KA-2023-000225 - [2025] EWHC 1605 (KB)

The purpose of Part 18 is to clarify or provide additional information about matters in dispute “whether or not the matter is contained or referred to in a statement of case.” The threshold requirement that there should be a dispute is set out in CPR rule 18.1(1). For the purpose of Part 18, a non-admission requiring the other party to prove its case is capable of giving rise to a “dispute” (see CPR 16.5). Indeed, in some situations it may be appropriate to request information under Part 18 to ascertain whether a dispute exists (see Harcourt v FEF Griffin [2007] EWHC 1500 (QB)). The existence of contentious or missing items within the cash account may constitute a matter in dispute potentially requiring clarification in a costs assessment (Edwards) since the Court has to be satisfied that the cash account is accurate in order to certify it. It does not seem to me to be appropriate to analyse this situation as akin to one where a party considers that “...an opponent has possibly caused him some loss” but would be unable to “get proceedings off the ground” in the “absence of any proof to support that suspicion” (see paragraph 31 in Brown). Nor do I think it is sufficient to assume that the cash account is accurate because the solicitor says it is, which would go well beyond the ratio in Tankard. Whilst I accept that it is generally unnecessary and disproportionate to ask a party with a compliant but concise Statement of Case to provide more detailed information (see Al Saud v Gibbs [2022] 1 WLR 3083), applying this approach in the costs arena is problematic. Points of Dispute, Replies and cash accounts are not Statements of Case. Neither are they, as a matter of practice, regarded as such. There is no compliant statement of truth so they could not be. They are often drafted by staff who are not legally qualified. Points of Dispute and Replies are not treated with the rigour applied to Statements of Case for the purposes of the CPR. The Costs Judge did not conclude otherwise. I note that in Edwards, Ritchie J observed:

“I did offer the Parties a way out of the secret commission issue by suggesting that a partner in the Defendant firm sign a statement of truth on the Cash Account in Raubenheimer, but no agreement could be reached on whether that would fully bite on the issues, so the parties did not accept that this suggestion would resolve the issues.”

I acknowledge that the Costs Judge, as an experienced specialist judge, was well-placed to assess the issue before him but he appears to have done so on the basis that the threshold was equivalent to establishing an arguable case of the sort that would be needed for pre-action disclosure and by reference to the observation [38]:

“a practice has grown up of stating that the cash account is in dispute as a means by which to interrogate the circumstances in which the ATE policy was taken out.”

While some of the requests in the Part 18 request of the 18th of July 2022 did relate to the ATE insurance policy most were aimed at direct or indirect commission or remuneration. Even if there is a practise of the sort referred to, the Costs Judge also acknowledged [57] that he was aware that relationships between solicitors and ATE insurers have resulted in some solicitors obtaining a payment for referring business to the insurer. If there was a practice of ‘interrogating’ ATE polices of which the Costs Judge was aware there was equally recognition of a practice of receiving commissions either directly or through an entity in common ownership. In Bendriss v Nicholson Jones Sutton Solicitors Ltd [2024] EWHC 1100 (SCCO) the nature of the arrangement appears to have emerged as a result of a Part 18 request being answered by the solicitor:

“I think it is true to say that the disclosure hare was set running by (i) the defendant agreeing to respond to a Part 18 Request regarding the ATE policy (ii) stating in the Response that an insurance intermediary (WGAL) “may well have received a commission”, and (iii) it transpiring that there are common owners of that intermediary and the defendant firm of solicitors.”

The fact of a commission payment in Raubenheimer emerged through the diligent inquiries of the Claimant's legal representatives, prompted by a suspicion of undisclosed financial benefits. Although the Defendant subsequently denied that this constituted a "commission" as properly understood, characterising it instead as a "legitimate claims-handling fee for services payable to a separate group company", the very existence of the payments only came to light because a third party, rather than the insurer itself (whose commercial arrangements would typically remain confidential), was able to disclose details which had not been revealed by the solicitor.

The Costs Judge observed [40] that Raubenheimer was an unusual case because: “The evidence obtained by the Claimant's lawyers must, it seems to me, be unlikely to be obtained in most cases”. However, that comment serves to make the point that where there may have been a “secret” commission the client will most likely be unaware of whether or not any sum has been paid. There was no suggestion that the arrangement which surfaced in that case was in itself such an unusual one that ordering further information to be provided was unnecessary or disproportionate in other cases; what was unusual was that the client received information, which would otherwise probably not have been disclosed, from an unusual source.

