SECOND COURT OF APPEAL DECISION ON COSTS TODAY: A WARNING SHOT FIRED AFTER BELSNER

Fast on the heels of the judgment in Belsner today was the Court of Appeal decision in Karatysz v SGI Legal LLP [2022] EWCA Civ 1388, where a clear warning shot was fired in relation to the practice of seeking assessment of small bills.

“Firms such as checkmylegalfees.com and their clients should be in no doubt that the courts will have no hesitation in depriving them of their costs under section 70(10) if they continue to bring trivial claims for the assessment of small bills to the High Court, even if those bills are reduced on the facts of the specific case by more than one fifth under section 70(9). The critical issue is and always will be whether it is proportionate to bring this kind of case to the High Court. In this case, it was not.”

 

THE CASE

The Court of Appeal dismissed an appeal against a decision in relation to the assessment of costs following a solicitor’s deduction of 25% of damages in personal injury clam.

OBSERVATIONS FROM BELSNER

  1. In Belsner, the court has already stated that (i) it is unsatisfactory that solicitors like checkmylegalfees.com can adopt a business model that allows them to bring expensive High Court litigation to assess modest solicitors’ bills in cases of this kind, and that (ii) the Legal Ombudsman scheme would be a cheaper and more effective method of querying solicitors’ bills in these circumstances.

THE CONSEQUENCES WERE OVERSTATED

    1. Both sides have argued that the consequences will be grave if the case is decided against them. I believe these points are much overstated on both sides.
    1. The Client allowed checkmylegalfees.com to bring this costly case on her behalf, when she had almost nothing to gain. As Lavender J demonstrated at [42], she recovered £177.50 before DJ Bellamy, which was all that was really at issue except massive sums by way of costs. The process whereby small bills of costs are taxed in the High Court is to be discouraged. It is far more economic to use the Legal Ombudsman scheme which is a cheaper and more effective method of querying solicitors’ bills in these circumstances. Moreover, whilst it has not been necessary to decide whether there were “special circumstances” in this case under section 70(10), because the Client has not succeeded on her appeal, there remains a lesson to be learned from this case. Firms such as checkmylegalfees.com and their clients should be in no doubt that the courts will have no hesitation in depriving them of their costs under section 70(10) if they continue to bring trivial claims for the assessment of small bills to the High Court, even if those bills are reduced on the facts of the specific case by more than one fifth under section 70(9). The critical issue is and always will be whether it is proportionate to bring this kind of case to the High Court. In this case, it was not.
    1. The Client argues that certainty is needed. I agree. Properly drawn bills ought in future to state the agreed charges and/or the amounts that the solicitors are intending by the bill to charge, together with their disbursements. They should make clear what parts of those charges are claimed by way of base costs, success fee (if any), and disbursements. The bill ought also to state clearly (i) what sums have been paid, by whom, when and in what way (i.e. by direct payment or by deduction), (ii) what sum the solicitor claims to be outstanding, and (iii) what sum the solicitor is demanding that the client (or a third party) is required to pay.
    1. The practice of imposing conditions on the face of a statutory bill is confusing and unhelpful. If conditions are to be imposed, they should be transparent. If, for example, the bill is for £5,000, but the solicitors wish to say that they will accept £4,000 in full and final settlement if payment is made within 14 days, that should be clearly stated. The amount of such a bill would be held to be £5,000, just as it was in Carthew.
    1. There was discussion about whether anything about this case changes because the Bill was, in the event, for non-contentious, rather than contentious, costs. I do not think so. But points made about gross sum bills and the legal (as opposed to good practice) requirements for the content of bills were not in the grounds of appeal and we have not, therefore, decided them.
    1. I have, however, decided that the proper question for the court to ask in determining “the amount of the bill” under section 70(9) is, in respect of the category or categories of costs being assessed, “what is the total sum that the bill is demanding be paid to the Solicitors, whether or not all or part of that total sum has actually been paid”.
  1. I would dismiss this appeal with costs.