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Clinical negligence ATE insurance premium challenge – technicalities and the reality

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By David Stoker, Senior Underwriter

(Estimated reading time: 3 minutes, 25 seconds)

We received a recent clinical negligence ATE insurance premium challenge from a well-known defendant law firm where the paying party is seeking to argue that a Tomlin Order is not a relevant “order for costs” and therefore the premium is not payable. We suggest that this is purely a technical point which should be given short shrift.

In this case proceedings were discontinued against the first defendant and then later settled against the second. The argument received was  as follows:

In Cartwright v Venduct Engineering Limited [2018] EWCA Civ 1654 the court confirmed that a Part 36 offer or a Tomlin Order did not amount to an ‘order for costs’. The second defendant notes that this matter likewise concluded by way of a Tomlin Order.

The second defendant refers to s46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”) which states:

Recovery of insurance premiums by way of costs

(1)In the Courts and Legal Services Act 1990, after section 58B insert—

“58C Recovery of insurance premiums by way of costs

(1)  A costs order made in favour of a party to proceedings who has taken out a costs insurance policy may not include provision requiring the payment of an amount in respect of all or part of the premium of the policy, unless such provision is permitted by regulations under subsection (2).

(2)  The Lord Chancellor may by regulations provide that a costs order may include provision requiring the payment of such an amount

The second defendant further refers to the Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No.2) Regulations 2013 which state:

3.—(1) A costs order made in favour of a party to clinical negligence proceedings who has taken out a costs insurance policy may include provision requiring the payment of an amount in respect of all or part of the premium of that policy if—

(a) the financial value of the claim for damages in respect of clinical negligence is more than £1,000; and

(b) the costs insurance policy insures against the risk of incurring a liability to pay for an expert report or reports relating to liability or causation in respect of clinical negligence (or against that risk and other risks).

(2) The amount of the premium that may be required to be paid under the costs order shall not exceed that part of the premium which relates to the risk of incurring liability to pay for an expert report or reports relating to liability or causation in respect of clinical negligence in connection with the proceedings.

Further and, in any event, the Second Defendant notes that LASPO makes clear that it permits recovery of ATE premiums in clinical negligence claims by a discretionary inclusion in the costs order; in other words, the order must contain a specific provision for payment of the ATE premium.  The Regulations echo that framework.

The second defendant further refers to the editorial note to the White Book (2019 edn), which confirms the same framework at p.1595 (in the 2019 volume), which says “If no such provision is included in the order, the cost of the premium will not be recoverable”.  The order contains no such specific provision for payment of the ATE premium.

The second defendant therefore contends that there is no order for costs which includes provision requiring the payment of the premium, and accordingly, the ATE premium is not recoverable from the Defendant.

The Temple perspective

Our view is that the post-LASPO regime and the advent of recoverable insurance premiums in clinical negligence cases was not set up to create such pitfalls when the defendant has always been aware of the potential liability for an additional liability for ATE cover.

If you encounter such an argument with a Temple premium, we would ask you to refer the matter to us so that we can prepare the desired response for you.

Please be aware that this type of argument may now become more common. Therefore you should strive to include reference to a recoverable ATE insurance premium in the final orders (not in a schedule to a Tomlin order).

If you have any questions please do not hesitate to contact David Stoker on 01483 514808 or email on david.stoker@temple-legal.co.uk

David Stoker, LL.B (Hons)

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

David Stoker, LL.B (Hons)

David joined Temple in August 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)