Court cannot force secret commission disclosure, rule appeal judges

Refusing to tell a client what commissions you were paid may be ‘unwise’, but the court cannot enforce disclosure through a Solicitors Act costs assessment, a new ruling has established.

The Court of Appeal today upheld a challenge from solicitors in Turner v Coupland Cavendish and ruled that there was no mechanism through Part 18 requests to force disclosure.

Lady Justice Andrews, giving the lead judgment, said there was no ‘shortcut’ for former clients to extract information from solicitors about any secret commissions made on after-the-event insurance. Under the Solicitors Act, there was no power for the court to direct a response to this request for information.

But the judge added that as a fiduciary, the solicitor ought to tell them if they ask, and that if they refuse to do so, there appeared to be no easy and cost-effective means of dealing with it. Andrews had said during the hearing that the solicitors’ refusal to tell the client whether they receive a commission was ‘unattractive’, and she added ‘unwise’ during her written ruling, describing the solicitors’ behaviour as ‘unedifying’.

‘The [High Court] was right to identify the unfairness of requiring the client to produce evidence that a commission was paid in order to obtain the evidence they need to prove it, especially when all the evidence is likely to be in the hands of the solicitor,’ she said. ‘However, it is not for this court to propose a solution. I merely flag it up as something which others who are in a position to make changes to the rules or to the law may wish to consider.’

The court heard that the ATE premium for the initial personal injury claim was £245, with the potential commission – if it could be established – likely to be no more than £25.

Andrews said the only people who stood to gain from a successful challenge to commissions were those who have made an industry out of challenging solicitors’ costs. The claim in this case was led by Leeds firm JG Solicitors.

The judge said that if there was a genuine widespread problem about solicitors flouting their professional obligations and concealing commissions on ATE premiums, this was not the way to go about solving it.

On first instance, Costs Judge Rowley had refused the claimant’s Part 18 request for further information. Mr Justice Sweeting had reversed that decision.

Appeal judges found that the costs judge had no power to carry out any inquiries into the accuracy, let alone the lawfulness of any items on the cash account which were neither payments on account of the bill nor amounts received on behalf of the client which could lawfully be used to pay it. There was also no obligation on the costs judge to resolve all disputes (or prospective disputes) in respect of the cash account before certifying what was due to or by the solicitor.