Jul 27

Rupert and his link with Box Legal

Posted in After The Event Insurance

Daniel will be back to his blog on Monday with words of wisdom. Until then I will continue with my tenuous linkage… Some would say the silly season is upon us in the world of journalism, but with resignations from Rebekah Brooks and the Murdochs appearing in front of the Commons Culture committee, how could anyone not find the recent media compelling. In his interview with the Wall Street Journal, Murdoch commented that he thought News Corp had handled the situation extremely well but changed this statement in front of MPs telling them this was the humblest day of his career.  With investigations still on going into the hacking of phones, the integrity that I’m sure  these journalists once held true, has now disappeared. I heard someone say that you only own one thing in life and that’s your integrity. Once you lose this you can never get it back.

So let me apply integrity to ATE Companies. On my weekly visit to our various panel members, I hear many stores about other After the Event Insurance Companies. How they have approached our clients and tried to poach them using various manipulative ways. I also hear about ATE companies that firms have worked with over a number of years, never claiming anything until that one case falls. Rather than thanking them for the good business by paying out immediately, they ask for a copy of the file to try to avoid paying that claim. At Box Legal we are very open about our scheme, we work closely with our panel members to ensure we give them the best possible service. We pay out claims in full within 7 days. Box Legal is run with integrity and with the interests of our firms at the forefront of our business. Can your After the Event Insurance Company say the same?

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Jul 25

La Belle et la Bête et Box Legal

Posted in After The Event Insurance

A Monday morning without rain and a hint of a blue sky and sun. Kind of makes it a little easier to take – especially in Manchester when a Monday morning with rain is standard. I had a quiet weekend, my niece and nephew – 5 and 3 respectfully, are over from France for two weeks. They are extremely conscious of the fact that we don’t speak French and whilst they will happily chatter in French to each other, they are always keen to explain in English their discussion. Whilst this is very open and honest, it can get a little embarrassing in company, when a 5 year old has to patiently explain the importance of something that has been said on Beauty and the Beast…

So what has this to do with ATE you ask? Well a possible tenuous link could be the openness of such a situation and the honesty of a Box Legal After The Event Insurance policy. At Box Legal, we never ask for a file if you lose a case. We are conscious of the fact that as a Solicitor, you are the ones qualified to make the decision whether to run the case or not and with a legal background, we are also aware that things can go wrong. Any claim you make is always paid out within 7 days. Our whole scheme is similar and very open. With minimal administration, we place you, the Solicitor back in control of your own case – as it should be. For more information about our ATE policies, give us a call or visit our website www.boxlegal.co.uk .  So a little bit of blatant publicity this morning. Why not! I also gave you the added bonus of a weather report, and you can’t have everything for free.

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Mar 25

Caselaw Review: Philips v Rafiq & MIB : Deceased client can claim against MIB even though he knew driver was uninsured

Posted in Personal Injury Claims, Practice & Procedure, Road Accidents

The Issues: Mr Rafiq was driving the Claimant’s uninsured car, in which the Claimant was travelling as a front seat passenger. Mr Rafiq lost control of the vehicle and crashed into the central reservation of the M25, overturning the vehicle. The Claimant suffered such serious injuries that he died in hospital later that day, and the claim was brought by his dependants. The question before the Court, was whether the MIB were exempt from paying the claim on the basis that had the Claimant survived the accident he would not have been able to recover damages from the MIB, on the basis that he allowed himself to be carried in a car which he knew, or ought to have known, was being used without proper insurance being in force (6.1(e) of the Uninsured Drivers’ Agreement).Held: Although Mr Rafiq had a policy of motor insurance which covered his own vehicle, this did not cover his use of the Claimant’s car. There was a finding of fact at first instance that the Claimant knew or ought to have known that he was being carried in a car which was uninsured. There was no appeal against this finding of fact.Clause 6.1(e) of the Uninsured Drivers’ Agreement provides the following exception to the MIB’s obligation to satisfy a compensation claim:

“Clause 5 [obliging the M.I.B to satisfy any judgment against the driver] does not apply in the case of an application made in respect of a claim of any of the following descriptions …

(e) a claim which is made in respect of a relevant liability described in paragraph (2) [it being common ground that this is such a relevant liability] by a claimant who, at the time of the use giving rise to the relevant liability was voluntarily allowing himself to be carried in the vehicle and, either before the commencement of his journey in the vehicle or after such commencement if he could reasonably be expected to have alighted from it, knew or ought to have known that –

(i) …

(ii) the vehicle was being used without there being in force in relation to its use such a contract of insurance as would comply with Part VI of the 1988 Act, …”

On considering the previous 1988 Agreement compared to the 1999 Agreement, the Court concluded that because the earlier Agreement had clearly excluded a claim of this type, but the 1999 Agreement had not, a reasonable man could only conclude that the 1999 Agreement meant to allow a dependent’s claim in such circumstances (para 25). The Agreement was between the Secretary of State and the MIB and the teams who drafted the Agreement must have had a high level of knowledge and expertise of the working of the scheme in the past and therefore must have intended to remove the exclusion to compensate dependents in this way.

