England and Wales High Court (Senior Courts Costs Office) Decisions

IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE

		Thomas More Building Royal Courts of Justice Strand London WC2A 2LL
		26/03/2018

Master Leonard:

1. The application considered by this judgment was issued on 1 November 2017. Referring to section 68 of the Solicitors Act 1974, the inherent jurisdiction of the High Court over solicitors, and the Data Protection Act, the application seeks delivery to the Claimant (a) of such parts of the Defendant solicitor's file over which the Claimant has proprietary rights and (b) of copies of such other parts of the file over which the Claimant does not have proprietary rights.
2. The stated purpose of the application is to enable the Claimant to take advice on his right to detailed assessment of all or part of the Defendant's fees, which it is said is not possible without further information.
3. The file referred to is the Defendant's file in relation to a claim brought by the Defendant on the Claimant's behalf, through the Ministry of Justice's RTA Portal, following a road traffic accident on 29 May 2013. The Data Protection Act part of the application was not pursued before me: I believe that that Act confers rights only to prescribed information, rather than to copies of documents.
4. The division of the Claimant's application into two categories reflects the law in relation to proprietary rights in documents created in the course of a solicitor's retainer. Certain documents, such as original letters sent by the solicitor to the client, belong to the client. Others, such as the solicitor's copies of those letters, belong to the solicitor.
5. It is not in dispute that in this case, the documents that belong to the Claimant had already been supplied to him before this application was issued. The real subject matter of this application (in common with many others currently before the SCCO and other courts) is that the Claimant also claims a right, on payment of copying costs, to receive from the Defendant copies of documents in which he has no proprietary interest. The Defendant resists that.
6. The scope of the documentation originally sought by the Claimant incorporated every record in the Defendant's possession, including for example copies of its timesheets and accounts documents. The application as put to me is limited to five categories; copies of any VAT invoices for costs and disbursements, including the success fee and any ATE premium; all funding documents; all correspondence between the Defendant and the Claimant; all correspondence in respect of recovery of the Defendant's legal fees in his Portal claim; and any ATE documents.

The Claimant's Evidence

7. The Claimant's application is supported by a witness statement of Mr James Green, a solicitor now representing the Claimant, dated 13 December 2017. Mr Green's statement confirms that the Claimant was involved in a road traffic accident on 29 May 2013. He instructed the Defendant to recover damages on his behalf resulting from personal injury sustained in that accident. According to Mr Green's instructions, the Claimant received correspondence from the Defendant on 24 April 2014 indicating that his claim had settled in the sum of £3,700 but that he would receive £1,950 after deductions taken from his damages by the Defendant.
8. The Claimant's instructions, says Mr Green, are that the Claimant was not provided with any invoices or bills raised by the Defendant in relation to that deduction or any other fees recovered in the course of his personal injury action. Having concerns about the amount of money that the Defendant had deducted from his damages as a contribution towards legal fees, he instructed his current solicitors to obtain a copy of this file of papers from the Defendant in order to review the file, advise him on whether the deduction taken from his damages was fair and in accordance with the funding agreement he had entered into with the Defendant, and to advise on the viability of an assessment of his bill of costs under the Solicitors Act 1974.
9. Judging from the correspondence, the Claimant did so in about August 2017. He has, says Mr Green, not retained any of the correspondence sent to him by the Defendant during the currency of its retainer.

