The County Court at Liverpool has recently refused permission to an insurer to recover costs on an indemnity basis where a GP Expert has agreed to cover the insurer’s costs.

If we are to park the indemnity basis point in this matter for a moment, the circumstances of the GP Expert’s involvement in this matter is important to understand.

Solicitor’s for the Defendant insurer used the Claimants in this matter as a test case for the GP Expert’s medical reporting, that GP named as a Dr Grace Kerali. The Claimant couple had filed a claim following an RTA but, at trial, abandoned Dr Kerali’s reports and requested an alternative expert assessment. Dr Kerali’s stated opinion after examining both Claimants was that the anticipated recovery time would be 14-16 months post-accident.

During the claim the Defendant submitted evidence that Dr Kerali’s reports were misleading and/or inaccurate. The Defendant insurer conducted a review of more than 1,000 cases, reported by Dr Kerali, involving soft-tissue whiplash injuries. It concluded that the average prognosis within Dr Kerali’s reports was 14 months, whereas that of hundreds of her peers during the same period was eight months. As a result the average figure for damages in cases involving Dr Kerali was significantly higher than cases involving her peers.

During the course of the claim Dr Kerali had voluntarily joined herself as an interested party to the action. The Defendant insurer sought its costs from her, but shortly before entering the witness box, Dr Kerali instead agreed to pay them.

A brief consideration of online reporting on the case identifies that the insurer in this matter is heralding this outcome very much as a success in relation to the order for costs as against the GP. It is however to be remembered that the order for Dr Kerali to meet the costs of the Defendant was very much a compromised outcome, given that the order was following on from Dr Kerali’s agreement to meet the Defendant’s costs.

The real victory was that of the paying party in successfully arguing against an order for indemnity basis costs.

It was highlighted by the trial judge that if indemnity basis costs were awarded in accordance with the Defendant’s request, not only would the question of proportionality be removed, but the burden of proof would shift to the paying party.

HHJ Wood advised that “substantial costs” had been run up by the insurer “in an attempt to challenge the evidence of Dr Kerali”. HHJ Wood went on to highlight that that whether costs were awarded on the indemnity basis depended on whether the facts of the case or conduct of the parties took the situation “away from the norm”. The difficulty was considered to stem from this “highly unusual” case in that there was “no benchmark by which the norm could be assessed”.

He went on: “Her role was very limited; it was that of an interested or intervening party, and little more than that…She has never been in a position to protect herself by making Calderbank or part 36 offers, or seeking to deflect the inevitable course of this litigation.”

HHJ Wood ordered that the costs which Dr Kerali agreed to pay should be assessed on the standard, and not on the indemnity, basis.

Interpretation of this case very much depends upon which “camp” the author heralds from. The supposed “victory” of the Defendant insurer in obtaining a costs order against the GP is something of a red herring as this was not a decision of the Court. The real issue here is the Court’s reluctance to make an order for indemnity basis costs. Indeed decisions relating to indemnity basis costs orders are of significant interest owing to the fact that such an order would render an approved or agreed costs budget meaningless. We do expect further case reports on the issue as receiving party’s make attempts to take their claim for costs outside of the budgeting process.