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

In the present case the Costs Judge also relied on his earlier Judgment in Brown. The principle that can be distilled from the Judgment is that Part 18 requests concerning alleged undisclosed commissions relating to ATE insurance were not justified in the absence of any evidence from the Claimant to suggest that such commissions had indeed been paid. The Costs Judge considered that without a "positive case" or any supporting evidence from the Claimant, such requests amounted to a fishing expedition as the Respondent also argued in the appeal before me. He considered that it was insufficient to assert that there was a dispute without identifying any facts which gave rise to it. The Costs Judge quoted [40] from his decision in Brown including paragraph 31:

“31.

But, in my judgment, there must be many situations where a party considers that an opponent has possibly caused him some loss but has no evidence as such. In the absence of any proof to support that suspicion, then proceedings cannot get off the ground. As indicated above, a pre-action disclosure application would need to have evidence of an arguable case and that must be the sort of threshold to apply in respect of Part 18 requests.”

It seems to me to be highly doubtful whether Part 18 requests can be regarded as analogous with pre-action disclosure in this context or require anything approaching an arguable case to be made out. What is required in the context of Part 18 requests is the identification of a dispute. Since there is a requirement to certify and an obligation on the solicitor to provide an accurate account, where queries are raised by the Court or the client there is a dispute until such time as they are answered to the satisfaction of the Court. I should add that although the part 18 request was not initially in the appeal bundle it was ultimately provided for the appeal hearing.

The Costs Judge was also mindful of the implications of the Court of Appeal's decision in Herbert. He was plainly concerned [38] in a general sense that Claimants were attempting to use challenges to items in the cash account (such as the ATE premium) as a gateway to “interrogate” ATE policies otherwise beyond the scope of a s.70 assessment and in a way that might circumvent the principles established in Herbert. However, the material requests in this case appear to me to have been directed towards whether a commission had been paid.

The Costs Judge also considered submissions based upon the decision in Yasuda Fire and Marine Insurance Co of Europe Ltd. v Orion Marine Insurance Underwriting Agency Ltd. [1995] QB 174 which concerns the entitlement of a principal to information from their agent. However, he rejected the submission that Yasuda provided a right to access to the Defendant's records or to a response to requests for information on the basis, again, that it was necessary to put forward a positive case to support the Part 18 requests. He therefore determined this argument on the same overall approach to Part 18.

He noted that there was no specific Part 18 request before him so as to enable him to consider the substance of the questions being asked. The Appellant had, it appears, made the application without placing a formal Part 18 request before the Costs Judge even though such a request had in fact been served on the Respondent nine months before the hearing and was referred to in the Points of Dispute. The requests were similar to or indeed identical to those made in Edwards and other cases. The Appellant’s skeleton argument before the Costs Judge included the following:

“The Part 18 questions relate to any commissions, financial or other benefits that may have been received by the defendant or an associate but for which the Defendant has not accounted to the client (broadly “undisclosed commissions”). They are all but identical to the questions ordered to be answered in Edwards…”

This may account for the observations made at paragraph 37 of the judgment:

“It seemed odd to me, but seemingly not to the parties, that I was asked to make orders requiring the defendants to respond to Part 18 requests without any of those requests being before the Court. That position was exacerbated by Mr Brighton’s submission that in fact some of the Part 18 requests did not go to the ATE insurance and any undisclosed commissions but concerned other matters. Mr Brighton’s submission was only made after Mr Carlisle had finished on this subject and during which he had made no mention of any Part 18 requests that did not relate to the taking out of ATE policies.”

It was pointed out to me in argument that in the lead-up to the hearing, there had been correspondence with the Costs Judge concerning the procedural requirements for the applications the Appellant wished to make. The central question was whether formal applications, with accompanying notices, and potentially witness evidence, were mandatory, or if these issues could be dealt with under the Court's general case management powers under CPR 3.1. The Court had previously indicated that it would do so without the necessity of formal application notices, provided certain provisos were met. The relative informality of the proceedings may account for the approach taken but in any event at the hearing both parties appear to have proceeded on the basis that the Costs Judge knew what information was requested. There is no indication that he asked for a copy of the request during the hearing.

The Costs Judge also referred to the decision of the Court of Appeal in Tankard v John Fredericks Plastics [2008] EWCA Civ 1375 which established a test, based on the perception of a reasonable person with knowledge of the relevant facts, to determine whether a solicitor has an 'interest' in recommending an ATE insurance policy that must be disclosed to the client under regulation 4(2)(e)(ii) of the 2000 Regulations. He concluded that absent any positive case by the client, the solicitor has to be taken to have followed the law as set out in Tankard regarding any declaration of interest in recommending or arranging any particular ATE insurance.