The recent decision in the Court of Appeal in the case of Gempride v Bamrah [2018] EWCA Civ 1367 demonstrates why Bills of Costs and Replies to Points of Dispute must be accurate and carefully checked before they are signed.
Ms Bamrah was admitted as a Solicitor in December 1999. Since 3rd July 2008, she had been in practice as a sole practitioner under the Falcon Legal Solicitors.
Ms Bamrah brought her own claim following a tripping accident in July 2008.
Ms Bamrah had a household insurance policy that included BTE insurance with ARC Legal Assistance Limited (“ARC”). Following her accident, on 22 August 2008, she contacted ARC, and spoke to their panel solicitors, Irwin Mitchell, who sent her a claim form to complete. Irwin Mitchell’s covering letter stated:
“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.”
This reflected the terms of the insurance which provided that cover was restricted to costs incurred with ARC’s prior consent, prior to the issue of proceedings, the costs of an approved panel solicitor only and solicitor’s costs at the rate of £135 plus VAT per hour.
Ms Bamrah did however wish to handle her own claim, through her own firm; and she made that clear when returning the completed claim form to Irwin Mitchell on 13th November 2008. Irwin Mitchell was also advised of her charging rate, and their authority was sought to instruct her own firm. ARC however confirmed that the insurance policy would only cover legal fees incurred by panel Solicitors prior to the issue of proceedings.
On 20th November 2008, determined to have her own choice of solicitor, Ms Bamrah entered into a Conditional Fee Agreement with Falcon Legal, completing the risk assessment, Funding Options Checklist and Conditional Fee Agreement herself.
Within the funding Options Checklist, Ms Bamrah confirmed that another funder was available but they had refused to fund until proceedings were issued and permission to use had been requested but refused.
The firm’s charging rate within the CFA was said to be £232.00 per hour, but this was increased to £280.00 per hour after claims about the Defendant’s unreasonable behaviour and the type of evidence required.
The Conditional Fee Agreement lasted until August 2012, before Ms Bamrah transferred the claim to Stinsons.
The claim for damages eventually settled for £50,000 in April 2013; on the basis that the Defendant would pay her costs.
In June 2013, Ms Bamrah for Falcon Legal, instructed Lawlords, a firm of Costs Consultants and Draftsmen, to draft a bill of costs for the period up to 12 August 2012.
Ms Bamrah advised Lawlords that she had carried out all of the work at the hourly rate of £232.00 pursuant to a CFA dated 10th July 2008. There was no contemporary documentary evidence of any agreement to change the hourly rate, although the computerised time costs system recorded an hourly rate of £232.00 to about March 2012 and £280.00 thereafter.
Lawlords sent the draft bill to Ms Bamrah by email on 8th July 2013, with a covering letter stating that:
“given the conduct of the Defendant and the complexity of this matter in response of the medical evidence and quantum we have applied a rate of £280.00 per hour throughout and a success fee of 100%”.
Ms Bamrah responded to Lawlords on 9th July 2013, with a number of queries, including a question regarding the hourly rate of £280.00 being applied throughout and corrections (including spelling errors). To expedite matters, Ms Bamrah also signed and returned the certificate to the bill, but stated that this was subject to the revised Bill of Costs.
Lawlords replied to Ms Bamrah’s email on 12th July 2013, sending a revised Bill of Costs, but this still included a charging rate of £280.00 throughout.
Ms Bamrah raised further questions regarding missing time, as claimed on the computerised ledger, which was changed accordingly.
On 26th July 2013, Mr Shaw (of Lawlords) sent Stinsons a copy of the CFA, but stated that this should not be disclosed to the Defendant without coming back to them. Stinsons put the two parts of the bill together, and the formal bill of costs was filed and served on 26th July 2013, which covered the period when Stinsons were instructed, totalling £65,208.33. Part 1, covering the period when Falcon Legal were instructed, totalled £135,878.43, of which £50,498.00 plus VAT represented profit costs, with a similar amount representing the 100% success fee.
Although there is no formal requirement for a copy of the CFA to be served with a bill of costs, it was normally provided because the courts had conducted that it should be “normal practice” for a CFA to be disclosed for the purpose of costs proceedings where a success fee was claimed. In any event, CPD rule 32.5 (1) (d) should be complied with.
Within their Points of Dispute, the Defendant raised issues with regard to non-disclosure of the CFA and the lack of provision of the specific information provided for by CPD paragraph 32.5 (1)(d). Further points were also raised regarding alternative methods of funding and the hourly rates claimed.
Although she had instructed Lawlords that they could disclose the CFA, Ms Bamrah knew or ought to have known that the CFA had not in fact been disclosed.
