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.
