ATE and BTE Insurance - Latest Legal Issues
This page contains the latest issues which are relevant to either After the Event Insurance or Personal Injury claims. We often add our own commentary to the caselaw in particular where relevant to After the Event Insurance. We suggest you bookmark this page and check once a month to ensure you keep up to date with the latest news. Panel Members will receive Newsflash emails of any important issues. Don't forget you can visit our ATE Insurance Library to get links to all ATE Insurance case law.
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No Obligation to Disclose CFA unless Detailed Assessment Commenced and Points of Dispute Raise a Genuine Issue.
Ashley Cole v News Group Newspapers – February 2007
Supreme Court Costs Office – Master Haworth
During the course of a detailed assessment, the Defendant asked to see the Claimant’s CFA, although the Defendant had not at that stage raised any specific point regarding it – they simply wished to see it.
Held: The Court’s power to order disclosure (rule 47.14 CPR and Para 40.14 of the Costs Practice Direction) did not arise until after Detailed Assessment had commenced and the paying party had first raised a “genuine dispute” on the CFA. If a “genuine issue” is raised, the “Pamplin procedure will apply.
(Pamplin -v- Express Newspapers Ltd [1985] 1 WLR 689 – since a CFA is a privileged document between solicitor and client, the Court has no power to force disclosure of it. If a Defendant raises an issue the Claimant can decide whether to disclose the CFA to prove his case. If the Claimant does not disclose the CFA the Court can take account of the fact that the Claimant may have a legitimate interest in not disclosing the CFA).
CFAs signed after 1 st November 2005 only need to be in writing and signed, in order to be valid (since the CFA Regulations were repealed in full on that date). This being so, once the Claimant confirms that the CFA is in writing and signed, it is difficult to envisage how a genuine issue could be raised on it, and therefore unlikely that a CFA signed post 1 st November 2005 would ever need to be disclosed.
Comment: It is a common misconception that solicitor’s have to automatically disclose their CFAs to allow a paying party to undertake “a fishing expedition” in relation to it. This should now be resisted unless the paying party first raises a genuine dispute regarding it. A full transcript of this judgment is not yet available, but will be linked to this page once published.
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BTE Insurance – Defendant’s Enquiries of Claimant’s Initial BTE Investigation are restricted
Hutchings v British Transport Police Authority - 11 th October 2006
Senior Costs Judge Hurst.
The Claimant sought to recover his ATE
Insurance premium. When costs came to be assessed,
the Defendants served a Part 18 request to establish
whether the Claimant had BTE insurance. They asked
firstly whether the Claimant (or
anyone else in his household) had building or contents
insurance, and if so they requested the insurers'
names and whether those policies provided Before The
Event legal expenses cover. Secondly
they asked why,if there was BTE cover, it was not
used; whether the building/contents policy wording
had been inspected; and if not, how the Claimant's
solicitors knew that it did not include BTE Insurance
legal
expenses cover.
Held: the Claimant was only obliged to supply the following information:
- whether the Claimant had any kind of insurance policies
- who were the insurers, and whether those policies include BTE legal expenses cover
The existing rule regarding discovery in costs proceedings should be followed, namely that the receiving party is not ordinarily compelled to disclose documentation (since it was likely to be privileged), and therefore requests which really amounted to asking for information contained in documents, would not be allowed.
Comment: The Court (Para. 47) confirmed the existing position, namely that cases to which the CFA Regulations do not apply (CFAs entered into after the 1st of November 2005) may still be subject to the above questioning and challenge, but if such challenge is successful, it will not result in all costs being disallowed, only recovery of the success fee and policy.
This case substantially ameliorates the effect of previous decisions such as Myatt -which required the Claimant’s solicitor to normally obtain and read for himself the Claimant’s household and motor etc. policies, rather than rely on the Claimant’s statement that he had no BTE cover – because the Defendant can no longer force the Claimant’s solicitor to prove that he has done so (but note that the Claimant's solicitor is certifying compliance with the Regulations (where they apply) at the stage when the bill of costs is signed, and false certification will be a serious matter).
