Non est ad astra mollis e terris via

One of my more harmless vices, is the collection of old law books. Included in my collection is Butterworths Costs in Civil Litigation and Non-Litigious Work by Messrs BP Treagus and HJC Rainbird, respectively Chief Clerk of the Supreme Court Taxing Office and First Class Clerk of the Supreme Court Taxing Office in the Royal Courts of Justice the second edition of which was published in 1962.

The authors are long since consigned to oblivion, but the foreword by Lord Evershed, then Master of the Rolls adds a further poignant note as he refers to long repealed costs provisions, similarly come to dust, noting also on the “remarkable extension of legal aid, which is now applicable in nearly all courts of the country”.

A book by the same authors that is currently not in my collection, but that I would very much like to add is called Introduction to Solicitors Costs by Messrs Treagus, Rainbird and Harvey published in 1963.

There is a purpose to collecting such books: the law and practice of costs extends back at least to 1275: in that time the legal wheel has been invented, discarded and reinvented many times. If you wish to understand why things are as they are now, then you must understand how things evolved and developed in the past, and often the answer to current legal conundrums, can be informed by caselaw decided decades, and even centuries ago.

A good illustration of this process at work is to be found in the recent decision of Master Rowley in the case of Raubenheimer v Slater & Gordon UK Limited (SCCO Master Rowley 18th June 2021)

Ostensibly the case is about the use of part 18 Requests in detailed assessment proceedings, as part of the current slew of solicitor-own client assessments currently running through the SCCO and various courts around the country. The use of Part 18 Requests in detailed assessment proceedings on an inter partes basis is necessarily going to be rare.

Although conceivably part 18 CPR can apply to detailed assessment proceedings, its scope is necessarily limited by the nature of assessment proceedings, which are very different from the substantive litigation.

The framework set by Part 18 and its associated Practice Direction is as follows. Rule 18.1 so far as is material provides:

(1) The court may at any time order a party to –

(a) clarify any matter which is in dispute in the proceedings; or

(b) give additional information in relation to any such matter,

whether or not the matter is contained or referred to in a statement of case.

(2)      Paragraph (1) is subject to any rule of law to the contrary.

The Practice Direction provides as follows:

Before making an application to the court for an order under Part 18, the party seeking clarification or information (the first party) should first serve on the party from whom it is sought (the second party) a written request for that clarification or information (a Request) stating a date by which the response to the Request should be served. The date must allow the second party a reasonable time to respond.

And:

A Request should be concise and strictly confined to matters which are reasonably necessary and proportionate to enable the first party to prepare his own case or to understand the case he has to meet.

It will be noted that:

(a)      Only a party can be ordered to give further information: part 18 has no application to legal representatives, who are not parties to the proceedings, or witnesses or others.

(b)       The request must relate to a matter “in dispute”.

(c)      The request must be strictly confined within the requirements of paragraph 1.2

(e)       Further information cannot be ordered, where there is a “rule of law” to the contrary.

In the context of an inter partes detailed assessment, the “rule of law” to the contrary, is privilege. The court cannot order the provision of privileged information to circumvent the restrictions on disclosure, in the context of a detailed assessment. Paragraph 13.12 of Practice Direction 47 lists the documents that must be filed with the court . But the documents are not served upon the paying party. The most the court can do is invoke the Pamplin procedure, the effect of which is summarised at paragraph 13.13 of Practice Direction 47.

The court may direct the receiving party to produce any document which in the opinion of the court is necessary to enable it to reach its decision. These documents will in the first instance be produced to the court, but the court may ask the receiving party to elect whether to disclose the particular document to the paying party in order to rely on the contents of the document, or whether to decline disclosure and instead rely on other evidence.

No such considerations apply in relation to solicitor-own client assessments, where privilege will not be a live issue and the client’s former legal representatives will be a party to the proceedings. The challenge in the Raubenheimer case advanced by way of Part 18 Request, was an attempt to get more information about ATE insurance arrangements that the solicitors may have had an interest in, even though an ATE insurance premium charged to the client was not capable of being subject to assessment under section 70 of the Solicitors Act 1974.

