Alpha Rocks Solicitors v Alade

An entire claim should be struck out at an early stage for abusive or fraudulent conduct only in very exceptional circumstances. The misconduct must be clearly established, so serious that continued prosecution would affront the court, and such that the claimant has forfeited the right to adjudication. Strike-out must also be just and proportionate.

The court should consider whether the impugned part alone can be struck out and whether a fair trial remains possible. It should not resolve stark conflicts of witness evidence or findings of fraud through forensic deduction at an interlocutory hearing without disclosure and cross-examination. Available alternatives include summary judgment, costs and interest penalties, contempt proceedings and criminal prosecution.

A firm of solicitors claimed fees from a former client for two separate pieces of litigation. On the client's application under Part 3.4(2)(b) of the Civil Procedure Rules 1998 and the court's inherent jurisdiction, a deputy High Court judge found that one bill had been deliberately exaggerated and that another claim relied on fabricated documents and a knowingly inaccurate bill.

The judge struck out both fee claims in their entirety and imposed an indemnity costs order. He reached the material findings from written evidence and documents without disclosure, oral evidence or cross-examination.

The solicitors appealed. The central issue was whether the alleged misconduct had been established sufficiently clearly, and was sufficiently serious, to justify the exceptional and draconian remedy of striking out the entire claims at an interlocutory stage.

1. Appeal allowed unanimously. The deputy judge had conducted an inappropriate mini-trial of fraud without hearing witnesses. He resolved direct conflicts of evidence, found a solicitor to have lied and rejected other witnesses as untruthful through forensic deductions from documents. Although fraud can exceptionally be established without oral evidence, the conflicts in this case required disclosure and cross-examination.

2. Under Part 3.4(2)(b) of the Civil Procedure Rules 1998, an early-stage strike-out for abusive or fraudulent conduct is available only where the claimant's misconduct in the proceedings is so serious that continued prosecution would affront the court and the claimant has forfeited the right to adjudication. The remedy must be just and proportionate and is appropriate only in very exceptional circumstances. Masood v Zahoor [2009] EWCA Civ 650 and Summers v Fairclough Homes [2012] 1 WLR 2004 applied.

3. The entirety of a claim should not be struck out merely because part appears to have been improperly or fraudulently exaggerated. The court should exercise particular caution at an interlocutory stage because the remedy extinguishes substantive rights and the evidence may appear different at trial. The abuse must be clearly established, and the court should focus on whether a fair trial and just disposal remain possible.

4. The deputy judge did not adequately consider proportionality, whether the circumstances were truly exceptional, or why a fair trial or detailed assessment would be impossible. The disputed entries represented only part of the bills, and the conflicting accounts could be determined through the ordinary trial process. The strike-out was therefore too blunt an instrument.

5. Other responses remained available, including partial strike-out, summary judgment, costs and interest sanctions, contempt proceedings and criminal prosecution. The strike-out application was not itself abusive, but its allegations could not fairly be decided by the procedure adopted.

6. The claims and bills were restored. The solicitors were to have an opportunity to revise the bills, after which a Chancery judge would give directions concerning trial or detailed assessment. The costs order below was set aside, with costs submissions to follow.

1. Court of Appeal (Civil Division): The appeal was allowed unanimously. The strike-out and the costs order below were set aside, and the case was remitted to a Chancery judge for directions.

2. High Court, Chancery Division: Mr Kevin Prosser QC, sitting as a deputy judge, struck out the claims for the Rufus and Catherine fees under Part 3.4(2)(b) of the Civil Procedure Rules 1998 and the inherent jurisdiction. He ordered the solicitors to pay 75% of the client's costs on the indemnity basis.