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ATE insurance in action case study – a pre-LASPO asbestos-related claim

By David Stoker, Senior Underwriter

(Estimated reading time: 5 minutes 47 seconds)

We have seen a lull in challenges to our ATE recoverable premiums, post LASPO, especially since the decision in West v Demouilpied, but now and again an interesting one occurs, including pre-LASPO challenges.

A recent challenge saw a law firm client with an asbestos-related illness who had signed up to a CFA/ATE pre April 2013. The final order for this case left the client with an opportunity to bring a further action if he went on to develop a worsening of his existing pleural effusions. He received appropriate damages for the illness suffered at the material time. Post April 2013 the client sadly developed asbestos-related lung cancer and passed away. The Estate brought the action on his behalf and the case went on to settle recently although additional liabilities are currently disputed as below.

The Defendant’s argument was that, in the points of dispute relating to additional liabilities, that both the success fee and ATE were disproportionate and denied the claimant was entitled to recover any additional liabilities from the paying parties.

The relevant law

CPR r44.17 states that QOCS does not apply where the Claimant has entered into a pre-commencement funding arrangement (I.e. prior to the commencement of the QOCS rules), whilst r48.2 states that –

“(1) A pre-commencement funding arrangement is –

 a) in relation to proceedings other than insolvency-related proceedings,

publication and privacy proceedings or a mesothelioma claim –

 i) a funding arrangement as defined by rule 43.2(1)(k)(i) where –

 (aa) the agreement was entered into before 1st April 2013 specifically for the purposes of the provision to the person by whom the success fee is payable of advocacy or litigation services in relation to the matter that is the subject of the proceedings in which the costs order is to be made; or

 (bb) the agreement was entered into before 1st April 2013 and advocacy or litigation services were provided to that person under the agreement in connection with that matter before 1st April 2013;

 ii) a funding arrangement as defined by rule 43.2(1)(k)(ii) where the party seeking to recover the insurance premium took out the insurance policy in relation to the proceedings before 1st April 2013.”

In this case these funding arrangements applied to the deceased and not to the Claimant – whether she is acting in her capacity as an Administratrix of his Estate, or otherwise.

The funding arrangement between the claimant and her solicitors must post date 1 April 2013. This is because by that point additional liabilities are no longer recoverable in disease claims, except those for a mesothelioma claim, which is not the subject of this case.

The claimant is required to prove an entitlement to the additional liabilities and to satisfy the court that the retainer did not terminate on the deceased’s death.

Reference is made to the reply to point 1 (see next paragraph) as the Claimant’s solicitor asserted that QOCS does not apply in circumstances where the original Claimant dies and the estate or personal representative enters into another CFA post-LASPO 2012, from April 2013.

Point 1; The Defendants request disclosure of the Claimant’s CFA.  The original CFA between the Claimant’s solicitors and the Deceased very likely contained a ‘death clause’ which automatically terminated the agreement upon his death.  The Claimant is put to strict proof that a valid retainer was in force throughout the life of the claim and that there is an entitlement to costs.

The Claimant’s solicitor referred to JUNE CATALANO v ESPLEY-TYAS DEVELOPMENT GROUP LTD [2017] EWCA Civ 1132 in which it was held that in any case in which litigation services had been provided under a conditional fee agreement made before 1 April 2013, success fees could continue to be recovered as costs and qualified one-way costs shifting would not apply – even if the CFA was terminated and a second CFA was made.

This was important, as the Claimant sought to enter into a new CFA on 15 July 2013 which was said to have replaced a pre-April 2013 CFA, then duly discontinued the case shortly before trial – seeking to rely on the QOCS regime.

Catalano (ibid) stated that the concept of a pre-1 April 2013 funding arrangement under CPR 48.2(1)(a) was remarkably wide. It included not only an agreement where services had been provided before 1 April 2013, but also an agreement made before 1 April 2013 for the provision of such services in the future. It was clear that the employee’s solicitors had provided services before 1 April 2013, for which a charge of £5375 had been included in their costs budget.

Thus, unless the employee/their Counsel were right to read the word “un-terminated” into CPR 48.2(1)(a)(i), there was undoubtedly a pre-commencement funding arrangement within CPR r.48.2(1). Not only did the employee/their Counsel seek to read a word into the rules which was not there, but such a construction would lead to a situation where a claimant could have the best of both worlds.

The correct construction of CPR 48.2(1)(a)(i) was said to give the words “funding arrangement” their natural meaning and apply them to any pre-1 April 2013 agreement, whether terminated or not.

The rule defining a pre-commencement funding arrangement was mirrored in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 s.44(4), which prohibited the recovery of a success fee as costs, s.44(6) preserved the position for those CFAs entered into before it came into force on 1 April 2013 where success fees could continue to be recovered as costs and QOCS would not apply, even if the CFA was terminated and a second CFA was made.

The Claimant’s reinstated claim related to a diagnosis of mesothelioma, but Article 6 of the CFA Order 2013 excludes mesothelioma claims from the provisions of sections 44 and 46 of LASPO 2012.

The ATE policy was correctly endorsed in 2018 to show that the new claimant was the insured on behalf of the deceased

The Temple perspective

 The paying parties’ arguments are misconceived and their failure to raise any meaningful arguments or evidence in respect of the quantum of the premium sum sought is rather damning to their case that the amount claimed is “disproportionate”.

Reference is made to the decisions in West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220 and Nokes v Heart of England Foundation NHS Trust [2015] EWHC B6 (Costs) in support of this assertion, as costs judges and district judges do not possess the necessary expertise to determine the reasonableness of a premium and ideally expert evidence is required, as in the case of Kris Motor Spares Limited v Fox Williams LLP [2010] EWHC 1008 (QB).

What happens next?

 The argument in relation to additional liabilities is ongoing and we shall see whether the costs judge will accept the receiving party’s argument that the Estate is entitled to continue with the original ATE and CFA as envisaged by the original pre April 2013 order allowing the Claimant to do so rather than a full and final settlement.

If you would like Temple ATE insurance for personal injury cases, please call David Stoker on 01483 514808 or email to discuss your requirements.

David Stoker, LL.B (Hons)

Senior Underwriter
Read articles by David Stoker, LL.B (Hons)

David Stoker, LL.B (Hons)

David joined Temple in 2015 having previously been an underwriter for another ATE insurance provider for nearly 9 years dealing with all aspects of personal injury work.

David’s experience allows him to undertake a key role in Temple’s ATE insurance personal injury and clinical negligence teams. He also participates in the assessments of delegated schemes that Temple provide with the objective of helping our customers make the most of the products and services Temple has to offer.

David has a LLB honours degree in law and also completed the Legal Practice Course at Guildford College of Law obtaining a commendation. He has worked as a personal injury case handler for 2 firms of solicitors post-graduation before moving into LEI.


Read articles by David Stoker, LL.B (Hons)