HOW COSTS HAVE CHANGED SINCE THE WORLD WAS YOUNG: SOLICITOR’S APPEAL AGAINST A REFUSAL TO ORDER A STAY AND SECURITY FOR COSTS DISMISSED: APPEAL FOR AN ORDER THAT SOLICITORS REPLY TO PART 18 QUESTIONS ALLOWED
In the judgment today in Edwards (& others) -v- Slater and Gordon UK Limited  EWHC 1091 (QB) Mr Justice Ritchie disallowed the defendant’s appeal in relation to issues relating to disclosure, funding and security for costs. He allowed the claimants’ appeal in relation to the requirement of the defendant to answer Part 18 questions in relation to alleged “secret commissions”.
A copy of the decision is available here. Raubeheimer Edwards v Slater and Gordon UK Ltd FINAL judgment (1)
“In the old days, when the world was young, the Government provided legal aid to injured claimants in most personal injury claims and that, along with Union funding, paid the claimants’ lawyers to fight PI cases. If the cases were won the defendants paid the claimants’ lawyers costs, if the cases were lost the Legal Aid Board or the Unions paid the claimants’ lawyers.”
Some 134 cases are being brought by Clear Legal Ltd trading as Checkmylegalfees.com (“Clear Legal”) challenging costs charged by the defendant company. The judge ordered that 10 cases be chosen, essentially as test cases. The judge made an application for disclosure in relation to some documents held by the defendant. The judge then considered the defendant’s applications for a stay and for an order that Clearwater pay an order for security for costs. The basis of the applications were that Clearwater were essentially “insurers” and bringing the actions on their client’s behalf, with a financial interest in the outcome.
At first instance:
- The judge made an order for disclosure in relation to documents held by the defendant.
- Did not make an order for a stay, or for security for costs.
The first instance decision is considered in detail here.
The defendant solicitors appealed arguing:
- The court did not have jurisdiction to order disclosure in a Part 8 claim.
- That a stay and security for costs should have been ordered.
The claimant appealed against the judge’s refusal to order the defendant to answer Part 18 questions in relation to secret commissions paid from the ATE insurer.
THE RESULT: THE DEFENDANT DID NOT FARE WELL
The High Court judge found that CPR 31 (power to order disclosure) did apply to Part 8 claims and the costs judge was right to so conclude.
“The Claimants sought standard disclosure of the Slater and Gordon retainers and the audio recordings of the signing of the retainers and all other documents relating to the pleaded issues. The Judge granted it. The Defendant did not want to give any of these and appeals the order for standard disclosure. Should I grant the appeal on the grounds that disclosure is not usually ordered in Part 8 claims? I see no reason in justice to do that. Should I grant the Appeal on the basis that there is no power to order disclosure?
I have already ruled that the Court had such power. Should I interfere with a case management decision on the basis that I disagree with it? I do not disagree with it. In addition I have taken into account the case law on my powers in appeals set out above and dismiss this ground of appeal. The disclosure order stands and should be complied with in my judgement.”
Champerty and “unlawful insurance”
The judge also rejected the argument that the claimants were conducting their case on the basis of champerty or unlawful insurance and, therefore, the case should be stayed or security for costs given.
THE PART 18 REQUESTS
The High Court judge did allow the defendants’ appeal in relation to Part 18 questions. The defendants had put questions relating to alleged “secret commissions” received by the solicitor from the ATE insurer.
Taking into account what I have set out above about hybrid hearings and transferring parts of part 8 claims to the Chancery Division for determination if that is necessary, I do not consider that the right way to go forwards in these claims was or would be to
require the Claimants to issue 150 or less part 7 claims relating to the alleged secret commissions. These commissions were very small sums. The issuing fees alone would be substantial. The better way for these issues to be dealt with would be to consider the correct Judge/transfer to the Chancery Division, at the next case management hearing after disclosure has been provided and the part 18 answers have been provided, certified by a statement of truth, and to determine the scope of the SOCA orders at the same time. The issues may involve quantification of the ATE premiums or the proof of the existence of and reason for the alleged secret commissions.
 I consider that the Judge fell into error when refusing to order the Defendant to answer the part 18 requests relating inter alia to the alleged secret commissions.