Ruling in West v Stockport NHS Foundation Trust & Demouilpied v Stockport NHS Foundation Trust [2019] EWCA Civ 1220, the court provided guidance on how lower courts should approach the reasonableness and proportionality of block-rated after-the-event (ATE) premiums, and how to apply the proportionality test generally in claims for costs.
The case concerned two appeals by clinical negligence claimants against costs assessments of insurer ARAG’s block-rated after-the-event (ATE) premiums, which were recoverable since they related to the risk of paying for expert reports on liability or causation.
Claire Green, chair of the Association of Costs Lawyers, said: ‘We are pleased that the senior judiciary has finally responded to the concerns we and others have raised about the lack of consistency on costs assessments.
‘Lord Justice Jackson always envisaged that case law would provide guidance on the new proportionality test, and though it has taken more than six years to get there, today’s ruling should curtail the arguments in court and varied approaches of judges at all levels.
‘The court has also locked down disputes over the recoverability of block-rated ATE premiums in clinical negligence cases, which is good news―speculative arguments about costs do nobody any favours and hopefully this ruling will bring order back into the system.’
Nick McDonnell, costs lawyer and director at Kain Knight, which acted for the ATE insurer ARAG in the case, said: ‘The Court of Appeal’s judgment in these appeals provides eagerly anticipated guidance regarding, not only the proper approach to be taken as to the “new” proportionality test on costs but also, crucially, the reasonableness and proportionality of ARAG’s block-rated clinical negligence premiums.
‘ARAG, in pursuing these appeals, is fully committed to, and achieved, its objective of ensuring claimants have necessary access to justice where they have suffered at the hands of clinical negligence. Affected claimants, their legal representatives and providers of block-rated ATE insurance must be very happy with this decision and we are delighted that we have been able to advise and assist ARAG through this process to achieve the company’s objective.’
According to Kain Knight, the Court of Appeal made it clear that access to justice must be the starting point for any debate about the recoverability of ATE insurance premiums. On reasonableness, the court held that consideration of reasonableness must relate to the wider insurance market. Any challenge brought by a defendant must be genuine, expert evidence must be obtained, and a comparison between the premium and value of the claim is not a reliable measure since premiums change according to market conditions.
On proportionality, Kain Knight said the court found ‘all the circumstances’ must be considered, including the wider ATE market, but certain ‘unavoidable’ costs such as court fees and reasonable ATE premiums should be left out of the consideration. The test of proportionality must include a line-by-line assessment of each item of cost and if, once this is done, the final figure appears disproportionate then the court should go back and reconsider.