The Court of Appeal upheld the first instance Court’s decision that the Claimant dependents should be compensated by the MIB.

Comment: This decision resulted in the MIB making a petition to the Government to change the law and amend the Uninsured Driver’s Agreement wording. Lawyers for Ms Philips said that the ruling would cost the MIB millions of pounds but the MIB played down the significance saying that there was only going to be a handful of cases where the “loophole” would apply. But the MIB was clearly concerned, evidenced by its contact with the Ministry of Transport.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 3

Caselaw Review: Gaynor v Central West London Buses Ltd – Work Carried out Before CFA Signed is Recoverable

Posted in Caselaw Review, Conditional Fee Agreements

The Issues: The Claimant retained solicitors to pursue her personal injury claim. Their retainer letter to her said: “If your claim is disputed by your opponent and you decide not to pursue your claim then we will not make a charge for the work we have done to date.” No CFA was ever signed. Did this retainer letter amount to a Conditional Fee Agreement so as to be caught by Section 58 of the Courts and Legal Services Act 1990 and therefore unenforceable because it did not comply with that Act or the CFA Regulations in force at the time?

Held: Section 58 defines a CFA as an agreement to provide litigation services. Section 119 of the same Act provides that this must relate to “contemplated proceedings”. No proceedings can be contemplated before a Defendant indicates a dispute. Work prior to there being a “real likelihood” of proceedings was not “litigation services”. The retainer was not a CFA, and the costs incurred under it could be recovered from the Defendant.

Comment: This is important authority from the Court of Appeal which will normally allow a Claimant to recover the cost of preliminary work carried out at the early stage of a claim before a CFA is entered into – including disbursements and an After the Event Insurance policy. It may also assist in recovering costs where an informal “No Win No Fee” agreement is mistakenly entered into. Alternatively, it may be possible to enter into a retrospective CFA which covers previous work – see Forde v Birmingham CC (2009).

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Feb 23

Caselaw Review: Metcalfe v Clipston – Notice of Funding not Mandatory Before Proceedings Issued

Posted in Conditional Fee Agreements, General, Practice & Procedure

The Issues: This dental negligence claim was settled without the issue of Court Proceedings, but the Defendants argued that the Claimant was not entitled to recover a success fee on the basis that they had not been given information regarding funding. Could the Claimant recover any of the success fee given the failure to notify the Defendant about the existence of a CFA; if not, could he obtain relief from the sanction imposed by CPR 44.15?

Held: The Pre Action Protocol for the Resolution of Clinical Disputes applied to this case. That Clinical Disputes Protocol was in turn governed by the Practice Direction in relation to Protocols (“PDP”) which at Paragraph 4 provided:

“A.1 Where a person enters into a funding arrangement within the meaning of rule 43.2(1)(k) he should (emphasis added) inform other potential parties to the claim that he has done so.”

Under section 19.2(5) CPD there is no requirement for any funding information to be provided before the commencement of proceedings. The effect of this, therefore, is that once proceedings are started there is an absolute requirement for the Claimant to provide funding information if he is to recover a success fee, but there is no such requirement before the issuing of proceedings (Para.45).

The Defendants had argued that the PDP required the Claimant in a clinical negligence case to notify a Defendant when a CFA was entered into. But, the Court disagreed, construing the word ‘should’, within the PDP, to mean ‘ought to’ and not ‘has to’ or ‘must’ (Para 49.). The requirement to provide funding information, pre action, is optional and not compulsory and therefore the Claimant could recover a success fee.

Comment: Although this was a clinical negligence matter the Personal Injury Pre Action Protocol is worded in similar terms. Para 3.2 of that Protocol states:

“…Where the case is funded by a conditional fee agreement (or collective conditional fee agreement), notification should (emphasis added) be given of the existence of the agreement and where appropriate, that there is a success fee and/or insurance premium, although not the level of the success fee or premium.”

Therefore the above decision is applicable to personal claims generally, and there is no requirement to provide funding information before proceedings are issued. However, it is recommended and may be best practice to do so.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Feb 17

Caselaw Review: Garbutt & Anor v Edwards & Anor – Breach of code of conduct does not invalidate CFA

Posted in Caselaw Review, Conditional Fee Agreements, Practice & Procedure

The Issues: 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 Solicitors’ Code of Conduct had statutory force (because it was contained in a Statutory Instrument) and any failure to comply was therefore a breach of the law which 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 including any After the Event Insurance policy. 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.

