The much-anticipated hearing in CAM Legal v Belsner was scrapped yesterday after the Court of Appeal raised the possibility that pre-action legal work was contentious business for costs purposes.
The Master of the Rolls, Sir Geoffrey Vos, said a fresh hearing would be arranged before 31 July, with a time estimate of two days and a third day available if needed.
The Senior Costs Judge, Andrew Gordon-Saker, is to be invited to sit as an assessor.
The one-and-a-half-day appeal by CAM Legal was hotly awaited to determine the issue of informed consent to deductions from damages in personal injury cases, Mr Justice Lavender having held in 2020 that law firms had to spell out in their retainers the costs clients could be liable for beyond what was recovered from defendants.
This was the case even if the solicitors ultimately capped their recovery.
Checkmylegalfees, which acts for CAM Legal’s former client, said at the time that millions of clients may have claims a result. The Court of Appeal heard that there were 900 cases stayed pending the outcome of the test case.
On the first day of the hearing, Sir Geoffrey suggested that work done under the pre-action protocols was contentious business, notwithstanding the fact that the established legal position is that – for the purposes of Solicitors Act 1974 assessments – it is non-contentious work.
Many claimant solicitors handling low-value personal injury claims use a contingency fee agreement for pre-issue work and a conditional fee agreement once the claim is issued; finding that pre-action work is contentious business would make the former unlawful and unenforceable.
Joining him on the high-powered bench were the Chancellor of the High Court, Lord Justice Flaux, and Lord Justice Arnold.
CAM Legal and the Law Society, which has intervened in the case, made written submissions on the issue overnight, and at the start of the second day, Vos LJ said he considered that the “ramifications are more profound than appeared at the start of the case”.
As a result, the court was concerned that there was insufficient time left for argument.
He put the issue into the wider context of the move to online courts and his goal of creating “a coherent civil justice system, of which the pre-action portal stage is incredibly important”.
Vos LJ went on: “If it is a non-contentious space, so called, then we need to understand the ramifications of that.”
He added that, if the appeal was upheld, the court was “not inclined” to send case back to the district judge but to reassess the costs on the correct basis so as not to delay matters any further.
Nick McDonnell, a costs lawyer and director of Kain Knight (North & Midlands) Ltd, acting for CAM Legal, said: “After a challenging day one, the appellants are very pleased that the Lord Justices have reflected overnight on the points of law regarding contentious and non-contentious business in accordance with the Solicitors Act 1974 and seem to now fully appreciate the appellant’s case.
“We are certainly in test case territory and the potential ramifications across the legal profession continue to become clearer.
“The Master of the Rolls also accepts the case has developed through no one’s fault. That being the case, it is not surprising the Court of Appeal has taken the unusual step to adjourn the hearing on day two and to relist the case…
“We are looking forward to be afforded the time to fully set out the appellant’s arguments orally at the adjourned longer hearing in due course so that a fully reasoned judgment can be reached.”
Mark Carlisle of Checkmylegalfees.com, which is acting for the claimant client, said: “We welcome the court’s appreciation, particularly following the submissions developed on Tuesday, that this appeal does not just concern legal fees deducted from the compensation of those involved in RTA claims, but instead involves fundamental elements of legal costs law, the decisions on which will potentially ripple far into the future.”
Professor Dominic Regan was in court and tweeted after the first day: “We weren’t expecting that. 165 minutes of fireworks with the Master of the Rolls saying that proportionality did apply to indemnity costs and floating the idea that non-contentious business was contentious. Ben Williams QC [for CAM Legal] stood firm.”
Tweeting as Vos LJ explained his concerns on the second day, Professor Regan noted: “The Court of Appeal has come to appreciate the importance of the distinction between contentious and non-contentious costs.”
Well-known injury solicitor Peter Todd, a consultant at Scott-Moncrieff & Associates, was watching too and tweeted on Tuesday that Vos LJ had said employment tribunal proceedings were contentious business. This meant, Mr Todd continued, that contingency agreements would be unenforceable and void. “Employment solicitors will be worried.”
Yesterday he tweeted: “The penny seems to have dropped overnight of the full implications of the court rejecting this appeal. Bench now in reverse gear…
“Court of Appeal adjourns #Belsner appeal until ‘the summer’, to allow for more detailed consideration of the seismic impact of ripping up the century old law on contentious and non-contentious costs and the chaos that could ensue otherwise.”