Quantum Care Limited & Anor v Lalit Modi

Misleading or inaccurate costs material does not automatically amount to misconduct under CPR 44.11. The conduct must be unreasonable or improper, meaning conduct which permits of no reasonable explanation or which professional consensus would regard as improper. Mistake, negligence or an error of judgment, without more, is insufficient. The court must also identify conduct by the party or the party’s legal representative. A foreign lawyer retained directly by the client is not necessarily a legal representative, and his conduct cannot ordinarily be attributed to the client’s solicitors where they neither retained nor subcontracted the work. Even where the threshold is met, any sanction must be discretionary and proportionate.

The claimants were entitled to challenge costs claimed by the defendant in related Chancery Division proceedings. The defendant’s bill included approximately £100,500 for work by an Indian lawyer, Mr Hora, whose fees had not been included in the approved costs budget except for disclosure work.

After the claimants challenged the adequacy and accuracy of later breakdowns of those fees, they alleged that presenting fictitious or unrecoverable items amounted to misconduct under CPR 44.11(1)(b). The issue was whether the defendant or his solicitors had acted unreasonably or improperly in presenting the claim and supporting breakdowns.

1. The misconduct allegation was rejected. The court was not satisfied that the threshold under CPR 44.11(1)(b) had been met.
2. Under Gempride Ltd v Bamrah [2018] EWCA Civ 1367, unreasonable conduct is essentially conduct permitting of no reasonable explanation, while improper conduct bears the hallmark of conduct regarded as improper by professional consensus. Mistake, negligence or an error of judgment, without more, is insufficient. The applicant bears the burden of establishing the threshold, and any sanction must be proportionate.
3. Mr Hora was not a legal representative within rule 2.3. He had been retained directly by the defendant to assist alongside the defendant’s solicitors. There was no evidence that the solicitors had retained or subcontracted work to him. His conduct therefore could not be attributed to either the defendant or his solicitors for the purposes of rule 44.11.
4. The claim for Mr Hora’s fees was optimistic and likely to be largely irrecoverable because he appeared to have acted as an intermediary for the client. That did not itself amount to misconduct. The breakdowns had been reconstructed retrospectively from emails and diary records in circumstances where contemporaneous time recording was not customary in India. The court accepted Mr Hora as an honest and credible witness and found no evidence that the work described in the invoices had not been done.
5. The deficiencies should have been explained, or the court should have been told that a proper breakdown could not be produced. The failure reflected a clash between different billing systems rather than an attempt to mislead. This distinguished Ikin v Shawbrook Bank Ltd. [2023] Costs LR 489 (SCCO), where domestic solicitors claimed for work which had not been done and intended to mislead the court and opponents.
6. There was no basis for concluding that the defendant or his solicitors had acted improperly or unreasonably. The misconduct allegation was dismissed.