Flatman & Anor v Germany & Anor

In costs proceedings following failed personal injury claims, the Court of Appeal may order limited disclosure where new material gives rise to a properly arguable possibility of a non-party costs application under section 51 of the Senior Courts Act. The court may admit new evidence on appeal where it satisfies the Ladd v Marshall criteria and is relevant to that ancillary issue, even if it does not bear on the principal issue under appeal. Disclosure should be confined to material relevant to the alleged conduct, instructions and funding arrangements, and must respect legal professional privilege. The court declined to use ancillary disclosure to bypass the disputed question whether funding disbursements under a conditional fee agreement takes a solicitor outside the ordinary role of solicitor.

Two failed personal injury claims had generated costs orders in favour of the defendants. The claimants’ solicitors appealed against an order made by Eady J requiring disclosure, obtained after HHJ Maloney QC had refused the defendants’ applications for information concerning a possible non-party costs application under section 51 of the Senior Courts Act.

During the appeal, correspondence from Mr Weddall alleged that the solicitors had proceeded without after-the-event insurance contrary to his instructions and had protected their own investment in the claim. The respondents sought disclosure and related relief. The Law Society intervened on the separate issue whether section 58 of the Courts and Legal Services Act 1990 treated disbursements as expenses funded under a conditional fee agreement. The central procedural issue was how the appeal should proceed in light of the new allegations.

1. Applications and joinder. The applications to strike out or set aside the appeal were refused. The application to impose conditions on the appeal was not pursued. The firm and the company were joined as parties for costs purposes, and the Law Society was joined as an intervener. A separate permission application concerning a judgment of King J was withdrawn or refused by consent, with no order for costs.
2. Limited disclosure. The court directed limited disclosure arising from Mr Weddall’s letters. The new material was admissible under the Ladd v Marshall tests, including relevance, not to determine the disbursements issue but because it might support ancillary disclosure before a possible section 51 application. The allegations concerning instructions and the absence of funding were sufficiently disturbing that they should be investigated so far as safely possible at that stage.
3. Scope and privilege. Disclosure was confined, subject to legal professional privilege and any issue of waiver, to letters, internal notes, memoranda and other file material concerning Mr Weddall’s complaints and the instructions given about the presence or absence of funding. Instructions on the merits of the underlying claim were outside the scope of the appeal.
4. Principal issue preserved. The court declined to order disclosure about the conditional fee agreements and funding generally because that was the issue addressed in the judgments below and raised in the appeal. The court therefore did not sidestep the question whether funding disbursements alone could take a solicitor outside the solicitor’s role. The Weddall letters were admitted as evidence in the appeal.

• Court of Appeal (Civil Division): on appeal from the High Court of Justice, Queen’s Bench Division, the court refused the applications to strike out or set aside the appeal, directed limited disclosure, admitted the Weddall letters as evidence, and made the ancillary joinder and costs orders described above.
• High Court of Justice, Queen’s Bench Division: Eady J allowed the defendants’ appeal from HHJ Maloney QC and ordered disclosure, staying the order pending a possible appeal.
• County Court: HHJ Maloney QC refused the defendants’ applications for disclosure, finding insufficient evidence and no prospect of a section 51 order based solely on solicitors funding disbursements.