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Supreme Court refuses to hear appeal over ‘dishonest’ costs claims

Supreme Court: No point of law of general importance

The Supreme Court has refused permission for a third appeal by a Leeds law firm against a ruling that it submitted ‘dishonest’ costs claims.

It said last week that it had refused permission “because the application does not raise an arguable point of law of general public importance which ought to be considered at this time bearing in mind that the case has already been the subject of judicial decision and reviewed on appeal”.

The Court of Appeal ruling [1] in GSD Law Ltd v Wardman and Ors [2017] EWCA Civ 2144 arose from 14 successful personal injury claims, for which GSD was on the record for nine and acting as agent for the other five.

The paying parties’ insurer, Allianz, responded to the detailed assessment proceedings with allegations of systematic fraud and misconduct, which it said included claims for hourly rates in excess of the retainer rates, claims for senior lawyers’ rates claimed for the work of junior fee-earners, and claims for work that had simply not been done.

According to Allianz, GSD initially sought £225,000 in costs. The formal bills for costs that followed totalled just under £160,000 but were later reduced to £128,000.

District Judge Neaves in Leeds County Court – the regional costs judge – held all the allegations made against GSD proved and that the extent of the conduct and dishonesty of GSD was at the most serious end of the scale. This included submitting a forged conditional fee agreement to the court.

He concluded: “The conduct of the receiving party’s solicitor is sufficiently egregious as to make the only appropriate sanction the disallowance of all costs on the sample files. The receiving party will also pay the costs of the assessment proceedings including the preliminary issues.”

GSD Law’s first appeal was rejected by His Honour Judge Gosnell and then in December by the Court of Appeal.

Both rejected GSD Law’s argument that the district judge was wrong to consider the allegations against the firm under CPR 44.11 – which deals with the court’s powers in relation to misconduct – because it is a summary jurisdiction, and that the procedure adopted by the district judge was unfair.

GSD had appealed to the Supreme Court on the grounds that the district judge did not act appropriately, fairly or within his jurisdiction under CPR r.44.11 in entertaining the allegations that its conduct was dishonest or fraudulent, as opposed to unreasonable or improper, when assessing costs, and that the district judge had not acted fairly in adopting the procedure which he used.