Harmans Costs Brief - February 2014
We're busy busy busy here at Harmans.  We're expanding our team and organising our next seminar as well as squeezing speaker bookings into Matthew Harman's diary - he's in demand!  As usual, we still aim to bring you all the latest news and developments in Costs along with expert analysis. Hope you enjoy the latest issue of Costs Brief.
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Relief from Sanctions – To grant or not to grant, that is the question
In the recent case of Burton –v- Cranfield Delta Whiskey Group, Master Rowley granted relief from sanctions where the failure to serve notice of funding due to human error occurred before the introduction of the Jackson reforms.

Master Rowley stated that the message sent by the Court of Appeal in Mitchell “seems to me to be aimed at the current and future practice, rather than being a stick to beat parties with, for errors for which relief, rightly or wrongly, would routinely have been granted had an application been made at the time”.

The Claimant’s solicitors, Irwin Mitchell, had failed to issue a notice of funding regarding their CFA after they took over from the original solicitors. The firm’s case management system had copies of the draft notice and accompanying letter, but neither the Defendant nor court received them. The Defendant took issue with this in their points of dispute and the Claimant was forced to make an application for relief from sanctions.

The Defendant was unable to prove that they suffered any prejudice, especially given the fact that the Claimant’s previous firm of solicitors had a CFA.
Master Rowley believed that the reasoning in Mitchell was very much aimed at human errors occurring after April 2013, rather than over a year before. Master Rowley subsequently granted relief from sanctions and made no order for costs on the application.

In another recent case Long –v- Value Properties & Anor, the Claimant had failed by reason of an oversight to serve a statement of reasons when serving her bill of costs in October 2013, which failed to comply with CPD 32.5(1)(c)&(d) putting the recovery of her success fee at risk.

The Defendants raised the issue of non-compliance within their points of dispute; therefore, the Claimant provided the relevant information and made an application for relief from sanctions. Even though the error was rectified promptly and the application was made extremely quickly, Master Rowley refused to grant relief from sanctions on the basis that the non-compliance had not been trivial and that oversight or human error is no longer to be required as a good reason for non-compliance with the rules.

To conclude, it appears that the Courts are trying to send out a message to everyone that there will be zero tolerance for non-compliance of the rules post April 2013.

Mat Knight, Costs Lawyer and Partner
Jim Knight takes a look at ATE Insurance premiums –
proportionate or disproportionate?
Following the implementation of LASPO on 1st April 2013, there has been a degree of ambiguity as to how the Court’s would treat ATE policies that had been incepted prior to this date.

The recent decision by Senior Costs Judge Hurst in the case of Margaret & Paul Kelly v Blackhorse Limited was that the premium claimed was considered to be wholly disproportionate along with the base costs and success fee.

The Kelly case involved an ATE insurance policy which covered adverse costs and the Claimants’ own disbursements. Excluding the Claimants’ Solicitors’ and Counsels’ own fees, the Claimants’ disbursements totalled £1,406.20. This, added to the £5,837.10 Defendants’ costs, meant that the insurer was facing a potential liability of £7,243.30 in respect of which the Claimants had paid a premium of £15,900.00 (including IPT).

Importantly, the Costs Judge accepted that the risk to which the ATE premium should be proportionate was the expected level of the opponent’s costs at the start of the action, rather than the actual level of opponent’s costs at the end of the case. A Claimant who reasonably overestimates their potential costs liability would not be penalised.

Following the Kelly case, the suitability of a Temple insurance policy was considered in the Appeal of Ultimate Products Ltd, Henleys Clothing Ltd v Nigel Woolley, Timesource Ltd which resulted in the Court taking a different approach to the recovery of ATE premiums.

The basis of the Wooley appeal was to dispute an ATE premium that the Court ordered the Appellants to pay in 2012. The Appellants did not dispute that taking out ATE cover was a necessity, only that the premium was disproportionate and unreasonable in amount.

Master Leonard decided that the premium of £42,930.00, for £60,000.00 insurance cover, was recoverable in full, as the amount was wholly proportionate and was calculated correctly for the level of risk involved in this appeal.

