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Parker v Seixo, Senior Courts Costs Office, 23 April 2010

23 April 2010
The issues

After the event insurance premium – Multi Track matter – appropriate premium.

The facts

The Claimant had an accident at a petrol station in Streatham Hill in August 2004 when he was knocked down by the Defendant reversing his vehicle. Liability was admitted promptly. The Claimant was funded by an after the event insurance policy issued by Keystone. The Claimant’s injuries were complicated. The parties were unable to agree quantum and proceedings were issued. The matter was settled in October 2008. Damages were agreed at £120,000.00.

Base costs were agreed but the Defendant challenged the quantum of the after the event insurance premium.

The policy provided the Claimant with both own solicitors costs and disbursements cover, and also adverse costs and disbursements cover. The claim was therefore able to be conducted without the need for a CFA and a success fee. The premium was staged in four stages: stage 1 from inception of proceedings to service of Defence; stage 2, from service of Defence until 28 days before Trial; stage 3, from 28 days pre-Trial to Trial, with a clause that the premium would be rebatable by 75% if the case settled prior to commencement of the Hearing; and stage 4 in the event of Part 8 costs proceedings. The stage 1 premium was £551.25. The stage 2 premium was £9,555.00.

The Defendant argued that the decision of the Court of Appeal in Rogers v Merthyr Tydfil did not preclude the disallowance of part of an ATE premium. The Courts observation in Rogers that costs Judges did not have the expertise to judge the reasonableness of a premium except in very broad brush terms, was not intended to make ATE insurers the sole arbiters of what was a reasonable premium. The Court had supported the concept of stage premiums, on the basis that they gave an incentive to a Defendant to admit liability at an early stage. However, a staged premium was unreasonable if it made no allowance at a subsequent stage for the fact that liability had been admitted before that stage was reached. Each stage of the premium, the Defendants submitted, had to reflect the actual risks pertaining at the time. In this case, on the basis of the Listing Questionnaire estimates, the total conceivable loss referable to stage 2 was both sides costs between the Defendant and 28 days before Trial, which was a maximum of about £44,000.00. This loss could only occur if the claim failed completely during this stage, which was, given the admission of liability, an infinitesimally small chance, apart from the possibility of the Defendant making a Part 36 offer. The chance of an offer being made, rejected and accepted out of time was very small and the Defendants admitted no greater than 5%. Applying the calculation on the basis of the evidence given in Rogers and applied by the Senior Costs Judge in Smith v Interlink Express Parcels Ltd, the reasonable stage 2 premium would have been about £3,638.00.

The Claimant argued that the Defendant was asking the Court to embark on precisely the task the Court of Appeal in Rogers said should be avoided by costs Judges.

The decision

The Defendant’s submissions were misconceived. This was not a case where the Court should regard itself, without the assistance of expert evidence, as better qualified than an underwriter to rate a financial risk. The Judgment of the Senior Costs Judge in Smith related to costs only proceedings where damages had been agreed in an employment liability case at £1,700.00 and nothing could be further removed from the facts of this case. Moreover, the premiums referred to in Rogers were block rated in respect of very different situations from this high value Multi Track case where the premiums were quite rightly individually rated and staged. The premiums would be allowed as claimed.

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