The Part 18 Requests made were as follows and noted by Master Rowley to be:

2. By a request served under Part 18 on 26 August 2020, the claimant in this case sought
the following information from the defendant:

1.The ATE insurance policy
The Claimant was not supplied with a copy of the ATE insurance policy and was not informed of the identity of the ATE insurer. Please state the name of the ATE insurer and provide the policy documents.

2.Intermediaries
In addition to yourself, please provide details of all other insurance intermediaries involved in the provision of the ATE
insurance to the Claimant.

3. You: Commission / remuneration
(a) Direct Payments to you
Was any direct payment (whether by way of commission, discount, rebate, referral marketing fee, or otherwise) received
by you from the ATE insurer or insurance intermediary (or any associate of theirs)?

If so, please specify – by whom payment was made, to whom payment was made, the amount of such payment, the date of such payment.

(b) Indirect Payments to you
Was any indirect payment (whether by way of commission, discount, rebate, referral marketing fee, or otherwise) received
by you from the ATE insurer or insurance intermediary (or any associate of theirs)?

If so, please specify – by whom payment was made, to whom payment was made, the amount of such payment, the date of such payment.

An Order for the requests to be answered was resisted and the context of the arguments was described as follows:

11. Robert Marven QC, appearing on behalf of the defendant, suggested that the comments of the Court of Appeal were a complete answer to the claimant’s application. The claimant is not entitled to challenge the amount of an ATE insurance premium through Solicitors Act proceedings. On that basis, there can be no entitlement to a request for information via Part 18 in such proceedings regarding the ATE premium.

12. Robin Dunne, on behalf of the claimant, had two replies to this submission. The first is that the question before the court is simply whether the information should be provided. The extent to which the court can enquire into the premium is not yet a consideration and there is no need to “get ahead of ourselves.” The second argument is that the premium can be investigated by the court via the cash account rather than the bill of costs itself which is the subject of the Solicitors Act proceedings.

13. It does not seem to me that the first argument holds very much water. There is no suggestion that these proceedings are in some way a precursor to other proceedings. Even if they were, it is unattractive to suggest that one court should carry out investigations into something which another court will ultimately need to consider. If this court has no jurisdiction to deal with the ATE premium, then it does not seem to me that it is the correct court in which to seek the information requested by the Part 18 request. Some form of pre-action disclosure in proceedings in the Chancery Division or an application within those proceedings would seem to be the appropriate course.

14. Mr Dunne’s second argument and indeed the essence of Mr Marven’s argument, requires the consideration of the nature and extent of the cash account and its role within Solicitors Act proceedings.

At this point Messrs Treagus Rainbird and Harvey enter the picture:

15. In their 1963 book entitled “Introduction to Solicitors Costs” Messrs Treagus, Rainbird and Harvey gave the following description of the role of a cash account in the relationship between a solicitor and client:
“Payments made by a Solicitor on his clients’ behalf fall into two categories. First, payments made in the course of his duty when acting for a client as solicitor are termed “disbursements.” Secondly, those payments made on behalf of the client as his agent are termed “cash account items.” Disbursements are included in the bill of costs itself. The cash account is a separate statement containing receipts and payments which is usually delivered to the client with the bill of costs, thus giving the client a complete record of the whole financial aspect of the transaction.”

16. In 1963 (and indeed prior to then) the relationship between solicitor and client was rather more rigid and the costs to be charged by a solicitor were prescribed. Scale fees set by Parliament applied to all, or almost all, work done by a solicitor. The task of the clerks in the Supreme Court Taxing Office was to ensure that the correct scale fees, and no more, were payable. A solicitor would require his client to be put into funds in order, for example, to instruct counsel and would not, in the ordinary course of things, finance the action or matter on which the solicitor was instructed.

