Factual and Procedural Background
The First Respondent ("Plaintiff") was admitted as a solicitor in December 1999 and has practiced as a sole practitioner under the style Company A since July 2008. Company A acted for Plaintiff in a successful personal injury claim against the Appellant ("Defendant"), who was ordered to pay Plaintiff's costs. This appeal concerns an order allowing an appeal against a previous order disallowing Company A's profit costs above the litigant-in-person rate. The disallowance was based on Plaintiff certifying a bill of costs with an hourly rate exceeding that which she was contractually bound to pay and providing an allegedly untrue or misleading answer regarding the availability of before the event legal expenses insurance ("BTE insurance").
The underlying personal injury claim arose from Plaintiff's tripping incident at premises owned by Defendant's group. Liability was admitted by Defendant's insurers, but disputes arose over quantum. The claim was issued in 2011 and settled in 2013 with Defendant making a Part 36 offer accepted by Plaintiff, including payment of costs.
Subsequently, costs proceedings ensued involving Company A and a firm of costs consultants and draftsmen ("Costs Firm"), who were not authorised to conduct litigation. Plaintiff instructed Costs Firm to draft a bill of costs for the period Company A acted. Plaintiff certified the bill, which included an hourly rate higher than that contractually agreed and made representations denying availability of BTE insurance, which were challenged by Defendant.
The Master allowed Defendant's application to disallow profit costs above the litigant-in-person rate, finding Plaintiff's conduct "unreasonable or improper" under CPR rule 44.11. Plaintiff appealed, and the appeal was heard by Judge [Last Name] (sitting with an assessor), who allowed the appeal, finding no dishonesty or improper conduct by Plaintiff. Defendant sought permission to appeal to a higher court, which was granted on selected grounds.
Legal Issues Presented
- Whether Plaintiff was liable for the conduct of Costs Firm under principles of agency despite Costs Firm acting contrary to Plaintiff's instructions.
- Whether Plaintiff's conduct in certifying a bill of costs with an hourly rate exceeding the contractual rate constituted "unreasonable or improper" conduct under CPR rule 44.11.
- Whether Plaintiff misrepresented the availability of BTE insurance in response to Points of Dispute.
- Whether the judge erred in requiring proof of dishonesty or intention to deceive to establish "unreasonable or improper" conduct.
- Whether Plaintiff was entitled to recover costs of personal attendance at the appeal hearings.
- Whether the costs order below should be varied consequential to the outcome of the substantive appeal.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Bailey v IBC Vehicles Limited [1998] 3 All ER 570 |
Solicitors as officers of the court must not mislead or allow the court to be misled; certification of bill of costs is a certificate of accuracy and compliance with indemnity principle. |
The court relied on this to emphasize the importance of the solicitor's certificate and the presumption of trust, holding recklessness in certification as serious misconduct. |
| Lahey v Pirelli Tyres Limited [2007] EWCA Civ 91 |
Interpretation of "unreasonable or improper" conduct in CPR rule 44.11 aligned with wasted costs provisions. |
The court adopted a narrow construction of "unreasonable or improper" conduct, looking to wasted costs authorities for guidance. |
| Ridehalgh v Horsefield [1994] Ch 205 |
Defines "improper", "unreasonable" and "negligent" conduct for wasted costs orders; emphasizes solicitor's duty to the court. |
The court summarized the scope of conduct warranting sanctions and confirmed solicitor's continuing responsibility for delegated work. |
| Patel v Air India Limited [2010] EWCA Civ 443 |
Reinforces that wasted costs jurisdiction is founded on breach of duty to the court, not necessarily dishonesty. |
Supported the principle that dishonesty is not a necessary element of unreasonable or improper conduct. |
| Medcalf v Weatherill [2002] UKHL 27 |
Endorsed Ridehalgh's definitions and scope of wasted costs orders. |
Confirmed the established understanding of "improper, unreasonable or negligent" conduct. |
| Crane v Canons Leisure Centre [2007] EWCA Civ 1352 |
Application of agency principles to costs draftsmen and solicitors; costs draftsmen's work considered solicitors' work for which solicitors remain responsible. |
The court held solicitors liable for acts of costs draftsmen as their agents, maintaining responsibility and control. |
| Watt v Thomas [1947] AC 484 |
General principle on findings of fact and appellate review. |
Referenced in submissions regarding appellate court's reluctance to interfere with findings involving evaluation of primary facts. |
| FAGE UK Limited v Chobani UK Limited [2014] EWCA Civ 5 |
Guidance on appellate interference with factual findings. |
Referenced in submissions on the nature of the challenge to findings of fact by the judge. |
| JSC BTA Bank v Ablyazov [2018] EWCA Civ 1176 |
Reluctance of appellate courts to interfere with findings of fact involving evaluation of primary facts. |
