Client Alert: Pirta v Shahi - Misconduct of Billing

Finding of misconduct as costs of over £453,000 disallowed.

Mr Sohan Pirta v Mr Padam Bahadur Shahi - Birmingham County Court

Following a two day detailed assessment hearing the court disallowed the claimant’s costs as a result of the legal representative’s serious misconduct and providing false certifications/declarations.

The judgment highlights the developing trend of courts being willing to disallow some or all of the claim for costs where a solicitor has mis-certified the bill as to accuracy and breached their duty to the court.

The case

Mr Pirta sustained a serious head injury whilst travelling as a passenger in a motor vehicle. A claim for damages was pursued and a compromise was reached including agreement for the defendant to pay the claimant’s costs to be assessed in default of agreement.

The claimant served a bill of costs in the sum of £454,471.00. The defendant raised objections in points of dispute putting the claimant to proof the retainer was compliant with the statutory requirements. The claimant’s representatives dismissed the objections in replies, relying upon the rebuttal presumption afforded by the signature of a solicitor on the certificate to the bill that the costs claimed did not breach the indemnity principle.

The defendant made further enquiries of the claimant’s representative and less than seven days before the start of the detailed assessment hearing, the claimant’s representative served an amended bill of costs totalling £453,454.00 together with amended replies to the points of dispute.

The amended bill contained different hourly rates to those appearing in the original bill. The amended replies continued to rely on the signature to the bill of costs as a reason why the court should not embark on inquiry into the retainer.

Upon the first day of the assessment, the court echoed the concerns raised by the defendant over the different hourly rates claimed in the two bills and those claimed in a statement of costs in the substantive proceedings. An hourly rate of £198 had been claimed in the bill of costs when the retainers showed that £168 per hour was chargeable for the conducting solicitor. In a statement of costs, an hourly rate of £144 was claimed when the retainer showed that £105 per hour was chargeable.

In addition to the concerns over the retainers relied upon, the court also accepted the bills did not reflect the fact work had been undertaken by different firms of solicitors on behalf of the claimant.

As a result, the court directed that the claimant’s conducting solicitor should attend court the following day to explain the retainer position governing the claim for costs.

During the course of giving live evidence the conducting solicitor provided previously undisclosed evidence to the court concerning the retainers.

Under cross examination, it was put to the conducting solicitor that he had claimed higher hourly rates for himself and a paralegal in a deliberate ploy to obtain more costs than he was entitled. He denied that it was a deliberate ploy and claimed that he had made an honest mistake.

The defendant requested the court disallow the entire claim for costs under CPR 44.11 on the basis that there had been (a) non-compliance with the rules; and that (b) the conduct had been unreasonable or improper.

Reserved judgment

In a damning judgment, the court found there had been three separate breaches of the rules and practice directions under CPR 44.11(a).

The original and the amended bill of costs had been mis-certified as to the indemnity principle and that amounted to “improper” conduct under CPR 44.11(b).

Further, the court found that the degree of criticism levelled at the solicitor’s conduct in this case, and without any reasonable explanation, meant that it fell clearly within the meaning of unreasonableness under CPR 44.11(b).

The court said of the conducting solicitor of Serious Accident Lawyers Ltd:

“Mr Abbas was not an impressive witness and changed his evidence as he was going along. He appeared rattled as the realisation of the implications of what was being put to him was sinking in and he appeared very much on the defensive.”

The court found that, “…he was, at the very least, extremely lax in the way that he administered the firm in terms of matters relating to time charging.”

The court went on to express concern as to the approach that he took to certifying the bills of costs:

“Most worrying of all, from the court’s point of view, is the rather cavalier attitude he had in respect of signing certifications on bills and statements of costs. It was most worrying to hear that he would not normally check the hourly rates despite these being such an important element of a costs claim, the effects of misstatement potentially being very significant…The certifications are put there for a purpose and are very important and solicitors should not put their signatures to such lightly.”

The court stopped short of finding that he deliberately claimed higher hourly rates, with the intention of securing a higher costs payment, finding on balance that:

“Mr Abbas remained adamant throughout cross–examination that he was mistaken but had acted honestly and in that regard he did appear genuine.”

Implications

It cannot be stressed enough how important it is for solicitors to take very seriously their duty to the court in certifying bills and statements of costs, knowing that others rely so heavily upon it.

Apart from the hourly rates and the grade of fee earner being misstated, the true funding position was masked resulting in a significant tactical advantage to the claimant in this case had it remained undetected.

Such a lack of transparency cannot be condoned by the courts and Keoghs will continue to investigate and challenge exaggerated costs behaviour wherever it arises.