Costs – ATE premium – staged premium – procedure to be followed by a Court when assessing reasonableness of an ATE premium in the context of a small personal injury claim.
The Claimant fell over on the edge of a play area in a local park in Merthyr Tydfil and was injured. The matter went to Trial on liability and the Defendants were found liable. On appeal in relation to the assessment of costs, the Judge was asked to consider a number of points in relation to the recoverability of the ATE Insurance premium.
Three issues arose for decision:-
i) What was the proper approach to proportionality in a small personal injury claim where the ATE premium appeared large in comparison to the amount of damages claimed;
ii) What was the proper approach to evidence of reasonableness in the choice and of the amount of the ATE premium in such cases;
iii) Are both staged premiums and single premiums for ATE insurance legitimate and is it reasonable that such premiums should be wholly or partially block rated?
If the Court considers that it is necessary to incur a staged premium then it should be a judged proportionate expense. Necessity may be shown by considering points which go beyond the particular case and which may include the unavoidable characteristics of the market in insurance of this kind. Once it is concluded that the ATE staged premium was necessarily incurred, principle and pragmatism together compel the conclusion that it was a proportionate expense.
Was the ATE premium necessarily incurred?
There is in principle no difference between a two staged success fee and a staged ATE premium. The Court of Appeal has consistently endorsed the merits of a two staged success fee. The situation with regard to an ATE premium for Defendants is no different. Exposure to the greater liability as Trial approaches requires the Defendant to think seriously about the merits of a position before a Trial takes place and this is in accordance with the philosophy of the CPR. It was not legitimate to compare the total premium payable at the third stage of a three stage premium model with a single premium under a single premium model payable throughout the progress of a claim to Trial.
In future, a party who has an ATE insurance policy incorporating two or more staged premiums should tell its opponent that the policy is staged and should set out accurately the trigger points at which the second or later stages will be reached. If this is done the Defendant's liability to pay at the second or third stage a higher premium than he would have had to pay if the claim had been settled at the first stage should not prove to be a contentious issue.
It will ordinarily be sufficient for a Claimant's solicitor to write a brief note for the purposes of the costs assessment explaining how he came to choose the particular ATE product for his client and the basis on which the premium is rated, whether block rated or individually rated. (para.117)
View case transcript: www.bailii.org/ew/cases/EWCA/Civ/2006/1134.html