Comment: In November 2005 the CFA Regulations were repealed and CFAs signed after that date were governed only by the Solicitor’s Code of Conduct which was amended to control how solicitors dealt with CFAs. The Court of Appeal’s clear decision is that any breach of the Solicitors’ Code of Conduct will not cause costs to be wholly disallowed, so a failure to follow the Code of Conduct after November 2005 will not have the same consequences as a failure to follow the CFA Regulations which applied to pre-November 2005 CFAs.

The relevant parts of the Solicitors’ Code of Conduct are Rules 2.03 (1), (2) & (3) at: http://www.sra.org.uk/solicitors/code-of-conduct/195.article

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Jan 28

Caselaw Review: Barr v Biffa Waste Services Ltd

Posted in After The Event Insurance, After The Event Insurance

The Issues: Should the Claimants in this group action be required to disclose a copy of their After the Event Insurance policy to allow the Defendant to examine the extent of protection provided by the policy and to assess its potential financial exposure.

Held: Traditionally, insurance policies were considered a private matter between the insured and the insurer and were therefore not generally disclosable. However, ATE insurance policies are a relatively modern creation and there were far fewer decisions dealing with disclosure, or other issues.

It was held that there was a difference between liability or BTE insurance, which may have been in existence for years before and have nothing to do with the events which gave rise to an action, and ATE insurance, the inception of which might be the trigger for the proceedings. In this case, the group litigation depended on the After the Event insurance policy without which there would be no proceedings at all (para 43). The Claimants’ solicitors had sent a mail shot letter to potential claimants referring to a no win no fee agreement and to the existence of the ATE insurance policy “to cover any potential cost liability”.

For these reasons it was concluded that the ATE insurance policy was a relevant document to these proceedings and, in accordance with CPR31.14, it should be disclosed for inspection, but with the amounts of the premiums redacted (para 52).

Comment: Although the facts were rather unusual in this case the principle that an ATE insurance policy is disclosable does seem to have been set, and this is especially the case where the action is only being pursued because of the existence of the After the Event Insurance policy.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Jan 24

Caselaw Review: Burgess v J Breheny Contracts Limited – OK to Purchase ATE Insurance Post Admission

Posted in After The Event Insurance, After The Event Insurance

The Issues: The Claimant claimed for injuries suffered through dust inhalation. Was it reasonable for the Claimant to purchase an ATE insurance policy with a premium of £2,730 (inc IPT) after the Defendants had admitted primary liability but had expressly reserved their position on causation?

Held: In Master Haworth’s judgment there were a number of risks which it was proper to insure at the time the policy was taken out, some 5 months after primary liability had been admitted. These were:

  1. A real risk on causation, i.e. that the Court would find the dust exposure had not caused the injury;
  2. The risk of the Defendant withdrawing its admission;
  3. The risk of the Defendant making a Part 36 offer which the Claimant does not accept but fails to beat;
  4. The risk of an adverse interim costs order; and
  5. The risk of failing to recover a disbursement

It was therefore reasonable for the Claimant to purchase an ATE policy after an admission of liability, and Master Haworth concurred with the judgment of HHJ Inglis in the Avril v Boultby (2008).

Secondly, a premium of £2,730 (inc IPT) was reasonable in all the circumstances.

Comment: The High Court has approved the recovery of an ATE insurance premium taken out after an admission of liability, because of the continuing risks. It is fair to comment that in this case the Defendant had specifically reserved their position on causation, but nevertheless, the rationale of this decision was based on the 5 risks identified above, of which causation was only one. For a similar decision where the Defendant admitted liability without making any comment on causation, see Avril v Boultby (2008) which the Court specifically approved in this case (para. 27).

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Dec 16

Caselaw Review: Crane v Canons Leisure Centre – Success Fee on Costs Draftsman’s Fees

Posted in Conditional Fee Agreements, Practice & Procedure

The Issues: The parties could not agree costs and the matter proceeded to detailed assessment. The claimant’s solicitors instructed costs consultants, acting under delegated authority. Could the work carried out by the costs draftsmen be considered profit costs, and therefore a success fee be applied and recovered, or were their fees simply a disbursement.

