Darya Belsner v Cam Legal Services Limited

The Court of Appeal decided that claims pursued and settled within the pre-action RTA portal without county court proceedings being issued are non-contentious for the purposes of the Solicitors Act 1974 and therefore section 74(3) and CPR Part 46.9(2) do not apply to them. The judge below was wrong to treat the solicitors as owing a fiduciary duty to obtain the client's fully informed consent when negotiating the retainer. Nevertheless the solicitors breached their professional obligations under the SRA Code by failing to tell the client the fixed recoverable costs payable at stages 1 and 2 of the portal, so depriving her of important information about the likely net position. The term in the retainer permitting the solicitors to charge more than the recoverable fixed costs was not unfair under the Consumer Rights Act 2015. The correct basis for assessment of the solicitors' charges in non-contentious portal work is paragraph 3 of the Solicitors' (Non-Contentious Business) Remuneration Order 2009 (the 2009 Order), requiring costs to be fair and reasonable; on that basis the court assessed the total payable by the client at £821.25 plus VAT and allowed the appeal of the solicitors so that the client must repay £295.50 to them.

Background and procedural history

The claimant (the client) instructed solicitors to pursue a small RTA personal injury claim through the RTA portal. The claim settled at stage 2. The defendant's insurer paid damages of £1,916.98 and fixed recoverable costs of £500 plus disbursements. The solicitors retained the fixed costs and deducted a success fee from the damages, leaving the client with a net payment. The client challenged the solicitors' bill and the validity and fairness of the conditional fee agreement (CFA). District Judge Bellamy gave a provisional assessment; Mr Justice Lavender allowed the client's appeal and limited the solicitors' recovery, reasoning that informed consent was required because of fiduciary duties and CPR Part 46.9(2). The solicitors appealed to the Court of Appeal.

Nature of the application / relief sought

• The appeal challenged Lavender J's conclusions that (i) section 74(3) of the Solicitors Act 1974 and CPR Part 46.9(2) applied to RTA portal cases settled without issued proceedings, (ii) solicitors owed a fiduciary duty to obtain fully informed consent in negotiating the CFA, and (iii) the client's CFA terms were unfair under the Consumer Rights Act 2015. The client sought reduction or repayment of sums charged; the solicitors sought restoration of the assessment below in their favour.

Issues for decision

1. Whether section 74(3) and CPR Part 46.9(2) apply to claims brought and settled within the RTA portal without county court proceedings being issued.
2. Whether the solicitors were required to obtain the client's fully informed consent to the CFA by virtue of fiduciary or other duties, or by the wording of Part 46.9(2).
3. Whether the client gave informed consent to the CFA terms.
4. Whether the retainer term allowing the solicitors to charge more than the fixed recoverable costs was unfair under the Consumer Rights Act 2015.
5. Consequences for the assessment of the bill.

Court's reasoning and conclusions

• Statutory construction: the statutory definitions in the Solicitors Act 1974 tie 'contentious business' to business done in or for the purposes of proceedings begun before a court. The RTA portal is a pre-action administrative process designed to avoid issuing proceedings; accordingly section 74(3) and Part 46.9(2) do not apply where no county court proceedings are issued.
• Part 46.9(2) could not be used to enlarge the scope of section 74(3) or to create an obligation applicable to non-contentious portal work.
• Fiduciary duties: solicitors do owe fiduciary duties when acting on a retainer, but when negotiating the terms of their own retainer (such as a CFA) they are acting in their own interests and the client cannot reasonably expect the solicitors to act to the exclusion of their own interests. Thus the judge was wrong to treat a duty to obtain fully informed consent as arising from fiduciary principle in the negotiation of the retainer.
• Professional obligations: the SRA Code (in particular provisions corresponding to [8.6] and [8.7]) requires solicitors to give clients clear information about pricing and likely overall costs. The solicitors failed to inform the client of the fixed recoverable costs payable within the RTA portal stages, and thereby failed to enable the client to make a properly informed decision.
• Consumer Rights Act 2015: because section 74(3) does not apply to portal claims, the client's central CRA argument (that the retainer removed a statutory protection) fell away. The retainer term permitting recovery above fixed costs was therefore not unfair under the CRA 2015.
• Assessment: costs for non-contentious portal work should be assessed under paragraph 3 of the 2009 Order on the basis of what is fair and reasonable in all the circumstances. Applying those factors in this case, and having re-assessed the bill, the Court of Appeal fixed the total payable by the client at £821.25 plus VAT and ordered that the sum of £295.50 (previously ordered by Lavender J to be repaid to the client) must be repaid by the client to the solicitors.

Wider comments

The court commented that the contentious/non-contentious distinction is now unsatisfactory in the online portal era and that legislative and procedural reform is desirable to address the inconsistencies and to ensure clearer consumer protection and regulatory coherence.

Appeal allowed. The Court of Appeal held that section 74(3) of the Solicitors Act 1974 and CPR Part 46.9(2) do not apply to claims pursued and settled within the RTA portal without county court proceedings. The judge below was wrong to treat solicitors as owing a duty to obtain fully informed consent in negotiating the retainer by virtue of fiduciary obligations or Part 46.9(2). The solicitors breached the SRA Code by not giving the client clear information as to the fixed recoverable costs in the portal, but the retainer term was not unfair under the Consumer Rights Act 2015. The bill was reassessed under paragraph 3 of the 2009 Order as fair and reasonable in the total sum of £821.25 plus VAT; the client must repay £295.50 to the solicitors.

Claim heard initially by District Judge Bellamy in the Sheffield District Registry (assessment of bill). The client appealed to the High Court (Queen's Bench Division) where Mr Justice Lavender allowed the client's appeal ([2020] EWHC 2755 (QB)). The solicitors appealed to the Court of Appeal, which delivered judgment allowing the appeal and remade the assessment ([2022] EWCA Civ 1387).