Monty: Treated solicitors’ evidence with caution
A law firm has won its claim over unpaid fees, even though the judge found that the client-care letters presented to the court were “retrospectively created” to support its case.
His Honour Judge Monty KC also raised a series of other concerns about the way West London firm SZ Solicitors conducted itself.
However, he rejected the arguments of married couple Aswant Singh Bharj and Amrik Kaur Bharj that they had agreed fixed fees and already paid them to SZ.
There were eight bills in total under scrutiny but the ruling focused on by far the largest, which concerned litigation over the ownership and occupation of a Sikh temple, the Gurdwara Miripiri Sahib in Southall (called the ‘3CL claim’), in which Mr and Mrs Bharj were the defendants.
The judge in Central London County Court was not convinced by the evidence provided by SZ partners Raghwinder Singh Siddhu and Mohammad Saeed Zafar.
“It was put to Mr Siddhu that it was not an infrequent occurrence at the firm to prepare client care letters after the event, sometimes in the face of an up-coming SRA visit, but he denied that was the case,” he said.
“In cross-examination, his answers about the original failure to disclose the firm’s ledgers were unsatisfactory (for example, it was put to him that correspondence, which had been disclosed, did not mean ledgers, and his response was, ‘It may be’, and he was unable to say why time sheets were not available, nor why there was no record of any interim bills or letters chasing fees which Mr Siddhu said were always paid late).
“I have concluded that for these reasons, I should treat Mr Siddhu’s evidence with some caution.
He held similarly in relation to Mr Zafar’s evidence, of which there were “a number of unsatisfactory aspects”.
For example, Mr Zafar said he made attendance notes, “but none have been produced, and he then said that there was no need to have many of them as Mr Bharj attended the office so frequently. He then (in my view unfairly) blamed Ms Bharj for not having produced attendance notes” – Kiran Bharj was the couple’s daughter, whom SZ took on as a trainee solicitor as her father’s request and largely worked on the 3CL case.
“Of particular concern”, the judge said, was the way in which Mr Zafar dealt with receipts from Mr Bharj.
“It is common ground in this case that Mr Bharj made payments to SZ, some by cheque and some by cash. There is a ledger, which… is not a wholly complete record of the transactions in the 3CL claim.
“The ledger records some £52,000 having been received from Mr Bharj, but there is not a single document produced by way of receipt.”
Mr Bharj said he had paid around £150,000 in total but did not have clear documentary proof either.
HHJ Monty said: “I agree with [counsel for the defendants] that it is incumbent upon the solicitors to keep proper records and evidence of receipts, and to keep proper attendance notes.”
“Of even more concern” was the fact that a large number of payments were made from an account which was set up by order in the 3CL claim to use for payments in connection with the expenses of the Gurdwara.
The order required Mr Bharj to authorise any payments and there was a dispute over whether this was done.
In any event, no payments should have been made to defray costs or disbursements incurred by Mr and Mrs Bharj as defendants to the 3CL claim.
HHJ Monty said: “Yet that is what happened, and Mr Zafar inexplicably allowed it to happen.
“Further, in relation to payments out from the Gurdwara account, there is no proper record of the payees, and in cross-examination Mr Zafar was left guessing as to their identities when taken to some of the payments out.”
Mr Zafar also said the firm had sent Mr and Mrs Bharj a number of invoices, “but he was unable to produce any of these either; he then said that he had not done so”.
Mr Zafar’s evidence was “also rather poor about the process by which the costs bill was prepared”.
Back in February 2015, HHJ Monty, sitting as a recorder, gave judgment broadly in favour of Mr and Mrs Bharj in the 3CL claim. He ordered the claimants to pay 70% of their costs and a payment on account of £65,000.
A bill of £335,000 was certified by Mr Zafar but the costs were eventually agreed at £180,000. The claim before the court was for £223,250 that SZ said was unpaid.
HHJ Monty rejected SZ’s case that its work was done pursuant to a client-care letter from June 2012. “I accept Mr Bharj’s evidence that there was no client care letter. I thought his evidence about this was clear and believable, whereas Mr Zafar’s was unsatisfactory…
“In my view, and I find as a fact, the client care letter was retrospectively created in order to support the present claim.”
But Mr Bharj was wrong about there having been a fixed fee agreed for each part of the litigation.
“In my judgment, on the evidence, what happened was that from time to time Mr Zafar would tell Mr Bharj when they met – and there was nothing in writing – that disbursements were about to be incurred, for example counsel’s fees, and that he thought SZ’s costs for the next stage would be £x, and Mr Bharj would then give Mr Zafar cash or cheques to cover that or at least part of it.
“Mr Bharj has, in my view, mistakenly concluded that this means there was a fixed fee for the work.”
This meant SZ was entitled to charge on an hourly rate plus disbursements for the work on the 3CL claim, but the judge held, under section 74(3) of the Solicitors Act 1974, that the claim was limited to what could have been recovered from the other side (ie £180,000).
Though the interim payment was made, the rest of the costs were not. The judge said writing this off was probably part of the agreement that saw ownership of the building housing the temple pass to Mr and Mrs Bharj.
The judge calculated that SZ was owed £62,600 and assessed the recoverable costs at £50,100.
He also allowed the £24,800 owing for seven other matters on which SZ acted but again found the retainers were created after the event.
“It is notable that the invoices for these other matters were produced many months, if not years, after the work was done,” he added.
He awarded SZ its costs of the costs claim but, as it did not file its costs budget in time and was refused relief from sanctions, they were limited to the £10,000 issue fee and the £1,175 trial fee.
SZ was also awarded £20,500 in costs thrown away by the adjournment of the trial because of the defendants’ failure to comply with the rules over translation of Mr Bharj’s witness statement.
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