The Defendant's Evidence

10. A witness statement filed on behalf of the Defendant by Mr Kasim, a solicitor and a director of the Defendant, confirms that the Claimant's personal injury claim was processed through the Portal. This is his account of the dealings between the Defendant and the Claimant.
11. The Defendant and the Claimant entered a Conditional Fee Agreement in respect of his costs with (as Mr Kasim puts it) "a 25% success fee/Solicitors costs to be deducted from any payment of general damages made to the Claimant". Although appropriate enquiries were made as to the possibility of existing legal expenses cover, the Claimant did not choose to take out an ATE premium.
12. Liability was admitted by an insurer, Zürich, and the sum of £4,550 was paid for vehicular damage. That sum was received by the Defendant and forwarded to the Claimant on 28 June 2013 without deduction. Storage and recovery charges were negotiated and agreed outside the Portal. Following receipt of a medical report, a loss of earnings claim was not pursued.
13. An offer of £3,700, considered to be more than the likely value of the Claimant's claim, was made to the insurer on his behalf by the Defendant. A counteroffer of £2,400 was rejected, but a further offer of £2,600 was accepted by the Claimant.
14. The Claimant, who had received the original funding documentation at the relevant time, would when accepting the offer have been aware that under the terms of his CFA he should receive the sum of £1,950 (75% of his damages) once (again, in Mr Kasim's words) "the deductions for Solicitors Costs/success fee had been deducted".
15. In fact, the insurer paid the full sum of £2,600 direct to the Claimant in May 2014. At the Defendant's request the Claimant, on 8 September 2014, paid to the Defendant the £650 that would have been deducted from his damages had the Defendant, in the normal way, received them on his behalf.
16. In the course of the retainer the Defendant, which sent VAT invoices to the Claimant for its costs and disbursements, received from Zürich payment of stage I and stage II Portal costs. The total received was £600 inclusive of VAT.
17. Mr Kasim exhibits to his witness statement a copy of a letter dated 3 October 2017 sent by the Defendant to the Claimant's current solicitors. The letter referred to the Law Society's published practice note on the provision of documents to former clients (which, in essence, identifies those documents which belong to the client as opposed to the solicitor) and provided documents in accordance with that guidance, excluding those documents that remain the property of the solicitor. Mr Kasim complains (in my view with some justification) that the Claimant's application exhibits copies of correspondence passing between the parties, but leaves out that key letter.
18. Mr Kasim says that the documents supplied by the Defendant to the Claimant show exactly how much has been received by way of costs from the insurer and that the claim for general damages was settled at £2,600, not £3,700 as Mr Green says.

The Weight of the Evidence

19. As regards the parties' dealings generally, I prefer the evidence of Mr Kasim to the evidence proffered by Mr Green on behalf the Claimant.
20. The Claimant himself gives no evidence. I have only Mr Green's evidence as offered on his behalf. It seems inconsistent in saying that the Claimant has retained no correspondence sent to him by the Defendant, whilst relying for details of the settlement of the Claimant's claim on key correspondence said to have been dated 24 April 2014.
21. Mr Kasim's evidence as to the original claim would appear to have been prepared by reference to available file records. The Claimant has not responded to his detailed account of the parties' dealings and of the records supplied by the Defendant to the Claimant's current solicitors: if that account were inaccurate, no doubt the Claimant would have challenged it.
22. Mr Kasim's evidence is not without its weaknesses. His evidence as to invoicing is rather vague. I appreciate that exhibiting copies of the relevant invoices to his statement might be seen, in effect, as submitting to the Claimant's application, but it would have been helpful to know exactly how many invoices were sent to the Claimant, and when.
23. Mr Kasim's broad references to a CFA that provides for a success fee of 25% of general damages are not helpful to the Defendant. The amount of the success fee must be limited, in cases such as the Claimant's, to a maximum of 25% of specified categories of damages: it does not follow that a solicitor is entitled to the full 25%. I appreciate that Mr Kasim may simply be saying that that was the amount of the success fee properly payable to the Defendant.
24. In any event, Mr Kasim's evidence overall appears to me to be more reliable than that of the Claimant. I am unable, in the face of Mr Kasim's evidence to the contrary and where the Claimant has retained none of the correspondence sent to him by the Defendant, to accept the Claimant's assertion that he received no bills from the Defendant. Notably the Claimant does not suggest that he did not receive a copy of his CFA and any other relevant retainer or funding documentation.
25. In summary, on the evidence the Claimant has, since the completion of the retainer in 2014, been in a position to know how much he received by way of damages, and to know how much he paid to the Defendant. If he cannot now accurately recall the position it would be because he has not kept, or has not checked, any relevant records.
26. It would also seem that that of the five categories of documents sought by the Claimant, two are redundant. There are no ATE records to supply, and copies of correspondence in relation to recovery of the Defendant's legal fees through the Portal process were supplied before this application was issued. That leaves three categories; copies of invoices and copies of funding documentation (which, on the weight of the evidence, were delivered to the Claimant in the normal way in the course of the retainer); and copies of correspondence passing between the Defendant and the Claimant.

