Gill: No interim costs payment
The Solicitors Regulation Authority (SRA) faces having to pay up to £700,000 in costs after its prosecution of a partner at top media firm Carter-Ruck was summarily dismissed.
The Solicitors Disciplinary Tribunal (SDT) ruled that the SRA’s conduct of the case meant there was ‘good reason’ to depart from the usual starting point in disciplinary matters of no order as to costs when allegations were dismissed.
In December, the SDT upheld the application by Claire Gill to summarily dismiss an allegation that she made an improper threat against an investor in cryptocurrency OneCoin, who had tried to warn others that it was a scam. The SRA is appealing the decision.
In its newly published ruling on costs, the SDT said: “The tribunal observed that the SRA’s handling of the case involved prolonged and unexplained delay, original allegations that had been framed in a diffuse and shifting manner, and legal inaccuracies.
“These factors cumulatively caused disproportionate prejudice to the respondent, including substantial personal and professional impact.
“In these circumstances, the tribunal was satisfied that ‘good reason’ existed to depart from the default position of no order for costs.”
The SDT emphasised that its role was “not to penalise the regulator, but to recognise that the conduct of the proceedings had made the respondent’s entitlement to costs a matter of principle”.
Ms Gill was represented under a ‘CFA Lite’ – a conditional fee agreement where the solicitors’ fees are capped at whatever is recovered from the other side – and the SRA contended that recovery was barred under the indemnity principle because Ms Gill’s liability to pay arose only upon the making of a costs order.
But the SDT said this would be a matter for the costs judge handling the detailed assessment at the Senior Courts Costs Office.
“Any perceived circularity or potential conflict with the indemnity principle was a matter more properly to be addressed at the stage of detailed assessment and did not operate as a threshold bar to making an order in principle.”
The SDT noted too that Ms Gill had purported to vary the CFA Lite so that a ‘win’ now included dismissal of the SRA’s case.
“While such a variation might, in principle, address any technical circularity, the tribunal observed that it was neither sought nor directed by the tribunal, and its introduction at such a late stage was, at best, a questionable ‘stratagem,’ a term which the respondent had used in her own submission.
“The tribunal did not consider itself obliged to address the variation and declined to do so.”
In any event, it said, the Chorley principle – under which a solicitor defending a case against themselves can recover their normal charge-out rate – would apply.
It explained: “The tribunal was satisfied that, should any challenge to the CFA Lite arise, the Chorley principle could provide an alternative basis for recovery unless expressly prevented.
“This reasoning appeared to be supported by the authority of Malkinson, recognising that a firm’s diversion of resources to support a partner constituted recoverable loss even absent a personal contractual liability.”
The SDT made an order for costs in favour of Ms Gill but decided that no interim payment was “necessary or appropriate” – she had sought £750,000.
It went on to decide that the date from which the SRA was liable to pay costs was 2 May 2025, in the wake of Ms Gill submitting representations, including an opinion by Adrienne Page KC.
Prior to that, it was reasonable for the SRA to investigate but from then its “continued pursuit of the case became unreasonable”.
Ms Gill’s statement of costs totalled a shade over £1m, of which counsel’s fees were nearly £580,000.
The breakdown provided to the SDT showed that £282,000 was incurred between July 2023 and 1 April 2025, meaning it was not recoverable, and £680,000 after 23 May, which was.
It did not detail how much of the £41,000 incurred between 2 April and 22 May came after 2 May.
The SDT went on to direct that costs be assessed on the standard basis and that Ms Gill pay the SRA’s costs of unsuccessful interlocutory applications in relation to disclosure and anonymity – and her own costs be excluded from the main costs order – while each party should bear their own costs of non-party disclosure applications.
Last month, the SRA was ordered to make an interim costs payment of £400,000 to Ashley Hurst, the solicitor for former Conservative Chancellor Nadeem Zahawi, after the High Court overturned the SDT’s finding of misconduct against him.
Leave a Comment