In relation to the Appellant’s argument by reference to agency principles, the Costs Judge considered the Yasuda decision and thought there might be a distinction to be drawn with the situation before him. In Yasuda, the High Court found that a principal is entitled to sight of the agent’s records relating to the transactions entered into on the principal's behalf, even after the agency relationship ceases. The rationale was that the principal, being a participant in the transactions, is entitled to the records. The Cost Judge noted the factual context of Yasuda, where the Claimant was a participant in a syndicate of underwriters (the principal) and the Defendant was the managing agent responsible for entering into contracts of insurance on behalf of the syndicate. He concluded that the relationship between a solicitor and client in the context of arranging ATE insurance was significantly different from the principal-agent relationship in Yasuda on the basis that the "vast majority” of ATE insurance is arranged by solicitors via a block policy. The Costs Judge did not determine whether in this situation the solicitor was acting as the agent of the insurer or the client and did not consider that he had “the materials” which would allow him to do so. I note that in Herbert the Court of Appeal observed [68] “In the present case, it was an insurance contract effected by HH as Ms Herbert’s disclosed agent, and it specified Ms Herbert as the Policyholder.” Presumably establishing the fiduciary capacity in which the solicitor was acting would, in itself, be a good reason for seeking further information through a Part 18 request. In so far as the solicitor might have been characterised as acting as the client’s agent the Costs Judge considered [55] that the scope of the agency was limited to the ATE policy; a point that was pertinent to the wider disclosure application in relation to call records, on which permission to appeal has not been granted. The overall position appears to be that the Costs Judge did not come to a firm conclusion on the agency point being advanced by the Appellant, falling back on the conclusion [57] that the application of Brown and Tankard and the absence of “any evidence whatsoever” that commissions had been paid meant that the arguments by reference to Yasuda could not make “any difference”.

For myself I am not persuaded that it can be assumed for the purpose of a Part 18 request that there was no agency or that it would not be a relevant factor in so far as it gave rise to a duty to account as agent in relation to the receipt of commission and hence a distinct basis for the provision of information as to the performance of that duty where queries were raised. As the Court of Appeal stated in Belsner v CAM Legal Services Ltd [2022] EWCA Civ 1387 [72]: “There is no doubt that solicitors acting for a client in relation to a RTA portal claim owe that client fiduciary duties from the moment they start to act.”

In relation to requests directed at commission I conclude that the only threshold condition is that the information must relate to a matter in dispute in the proceedings. There is no requirement for a witness statement or a "positive case" to be established by the party seeking information. There is no requirement on a party to "prove" something that is not within their knowledge, especially when it lies within the exclusive knowledge of the other party. Part 18 requests are precisely designed for circumstances, amongst others, where clarification is needed, and the facts are not within the knowledge of the requesting party. It is not correct to equate the threshold for ordering further information under CPR Part 18 with the more stringent requirements for specific disclosure or pre-action disclosure. It is, and always has been, incumbent upon the solicitor to satisfy the Court as to the accuracy of the cash account, not for the client to disprove it. Queries raised by the client or the Court itself place the account in dispute. Even if a threshold of "reasonable suspicion" were required, that threshold has been met in this case. The fact that undisclosed commissions are acknowledged to be a feature of some litigation arrangements which involve ATE insurance, coupled with the unusual payment arrangements for the success fee in this case, provides ample grounds for a query to be raised. "Points of Dispute," "Replies," and "Cash Accounts" are not Statements of Case within the meaning of CPR 22.1, due to the absence of a statement of truth and so cannot be regarded as an explicit statement that no commission has been received.

The information sought by the Claimant can be easily provided. Ordering the provision of this information would not result in disproportionate expenditure or effort. Indeed, if no commission was received, the response will be simple. If a commission was received, it ought, arguably, to have been disclosed previously. I therefore allow the appeal in relation to the provision of answers to the Part 18 requests served by the Appellant. In the event that I did so the parties agreed that I should determine the substantive application to which the appeal related in this respect. Whilst the first three requests relate to the inception of the policy and the payment of the premium they nevertheless appear to me to relate to matters in issue. Thereafter the requests are squarely directed at commissions or payments. In those circumstances the requests should be answered in their entirety.

As to the application for information regarding the Gibraltar-based company, AJG Ltd, to which a payment was made from the Appellant’s recovered compensation, the Costs Judge considered that such information, if obtainable elsewhere, did not necessitate a response from the Respondent.

Since, the Respondent included a debit for client money sent to this offshore entity within its cash account the Appellant, in my view, had a legitimate interest in understanding the nature and basis of the payment. While the Appellant has since obtained the company number, the initial refusal to provide basic identifying information was, I consider, unwarranted. Solicitors are officers of the Court and generally act as fiduciaries and agents for their clients. This relationship imposes a clear obligation to provide their principal with full information regarding their dealings as an agent. Client accounts are held on trust, further underscoring the need for transparent and complete disclosure of all financial benefits received. Case law establishes that for beneficiaries seeking documents held by trustees, no threshold of suspicion is required; the question is simply whether it is appropriate for the Court to intervene. This principle supports the need for such information where a solicitor acts as a fiduciary.

As the Costs Judge observed the query in relation to the Gibraltar company did not impose any onerous obligation on the Respondent, merely requiring it to provide information of a limited sort which must have been in its possession. Transferring the onus onto the client to independently obtain fundamental details regarding a payment initiated by the solicitor is, in my view, inconsistent with the solicitor’s duty to explain an otherwise inexplicable transaction appearing in the cash account relating to the client’s money.

In light of the foregoing, the Costs Judge erred in dismissing the applications for information concerning the Gibraltar company notwithstanding that he took a dim view of the Respondent’s conduct which he proposed to reflect in costs. The matter was largely academic by the time it came in front of the Costs Judge, but he nevertheless determined it, as must I in the appeal. I therefore allow the appeal in respect of the Costs Judge’s refusal to order the provision of information regarding the Gibraltar company.

I acknowledge with gratitude the substantial assistance and guidance I have received from Master Brown in this appeal. The conclusions reached are however entirely my own.