EmilyNoakes v Heart of England Foundation NHS Trust [2015]EWHC B6 (Costs)
The case concerned the recoverability of anATE premium in clinical negligence proceedings incurred post LASPO. The premiumin question is from Temple Litigation in the sum of £5,680 plus IPT. MasterLeonard held that the premium was compliant with Section 58C of the Courts and LegalServices Act 1990 andthe Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings(No.2) Regulations 2013, was neither unreasonable nor disproportionate and wasproperly recoverable inter parties.
Section 58C reads, insofar as material, as follows:
1. Recovery of insurance premiums by way ofcosts
(1) A costsorder made in favour of a party to proceedings who has taken out a costsinsurance policy may not include provision requiring the payment of an amountin respect of all or part of the premium of the policy, unless such provisionis permitted by regulations under subsection (2).
(2) TheLord Chancellor may by regulations provide that a costs order may includeprovision requiring the payment of such an amount where—
(a) theorder is made in favour of a party to clinical negligence proceedings of aprescribed description,
(b) theparty has taken out a costs insurance policy insuring against the risk ofincurring a liability to pay for one or more expert reports in respect ofclinical negligence in connection with the proceedings (or against that riskand other risks),
(c) thepolicy is of a prescribed description,
(d) thepolicy states how much of the premium relates to the liability to pay for anexpert report or reports in respect of clinical negligence ("the relevantpart of the premium"), and
(e) theamount is to be paid in respect of the relevant part of the premium...
(5) In thissection—
"clinicalnegligence" means breach of a duty of care or trespass to the personcommitted in the course of the provision of clinical or medical services(including dental or nursing services); "clinical negligenceproceedings" means proceedings which include a claim for damages inrespect of clinical negligence; "costs insurance policy", in relationto a party to proceedings, means a policy insuring against the risk of theparty incurring a liability in those proceedings; "expert report"means a report by a person qualified to give expert advice on all or most ofthe matters that are the subject of the report; "proceedings"includes any sort of proceedings for resolving disputes (and not just proceedingsin court), whether commenced or contemplated.
Costs order may require payment of anamount of the relevant part of the premium
3.—(1) A costs order made in favour ofa party to clinical negligence proceedings who has taken out a costs insurancepolicy may include provision requiring the payment of an amount in respect ofall or part of the premium of that policy if—
(a) the financial value of the claimfor damages in respect of clinical negligence is more than £1,000; and
(b) the costs insurance policy insuresagainst the risk of incurring a liability to pay for an expert report orreports relating to liability or causation in respect of clinical negligence(or against that risk and other risks).
(2) The amount of the premium that maybe required to be paid under the costs order shall not exceed that part of thepremium which relates to the risk of incurring liability to pay for an expertreport or reports relating to liability or causation in respect of clinicalnegligence in connection with the proceedings.
Compliance with the legislation
The Defendant submitted that the policy was non-compliant with section58C in that two separate premiums were payable and those premiums wereself-insured and thus unable to comply with Section 58C (2) (d) and (e). On theDefendant’s interpretation the policy was not recoverable inter partes. Theclaimant’s position was that the policy, on a proper interpretation, wascompliant with the statute, there was one policy of insurance payable simplydivided to show which part is payable in relation to expert reports.
Master Leonard at paragraph 12 set out the question to be answered “whether, on a proper reading by reference toestablished contractual principles of interpretation, the policy does or doesnot comply with the statutory requirements”.
The court is unwilling to consider speciouschallenges of interpretation; “it is wrong in principle to single out any partof the contract and read it in isolation” (para 15) instead looking at thewhole picture, including the intent of the Insurers in drafting these postLASPO premiums. Master Leonard held that “it seems to be clear both that this policyis expressly designed to comply with Section 58C and the 2013 Regulations…..andthat it does comply.” (paragraph 14).
The approach is best summarised at paragraph20 “whilst it is possible to interpret the policy, by reference to some loosewording, as non-compliant with the statute, that would in my view (withrespect) be an incorrect and distorted reading defeating its purpose.”
Proportionality – a move from Rogers?
Master Leonard held that the premium wasneither unreasonable nor disproportionate, he was unconvinced by theDefendant’s evidence; “there must be some sound basis for arguing that the ATEpremium is unreasonable in amount” (paragraph 102), “it is for the Defendant aspaying party to advance some viable case to the effect that the amount of thepremium is either unreasonable or disproportionate, in which event any doubtwill be resolved in favour of the Defendant.” (paragraph 99).
The Master was unconvinced by the arguments raised by theDefendant stating that “the evidence Ihave seen offers no sound basis for charactering an indemnity limit of £10,000in an individually rated policy, much less a block-rated policy, asunreasonable.” (paragraph 112). However, theobiter comments indicate that the court would be willing to conclude that anATE premium is disproportionate in the correct circumstances, at paragraph 101Master Leonard confirmed “It does not follow that a judge would never,unassisted by expert evidence, be in a position to conclude that an ATE premiumis unreasonable or disproportionate….matters have moved on to some extent sinceRogers.” Master Leonard’s judgment isnot binding and we will have to wait for a decision of a higher court todetermine the issue.
Conclusion
Whilstthe case makes for interesting reading it does not tell us more than we alreadyknew/expected. It seems as though ATE premiums in Clinical Negligence proceedingsare capable of challenge however the court will require more specific evidencethan that of the Defendant in this case.
Written by Sophie Culley, Non Practicing Barrister/Experienced CostsConsultant, A&M Bacon Limited
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