The Court of Appeal has upheld a decision that the fixed success fee of 12.5% should apply to all Road Traffic cases settled pre-issue even if the client has an existing Before the Event insurance policy.

The case of Kilby v Gawith agreed with the lower court that the fixed costs rules did not give the Courts any discretion with regard to the uplift and that therefore it should apply to all matters settled pre-issue.

The decision comes as a blow to the insurance industry as it is estimated it will affect almost 100,000 cases per year. In addition, there are a large number of cases which have been stayed awaiting the Court of Appeal's ruling which which will now have to be settled.

Following the Court of Appeal decision, the solicitor acting for Gawith called for a change in the rules stating that the insurers have seen a worrying increase in additional liabilities. Simon Pinner, Director of Box Legal commented 'This is a strange statement by McCullagh & Co as the defendant insurers were part of the 'Big Tent' discussion group who ultimately decided on the predictable costs regime. The costs can't be increasing as they are by definition fixed and they were fixed with the defendant insurance industry's agreement. ATE policies have remained at £367.50 for motor cases since Callery which was decided in 2002 so in real terms costs and additional liabilities have in fact been decreasing with inflation over time.'

Click here to read the Court of Appeal decision in full.