30 June 2022

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Court of Appeal upholds right of costs judges to order disclosure in Solicitors Act proceedings

Lord Justice Warby refuses Slater & Gordon permission to appeal on several issues raised in challenges brought by Checkmylegalfees

The Court of Appeal has confirmed Mr Justice Ritchie’s ruling last month that costs judges can order disclosure as part of Solicitors Act assessments

Lord Justice Warby made the comments in refusing Slater & Gordon’s (S&G) application to appeal the decision in cases brought by Checkmylegalfees.

Ritchie J was ruling on appeals against two test case decisions by Costs Judge Rowley: Edwards concerns the process S&G used to sign up personal injury clients and whether they gave informed consent, while Raubenheimer involves the allegation that S&G received a secret commission from an after-the-event (ATE) insurer.

S&G appealed on four grounds. The first was whether the judge was wrong to reject its contention that the retainers between the claimants and their current solicitors were unlawful insurance policies. Warby LJ said Ritchie J’s reasoning on this was “entirely convincing”.

He continued that, “in reality”, the issue was concluded against S&G by the decision of MacDuff J in the 2010 case of Morris & Sibthorpe v LB Southwark, as endorsed by the Court of Appeal’s refusal of permission to appeal.

Warby LJ then rejected S&G’s argument that the judge was wrong to refuse its application for security for costs. The ground neither raised an important point of principle or practice, nor did it have a realistic prospect of success. There were no sufficient grounds to interfere with the lower courts’ conclusions that an order for security would not be just in this case.

On the question of disclosure, Warby LJ said the court “plainly has jurisdiction to make an order of this kind in proceedings of this nature”. He explained: “Part 31 does apply to these proceedings; and even if it did not, CPR 3.1(2)(m) would fill the gap. As a matter of case management, the discretionary decision to make the limited order now under challenge is unimpeachable.”

The final challenge was to Ritchie J’s order under part 18 that S&G disclose whether it received secret commissions.

Warby LJ said this was a case-specific issue “of an unusual nature” and did not raise an important wider issue. Again, the judge’s reasoning was “convincing” and his order represented a proper exercise of the judicial discretion conferred by part 18.

In a statement, Checkmylegalfees founder Mark Carlisle said that, as a result, there was no longer any debate that its offer to cover any costs orders against its clients was entirely lawful and could not be used “as a device to avoid or derail the claim”.

Further, it meant that standard disclosure of documents was available in these sorts of claims and where the cash account was disputed in proceedings under the Solicitors Act, “the court must resolve that dispute before any final order can be made”. This meant the court could compel solicitors to answer questions about payments/receipts in the cash account that might be wrong or omitted altogether.

He continued: “We are delighted that there is now finality on these technical points. It levels the playing field because now clients, where appropriate, will have access when pursuing these claims to all of the documents and information that their former solicitors have. They no longer have to fight with one hand tied behind their backs.

“And it means that there is finally a  recognised legal route to disputing items in the ‘cash account’, which is something that we have argued for a long time always was an integral consumer protection element of these very proceedings.”