Common Sense Prevails!
Belsner v CAM Legal Services Ltd [2022] EWCA Civ 1387 – Common Sense Prevails!
Background to the case
In 2016 the Claimant was knocked off a motorcycle on which she was a pillion passenger and sustained minor injuries. She entered into a Conditional Fee Agreement (CFA) with the Solicitors. The CFA terms and conditions advised that the amount of the Solicitors’ basic charges payable by the defendant to the claim was fixed by the provisions of the Civil Procedure Rules, but that the Solicitors reserved the right to charge the Claimant the actual costs.
The claim settled for damages of £1,916.98 at stage 2 of the RTA portal. The Defendant paid the applicable fixed costs of £500 (plus VAT and disbursements).
The Solicitors deducted a success fee of £385.50 from the Claimant’s damages. The Claimant later issued a Part 8 application asking for their solicitors to deliver a final statutory bill. The bill came to a figure in excess of the damages, however the Solicitors had capped the Claimant’s contribution to 25% of recovered damages (this being the £385.50) in accordance with statute.
The Claimant brought assessment proceedings in the High Court under section 70 of the Solicitors Act 1974. Upon assessment, DJ Bellamy decided that the Solicitors were entitled to recover the only sum which they had claimed from the Claimant, namely the success fee of £385.50. An appeal of this decision was allowed by Lavender J, who allowed the Solicitors to charge a success fee on only the fixed costs of £500. The success fee was therefore calculated at £75 and the Solicitors were ordered to repay £295.50 to the Claimant.
Lavender J proceeded on the basis of Section 74 of the 1974 Act, which relates to Special provisions as to contentious business done in county courts. Paragraph (3) provides:
(3) The amount which may be allowed on the assessment of any costs or bill of costs in respect of any item relating to proceedings in the county court shall not, except in so far as rules of court may otherwise provide, exceed the amount which could have been allowed in respect of that item as between party and party in those proceedings, having regard to the nature of the proceedings and the amount of the claim and of any counterclaim.
CPR Part 46.9(2) provided exception to the statutory provision: “section 74(3) of the Solicitors Act 1974 applies unless the solicitor and client have entered into a written agreement which expressly permits payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings”
Lavender J decided that, under CPR 46.9(2), informed consent had to be obtained from the client to charge costs more than those recoverable from the Defendant under fixed costs and that the Solicitors owed the Claimant fiduciary duties in the negotiation of their retainer. It was held that informed consent had not been obtained, in that the implications of low value settlement and consequences thereof had not been thoroughly explained and understood. This decision was appealed.
The Court of Appeal decided that:
- section 74(3) and CPR Part 46.9(2) did not apply at all to claims brought through the RTA portal without county court proceedings being issued
- the judge was wrong to say that the Solicitors owed the client fiduciary duties in the negotiation of their retainer
- although the Solicitors were not obliged to obtain the Client’s informed consent to the terms of the CFA on the grounds decided by the judge, the Solicitors did not comply with the Solicitors Regulatory Authority’s Code of Conduct for Solicitors in that they neither ensured that the Client received the best possible information about the likely overall cost of the case, nor did they ensure that the Client was in a position to make an informed decision about the case
- the term in the Solicitors’ retainer allowing them to charge the Client more than the costs recoverable from the defendant was not unfair within the meaning of the Consumer Rights Act 2015, and
- the court would reconsider the assessment on the correct basis under paragraph 3 of the Solicitors’ (Non-Contentious Business) Remuneration Order 2009 requiring the Solicitors’ costs to be “fair and reasonable having regard to all the circumstances of the case”. The costs actually charged to the Client in this case were fair and reasonable.
Judgment was handed down on 27 October 2022, concluding that the appeal be allowed and the sum of £295.50 was to be repaid by the Client to the Solicitors.
Summary
The Court of Appeal found in favour of the Solicitor in that the costs were fair and reasonable and therefore the amounts deducted from the Claimant’s damages should stand.
Whilst this essentially means that we are back where we were, it is worth noting the Court of Appeal’s comments that the Solicitors ought to have informed the Claimant of what she would recover by way of fixed costs in the RTA portal and even … they ought to have agreed in advance when they entered into the CFA, to the cap they later applied voluntarily.
It was also noted by the Court of Appeal that “the Client in this case did not have any real or economic interest in the pursuit of this costly litigation. Only ‘checkmylegalfees.com’ have such an interest”.
How can PIC help?
The rise of Solicitor own Client costs companies in the marketplace has resulted in an increase of satellite litigation relating to technical arguments formulated to invalidate costs agreements and to force Solicitors to repay or cancel costs rightfully payable by their clients.
Partners in Costs are specialists in costs litigation and can provide guidance on the appropriate advice to be given to clients upon entering into funding agreements, along with analysis and tactical tips to combat such arguments from prospective solicitor client conflicts.
Rebecca Humber and Sam Thaker
27.10.22
You can find the judgment at Bailii: Belsner v CAM Legal Services Ltd [2022] EWCA Civ 1387 (27 October 2022) (bailii.org)