In the recent County Court case of Ena Aminu-Edu v Esure Insurance Company Limited (8th March 2024), HHJ Saggerson criticised hidden commissions for referral agencies in personal injury matters.

In considering whether the breakdown of a medical report ought to be provided, the Judge said “In my judgment, any adjudication on proportionality, in all its component parts, demands transparency”.

BACKGROUNDFollowing a Road Traffic Accident on 16 November 2018, a personal injury claim for £80,000 was brought. The claim was started via the MOJ portal and ultimately settled for £40,000, pursuant to a Part 36 offer.

A dispute arose in determining costs. The Claimant sought fixed costs of £10,992 (inclusive of VAT) pursuant to the applicable (pre-October 2023) version of Part 45 Section IIIA. Part of these costs was £2,916 for a pain management medical expert report. The sum included both the expert's fee and the fee charged by the Medical Referral Agency (“the Agency”). The Defendant disputed this fee on the basis that the sum due to the Agency was not disclosed.

The Defendant made an application for information regarding the breakdown of the disbursement, pursuant to Part 18. The Claimant made an application of determination of their fixed costs and disbursements pursuant to r.36.20(11).

THE PARTIES’ POSITIONSThe Agency chose not to provide a breakdown of the fee due to “commercial sensitivity” and because providing a breakdown would “require a detailed and complex analysis of macro economics of the wider medical reporting market, which is disproportionate…”. They stated “there was no obligation, and it is not necessary” for reasonableness and proportionality to be considered.
The Claimant argued that the fixed costs regime applies and provisions as to detailed assessment in rule 44.6 makes it clear that such assessments do not apply to the fixed costs regime in Part 45. The claimant relied upon Doyle v M&D Foundations & Building Services Limited [2022] EWCA Civ 927 in support of this.

The Claimant submitted that whilst the court has the power to assess proportionality in respect of the disputed charges it does not need the breakdown demanded by the Defendant and should make an assessment briskly on a broad-brush basis. This court should designate the relevant charges as proportionate in all the circumstances without demanding the breakdown the Defendant seeks.

THE JUDGMENTHHJ Saggerson took umbrage with the argument that providing a breakdown of the fee would be disproportionate and found “transparency is a matter of some importance”. Indeed, he said, “This little micro-industry of unknown and unknowable commissions or referral or arrangement fees underscores the risk that litigation is pursued in the interests of an economic ecology far removed from the interests of justice or the protagonists. This is not an unknown problem. The racket that is claims for “Hire Charges” illustrates how this sort of remote ecology can get completely out of hand to the benefit of nobody but lawyers and insurance companies.”

Whilst the learned Judge did not disagree with the decision in Doyle, he distinguished this matter as in this case The claimant invited the court to determine proportionality of the disbursement. He also noted Stringer v Copley [2002] 5 WLUK 977 (HHJ Cook) whereby HHJ Cook determined that medical agency’s costs of obtaining a medical report was recoverable provided it is demonstrated that the charge is reasonable and proportionate.

HHJ Saggerson considered that it is for the Claimant to establish proportionality. “The court is unlikely to be able to adjudicate on proportionality (or it will be more difficult to do so) without being able to determine whether the relevant fee is in proportion to that which would have been charged by a solicitor doing the work in conjunction with all the other factors that inform proportionality. … In the absence of agreement or a summary determination of the court in an obvious case, the paying party is entitled to know who is being paid what and what for.”

He stated “medical agencies should be able to provide at least sufficient indicative information as to the proportion of the medical invoice that reflects the true value of their commission. … is just as likely to produce a more competitive market, and in any event, commercial sensitivity does not have any impact on proportionality.”

The Judge rejected the submission that £2,916 was prima facie proportionate and assessed costs in the sum of £750 plus VAT (i.e. £900 inclusive of VAT) for the index report unless the breakdown was forthcoming. Permission to appeal was refused.

CONCLUSIONThis is not the first personal injury case in which the Court has been invited to consider the reasonableness and proportionality of agency fees. It is notable that the Claimant has not (as of the time of writing) lodged an appeal in this matter. However, it may not be long before this matter is considered by a higher Court. That is, of course, unless parties request greater transparency from medical report providers.