Rogers v Merthyr Tydfil County Borough Council
| Jurisdiction | England & Wales |
| Judge | Lady Justice Smith,Lord Justice Brooke,LADY JUSTICE SMITH |
| Judgment Date | 31 July 2006 |
| Neutral Citation | [2006] EWCA Civ 1134 |
| Docket Number | Case No: A2/2005/2783, A2/2005/2783(A), A2/2005/2783(B) |
| Court | Court of Appeal (Civil Division) |
| Date | 31 July 2006 |
[2006] EWCA Civ 1134
Lord Justice Brooke
Vice-President, Court of Appeal (Civil Division)
Lord Justice Laws and
Lady Justice Smith
Case No: A2/2005/2783, A2/2005/2783(A), A2/2005/2783(B)
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CARDIFF COUNTY COURT
His Honour Graham Jones, sitting as a Deputy Circuit Judge
Deputy District Judge Sandecott
Royal Courts of Justice
Strand, London, WC2A 2LL
Andrew Bartlett QC and Nicholas Bacon (instructed by Messrs Coleman Coyle LLP) for the Appellant
Benjamin Williams (instructed by Messrs Dolmans) for the Respondents
Nigel Cooksley QC (instructed by the Law Society) for the Law Society (as interveners)
Richard Drabble QC (instructed by Coleman – ctts) for Temple Legal Protection Ltd & Keystone Legal Benefits Ltd (as interveners)
INDEX
Part Paragraph
The proceedings in the courts below ….. ….. ….. ….. ….. 1
The preliminary proceedings in this court ….. ….. ….. ….. 6
The evidence before Master Hurst:
Appellant's witnesses: (1) Christopher Cater ….. ….. ….. ….. 16
The evidence before Master Hurst:
Appellant's witnesses: (2) Phillip Bellamy ….. ….. ….. ….. 30
The evidence before Master Hurst: The DAS 80e Product ….. ….. 39
The evidence before Master Hurst: The Respondents' witnesses ….. 58
The Law Society's submissions to Master Hurst ….. ….. ….. 60
The experiences of Temple and Keystone….. ….. ….. ….. ….. 61
The Law Society's evidence ….. ….. ….. ….. ….. ….. ….. 74
Allianz Cornhill's experience ….. ….. ….. ….. ….. ….. ….. 83
The evidence from LAMP ….. ….. ….. ….. ….. ….. ….. 84
Brit's submissions ….. ….. ….. ….. ….. ….. ….. ….. 89
Abbey's observations ….. ….. ….. ….. ….. ….. ….. ….. 92
The Liability Insurers' Group's submission ….. ….. ….. ….. 93
Discussion ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. 96
Proportionality ….. ….. ….. ….. ….. ….. ….. ….. ….. 102
The legitimacy of a staged premium model ….. ….. ….. ….. 107
The size of the premium in the present case ….. ….. ….. ….. 108
The Respondents' submissions ….. ….. ….. ….. ….. ….. 113
The procedure to be followed in future ….. ….. ….. ….. ….. 116
Evidence justifying the ATE premium claimed ….. ….. ….. ….. 117
Self-insurance of the premium in the event of failure
or only partial success….. ….. ….. ….. ….. ….. ….. 118
An issue we have not decided….. ….. ….. ….. ….. ….. 119
Conclusion ….. ….. ….. ….. ….. ….. ….. ….. ….. 120
Annex by Lady Justice Smith….. ….. ….. ….. ….. ….. ….. 123
Lord Justice BrookeThis is the judgment of the court.
The proceedings in the courts below
This is an appeal by the claimant, but in reality by DAS Legal Expenses Insurance Co Ltd ("DAS"), who acted as the claimant's "after the event" ("ATE") legal expenses insurers, on appeal from a decision of His Honour Graham Jones sitting as a deputy circuit judge on 23 November 2005 when he allowed an appeal by the defendants from an assessment of costs by Deputy District Judge Sandecott in the Pontypridd County Court on 5 March 2005. This case is concerned with an injury to the claimant on the evening of 23rd August 2001 when he was 11 years old. He fell over on the perimeter of a play area in a local park in Merthyr Tydfil, and was cut by shards of glass embedded in the timber edging of the play area. There were no witnesses.
