The High Court has overturned a cost judge’s ruling that a redacted after-the-event (ATE) insurance certificate did not comply with the Costs Practice Direction (CPD) because it did not show what premiums would have been payable had the case concluded earlier than it did.
Mrs Justice Slade also set aside Master Haworth’s decisions not to grant relief from sanctions and to reduce the success fees payable to solicitor and counsel.
Light On Line Ltd and Anor v Zumtobel Lighting Ltd  EWHC 3376 (QB) followed a claim that arose from the costs of remedial work alleged to have been carried out by the claimants following the supply by the defendant of defective lights. The claim for nearly £240,000 was settled with the defendant agreeing to pay £120,000 plus costs.
At the detailed assessment, Master Haworth struck down the £60,375 ATE premium from Temple Legal Protection (from £100,000 cover) because the redacted insurance certificate served on the defendant failed to comply with CPD 32.5(2)(c), which requires the certificate to show “the amount of the premium paid or payable”.
It was a three-stage policy and the costs judge said it was important for the paying party to know what the premium would have been at the first two stages so they could come to a conclusion as to what was a reasonable premium.
After the unredacted certificate had been provided, he then denied an application for relief from sanctions because the it had not been supplied with the bill of costs; in fact, Mrs Justice Slade said no certificate of any kind was supplied with the bill several months earlier as it should have been under CPD 32.5(2). Master Haworth decided the absence of the information in the certificate had been disruptive and prejudicial to the defendant.
Mrs Justice Slade – sitting with Master Campbell and solicitor Graham Humby as assessors – said the costs judge was wrong to say that the certificate should show what would have been paid had the case settled at an earlier stage.
She said: “In my judgment there is a distinction between the mandatory requirement on the receiving party claiming an additional liability of an insurance premium to provide a copy of the insurance certificate showing the amount of the premium paid or payable, and evidence, which may include amounts payable if proceedings had concluded at earlier stages, which would enable a paying party to assess the reasonableness of the premium claimed as an additional liability.”
On relief from sanctions, she found that the first error had contributed to the refusal of relief and so set the decision aside. However, given that the certificate was served late in breach of the CPR and CPD, she considered whether relief should still be granted. The judge concluded that the prejudice suffered by the defendant by the late disclosure of the certificate could be “reduced or eliminated by case management measures”, while the prejudice to the claimants would be substantial.
“In my judgment, properly directing himself or herself, on the law and the relevant facts, a costs judge would conclude that relief from sanctions for failing to serve the insurance certificate on the due date, the default in this case, should be granted,” Mrs Justice Slade said.
She also struck down Master Haworth’s reductions of the success fees because he wrongly based his decision on the premise that what was at issue in the case was quantum only.