BILL OF £101,677.21 AND THE CLAIMANT ENDS UP WITH £2,515.60: MISCONDUCT DURING THE ASSESSMENT PROCESS HAS SERIOUS CONSEQUENCES
I am grateful to Justin Edwards of BLM solicitors for sending me a copy of the decision of Master Whalan in Jago -v-Whitbread a decision of Master Whalan. A copy of that case is attached here ( 2016.10.05 – Approved Judgment). The case shows the importance of checking bills carefully and being wholly accurate. It also emphasises the importance of the signature on the bill of costs itself.
- The claimant settled a personal injury case for £41,035.75.
- Shortly after settlement the claimant served a bill for £101,677.21.
- That bill included a claim for a success fee with an uplift of 20%, it was signed by a partner.
- The defendant sought disclosure of the conditional fee agreement. This was never forthcoming.
- On commencement of detailed assessment another bill was served, this time of £91,474.41. The claim for a 25% success fee was maintained.
- Points of dispute were served with a number of detailed queries and challenges.
- In response the claimant served another new bill, this time with a total of £56,719. The success fee had now been removed and profit costs and disbursements were reduced.
- The bill included a claim for 3 1/2 hours costs draftsman’s time and an hour checking by the partner.
- In response to the defendant’s comments that a revised bill was needed a further bill was required, reducing the costs to £55,393.19.
THE DEFENDANT’S APPLICATION
The Defendant made an application “for an order pursuant to CPR 44.11(1) and (2) that the court disallow all or part of the claimant’s entitlement to costs on the grounds of her solicitors’ improper and/or unreasonable conduct during or in the context of these detailed assessment proceedings.”
The Master set out the rules and the relevant case law in some detail
17. CPR 44.11(1) and (2) provides as follows:
“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.”
That part of the CPR is supplemented by notes at 44.11(1) onwards on pages 1273 and 1274 of Volume 1 of the 2016 White Book. The provision is supplemented by directions at subsection (11) of Practice Direction 44.
18. In this application, the defendant relies on the provision at 44.11(1)(b), in that it alleges that the claimant’s solicitor’s conduct was improper or unreasonable, or a combination of both.
19. It is common ground that these words “improper” and “unreasonable” have the meaning transposed to them from the identical wording applicable to wasted costs order made pursuant to s.51(6) of the Supreme Court Act 1981. This was the finding of the Court of Appeal in Lahey v. Pirelli Tyres Limited  EWCA Civ. 91, specifically Lord Justice Dyson at para.30 of that judgment.
20. The leading case on wasted costs is Ridehalgh v. Horsefield  3 All ER. At p.861 and 862 of that judgment, Sir Thomas Bingham (as Master of the Rolls) 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.”
It is upon those last two sentences that, in respect of “improper”, the defendant relies specifically.
‘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.”
21. In outlining those definitions, Sir Thomas Bingham had cited with approval the judgment of the House of Lords in Myers v. Elman  4 All ER 484 and I quote the relevant provisions from that case from p.856 and 857 of Ridehalgh as follows:
“The court’s jurisdiction to make a wasted costs order against a solicitor is founded on breach of the duty owed by the solicitor to the court to perform his duty as an officer of the court in promoting within his own sphere the cause of justice.
To show a breach of that duty it is not necessary to establish dishonesty, criminal conduct, personal obliquity or behaviour such as would warrant striking a solicitor off the roll. While mere mistake or error of judgment would not justify an order, misconduct, default or even negligence is enough if the negligence is serious or gross.
The jurisdiction is compensatory and not merely punitive.”
22. In brief summary, therefore, the court has a discretion to disallow all or part of a bill where the receiving party has either breached the rules or practice direction or, as is alleged in this particular case, engaged in conduct that can be said to be improper and/or unreasonable. Central to this jurisdiction is the principle that the solicitor’s conduct constitutes a breach of his or her obligations to the court as an Officer of the Court. Improper and unreasonable are defined carefully so that, while dishonesty need not be shown, a mere mistake is not enough. However, as the court has outlined, carelessness or indeed negligence can qualify if it is classified as “gross” or “significant”. “
APPLYING THOSE PRINCIPLES TO THIS CASE
The Master largely accepted the defendant’s arguments.
“The defendant, in summary, submits that the claimant’s solicitors have been guilty of filing and relying on bills that are both inaccurate and/or mis-certified on a scale that is significant, repeated and in circumstances that are either inexplicable or unexplained. The evidence filed by the claimant is demonstrably inadequate insofar as it constitutes a statement of Mr. Davison, a trainee legal executive at the firm, while Ms. Nancy Ballard, the senior partner who on each occasion signed and certified the statements of bills, has not filed any evidence. In any event, the evidence of Mr. Davison does not constitute either an explanation or certainly a reasonable explanation or justification for the solicitors’ repeated conduct”
The Master found that:
- The claimant had repeatedly filed and served bills that were inaccurate and mis-certified.
- There was initially a claim for a 25% success fee to which the claimant was not entitled.
- Two bills had claimed a success fee to which the claimant was not entitled.
- The initial bills were characterised by inaccuracy and mis-certification. The final bill was undermined in the same way.
- The explanations put forward by the claimant were inadequate.
THE MASTER’S CONCLUSION
“33.It must follow from these findings, in my view, that the claimant’s solicitors have been guilty of conduct that can be described properly as both improper and/or unreasonable. At this point reference is made to the judgment of the Court of Appeal in Bailey v. IBC Vehicles Limited  All ER D 113 or 3 All ER 570, where Lord Justice Henry at p.5 and 6 of the bill made specific reference to the task and the solemnity of the task of a solicitor checking and signing a bill of costs. Lord Justice Henry said this:
“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…The signature of 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.”
A little later on p.6, he says this:
“And the other side of a presumption of trust afforded to the signature of an officer of the Court must be that breach of that trust should be treated as a most serious disciplinary offence.”
THE APPROPRIATE SANCTION
The Master considered the appropriate penalty in some detail. He held that:
- The appropriate sanction was to reduce the claimant’s entitled to costs by 50%.
- Certain individual items were also deducted.
- The entire time for drafting and checking the bill was deducted in full.
AND THE RESULT…
This is succinctly described by Justin
At the hearing on 5 October 2016, the Costs Master found in favour of the defendant in respect of an application for misconduct and disallowed 50% of the claimant’s assessed costs. At a further hearing on 29 March 2017, the claimant’s costs were agreed at £18,000 net of the 50% reduction.
The defendant’s costs of the application and assessment were assessed at £13,831.90. Prior to the first hearing the claimant also paid £452.50 in respect of the defendant’s application for the claimant to request a detailed assessment hearing. The final consent order also re-iterated that the claimant was to pay £1,200 in respect of costs of an application made during the main claim.
The net amount recovered by the claimant for costs in respect of this matter was therefore just £2,515.60.
- Misconduct on assessment leads to reduction of costs by 50%: Kerins -v- Heart of England NHS Foundation Trust