Master Leonard stated that “the premium would be proportionate if it was necessary to obtain it and necessity must be judged by reference to the realities of the ATE insurance market. In the absence of (a) evidence to the effect that cover could reasonably have been obtained at lower cost, (b) expert evidence to show that the premium was wrongly calculated or (c) as in Kelly v Redwing Construction”.
Chelmsford costs team strengthened further with new appointment
Harmans were pleased to announce this week that Costs Lawyer, Mark Brown, has joined the team at their Chelmsford office. Mark joins Harmans from R Costings and brings with him 17 years of experience. He is used to dealing with all aspects of costs including Clinical Negligence, catastrophic Personal Injury claims and Commercial Litigation. 

Mark has attained rights of audience at Court to conduct litigation, following his qualification as a Costs Lawyer. Mark is a skilled advocate having attended many Detailed Assessment Hearings at the S.C.C.O and County Courts countrywide.

Working out of Harmans’ Chelmsford office Mark will be working alongside Partners Jim Knight, Gary Knight, Mat Knight and James Scott with their growing Essex client base.

Matthew Harman, Partner, said, “We are delighted to welcome Mark to the Harmans team in Chelmsford.  Harmans are very much focused on strengthening our already significant costs experience this year and Mark’s expertise will certainly help us achieve our targets in 2014.”

Matt Harman continues with his speaker bookings on 2 April in London at the Westminster Legal Policy Forum keynote seminar on civil justice and the Jackson reforms. The Honourable Mr Justice Ramsey will be providing a keynote address at this seminar along with Robert Wright, Head of Civil Litigation Funding and Costs at the Ministry of Justice.  For more details, to book your place or to have a sneak peek at the agenda just click here.

Contentious and Non-contentious Business Agreements by Jim Knight

I still receive requests from solicitors to render advice and assistance in connection with problems encountered over contentious and non-contentious business agreements


The main difference between a solicitor relying on a contentious and a non-contentious business agreement is that he must obtain permission of the Court to enforce the former.


Where the client’s liability is disputed and the solicitor wishes to rely on a contentious business agreement he must apply for leave to enforce it. The agreement itself does not give a cause of action and if the need does arise to seek permission to rely on a contentious business agreement a Part 8 application should be made.


Under section 59 of the Solicitors Act 1974, a contentious business agreement must not give the solicitor any interest in the proceedings, i.e. it must not be champertous or on a contingency basis. It may however contain a conditional fee agreement stipulating for payment only in the event of success (with or without a success fee uplift) provided it complies with the existing rules and regulations relating to conditional fee agreements of which we all by now are well aware.


The effect of a contentious business agreement is to preclude a Solicitors Act assessment of the costs between solicitor and client except in respect of agreements by reference to hourly rates when the same provisions apply as for non-contentious business agreements.


Section 57 of the Solicitors Act 1974 provides that if the solicitor relies on a non-contentious business agreement and the client objects to it as being unfair and unreasonable, a Costs Officer may inquire into the facts and certify them to the Court. If from that certificate it appears to the Court that the agreement should be set aside, or the amount payable under it should be reduced, the Court may order so. The Court may also give consequential directions such as directing that an itemised Bill be delivered and assessed.


Although the Court requires only prima facie evidence of unfairness or unreasonableness in order to intervene, from a practical point of view the agreement of the client is the strongest evidence that the fee is reasonable.

To read the rest of Jim's useful guide including a section on contentious and non contentious costs just click here.
Due to popular demand we have put our next costs breakfast seminar in the diary for Friday 11 April 2014 at The Law Society in London, focusing on developments 12 months post Jackson.

Our seminars are free and open to all clients but are limited to 30 attendees per session.  To register your interest for this and future Harmans costs seminars please email


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.
We have again entered an intrepid team for this year's London Legal Walk (or in Gary's case jog) on Monday 19 May. 
Hope to see you there too, it's a great event for a worthwhile cause.
We hope you enjoyed this month's Costs Brief,
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Look out for our next edition coming soon with news of
an exciting digital development for Harmans...
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