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Belsner v CAM Legal Services judgment raises more questions than answers - Ged Courtney, Kain Knight

05/12/20. On Friday 16th October 2020, the Court handed down an eagerly-awaited judgement for personal injury lawyers. It was hoped that the appeal in Belsner v CAM Legal Services Limited [2020] EWHC 2755 (QB) would bring about a degree of certainty to firms of solicitors involved in disputes with their former clients, but in some ways it raises just as many questions as it answers.

Ms Belsner sustained injuries when she was knocked off a motorcycle on which she was a passenger. This sort of matter was fairly typical of the work undertaken by the Defendant and the matter proceeded through the RTA Portal. The claim settled following the submission of a stage two settlement pack for the sum of £1,916.98. At the conclusion of the case, the Defendant retained £385.50 of the Claimant's damages (just over 20%) towards the fees they’d incurred. Ordinarily this is where matters come to an end.

Sometime later, the Defendant received correspondence from the Claimant's new legal representative. The Claimant asked for a Final Statute Bill (one having not been sent) and one was provided. The Bill set out the work done on the case and the fees payable in line with the agreed retainer. Whilst the Defendant’s retainer set out that their client was liable for all unrecovered basic charges, they set a bill that capped the shortfall and success fee to the £385.50 taken previously. This meant that the Defendant had accepted the sums recovered from the other side and £385.50 in full and final settlement of their Bill. The Claimant remained of the view the charges were unreasonably high and brought a challenge in the Sheffield District Registry.

An idiosyncrasy of the directions in such matters in Sheffield resulted in the Judge initially assessing the Bill on paper. On paper he agreed with the Claimant that the success fee was too high at 100% and reduced it down to 15%. He also accepted the submission of the Claimant, that the basic charges should be restricted to the sums recovered from the other side due to an absence of an express agreement to charge more. When arriving at this conclusion he referred to s. 74(3) of Solicitors Act 1974 and CPR 46.9(2). The effect of this was that the success fee was calculated at 15% of the £500.00 fixed profit costs recovered as opposed to the profit costs calculated on an hourly rate. The Judge ordered the Defendant to repay the majority of the sums deducted from the Claimant's damages. The Defendant was not content with the findings and asked the judge to revisit his decision with the benefit of oral submissions.

At the subsequent hearing, the Judge, with the benefit of the papers and further submissions, overturned his earlier paper decision. He found that in order for a solicitor to rely on CPR 46.9(2), they needed to show that the retainer was sufficiently clear and express when setting out the Claimant’s responsibility to meet unrecovered basic charges. He was happy that the Defendant’s retainer did this. To require informed consent of the client to rely on CPR 46.9(2) would be setting the bar too high.

The Claimant appealed the Judge's decision. In the Grounds of Appeal the Claimant pointed to the fiduciary nature of the relationship between solicitors and lay clients and argued that in order to satisfy the requirement of CPR 46.9(2), it wasn't good enough for the materials to simply say that the Claimant was liable for unrecovered costs. To meet the threshold in the rule, the Claimant’s legal representative said that the solicitor must have the informed consent of their client. Moreover, that informed consent could only be obtained where solicitors advise the client as to the likely recovery in costs from a third party.

The appeal was heard in May 2020 but for a variety of reasons judgement was not handed down until October 2020. In his judgement, Lavender J found for the Claimant. He was of the view that the Defendant had not done enough so as to meet the requirements of CPR 46.9(2). His reasons for arriving at this decision fall broadly into three categories:

Informed consent

Contrary to the findings of District Judge Bellamy at first instance, Lavender J felt that informed consent was a requirement if the Solicitor were to rely on CPR 46.9(2). He opined that this did not arise from the wording of the rules, but by virtue of the fiduciary relationship between the solicitor and their client. At para 68, he said...

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