West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220



Judge: Irwin LJ and Coulson LJ

Citation: [2019] EWCA Civ 1220

Summary:

Disputes regarding the recoverability of ATE policy premiums, are not to be determined on the normal case-by-case basis; questions of reasonableness are settled at a macro level by reference to the general run of cases and the macro economics of the ATE insurance market.  Assessment of the reasonableness of the premiums will normally require expert evidence (See also the summaries regarding the assessment of proportionality, and approach to detailed assessment).

Longer Text:

  1. Section 58C of the Courts & Legal Services Act 1990, inserted by Section 46 of LASPO, with effect from the 1st April 2013, enables the Lord Chancellor to make regulations, whereby the premium of an ATE policy would be recoverable where the policy insured against the risk of incurring liability to pay for one or more expert reports in respect of clinical negligence in connection with the proceedings. A policy must state how much of the premium relates to the liability to pay for an expert report or reports.  The Regulations are The Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No. 2) Regulations 2013[1].  The Regulations effect three particular changes:
  • The removal of the absolute bar against recovery of ATE insurance premiums in the event that the experts’ report was not in fact obtained;
  • The introduction of a minimal financial value of the case (£1,000) before an ATE insurance premium was capable of being recovered; and
  • The removal of the contemplation that the cost of the report may not be allowed under the Costs Order.[2]
  1. The Court referred to Rogers v Merthyr Tydfil County Borough Council [3]. Having noted that the decision in Lownds v The Home Office[4] was no longer good law, the Court held that Rogers remains an important and useful authority, having recited part of the Judgment in Rogers, the Court stated:

[52] It is accepted that the particular comments as to necessity need to be disregarded following the change in the law and the overruling of Lownds, but the Court of Appeal’s observations as to the inability of Judges, without the assistance of expert evidence, sensibly to address the reasonableness of the premium (except in very broad brush terms), and the risk to the whole market if they do, remain entirely relevant and appropriate.

  1. Having considered further authorities (Kris Motor Spares Limited v Fox Williams LLP[5] and McMenemy (above)), the Court stated:

[56] We derive the following principles from these authorities: 

(1)     Disputes about the reasonableness and recoverability of the ATE insurance premium are not to be decided on the usual case-by-case basis.  Questions of reasonableness are settled at a macro level by reference to the general run of cases and the macro economics of the ATE insurance market, and not by reference to the facts in any specific case [McMenemy];

(2)     Issues of reasonableness go beyond the dictates of a particular case and include the unavoidable characteristics of the ATE insurance market [Rogers];

(3)     District Judges and Costs Judges do not have the expertise to judge the reasonableness of a premium, except in very broad brush terms, and the viability of the ATE market will be imperilled.  If they regard themselves (without the assistance of expert evidence) as better qualified than the underwriter to rate the financial risk the insurer faces.

(4)     It is for the paying party to raise a substantive issue as to the reasonableness of the premium which will generally only be capable of being resolved by way of expert evidence [Kris]

 

  1. The Court disagreed with the suggestion by Foskett J that Rogers was in some way out of date and that Costs Judges could consider ATE premiums by engaging in a robust analysis and entering the arena. The Court stated:

[59]… that significantly overstates the legitimate role of the Costs Judge in dealing with such premiums and is contrary to the principles that we have identified in paragraph 56…

The Assessors’ Findings

  1. The Court of Appeal had asked for a report from two assessors, Kerr J and Master Leonard, which supported the principles set out by the Court, i.e.
  • Expert evidence would be required in order to reach a view that a particular premium was unreasonable;
  • For a block rated policy the premium is unconnected both to the risk of success and the level of cover in any particular case;
  • The workings of the ATE market are complex, with a number of interlocking elements which make it unsuitable for broad brush or generalised submissions.
  1. At paragraphs 62 to 69 of the Judgment, the Court of Appeal set out “the correct approach” concluding:

[68] If the District Judge or Costs Judge decides that there is substantive evidence which genuinely puts in issue the reasonableness of a premium, then he or she can require the Claimant to address that evidence and decide the resulting debate on the evidence in the usual way. 

We stress, however, that that should only happen if the Judge considers that a genuine point of substance, usually requiring expert evidence, has been raised by the paying party and not otherwise.

[69] On the basis of the assessors’ report in this case we consider that the issue of the reasonableness of ATE insurance premiums has, at least for the foreseeable future, been settled.  That ought, therefore, to resolve the issue of their reasonableness in all or almost all of the other cases apparently waiting for the outcome of these appeals.  We appreciate, of course, that in the future things may change.

[1]               SI 2013, No. 739

[2]               See Lewison LJ in McMenemy v Peterborough & Stamford Hospitals NHS Trust [2017] EWCA Civ 1941; [2018] 1 WLR 2685.

[3]               [2006] EWCA Civ 1134; [2007] 1 WLR 808

[4]               [2002] EWCA Civ 365; [2002] 1 WLR 2450

[5]               [2010] EWHC 1008 (QB); [2010] 4 Costs LR 620

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