17. In such circumstances, it was a relatively simple matter to divide the disbursements which had been incurred as the client’s solicitor and which should go on the solicitor’s bill from those where the solicitor was acting as the client’s agent and which would simply be paid from monies held by the solicitor on behalf of the client. Those latter payments would form the cash account entries along with the monies received with which to make those payments.

18. There would therefore be in the cash account a column of receipts and a column of payments with the figure at the bottom showing a net figure either payable by the client or refundable by the solicitor in order to balance both sides of the ledger.  With the Court of Appeal’s pronouncement in Herbert appearing to be against him, Mr Dunne was obliged to put forth a novel argument regarding the cash account. Since the ATE premium would appear in the cash account rather than in the solicitor’s bill, it was Mr Dunne’s submission that the court’s consideration of the cash account during a Solicitors Act assessment could include facets of the ATE premium, albeit not the reasonableness of the premium paid.

The judge observed:

22. With the Court of Appeal’s pronouncement in Herbert appearing to be against him, Mr Dunne was obliged to put forth a novel argument regarding the cash account. Since the ATE premium would appear in the cash account rather than in the solicitor’s bill, it was Mr Dunne’s submission that the court’s consideration of the cash account during a Solicitors Act assessment could include facets of the ATE premium, albeit not the reasonableness of the premium paid.

The judge had no difficulty rejecting this novel argument. One’s heart always sinks when a court describes one’s argument as “novel”: its a word, almost in the same category as “bold” or “spirited”:

49. I set out at paragraph 15 of this decision a description of the cash account written by two of the then clerks of the Supreme Court Taxing Office. The essence of the cash account has not changed even though the scale fees etc have very largely disappeared. The current description of a cash account can be found at PD46 paragraph 6.6(b) as follows:

“(b) in applications under Section 70 of the Solicitors Act 1974, a cash account showing money received by the solicitor to the credit of the client and sums paid out of that money on behalf of the client but not payments out which were made in satisfaction of the bill or of any items which are claimed in the bill.”

50. Whichever description is taken, a cash account is no more than a ledger showing receipt of monies during the retainer, invoices rendered and the payment of items such as damages or purchase monies to others. The payment of an insurance premium to the ATE provider fits into this category. The client has taken out the insurance and the solicitor, as his agent, pays for it by sending money to the ATE insurer, often at the end of proceedings upon receipt of monies from the losing opponent.

51. Solicitors Act proceedings involve consideration of some or all of the invoice(s) rendered by the solicitor to his client together with a cash account. Given my finding that the cash account is no more than a ledger which needs calculating at the conclusion of the case and the Court of Appeal’s decision that the ATE premium should not be in the solicitor’s invoice, there is simply no room for the court in a Solicitors Act assessment to consider the composition of the premium.

52. When looking at the nature of the cash account, I have given the example of a solicitor paying out monies to another party on behalf of the client. There is no possibility, in my view, of the court in Solicitors Act proceedings, making any enquiries as to the adequacy of that sum of money. The remedy of the client if the monies paid out had in some way be in error would be to bring proceedings against the solicitor for breach of one of a number of potential duties. I can see no reason to distinguish between the ATE premium and any other cash account payment in this respect.

53. Bringing a second set of proceedings would no doubt be less “convenient”, to use the Court of Appeal’s phrase, than being able to deal with everything in these proceedings. But convenience is not sufficient to justify attempting to deal with matters which do not seemingly fit in one proceedings rather than obliging the parties to go elsewhere.

The wider picture, just discernible, which may yet come into view, is the intriguing prospect of a new type of Plevin style claim against solicitors firms who benefit collaterally from the wider provision of services they may quite properly make as part of a “one stop shop” under various corporate vehicles, lawfully permitted under the regulatory framework.

In addition to ATE insurance, many firms will have ties to medical agencies, physiotherapy providers, and other ancillary services. Such claims may be thought to be speculative, may yet founder on proper analysis of the fiduciary duties owed and are usually preventable in any context, by full disclosure of such arrangements and the obtaining of the clients informed consent. But I think such claims may be sought to be made and there may be firms whose arrangements lack the necessary transparency, who will have cause for concern.

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