Harmans Costs Brief - May 2014

There is a lot happening at Harmans this May - the London Legal Walk is nearly upon us, we're trialling LiveChat on our website as well as waiting for the go ahead on another exciting digital development.  As usual, we still aim to bring you all the latest news and developments in Costs along with expert analysis. 

Welcome to all our new subscribers following our costs seminar at The Law Society last month, we hope you enjoy Costs Brief. Please let us know what you think and what you'd like to see more or less of!  We hope you enjoy the latest issue of Costs Brief.

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Details to be provided when serving a Bill of Costs in respect of a recoverable pre 1 April 2013 ATE premium and Applications for relief from sanction for “non-compliance”

CPR 47 Costs Practice Direction 32.5 provides that the relevant details of an insurance premium are as follows:

ʺA copy of the insurance certificate showing whether the policy covers the receiving party’s own costs; his opponent’s costs; or his own costs and his opponent’s costs; and the maximum extent of that cover, and the amount of the premium paid or payable.ʺ

Most parties when serving an itemised Bill with the required Notice of Commencement are content to serve the policy schedule or insurance certificate with the Bill. However, not all schedules and certificates show all of the required information in full.

Following the Court of Appeal decision in Mitchell, Defendant’s have now begun to argue that Claimant’s have not fully complied with the requirements of the Costs Practice Direction in cases where the Insurance policy schedule or certificate served with the Bill does not show ʺwhether the policy covers the receiving party’s own costs: his opponents costs; or his own costs and his opponents costs …ʺ and beware, not all policy documents do.

Prior to Mitchell the point was seldom taken and when it was it would usually be given short shrift by the Courts on the basis that the period in the proceedings during which the Claimant failed to provide the relevant information ran from the date of service of the bill and as a result any “missing” information could reasonably be provided at any time.

Should a paying party insist that in such circumstances no premium is recoverable then a timeous application for relief from sanctions will be required under CPR 3.9 which surely must succeed – see Wooldridge v Hayes (2005) unreported SCCO Case No: HQ 0100072.

In the Wooldridge case, Master O’Hare decided that whilst the omission of the type of cover from the Insurance Schedule could have misled the Defendants as to the type of cover which the policy in fact provided, despite the omission from the schedule the Defendants had at all times correctly assumed that the insurance cover was limited to supporting a claim largely funded on CFA terms.

Master O’Hare went on to grant the Claimant full relief from the sanction imposed by CPR 44.3B. He took the view that the Claimants failure to comply with the Costs Practice Direction was caused largely by the ATE insurer and not the Claimant or his legal representative. Since the failure had no harmful effect at all on the Defendants it was a technical breach only and a refusal to grant relief in respect of it would serve only to award the paying party an unmerited windfall.

Personally, and to avoid any doubt or argument, I include details of the cover provided at the end of the Bill narrative along with all other relevant funding information.

Jim Knight, Partner and Costs Lawyer

Court fee changes

The Ministry of Justice (MoJ) has recently announced a series of changes to the level of fees in the civil courts. The changes are aimed at achieving a greater level of costs recovery from court users, while the MoJ has reserved judgment on whether to charge enhanced fees for high-value commercial claims.

The changes came into effect on 22nd April 2014 and include reductions and exemptions for family law cases, with increases for money claims and other hearings including judicial review hearings - for details of all the changes click here.

The 72nd update to the Civil Procedure Rules comes into force on 22 April 2014

The rules are amended to provide clarification of the rules introduced in 2013 which extended the courts’ management powers in respect of costs. Cases to which cost management will apply and costs budgets are to be filed is more clearly defined and limited to Part 7 Multi-track claims except where the claim is valued at £10m or more. In other types of case the court will have the discretion to implement costs management and parties will be able to apply for costs management if it is deemed appropriate by the circumstances of the individual case.

Historic VAT rates for the UK since the 1980s can be quite hard to pin down so we have published them here.

Partner Jim Knight looks at interest on Costs including pre-judgment interest

The Court’s power to order interest on costs, including pre-judgment interest on costs is derived from CPR 44.2 (6) (g). (The equivalent rule was CPR 44.3(6)(g) before the Jackson reforms).

The rule provides that the court may order “interest on costs from or until a certain date, including a date before judgment”. The purpose of such an award is to compensate a party who has been deprived of the use of his money, or who has had to borrow money to pay for his legal costs.

The relevant principles do not materially differ from those applicable to the award of interest on damages under section 35 A of the Senior Courts Act 1981. The discretion conferred by the rule in respect of pre-judgment interest is not fettered by the statutory rate of interest, under the Judgments Act 1838, but remains at large.

Ultimately, the Court conducts a general appraisal of the position having regard to what is reasonable for both the paying and the receiving parties. This in turn normally involves an assessment of what is reasonable having regard to the class of litigant to which the relevant party belongs, rather than a minute assessment which would be inconvenient and disproportionate to undertake.

In commercial cases the rate of interest is usually set by reference to the short-term cost of unsecured borrowing for the relevant class of litigant, though it is always possible for a party to displace a ‘rule of thumb’ by adducing evidence, and the rate charged to a recipient who has actually borrowed money may be relevant but is not determinative. See F & C Alternative Investments Ltd v Barthelemy (No 3) CA [2013]1 WLR at paragraphs 98, 99 and 102 to 105; Bim Kemi AB v Blackburn Chemicals Ltd [2003] EWCA Civ 889 at 18 and for example, Fiona Trust & Holding Corporation v Privalov [2011] EWHC 664 (Comm).

The rate may differ depending on whether the borrower is classed as a first class borrower, an SME or a private individual. Historically at least, first class borrowers, have generally recovered interest at the appropriate base rate plus 1 per cent, unless that was unfair or inappropriate though in the light of recent interest rate developments there is no presumption that base rate plus 1 per cent is the appropriate measure of a commercial rate of interest.

To read the rest of Jim Knight's article click here.

Matthew Harman continues with his speaker bookings - he spoke to the Southend Law Society last month and will be talking to the Bucks, Berks and Oxon Law Society later this month as well as featuring in the latest issue of Costs Lawyer magazine on the 'The emergence of the Costs Lawyer' - he's in demand!  The article is available to view here.
Ministry of Justice proposals for the reform of medical examinations/medical agencies
We were delighted with the feedback following our costs seminar at The Law Society last month - it was rated as either excellent or good by 100% of attendees.

If you couldn't be there on the day the new Precedent H guidance notes that Matthew Harman referred to in his talk and Steve Jones' updated Relief from Sanction notes are now available on our website.



Follow us on Twitter @HarmansCosts for the latest industry comment.  We also hold regular Q&A sessions when you can tweet or DM our legal costs experts a question - look out for details of our next one coming soon.
Our intrepid team are looking forward to this year's London Legal Walk (or in Steve's case jog) which takes place on Monday 19 May. It's the 10th anniversary of this great event and it's for a very worthwhile cause. We'd be delighted if you could sponsor us.  You can click the banner below for more information on the event, why not enter a team too and join us...
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