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Tranta v Hansons (Wordsley) Ltd, Supreme Court Cost Office, 18 June 2009

28 August 2009
The issues

Costs – Conditional Fee Agreement – availability of legal expenses cover – bus company’s legal expenses cover intended to cover passengers.

The facts

On the 25th March 2005 the Claimant was travelling on a bus owned by the Defendant when the driver suddenly reversed and then shot forward, causing the Claimant to be thrown forward, hitting the base of her neck on a post in the bus. She instructed solicitors who served a letter of claim. Liability was eventually conceded in April 2007. Proceedings were subsequently issued and following Part 36 offers on both sides and negotiations the Claimant accepted £10,000.00, plus costs to be assessed. Detailed Assessment Proceedings were commenced on 30th June 2008. By their Points of Dispute the Defendant contested the enforceability of the CFA, particularly in the context of existing before the event cover. In particular they relied on the fact that legal expenses cover was available to the Claimant under the motor policy of the vehicle in which she was travelling at the time of the accident. The policy had been provided by DAS Insurance and the existence of the policy had been confirmed by a telephone call on the 27th February 2008. The Defendant’s case was that the Claimant’s solicitors did not appear to be aware of the cover and therefore a genuine issue arose as to whether proper consideration had been given to the availability of pre-existing legal expenses cover in accordance with Regulation 4(2)(c) of CFA Regulations 2000 before entering into the CFA.

The Defendant relied on a statement by Richard Jones, the claims handler with QBE Insurance (previously Ensign Motor Policies at Lloyds) who stated that the DAS BTE insurance cover was in effect a “bolt on” on the Ensign policy and that it included before the event legal expenses insurance for passengers. Although that cover was included in the motor policy it was not provided by Ensign but by DAS. Mr Jones confirmed that Ensign had no control or influence over the BTE policy which was entirely dealt with by DAS. Ensign did not correspond with DAS in relation to any of the claims being managed by them and the claims were dealt with by DAS and the Claimant’s appointed solicitors in their entirety. It was the Defendant’s case therefore that no conflict of interest arose and that the BTE was available for use, even against Ensign policy holders.

The decision

The Defendant had raised a genuine issue. The Claimant’s solicitors had failed to comply with Regulation 4(2)(c) of the Conditional Fee Agreement Regulations 2000. Whether or not it was common knowledge in the industry at the date the Conditional Fee Agreement was signed that a bus company would have applied legal expenses insurance to the passengers on the bus to sue itself, it certainly was common knowledge that motor insurance policies frequently provided insurance cover for passengers to enable them to sue the driver. This much was clear from the decision of Sarwar v Alam, a Judgment of the Court of Appeal in 2001. There was no justification for making a distinction between private motor insurance policies and insurance policies taken out by the operators of public vehicles such as buses. Regulation 4(2)(c) required the legal representative to consider whether the client’s risk of incurring a liability for costs was insured against under an existing contract of insurance. The Regulation did not confine the enquiry to policies of insurance taken out by the client and should include the possibility that there may be a policy taken out by the proposed Defendant which might protect the client. The Claimant’s solicitors ought to have known that private motor insurance policies often contain provisions which protect its passengers and ought to have anticipated that in the case of public vehicles such as buses there might be similar provisions in the policies taken out by the operators of such vehicles. They should have taken reasonable steps to enquire. They did not do so. This had led them to be in breach of Regulation 4(2)(c).

The breach was a material breach because the Claimant was denied the opportunity of deciding with the benefit of her solicitor’s advice whether or not to rely on any policy which the Defendant might have had. It did not matter that she may well have decided not to rely on such a policy. The consequence was that the Claimant as unable to recover her solicitor’s profit costs from the Defendant because the Claimant was under no obligation to pay those profit costs to her solicitors.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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