Green & Ors v SGI Legal LLP

27. In Green & Ors v SGI Legal LLP [2017] EWHC B27 (Costs) I considered and rejected a similar application, made by the same solicitors on behalf of other claimants, for delivery (in return for payment of copying costs) of documents which belonged to the solicitor rather than to the client. Mr Carlisle for the Claimant did not pursue before me the arguments considered and rejected by me in Green & Ors, but I fully understand that the Claimant has not abandoned those arguments. Mr Carlisle, very properly, did not wish to waste the court's and the parties' time going over the same ground. This judgment should, then, be read as if the arguments considered by me in Green & Ors had been put to me in this case, and rejected for the same reasons.

Inherent Jurisdiction and Fiduciary Duty

28. Mr Carlisle invited me to consider two new lines of argument, which I have attempted fully to address in this judgment. The first is that it would be appropriate for the court, in the exercise of its inherent jurisdiction over solicitors, to make an order for the delivery of the documents sought by the Claimant. The second is that the Defendant owes fiduciary duties to the Claimant, which should be taken into account when considering whether the court should exercise that inherent jurisdiction.
29. Both those arguments, as put to me by Mr Carlisle, were based largely upon the premise that the Defendant has overcharged the Claimant. On the figures supplied by Mr Kasim, Mr Carlisle argued that the success fee of £650 paid to the Defendant by the Claimant must be excessive. If the Claimant's base costs inclusive of VAT were £600, then a success fee, inclusive of VAT, should have been no more than £600. Anything else would have been in excess of 100% and so in excess of the 100% statutory limit on all success fees.
30. On that basis, says Mr Carlisle, a breach of duty by the Defendant has been established. A solicitor's fiduciary duties to a client do not terminate with the retainer. That, for example, is why a solicitor cannot take instructions from a new client if to do so might create a conflict between the interests of that new client and the solicitor's continuing duty of confidentiality to a former client. In the circumstances, in refusing to give the Claimant the documents he needs to establish the extent of overcharging and to take advice upon it, the Defendant puts its interests ahead of the interests of its client and is again in breach of fiduciary duty.
31. Under those circumstances, Mr Carlisle submits that it is right for the court to exercise its inherent jurisdiction to make the order sought by the Defendant. The Claimant has no other effective remedy.
32. I do not accept that the evidence shows that an unlawful success fee has been charged. Mr Carlisle's argument to that effect is based upon the assumption that the Defendant's base costs are exactly £600 inclusive of VAT. That was however the amount received by way of costs between the parties. It does not follow that the Defendant was not entitled, under the terms of its retainer, to charge more than £600 to the Claimant by way of base costs on a solicitor/client basis. If the Defendant's base costs, as payable by the Claimant, were £650 or more then the success fee will not have been in excess of 100%.
33. I have, as I have said, some concern about the way in which Mr Kasim has described the Defendant's success fee, but it does not follow that the Claimant has been overcharged, nor do I have any cogent evidence to support that proposition. This leaves me in the position described by Mr Parker for the Defendant: I am being asked to exercise the inherent jurisdiction of the court so that the Claimant's advisers can investigate whether that is the case.
34. Mr Parker, for the Defendant, submits that the inherent jurisdiction which the Claimant seeks to evoke is in fact a residual jurisdiction, to be exercised in cases of clear breach of duty and only where there is no other way of avoiding an injustice. I am unable to agree entirely with the "residual jurisdiction" point as he puts it. The key authority referred to by the parties, Assaubayev v Michael Wilson and Partners Ltd [2014] EWCA Civ 1491, indicates (at paragraph 31 of the judgment of Christopher Clarke LJ) that it is for the court, in its discretion, to decide whether and when to exercise its jurisdiction over solicitors. The reference to the jurisdiction as "residual" was made in Symbol Park Lane Ltd. v Steggles Palmer (A Firm) [1985] 1 W.L.R. 668 in the very particular context of the possibility of overriding statutory time limits.
35. I bear in mind rather the characterisation of the jurisdiction as referred to in Assaubayev at paragraphs 28 and 30.
36. At paragraph 28, Christopher Clarke LJ refers to the words of Lord Esher in In Re Grey [1892] 2 QB 440 at 443:

