Harmans Costs Brief - October 2015

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October is shaping up to be a busy month at Harmans - we're looking forward to the Law Society Excellence Awards in London on Thursday and keeping everything crossed for our app Costs Expert which has been shortlisted in the Business Development category!

The Harmans Aylesbury team is on the move to fresh new offices just up the road so we really have got our hands full. Still time for all the latest costs and industry news though...

Many thanks, Harmans Costs

For even more news and comment visit our website

Whatever the cost?

Matthew Harman was recently asked to give his views as a costs specialist on the joys and horrors of cost budgeting in personal injury cases, read what he has to say.

"I spend a good deal of time dealing with budget hearings in the Queen’s Bench Division corridor.  From my perspective they waste an awful lot of time being listed at times like 11:30am which leads to a complete morning and early afternoon out of the office.  However, my slight inconvenience is of nothing compared to the desperation that must be felt by the Masters.  I actually feel slightly sorry for them – there, I have said it.

They signed up for something completely different and have found themselves, with little training, being thrown into the fascinating and magical world of costs, having to cope with these strange costs lawyer types who were previously restricted to the nether regions of the Thomas More Building.  It is fair to say that our appearance on the QBD corridor has not met with universal approval, although I don’t know why that should be as I suggest that we know a great deal more about costs issues than most advocates.

The decision to suspend costs budgeting was the inevitable outcome of ill thought out changes in procedure.  It really was pretty obvious that, if you increase the time of a case management conference to include dealing with a costs budget and increase the time estimate from 30 to 90 minutes, it will not be long before the wait for hearing extends over the horizon. 

Further, previously directions could often be agreed - obviating the need for a hearing. That has been rare to date on budget hearings. The best one can expect generally is to agree some of the more straightforward phases ahead of time.

The problem with the suspension is that it will not fix things. It will allow the Masters to catch up for now, but unless something is done the same situation will arise and a further suspension will be required. Dykes and fingers come to mind." (continued)

Read the rest of Matthew's article here which was originally featured in the Legal Futures Insight PI report.

The Court of Appeal upholds lower court’s decision to grant relief from sanctions for failure to give notice of funding arrangements

In Caliendo v Mishcon de Reya [2014] EWHC 3414 (Ch) on 21st October 2014, Mr Justice Hildyard had granted the Claimants relief from sanction under the old CPR 44.3B and allowed the Claimants to keep their CFAs with DLA Piper, despite having served Notice of Funding late and in contravention of Paragraph 9.3 of the PDPAC which requires that a party who enters into a funding arrangement must inform the other parties;

“as soon as possible and in any event within 7 days of entering into the funding arrangement concerned or, where a claimant enters into a funding arrangement before sending a letter before claim, in the letter before claim.”

Mr Justice Hildyard found that relief could be granted even though the Claimants had no “good reason” for their delay, finding that the Defendant had not been prejudiced by the delay and it would not be “fair, just or appropriate” to deny the relief sought.

The Defendant appealed on 7 grounds.

In dismissing the appeal Lady Justice Gloster, sitting in the Court of Appeal, reiterated the importance for the court to consider the three stage test in Denton & Ors v TH White Ltd & Ors [2014] EWCA Civ 906  

In Paragraph 22 of his judgment Mr Justice Hildyard had identified the three stage test as follows:

The first stage is to identify and assess the seriousness and significance of the "failure to comply with any rule, practice direction or court order" which engages rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate "all the circumstances of the case”, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]

The Court of Appeal analysed Mr Justice Hildyard’s reasoning at length, and found no real grounds for interfering with the exercise of his discretion in granting relief.

This case compounds the importance of the Denton test and highlights the need for the Court to first consider the effect of the breach, with the prejudice suffered should relief be granted, a secondary factor.

HMCTS selects KIDATU for Emergency Service

KIDATU has been selected by HMCTS to handle its new out of hours Emergency Protection Orders, following the changes introduced by the creation of the Single Family Court in April 2014. The service supports the HMCTS process in relation to the handling of out of hours Emergency Protection Orders as defined in Practice Direction 12E. (High Court Urgent Business Practice Direction 12E).


Read more
More Tax on Dividends
The current dividend tax credit is to be replaced by a tax free dividend allowance of £5,000. Although this may be an advantage to moderate savers, business owners who take dividends in excess of this amount will pay an additional 7.5% tax from April 2016 compared to what they are paying now.

Updated guidance from Law Society on how to comply with EU Directive on Consumer ADR
from 1 Oct 2015

The Law Society has changed its advice for firms on compliance with UK regulations which transpose the EU Directive on consumer alternative dispute resolution (ADR Directive).

This is in response to the unexpected withdrawal of the Legal Ombudsman's application to the Legal Services Board to become certified as an ADR approved body for the purposes of the ADR Directive.

Read more
Minimum Wage increase
The National Minimum Wage for over 21s increased to £6.70 from 1 October 2015 and next year (April 2016) a National Living Wage will be introduced which will be £7.20 for over 25s.


Matthew Harman discusses the increase in Insurance Premium Tax (IPT)

From 1 November 2015, the standard rate of IPT will be increased by 3.5 percentage points to 9.5%. From this date all premiums received by insurers using the IPT cash accounting scheme will be charged at 9.5%. For insurers using the special accounting scheme, there will be a 4 month concessionary period that will begin on 1 November 2015 and end on 29 February 2016, during which premiums received that relate to policies entered into before 1 November 2015 will continue to be liable to IPT at 6%. From 1 March 2016 all premiums received by insurers will be taxed at the new rate of 9.5%, regardless of when the policy was entered into.

"The above notice was tucked away amidst a whole plethora of announcements in the summer Budget of 2015. At first blush the announcement looks to be nothing more than an irritant akin to a VAT change. However, there are significant and worrying implications for lawyers and cost lawyers alike arising from the wording of the announcement. The offending wording is, 'From this date all premiums received by insurers using the IPT cash accounting scheme will be charged at 9.5%.' 

I am by no means an expert on either insurance or tax but that wording suggests to me that if premiums are paid on policies after 1 November 2015 then the higher IPT applies. the average lawyer will not know whether their insurer uses a cash accounting scheme or a special accounting scheme. The prudent default, therefore, has to be that any outstanding premiums should be paid up before 1 November 2015 to avoid being penalised a further 3.5%.

Clearly, many policies are payable when the policy is entered into and for those matters I cannot see a problem. However, I do see significant problems with deferred and conditional policies." (continued)

Read more of Matthew's take on the potential problems following the IPT increase.


Case Management

Unrepresented parties - New Rule 3.1A

On 1 October 2015 a new rule was introduced in relation to case management of matters involving “litigants in person” by way of the 81st update to the Civil Procedure Rules:-

"Case Management- unrepresented parties -

3.1A - (1) This rule applies in any proceedings where at least one party is unrepresented.

(2)  When the court is exercising any powers of case management, it must have regard to the fact that at least one party is unrepresented.

(3) Both the parties and the court must, when drafting case management directions in the multi-track and fast track, take as their starting point any relevant standard directions which can be found online at and adopt them as appropriate to the circumstances of the case.

(4)  The court must adopt such procedures at any hearing as it considers appropriate to further the overriding objective.

(5)  At any hearing where the court is taking evidence this may include-

(a) ascertaining from an unrepresented party the matters about which the witness may be able to give evidence or on which the witness ought to be cross-examined; and

(b) putting, or causing to be put, to the witness such questions as may appear to the court to be proper."



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