The reply regarding alternative methods of funding stated that Ms Bamrah did not have BTE insurance available at the time she entered into the CFA. Ms Bamrah had also approved that response.
With regard to hourly rates, the Defendant disputed the rates as claimed and offered a composite Grade A Outer London rate of £241.00. Within the Replies, the hourly rate was accepted and subsequently approved by Ms Bamrah.
Following service of the Replies, on 30th September 2013, Stinsons applied for a detailed assessment, which was fixed for 18th November 2013, to be treated as a directions hearing. On 15th November 2013, further Points of Dispute were served, pressing for the success fee to be disclosed because no risk assessment, etc. had been disclosed.
At the hearing before Master Leonard on 18th November 2013, Ms Bamrah was represented by Mr Owen of Lawlords. The outcome of the hearing was that Gempride would not pursue any point on alternative funding; Lawlords agreed to provide a copy of the CFA and supporting documents, which were sent by Stinsons to Gempride that day. The matter directed that there should be a hearing of preliminary issues as to the status of Ms Bamrah and the validity of the CFA, which was fixed for 12th April 2014. He also directed that any witness evidence relied on by Ms Bamrah in relation to those preliminary issues be served by 14th February 2014.
Having received and considered the Funding Options Checklist, Gempride’s Solicitors raised an issue in relation to the response provided regarding alternative methods of funding. They said that they could not see how the Reply “could be said to be anything other than, at best, misleading”. Having seen that the hourly rate claimed in the bill (£280) was higher than the hourly rate in the CFA (£232), they raised the issue of the bill breaching the indemnity principle.
Gempride thereafter issued an application seeking to resile from their concession regarding unavailability of alternative funding and an Order that Ms Bamrah’s claim for costs be dismissed or alternative relief granted under CPR 44.11 on the basis that, in certifying her hourly rate as £280.00 and replying to Points of Dispuite to the effect that she had no alternative funding, her conduct was “unreasonable or improver” within the meaning of rule 44.11.
The Application was heard by Master Leonard on 13th January 2014. Ms Bamrah was represented by Lawlord, Ms Bamrah was not in attendance and no witness evidence had been lodged on her behalf and it appeared that Ms Bamrah had not been told about the hearing.
Master Leonard thus found that Ms Bamrah had certificated a misleading bill of costs and found her conduct to have been “unreasonable or improper” and he disallowed the claimed profit costs in Part 1 of the bill, so far as they exceed the fixed hourly rate recoverable by litigants-in-person.
Ms Bamrah appealed and instructed Radcliffe LeBrassur. Ms Bamrah said that she had not personally known of the hearing before the Master and that Lawlords were responsible for the detailed assessment and any errors that may have occurred.
The appeal was heard by Judge Mitchell, sitting with District Judge Langley as an assessor and took place over thirteen days between May and September 2016. In an Order dated 19th December 2016, Judge Mitchel consequently allowed the appeal and dismissed the Defendant’s application under CPR rule 44.11.
The Defendant then sought to appeal Judge Mitchell’s decision at the Court of Appeal.
At the Court of Appeal, Ms Bamrah was found not to have acted dishonestly, but the court ruled that her conduct in certifying an inflated costs bill was ‘unreasonable and improper’, and she ought to have realised that errors in her bill had not been set out to the defendant. Lord Justice Hickinbottom said Ms Bamrah had shown ‘essential recklessness’ by signing off on the inaccurate bill and her acceptance of the Defendant’s costs offer was ‘incapable of any sensible explanation’.
LJ Hickinbottom did not think it would be appropriate to maintain the Master’s Order, that Ms Bamrah be prevented from recovering her profit costs at any greater rate than the rate appropriate for a litigant-in-person. It was his review that it would do justice to the case if half the profit costs in Part 1 of the bill be disallowed under CPR rule 44.11. Therefore, the Order of Judge Mitchell dated 19 December 2016 was quashed and paragraph 2 of the Order of Master Leonard dated 5th March 2014 by deleting the first sentence and replacing it with “Half of the profit costs that would otherwise be payable in Part 1 of the Bill of Costs shall be disallowed under CPR rule 44.11”.
In my opinion, the Claimant was extremely lucky that the only sanction was to disallow 50% of the profit costs in Part 1 of the bill. Certifying a Bill of Costs as accurate when the hourly rates claimed are in excess of those agreed with the client is a breach of the indemnity principle.
Ms Bamrah has now confirmed that she is readying a challenge to the ruling and has stated that her firm Falcon Legal, should not be liable for the actions and submissions of their costs draftsmen.