"… the court has a punitive and disciplinary jurisdiction over solicitors, as being officers of the court, which is exercised not for the purpose of enforcing legal rights, but for the purpose of enforcing honourable conduct on the part of the court's own officers … the court has a right to see that its own officer does not act contrary to his duty".

37. At paragraph 30, quoting Sir John Donaldson MR in John Fox (A Firm) v Bannister King & Rigbeys [1988] Q.B. 925, the jurisdiction is described as:

"indeed extraordinary, being based upon the right of the court to see that a high standard of conduct is maintained by its officers acting as such … It is, in a sense, a domestic jurisdiction to which solicitors are only amenable because of their special relationship with the court and it is designed to impose higher standards than the law applies generally."

38. In summary, then, the point of the jurisdiction is to address cases where the conduct of the solicitor is not what it should be. The examples referred to in Assaubayev seem to me to make it quite clear that it is a summary jurisdiction, to be exercised only in clear-cut cases.
39. As for fiduciary duties, it is not in issue that a solicitor owes fiduciary duties to a client nor that such duties can continue to exist after the retainer is terminated. John Youngs Insurance Services Ltd v Aviva Insurance Service UK Ltd [2011] EWHC 1515 (TCC), referred to in submissions by both parties, seems to me to add little to that other than to demonstrate that the existence of a fiduciary duty, its nature and the extent to which it survives the termination of a contract will depend upon the relationship between the parties and the terms of the contract.
40. Mr Parker reminds me that the equitable remedies for breaches of fiduciary duty are not, generally speaking, matters for a Costs Judge. For that reason, the suggestion that the court's inherent jurisdiction should be exercised by reference to alleged breaches of fiduciary duty has, in my view, to be approached with some caution.
41. To my mind, Mr Carlisle's submissions must fail for three reasons. First, there is no evidence, certainly not of the clear-cut kind that would be needed, of any conduct on the part of a solicitor that might make it appropriate for the court to exercise its inherent jurisdiction. Second, Mr Carlisle has not identified either a fiduciary duty which obliges a solicitor to supply to a client copies of documents which do not belong to the client, or a breach of any other fiduciary duty.
42. Third, it does not seem to me that it would be appropriate to exercise the inherent jurisdiction of the court to order, in effect, pre-action disclosure on the basis that the Claimant suspects overcharging by the Defendant.
43. It is important to put this application into context. One must bear in mind the criteria for pre-action disclosure set out by CPR 31.16, which this case does not meet. One must also bear in mind the stated purpose of the application, which is to allow the Claimant to take advice on the exercise of his statutory right to apply for assessment of the Defendant's bills. Those rights are subject to time limits. Given that, on the evidence, the Claimant received bills and paid them about three years before he instructed his present solicitors to explore the possibility that he had been overcharged, it seems likely that those time limits expired some years ago.
44. For those reasons, the application will be dismissed.