Held: The costs draftsmen were doing work which the solicitors had undertaken to their client to do (para 15). It was solicitor’s work and had they carried out the work themselves then the solicitors would have been able to charge and recover a success fee. In theory, the solicitors remained liable to the claimant for any negligence in the conduct of the costs assessment. There are cases where work done by “outsiders” has been held to have been done, for costs purposes, as a fee earner for the solicitor, e.g. when a solicitor engages another solicitor such as when a London agent acts for a solicitor out of London. LJ May did not think that the classification of the cost of this type of work could sensibly depend on whether the solicitor did the work themselves, whether they delegated the work to another firm of solicitors or whether they delegated it to costs draftsmen who were not solicitors. As an alternative the defendant argued that the success fee of 45% should be significantly reduced because there was little or no risk in proceeding to detailed assessment after the claim had been won and any success fee should therefore have been reassessed. However this argument was not accepted on the basis that a single agreed success fee had to be looked at with the knowledge known at the time the success fee was set, without the benefit of hindsight (para 16), and further the Court has no power to direct that a success fee is recoverable at different rates for different periods of the proceedings (para 17). In the circumstances, the appeal was allowed and the claimant recovered a success fee of 45% for the work carried out by the costs draftsmen.

Comment: This case can assist firms to improve their profitability because a success fee can validly be charged on costs draftsmen’s fees. To do so, it would be best to ensure that:

  • The draftsmen’s fees are treated as a firm overhead and paid from the nominal account rather than added to the client’s ledger as a disbursement.
  • The client should be charged for the time taken (which obviously needs to be recorded by the costs draftsman) at the appropriate hourly rate – normally grade C or D.
  • It may be prudent for the solicitor’s client care letter to include a statement that the firm can outsource certain tasks from time to time but that the client would be charged for the work at the solicitor’s hourly rate as though the work had been undertaken by the solicitor themselves.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk | daniel@boxlegal.co.uk | 0870 766 9997

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Dec 13

Caselaw Review: Dimond v Lovell – Credit Hire Agreements

Posted in Practice & Procedure, Road Accidents

The Issues:

The Claimant arranged a replacement car from a credit hire company whilst her vehicle was being repaired. However, the Defendant’s insurers refused to pay the hire charges on the basis that:

  1. the hire agreement had not been prepared in accordance with the Consumer Credit Act 1974 (‘the Act’) and was therefore unenforceable; and
  2. the charges of £364.63 for an 8 day period of hire were unreasonable.

Held:

  1. The Claimant was provided with credit in that the payment of the hire charges was deferred until the conclusion of her case and therefore, as a personal credit agreement, it was a ‘regulated agreement’ within the meaning of ‘the Act’. The Claimant’s and hirer’s agreement did not contain all of the ‘prescribed terms’, and therefore it was unenforceable. As the agreement was unenforceable the Claimant had no liability to the credit hirer and therefore the hire charges could not be recovered from the Defendant’s insurer. Once this point was conceded, it was then argued, on behalf of the Claimant/credit hirer, that the Claimant had been unjustly enriched because she had had the use of the car for nothing and consequently she should be required to pay the hire charges. If the Court had agreed then as this was a liability caused as a result of the accident and the hire charges could be recovered from the Defendant’s insurers. However, this was dismissed on the basis that to accept this argument would be inconsistent with the purposes of ‘the Act’. Parliament intended that if a consumer credit agreement was not executed correctly then the debtor should not have to pay, and this meant that Parliament had contemplated the debtor might be enriched.
  2. On the basis of the above findings, no specific judgment was required on the amount of the hire charges however comment was made, in obiter, as the point was of general importance to credit hire companies and insurance companies. By a majority, it was stated that a Claimant could not recover any additional fee applied by the credit hire company, on the basis of any additional services provided, e.g. providing credit. Therefore, the damages recoverable for loss of use are limited to the ‘spot rates’ quoted by ordinary car hire companies.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk | daniel@boxlegal.co.uk | 0870 766 9997

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Dec 8

Caselaw Review: Rogers v Luteaim Limited – Commission payable on an After the Event Insurance policy not discloseable

Posted in After The Event Insurance, After The Event Insurance

The Issues: The successful Claimant sought to recover his fixed recoverable costs in respect of an RTA including a “ClaimSafe” After the Event Insurance premium of £367.50 (inc. IPT) arranged by Box Legal Limited. The Defendant believed that the Claimant’s solicitor might receive a commission in respect of the ATE Insurance policy, but had no evidence that any was paid. It therefore wanted the Claimant’s solicitors to disclose whether they would receive any commission, in order that the Court could then decide ‘whether the cost of insurance cover was reasonable, relevant factors to be taken into account’….being….’the amount of commission payable to the receiving party or his legal representatives or other agents’ (Part 44 Section 11.10 of the Practice Direction).

Held:

(a) £367.50 was a reasonable and proportionate premium and entirely unexceptional. There was no ‘basket of services’ being offered by a claims company (as in the Accident Group cases) to cause possible concern. Only in exceptional circumstances should the Court attempt to examine the various elements of an After the Event Insurance premium.

(b) Contrary to the Defendant’s submission, the Court could not simply order the commission element to be revealed and then decide if the commission was reasonable. It would instead need detailed evidence of how all other parts of the premium were made up, and expert evidence of commission and premium rates in the ATE Insurance market as a whole.

