Costs recovery lawyers have told the Court of Appeal that firms should have to answer questions about any secret commissions they may be receiving.
The pleading came as they responded to an appeal from personal injury firm Coupland Cavendish, trading as Gowing Law Solicitors, against a ruling that it was required to respond to Part 18 requests for further information in a dispute over the cash account.
Robin Dunne, for the firm’s former client Stephen Turner, told appeal judges that PI firms were responsible as agents for sourcing and purchasing after-the-event insurance which was then taken out of damages. In return, he submitted, clients should be able to ask ‘simple questions’ through the existing channel of the Solicitors Act 1974 to establish what commissions – if any – had been received by solicitors.
‘The idea [solicitors] would simply refuse to answer would be both surprising and troubling,’ said Dunne. ‘If I use a broker to purchase road traffic insurance and asked a question, I would not expect the broker to say "I’m not telling you". It is not attractive for solicitors to essentially hide behind section 70 which is part of an act designed to protect consumers of legal services.’
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Lady Justice Andrews, one of three judges hearing the appeal, agreed it was ‘highly unattractive behaviour’ for solicitors to refuse to answer questions about commissions but suggested that this could be something to take up with the legal ombudsman rather than go through the courts.
The original personal injury claim was for £3,000, with the solicitors charging £750 for base costs and the success fee. A further deduction of £245 for the ATE premium was included in the breakdown of costs. Four months after the bill was delivered, Turner served his Part 18 request seeking responses to six different questions.
The firm declined to respond on the grounds that the requests amounted to a fishing expedition.
In Turner v Coupland Cavendish, Mr Justice Sweeting had overturned a cost judge’s decision requiring the firm to answer Part 18 requests for further information. Turner is now represented by Leeds firm JG Solicitors, which specialises in costs challenges by former PI clients. Sweeting had ruled that the only threshold requirement for answering Part 18 requests was that information should relate to a matter in dispute in the proceedings. It followed there was no requirement for a witness statement or a ‘positive case’ to be established by the party seeking information.
Erica Bedford, for Coupland Cavendish, said the type of assessment facilitated through the Solicitors Act was not designed to deal with questions around any possible commissions that had been received (there was no suggestion that the firm actually received any such commission).
Bedford said: ‘The act is concerned with protecting against excessive costs – it is not a wide-ranging consumer protection function. Broader and wider concerns are not the context and purpose of this particular piece of legislation.’
She added there had been no cause for overturning the cost judge’s original decision and that Sweeting should have directed that the requests fell outside the scope of Part 18. Bedford also suggested that the requests were all properly categorised as fishing expeditions.
‘The costs judge’s decision in refusing the Part 18 requests was correct as a matter of law. Furthermore, that conclusion in any event did not fall outside the ambit of his wide discretion.’
The case is so important because if the court insists that Part 18 requests around ATE commissions are answered, costs recovery lawyers could make thousands of similar requests of PI firms in the hope of finding elements that could be claimed back. Dunne denied in court that upholding the Sweeting judgment would open up more satellite litigation.
‘This [requiring responses to Part 18 requests] is the way to avoid that to a large extent,’ he said. ‘You avoid the time spent in courts because the solicitor should answer the questions.’
Judgment was reserved and will be handed down after the higher courts reopen in October.
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