It remains unclear as to whether the paying Defendant can ask questions to establish whether Garrett v Halton has been complied with (was the Claimant's solicitor on a referral panel which gave him an interest in recommending a particular ATE policy). The paying Defendant in this present case initially asked such questions, but withdrew them before the hearing (Para.6). It appears however that by analogy such questions would not be permitted since they would be similar in nature to questions regarding BTE investigation, and “fishing expeditions” and satellite litigation regarding costs were specifically deprecated in this judgment.
< Click here for a download of the transcript (Requires Adobe Acrobat) > |
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Medical Agency Fees Allowed Under RTA Predictable Costs
Woollard v Fowler [Senior Costs judge Hurst sitting as a Recorder 24/05/2006]
The parties agreed the instruction of Mobile Doctors. Evidence showed that Mobile Doctors had charged a £25 fee for their work in obtaining GP notes and £25 for obtaining hospital notes. The medical expert’s charge had been £275 to which they had also added a £160 fee for their work.
Held: (reversing the previous decision of Master Seager-Berry of 14 th December 2005) that under CPR 45.10, the Court could allow a claim for a disbursement which included “the cost of obtaining a medical report” and that “obtaining” included the work of procuring the report rather than simply the cost of the report itself. The intention of the predictable costs regime was to provide certainty, and disputes about the breakdown of medical agency fees would cause additional cost and delay. If the previous decision were upheld, then in cases where damages were on the borderline of the predictable costs regime, it would not be known at the time of instruction how the medical agency fee would be treated, which was undesirable. Accordingly medical agency invoices which included a charge for the work which they carried out, in addition to the cost of the report itself, were recoverable.
The general tests of reasonableness and proportionality would continue to be applied in the usual way. A pure administration fee however (ie a sum in the nature of a booking in fee, which was unrelated to the work carried out by the medical agency) would never be allowed, but the Court was not aware of any medical agencies making such a charge.
< Click here for a download of the transcript (Requires Adobe Acrobat) > |
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Repeal of CFA Regulations Means Samonini Type Challenges Will no Longer Succeed
Garbutt and Another v Edwards [Court of Appeal – 27/10/2005]
In breach of the Law Society’s Code of Conduct, solicitors for the successful Claimant had failed to provide that Claimant with regular costs estimates. The defendant argued that the Code of Conduct had statutory force and that therefore a breach of it rendered any retainer unlawful and unenforceable.
Held: that while the Code of Conduct did indeed have statutory force, it was not intended to be utilised by a defendant to avoid their proper obligation to pay costs. The Code provided instead for disciplinary action against a solicitor and a monetary award in favour of the solicitor's client, if necessary. If a breach of the Code could be shown by a paying party to have caused an actual increase in costs, then a costs judge had the discretion to disallow that increase, but this was very different from disallowing all costs.
The Court of Appeal’s clear decision is that any breach of the CFA requirements now contained in the Code of Conduct, will not cause costs to be wholly disallowed.
< Click here for an analysis of the decision or here for a link to the transcript >
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Costs in RTA Personal Injury claims under £10,000 (Part 45 Fixed Costs) are recoverable even if CFA is defective
Nizami v Butt – Simon J. [2006] EWHC 159 QB
Mr Nazimi suffered whiplash injury from a road accident in 2003 and in February 2005 agreed to accept damages of £2,400 plus costs without proceedings being issued. In Part 8 proceedings, the defendant sought to challenge the CFA which Mr Nazimi had entered into, on the grounds that his solicitors had not made BTE inquiries sufficient to comply with the regulations (which applied to CFAs entered into prior to November 2005).
Held: It was not necessary for a valid CFA to exist in order for a successful claimant to recover fixed costs or a success fee, because the indemnity principle did not apply to fixed costs under Part 45, and it was intended that those costs should be recoverable in a straightforward way without technical challenge and investigation in each instance. This did not apply to disbursements under the fixed costs regime however, because disbursements were not fixed, but had to be incurred on behalf of a client in order to be recovered.
Comment: Firms have been concerned about challenges to their costs in respect of pre-November 2005 CFAs. It is now apparent that where fixed costs apply, base costs, the success fee and VAT are recoverable even if the CFA is defective, although disbursements could still be open to challenge under the fixed costs regime, if there is a defective CFA entered into pre-November 2005. Lengthy questionnaires from costs draftsmen on this subject should now be resisted.
< Click here for the full judgement>
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