(c) Some commission was no doubt legitimate, so at best the Court might only disallow £50 or so. Even across a substantial number of policies, the cost of such an exercise would be disproportionate to the amount at stake.

(d) The Court of Appeal had repeatedly warned against unnecessary, complicated and expensive exercises to “deconstruct” ATE Insurance premiums.

(e) Such an exercise would remove much of the advantage of certainty bestowed by the fixed costs regime.

Conclusion: The Solicitors’ Code of Conduct of course requires clients to be advised of any commission received. That advice (being between the solicitor and his client) will inevitably be privileged and therefore need not be disclosed to the Defendant.Where the policy is unexceptional and the premium is modest (as with the ClaimSafe policy), there is no reason to advise the Defendant as to whether or not you receive a commission payment from your After the Event insurer, and it will certainly be unwise to reveal the level of any such payment. All requests for such information should be resisted.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Dec 3

Caselaw Review: Tilby v Perfect Pizza – Deferred After Event Insurance policy is not subject to CCA

Posted in After The Event Insurance, After The Event Insurance

The Issues: The premium on the Claimant’s After the Event Insurance policy was only payable at the end of the case. The Defendant argued that it was not liable to pay the ATE Insurance premium because deferring payment of the premium was providing the Claimant with credit and the policy was therefore subject to the Consumer Credit Act 1974 (“the Act”). As the Act had not been complied with (no Consumer Credit Act agreement had been signed) the agreement was unenforceable and therefore the ATE Insurance premium was irrecoverable.

Held: ATE insurance was an entirely new product and there was no established normal business practice. Payment of the premium only fell due at the end of the case. The After the Event insurance policy was still in force (i.e. the case was still not at an end, because the proceedings were not concluded until costs were assessed). A premium is not deferred unless the payment is not required for a significant period beyond the end of the case. The ATE Insurance policy was not therefore caught by the provisions of the Act and no consumer credit agreement was required. The After the Event Insurance premium was accordingly recoverable. 

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Dec 2

Caselaw Review: Claims Direct Test Cases – After the Event Insurance of £621.13 recoverable

Posted in After The Event Insurance, After The Event Insurance

The Issues: A number of test cases were selected to decide issues of principle. The main question was: Which of the elements which had been included in the premium of £1,312.50 (inc of IPT) could properly be categorised as a legitimate part of an After the Event insurance premium (within the meaning of s.29 of The Access to Justice Act 1999), and therefore which of those elements was recoverable?

Held: (1) Claimants could only recover the insurance element of any purported ATE Insurance premium, not the cost of other bundled services which were included in the Claims Direct “premium”. (2) The elements which were nevertheless part of the ATE premium and therefore recoverable, were naturally, payments to underwriters and IPT, but also Claims Direct commission, and a modest payment for insurance services, giving a total premium of £621.13. The £621.13 was made up as follows:

  • £451.55 payment to underwriters (£311.55 risk bearing element and £140 brokerage and commission)
  • £110 Claims Direct Commission
  • £30 fee for MLSS for insurance services
  • £29.58 IPT

The Court confirmed that commissions were part and parcel of any insurance policy.

Comment: Dicta of Master Hurst also suggested (para. 231) that it might be unreasonable to purchase an ATE insurance policy following an admission, except where causation was a live issue (although the issues do not appear to have been fully argued or considered). See however Avril v Boultby (2008), where it was decided that an ATE insurance premium taken out following an admission of liability is indeed recoverable, since in particular there remained a continuing risk of an adverse costs award e.g. a failure to beat a Part 36 offer.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Nov 29

Caselaw Review: Avril v Boultby – After the Event Insurance taken out post admission is recoverable

Posted in After The Event Insurance, After The Event Insurance

The Issue: Liability had been admitted from the outset in a road traffic accident. Could an After the Event Insurance premium taken out after that admission, be recovered?

Held: The Defendant in the case had attempted to rely on the often quoted dicta from Master Hurst in the Claims Direct Test Cases ( [2002] EWHC 9002 (Costs) – Para.223). The Senior Costs Judge however decided that, six years on, Master Hurst would most likely have come to a different conclusion when considering the risks in personal injury cases faced by today’s claimants.

There were several real risks which could result in the claimant having to pay adverse costs after an admission namely:

  1. The admission being withdrawn
  2. Adverse costs awarded on an interlocutory hearing
  3. Disbursements being disallowed
  4. The claimant failing to beat a Part 36 offer.

It was considered that these were real risks which clearly came within those identified by Section 29 of the Access to Justice Act 1999 and therefore they should be insured against, even after an admission of liability. In line with the reasoning in Callery v Gray, a solicitor should not ‘wait and see’ but should take out After the Event Insurance on all claims from the outset of a case or as soon as possible thereafter, notwithstanding an admission of liability.

