Part 18 requests and the role of agency in solicitor-client cost assessments (Turner v Coupland Cavendish Ltd)

The question for the court was whether Part 18 requests in relation to a policy of After the Event (ATE) insurance should be answered, whether as part of solicitor own client costs assessment (SOCA) or as part of the court’s consideration of the solicitor-client cash account. The court held that there was no strict requirement for a prima facie or arguable case prior to the raising of a Part 18 request in respect of the solicitor-client cash account; a reasonable suspicion was sufficient grounds. Part 18 in this context did not impose the same threshold requirements as disclosure. The specific Part 18 request subject of the appeal related to details of secret commissions paid as part of the solicitor arranging ATE insurance for the lay client to use in a CFA funded personal injury claim. A conflict in previous authorities as to whether such policies can and generally should be subject of Part 18 request was resolved in favour of Part 18 applying.

What are the practical implications of this case?

The court found that Part 18 requests were available in SOCA cases (that is the assessment of the statutory solicitor bills of costs) and in related challenges to the solicitor-client ‘cash account’ (also mandated by statute).

The preparedness of the Appeal Court to consider the Part 18 issue even when there was no formal Part 18 application before the court (below) was also of interest. Consistent with the informality of assessment proceedings, the Appeal Court noted that the parties had been encouraged to believe that certain matters would be considered under the court’s inherent case management powers (CPR 3) such that a formal application was unnecessary.

Charges incurred by the solicitor in relation to the cash account on the client’s behalf created a relationship of agency which meant that the client was arguably entitled to any document relevant to each item of expenditure and not merely to evidence of disbursements on the bill of costs.

The case will be of interest to those undertaking SOCA assessments and/or solicitor client cash account challenges where there is a policy of ATE insurance and the possibility of a challenge to an undisclosed or secret commission.

Perhaps the wider significance is the availability of Part 18 in costs assessments and the lower threshold of reasonable suspicion rather than arguable or prima facie case.

Further, the Court re-emphasised the (perhaps trite) principle that a solicitor will usually be in a relationship of agency with the client where context specific fiduciary duties will be owed by the solicitors to the client, including the provision of information and documentation relevant to the scope of the agency.

What was the background?

The Respondent had acted for the Appellant in a personal injury case governed by the relevant personal injury portal.

The Appellant was seeking a SOCA assessment of the costs of these proceedings including consideration of the statutorily mandated solicitor-client cash account.

In this context, a concern had arisen as to whether a payment out of the cash account for ATE insurance included some element of commission which was not strictly commercially necessary or may in some way benefit the solicitors financially.

A series of Part 18 requests had been raised with the Respondent but not answered. The Appellant sought an order at court that these questions be answered.

It appears to have been common ground that the ATE insurance issue could only relate to the solicitor-client cash account, as in accordance with the principle in Herbert v HH Law Ltd [2019] 1 WLR 4253, it was not to be treated as a disbursement.

What did the court decide?

The Judge considered, on first principles, whether the agency principle applied as set out in Yasuda Fire and Marine Insurance Co of Europe Ltd v Orion Marine Insurance Underwriting Agency Ltd [1995] QB 174which concerned the entitlement of a principal to information from their agent.

The Judge cited the Court of Appeal in Belsner v CAM Legal Services Ltd [2022] EWCA Civ 1387 [72]:

‘There is no doubt that solicitors acting for a client in relation to a RTA portal claim owe that client fiduciary duties from the moment they start to act.’

The conclusion was that the Appellant as principal was entitled to information from their agent (the Respondent firm of solicitors) in respect of any transaction within the scope of that agency. Flowing from the logic of an agency relationship, there was also no obligation to meet a particularly onerous threshold of a ‘positive case’ or to lead evidence to justify a prima facie case. Further, in relation to the solicitor-client cash account, it was for the solicitor to justify the specific expenditure items in the account, not for the client to disprove it.

The Judge also considered the specific authorities that were in tension when it came to the powers of the court to order responses to requests under Part 18 that related to ATE insurance.

The key cases include Edwards v Slater and Gordon UK Ltd [2022] EWHC 1091 (QB) where the existence of the secret commission was discovered from a third party such that further information was ordered and Brown v JMW Solicitors LLP [2022] EWHC 2848 (SCCO) where there was no prima facie evidence or case as to the secret commission and so information was not ordered.

The key question was whether Part 18 required some prima facie or positive case to be advanced on credible evidence. The Appeal Judge held there was no such requirement. An omission to deal with an allegation or a gap in the stated cases was sufficient. There was no basis to equate the requirements under Part 18 with those under the disclosure regime in the CPR.

The Appeal Judge also noted that there was a concern industry-wide of undisclosed commission payments and that the application should not turn on the good luck of a litigant (for example obtaining the information from a third party) but should be a matter of a principled application of the CPR.

Case details

• Court: King’s Bench Division
• Judges: The Honourable Mr Justice Sweeting sitting with Costs Judge Simon Brown as an assessor
• Date of judgment: 26 June 202

Article by Lauren Godfrey – first published by LexisNexis