The damages were agreed in the sum of £3,105 plus interest. We were told that one of the reasons why the defendants resisted liability was that there was a hospital note to the effect that the boy had suffered his injuries after falling from a swing. It was not until the trial that it became clear that it was his mother who was the source of this misinformation, and that she had simply told the hospital that night how she understood the accident had occurred. We have not seen the parties' statements of case or the witness statements disclosed before the trial. We therefore do not know whether the costs of this very expensive trial might have been avoided if the defence had been settled in such a way (pursuant to CPR 16.5(2) (a)) that this explanation would inevitably have surfaced in the mother's witness statement before the parties prepared for trial. However that may be, the matter did go to trial on liability and the deputy district judge held that the defendants were liable. He then assessed the costs summarily in the sum of £16,821.30, which was a reduction from the sum of £18,632.73 on the schedule produced to him. The sums he allowed included an ATE premium of £5,103, being £4,860 premium plus insurance premium tax ("IPT") . He upheld a 100 per cent success fee.
The defendants appealed against that order. There was no new evidence adduced for the purposes of the appeal, apart from some material from the April 2002 edition of a magazine called Litigation Funding (a date chosen because the defendants wrongly believed that the ATE insurance had been taken out in July 2002) . This material was sent by the defendants to the claimant's advisers five months before the appeal was heard. It was included in the appeal bundle without being formally put in evidence. The approach of the judge was influenced very considerably by the contents of that document. He heard the appeal on his own without an assessor, and he reduced the costs to £12,628.30, including VAT. In particular, he reduced the recoverable ATE premium to £900. The base profit costs of £4,000, the 100 per cent success fee of £4,000, counsel's fees of £1,100, and court fees, disbursements and VAT were all left undisturbed.
The judge was influenced by the fact that DAS was using an ATE product with a three-stage premium. £450 was payable at the outset, a further £900 when proceedings were issued, and a further £3,510.60 days before the trial. This third stage premium was individually rated, and IPT of 5% was added at each stage. The judge observed that according to Litigation Funding, ATE insurance was available at a cost of between £450 and £1,350 from a range of companies, and he could not see that the staged premium justified the wholly excessive charge that was made, given that other companies in the market were charging much less than £1,800 for the whole proceedings.
He said that nobody conducting litigation reasonably would have agreed to pay a premium of this order if the case did not settle, when he could obtain an insurance policy that covered him for the whole of the conduct of the proceedings for much less than was payable at Stage Two of the DAS policy, and indeed for not very much more than was payable at Stage One. He decided that the evidence before him clearly indicated that products were available from a range of companies for cheaper premiums providing the same amount of cover, including the self-insurance aspects of it. That was why he reduced the recoverable premium to £900, which he said was in the middle of the range of £450 to £1,350 quoted in Litigation Funding.
The preliminary proceedings in this court
In the grounds of appeal for a second appeal to this court, the claimant's insurers asserted that the judge had been wrong to reduce the premium in this way. He had failed to pay any or any sufficient regard to the risks being insured under the policy. If he had done so he would have allowed the premium in the sum claimed. They said that the £900 did not reasonably reflect the risks insured, and that the judge had failed to apply paragraph 11.10 of the Costs Practice Direction. He had been wrong to take any account of the material in Litigation Funding. Reference was made in this context to what Master Hurst had said about this in his judgment in re RSA Pursuit Test Cases [2005] EWHC 90003 (Costs)(27 May 2005).
They asserted that the sum of £900 was unreasonable and therefore wrong in the context of CPR 44.4, and that the judge was wrong not to have ordered a detailed assessment as opposed to attempting a summary assessment on the limited evidence and information available. They accepted that the arguments they wished to advance on the appeal were significantly different from those advanced by the different solicitors and counsel instructed before the deputy judge. In particular, DAS wished to adduce a good deal of evidence about the way they set about their task in fixing a premium, none of which was placed before the judge.
With their notice of appeal they filed a witness statement from Mr Bellamy, who is DAS's Operations Manager, with particular responsibility for the operation of a product called the DAS 80e policy. He said the appeal was of extreme public importance and of critical importance to the insurance industry in general. The judge's arbitrary reduction of the premium was so severe that if it should be used as a persuasive precedent (with the result that all ATE trial premiums were reduced to this level), some ATE insurers would stop writing this business overnight. With an already very limited UK-based ATE insurance market, this result would be at odds with the Government's Access to Justice Act requirements. The judge's decision, if unappealed, would impact on the entire ATE market, and the question of a second appeal had to be considered from this global position. He said that, in many hundreds, if not thousands, of settled cases throughout the market, defendants were refusing to pay an ATE insurance premium and were awaiting a decisive ruling from the Court of Appeal.
He said that another hindrance for the fledgling ATE market was that insurers not only had to predict future claim numbers and claims...
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