Comment: This can be seen as a practical application of the reasoning laid out in Callery v Gray and should at last put to rest the challenges of ATE Insurance premiums made by defendant insurers where liability has been admitted.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Nov 23

Caselaw Review: Aktas v Adepta (2010) – Issuing second claim form after limitation is not an abuse of process

Posted in Practice & Procedure

The Issues: These were conjoined appeals where the Claimants had issued proceedings towards the very end of the limitation period but the cases were then struck out because of their solicitors failure to serve the Claim Forms within the 4 month period allowed under the CPR. The Claimants then issued fresh proceedings, relying on s.33 of the Limitation Act 1980, but was this an abuse of process?

Held: The Defendant ‘s central submission was that a failure to serve in time in the first action is so serious a misuse of procedure and is so strictly regarded as an act of disrespect to the court that the second claim must be struck out without reference to the s.33 discretion. However, the Claimants’ argued this had never been the case in any of the numerous cases which had considered the problem previously and would be putting the clock back to before the recent House of Lords decision in Horton v Sadler (2006). It is important to note that although the Claimants, through their solicitors, had been at fault for failing to serve their claim forms within the required time, this was the only breach of a court rule and the Defendants had been well aware of the claims before the error had occurred, and had admitted liability. Lord Justice Rix explained that the issue was a tension of, on the one hand the strictness of the rules of court with regard a failure to serve a claim form in time, and on the other hand the statutory concession which Parliament has allowed PI claimants who fail to issue their claims within the limitation period. The s.33 discretion is wide and traverses all the circumstances of the case, but is largely determined by the question of prejudice to the parties. The Court of Appeal concluded that the Defendants argument that to issue a second claim form in these circumstances is an abuse of process failed [para 89]. A “mere” negligent failure to serve a claim form in time has never been held to be an abuse of process, although a single negligent oversight to serve in time (i.e. a “mere” negligent failure) is distinguishable from other cases where there is an inordinate or inexcusable delay, intentional default or a wholesale disregard for the rules [para 90]. The Court therefore allowed both appeals and set aside the orders for striking out the Claimants second actions, although the s.33 discretion point was to be decided as a separate issue.

Comment: Clearly a very useful case and a sensible decision which finally abolishes the previous contradiction that a claimant was in a better position by failing to issue proceedings within the limitation period than by issuing proceedings in time, but then failing to serve the proceedings within the 4 month period allowed. However, a court may consider an inordinate or inexcusable delay is an abuse of process and so a fresh claim should issued without delay on a solicitor discovering that the time for service of a claim form has elapsed.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Nov 12

Caselaw Review: Callery v Gray: After Event Insurance Recovery

Posted in After The Event Insurance

The Issues: The House of Lords considered at what stage in a personal injury claim is it appropriate for a solicitor to enter into a CFA and for an After the Event Insurance policy to be purchased. Additionally, was a 20% success fee (reduced from 60% at previous hearings) reasonable in the particular circumstances of this road traffic accident, where the Claimant was a passenger in a car which had been hit in the rear by the Defendant’s vehicle.

Held: Their Lordships refused to interfere with the findings of the Court of Appeal in Callery –v- Gray (No.1) (2001) and Callery –v- Gray (No.2) (2001), which had rejected a “wait and see” approach in relation to entering into a CFA. The Defendant’s suggestion that After the Event Insurance should be purchased only when proceedings were issued, was also rejected. The “basket” approach to After the Event Insurance was approved, so that the premiums recovered on straightforward cases with negligible risk of adverse costs, pay for lost cases. Where a reasonable uplift was agreed and After the Event Insurance at a reasonable premium was taken at the outset of a claim, the costs of each were recoverable from the Defendant.

Callery –v- Gray (No.1) : if a “wait and see” approach was adopted, liability for success fees would be borne in much larger amounts by those unsuccessful defendants who persisted in contesting liability. This would not result in an equitable sharing of costs between unsuccessful defendants. ATE Insurance premiums also benefited defendants as they ensured payment of the defendant’s costs when a claimant was unsuccessful. Premiums taken out at an early stage were substantially cheaper than when it was known that the defendant was going to contest liability. Further, it would assist access to justice for solicitors to offer legal services where claimants will not pay costs whatever the circumstances. The success fee was reduced from 40% to 20%, which was reasonable taking into account the information known at the beginning of the claim.

Callery –v- Gray (No.2) : the court was only concerned with whether the premium was a reasonable price to pay for the benefits it purchased and the Court would take into account evidence of the current ATE Insurance market from sources such as “Litigation Funding” magazine, but satellite litigation on the subject would be unsatisfactory . Master O’Hare, considered the evidence of the relationship between the ATE Insurance premium, the risk and the cost of alternative cover, and assessed that a premium of £350 (exclusive of IPT) was reasonable.

