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Clients bankrupted by dishonest solicitor in Kafkaesque dispute lose Court of Appeal case
There is a very disturbing background to the appellants' bankruptcies. They were based on a judgment obtained against them by a firm of solicitors, Dean & Dean, in respect of apparently outstanding fees. Judgment was entered on 16 February 2004 for damages to be assessed, with an interim payment of £5,000 and costs of £3,858. Over eight years later, on 23 October 2012, it was ruled that the bankruptcies should be annulled and the judgment set aside, on the grounds that the judgment had been based on fraudulently charged fees. The judge, Mr Robert Ham QC (sitting as a Deputy High Court Judge), said that there had been a miscarriage of justiceLord Justice David Richards [paragraph 4 of judgment]
In a case that started as a dispute over legal fees of some £20,000 in 2004, Dr & Mr.Oraki, have had to cope with judgment being entered against them, bankruptcy proceedings, possession orders in respect of properties, setting aside of judgment and annullment of bankruptcy, 13 years of litigaion and ultimately a lost case in the Court of Appeal arising out of an action for damages against their trustees in bankruptcy.
The decision of the High Court, Mr.Robert Ham QC in 2012 setting aside the original judgment was made as a result of of evidence coming to light that supported what the clients had said all along about the solicitor at Dean & Dean who had handled their matter – Shahrokh Mireskandari (described as "a flamboyant character with powerful friends, such as Mr Keith Vaz MP and Commander Ali Dizaei of the Metropolitan Police").
Mr.Mireskandari had been struck off, and the firm closed down, as a result of the Solicitors Disciplinary Tribunal finding that he had been "admitted as a solicitor as a result of dishonest representations as to his legal qualifications and the dishonest non-disclosure of his criminal record in the United States". Mr.Mireskandari was found guilty by the Tribunal in 2012 of 23 out of 25 charges, 21 of which included findings of dishonesty.
This is an object lesson in making sure that you invoke the proper procedure for disputing costs at an early stage. Rather than proceeding under the provisions of s.70 Solicitors Act 1974 it seems that this case was allowed to escalate until the solicitors issued proceedings. Upon judgment then being entered for an amount to be determined at a later date, but with an order for an interim payment of £5,000 and costs of £3,858, it was then possible for the solicitors to Petition for bankruptcy and it was that that, it seems, led to the extensive proceedings that subsequently unfolded.
She expressed great sympathy for the predicament that the appellants found themselves in, describing it as KafkaesqueLord Justice David Richards, referring to the decision of Mrs.Justice Proudman in the court below
It is impossible to tell from the judgment (available for download below) whether the clients were given advice by Dean & Dean about their rights under the Solicitors Act 1974 to have the Court determine a reasonable level of fees.
Where an application for assessment of fees is made within one month of delivery of a bill, then the right is absolute and the solicitors cannot sue for outstanding fees (or indeed issue any sort of enforcement proceedings, including bankruptcy) until the amount has been determined by the court, nor can the costs judge order any sum to be paid into court on account of the fees. The right is not lost entirely after a month but immediately begins to erode and, the later an application made, the more leverage the solicitor has in terms of requiring an interim payment. After 12 months from payment of a bill, the entitlement to assessment disappears altogether.
It is of course possible that the Orakis were given the correct advice, but in our experience there are many cases where even if that advice is given it is inaccurate, incomplete or just plain wrong. Even the Law Society guidance tends to steer clients towards a firm's internal complaints procedure, or to the Legal Ombudsman, without reminding client that in doing so then they are, by delaying, potentially prejudicing their position in terms of the time limits under the Solicitors Act.