Manchester personal injury specialist firm Amelans has won a landmark victory and set a precedent for the recoverability of after-the-event (ATE) insurance premiums
Senior costs judge Master Hurst ruled last week that the ATE policy does not constitute a credit agreement. The case, Tilby Perfect Pizza, was settled and damages agreed prior to trial. It was on the issue of costs and payment of the policy premium that discussion broke down. Perfect Pizza's insurers Highway Insurance refused to pay the ATE premium and subsequent court action ensued (The Lawyer, 3 December 2001). Highway, through barrister Robert McGinty of 24a St John Street in Manchester, pointed out that when obtaining insurance cover, a policyholder will pay the premium prior to the commencement of cover. It argued that, in allowing claimant Karen Tilby to pay at the end of the case, Temple Legal Protection had provided her with credit and the policy, and should therefore take account of the Consumer Credit Act 1974.
"The Temple policy was in the spirit of the Woolf reforms" Martin Cockx, Amelans
Amelans and barrister Marc Willems of Cobden House Chambers asserted that the claimant was buying a service that was ultimately delivered when all proceedings, including costs, had been concluded. McGinty had argued that the "conclusion of the legal action" stipulated in the Temple policy meant the initial settlement rather than decisions on costs. In his conclusion, Hurst said: "The introduction of recoverable insurance premiums under the Access to Justice Act 1999 has, with effect from 1 April 2000, opened up an entirely new sector of insurance business. Litigants in general might be put off litigating if they had to pay significant amounts of money, such as insurance premiums at the outset of their claim." Amelans partner Martin Cockx said that the Temple policy was in the spirit of the Woolf reforms, which stated that new provisions should not make individual claimants worse off than they were under the old legal aid regime. Hurst stated: "I'm not persuaded that there is, as yet, any normal insurance business practice which requires the ATE premium to be paid at the inception of the policy. "In my view, this area of insurance is still in its infancy and the practice and procedure is developing." At the time of writing, no application had been made for permission to appeal the decision. Amelans still has one ATE hurdle to overcome - Callery Gray goes to the House of Lords in April.