Dance v East Kent University Hospitals NHS Foundation Trust & Ors  EWHC 2198 (SCCO)
It has been a while since most Practitioners have had arguments regarding the recoverability of After the Event Insurance Premiums. As a general concept, when the law changed in 2013, the arguments from paying parties regarding the recoverability of ATE Premiums fell away, despite the CPR confirming the “old style” rules still apply when a party is seeking to recover an ATE premium as part of that party’s costs.
The change in law in 2013 confirmed that the receiving party could no longer recover the ATE premium from the paying party, except in limited exceptions. Clinical Negligence cases are an exception, however the ATE premium recoverable can only be in relation to cover for the cost of liability and causation expert evidence. This is as per The Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No. 2) Regulations 2013.
However, in the case of Dance, the Defendant sought to object to recovery of the ATE premium which was claimed in the Bill of Costs on two grounds:
- “In Cartwright v Venduct Engineering Limited  EWCA Civ 1654 “the Court of Appeal confirmed that a Part 36 offer or a Tomlin Order did not amount to an ‘order for costs’
- Regulation 3 of the 2013 Regulations provides that ‘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’. It is therefore incumbent upon the party seeking costs to request the judge to include the necessary provision when making the order. If no such provision is included in the order, the cost of the premium will not be recoverable. The Civil Procedure Rule Committee decided that there was no need for any further rules in respect of ATE premiums in clinical negligence cases.”
With regards to the first point taken by the Defendant, CPR 44.9 confirms that a Costs Order is “deemed to have been made on the standard basis” when a Part 36 offer has been accepted. In any event, the case of Cartwright did not seek to address the issue of a Part 36 offer being an order for costs.
That issue addressed was whether a Tomlin Order was “an Order for Damages and interest made in favour of the Claimant” under CPR 44.14 (the QOCS Provisions). Whilst it was held a Part 36 offer was not an Order for damages, the issue of whether acceptance of a Part 36 created a costs Order was not addressed. If the Defendant’s point was correct on this issue, then it would mean any case settling by Part 36 would leave the receiving party without an Order for Costs, meaning they could not proceed to Detailed Assessment.
It is unsurprising that Master Leonard disregarded this point. From the Judgment it is also confirmed that the Defendant’s Counsel, Dr Friston, did not press the point either. It would be difficult to conceive the wide-reaching ramifications should the Defendant have succeeded on the point.
Turning to the second point, the Defendant relied upon an editorial note in the White Book and the wording of the relevant legislation as being permissive. The Regulations, as stated above confirmed at Regulation 3 that “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…”
The editorial note in the White Book confirmed:
“It is therefore incumbent upon the party seeking costs to request the judge to include the necessary provision when making the order. If no such provision is included in the order, the cost of the premium will not be recoverable. The Civil Procedure Rule Committee decided that there was no need for any further rules in respect of ATE premiums in clinical negligence cases.”
It was decided by Master Leonard that the Regulations did not create an exception to the normal rule that “costs” under CPR 44.1 included the ATE premium, as per McMenemy v Peterborough and Stamford Hospitals NHS Trust  EWCA Civ 1941. As such the ATE premium was recoverable under the costs Order.
Master Leonard confirmed that the Regulations were naturally permissive, which would allow the Court to disallow recoverability of the ATE premium upon Detailed Assessment.
“It follows that a recoverable ATE premium will, subject to the normal principles on the assessment of costs, be recoverable under any order for costs (whether deemed or actual) without any need for the order, CPR Part 36, or any other part of the CPR to make further provision.”
Master Leonard also concluded that he disagreed with the commentary in the White Book with regards to their editorial note. The ATE premium was therefore allowed as claimed in the sum of £5,266.01.