Belsner v Cam Legal

• Published date: 31 October 2022
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Gatehouse Chambers
• Author: Robin Dunne and PJ Kirby KC

The decisions in Belsner v Cam Legal and Karatysz v SGI were handed down today. Robin Dunne, who appeared for the Respondent in Belsner with PJ Kirby KC and for the Appellant in Karatysz v SGI considers the implications of the Belsner judgment.

The appeals in Belsner and Karatysz will no doubt generate a great deal of legal commentary. Many in the solicitors' profession, particularly those who handle large volume low value personal injury claims will no doubt rejoice at the decisions, both of which went in favour of the respective solicitors and against the clients. Consumers of legal services may well be dismayed at the judgments. Certainly, firms who specialise in challenging solicitors' bills in these cases will be concerned.

This article will look at the likely effect of the judgment in Belsner going forward. In particular, it will look at whether once the dust has settled, PI solicitors will still be as pleased with the decision as they first thought.

What was it all about?

In Belsner, the client was injured when she was involved in an RTA as a pillion passenger on a motorbike. The solicitors issued her claim on the MOJ portal and signed her up to a CFA. That CFA provided that the firm was able to claim costs from her over those which she might recover from the opponent (which would be fixed costs in this case per CPR r.45 ). However, it did not set out what those costs would be. The CFA did not cap her costs liability in any way (save as to the success fee which was subject to the usual statutory cap). The solicitors estimated that it would cost '2,500 plus vat for base costs to bring her claim to the point where most cases of this type settled. The fixed costs at the same point would be '500.

The success fee, in this passenger RTA, was set at 100%. The firm once challenged accepted a reduction of this uplift to 15%. They also chose, at their own discretion, to only claim from Ms. Belsner '500 plus vat in respect of base costs (namely the amount of fixed costs). However, they calculated their success fee on their "full" base costs figure of '2,171.90 plus VAT (capped at 25%). Thus, they sought the sum of '385.50 for their success fee. Had the success fee been calculated on the fixed costs figure it would have been '75.

The first assessment

The client issued an application for assessment of the base costs (including the success fee). They argued that per s.74(3) of the Solicitors Act 1974 and r.46.9(2) CPR the solicitors did not obtain informed consent to charge anything over the fixed costs, because they had not told the client what those costs would be.

s.74(3) reads as follows:

(3) The amount which may be allowed on the assessment of any costs or bill of costs in respect of any item relating to proceedings in the county court shall not, except in so far as rules of court may otherwise provide, exceed the amount which could have been allowed in respect of that item as between party and party in those proceedings, having regard to the nature of the proceedings and the amount of the claim and of any counterclaim.

Rule 46.9(2) reads thus:

(2) Section 74(3) of the Solicitors Act 1974 applies unless the solicitor and client have entered into a written agreement which expressly permits payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings.

The District Judge found in favour of the client on a provisional determination by paper but found for the solicitor at an oral hearing. In essence, he held that per r.46.9(2) all that was required was a written agreement which allowed for the recovery of costs in excess of the fixed costs, and not informed consent.

The First Appeal

Lavender J overturned that decision. He found that the need for informed consent arose as a result of the fiduciary relationship between the client and solicitor. As a...