Court of Appeal dismisses the appeal in the case of Karatysz v SGI Legal LLP

Judgment in Karatysz v SGI Legal LLP [2022] EWCA Civ 1388 was delivered at the same time as the Judgment in Belsner v Cam Legal Services Ltd [2022] EWCA Civ 1387.  The appeals in both cases were dismissed, with stark warnings from the Master of the Rolls, Sir Geoffrey Vos.

In this case, at the start of the judgment, Sir Geoffrey Vos said that the following three points should be noted from Belsner:

  1. Solicitors undertaking claims for their clients within the pre-action protocol for low value personal injury claims via the RTA Portal are undertaking non-contentious business within the meaning of the Solicitors Act 1974 (the 1974 Act) until legal proceedings are formally issued.
  2. Consequentially, section 74(3) of the 1974 Act (which limits the remuneration of a solicitor to that which can be recovered between the parties to an assessment) does not apply to limit the costs that solicitors can recover from their clients in respect of claims pursued through the RTA Portal, because that section applies only to contentious business in the county courts.
  3. CPR part 46.9(2), which requires a written agreement between solicitor and client expressly allowing the solicitor to charge the client more than can be recovered inter partes, does not extend the ambit of section 74(3) of the 1974 Act to make it apply to costs incurred in non-contentious business.

In Karatysz, the issue in question was largely based around the amount of the solicitor’s statute bill.  There was confusion as to the amount of the bill, and therefore how the £455.50 retained out of the client’s damages was calculated.  It was argued, therefore, that the bill was not complete. Sir Geoffrey Vos held that:

  1. “36.The only sensible interpretation of the Bill as a whole was that it was demanding whatever had already been paid, namely £1,116 by Aviva plus £455.50 by the client, totalling £1571.50…”

He then went onto say:

  1. The Client allowed to bring this costly case on her behalf, when she had almost nothing to gain. As Lavender J demonstrated at [42], she recovered £177.50 before DJ Bellamy, which was all that was really at issue except massive sums by way of costs. The process whereby small bills of costs are taxed in the High Court is to be discouraged. It is far more economic to use the Legal Ombudsman scheme which is a cheaper and more effective method of querying solicitors’ bills in these circumstances. Moreover, whilst it has not been necessary to decide whether there were “special circumstances” in this case under section 70(10), because the Client has not succeeded on her appeal, there remains a lesson to be learned from this case. Firms such as and their clients should be in no doubt that the courts will have no hesitation in depriving them of their costs under section 70(10) if they continue to bring trivial claims for the assessment of small bills to the High Court, even if those bills are reduced on the facts of the specific case by more than one fifth under section 70(9). The critical issue is and always will be whether it is proportionate to bring this kind of case to the High Court. In this case, it was not.
  2. The Client argues that certainty is needed. I agree. Properly drawn bills ought in future to state the agreed charges and/or the amounts that the solicitors are intending by the bill to charge, together with their disbursements. They should make clear what parts of those charges are claimed by way of base costs, success fee (if any), and disbursements. The bill ought also to state clearly (i) what sums have been paid, by whom, when and in what way (i.e. by direct payment or by deduction), (ii) what sum the solicitor claims to be outstanding, and (iii) what sum the solicitor is demanding that the client (or a third party) is required to pay.
  3. The practice of imposing conditions on the face of a statutory bill is confusing and unhelpful. If conditions are to be imposed, they should be transparent. If, for example, the bill is for £5,000, but the solicitors wish to say that they will accept £4,000 in full and final settlement if payment is made within 14 days, that should be clearly stated. The amount of such a bill would be held to be £5,000, just as it was in Carthew.
  4. There was discussion about whether anything about this case changes because the Bill was, in the event, for non-contentious, rather than contentious, costs. I do not think so. But points made about gross sum bills and the legal (as opposed to good practice) requirements for the content of bills were not in the grounds of appeal and we have not, therefore, decided them.
  1. I have, however, decided that the proper question for the court to ask in determining “the amount of the bill” under section 70(9) is, in respect of the category or categories of costs being assessed, “what is the total sum that the bill is demanding be paid to the Solicitors, whether or not all or part of that total sum has actually been paid”.
  2. I would dismiss this appeal with costs.”
Why not find out more about how we can help? Call us on 01244 256865 or send a message via our contact page.