Kris Motor Spares Ltd v Fox Williams LLP

ATE insurance premiums may in principle be recovered as costs where authorised by Access to Justice Act 1999, section 29. Late procurement does not automatically make a premium irrecoverable; reasonableness depends on the circumstances.

There is no presumption that an ATE premium is reasonable. A paying party challenging the amount must advance some evidential material supporting the challenge. Any remaining doubt is resolved in favour of the paying party under the applicable costs rules. Challenges should be identified promptly and determined through evidence and analysis.

On appeal, the court will not interfere with a Costs Judge’s evaluative assessment unless the decision falls outside the available discretion.

Fox Williams acted for Kris Motor Spares Ltd under a conditional fee agreement in litigation against Brewin Dolphin. After Fox Williams terminated the agreement, KMS commenced proceedings under the Solicitors Act 1974 to challenge its bill.

A preliminary issue concerning lawful termination was decided for Fox Williams. On detailed assessment, Master Rogers allowed an ATE insurance premium of £95,550 and £12,000 for work undertaken by a former Fox Williams partner, Mr Greager. KMS appealed those two items.

The issues were whether the ATE premium was recoverable despite the late procurement of insurance, whether its amount was reasonable, and whether the hours allowed for Mr Greager’s work were properly recoverable.

1. ATE insurance. The appeal concerning the ATE premium was dismissed. Under section 29 of the Access to Justice Act 1999, read with CPR Part 44.4(2), an ATE premium may in principle form part of recoverable costs. The late inception of a policy may indicate that the premium was unreasonable, but there is no rule that a premium obtained late in the proceedings is irrecoverable. The question is fact-sensitive.
2. It was reasonable for Fox Williams to insure when it did. The instruction of leading counsel by KMS created a risk that Fox Williams’s prospects would worsen and its exposure to costs would increase. The court therefore rejected the contention that insurance should have been obtained earlier or not at all.
3. There was no presumption that the premium was reasonable. A party challenging the amount must raise the issue and provide at least some material supporting the contention that the premium is unreasonable. If evidence and argument leave a doubt, the doubt is resolved in favour of the paying party under CPR Part 44.4(2)(b). KMS had produced no evidence capable of assisting the Costs Judge, so his conclusion could not be shown to be wrong.
4. The court stressed that challenges to ATE premiums should be addressed through prompt identification of the issue, appropriate directions and evidence, potentially including information about the proposal and the basis on which the premium was rated.
5. Mr Greager’s charges. The appeal concerning the £12,000 allowance was also dismissed. Applying the principles in Meretz Investments NV and Britel Corporation NV v ACP Ltd and ors [2007] EWHC 2635, recoverable work by a solicitor who is also a witness may include assistance and general preparation as a solicitor, work connected with producing the witness statement, and attendance at court, subject to the distinction between solicitor work and work that any witness would undertake.
6. Master Rogers had analysed the work and was particularly well placed to assess it. The allowance of 60 hours was within the discretion available to a Costs Judge. The appeal was dismissed in its entirety.

• High Court (Queen's Bench Division): Master Rogers conducted the detailed assessment and allowed the disputed ATE premium and Mr Greager’s costs. The present court dismissed KMS’s appeal.
• Earlier costs appeal: An earlier appeal against the order for the costs of the assessment proceedings had been dismissed by Holroyde J. No citation was stated.