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Accident Group Test Cases - Tranche 2 Issues - Sharratt v London Central Bus Co & Other Cases, 15 May 2003

20 May 2003
The issues

1. Costs
2. TAG – insurance policies – referral fees – introduction and referral code

The facts

This was the Hearing of the second tranche of issues, decided in respect of the Accident Group and its funding arrangements.

The decision

1. Generally, it had not been Parliament’s intention to overload the recoverable premium by adding to the costs normally included in such a premium, the costs which a company like MLSS had to incur. The Insurers obligation was to provide an indemnity and not to provide “continuing insurance services”. This was an exceptional case of the type which Lord Justice Brook had in mind in the Claims Direct Test Cases and it was therefore appropriate to carry out an analysis to determine how much of the premium claimed was properly recoverable.

2. The outstanding issues:-

(i) Issue 2 – Is the whole sum payable for insurance by a Claimant under the TAG scheme properly to be regarded as a premium within the meaning of Section 29 Access to Justice Act 1999? If not, how much is to be regarded as a premium?

The sums paid under the TAG claim were to be regarded as a premium. The amounts properly recoverable were as follows:-

For 2000 : £450.00 including IPT

For 2001 (Lloyds) : £480.00 including IPT

For 2001 (NIG) : £425.00 including IPT

(ii) Issue 3 – Does the sum payable for insurance under the TAG scheme finance services or provide benefits, which are collateral or extraneous to such insurance? To what extent should the cost of those services or benefits be recoverable?

Deductions should be made for ring-fencing and for ensuring the cost of funding and ensuring the cost of failing to recover the AIL fee.

(iii) Issue 10 – are all or part of the following referral fees:-

(a) The payment of £310.00 plus VAT to AIL;
(b) The payment of £385.00 to Mobile Doctors Ltd;
(c) The Payment to Rowe & Cohen of a vetting fee.

(iv) Issue 11 – if so, does the Solicitor’s agreement to pay them breach the introduction and referral code?

(v) Issue 13 – are these payments irrecoverable in whole or in part for any other reason?

No submissions were made by the Defendants in respect of payments to Mobile Doctors or to Rowe & Cohen and the only live issue was therefore the AIL fee. That fee was a referral fee.

Agreement to pay that fee was a breach of the Introduction and Referral Code.

Such a fee was not recoverable as such. In any event, the payment to AIL was not a disbursement paid by the Solicitor on the client’s behalf nor expenditure authorised by the client on his or her own behalf. No part of the fee paid to AIL was recoverable as a disbursement.

(vi) Issue 16 – does the TAG Panel Solicitors obligation to reimburse any disbursements, which are not recovered from the Defendant breach the indemnity principle?

The obligation to reimburse was not a breach of the indemnity principle.

(vii) Issue 17 – in some versions of the CFA, it is explicitly provided that the Panel Solicitor will, in successful cases, limit his fees to those recovered from the paying party. Does this breach the indemnity principle?

This provision in some versions of the CFA was not a breach of the indemnity principle.

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