Comment: The Court approved the purchase of an After the Event Insurance policy at the very beginning of a case even where the Claimant in this case had the least possible risk of adverse costs – the Claimant was a passenger in a car whose driver had been subject to a “rear shunt”.

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Nov 10

Caselaw Review: Able UK Ltd v Reliance Security Services Limited – No need to get more than one quote for ATE Insurance

Posted in After The Event Insurance

The Issues: In a successful contractual claim the Claimant claimed the cost of an After the Event Insurance policy in the sum of £63,000 (inc of IPT), being 30% of the indemnity provided under the terms of the policy. The Claimant’s solicitors had obtained one quote for ATE Insurance cover. The Defendants argued that the premium was excessive and there had been a lack of investigation as to the availability of a reasonable insurance premium. Should the Claimant’s solicitors have obtained more than one quote for legal expense cover?

Held: In all the circumstances, it was reasonable for the Claimant to pay an ATE Insurance premium based on 30% of cover. The Claimant’s solicitors had considerable experience of the ATE market and the Defendants did not prove that a more suitable alternative premium was available. The Claimant had made a reasonable choice of ATE Insurance cover and to insist that he should have gone in search of alternative insurers would fail to have regard to the overriding objective, specifically CPR 1.1(2)(b) and (c)

Comment: Even with this very large premium, the Court ruled that so long as the premium was generally reasonable and broadly comparable to the market, it was not necessary to obtain more than one quotation for After the Event Insurance. It follows that this must apply even more so, where much smaller premiums are involved.

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Nov 5

Caselaw Review: Sarwar v Alam – After the Event Insurance for passenger claims

Posted in After The Event Insurance, Before The Event Insurance

The Issues: The Claimant was a passenger in a car and purchased an After the Event insurance policy in order to claim personal injury against the Defendant driver. At detailed assessment the Defendant’s insurers produced for the first time the Defendant’s Before The Event (“BTE”) insurance policy which would have covered the Claimant’s claim.

(1) When should an existing BTE policy generally be used in preference to an ATE Insurance policy?
(2) Should the Claimant passenger have used the Defendant driver’s BTE policy?
(3) What was the extent of the BTE enquiries a Claimant solicitor should normally make for any personal injury claimant?

Held:
(1) In the ordinary course of events a claimant making a straightforward modest RTA claim (i.e. less than £5,000) should use any pre-existing BTE policy they know of (para. 51), even though the claimant will probably have to use a BTE panel solicitor, and not the solicitor of their choice. This was not so for complex, specialist or more serious claims. It was therefore reasonable for take out an After the Event insurance policy.

(2) It was important that justice should not only be done but be seen to be done. The Claimant was not obliged to use the Defendant’s BTE insurance policy because (as with most such policies), it provided that the Defendant’s insurers would retain full conduct and control of the claim which was unreasonable since they were the same organisation against whom the claim was being made. (para. 54). NB. The position might be different if a defendant insurer were to finance a transparently independent BTE insurer to handle claims.

(3) The Court recommended that a solicitor should normally send a standard letter, asking his client to bring to an initial interview any motor or household insurance belonging to either themselves or their spouse/partner and any union membership or stand alone legal expenses insurance either of them might have. Searches should be proportionate to the amount at stake and the solicitor was not obliged to embark upon a “treasure hunt” nor check policies attached to credit cards. In addition, if the claimant was a passenger and there appeared to be no possibility of a claim against the driver, then the solicitor should ask the client to bring a copy of the driver’s motor insurance policy. (paras.45-50)

Comment:
(1) This case relates to a claim where the CFA was entered into before the Conditional Fee and Collective Conditional Fee Regulations 2000 were enacted, but it certainly applied to the duty to make BTE enquiries once those regulations were enacted, and continues to apply. Prior to November 2005 (when those regulations were repealed), if a defendant could show that BTE enquiries had not been carried out in accordance with the regulations, then no valid CFA had been created and the claimant’s costs would be entirely disallowed. After November 2005, many of the requirements which had been in the Regulations were instead included in the Solicitors Code of Conduct. A breach of the Code will not normally invalidate a CFA, Garbutt & Anor v Edwards & Anor (2000), and accordingly if a solicitor fails to carry out BTE enquiries then costs should now remain recoverable provided the CFA was signed on or after 1 November 2005.

(2) For CFAs signed after November 2005, the claimant’s costs will not be disallowed, but a failure to follow the guidelines will still result in an inability to recover a success fee and an ATE Insurance premium, (unless the case is within the fixed costs regime and the 12.5% fixed success fee then remains recoverable – see Kilby v Gawith (2008).

