Considering the Court of Appeal Judgment in West v Stockport NHS Foundation Trust and Demouilpied v Stockport NHS Foundation Trust [2019] EWCA Civ 1220.

Disputes over the levels of premiums for After the Event Insurance (ATE) have been reducing steadily since 2013. After that date it was no longer possible, in most cases, to recover that premium from the losing party. For obvious reasons, this removed the need for any further battles between the parties. An exception however concerns part of the premium payable in a Clinical Negligence case. It is not usually possible in such a case to evaluate the merits without a medical report. Those reports can be expensive – sometime several thousand pounds in a complex case. This led to the continuing right to recover, from the losing party, that part of an ATE premium which insured against the cost of the report.

Another development in recent years is the concept of proportionality. When a judge assesses the costs payable to a successful party, he/she has to consider whether those costs are proportionate to the amount at stake. In practice this means that a costs judge will go through a bill of costs, line by line. This will give an overall figure that is reasonable. The judge will then consider that overall figure and discount it, if the total is excessive having regard to what was required to pursue the claim. This will normally relate to the amount but can also include other matters such as complexity –

Both of these issues were contested in the West and Demouilpied cases in which the Court of Appeal gave judgment last week. These were two appeals, heared together. In West the case settled for £10k. In Demouilpied the settlement was £4500. In each case the insurance Premium was £5088. The premiums were disputed on the grounds that they were excessive and also disproportionate. These were ‘block rated’ premiums. They were not calculated as against the particular cases but against a basket of risk across a range. This is a common basis for calculating the risk faced by insurers. The Court of Appeal in West and Demouilpied confirmed the established principle that the court will not interfere with the reasonableness of those premiums in the absence of expert evidence. Such evidence is rare.

What is of interest is the decision on proportionality. Sir Terence Etherington provided guidance to judges. In particular he found that once a premium is found to be reasonable, there will no further consideration of proportionality –

‘Specifically, therefore, if the ATE premium is assessed as reasonable, it will not fall to be reduced by any further assessment of proportionality.’ (Para 91)

Which means that it will be in rare cases that a successful Claimant will not recover the ATE Premium as claimed. This applies to block rated policies. It remains to be seen whether the same would apply to policies where the premium is calculated by reference to the risks of the case. There could well be further litigation on the point. I would guess that the same principles will apply.

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