Gempride Ltd v Bamrah & Anor [2018] EWCA Civ 1367

“As officers of the court, solicitors are trusted not to mislead or to allow the court to be misled. This elementary principle applies to the submission of a bill of costs”

“Conduct which is unreasonable or improper includes steps which are calculated to prevent or inhibit the court from furthering the overriding objective.”

“… any costs incurred by a party— (a) as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative; or (b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay.”

“ ‘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. ‘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.”

“The term ‘negligent’ was the most controversial of the three. It was argued that the 1990 Act, in this context as in others, used ‘negligent’ as a term of art involving the well-known ingredients of duty, breach, causation and damage. Therefore, it was said, conduct cannot be regarded as negligent unless it involves an actionable breach of the legal representative's duty to his own client, to whom alone a duty is owed. We reject this approach. (1) As already noted, the predecessor of the present Order 62 rule 11 made reference to ‘reasonable competence’. That expression does not invoke technical concepts of the law of negligence. It seems to us inconceivable that by changing the language Parliament intended to make it harder, rather than easier, for courts to make orders. (2) Since the applicant’s right to a wasted costs order against a legal representative depends on showing that the latter is in breach of his duty to the court it makes no sense to superimpose a requirement under this head (but not in the case of impropriety or unreasonableness) that he is also in breach of his duty to his client. We cannot regard this as, in practical terms, a very live issue, since it requires some ingenuity to postulate a situation in which a legal representative causes the other side to incur unnecessary costs without at the same time running up unnecessary costs for his own side and so breaching the ordinary duty owed by a legal representative to his client. But for whatever importance it may have, we are clear that ‘negligent’ should be understood in an untechnical way to denote failure to act with the competence reasonably to be expected of ordinary members of the profession. In adopting an untechnical approach to the meaning of negligence in this context, we would however wish firmly to discountenance any suggestion that an applicant for a wasted costs order under this head need prove anything less than he would have to prove in an action for negligence : ‘advice, acts or omissions in the course of their professional work which no member of the profession who was reasonably well-informed and competent would have given or done or omitted to do’; an error ‘such as no reasonably well-informed and competent member of that profession could have made’ (Saif Ali v Sydney Mitchell & Co, at pages 218D, 220D, per Lord Diplock).”

“We were invited to give the three adjectives (improper, unreasonable and negligent) specific, self-contained meanings, so as to avoid overlap between the three. We do not read these very familiar expressions in that way. Conduct which is unreasonable may also be improper, and conduct which is negligent will very frequently be (if it is not by definition) unreasonable. We do not think any sharp differentiation between these expressions is useful or necessary or intended.”

“We are required to tell you at this stage of your claim you are only covered for legal fees incurred by this firm… If you have, or are about to instruct another firm of solicitors… to run your case, their fees will not be covered under this insurance.”

“… [S]ubject to our final assessment of the claim and agreement with you as to costs, we will be able to indemnify costs that you and the third party incur after the court proceedings are issued…. Until such time, Underwriters are not liable for any such costs incurred in this case.”

“We will notify you of any change in the rate in writing”

“… [P]lease note that whilst we are still pursuing our client’s legal expense insurers for appropriate funding of the proceedings, however, in the meantime we continue to conduct this claim under a [CFA] that provides for success fee. A Notice of Funding will be forwarded shortly.”

“Unfortunately, [Counsel] went beyond our instructions for case management directions that he was instructed to obtain at the hearing on 22 June 2012. It appears that Counsel unilaterally agreed an order for extensive disclosure of documents that were either not relevant to liability or causation and were clearly disproportionate. Liability had been admitted. Although causation had been partly disputed we feel that the best way to proceed would have been for the experts of like discipline to hold discussions and prepare a joint statement for the court, rather than subjecting the Claimant to unreasonable search of historical records. Given the defendant’s unreasonable behaviour and the type of evidence they required the hourly rate for this claim was increased to £280.00 per hour. Please note that Ms Bamrah is a sole practitioner and she is also the Claimant in this matter. All work was carried out [by] Ms Bamrah at the hourly rate of £232.00 pursuant to a [CFA] date 10/07/2008. Accordingly please recover all costs incurred in this matter including the maximum success fee.”