(3) Where there is a suspicion that a CFA is unenforceable because of a failure to comply with the pre 1 November 2005 Regulations (eg. to properly investigate the possibility of BTE insurance), the recent case of Forde v Birmingham CC (2009) may be relevant. Here the High Court allowed recovery of costs under a second, retrospective, CFA, which was entered into because of doubts over the validity of the first CFA.

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Nov 4

Caselaw Review: Adris v Royal Bank of Scotland

Posted in Caselaw Review

The Issues: A number of Claimants brought claims against their banks for breaches of the Consumer Credit Act 1974 and had been introduced to a firm of solicitors by a Case Management Company (“CMC”).  The solicitors failed to arrange After the Event Insurance (ATE) cover and did not inform their clients about the risk of an adverse costs award and that there was no cover in place.  The Claimants case failed and costs were awarded against some of them, but when they were unable to pay the Defendant made an application for a non-party costs order (NPCO) against the solicitors and the CMC.

Held: Whether the “non-party” has effective control of the litigation and causation are important factors in determining whether a NPCO should be made.

The CMC’s literature said that ATE insurance would be purchased on their behalf should proceedings be issued, but no such cover was ever arranged.  It was accepted that this was a failure on the part of the Claimants’ solicitors.

The Claimants’ solicitors had never spoken to any of the Claimants informing them that they had no insurance nor did they explain to any of their clients the costs consequences of them having no insurance if they lost.  This failure to tell clients that they had no ATE insurance when they believed they were protected was “a gross breach of duty” by the Claimants’ solicitors and meant that they were effectively acting without instructions as their clients were prevented from giving instructions on anything like an informed view [para 27].

The Court held that had the Claimants been aware of the risk that they might become personally liable for the Defendant’s costs then they would have been likely to inform their solicitors that they did not want to continue with their claims.  Therefore had the Claimants’ solicitors acted as they should have done, these cases would not have been issued nor would the Defendant’s costs have been incurred, creating a direct causal link.  It was also held that as the Claimants’ solicitors were effectively acting without instructions, they were in a very real sense controlling the litigation. [para 43]

The NPCO applications against the CMC were dismissed, but those against the solicitors succeeded on the basis of the central failing of not arranging ATE insurance [para 46].

Comment:

  1. In this case the client was told by a work referrer that an ATE policy would be purchased so care needs to be taken especially when clients have been told by either a work referrer or the solicitor that the claim is risk free, or that cover is being arranged, that there is sufficient legal expense insurance in place. Indeed it may be reasonable to assume that most work referrers have told their clients (orally at least) that there is no costs risk to them.
  2. In addition, Rules 2.03(1)(f) and (g) of the Code of Conduct require solicitors to advise their clients of their potential liability for another party’s costs and to discuss whether their liability for adverse costs is covered by an existing insurance policy or whether specially purchased insurance should be obtained.  It therefore seems that there is a risk of a NPCO against a solicitor whenever they fail to properly advise and protect their client against the risk of adverse costs, and where they fail to do so, they may be deemed to have pursued an action without instructions.

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Nov 3

Caselaw Review: Ashley Cole v News Group Newspapers

Posted in Conditional Fee Agreements

The Issues: During the course of a detailed assessment, the Defendant asked to see the Claimant’s Conditional Fee Agreement (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).

Comment: In Hollins v Russell (2003) the Court of Appeal indicated that CFAs should normally be disclosed (although the Defendant still had to raise a genuine dispute before taking matters any further). Hollins was decided however when the CFA Regulations were in force (pre November 2005). At that time there were many possible ways in which a Claimant’s solicitor might slip up and fail to enter into a valid CFA, and it appears that the Court had this in mind when deciding that CFAs should be disclosed. The Master in this case did not specifically decide on whether Hollins applied to CFAs signed after November 2005, however such CFAs need now only be in writing (Section 27 Access to Justice Act 1999), in order to be valid – the other procedural requirements were all repealed in 2005. This being so, Counsel for the Claimants certainly argued that once the Claimant confirms that the CFA is in writing, it is difficult to envisage how a genuine issue could be raised on it, and it is therefore unlikely that a CFA signed after November 2005 would ever need to be disclosed.

It is also relevant to note that CFAs signed under the regulations contained much more sensitive information than those used after November 2005 (for example they contained details of the solicitor’s interest in any ATE policy they recommended). Claimant solicitors were therefore quite rightly reluctant to disclose a document which would simply provide the Defendant with ammunition for a potential challenge. Since CFAs used after November 2005 are unlikely to contain information which Claimant solicitors would be reluctant to disclose (certainly those based on the standard Law Society model) the question of whether or not to disclose the CFA is much less sensitive.

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