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Tilby -v- Perfect Pizza Limited (SCCO)

25 March 2002
The issues

Insurance premiums – credit – recoverability.

The facts

The Claimant had an RTA, instructed Solicitors, and entered into a CFA supported by an ATE Policy. The contract provided that the Claimant did not become liable to pay the premium until the risk in respect of which the ATE was taken out, arose. An invoice was sent by Insurers which stated “payments to be made upon conclusion of the case”. The case was settled and the Defendant agreed to pay Claimant’s costs. The premium for the ATE was £367.50. The Defendant disputed the premium on the basis that the contract provided for credit in respect of the payment and that the statutory requirements under the Consumer Credit Act 1974 had not been met. The Claimants argued that the contract was a contract of service and that the services were provided throughout the case, which itself did not conclude until the costs only proceedings had ended, since the CFA covered a claim against the Defendant for “any proceedings you take to enforce a Judgment, Order or agreement”.

The decision

1. There was no established business practice requiring the premium to be paid at the beginning of an ATE Policy.

2. There was no deferment of payment unless it was deferred beyond the conclusion of the case for a significant time.

3. The Policy was still in force, as the case had not been concluded.

4. The Claimant knew that she would be liable to pay the premium when the case ended. Accordingly, no credit was provided and the case did not come within the 1974 Act or the 1983 Regulations.



This was a Temple Policy which clearly provided that the premium did not become due until the legal action concluded, ie there was no contractual liability until the action was at an end. Not all the ATE providers include this provision. For the ones that do not, the consumer credit challenge is still open.

This may have been the wrong case to push before Master Hurst – although it is still strongly arguable, surely, that the decision is wrong on the basis that in entering into the agreement the Claimant committed himself to payment at some point – therefore there was already a contractual liability to pay. The issue was when payment was to be made. To that extent, surely there was deferment, ie credit or perhaps I am merely being simplistic!

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