of the conduct of litigation, particularly when those to whom such work is delegated are not authorised”.
An unusual factor in Gempride Ltd v Bamrah & Anor  EWCA Civ 1367 was that the claimant, Jagrit Bamrah, was herself a personal injury solicitor and the firm she ran – Falcon Legal – acted for her as claimant for part of her personal injury claim.
Ms Bamrah settled for £50,000 in her claim against Gempride, which owned the block of flats where she tripped over a doorstop while visiting a client.
In the detailed assessment, the bill of costs was prepared by a costs draftsmen at the costs firm Lawlords, and certified by the solicitor while claiming hourly rates in excess of those that had been agreed.
The replies to the points of dispute also asserted that before-the-event (BTE) insurance was not available, when in fact it was, had Ms Bamrah been willing to accept terms such as representation by the insurer’s panel solicitor, Irwin Mitchell.
At first instance, Master Leonard in the Senior Courts Costs Office found there had been misconduct in certifying the bill and replies, and under the conduct provisions of CPR 44.11 limited part of the claimant’s bill to the litigant in person rate.
The Court of Appeal recounted that Master Leonard “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”.
The master made no express finding that Ms Bamrah had been dishonest, although the Court of Appeal noted that he “clearly regarded her conduct as more than ‘an honest mistake’”.
On the first appeal, His Honour Judge Mitchell in Central London County Court reversed the decision for several reasons, most notably 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 actually acted contrary to them.
The Court of Appeal upheld Gempride’s appeal on five grounds.
On agency, Lord Justice Hickinbottom said: “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…
“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.”
Further, Hickinbottom LJ held that HHJ Mitchell had misdirected himself in saying that Gempride had to prove that Ms Bamrah had acted dishonesty for a CPR 44.11 application to succeed.
“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.”
He went on to rule that in certifying the bill of costs as 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 44.11.
HHJ Mitchell’s ruling on the BTE insurance was also wrong, said Hickinbottom LJ: “The judge proceeded on the basis that, in this context, 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.”
He said that, although the court had to proceed on the basis that Ms Bamrah was at no time dishonest, as that was the original finding of Master Leonard, “in my view her conduct was serious even within the parameters of ‘unreasonable and improper’”.
But given the finding that Ms Bamrah was not dishonest, he considered that Master Leonard’s order went too far; it would “do justice” to disallow half of the profit costs in the bill of costs for the damages claim.
Matthew Hoe, director of dispute resolution at Taylor Rose TTKW, the law firm that acted for Gempride, said: “The judgment firmly reasserts the solicitor’s responsibility for the detailed assessment process. Solicitors are accountable for the actions of costs draftsmen.
“It will mark the end of the ‘fast and loose’ lax approach in which everything can be ‘sorted out’ in negotiations. Instead, the bill and the replies to points of dispute will be taken more seriously and must be correct from the start – or risk sanction.”
He said courts would more readily apply CPR 44.11 in future with the benefit of this guidance from the Court of Appeal, meaning that claims for hourly rates or costs generally in breach of the indemnity principle “should now not only be corrected – no more ‘nice try, mate’ – but penalised”.
Mr Hoe continued: “Opaque obfuscation in replies to points of dispute will now be more likely to lead to a sanction than a windfall.
“Findings of dishonesty were not open to the Court of Appeal because of the findings of fact in the lower court stood. But another court in another case may well find similar behaviour dishonest.
“Expect this case to be cited in very many detailed assessments going forward. Many solicitors may now be sweating about what bills and replies they have certified. Greater care at the outset should in the long term lead to fewer assessment hearings and more settlements.”