“We have ensured whilst preparing the bill that your profit costs have been maximised in order to reflect the level of work undertaken and the defendant’s poor conduct.”

“Given the conduct of the defendant and the complexity of this matter in respect of the medical evidence and quantum we have applied a rate of £280.00 per hour throughout and a success fee of 100%”

“The charging rate was not applied until much later as the matter became more complex due to the historical fishing of the documents, by the defendant”

“It is quite clear from the tenor of this email, and indeed other documents that Ms Bamrah was concerned to ensure she was not accused of charging a higher rate than that permitted by the CFA until the date the hourly rate was increased, which she identifies as 22 June 2012. By virtue of the fact that this email was sent we are inclined to the view she did speak to Mr Shaw on or about 9 July 2013 about the rates to be billed, because it was something which concerned her and offended the indemnity principle, of which she was all too well aware. However we entirely agree with Mr Singh’s submission that even if the telephone call was not made, it does not affect her position.”

“To expedite matters I have attached the signed certificate but this is subject to the revised Bill of Costs as I have the following Queries…”

“I certify that this bill is both accurate and complete and… in respect of Part 1 of the bill the costs claimed herein do not exceed the costs which the receiving party is required to pay me/my firm.”

“… if the conditional fee agreement is not disclosed (and the Court of Appeal has indicated that it should be the usual practice for a conditional fee agreement, redacted where appropriate, to be disclosed for the purpose of costs proceedings in which a success fee is claimed), a statement setting out the following information contained in the conditional fee agreement so as to enable the paying party and the court to determine the level of risk undertaken by the solicitor – (i) the definition of ‘win’ and, if applicable, ‘lose’; (ii) details of the receiving party’s liability to pay costs if that party wins or loses; and (iii) details of the receiving party’s liability to pay costs if that party fails to obtain a judgment more advantageous than a Part 36 offer.”

“Time spent considering voluminous files comprehensively, preparing draft Bill in respect of Falcon Legal Solicitor’s costs, checking and finalising thereafter. Total time spent – 26 hours at £161.00 per hour. That was the time spent by Lawlords on drawing the bill of costs, included as an item of profit costs and thus subject to the 100% success fee uplift. Item 111 £420 plus VAT was for: “Time engaged checking Part 1 of the Bill of Costs, in particular the time spent and disbursements and thereafter signing Certificate of Accuracy. Total time spent – 1 hour 30 minutes.”

“In accordance with CPD 32.5(1)(d), the Claimant provided a statement of information setting out the definition of ‘win’ and the Part 36 provision. Compliance has therefore been achieved.”

“… [T]he receiving party is asked what other methods of financing costs were available other than those involving additional liabilities [i.e. success fee and ATE insurance premium] and why were they not used…. Costs arising from an unreasonable choice should be disallowed.”

“Mrs Bamrah was fully aware of her obligation to make enquiries into the availability of any pre-existing legal expenses cover and all other methods of funding. BTE legal expenses cover was not available therefore the appropriate method of funding in this case was put in place, a CFA…”

“The claimed hourly rates are unreasonably high. They are enhanced rates. The claimant has not produced material to establish that: (a) the claimant’s solicitor is a ‘specialist’; (b) the facts and circumstances warranted the instruction of a specialist; and (c) the overheads of the claimant’s solicitors exceed the local average…. In addition, the claimant is a Grade A solicitor, and dealt with the matter herself, until [Stinsons] took over conduct. In default, and because doubt arises on this standard basis assessment, the paying party contends guideline rates should be allowed. A composite Grade A Outer London rate of £241.00 is offered.”

“The Claimant will accept the rate offered.”

“You will see from the points that the Defendants have attacked various aspects of the costs claimed. The hourly rate of £280 has been objected to and £241ph offered which in the replies I have accepted as I don’t believe you will obtain a higher rate on assessment. If you object I can always amend the replies.”

