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Wayne Raubenheimer v Slater & Gordon UK Ltd

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ATE policy information not obtainable under Part 18 in Solicitors Act assessment (Wayne Raubenheimer v Slater & Gordon UK Ltd)

Dispute Resolution analysis: The claimant was refused its application to compel the defendant to answer a Part 18 request for further information in relation to an after-theevent (ATE) policy, including the policy documents. The ATE premium is a cash account item and not a disbursement. The solicitor is simply paying this on the client’s behalf and therefore such an item cannot be challenged via a Solicitors Act 1974 (SA 1974) assessment. It followed that the Part 18 request was not suitable for these proceedings. Written by Nicholas Lee, costs lawyer and mediator at Paragon Costs Solutions.

Wayne Raubenheimer v Slater & Gordon UK Ltd [2021] Lexis Citation 112

What are the practical implications of this case?

A Part 18 application in a SA 1974 assessment cannot be used as a route to obtaining ATE policy documents or information about an ATE policy. It is important for solicitors to understand the difference between a disbursement and a cash account item. A disbursement is an expense incurred by the solicitor while acting for the client which is inserted into the solicitor’s bill and is subject to assessment if the client initiates an assessment of the solicitor’s charges. A cash account item is a sum simply paid on a client’s behalf as their agent. The latter is not subject to scrutiny during a SA 1974 assessment. An ATE policy is a contract between a client and the insurer, and thus payment of the premium for an ATE policy, if made by the solicitor on behalf of the client, is a cash account item.

What was the background?

These were proceedings under the SA 1974 between Mr Raubenheimer (the claimant) and Slater & Gordon UK Ltd (the defendant). The claimant served a Part 18 request on 26 August 2020 seeking from the defendant the identity of the ATE insurer, a copy of the policy documents, details of any intermediaries involved in the provision of the ATE insurance and of any direct or indirect commission or benefits received by the defendant.

The defendant did not respond and therefore the claimant issued an application for an order compelling the defendant to provide the information sought. The claimant’s costs lawyers had served at least a hundred identical Part 18 requests upon the defendant. This was part of what was described by the defendant’s counsel as a ‘large-scale campaign by the claimant’s lawyers’.

The claimant asserted that the defendant appeared to have breached its fiduciary duty not to make a secret profit from its role as a fiduciary. The defendant asserted that the inferences drawn by the claimant were wrong and that the claimant was not entitled to make the Part 18 request. Having regard to the judgment of the Master of the Rolls in Herbert v HH Law Ltd [2019] EWCA Civ 527, the defendant submitted that the claimant was not entitled to challenge the amount of an ATE premium through SA 1974 proceedings. It followed that there could be no entitlement in such proceedings to a Part 18 request for information concerning the premium. In response the claimant submitted that the court need only decide whether the information should be provided and should not rule upon the claimant’s right to challenge the premium. Furthermore, the claimant asserted that the premium could be investigated via the cash account rather than the bill itself.

What did the court decide?

The court firstly dealt with the claimant’s assertion that this was a simple question of whether the information should be provided. The Master concluded that it was unattractive that one court should carry out investigations into something which would ultimately be considered by a different court. If there was no jurisdiction to deal with the ATE premium in a SA 1974 assessment then it would not be the correct forum to seek the information sought by the Part 18 request. The court then considered the nature and extent of the cash account and its role within SA 1974 proceedings.

The court referred to a 1963 book entitled ‘Introduction to Solicitors’ Costs’ which explained the difference between disbursements (payments made in the course of the solicitors’ duty when acting for a client) and cash account items (payments made on behalf of a client as their agent). Disbursements would typically go on the solicitor’s bill whereas cash account items would typically be paid from sums held by the solicitor on behalf of the client. The current description of a cash account can be found at PD46 paragraph 6.6(b) as follows:

‘(b) in applications under section 70 of the Solicitors Act 1974, a cash account showing money received by the solicitor to the credit of the client and sums paid out of that money on behalf of the client but not payments out which were made in satisfaction of the bill or of any items which are claimed in the bill.’ The Court of Appeal in Hollins v Russell [2003] EWCA Civ 718 confirmed that an ATE policy is a contract between the client and the insurer, so it was not a disbursement and did not belong in a solicitor’s bill of costs delivered to their client.

The court then considered the extent to which it would consider the cash account in a SA 1974 assessment. The Master confirmed that the intention of the bill and cash account was to provide a complete record of the financial transactions between the solicitor and client during the period of the retainer. In order to complete the cash account, the solicitors’ bill needs to be assessed and then there would be an outstanding balance to be paid by or refunded to the client. However, it was not the function of the court in a SA 1974 assessment to determine whether an item in the cash account to another party was for an appropriate amount. The court accepted the defendant’s submission that any challenge that the claimant had in respect of the ATE premium should be brought in the Chancery Division.

The court’s final consideration was whether it should exercise its inherent jurisdiction to scrutinise the ATE premium. The claimant submitted that there was sufficient evidence to cause the court to enquire as to whether there had been undisclosed commission. The claimant referred to the court’s right and duty to supervise the conduct of solicitors. The defendant asserted that the court’s inherent jurisdiction was an extremely rare beast and that the court had less duty to supervise officers in view of the existence of the Solicitors Regulation Authority and the Solicitors Disciplinary Tribunal.

The court ruled that there was no room for it to consider the composition of an ATE premium during a SA 1974 assessment. There was no possibility during the course of such proceedings to make enquiries as to the reasonableness of cash account items.

A cash account does no more than set out receipts and payments made. An ATE policy falls under the cash account items. The solicitor is simply paying this on the client’s behalf and such items cannot be challenged via a SA 1974 assessment.

The Master also commented on the likely benefit of any Part 18 response in any event and suggested that the claimant appeared to have sufficient evidence with which to bring separate proceedings if it so wished. If that were the case, the defendant would be compelled to respond and set out its defence. The claimant could not be criticised for bringing such proceedings given that the defendant had not responded to the questions brought in these proceedings.

The claimant’s application was therefore dismissed.