Referenced in submissions regarding the appellate standard of review. |
| Clydesdale Bank plc v Workman [2016] EWCA Civ 73 |
Referenced in relation to the requirement of proof in misconduct allegations. |
Mentioned in the context of dishonesty and improper conduct but not considered highly relevant. |
| R (Goring-on-Thames Parish Council) v South Oxfordshire District Council [2018] EWCA Civ 860 |
Jurisdiction of appellate courts to revisit costs orders. |
Referenced in submissions regarding the court's jurisdiction to vary costs orders below. |
| Ivey v Genting Casinos (UK) Limited [2017] UKSC 67 |
Defines the legal test for dishonesty. |
The judge's decision predated this case; the court noted the judge did not consider dishonesty under this test but found no dishonesty regardless. |
| Turner Page Music v Torres Design Associates (1998) |
Summary nature of wasted costs procedure may be inappropriate for dealing with allegations of dishonesty. |
Referenced to explain procedural limitations in dealing with dishonesty allegations. |
| Regent Leisuretime Limited v Skerrett [2006] EWCA Civ 1032 |
Procedural fairness in wasted costs applications. |
Referenced regarding procedural requirements applicable to CPR rule 44.11 applications. |
| Hollins v Russell [2003] EWCA Civ 718 |
Practice regarding disclosure of conditional fee agreements in costs proceedings. |
Referenced to explain the usual practice of disclosing CFAs in costs proceedings. |
Court's Reasoning and Analysis
The court analyzed the statutory and regulatory framework governing authorised persons conducting litigation, emphasizing their overriding duty to the court and the regulatory objectives under the Legal Services Act 2007. It underscored the importance of the solicitor's certificate of accuracy on a bill of costs as a fundamental element of trust and the indemnity principle.
The court reviewed the scope of CPR rule 44.11, clarifying that it is a supervisory jurisdiction intended to sanction unreasonable or improper conduct by a party or legal representative, without requiring proof of loss or dishonesty. It examined the definitions of "unreasonable" and "improper" conduct as established in Ridehalgh, noting that negligence alone is insufficient and that conduct may be improper without being dishonest.
Applying these principles to the facts, the court found that Plaintiff was liable for the conduct of Costs Firm under agency principles, as solicitors remain responsible for work they subcontract, especially to unauthorised persons. The court identified that the judge below erred in absolving Plaintiff of responsibility for Costs Firm's conduct due to their acting contrary to instructions.
Regarding the certification of the bill of costs, the court found that Plaintiff certified a bill with an hourly rate exceeding her contractual obligation, relying on Costs Firm's advice. Although there was no dishonesty, Plaintiff's conduct was at least reckless and amounted to "unreasonable or improper" conduct under CPR rule 44.11. The acceptance of an offer from Defendant based on the inflated rate further demonstrated this impropriety.
On the issue of BTE insurance availability, the court rejected the judge's finding that Plaintiff's denial of availability was accurate. It held that, although Plaintiff did not intend to mislead, the representation was misleading and improper, as BTE insurance was in fact available but not used due to Plaintiff's choice.
The court also found that Plaintiff was not entitled to recover costs of personal attendance at the appeal hearings, as she attended as a party represented by solicitors and counsel, and such costs are not recoverable.
Finally, the court addressed the costs order below, confirming its jurisdiction to vary or revisit costs orders consequential to the outcome of the substantive appeal, allowing Defendant to seek a consequential variation.
The court considered procedural fairness, noting that although the Master gave Plaintiff an opportunity to file evidence, procedural irregularities occurred, yet the Master was entitled to proceed given Plaintiff's failure to provide evidence or seek adjournment.
Overall, the court concluded that Plaintiff's conduct, though not dishonest, was serious and fell within the scope of "unreasonable or improper" conduct warranting a sanction under CPR rule 44.11.
Holding and Implications
DISPOSED OF
The court allowed the appeal, quashed the previous order dismissing Defendant's CPR rule 44.11 application, and varied the earlier order to disallow half of the profit costs in Part 1 of the bill of costs. Plaintiff was found liable for the conduct of Costs Firm under agency principles, and her certification of the bill with an inflated hourly rate and misleading representation about BTE insurance constituted unreasonable or improper conduct.
The costs order was varied to exclude Plaintiff's recovery of costs for personal attendance at the appeal hearings. Defendant was permitted to seek consequential variation of the costs order below.
The decision directly affects the parties by reducing Plaintiff's recoverable costs and clarifying solicitor responsibility for subcontracted work. No new precedent was established beyond reaffirming existing principles on solicitor duties, agency, and CPR rule 44.11 application.