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ATE Insurance Premium Deductions: A Minor Issue?

By Peter Morgan, Senior Underwriter

(Estimated reading time: 2 minute 44 seconds)

The argument of whether the cost of an After the Event (ATE) insurance premium, in a case involving a minor was reasonably incurred has now been decided thanks to HHJ Lethem and his judgment of X –v- H&M Hennes.

HHJ Lethem overturned a decision where the cost of the ATE premium was not to be deducted from the child’s damages. The previous decision found that, although the Claimant was successful in recovering £1,750.00 in damages, the ATE premium of £336 was not to be deducted; even though the 25% success fee was.

The Deputy District Judge (DDJ) was not prepared to deduct the premium on the basis of there being an unnecessarily small risk of this case running to trial, resulting in a large payment of costs. Because of this, the District Judge deemed it not reasonable to insure the claim.

This decision was appealed on 3 grounds;

1.That the DDJ was incorrect with his approach to the assessment of the insurance premium in assessing them as too high. This was impermissible following the Court of Appeals decision in West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220.

2.The DDJ erred in trying to address the reasonableness of the premium recovery from the Claimant’s damages from a solicitor and own client context. Also that it was inconsistent of the Court to disallow the premium, particularly in circumstances where there is no suggestion that the litigation friend was not acting in the best interests of the Claimant.

3.Finally, the error of discretion by the Judge, who was wrong to find the insurance premium was not reasonably incurred and reasonable in amount. The Court was drawn to the 25% success fee being allowed, meaning the DDJ had to accept there was an insurable risk. The finding that the risk was so small it was unreasonable to insure the case was, in short, incorrect.

HHJ Lethem addressed each of these 3 grounds in turn and made the following judgment “17. I thus consider that the deputy district judge failed to properly apply the operation of Rule 21.12(4) and failed to have a proper regard from the assumptions and presumptions that arise from that provision via CPR 46.9.  This was a failure to properly apply Rule 21.12 and an inherent contradiction in factual findings.  In the circumstances, I will allow the appeal under grounds two and three and I will order that the litigation friend is entitled to have the £336 deducted from the children’s damages.

The Temple Perspective

This is good news for those who have correctly followed Rule 21.12 only to have the Court, at its own discretion, decide not to make the appropriate deductions. Temple welcomes this decision as every case presents an insurable risk. If the appropriate procedures are followed, there should be no reason why the ATE insurance premium should not be deducted from the Claimant’s damages.

Importantly, this decision continues to give minor Claimants access to justice; but now there is a degree of certainty that the ATE premium will be deducted accordingly – by making their claim an insurable risk and therefore protecting them from the cost of their own disbursements.

If you have any questions or would like to discuss how Temple can benefit both you and your client, please contact our Senior Underwriter, Peter Morgan on 01483 514 800 or by email at peter.morgan@temple-legal.co.uk.

Peter Morgan, FCILEx

Senior Underwriter
Read articles by Peter Morgan, FCILEx

Peter Morgan, FCILEx

Peter has been at Temple Legal Protection since September 2011 having previously worked for a national law firm and insurer giving him valuable experience in both Claimant and Defendant work.

Peter is a Senior Underwriter within the Personal Injury and Clinical Negligence team and is responsible for assessing risks along with the day to day management of delegated authority schemes.

He is also available to help with any underwriting questions to ensure customers are getting the best of their ATE and funding products.

He is currently studying with CILEX to qualify as a Chartered Legal Executive which he will use to further develop his knowledge and expertise.

 

Read articles by Peter Morgan, FCILEx