“[Ms Bamrah] took the view that the difficult work undertaken merited a higher rate and decided retrospectively to revise [Falcon Legal’s] hourly rates upwards to £280 for the entire period covered by part 1 of the bill… … [She] had taken the view that the hourly rates agreed between her, as the client, and [Falcon Legal] could be adjusted at will. If that were the case there would be no contractual agreement binding upon [Ms Bamrah] to pay any particular hourly rate, and so no proper basis for the certification of an hourly rate of £280.”

“49. It is not open to [Ms Bamrah] to record for her own purposes, as she did, that BTE funding was available to her but to tell the paying party, as she did, that it was not. Nor can she say that because it was not available to her on terms acceptable to her, it was not available at all. 50. I am reminded by Ms Scott for [Gempride] that there is no process of disclosure in detailed assessment proceedings. A paying party cannot expect to inspect as of right a receiving party’s [CFA] or his records of enquiries as to alternative sources of funding. Unless there is good reason to conclude that replies such as those served by the [receiving party] may be inaccurate the paying party will be expected by the court to accept them. 51. The clear and obvious purpose of an enquiry such as that at general point 3 is (a) to allow a paying party to ascertain whether a receiving party claiming the cost of a CFA and an ATE premium made a choice not to use an alternative, less expensive method of funding and (b) to take a position on whether that choice was reasonable. The equally clear statement in [Ms Bamrah’s] reply to general point 3, to the effect that BTE cover was unavailable, was not true and no amount of sophistry can make it true.”

“If [Ms Bamrah’s] conduct admits of a reasonable explanation, in the absence of some evidence from her I have no idea what it might be.”

“Generally, in the event the Appellant succeeds in reversing the court’s findings, the court will be invited to reverse… the costs order to ensure they follow the event of the outcome of the appeal.”

“Granted on grounds 1, 3, 7, 8 and 10 only. Reasons 1. The appellant has a real prospect of success on those five grounds and they raise important points of principle. 2. The judge’s findings of fact, in particular his rejection of dishonesty, must stand. The judge was entitled to make those findings and the Court of Appeal will not go behind them.”

“Where a person, by words or conduct, represents or permits it to be represented that another person has authority to act on his behalf, he is bound by the acts of that other person with respect to anyone dealing with him as an agent on the faith of any such representation, to the same extent as if such other person had the authority that he was represented to have, even though he had no such actual authority. … Under this doctrine a principal may be bound by the acts of an agent which he has not authorised, and has even forbidden…”

“The improper conduct alleged in this case amounted to an allegation by Gempride of dishonesty i.e. Ms Bamrah inflated her hourly rate to a rate to which she knew she was not entitled, thus gaining a substantial financial advantage. This is the sort of conduct Lord Bingham had in mind in Ridehalgh v Horsefield… when he said ‘… conduct which would ordinarily be held to justify… striking off, suspension from practice, or other serious professional conduct…”

“…. It is the view of both of us that the letter [of instruction] was saying quite clearly that [Ms Bamrah] charged £232 per hour pursuant to the CFA and as of 22 June 2012 she had increased her rate. … … Ms Bamrah had made it plain in her letter of instruction that she was acting under a CFA with a recorded hourly rate of £232. Why on earth were Lawlords concluding £280 was an appropriate rate when the CFA said otherwise?”

“It is quite clear from the tenor of this email, and indeed other documents that Ms Bamrah was concerned to ensure she was not accused of charging a higher rate than that permitted by the CFA until the date the hourly rate was increased, which she identifies as 22 June 2012. By virtue of the fact this email was sent we are inclined to the view she did speak to Mr Shaw on or about 9 July 2013 about the rates being billed, because it was something which concerned her and offended the indemnity principle, of which she was all too well aware. However, we entirely agree with Mr Singh’s submission that even if the telephone call was not made, it does not affect the position.”

“BTE Insurance Allegation: Error of fact: Contrary to the evidence and the facts, the learned judge erred in finding that BTE insurance had not been available to [Ms Bamrah]”

“BTE Insurance Allegation: Error of law and/or fact: In the premises the learned judge erred in finding that there had been no misrepresentation as to the BTE position, and (in the circumstances) in failing to find misconduct.”

“Half of the profit costs that would otherwise be payable in Part 1 of the Claimant’s bill of costs shall be disallowed under CPR rule 44.11”