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Additional Liabilities – New Notice Requirements

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Changes to the Costs Practice Direction and the Practice Direction (Pre-Action Conduct) came into force on 1 October 2009. The changes apply to additional liabilities entered into from 1 October 2009.

Changes to the Costs Practice Direction and the Practice Direction (Pre-Action Conduct) came into force on 1 October 2009. The changes apply to additional liabilities entered into from 1 October 2009.

Previously, it was recommended that parties advise their opponents of the existence of an additional liability i.e. ATE Insurance Policy, Conditional Fee Agreement (CFA) or undertaking from a membership body. However, this was not mandatory until proceedings were issued by which point notice would be given by way of form N251 (Notice of Funding).

The changes now mean the following:

In respect of ATE insurance the following information must be given:

It is imperative to inform other parties about the existence of an ATE Insurance premium as soon as possible and in any event within 7 days of entering into the funding agreement.  If the ATE Insurance is entered into before the letter of claim is sent, then the parties must be advised in the letter of claim.

In respect of Conditional Fee Agreements, the same rules apply in that you must inform the other parties about the CFA as soon as possible (within 7 days of entering into the funding arrangement) or in the letter of claim where it is entered into before the letter of claim. If acting under a retrospective CFA, then you should advise of the date of the CFA and also the date to which it is retrospective to. This provides transparency and can only help on any Costs Assessment Hearing.

Form N251 (Notice of Funding) has been amended to incorporate these changes. This is the form that must be filed and served when proceedings are issued.

As soon as confirmation of a successful application for ATE Insurance has been received then steps should be taken to notify of its existence. Failure to do so will no doubt result in non-recovery of the premium.

There has also been a specific change concerning publication (defamation) proceedings. Part 44 of the CPR has also been changed so that, if a defendant in publication proceedings admits liability and offers to settle within 42 days of notification of an ATE premium, they will not incur the liability for the premium if the matter settles pre-issue.

Costs in Publication Proceedings have been a talking point for sometime and resulted in a consultation by the Ministry of Justice in February. Jack Straw, Lord Chancellor and Secretary of State for Justice, recently said:

"Spiralling costs and disproportionate legal fees are often a feature of defamation proceedings". 

 

 

 

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