Highway Insurance claims policy is credit agreement and should fall under the Consumer Credit Act
An after the event (ATE) insurance costs adjudication could spark a change in the way legal fees are regarded. Insurance broker Alex-ander Forbes has warned that fees issued by law firms could fall under the jurisdiction of the Consumer Credit Act. The point is being used to counter an argument by counsel acting for Highway Insurance in a costs master's adjudication. Highway is refusing to pay the costs of an ATE insurance policy taken out by Manchester-based law firm Amelans. The policy, supplied by insurance company Temple, was necessary to pursue a personal injury claim for its client, Karen Tilby. Tilby's claim has been settled and damages have been agreed. Amelans now has to obtain its fees and disbursements. Highway has contended that as the policy is only payable at the end of the case, it should be regarded as a credit agreement. As such, the insurer believes it should be subject to the Consumer Credit Act. In most instances of acquiring insurance, the policyholder pays the premium in advance of the cover, but this does not necessarily make it standard practice for the whole insurance industry. ATE cover does not fit a system of annual renewals, but works on an ad hoc, claim-by-claim, basis. Temple's underwriting director Chris Wait said that the Temple policy contains an express term which states that the premium is payable at the end of the action. He said that as a result, Temple is not giving credit. He added: "We would say that the ATE premium is a necessary disbursement that the client has and should be paid at the end." Amelans has instructed barrister Marc Williams. His argument draws a parallel with the way clients instruct a solicitor, receive a service and pay at its conclusion. Alexander Forbes divisional director Steve Holland said: "The Highway ruling could turn out to be the thin end of the wedge for the legal profession."
"The Highway ruling could turn out to be the thin end of the wedge for the legal profession" Steve Holland, Alexander Forbes
Cases involving Temple have a habit of setting legal precedents. The Court of Appeal decision in Callery Gray ensured that reasonable ATE premiums were recoverable. Temple had provided the ATE policy to Stephen Callery. They were seeking to recover the £350 premium paid for Callery's policy. Wait said: "These points could have been raised during Callery. Saying that the legal brains involved in that case failed to spot this argument is ludicrous." He argued that had the credit angle been a sufficiently-strong argument, it should have been dealt with during the Callery case. It is understood that the adjudication on costs will be concluded by the beginning of next year.